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/raid1/www/Hosts/bankrupt/TCR_Public/071207.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, December 7, 2007, Vol. 11, No. 290 Headlines AEROSPACE & INDUSTRIAL: Case Summary & 20 Largest Unsec. Creditors AMERICAN HOME: Seeks March 3 Extension of Plan Filing Period AMERICAN HOME: $50 Mil. Limited Recourse Financing Gets Final OK AMERICAN HOME: Court Extends Removal Period Until March 4 AMERICAN HOME: Lease Decision Period Extended Until March 3 AMORTGAGE ASSET: Fitch Rates Class B-5 Certificates at B ARROW ELECTRONICS: Arrow ECS Merges Distribution Biz with ATI ASSET BACKED: Moody's Lowers Ratings on 13 Tranches BANC OF AMERICA: Fitch Affirms 'B' Rating on Class 2-B-5 Certs. BAYWOOD INT'L: Posts $202,644 Net Loss in Third Quarter BLINK LOGIC: Posts Net Loss of $1.5 Million in Third Quarter BNC MORTGAGE: Moody's Cuts Ratings on Two Classes to B3 BOMBAY CO: Court Sets January 21 as Claims Bar Date BOSTON HILL: Case Summary & 13 Largest Unsecured Creditors BROADVIEW NETWORKS: IPO Cues Moody's to Hold B3 Corporate Rating CAPITAL LAND: Case Summary & Largest Unsecured Creditor CARRINGTON MORTGAGE: Moody's Junks Rating on Cl. M-10 Loans CHRISTIAN FAITH: Case Summary & Nine Largest Unsecured Creditors CHRYSLER LLC: CEO Expects $1.6 Billion Loss in 2007, Source Says CHRYSLER LLC: Expected $1 Bil. Loss Spurs January Production Cuts CITICORP MORTGAGE: Fitch Affirms Low-B Ratings on 10 Classes COMCAST CORP: RGU Additions to Fall Short of Previous Guidance CVR ENERGY: Earns $13.4 Million in Third Quarter of 2007 CVR ENERGY: Moody's Lifts Corp. Family Rating to B2 from Caa1 DB KEY: Can Hire Fisher to Auction Key Largo Property DB KEY: Obtains Court Approval to Hire Rice Pugatch as Counsel DB KEY: Case Dismissal Hearing Continued on December 26 DELTA FINANCIAL: Failing Angelo Gordon Deal May Lead to Bankruptcy DEUTSCHE ALT-A: Fitch Cuts Rating on Class B-3 Certs. to B E*TRADE FINANCIAL: Faces Lawsuit on Exploiting Stock Accounts EL POLLO: Dispute Judgment Prompts Moody's Ratings Review FIELDSTONE MORTGAGE: Moody's Downgrades Ratings on Nine Certs. FIRST FEDERAL: Fitch Holds Junk Rating on Class B Loans FORD MOTOR: Mulls Production Cuts Due to Low November Sales FRESENIUS MEDICAL: Acquires Renal Solutions for $190 Million GENERAL MOTORS: Mulls Production Cuts Due to Low November Sales GLOBAL EPOINT: Sept. 30 Balance Sheet Upside-Down by $9.8 Million GOLDEN EAGLE: Posts $554,623 Net Loss in Third Quarter GREENBELT CT: GECC Wants Examiner to Investigate Fund Transfers HEALTHSPORT INC: Posts $3.0 Million Net Loss in Third Quarter HIDDEN SPLENDOR: Wants to Access First Zion's Cash Collateral HOME DIRECTOR: Sept. 30 Balance Sheet Upside-Down by $4.3 Million HYDROGEN POWER: Posts $1.5 Million Net Loss in Third Quarter ICONIX BRAND: Planned Loan Increase Cues Moody's to Hold B1 PDR IKON OFFICE: Moody's Rates Proposed $150MM Senior Notes at Ba3 INPHONIC INC: Hires BMC Group as Claims and Balloting Agent INPHONIC INC: Section 341(a) Meeting Scheduled for December 13 INTEGRAL NUCLEAR: Exclusive Plan Filing Period Moved to Jan. 28 JAYS FOODS: Submits Schedules of Assets and Liabilities JAYS FOODS: Court Sets December 17 as General Claims Bar Date JOSEPH CHOAT: Case Summary & 15 Largest Unsecured Creditors KEVIN COOK: Case Summary & 14 Largest Unsecured Creditors LEVITT AND SONS: Trustee Appoints Nine-Member Creditors Committee LEVITT AND SONS: Wants to Hire Ruden McClosky as Special Counsel LEVITT AND SONS: Can Use Cash Collateral Until December 19 MARC HORTON: Voluntary Chapter 11 Case Summary MCTYRE GRADING: Case Summary & 20 Largest Unsecured Creditors MILDRED MIRAN : Case Summary & Nine Largest Unsecured Creditors MORGAN STANLEY: Minimal Paydown Cues Fitch to Hold Ratings MOVIE GALLERY: Can Hire Ernst & Young as Tax Advisors MOVIE GALLERY: Inks DIP Financing Pact Amendment w/ Goldman Sachs MOVIE GALLERY: Wants Lease Termination Procedures Approved NATIONAL FARM: Voluntary Chapter 11 Case Summary NATIONAL RETAIL: Fitch Lifts Rating on Preferred Stock from BB+ NETBANK INC: Court Approves Rogers Towers as Panel's Local Counsel NETBANK INC: Court OKs Kilpatrick Stockton as Committee's Counsel NETBANK INC: Creditors Have Until Feb. 15 to File Proofs of Claim NEW CENTURY: Court Approves Termination of Captive Policies NEW WORLD: Posts $731,079 Net Loss in Third Quarter NEXIA HOLDINGS: Sept. 30 Balance Sheet Upside-Down by $685,025 NOVELL INC: SEC Inquiries Prompt Delay in 2007 Earnings Release PAN AMERICAN: Foreclosure Protection Extended Until December 12 PERFORMANCE TRANS: U.S. Trustee Picks Five-Member Creditors Panel PERFORMANCE TRANS: Taps Hodgson Russ as Bankruptcy Co-Counsel PERFORMANCE TRANS: Can Use All Cash Collateral of Secured Lenders PETROQUEST ENERGY: Moody's Lifts Corp. Family Rating to B3 PYRAMIDS CHILD: Case Summary & 25 Largest Unsecured Creditors REMY WORLDWIDE: Emerges from Chapter 11, Completes Sale of Knopf RESIDENTIAL CAPITAL: Extends $750 Million Debt Securities Offering REVLON INC: Stockholder to Refinance Unit's $170 Mil. Sub. Loan RH DONNELLEY: Board Authorizes $100 Mil. Common Stock Purchase RITCHIE (IRELAND): Wants Auction Sale Deferred to January 9 RIVERSIDE CASINO: Good Operation Cues Moody's to Lift Ratings SCO GROUP: Court Approves Tanner LLC as Accountant SCO GROUP: Court Permits CFO Solutions to Provide Company w/ CFO SOFA EXPRESS: Files for Chapter 11 Protection in Nashville SOFA EXPRESS: Case Summary & 20 Largest Unsecured Creditors TECO ENERGY: Moody's Lifts Debt Rating to Baa3 from Ba1 THORPE INSULATION: ERC and Westport Oppose Employment of Firms THORPE INSULATION: Chicago Balks at Hamilton as Rep.'s Consultant TRUMAN CAPITAL: Fitch Junks Rating on Class B Certificates UNISYS CORP: Considers Offering $250 Million of Senior Notes UNITEDHEALTH GROUP: Owns Up to Errors in Customer Service Relation UNITEDHEALTH GROUP: Current & Former Execs Agree to Give Up $900MM UNIVERSAL PROPERTY: Posts $41.7 Million Net Loss in Third Quarter URS CORP: Completed WGII Deal Cues Moody's to Cut Rating to Ba2 VALENTEC SYSTEMS: Sept. 30 Balance Sheet Upside-Down by $8.1 Mil. VERIFONE INC: To Restate 2007 Quarterly Financial Statements VERIFONE INC: Financial Restatement Cues Moody's Ratings Review WESTGATE FUNDING: Moody's Rates $19MM Class C Notes at Ba3 * Fitch Expects Improved Credit Quality for Packaging Industry * Fitch Expects Improvement for US Healthcare Sector in 2008 * Fitch Has Positive Outlook For NA Commc'l Aerospace Industry * Fitch Says Issuers Have Capacity to Maintain Fin'l Measures * BOOK REVIEW: American Economic Histor ********* AEROSPACE & INDUSTRIAL: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Aerospace & Industrial Manufacturing, Inc. 210 South Morocco Dallas, TX 75211 Bankruptcy Case No.: 07-36094 Type of Business: The Debtor manufactures aerospace and industrial systems. Chapter 11 Petition Date: December 5, 2007 Court: Northern District of Texas (Dallas) Judge: Stacey G. Jernigan Debtor's Counsel: Edwin Paul Keiffer, Esq. Wright Ginsberg Brusilow, P.C. 1401 Elm Street, Suite 4750 Dallas, TX 75202 Tel: (214) 651-6517 Fax: (214) 744-2615 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Longhorn Fabrication & Design, Vendor $57,000 Inc. 2919 Hansboro Dallas TX 75233 A.B.T.E.C.H. Vendor $48,113 P.O. BOX 16006 Phoenix, AZ 85011 Fleet Group, Inc. Vendor $47,535 7610 Pebble Drive Fort Worth, Texas 76118 Reliant Energy Vendor $31,769 S.&P. Machne Shop Vendor $21,156 Hexagon Metrology Vendor $9,558 A.M.I. Metals Vendor $8,368 Equipment Depot Vendor $7,927 G.T. Southwest Hose, Inc. Vendor $6,080 J.&L. Industrial Supply Vendor $5,963 Universal Alloy Corp. Vendor $5,560 AlliedBarton Security Services Vendor $5,303 Locher, Inc. Vendor $5,029 Southwest United Industries Vendor $4,962 U.N.I.V.A.R. Vendor $3,900 Weatherford Aerospace Vendor $3,892 M.S.C. Industrial Supply Co., Vendor $3,544 Inc. Frymire Services Vendor $3,092 Siemens Vendor $2,017 Har-Conn Chrome Comp. of Texas Vendor $1,917 AMERICAN HOME: Seeks March 3 Extension of Plan Filing Period ------------------------------------------------------------ American Home Mortgage Investment Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive periods to: (a) file a plan through March 3, 2008; and (b) solicit and obtain acceptances of that plan through May 5, 2008. James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that since bankruptcy filing, the Debtors have made progress in administering the bankruptcy cases by, among other things, stabilizing their business operations, eliminating administrative costs arising from discontinued portions of the Debtors' business operations, and commencing, conducting, and concluding a hotly contested sale process for the Debtors' loan servicing business. Mr. Patton further relates that, among other things, the Debtors: -- sought and obtained the Court's authority to establish procedures to effectuate the sale of certain assets related to their mortgage origination business, including real property leases, equipment leases, and furniture, fixtures and equipment at the premises; -- filed requests seeking to reject about 800 unexpired leases of nonresidential real property and numerous executory contracts; -- have closed and fully vacated numerous locations, within the first 90 days of the cases and avoided significant additional administrative rent liability by vacating the various locations in a timely manner; -- engaged in negotiations and stipulations with Federal Home Loan Mortgage Corp. and the Government National Mortgage Association permitting the Debtors to continue to service certain mortgage loans for sufficient periods of time to effectuate the orderly transfer of the servicing of the loans for value; and -- sought and obtained the Court's permission to sell their Servicing Business to AH Mortgage Acquisition Co., Inc. Mr. Patton relates that as with other large and complex cases, the initial 120-day exclusive period did not provide the Debtors with an adequate opportunity to develop and negotiate a Chapter 11 plan. He adds that the contested nature of nearly every facet of these cases has prevented the Debtors and their professionals from turning their attention to a Plan. He points out that the Debtors have been focused on stabilizing the their business operations in the wake of the unprecedented upheaval in the mortgage loan and mortgage-backed securities experienced nationwide. Additionally, there are a variety of other tasks that are lie ahead of the Debtors before a meaningful Plan can be proposed, Mr. Patton notes. He discloses that the Debtors still have numerous assets that must be marketed and sold, including the their federally chartered thrift and bank, certain whole loans and construction loans, and certain other real estate holdings, like their corporate headquarters in Melville, New York. Termination of the Debtors' Exclusive Periods would adversely impact their business operations and the progress of these cases, Mr. Patton says. If the Court were to deny the request for extension, with any party-in-interest free to propose a Plan, that would foster a chaotic environment with no central focus, he notes. Judge Sontchi will convene a hearing on December 21, 2007, at 10:00 a.m., to consider the Debtor's request. Pursuant to Del.Bankr.LR 9006-2, the Debtor's Exclusive Periods is automatically extended until the conclusion of that hearing. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 18, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: $50 Mil. Limited Recourse Financing Gets Final OK ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave American Home Mortgage Investment Corp. and its debtor-affiliates authority, on a final basis, to enter into a $50,000,000 debtor- in-possession loan and security agreement dated Nov. 16, 2007, among the Debtor-borrowers, several lenders, and AH Mortgage Acquisition Co., Inc., in its capacity as lender and administrative agent. The Debtors previously obtained interim approval to borrow up to $35,000,000 under the limited recourse DIP facility, to fund their loan servicing business, pursuant to the terms of the final order and the Limited Recourse DIP Financing Documents. Upon the payment of the purchase price of the Servicing Business at the initial closing, and to secure the repayment of the Limited Recourse DIP obligations, the Administrative Agent is granted a valid, binding, enforceable, and perfected security interest in and lien on (i) all the Purchased Assets, including all proceeds and profits, and (ii) the collateral that is immediately junior to any permitted lien. The Court reminds the parties that nothing in the Final Order will be construed as granting the Secured Parties a security interest in or lien on any (i) proceeds of the sale of the Servicing Business, (ii) proceeds of the Bank of America collateral received by the sellers but not paid to BofA, (iii) the Sellers' assets that are not being purchased by AHM Acquisition Co., or (iv) other assets of the Debtors used in the Servicing Business, but not purchased by AHM Acquisition. The liens and security interests granted to the Administrative Agent will not (i) be subject to any lien or security interest that is avoided and preserved for the benefit of the bankruptcy estates, or (ii) be subordinated to any other lien or security interest pursuant Section 364(d) of the Bankruptcy Code, Judge Sontchi notes. In an event of default, Judge Sontchi notes, the Administrative Agent may: -- terminate all or any portion of the Limited Recourse DIP Facility and the Secured Parties' obligation to any further loans or advances; -- declare the Limited Recourse DIP Obligations to be immediately due and payable; and -- subject to certain Limited Recourse Provisions, exercise the sole rights and remedies against the collateral, as allowed under the request's interim and final orders, and the Limited Recourse DIP Documents. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 18, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Court Extends Removal Period Until March 4 --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has granted American Home Mortgage Investment Corp. and its debtor-affiliates' request to extend to March 4, 2008, the deadline to file notices of removal of all civil actions pending as of Aug. 6, 2007. The Court, however, noted that the order is without prejudice to (i) any position the Debtors may take regarding whether Section 362 of the Bankruptcy Code applies to stay any litigation pending against them, or (ii) the Debtors' right to seek further extensions. As reported in the Troubled Company Reporter on Nov. 9, 2007, since their bankruptcy filing, the Debtors said they have focused primarily on maximizing the value of their bankruptcy estates for the benefit of the stakeholders through the orderly liquidation of assets. To that end, the Debtors have solicited, negotiated and sought approval for several sales of various assets, including the Debtors' mortgage loan servicing business. According to the Debtors, Chapter 11 imposes on them additional obligations to prepare schedules of assets and liabilities, produce monthly operating reports, respond to creditor inquiries, retain professionals and handle various tasks. Hence, they have not had an opportunity to fully investigate all of the State Court Actions to determine whether removal is appropriate. Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 18, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Lease Decision Period Extended Until March 3 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended American Home Mortgage Investment Corp. and its debtor-affiliates' time to assume or reject any of the leases, subleases or other agreements, to which any of the Debtors are a party that may be considered an unexpired lease of nonresidential real property through and including March 3, 2008. As reported in the Troubled Company Reporter on Nov. 15, 2007, since their bankruptcy filing, the Debtors have focused primarily on maximizing the value of the Debtors' bankruptcy estates for their stakeholders through the orderly liquidation of their assets. As a result of the expedited and lengthy sale process of the Debtors' loan servicing business and other matters the Debtors faced during the initial stage of their bankruptcy cases, they have not had ample opportunity to evaluate all of their remaining real property leases, James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, said. As of November 8, 2007, the Debtors have assumed and assigned approximately 40 unexpired leases of non-residential real property related to the Debtors' loan origination business, Mr. Patton disclosed. In addition, the Court has approved the Debtors' request to extend the deadline for lease disposition for unexpired leases related to the Servicing Business until March 3, 2008. Mr. Patton contended that the extension will not damage the lessors beyond the compensation that is available to them under the Bankruptcy Code because the Debtors had and will perform their undisputed obligations in a timely fashion, including the payment of postpetition rent. He also noted that the Debtors should not be forced at this relatively early stage of the Chapter 11 cases to prematurely assume the Leases and incur potentially significant and unnecessary administrative claims, or to reject the Leases and lose the opportunity to obtain value for those leases. Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 18, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMORTGAGE ASSET: Fitch Rates Class B-5 Certificates at B -------------------------------------------------------- Fitch Ratings has affirmed these Mortgage Asset Securitization Transactions Adjustable-Rate Mortgages Trust mortgage pass-through certificates: Series 2004-8 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; -- Class B-4 at 'BB'; -- Class B-5 rated 'B', placed on Rating Watch Negative. The affirmations, affecting approximately $148.3 million of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. Class B-5 was placed on Rating Watch Negative due to recent trends in delinquencies. The transaction has serious delinquencies (loans delinquent more than 90 days, inclusive of loans in foreclosure, bankruptcy, and real estate owned) of 4.64%, while the CE of the B-5 bond is 1.01%. The deal has incurred 0.03% of loss to date. Fitch will closely monitor this transaction to see how delinquent loans move through the pipeline before taking rating action on this class. The collateral of the above transaction consists of conventional, fully amortizing, 30-year adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. The loans were acquired by UBS from various originators and are serviced by various servicers. Wells Fargo Bank N.A. (rated 'RMS1' by Fitch) is the master servicer.. As of the November 2007 distribution date, the pool factor is approximately 35% and the transaction is seasoned 39 months. ARROW ELECTRONICS: Arrow ECS Merges Distribution Biz with ATI ------------------------------------------------------------- The Enterprise Computing Solutions business of Arrow Electronics Inc. is transitioning its software distribution business to Arrow's subsidiary, Alternative Technology Inc., creating a software business in excess of $1 billion. Through this arrangement, ATI will gain eight additional product lines that were part of Arrow ECS' Software Group and will oversee partner relationships and internal staff for that business. Product lines that will be transferred to ATI include Bakbone, BEA, CA, CommVault, McAfee, Novell, Oracle and Symantec. Arrow ECS' storage, HP and IBM businesses will not change. "Arrow ECS is committed to increasing the depth of our offerings in high- growth sectors, including software and security," Kevin Gilroy, president of Arrow ECS, said. "In addition, Arrow ECS is focused on delivering comprehensive solutions to our partners. This initiative enables Arrow ECS to best serve our software suppliers and partners by providing focused support and dedicated resources to grow their business." It is anticipated that the suppliers will be transitioned to ATI by the end of Arrow's first quarter in 2008. A team comprising representatives from both Arrow ECS and ATI will manage the integration process. "This integration best enables Arrow ECS and ATI to share and apply best practices within our respective software businesses," Bill Botti, president and chief executive officer of ATI, said. "Partners will benefit from enhanced complementary product lines and a full suite of professional services available through ATI." ATI represents more than 30 software and security suppliers, including Citrix and VMware. About Arrow Electronics Headquartered in Melville, New York, Arrow Electronics Inc. -- http://www.arrow.com/-- provides products, services and solutions to industrial and commercial users of electronic components and computer products. Arrow serves as a supply channel partner for nearly 600 suppliers and more than 130,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of over 270 locations in 53 countries and territories. The company operates in France, Spain, Portugal, Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, Norway, Sweden, Italy, Germany, Austria, Switzerland, Belgium, the Netherlands, United Kingdom, Argentina, Brazil, Mexico, Australia, China, Hong Kong, Korea, Philippines and Singapore. Arrow Enterprise Computing Solutions is a Englewood, Colorado- based business unit of Arrow Electronics Inc. that provides enterprise and midrange computing products, services and solutions to value-added resellers, system integrators, and independent software vendors. Alternative Technology Inc. is a Englewood, Colorado-based wholly owned subsidiary of Arrow Enterprise Computing Solutions, that provides end-to-end solutions, presales support, order management and marketing services to more than 3,000 partners. Established in 1986, ATI also offers a robust portfolio of processional services for partners, including onsite engineering, security assessments and technical call support. Alternative Technology Inc. has offices in Ft. Lauderdale, Florida, Carlsbad, California, and Mississauga, Canada. * * * Arrow Electronics' senior subordinated stock continues to carry Moody's Investors Service's Ba1 rating. The company's senior preferred stock is rated at Ba2. ASSET BACKED: Moody's Lowers Ratings on 13 Tranches --------------------------------------------------- Moody's Investors Service has downgraded the ratings of 13 tranches and has placed under review for possible downgrade the ratings of 2 tranches from 2 transactions issued by issued by Asset Backed Securities Corporation Home Equity Loan Trust in 2007. Additionally one downgraded tranche remains on review for possible further downgrade. The collateral backing these classes consists of primarily first lien, fixed and adjustable-rate, subprime mortgage loans. In its analysis, Moody's has combined its published methodology updates as of July 13th, 2007 to the non delinquent portion of the transactions. Collateral backing these transactions is also experiencing higher than anticipated rates of delinquency, foreclosure, and REO relative to credit enhancement levels. Complete list of Rating Actions: Issuer: Asset Backed Securities Corporation Home Equity Loan Trust, Series AMQ 2007-HE2 -- Cl. M3 Currently Aa2 on review for possible downgrade, -- Cl. M4 Currently Aa3 on review for possible downgrade, -- Cl. M5, Downgraded to A2, previously A1, -- Cl. M6, Downgraded to A3, previously A2, -- Cl. M7, Downgraded to Baa3, previously A3, -- Cl. M8, Downgraded to Ba2, previously Baa1, -- Cl. M9, Downgraded to B1, previously Baa2, -- Cl. M10, Downgraded to Caa2, previously Baa3. Issuer: Asset Backed Securities Corporation Home Equity Loan Trust, Series RFC 2007-HE1 -- Cl. M5, Downgraded to A3, previously A2, -- Cl. M6, Downgraded to Baa2, previously A3, -- Cl. M7, Downgraded to Ba2, previously Baa1, -- Cl. M8, Downgraded to Ba3, previously Baa2, -- Cl. M9, Downgraded to B3 on review for possible further downgrade, previously Baa3, -- Cl. M10, Downgraded to Caa3, previously Ba1, -- Cl. M11, Downgraded to C, previously Ba2. BANC OF AMERICA: Fitch Affirms 'B' Rating on Class 2-B-5 Certs. --------------------------------------------------------------- Fitch Ratings has taken these rating actions on Banc of America Funding Corporation mortgage pass-through certificates: Series 2004-2 Group 1 -- Classes 1-CB-1, 1-CB-R, 1-CB-IO, 1-CB-PO and 1-30-PO affirmed at 'AAA'; -- Class 1-B-2 affirmed at 'A'; -- Class 1-B-3 affirmed at 'BBB'. Series 2004-2 Group 2 -- Classes 2-A-1, 2-A-IO and 2-30-PO affirmed at 'AAA'; -- Class 2-B-1 upgraded to 'AA+' from 'AA; -- Class 2-B-2 upgraded to 'A+' from 'A'; -- Class 2-B-3 upgraded to 'BBB+' from 'BBB'; -- Class 2-B-4 affirmed at 'BB'; -- Class 2-B-5 affirmed at 'B'. Series 2004-2 Group 3 -- Classes 3-A-1 to 3-A-17, 3-A-IO and 3-30-PO affirmed at 'AAA'. The upgrades are taken as a result of improvement in the relationship between credit enhancement and future expected losses and affect approximately $3.6 million of outstanding certificates, as of the November 2007 distribution date. The affirmations reflect a satisfactory relationship between CE and future loss expectations and affect approximately $370 million of outstanding certificates. This transaction is 39 months seasoned and the pool factors (current collateral balance as a percentage of initial collateral balance) for the various pools range from approximately 36% to 64%. BAFC, a special purpose corporation, purchased the mortgage loans from various sellers and deposited the loans into the trust. The above pools comprise of conventional, fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. Wells Fargo bank, N.A., rated 'RMS1' by Fitch, is the master servicer for the loans in these pools. BAYWOOD INT'L: Posts $202,644 Net Loss in Third Quarter ------------------------------------------------------- Baywood International Inc. reported a net loss of $202,644 on net sales of $3.2 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $179,003 on net sales of $205,331 in the same period last year. The increase in net sales for the three month period is attributable to the acquisition of Nutritional Specialties Inc., d/b/a LifeTime(R) on April 5, 2007, effective March 30, 2007. Gross profit increased to $1.3 million during the three months ended Sept. 30, 2007, compared to gross profit of $96,660 in the prior period quarter. Selling, general and administrative expenses for the three month period ended Sept. 30, 2007, were $1.2 million, compared to $227,835 for the same period last year. Total other expense for the three months ended Sept. 30, 2007, was $346,390, compared to $47,828 for the same period last year. Interest expense increased to $199,624 from $47,828 in the 2006 quarter. There is no income tax benefit recorded because any potential benefit of the operating loss carry forwards has been equally offset by an increase in the valuation allowance on the deferred income tax asset. Net sales for the nine months ended Sept. 30, 2007, were $6.6 million, compared to $900,026 for the same period last year, an increase of $5.7 million. Net loss for the nine months ended Sept. 30, 2007, was $892,840 as compared to a net loss of $393,388 for the same period last year. At Sept. 30, 2007, the company's consolidated balance sheet showed $13.9 million in total assets, $9.6 million in total liabilities, and $4.3 million in total stockholders' equity. The company's consolidated balance sheet at Sept. 30, 2007, moreover showed strained liquidity with $3.6 million in total current assets available to pay $4.1 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2614 Acquisition of Nutritional Specialties Inc. On April 5, 2007, effective March 30, 2007, the company acquired, substantially all of the assets, and assumed certain liabilities, of Nutritional Specialties Inc., d/b/a LifeTime(R) or LifeTime(R) Vitamins, a California corporation, for a purchase price of approximately $11,100,000. Going Concern Doubt Epstein, Weber & Conover PLC, in Scottsdale, Ariz., expressed substantial doubt about Baywood International Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements as of Dec. 31, 2006. The auditing firm reported that the company has experienced material operating losses and had a net working capital deficiency of $3,025,365 at Dec. 31, 2006. About Baywood International Headquartered in Scottsdale, Ariz., Baywood International Inc. (OTC BB BYWD.OB) -- http://www.bywd.com/-- is a nutraceutical company specializing in the development, marketing and distribution of its own proprietary brands under the names BAYWOOD PURECHOICE(R), BAYWOOD SOLUTIONS(R), Complete La Femme(R), and BAYWOOD EVOLUTION(TM). BLINK LOGIC: Posts Net Loss of $1.5 Million in Third Quarter ------------------------------------------------------------ Blink Logic Inc. reported a net loss of $1.5 million on revenues of $74,795 for the third quarter ended Sept. 30, 2007, compared with a net loss of $360,040 on revenues of $172,064 in the same period last year. The decrease in revenues results primarily from lower services revenue as a result of decreased revenues from a significant customer in 2007 compared to 2006. General and administrative expenses for the three months ended Sept. 30, 2007, were $451,389 compared to $163,451 for the three months ended Sept. 30, 2006. Interest expense increased from $55,928 for the three months ended Sept. 30, 2006, to $565,760 for the three months ended Sept. 30, 2007. This increase results primarily from the impact of the intrinsic value of beneficial conversion features on promissory notes and accretion of promissory notes to face value on conversion of promissory notes to common stock in Sept. 2007. At Sept. 30, 2007, the company's consolidated balance sheet showed $3.9 million in total assets, $2.3 million in total liabilities, and $1.6 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?261a Going Concern Doubt KPMG LLP, in Ottawa, Canada, expressed substantial doubt about DataJungle Software Inc. nka. Blink Logic Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm reported that the company has negative working capital at Dec. 31, 2006, and has incurred recurring losses, as well as recurring negative cash flow from operating activities. The auditing firm added that the company has an accumulated deficit and its economic viability is dependent on its ability to generate additional sales and finance operational expenses. About Blink Logic Inc. Headquartered in Mill Valley, Calif., Blink Logic Inc. (OTC BB: BLLG) -- http://www.blinklogic.com/-- formerly DataJungle Software Inc., develops and markets a web-based front-end dashboard software product for leading business intelligence platforms. The product allows an end-user to create visual and interactive dashboard views on top of their existing databases and data cubes without significant involvement from specialized software programmers. BNC MORTGAGE: Moody's Cuts Ratings on Two Classes to B3 ------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 18 tranches issued by BNC Mortgage Loan Trust in 2007. Additionally two downgraded tranches remain on review for possible further downgrade. The collateral backing these classes consists of primarily first lien, fixed and adjustable-rate, subprime mortgage loans. In its analysis, Moody's has combined its published methodology updates as of July 13, 2007 to the non delinquent portion of the transactions. Collateral backing these transactions is also experiencing higher than anticipated rates of delinquency, foreclosure, and REO relative to credit enhancement levels. Complete list of Rating Actions: Issuer: BNC Mortgage Loan Trust 2007-1 -- Cl. M5, Downgraded to A3, previously A2, -- Cl. M6, Downgraded to Baa1, previously A3, -- Cl. M7, Downgraded to Ba1, previously Baa1, -- Cl. M8, Downgraded to Ba2, previously Baa2, -- Cl. M9, Downgraded to B3 on review for possible further downgrade, previously Baa3, -- Cl. B1, Downgraded to Caa2, previously Ba1. Issuer: BNC Mortgage Loan Trust 2007-2 -- Cl. M6, Downgraded to Baa1, previously A3, -- Cl. M7, Downgraded to Baa3, previously Baa1, -- Cl. M8, Downgraded to Ba1, previously Baa1, -- Cl. M9, Downgraded to Ba2, previously Baa2, -- Cl. B1, Downgraded to B1, previously Ba1, -- Cl. B2, Downgraded to Caa2, previously Ba2. Issuer: BNC Mortgage Loan Trust 2007-3 -- Cl. M6, Downgraded to Baa1, previously A3, -- Cl. M7, Downgraded to Baa2, previously Baa1, -- Cl. M8, Downgraded to Baa3, previously Baa2, -- Cl. M9, Downgraded to Ba1, previously Baa3, -- Cl. B1, Downgraded to B1, previously Ba1, -- Cl. B2, Downgraded to B3 on review for possible further downgrade, previously Ba2. BOMBAY CO: Court Sets January 21 as Claims Bar Date --------------------------------------------------- The United States Bankruptcy Court for the Northern District of Texas set Jan. 21, 2008, as the last day within which creditors of Bombay Co. and its debtor-affiliates may file their proofs of claim. Governmental units may file their proofs of claim on or before March 18, 2008. Proofs of claims must be filed at this address: AlixPartners LLP c/o John Franks 2100 McKinney Avenue, Suite 800 Dallas, Texas 75201 Basedc in Fort Worth, Texas, The Bombay Company Inc., (OTC Bulletin Board: BBAO) -- http://www.bombaycompany.com/-- designs, sources and markets a unique line of home accessories, wall decor and furniture through 384 retail outlets and the Internet in the U.S. and internationally, including Cayman Islands. The company and five of its debtor-affiliates filed for Chapter 11 protection on Sept. 20, 2007 (Bankr. N.D. Tex. Lead Case No. 07-44084). Robert D. Albergotti, Esq., John D. Penn, Esq., Ian T. Peck, Esq., and Jason B. Binford, Esq., at Haynes and Boone, LLP, represent the Debtors. Attorneys at Cooley, Godward, Kronish LLP act as counsel for the Official Committee of Unsecured Creditors. Forshey & Prostok LLP is the Committee's local counsel. As of May 5, 2007, the Debtors listed total assets of $239,400,000 and total debts of $173,400,000. BOSTON HILL: Case Summary & 13 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Boston Hill Realty Trust 93 Main Street Kingston, MA 02364 Bankruptcy Case No.: 07-17770 Type of Business: The Debtor owns and develops real estate. Chapter 11 Petition Date: December 5, 2007 Court: District of Massachusetts (Boston) Debtor's Counsel: Earl D. Munroe, Esq. Munroe & Chew 5 Broadway Saugus, MA 01906 Tel: (617) 848-1218 Fax: (617) 507-8377 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Gary Coyne $1,500,000 c/o Richard McCarthy 2310 Commonwealth Avenue, Unit 3-6 Newton, MA 02466 Scott Farah $400,000 c/o Richard McCarthy 2310 Commonwealth Avenue, Unit 3-6 Newton, MA 02466 B.S.C. Cos., Inc. bank loan $350,000 15 Elins Street. Boston, MA 02127 Petruzzi Brothers $85,000 Eagle Leasing Co. $40,000 White Water, Inc. $32,500 Nations Rent U.S.A., Inc. $18,500 V.G.T. Enterprises, Inc. $5,700 Town of Shrewsbury $5,000 Ronald Rainer $2,000 R.W.W. Management Co., Inc. $2,000 Leo Dodier $100 Mark Valas $100 BROADVIEW NETWORKS: IPO Cues Moody's to Hold B3 Corporate Rating ---------------------------------------------------------------- Moody's Investors Service has affirmed Broadview Networks Holdings, Inc.'s B3 corporate family rating and the stable outlook following the Company's announcement that it has filed for an initial public offering of its common stock. If the Company successfully completes the IPO, Moody's believes that Broadview's credit profile would be improved via the elimination of the 50% debt attribution of the Series A and B preferred stock (about $60 million as per Moody's adjustments for hybrid instruments). Moreover, according to Moody's Vice President and Senior Analyst, Gerald Granovsky, "the Company could generate upward rating momentum if it achieves the targeted synergies in the ATX and InfoHighway acquisitions." However, the uncertainty of successfully consummating the IPO in a difficult capital markets environment and the intensifying competitive pressures temper the prospect to change the Company's ratings or the outlook at this time. The future ratings and the ratings outlook will incorporate the Company's leverage profile in light of organic or capital markets deleveraging, the potential for future debt-driven acquisitions, and a review of the company's performance and integration progress. Broadview plans to use the proceeds from the IPO for general corporate purposes, to fund capital expenditures or for future acquisitions. The Company may also exercise the clawback provision to redeem up to 35% of its outstanding 11-3/8% notes, due 2012. In conjunction with the IPO, Broadview will convert all preferred stock to common, and the shareholders will sell a portion of their common holdings in the IPO. The Company will not receive any proceeds from the sale of stock held by its existing shareholders. Broadview, headquartered in Rye Brook, New York, is a CLEC serving over 800,000 access line equivalents. CAPITAL LAND: Case Summary & Largest Unsecured Creditor ------------------------------------------------------- Debtor: Capital Land Investors, L.L.C. Lisa M. Poulin, Trustee c/o Gordon & Silver, Ltd. 3960 Howard Hughes Parkway, 9th floor Las Vegas, NV 89169 Bankruptcy Case No.: 07-18099 Type of Business: The Debtor owns and manages real estate. Chapter 11 Petition Date: December 4, 2007 Court: District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Talitha B. Gray, Esq. Gordon & Silver, Ltd. 3960 Howard Hughes Parkway, 9th floor Las Vegas, NV 89109 Tel: (702) 796-5555 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ohio Savings Bank construction deed $44,000,000 Commercial Lending Department of trust; value 200 Ohio Savings Plaza of security: 1801 East Ninth Street $30,000,000 Chicago, IL 60601 CARRINGTON MORTGAGE: Moody's Junks Rating on Cl. M-10 Loans ----------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 10 tranches from 2 transactions issued by Carrington Mortgage Loan Trust in 2007. The collateral backing these classes consists of primarily first lien, fixed and adjustable-rate, subprime mortgage loans. In its analysis, Moody's has combined its published methodology updates as of July 13, 2007 to the non delinquent portion of the transactions. Collateral backing these transactions is also experiencing higher than anticipated rates of delinquency, foreclosure, and REO relative to credit enhancement levels. Complete list of Rating Actions: Issuer: Carrington Mortgage Loan Trust, Series 2007-FRE1 -- Cl. M-6, Downgraded to Baa1, previously A3, -- Cl. M-7, Downgraded to Baa2, previously Baa1, -- Cl. M-8, Downgraded to Baa3, previously Baa2, -- Cl. M-9, Downgraded to Ba2, previously Baa3, -- Cl. M-10, Downgraded to B3, previously Ba1. Issuer: Carrington Mortgage Loan Trust, Series 2007-RFC1 -- Cl. M-6, Downgraded to Baa1, previously A3, -- Cl. M-7, Downgraded to Baa2, previously Baa1, -- Cl. M-8, Downgraded to Ba2, previously Baa2, -- Cl. M-9, Downgraded to B3, previously Baa3, -- Cl. M-10, Downgraded to Ca, previously Ba1. CHRISTIAN FAITH: Case Summary & Nine Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: The Christian Faith Assembly dba Calvary Apostolic Church 43500 Telegraph Road Elyria, OH 44035 Bankruptcy Case No.:07-19234 Type of Business: The Debtor owns and manages a church. Chapter 11 Petition Date: December 5, 2007 Court: Northern District of Ohio (Cleveland) Judge: Randolph Baxter Debtor's Counsel: Frederic P. Schwieg, Esq. Cowden & Humphrey Co. L.P.A. 4415 Euclid Avenue, Suite 200 Cleveland, OH 44103-3758 Tel: (216) 241-2880, 133 (extension) Fax: (216) 241-2881 Total Assets: $1,238,306 Total Debts: $618,159 Debtor's Nine Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Syd Orr Loans $34,000 43500 Telegraph Road Elyria, OH 44035 Mike P. Harvey Co., L.P.A. Legal Fees $11,000 311 Northcliff Rocky River, OH 44116 Columbia Gas of Ohio, Inc. Utilities $840 P.O. Box 9001847 Louisville, KY 40290-1847 Ohio Edison Electric Service $330 Windstream Communications, Telephone $60 Inc. Elyria City Utilities Water & refuse $50 Church Mutual Insurance Co. Insurance Premium Unknown Lorain County Court of Common Court Costs Unknown Pleas Treasurer of State of Ohio Non-profit status Unknown CHRYSLER LLC: CEO Expects $1.6 Billion Loss in 2007, Source Says ---------------------------------------------------------------- Chrysler LLC Chief Executive Officer Robert Nardelli disclosed to company employees that Chrysler is in for a wider financial loss of $1.6 billion than what Steve Landry, executive vice president of North American sales, revealed to marketing and business students in Halifax, Nova Scotia last week, various papers report. It would be the Chrysler's second consecutive year of losses if Mr. Nardelli's forecast is right, according to the Associated Press citing an unnamed source. The company reported a loss of $618 million in 2006 but disclosed earnings of $1.8 billion in 2005. As reported in the Troubled Company Reporter on Dec. 3, 2007, Mr. Landry declared that Chrysler aniticipates a loss of $1 billion this year in costs. He told Saint Mary's University students in Halifax, Nova Scotia, that Chrysler's 2007 revenue is expected at $64 billion and costs at about $65 billion. Mr. Landry recounted Chrysler's business aim to recover costs next year and to yield a huge profit in 2009 and 2010, slashing about 8 models from its lineup. Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. The outlook is negative. CHRYSLER LLC: Expected $1 Bil. Loss Spurs January Production Cuts ----------------------------------------------------------------- Chrysler LLC plans to temporarily cease car production in its plants in Warren, Michigan and Fenton, Missouri, before Christmas, postponing its opening until the whole month of January, according to various sources. The move is due to due to the company's expected $1 billion loss, slow pickup sales and prevention of an oversupply. Sources say that the company will also shutter a truck plant in Mexico for two weeks in January. As reported in the Troubled Company Reporter on Dec. 4, 2007, Chrysler dealers delivered 161,088 new vehicles to U.S. customers in November 2007, down 2% compared with a year ago. Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. The outlook is negative. CITICORP MORTGAGE: Fitch Affirms Low-B Ratings on 10 Classes ------------------------------------------------------------ Fitch Ratings has affirmed these Citicorp Mortgage Securities Inc. trust issues: Series 2005-4 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; -- Class B-4 at 'BB'; -- Class B-5 at 'B'. Series 2005-7 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; -- Class B-4 at 'BB'; -- Class B-5 at 'B'. Series 2005-8 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; -- Class B-4 at 'BB'; -- Class B-5 at 'B'. Series 2006-1 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; -- Class B-4 at 'BB'; -- Class B-5 at 'B'. Series 2006-5 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; -- Class B-4 at 'BB'; -- Class B-5 at 'B'. The mortgage loans consist of 12-30-year fixed-rate mortgages extended to prime borrowers and are secured by one- to four-family residential properties. As of the November distribution date, the transactions are 13 to 28 months seasoned and the pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) range from 82% (2005-4) to 88% (2006-1). The affirmations reflect a stable relationship between credit enhancement and future loss expectations and affect approximately $2.457 billion of outstanding certificates. COMCAST CORP: RGU Additions to Fall Short of Previous Guidance -------------------------------------------------------------- Comcast Corporation disclosed Tuesday that Michael Angelakis, co- chief financial officer, will participate in the 35th Annual UBS Global Media & Communications Conference on Dec. 5, 2007, at which time he will discuss, among other items, the company's current outlook for 2007. Reflecting an increasingly challenging economic and competitive environment and consistent with trends across the sector, Revenue Generating Units are now expected to increase by approximately 6 million, versus previous guidance of approximately 6.5 million additions. This represents a significant increase compared to the 5 million RGUs added in 2006. This RGU growth is expected to contribute to cable revenue growth for 2007 of approximately 11%, compared to previous guidance of at least 12%, cable operating cash flow growth, presented on a pro forma basis, of approximately 13% as compared to previous guidance of at least 14%, and consolidated operating cash flow growth of approximately 13% as compared to previous guidance of at least 13%. Cable capital expenditures are expected to be approximately $6.0 billion for the year, a 5% increase from originally issued guidance, reflecting increased advanced digital set-top box purchases, the company's digital acceleration program, expanded network enhancements and acquisition-related investments. Reflecting the impact of all the aforementioned items, Comcast's consolidated free cash flow is expected to be approximately 80% of 2006, compared to previous estimates of 2007 consolidated free cash flow of at least 90% of 2006. With the current outlook of 6 million RGU additions, 11% cable revenue growth, and 13% cable operating cash flow growth, 2007 will be a year of record RGU additions and solid financial performance, with the company enjoying its 8th consecutive year of double digit cable operating cash flow growth. About Comcast Corporation Based in Philadelphia, Comcast Corporation (Nasdaq: CMCSA, CMCSK) -- http://www.comcast.com/-- is a provider of cable, entertainment and communications products and services. With 24.2 million cable customers, 12.9 million high-speed Internet customers, and 4.1 million voice customers, Comcast is principally involved in the development, management and operation of broadband cable systems and in the delivery of programming content. Comcast's content networks and investments include E! Entertainment Television, Style Network, The Golf Channel, VERSUS, G4, AZN Television, PBS KIDS Sprout, TV One, Comcast SportsNet and Comcast Interactive Media, which develops and operates Comcast's Internet business. Comcast also has a majority ownership in Comcast Spectaccor, whose major holdings include the Philadelphia Flyers NHL hockey team, the Philadelphia 76ers NBA basketball team and two large multipurpose arenas in Philadelphia. * * * Moody's Investors Service assigned a Ba1 rating to Comcast Corporation's preferred stock in April 2005. CVR ENERGY: Earns $13.4 Million in Third Quarter of 2007 -------------------------------------------------------- CVR Energy, Inc. reported third quarter 2007 net income of $13.4 million, compared to net income of $129.0 million for the third quarter of 2006. Net loss for the nine months ended Sept. 30, 2007, was $40.9 million compared to net income of $170.8 million for the same period in 2006. Third quarter operating income was $38.7 million in 2007, compared with $52.1 million for the same period in 2006, and for the nine months ended Sept. 30, 2007, operating income was $162.5 million compared with $267.0 million in the same period of 2006. "Our refinery and nitrogen fertilizer facilities in Coffeyville, Kansas, recovered rapidly from the devastating floods which swept across the area beginning June 30, and in fact, our refinery is now operating significantly above pre-flood rates," said Jack Lipinski, chief executive officer. "In addition, the nitrogen fertilizer plant, which was less affected by the flood and therefore lost only 18 days production, continues to perform well. It is the lowest-cost nitrogen fertilizer producer in North America." "CVR Energy's rapid recovery from the flood is the direct result of a committed effort by our employees and the dedication of our contractors and suppliers," he said. "Our return to normal operations so quickly demonstrates the phenomenal talents in this organization." At Sept. 30, 2007, the company's balance sheet showed total assets of $1.8 billion and total liabilities of $1.0 billion, resulting in a stockholders' equity of $34.5 million. Equity, as of Sept. 30, 2006, was $303.1 million. IPO On Oct. 26, 2007, the company consummated an initial public offering of 23 million shares of its common stock. The initial public offering price was $19 per share. The net proceeds to CVR Energy from the sale of common stock were $408.5 million before offering costs of approximately $11.4 million. The net proceeds were used to repay $380 million of debt, including $50 million of outstanding indebtedness under CVR Energy's revolving credit facility. The variance from operating income guidance provided in CVR Energy's IPO prospectus results from accelerating the recognition of expenses associated with the flood and related crude oil discharge into the third quarter. These expenses are within the original total estimate of flood related expenditures. The company believes it is fully insured for these expenses and will record any additional insurance proceeds as collection becomes more imminent. About CVR Energy Headquartered in Sugar Land, Texas, CVR Energy, Inc. -- http://www.cvrenergy.com/-- is an independent refiner and marketer of high value transportation fuels and, through a limited partnership, a producer of ammonia and urea ammonia nitrate fertilizers. CVR Energy's petroleum business includes a 113,500 barrel per day, complex, full-coking sour crude refinery in Coffeyville, Kansas. In addition, CVR Energy's supporting businesses include a crude oil gathering system serving central Kansas, northern Oklahoma and southwest Nebraska; storage and terminal facilities for asphalt and refined fuels in Phillipsburg, Kansas; and a rack marketing division supplying product to customers through tanker trucks and at throughput terminals. CVR ENERGY: Moody's Lifts Corp. Family Rating to B2 from Caa1 ------------------------------------------------------------- Moody's Investors Service upgraded CVR Energy, Inc.'s Corporate Family Rating from Caa1 to B2, senior first secured debt ratings from Caa1 (LGD 3; 31%) to B2 (LGD 3; 31%), Probability of Default rating from Caa2 to B3, and assigned a stable outlook. Moody's also assigned an SGL-3 speculative grade liquidity rating. The rating reflects substantial capital spending, working capital investment, and a major third quarter 2008 hedge obligation payment, all well in excess of expected otherwise sound 2008 operating cash flow. This is supported by adequate back-up liquidity lines and sound expected bank loan covenant coverage. CVR was formerly known as Coffeyville Resources LLC. It operates a 113,500 barrel-per-day crude oil refinery in Coffeyville, located in southeastern Kansas, a fertilizer production business, and a crude oil gathering system in Kansas and Oklahoma. CVR produces a very low level of premium gasoline and it carries the higher unit costs of comparatively low energy and heat efficiency. The upgrades reflect CVR's (i) strong management and strong technical team, (ii) comparatively quick return to full refinery capacity utilization and near normal processing yields, (iii) substantial debt reduction after its recent initial public offering, (iv) expected continued leverage reduction, (v) expected adequately supportive refining sector margins, particularly in its region, and (vi) a degree of diversification from CVR's low cost nitrogen fertilizer production business and sound fertilizer sector fundamentals. CVR has long-established crude oil sourcing logistics and diversified crude oil sources, strong regional refined product distribution logistics, and proximity to end-user markets. The ratings are restrained by sharply reduced 2007 free cash flow due to substantial downtime; expected more moderate fourth quarter 2007 and 2008 sector refining margins; still high leverage for a single standalone refinery operating in a capital intensive, volatile, commodity business; higher expected leverage in 2008 with outlays well in excess of cash flow; substantial cash consumed this quarter to rebuild working capital; a large cash obligation to CVR's hedge counter party (J. Aron); and a degree of uncertainty concerning CVR's full eventual environmental and liability settlements. A further restraint is that CVR may eventually convert its fertilizer business to a Master Limited Partnership. CVR will continue to fund substantial growth capital spending through 2009. Moody's anticipates that CVR's debt levels will surpass $600 million during 2008 before potentially falling in 2009, including funding a $123.7 million payment due to J. Aron in third quarter 2008. To the degree fourth quarter 2007 margins moderate, leverage would be higher as well. CVR's $397 million of net IPO proceeds repaid approximately $380 million of debt, including $50 million of bank revolver debt, taking pro-forma adjusted Sept. 30, 2007 balance sheet debt to approximately $491 million excluding $123.7 million of CVR's deferred hedge obligations to its counterparty that accumulated with the refinery flood downtime. CVR's ratings were downgraded to a Caa1 Corporate Family Rating in early August 2007 after its Coffeyville refinery incurred an emergency shut down due to a record flash flood of the nearby Verdigris River. CVR reported that major process units and equipment were not directly impacted by the flood but that damage to hundreds of individually minor, but systemically vital, motors and pumps was extensive. The incident also led to a spill of approximately 71,000 gallons of petroleum products into the adjacent community and river system and further delayed an IPO that had been essential for CVR to retain its ratings. Through the end of September 2007, including repairs, environmental settlements, and liability settlements, CVR incurred approximately $131 million of new costs associated with the flood and currently expects that number to increase to as much as $160 million. That figure excludes lost profit and the very large hedge obligation to J. Aron. CVR believes a substantial portion of the costs will eventually be reimbursed by insurance and has received $20 million of insurance proceeds to date. CVR's 2007 earnings and cash flow have been curtailed due to scheduled first quarter turnaround, the longer than expected downtime of that turnaround, complications arising with a coinciding major expansion program, the downtime associated with the Verdigris flood, and costs associated with its downtime and flood liabilities. For the nine months ending September 30, 2007, CVR reported $157 million of adjusted EBITDA before unrealized hedging gains and losses, down from $280 million in the same 2006 period. In Moody's view, given the macro and refining sector market forces at work, the sector has already seen its cyclical peaks and refining margins will moderate during 2008. The B2 first secured ratings apply to CVR's $775 million senior first lien secured term loan and $150 million senior first lien secured revolving credit facility. Under Moody's Loss Given Default Methodology, CVR's B3 Probability of Default Rating is below the B2 Corporate Family Rating due to CVR's all-bank pari- passu first secured capital structure. CVR Energy, Inc. is headquartered in Sugar Land, Texas. DB KEY: Can Hire Fisher to Auction Key Largo Property ----------------------------------------------------- D.B. Key Largo LLC obtained approval from the U.S. Bankruptcy Court for the Southern District of Florida to employ Fisher Auction Co. Inc. as its auctioneer. The objection of Philrich of Key Largo LLC, secured creditor, to the retention of Fisher was denied by the Court. Fisher's compensation as auctioneer will be based upon: (i) a 2.5% commission with an additional 1.5% commission to any cooperating buyer's broker; (ii) an additional 0.5% commission for the auctioneer if there is no cooperating buyer's broker; and (iii) a $7,000 flat fee if the stalking horse bid submitted by Philrich is the only bid received at the auction. The Court authorized the auctioneer to spend a maximum of $53,000 for out-of-pocket expenses to market the Debtor's property. The auction of the property is scheduled for Feb. 1, 2008, extendable for cause. As reported in the Troubled Company Reporter on Oct. 26, 2007, Fisher will assist the Debtor in the proposed auction of the Multi Family Development Site at Mile Marker 104 in Key Largo, Florida. The Debtor had proposed an "all cash" sale of the property at closing with no post contract due diligence period. The property has a purported value of $10 million. Fisher had proposed a $62,360 pre-sale budget for marketing and advertising expenses. In the event the Debtor cancels the sale, the Debtor agrees to reimburse the auctioneer reasonable expenses, plus 10% overhead costs. Hence, the Debtor will pay Fisher a maximum amount of $68,596 for costs and expenses. The firm can be reached at: Louis B. Fisher, III Fisher Auction Co., Inc. 619 East Atlantic Blvd. Pompano Beach, FL 33060 Tel: (954) 942-0917 or (800) 331-6620 Fax: (954) 782-8143 http://www.fisherauction.com/ Coconut Grove, Florida-based D.B. Key Largo LLC owns and manages real estate. The company filed for chapter 11 bankruptcy protection on Sept. 28, 2007 (Bankr. S.D. Fl. Case No. 07-18127). The U.S. Trustee has not appointed members to the Official Committee of Unsecured Creditors in this case. The Debtor's schedules disclosed total assets of $10,382,165 and total liabilities of $14,090,922. DB KEY: Obtains Court Approval to Hire Rice Pugatch as Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida gave D.B. Key Largo LLC authority to hire Rice, Pugatch, Robinson & Schiller PA as its counsel, nunc pro tunc to Sept. 28, 2007. The Troubled Company Reporter said on Oct. 26, 2007, that prior to the bankruptcy filing, the firm received a $20,000 retainer for its representation, along with the advance payment of a $1,039 filing fee for the case. The retainer was paid by M.A.M.C Inc, a servicing agent acting on behalf of the various individual lenders who collectively hold the second mortgage on the Debtor's real property. Lisa M. Schiller, Esq., of Rice Pugatch however, had explained to Alan Goldberg, M.A.M.C.'s chief restructuring officer, that despite its payment of the retainer, Rice Pugatch solely and strictly represents the Debtor. Ms. Schiller also told Mr. Goldberg that M.A.M.C. will have to hire a separate and independent counsel should they elect to do so. As such, Mr. Goldberg has advised Ms. Schiller that he agrees to the foregoing. Ms. Schiller assured the Court that her firm does not represent any interest adverse to the Debtor. The firm can be reached at: Lisa M. Schiller, Esq., Partner Mark S. Roher, Esq. Rice, Pugatch, Robinson & Schiller, P.A. 101 Northeast 3 Avenue, Suite 1800 Fort Lauderdale, FL 33301 Tel: (954) 462-8000 http://www.rprslaw.com/ Coconut Grove, Florida-based D.B. Key Largo LLC owns and manages real estate. The company filed for chapter 11 bankruptcy protection on Sept. 28, 2007 (Bankr. S.D. Fl. Case No. 07-18127). The U.S. Trustee has not appointed members to the Official Committee of Unsecured Creditors in this case. The Debtor's schedules disclosed total assets of $10,382,165 and total liabilities of $14,090,922. DB KEY: Case Dismissal Hearing Continued on December 26 ------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida scheduled on Dec. 26, 2007, at 1:30 p.m., a continued hearing of the request of Philrich of Key Largo LLC, secured creditor, to dismiss D.B. Key Largo LLC's bankruptcy case. As reported in the Troubled Company Reporter on Oct. 24, 2007, Philrich had asked the Court to dismiss D.B. Key Largo LLC's chapter 11 bankruptcy case alleging bad faith filing. Philrich had informed the Court that the Debtor rushed to file chapter 11 case with the idea of "staving off" a foreclosure sale on a property securing the Philrich Mortgage Obligation. The real property securing the Philrich Mortgage Obligation is located at Mile Marker 104 in Key Largo, Florida and was intended to be developed by the Debtor as a condominium-hotel facility. Philrich had related that on June 16, 2006, the Debtor executed a certain promissory note and a mortgage securing payment of the note to TIB Bank of the Keys in the original principal amount of $6,234,000. Subsequently, the Debtor defaulted under that obligation by failing to pay it in full on its maturity date on April 1, 2007. The Debtor owes Phirich the sum of $5,982,522 on the principal of the Philrich Mortgage Obligation, with a default interest from April 1, 2007 to present of 18% per annum, plus other fees. Kluger, Peretz, Kaplan & Berlin, PL represents Philrich. Coconut Grove, Florida-based D.B. Key Largo LLC owns and manages real estate. The company filed for chapter 11 bankruptcy protection on Sept. 28, 2007 (Bankr. S.D. Fl. Case No. 07-18127). The U.S. Trustee has not appointed members to the Official Committee of Unsecured Creditors in this case. The Debtor's schedules disclosed total assets of $10,382,165 and total liabilities of $14,090,922. DELTA FINANCIAL: Failing Angelo Gordon Deal May Lead to Bankruptcy ------------------------------------------------------------------ Delta Financial Corporation provided an update Thursday of its financial condition and current plans, including a possible filing of chapter 11 bankruptcy and an event of default under its warehouse facilities. The company said on Nov. 15, 2007, that it had entered into a letter of intent with an affiliate of Angelo, Gordon & Co. The letter of intent contemplated, among other things, the issuance of senior notes and common stock to that affiliate of Angelo Gordon. Also on Nov. 15, 2007, the company entered into a standstill agreement with three of its warehouse providers. Each of these agreements was subject to several varying conditions, including the company's pricing a securitization of mortgage loans. The company has been unable to complete the securitization transaction upon satisfactory terms. Warehouse Facilities Default Consequently, on Dec. 5, 2007, the company received reservation of rights notices from its warehouse lenders indicating that events of default have occurred under the warehouse facilities and the standstill agreement. Under these circumstances, the company's financial obligations under the agreements may be accelerated, and it may be subject to substantial payment obligations, as well as incurring cross-default claims from its other creditors. Likely Bankruptcy The company said it does not expect to be able to consummate the transaction with Angelo Gordon. Furthermore, the company does not believe that it will be able to continue as a going concern. The company presently intends to file shortly for protection under the federal bankruptcy code. The company intends to continue to operate its business as a "debtor-in-possession" as provided under the bankruptcy code; however, it intends to suspend taking new mortgage loan applications until further notice. The company is currently conducting discussions with entities that are potentially interested in acquiring its assets and operations in connection with a bankruptcy proceeding. However, due to the preliminary nature of these discussions, no assurances can be given that the company will complete any transaction. Angelo Gordon Deal Delta Financial stated in a Securities and Exchange filing in mid-November that it had entered into a letter of intent, dated Nov. 15, 2007, with an affiliate of Angelo, Gordon & Co., one of the company's principal stockholders. The letter of intent contemplates an aggregate financing of $100.0 million, including amounts outstanding under the residual financing facility established in August 2007. Once the proposed transaction is completed, an affiliate of Angelo Gordon, AG Special Situation Corp., will purchase from the company a new series of 10% Senior Secured Notes. The maturity of the notes will be three years after issuance. The initial aggregate principal amount of the notes will be equal $100.0 million, minus the principal amount outstanding under the August 2007 residual financing facility as of the issuance date of the notes. The company currently estimates that if the transaction closes in December 2007, the principal amount will be between $45 million and $49 million, such that the initial principal amount of the 10% Senior Secured Notes will be between $51 million and $55 million. Interest on the notes is expected to be payable on a payment-in- kind basis until the first anniversary of the closing date. In connection with the proposed note issuance, the company will issue to AGSSC 40 million newly issued shares of common stock as additional consideration, which may be initially issued in the form of convertible preferred stock or convertible debt securities. The company will also reduce the exercise price of Angelo Gordon's warrants to purchase 10.0 million shares of common stock to $1.00 per share. The warrants remain due to expire in February 2009. The transaction is subject to the completion of Angelo Gordon's due diligence procedures, and the negotiation and execution of definitive transaction agreements. The proposed Senior Secured Notes will be secured by a security interest in all of the company's securitization residuals, BIO certificates and excess cashflow certificates as of the closing date, together with any other assets of the company as the parties will agree upon in the definitive transaction documents. The Senior Secured Notes are repayable at the option of the company, and are subject to several events of default. If the transaction closes, the company's August 2007 residual financing facility will be extended to the day prior to the first anniversary of the closing date of the Senior Secured Notes (in or about December 2008). If the transaction closes as planned, Angelo Gordon will be the beneficial owner of about 61.4% of the company's outstanding common stock, and approximately 66.5% of the company's outstanding stock if it exercises all of its warrants. Upon the closing of the transaction, subject to certain limitations intended to comply with certain state lending regulations, AGSSC will obtain the right to elect a majority of the company's Board of Directors. AGSSC will also obtain registration rights with respect to the new shares of common stock, and preemptive rights with respect to the issuance of new shares of the company's capital stock. The company has agreed that, until Dec. 15, 2007, it will not to enter into any "Competing Transaction". However, the company has the right to terminate the letter of intent if it receives a "Superior Proposal". Arrangements with Warehouse Providers Contemporaneously with signing the letter of intent with AGSSC, the company entered into an agreement with three of its warehouse providers to facilitate the completion of the proposed transactions with AGSSC. These warehouse providers have agreed, until 11:59 P.M. on Dec. 14, 2007, (1) not to make any margin calls, or reduce their advance rates, on the loans currently collateralizing their warehouse lines and (2) to continue to fund the company's loan originations at prescribed advance rates. The agreement of these institutions is subject to several conditions, including: -- the company's letter of intent with AGSSC must remain in full force and effect; -- the company must complete certain whole-loan sale transactions and price a securitization of mortgage loans during this period; and -- the company is subject to certain financial covenants. Under these arrangements, and in light of market conditions, the company expected to significantly limit its originations during this period and until market conditions improve. In light of the company's significantly reduced loan production, it planned to terminate a warehouse facility that it has with a fourth financial institution, under which the company does not currently have any outstanding indebtedness. The company said it intends to close the transactions contemplated by the letter of intent with AGSSC on or prior to Dec. 14, 2007. At that time, under the arrangements with the warehouse providers, the company's existing warehouse facilities will expire. The company and these three financial institutions intend to negotiate to renew or replace the warehouse facilities with new facilities totaling $200 million in the aggregate. However, the company said there can be no assurance that the company will succeed in obtaining such facilities. About Delta Financial Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. DEUTSCHE ALT-A: Fitch Cuts Rating on Class B-3 Certs. to B ---------------------------------------------------------- Fitch Ratings has taken various rating actions on these Deutsche ALT-A Securities Mortgage Loan Trust 2006-AR1 mortgage pass- through certificates: -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 rated 'BBB', is placed on Rating Watch Negative; -- Class B-3 downgraded to 'B' from 'BB', and is removed from Rating Watch Negative; -- Class B-4 downgraded to 'C/DR4' from 'B', and is removed from Rating Watch Negative. The affirmations reflect a stable relationship between credit enhancement and expected losses, and affect approximately $316.98 million in outstanding certificates. The downgrades reflect deterioration in the relationship between CE and expected losses, and affect approximately $4.24 million in outstanding certificates. In addition, approximately $2.82 million is placed on Rating Watch Negative Since the last review in June 2007, the 60+ delinquencies have increased from 2.21% to 3.02% of the current balance. The expected losses, as a result, since then have increased creating significant downgrade pressure on the subordinate bonds. The lowest rated class, B-4, has a CE level of 0.39%. Group 1 was not rated by Fitch. The collateral consists of conventional, adjustable-rate first lien residential mortgage loans. The originators comprising at least 10% of the pool include Greenpoint, Sierra Pacific, and IndyMac. Wells Fargo Bank, N.A. (rated 'RMS1' by Fitch) is the master servicer. E*TRADE FINANCIAL: Faces Lawsuit on Exploiting Stock Accounts ------------------------------------------------------------- E*Trade Financial Corp. disclosed that Sebastian River Holding's Inc. has filed a lawsuit that alleges collusion amongst E-trade and its employees to unlawfully, manipulate the company's stock. Sebastian River is suing under the civil section of the Racketeer Influenced and Corrupt Organizations Act. Several individual shareholders have joined the company as plaintiffs. In addition, the plaintiffs allege that E*trade illegally froze shareholders accounts, not allowing them to buy or sell nor move stock or cash out of their accounts. The suit seeks return of all assets confiscated by E*Trade, including cash and stock. Sebastian River is seeking actual and punitive damages for loss of market value and for loss of business opportunity. "You often hear about these large brokerage firms manipulating stock of small public companies for their own financial gain," Daniel Duffy, Sebastian River's CEO, stated. "The magnitude of E*Trade and its employees' conduct to artificially knock down our market cap is egregious and absolutely astounding. The really amazing part of this whole process is the fact that there is substantial documentation to prove all of the allegations of our lawsuit." On Aug. 8, 2007, the company declared an Iraq Dinar dividend to all shareholders of record on Sept. 14, 2007, because of the acts of E*Trade the company can not get an actual count of record date shareholders. As soon as this matter is concluded, Sebastian River Holding's Inc. will honor the dividend, even if the rate of the dinar is one dinar for one US dollar. About E*Trade Financial Based in New York City, E*Trade Financial Corp. (NasdaqGS: ETFC) - - http://us.etrade.com/-- provides financial services including trading, investing, banking and lending for retail and institutional customers. Securities products and services are offered by E*Trade Securities LLC. Bank and lending products and services are offered by E*Trade Bank, a Federal savings bank or its subsidiaries. * * * As reported in the Troubled Company Reporter on Dec. 4, 2007, Moody's Investors Service lowered E*Trade Financial Corporation's long-term senior debt rating to Ba3 from Ba2. The outlook for the long-term rating is negative. EL POLLO: Dispute Judgment Prompts Moody's Ratings Review --------------------------------------------------------- Moody's Investors Service placed El Pollo Loco, Inc.'s B3 corporate family rating and all its other long term debt ratings under review for possible downgrade and lowered the speculative grade liquidity rating to SGL-4 from SGL-3, following an unfavorable final judgment entered in a trademark dispute against the company. The rating action reflects Moody's concern about strains on the company's liquidity and its ability to pay a relatively large penalty, or to post a bond. The judgment was entered in a U.S. District Court in Texas on Nov. 30, 2007, with regard to a trademark dispute filed by El Pollo Loco -- Mexico, an unrelated entity controlled by founder of the first El Pollo Loco restaurant in Mexico and the US, for El Pollo Inc.'s alleged breach of contract in failing to develop new restaurants in Mexico. The Court awarded damages in the amount of $20.3 million plus attorneys' fees, in addition to directing the company to return certain intellectual property to Mexico, among other things. El Pollo stated that it would initiate the appeal process through a higher court in which case, collateral in the form of a letter of credit needs to be posted. "If El Pollo were to appeal, they would need to find alternative financing resources to post the bond besides using its existing credit facilities, and quickly," commented Moody's analyst, John Zhao, "the remaining availability under its L/C facility and cash flow from operations won't be sufficient to cover the collateral requirement at this time." As of September 30, 2007, the company had an approximately $7.4 million availability of Letter of Credit under the total $15 million L/C sub-limit. Moody's review will focus on the company's ability to secure a financing for the penalty payment or bond posting while staying in compliance with its financial covenants. Moody's will also assess the conditions on the alternative funding and its potential effect on the company's operational and financial condition if the company were able to obtain the funding. The SGL-4 Speculative Grade Liquidity rating reflects the company's weakened liquidity, primarily stemming from the need to fund the penalty or bond, potential increased demands on cash flow and/or reliance on its credit facility. These ratings were placed on review for possible downgrade: -- B3 Corporate family rating -- B3 Probability of default rating -- Ba3 (LGD2, 18%) for the $104.5 million senior secured term loan B maturing in 2011, -- Ba3 (LGD2, 18%) for the $25 million senior secured revolver maturing in 2010, -- Caa1 (LGD5, 71%) for the $123.4 million senior unsecured notes maturing in 2013, Rating downgraded: -- Speculative grade liquidity rating to SGL-4 from SGL-3. El Pollo Loco Inc, headquartered in Irvine, California, is a leading quick-service restaurant chain specializing in flame- grilled chicken and other Mexican-inspired entrees. The company operates or franchises approximately 341 restaurants primarily around Los Angeles and throughout Southwestern US, and generated total revenues of approximately $260 million in FY2006. FIELDSTONE MORTGAGE: Moody's Downgrades Ratings on Nine Certs. -------------------------------------------------------------- Moody's Investors Service has downgraded nine certificates from a transaction issued by Fieldstone Mortgage Investment Trust. The transaction is backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were too low compared to the current projected loss numbers at the previous rating levels. Pool losses over the last few months have eroded credit enhancement available to all certificates of this transaction. In addition, between the July 25 and November 25 reporting dates, the 90+ day delinquency pipeline has doubled from approximately $16 million to $32 million as borrowers continue to default. The actions reflect Moody's expectation that the significant delinquency pipeline will have a further negative impact on the credit support for all certificates. Complete rating actions are: Issuer: Fieldstone Mortgage Investment Trust 2006-S1 -- Cl. A, Downgraded to Baa2 from Aaa -- Cl. M1, Downgraded to Ba2 from Aa1 -- Cl. M2, Downgraded to B1 from Aa2 -- Cl. M3, Downgraded to B3 from Aa3 -- Cl. M4, Downgraded to Caa2 from A1 -- Cl. M5, Downgraded to Ca from Ba3 -- Cl. M6, Downgraded to C from B1 -- Cl. B1, Downgraded to C from B3 -- Cl. B2, Downgraded to C from Ca FIRST FEDERAL: Fitch Holds Junk Rating on Class B Loans ------------------------------------------------------- Fitch Ratings has affirmed five classes (representing approximately $15.95 million in outstanding principal) of First Federal Corporation manufactured housing issues as: Series 1996-1 -- Class A affirmed at 'AA'; -- Class B affirmed at 'CCC' and remains at 'DR1'. Series 1997-1 -- Class A affirmed at 'AA'; -- Class B affirmed at 'BBB'; Series 1997-2 -- Class A affirmed at 'AA+'; -- Class B remains at 'CC/DR1'. The collateral in the aforementioned transactions consists of fixed-rate manufactured housing contracts. As of the November distribution date, the transactions are seasoned from a range of 126 to 132 months, and the pool factors (current contract principal outstanding as a percentage of the initial pool) range from approximately 16% (series 1996-1) to 25% (series 1997-2). First Federal Savings and Loans Association converted its charter to a national bank charter and changed its name to Signal Bank, N.A. In order to achieve consistency among affiliated companies, the name of FirstFed Corp. (the special purpose corporation used to facilitate the securitization of manufactured housing contracts) was changed to Signal Securitization Corp. In December 2003, Clayton Homes Inc. assumed the servicing responsibilities for the FirstFed portfolio. When estimating future collateral losses for the aforementioned transactions, Fitch assumed default rates, prepayment rates and loss severities to remain relatively consistent with current levels. Based on these assumptions, Fitch expects losses on the remaining pool balance of approximately 7.43% for series 1996-1 transaction, 10.26% for series 1997-1 transaction and 8.84% for series 1997-2 transaction. When included with losses already incurred, total cumulative losses as a percentage of the initial pool balance are expected to be approximately 16.67% for series 1996-1 transaction, 13.76% for series 1997-1 transaction and 17.06% for series 1997-2 transaction. Of particular note, the transactions reviewed pay principal due to senior bonds prior to paying interest due to subordinate bonds. Higher than expected losses have caused significant interest shortfalls to various subordinate bonds in the transactions. While the structures allow for interest shortfalls to be recovered in the future in the event of sufficient excess spread, Fitch assessed the likelihood of the bondholder receiving all interest due when determining the bond's credit rating. FORD MOTOR: Mulls Production Cuts Due to Low November Sales ----------------------------------------------------------- Ford Motor Company and General Motors Corp. disclosed that due to low November sales, the carmakers intends to slash vehicle production in the first quarter of 2008, various sources report. Ford plans a 7% car production decrease in the first quarter, expecting to produce only 685,000 vehicles, while GM anticipates a production of 950,000 vehicles from January through March, down 11% from the same period in 2007, Nick Bunkley of The New York Times relates. As reported in the Troubled Company Reporter on Dec. 4, 2007, due to continued growth in crossover sales and increased demand for hybrids, fuel-efficient cars and Ford's industry-exclusive SYNC in-car connectivity technology, Ford sales in November totaled 182,951, up 0.4% versus a year ago. November marked the first sales increase following 12 months of declines. According to the Associated Press, analysts anticipate low annual sales in 2008, a drop in U.S. light vehicle sales to 3% to 15.6 million units, a record low since 1998. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. * * * As reported in the Troubled Company Reporter on Nov. 19, 2007, Moody's Investors Service affirmed the long-term ratings of Ford Motor Company (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured, and B3 probability of default), but changed the rating outlook to Stable from Negative and raised the company's Speculative Grade Liquidity rating to SGL-1 from SGL-3. Moody's also affirmed Ford Motor Credit Company's B1 senior unsecured rating, and changed the outlook to Stable from Negative. These rating actions follow Ford's announcement of the details of the newly ratified four-year labor agreement with the UAW. FRESENIUS MEDICAL: Acquires Renal Solutions for $190 Million ------------------------------------------------------------ Fresenius Medical Care AG & Co. KGaA has acquired Renal Solutions, Inc. for total consideration of up to $190 million, consisting of $100 million at closing, $60 million after the first year, and up to $30 million in milestone payments over the next three years. RSI had approximately $10 million of net debt outstanding at closing. RSI is currently commercializing the Allient Sorbent Hemodialysis System, which is returning sorbent-based technology to the dialysis field. The SORB cartridge has a long market history in hemodialysis with over 6 million cartridges sold. As the innovator in the SORB technology field, RSI holds key patents and other intellectual property worldwide related to the SORB technology. The sorbent technology purifies tap water to dialysate quality and allows dialysate to be regenerated. This reduces the water volume requirement for a typical hemodialysis treatment from 120 liters/37 gallons of reverse osmosis water to just 6 liters/ 1.5 gallons of drinking water per treatment. The combination of Fresenius Medical Care's leading hemodialysis technology and the SORB technology will provide a platform for superior home products and therapies. Furthermore, the significant reduction of dialysate through SORB technology is one major step towards miniaturization -- a pre-requisite for the wearable kidney concept which could benefit certain patients and complement clinical-based therapy. Fresenius Medical Care sees the current market size of the Home Therapy Market (Peritoneal Dialysis and Home Hemodialysis) at about $2 billion representing approximately 11% of the overall worldwide dialysis market. The company believes the Home Therapy market has the potential to grow to $4 billion within the next 10 years. Fresenius Medical Care has a market share in this market segment of approximately 30%. Home hemodialysis has been a niche market for many years but with growing attention in recent past. With increased access to adequate therapy, the company projects the number of HHD patients in North America could grow from about 0.5% at the end of 2006 to approximately 4% of the patient population in the next 10 years. "The acquisition of RSI is an important step to advance the technology required for strong future growth in this field," Dr. Ben Lipps, Fresenius Medical Care CEO, said. "The combination offers us the long-term opportunity to extend our leadership to home and acute dialysis products. Furthermore, by combining our equipment and membrane technology with the SORB technology, we can provide innovative solutions in the future such as a possible wearable kidney. With this acquisition, Fresenius Medical Care expects to increase its annual R&D spending by approximately US$10 million starting in 2008. Our mid-term financial targets for the years 2007 through 2010 remain unchanged." About Fresenius Medical Headquartered in Bad Homburg, Germany, Fresenius Medical Care AG & Co. KGaA -- http://www.fmc-ag.com/-- provides products and services for individuals undergoing dialysis because of chronic kidney failure. Fresenius Medical Care also provides dialysis products such as hemodialysis machines, dialyzers and related disposable products. Fresenius Medical Care provides dialysis treatment to around 128,200 patients around the globe. Fresenius AG holds around 37% of Fresenius Medical Care AG & Co. KgaA's capital. The company also operates facilities in Australia, Brazil, Canada, China, France, Korea, Mexico, Portugal and Sweden, among others. * * * The company carries Moody's Investors Service's Ba2 corporate family rating. GENERAL MOTORS: Mulls Production Cuts Due to Low November Sales --------------------------------------------------------------- General Motors Corp. and Ford Motor Company disclosed that due to low November sales, the carmakers intends to slash vehicle production in the first quarter of 2008, various sources report. GM said earlier this week that to avoid a deluge of inventory, it will shutter three pickup truck plants for two weeks in January. Aside from that, GM plants will also be closed over the holiday, according to Josee Valcourt, Terry Kosdrosky and Mike Spector of the Wall Street Journal. GM anticipates a production of 950,000 vehicles from January through March, down 11% from the same period in 2007, while Ford plans a 7% car production decrease in the first quarter, expecting to produce only 685,000 vehicles, Nick Bunkley of The New York Times relates. As reported in the Troubled Company Reporter on Dec. 4, 2007, GM dealers in the U.S. delivered 263,654 vehicles in November, down 11%, after three consecutive monthly increases, compared with a year ago, reflecting continuing reductions in daily rental sales and softening industry demand. However, GM's retail car deliveries increased, based on the strength of the all-new Chevrolet Malibu, 2008 Cadillac CTS and fuel-efficient Chevrolet Aveo, Cobalt, Pontiac G5 and G6. According to the Associated Press, analysts anticipate low annual sales in 2008, a drop in U.S. light vehicle sales to 3% to 15.6 million units, a record low since 1998. Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 280,000 people around the world and manufactures cars and trucks in 33 countries, including the United Kingdom, Germany, France, Russia, Brazil and India. In 2006, nearly 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on Nov. 9, 2007, Moody's Investors Service affirmed its rating for General Motors Corporation (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured and SGL-1 Speculative Grade Liquidity rating) but changed the outlook to Stable from Positive. In an environment of weakening prospects for US auto sales GM has announced that it will take a non-cash charge of $39 billion for the third quarter of 2007 related to establishing a valuation allowance against its deferred tax assets (DTAs) in the US, Canada and Germany. As reported in the Troubled Company Reporter on Oct. 23, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with positive implications, where they were placed Sept. 26, 2007, following agreement on the new labor contract. The outlook is stable. GLOBAL EPOINT: Sept. 30 Balance Sheet Upside-Down by $9.8 Million ----------------------------------------------------------------- Global ePoint Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $11.3 million in total assets and $21.1 million in total liabilities, resulting in a $9.8 million total shareholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $7.1 million in total current assets available to pay $19.1 million in total current liabilities. The company reported a net loss of $5.4 million on sales of $302,000 for the third quarter ended Sept. 30, 2007, compared with a net loss of $3.3 million on sales of $1.1 million in the corresponding period last year. The decrease in revenue and in cost of goods sold in the quarter ended September 2007 from the quarter ended September 2006 is due to the closed maintenance services operations. Loss from discontinued operation Loss from discontinued operations, net of tax was $3.8 million for the three months ended Sept. 30, 2007, compared with loss from discontinued operations, net of tax of $1.3 million during the three months ended Sept. 30, 2006. Nine Month Results Revenues for the nine months ended September 30, 2007 totaled $2.3 million compared to $4.4 million for the nine months ended Sept. 30, 2006. The decrease in sales is the result of a decrease in aircraft maintenance services of $2.4 million. Net loss increased to $16.3 million from $7.5 million during the nine months ended Sept. 30, 2006. Loss from discontinued operations, net of tax during the nine months ended Sept. 30, 2007, was $10.5 million, versus loss from discontinued operations, net of tax of $3.3 million in the same nine month period ended Sept.30, 2006. Operating expenses for the nine months ended Sept. 30, 2007, included a non cash charge of $1.4 million for the impairment of goodwill. Excluding the goodwill impairment charge, operating expenses declined $1.6 million for the nine months ended Sept. 30, 2007, from the nine months ended Sept. 30, 2006. Discontinued Operations The company closed its contract manufacturing operations in the second quarter of 2007. Additionally, the company discontinued the digital technology division operations in the third quarter of 2007. These operations were discontinued to focus the company's resources on its aviation services operation which it believes has higher margin and growth potential. The discontinuation of the contract manufacturing division resulted in an after tax charge of $2.4 million for the nine months ended Sept. 30, 2007, of which $1.5 million was due to the impairment of goodwill. The discontinuation of the digital technology division resulted in an after tax charge of $8.1 million for the nine months ended Sept. 30, 2007, of which $4.3 million was due to the impairment of goodwill and other intangible assets. Balance Sheet Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2615 Bankruptcy Warning In July 2007, the company agreed to the entry of a judgment in the amount of $5,292,503 in favor of the company's largest preferred stockholder, Iroquois Master Fund Ltd., in settlement of Iroquois' claim for mandatory redemption of the company's Series C and Series E convertible preferred stock previously sold to Iroquois. The company believes that it will require a minimum of $3 million of additional funding, in addition to any funding required to resolve the $5.2 million Iroquois judgment and the $900,000 in redemption demands of its preferred shareholders, in order to fund its ongoing and planned operations over the next 12 months. In the event it is unable to acquire the required financing within the next few months, it may be forced to seek protection under the bankruptcy laws. Going Concern Doubt Vasquez & Company LLP, in Los Angeles, expressed substantial doubt about Global ePoint Inc.'s ability to continue as a going concern after completing its audit of the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm reported that the company has recurring losses, reclassified all of its preferred stock as current liability because of mandatory redemption, and the company has negative working capital. About Global ePoint Inc. Headquartered in City of Industry, Calif., Global ePoint Inc. (GEPT.PK) -- http://www.globalepoint.com/-- and its subsidiaries provide digital video surveillance products, information technology network, and computing solutions in the United States and internationally. GOLDEN EAGLE: Posts $554,623 Net Loss in Third Quarter ------------------------------------------------------ Golden Eagle International Inc. reported a net loss of $554,623 on $-0- of revenues for the third quarter ended Sept. 30, 2007, compared with a net loss of $525,563 on revenues of $-0- in the same period last year. During the three months ended Sept. 30, 2007, and Sept. 30, 2006, the company's pilot plant at the C Zone on its Precambrian properties was involved in batch analysis of various points within the C Zone gold project and produced only metallurgical quantities of gold that the company has reserved for analysis and that have not resulted in revenues. The increase in net loss was due to non-cash financing costs related to the issuance of Series B Preferred Stock less the reductions in exploration and development and general and administration. Without the inclusion of financing costs, net loss would have decreased to $305,482 during the three-month period ended Sept. 30, 2007, from $525,563 during the same period in 2006. At Sept. 30, 2007, the company's consolidated balance sheet showed $5.9 million in total assets, $826,693 in total liabilities, and $5.1 million in total stockholders' equity. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $195,351 in total current assets available to pay $602,662 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?261c Going Concern Doubt Chisholm, Bierwolf & Nilson LLC, in Bountiful, Utah, expressed substantial doubt about Golden Eagle International Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm reported that the company has negative working capital and has incurred substantial losses since its inception. The company currently has no mineral production and requires significant additional financing to satisfy its outstanding obligations and resume and expand mining production. In addition, the company's ability to conduct operations remains subject to other risks, including operating in isolated regions of Bolivia and the concentration of operations in a single undeveloped area. About Golden Eagle Golden Eagle International Inc. (OTC BB: MYNG.OB) -- http://www.geii.com/-- is a gold and copper exploration and mining company headquartered in Salt Lake City, Utah and with offices also in Santa Cruz, Bolivia. The company is concentrating its efforts on expanding its pilot operations into production operations on its gold project on the C Zone within its 136,500 acres in eastern Bolivia's Precambrian Shield. GREENBELT CT: GECC Wants Examiner to Investigate Fund Transfers --------------------------------------------------------------- General Electric Capital Corporation, a major secured creditor in Greenbelt CT Imaging Center LLC's Chapter 11 case, asks the U.S. Bankruptcy Court for the District of Maryland to appoint an examiner to investigate whether or not any of the Debtor's assets have been improperly diverted to its sole principal. Fraudulent Transfers to Affiliate The Debtor had admitted that its affiliated company, Greenbelt PET Imaging Center, LLC, a guarantor of GECC's financing, paid $60,000 from its corporate assets to redeem the membership interest of Dr. Irwin Shafique, a minority owner of Greenbelt PET. Insofar as Greenbelt PET's un-audited balance sheet at Nov. 30, 2006, reflected negative partners' capital of $471,316, it seems clear that Greenbelt PET was clearly insolvent when the $60,000 transfer was made, especially once Greenbelt PET's contingent liability on an unlimited corporate guarantee of more than $7.5 million in GECC financing to the Debtor is factored in, says GECC. Yet, GECC notes, the Debtor has done nothing during its bankruptcy to recover this apparent fraudulent conveyance. Unaccounted Board Meetings GECC relates that, at the first meeting of creditors, it inquired regarding the details of board meetings held by the Debtor. Dr. Sahni testified there had been such meetings, but that he could not then recall any details of their particulars, frequency or timing, without consulting his records. To date, no board minutes of Greenbelt CT, itself, whatsoever, have been delivered to GECC. These circumstances, GECC contends, strongly suggest that the corporation minutes themselves are only now being created, retroactively, or that no meetings of the company's directors were ever held, at all. Unreimbursed Limousine Expenses Dr. Rakesh Sahni, GECC relates, is the sole owner of Greenbelt. At the first meeting of creditors, Dr. Sahni testified that the Debtor owns a luxury Maybach limousine for more than $240,000. While the Debtor is no longer paying debt service on the vehicle, it is still being used by Dr. Sahni, and there is no indication that Dr. Sahni is presently reimbursing the Debtor for post- petition mileage and depreciation on the vehicle, let alone at an appropriate rate. GECC believes that any improper uncompensated personal use of the Maybach limousine which is found to exist, or the substantial cost paid by the Debtor for the vehicle's acquisition, together with a ratable share of the salary and beneifts paid by the Debtor to the driver may constitute a fraudulent conveyance or an otheriwse avoidable transfer from the Debtor under Maryland law. Unreimbursed Personal Services In addition, GECC believes that a close examination of the Debtor's books, records and business practices may conceivably reveal that Dr. Sahni and his wife, who was, for a period of time herself on the company's payroll, may either not have been reimbursed by Greenbelt CT or Greenbelt PET at arms-length rates for their various personal services to the Debtor and Greenbelt PET, given the "handsome" levels of compensation paid out by the Debtor to them. GECC continues that they may not have paid the Debtor and Greenbelt PET at market rate for the value of perks such as personal use of company automobiles, like the Maybach, which they may have received from the Debtor, or that voidable transfers of other natures, both to these persons and to other corporate affiliates of the Debtor, may exist. As a result of these anomalies, GECC tells the Court that an appointment of an examiner is appropriate, including an investigation as to the following: (1) Whether any corporate assets of the Debtor or Greenbelt PET have been improperly diverted to Dr. Sahni or his family members or to various corporate affiliates of the Debtor via dealings between these persons and the Debtor and Greenbelt PET at less than arms-length, for inadequate value, and, if so, whether these circumstances give rise to de-facto fraudulent conveyances or other avoidable transfers which should be recovered by the Debtor's bankruptcy estate, for the benefit of all creditors, under applicable law; and (2) Whether grounds exist to pierce the Debtor's corporate veil and make Dr. Sahni liable for the claims of all corporate creditors, insofar as the delay in producing corporate records suggests both records mis-management as well as the possibility that corporate formalities may not have been followed. GECC reminds the Court that the requested appointment of an examiner is mandatory under Section 1104(c)(2) of the U.S. Bankruptcy Code, if a Debtor's unsecured liquidated debts to corporate creditors exceed $5 million. Otherwise, appointment is discretionary under Section 1104(c)(1). Here, the Debtor's liquidated debt to GECC totals more than $5 million. Whether or not unsecured debt of more than $5 million is owed to GECC will depend on the scope and valuation of GECC's collateral, including receivable collateral for which the Debtor disputes the validity of GECC's lien. About Greenbelt CT Greenbelt, Maryland-based Greenbelt C.T. Imaging Center LLC provides medical laboratory and diagnostic services including computer tomography imaging and positron emission tomography. The Debtor filed for chapter 11 protection on Sept. 16, 2007 (Bankr. D. Md. Case No. 07-18958). Karen H. Moore, Esq., at Paley, Rothman, Goldstein, Rosenberg, Eig & Cooper, Chartered, represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in this case to date. When the Debtor filed for bankruptcy, it listed estimated assets and debts between $1 million to $100 million. HEALTHSPORT INC: Posts $3.0 Million Net Loss in Third Quarter ------------------------------------------------------------- Healthsport Inc. reported a net loss of $3.0 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $296,107 in the comparable period in 2006. During the three months ended Sept. 30, 2007, the company had product sales of $110,473 and revenues from license fees, royalties and services of $45,134, a total of $155,607. There were no sales in the corresponding 2006 period. Total costs and expenses increased to $3.0 million in the three months ended Sept. 30, 2007, compared to total costs and expenses of $176,922 in the 2006 period. The company had minimal operations in 2006 until completing the acquisition of Health Strip at the end of March 2006. During the nine months ended Sept. 30, 2007, the company had product sales of $135,058 and revenues from license fees, royalties and services of $109,156, a total of $244,214. There were no sales in the corresponding 2006 period. Net loss was $6.9 million during the nine months ended Sept. 30, 2007, compared with a net loss of $1.1 million in the nine months ended Sept. 30, 2006. Total costs and expenses increased to $7.0 million from $392,982 in the nine months ended Sept. 30, 2006. At Sept. 30, 2007, the company's consolidated balance sheet showed $34.7 million in total assets, $2.1 million in total liabilities, and $32.6 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2613 Going Concern Doubt As of Sept. 30, 2007, the company had working capital of $1.1 million and had incurred losses of $3.0 million and $6.9 million during the three and nine months ended Sept. 30, 2007, respectively. In addition, the Company had revenues of $155,607 and $244,214 during the three and nine months ended Sept. 30, 2007, respectively. The company began sales of two new products in the fourth quarter, FIX STRIPS(TM) and a lower dose electrolyte strip for children. However, while the company expects substantial sales growth from these and its other products, it is unlikely sales will generate sufficient cash flow to fund the development of business, projected operating expenses and commitments before 2008. These conditions raise substantial doubt about the company's ability to continue as a going concern. About Healthsport Inc. Headquartered in Tulsa, Okla., HealthSport Inc. (OTC BB: HSPO.OB) -- http://www.healthsportinc.com/-- is a developer, manufacturer and marketer of proprietary branded and private label edible film strip nutritional supplements and over-the-counter drugs. The company owns two subsidiaries - Enlyten Inc. and InnoZen Inc. Enlyten was created to market and distribute HealthSport's products. InnoZen -- http://www.innozen.com/-- is the developer, formulator, and manufacturer of edible film strips that deliver drug actives through buccal absorption. HIDDEN SPLENDOR: Wants to Access First Zion's Cash Collateral ------------------------------------------------------------- Hidden Splendor Resources Inc. asks the United States Bankruptcy Court for the District of Nevada for authority to use the cash collateral of Zions First National Bank. The Debtor tells the Court that the cash collateral will be used to enable continued operations during the course of its Chapter 11 proceeding. The Debtor's bankruptcy counsel, John White, Esq., said Zions First have agreed to allow the Debtor to use its cash collateral provided that the Debtor complies with the terms in the agreement and financial requirements of the budget. Under the agreement, the Debtor will, among others: a) forfeit the Debtor's right to seek, absent Zions First consent, superprioty financing under the provisions of the Bankruptcy Code Section 364(d); b) grant to Zions First a lien on property of the estate subject to its pre-petition lien, including cash and any other postpetition accretions, which lien has priority over any and all administrative expenses of the kind specified in Section 503(b) of the Bankruptcy Code; c) agree not to contest the validity or perfection of Zions First prepetition liens and financing statements; d) agree that Zions First postpetition liens are subject to automatice perfection, without need to comply with applicable state laws; e) agree that any extension of the exclusivity period to file a disclosure statement and plan shall not extend that period as to Zions First; and f) release Zions First from any prepetition liability. In addition, the Debtor agreed that all cash and cash equivalent will be deposited immediately as provided in the agreement. Based in Reno, Nevada, Hidden Splendor Resources, Inc., is a real estate investment trust. The company and its affiliate, Mid-State Services, Inc., filed for chapter 11 protection on Oct. 15, 2007 (Bankr. D. Nev. Case Nos. 07-51378 & 07-51379). John A. White, Jr., Esq., represents the Debtor in its restructuring efforts. The U.S. Trustee for Region 17 has appointed five creditors to serve on an Official Committee of Unsecured Creitors for the Debtor's case. Mark E. Freedlander, Esq., at McGuirewoods LLP, represents the Committee. Hidden Splendor diclosed estimated assets between $10 million and $50 million and estimated debts between $1 million and $10 million at the time of its filing. Mid-State disclosed estimated assets and debts between $1 million and $10 million. HOME DIRECTOR: Sept. 30 Balance Sheet Upside-Down by $4.3 Million ----------------------------------------------------------------- Home Director Inc.'s consolidated financial statements for the quarter ended Sept. 30, 2007, showed $5.5 million in total assets and $9.8 million in total liabilities, resulting in a $4.3 million total shareholders' equity. At Sept. 30, 2007, the company's consolidated financial statements also showed strained liquidity with $1.3 million in total current assets available to pay $8.3 million in total current liabilities. The company reported a net loss of $1.5 million on revenue of $870,215 for the third quarter ended Sept. 30, 2007, compared with a net loss of $649,356 on revenue of $26,262 in the same period last year. The increase in revenue was primarily attributable to businesses acquired during the first quarter of 2007 and the balance is attributable to the company's emergence from bankruptcy. The increase in net loss was primarily attributable to increased general and administrative, sales and marketing, and interest and other expenses. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2616 Going Concern Doubt Bedinger & Company CPAs, in Concord, Calif., expressed substantial doubt about Home Director Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's recurring losses from operations. About Home Director Headquartered in Fremont, Calif., Home Director Inc. (OTC BB: HMDO.OB) -- http://www.homedirector.com/-- provides home networking solutions to homeowners through a network of distribution and technology business partners. The company and its debtor-affiliates filed separate chapter 11 petitions on Sept. 28, 2005 (Bankr. N.D. Calif. Lead Case No. 05-45812). Tracy Green, Esq., and Elizabeth Berke-Dreyfuss, Esq., at Wendel, Rosen, Black and Dean, represented the Debtors. The Debtors estimated their assets at $10.6 million and Debts at $4.2 million when they filed for bankruptcy. Subsequent to the Bankruptcy Court's confirmation of Debtors' Joint Plan of Reorganization on Oct. 12, 2006, the company emerged from Bankruptcy on Oct. 23, 2006. HYDROGEN POWER: Posts $1.5 Million Net Loss in Third Quarter ------------------------------------------------------------ Hydrogen Power Inc. reported a net loss of $1.5 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $2.9 million in the same period last year. The company reported $-0- revenues for both comparable periods. At Sept. 30, 2007, the company's consolidated balance sheet showed $7.9 million in total assets, $2.1 million in total liabilities, and $5.8 million in total stockholders' equity. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $403,988 in total current assets available to pay $2.1 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2618 Going Concern Doubt Peterson Sullivan PLLC, in Seattle, Washington, expressed substantial doubt about Hydrogen Power Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm reported that the company incurred significant losses and has an accumulated deficit of approximately $55 million, and a working capital deficit of $2.0 million at Dec. 31, 2006. On Aug. 6, 2007, the company received a notice of default from two of its lenders demanding immediate payment of all monies due including costs incurred in collection. About Hydrogen Power Headquartered in Seattle, Wash., Hydrogen Power Inc. (OTC BB: HYDP.OB) -- http://www.hydrogenpowerinc.com/-- performs hydrogen- related testing, research and engineering, and has developed a patented system that creates pure hydrogen from the reaction of aluminum and water. The patented technology allows hydrogen gas to be generated on-site and on-demand, without electricity, thus offering the potential to overcome transportation and storage problems. The company is at the early stage of testing and evaluating the commercial application of the licensed technology and the design and engineering of prototypes. ICONIX BRAND: Planned Loan Increase Cues Moody's to Hold B1 PDR --------------------------------------------------------------- Moody's Investors Service affirmed Iconix Brand Group Inc.'s Corporate Family and Probability of Default Ratings at B1 and the company's secured term loan financing at Ba2 following the company's announcement it is intending to increase the existing term loan to approximately $270 million from $210 million utilizing the term loan facility's 'accordion' option. The proceeds from the incremental term loan facility will be primarily used to fund the purchase of the Starter brand from Nike, Inc. Moody's also affirmed the B3 rating of the company's $287.5 million senior subordinated notes. The rating outlook remains stable. Iconix's B1 corporate family rating reflects its relatively stable and predictable revenue streams from royalty payments received by the company which include significant guaranteed minimum amounts, diversification of the company's product and brand portfolio, and financial metrics which remain higher than for similarly rated peers. These factors are offset by its narrow business focus solely as a licensor of brands, its acquisitive growth strategy, with the majority of current revenues derived from brands acquired since the beginning of 2006. The stable outlook reflects Moody's expectations the company will continue to maintain financial metrics at levels appropriate for the rating category and to maintain stable licensing revenues for the company as a whole. The secured term loan rating reflects its probability of default rating of B1 and its loss given default assessment of LGD 2 -- 21% and the B3 rating for the convertible senior subordinated notes reflects the probability of default rating of B1 and the loss given default assessment of LGD 5 -- 78%. These ratings were affirmed, and LGD assessments amended: -- Corporate Family Rating and Probability of Default Rating at B1 -- $270 million senior secured term loan at Ba2 (LGD amended to LGD 2 -- 21% from LGD 2 -- 20%) -- $287.5 million senior subordinated notes due 2012 at B3 (LGD amended to LGD 5 -- 78% from LGD 5 -- 77%) -- Speculative Liquidity Rating at SGL-2 Based in New York, NY, Iconix Brand Group, Inc. owns, licenses and markets a portfolio of consumer brands including Candies, Bongo, Badgley Mischka, Joe Boxer, Rampage, Mudd, London Fog, Mossimo, Ocean Pacific, Danskin, Rocawear, Fieldcrest, Cannon, Royal Velvet, Charisma and Starter (pending). The company reported revenues of $139 million for the 12 month period ending Sept. 30, 2007. IKON OFFICE: Moody's Rates Proposed $150MM Senior Notes at Ba3 -------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to the proposed $150 million senior unsecured note of IKON Office Solutions and, consistent with its existing debt, placed the rating under review for possible downgrade. Ratings assigned and placed under review include: -- Senior unsecured $150 million note due 2012 at Ba3; LGD 4; 64% The review was initiated November 21, 2007, and prompted by the company's announcement that it will tender for $295 million of common stock and fund such transaction with the proposed note issuance as well as balance sheet cash. The company also intends, subject to financing and market conditions, to repurchase additional shares in fiscal 2008 such that total repurchases would reach $500 million. The review will focus on the company's capital structure and liquidity profile pro forma the tender offer and subsequent share repurchases as well as the company's prospects to profitably grow revenues on a sustained basis in the competitive and slow growth office equipment sector. IKON Office Solutions, headquartered in Malvern, Pennsylvania is the largest independent copier distributor in North America and the United Kingdom with revenues of $4.2 billion. INPHONIC INC: Hires BMC Group as Claims and Balloting Agent ----------------------------------------------------------- InPhonic Inc. and its debtor-affiliates obtained authority from the United States Bankruptcy Court for the District of Delaware to employ BMC Group Inc. as their noticing, claims and balloting agent, nunc pro tunc to Nov. 8, 2007. BMC Group is expected to: a) prepare and serve required notices in these Chapter 11 cases, including, as necessary; -- notice of the commencement of these Chapter 11 cases and it the initial meetings of creditors under Section 341 of the Bankruptcy Code; -- notice of the claims bar date; -- notice of objections to claims; -- notice of any hearings on a disclosure statement and confirmation of a plan of reorganization; -- other miscellaneous notices to any entities as the Debtors or the Bankruptcy Court may deem necessary or appropriate for an orderly administration of these Chapter 11 cases; and -- the publication of required notices, as necessary; b) within five days after the mailing of a particular notice, file with the clerk's office a certificate of affidavit of service that includes a copy of the notice involved, a list of persons to whom the notice was mailed, and the date and manner of mailing; c) assist the Debtors in the preparation and filing of the schedules of assets and liabilities and statement of financial affairs; d) maintain copies of all proofs of claim and proofs of interest filed; e) maintain official claims registers, including, among other things, these information for each proof of claim or proof of interest; -- name and address of the claimant and any agent; -- date received; -- claim number assigned; and -- asserted amount and classification of the claim; f) create and administer a claims database; g) implement necessary security measures to ensure the completeness and integrity of the claims registers; h) transmit to the clerk's office a copy of the claims register on a monthly basis, or, in the alternative, make available the proof of claim docket online to the clerk's office via the claims manager claims systems; i) 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; j) provide access to the public for examination of copies of the proofs of claims or interest without charge during regular business hours; k) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of the transfers as required by the Bankruptcy Rule 3001(e); l) assist the Debtors in the reconciliation and resoultion of claims; m) comply with applicable federal, state, municipal, and local statutes, ordinances, rules, regulations, orders and others requirements; n) provide temporary employees to process claims, as necessary; o) provide balloting services in connection with the solicitation process for any Chapter 11 plan to which a disclosure statement has been approved by the Court; p) provide others claims processing, noticing, and related administrative services as amy be requested from time to time by the Debtors; and q) promptly comply with further conditions and requirements as the clerk's office or the Court may at any time prescribe. The Debtors agreed that fees and expenses of the firm incurred be treated as administrative expense of the Debtors' estates, and the firm be paid in the ordinary course of business. Tina Marie Feil, the president of the firm's legal services, assures the Court that the firm is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. Headquartered in Washington, DC, InPhonic Inc. (NASDAQ:INPC)-- http://www.inphonic.com/-- is an online seller of wireless services in the United States. The company operates its business through three business segments: wireless activation and services; mobile virtual network enabler services, and data services. The company and its debtor-affiliates filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. D. Del. Case Nos. 07-11666 to 07-11673). Mary E. Augustine, Esq., and Neil B. Glassman, Esq., at The Bayard Firm, in Wilmington, Delaware, represent the Debtors. When the Debtors filed from protection from their creditors, they listed total assets of $120,916,991 and total debts of $179,402,834. INPHONIC INC: Section 341(a) Meeting Scheduled for December 13 -------------------------------------------------------------- The U.S. Trustee for Region 3 will convene a meeting of creditors of InPhonic Inc. and its debtor-affiliates at 2:30 p.m. on Dec. 13, 2007. The hearing will be held at Caleb Boggs Federal Building, 844 King Street, 2nd Floor, Room 2112 in Wilmington, Delaware. This is the first meeting of creditors required under Section 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. Headquartered in Washington, DC, InPhonic Inc. (NASDAQ:INPC)-- http://www.inphonic.com/-- is an online seller of wireless services in the United States. The company operates its business through three business segments: wireless activation and services; mobile virtual network enabler services, and data services. The company and its debtor-affiliates filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. D. Del. Case Nos. 07-11666 to 07-11673). Mary E. Augustine, Esq., and Neil B. Glassman, Esq., at The Bayard Firm, in Wilmington, Delaware, represent the Debtors. When the Debtors filed from protection from their creditors, they listed total assets of $120,916,991 and total debts of $179,402,834. INTEGRAL NUCLEAR: Exclusive Plan Filing Period Moved to Jan. 28 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey further extended Integral Nuclear Associates LLC and its debtor- affiliates' exclusive period to file a plan of reorganization until Jan. 28, 2008, Bill Rochelle of Bloomberg News reports. Within that period, other parties are barred from filing any plan. The Court previously extended the Debtors' exclusive periods to: a) file a plan of reorganization until Dec. 11, 2007; and b) solicit acceptances to that plan until Feb. 9, 2008. Based in Paoli, Pennsylvania, Integral Nuclear Associates LLC -- http://www.integralpet.com/-- operates nuclear imaging centers. The company and 25 of its affiliates filed for Chapter 11 protection on April 15, 2007 (Bankr. D. N.J. Case Nos. 07-15183 through 07-15215). Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., represent the Debtors. Lawyers at Norris McLaughlin & Marcus, PA, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $1 million to $100 million. JAYS FOODS: Submits Schedules of Assets and Liabilities ------------------------------------------------------- Jays Foods Inc. and Select Snacks Inc. submitted to the Honorable Pamela S. Hollis of the U.S. Bankruptcy Court for the Northern District of Illinois their schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ----------- A. Real Property $2,966,272 B. Personal Property 37,742,892 C. Property Claimed - as Exempt D. Creditors Holding $20,124,308 Secured Claims E. Creditors Holding 757,580 Unsecured Priority Claims F. Creditors Holding 9,863,867 Unsecured Non- Priority Claims ----------- ----------- TOTAL $40,709,164 $30,745,755 About Jays Foods Chicago-based Jays Foods Inc. -- http://www.jaysfoods.com/-- wholesales confectionery products and manufactures snack chip products. Jays Foods leases real property, and owns certain equipment, in Chicago, Illinois where it operates a manufacturing facility that makes snacks mostly under the Jays, O-KE-DOKE and Krunchers brand names. Jays is 100% owned by Jays Holding Company, Inc. The company, then known as Jays Food LLC, first filed for chapter 11 protection on March 5, 2004 (Bankr. N.D. Ill. Case No. 04- 08681). David Missner, Esq., Marc I. Fenton, Esq. and Thomas Zwartz, Esq. at Piper Rudnick LLP were counsels to the Debtor. In the March 2004 case, a Section 363 sale took place and most of the assets of former Jays Foods were sold to Jays Foods Acquisition Inc., predecessor to Jays Foods Inc. The March 2004 case was closed on or about March 9, 2007. Select Snacks Inc., on the other hand, owns real property, improvements and equipment in Jeffersonville, Indiana where it operates a manufacturing facility that makes private label and co- manufactured snacks for its customers. Select Snacks is 100% owned by Select Snacks Holdings Company, Inc. Both Select Holding and Jays Holding are 100% owned by Ubiquity Brands LLC. As of the Oct. 11, 2007, the Debtors had approximately 943 employees of which Select has 262 (211 union employees and, 51 non-union employees) and Jays has 681 total employees (236 union employees and 445 non-union employees). Jays Foods and Select Snacks filed voluntary chapter 11 petitions on Oct. 11, 2007 (Bankr. N.D. Ill. Case Nos. 07-18768 and 07-18769). Mark K. Thomas, Esq., Brian I. Swett, Esq., Jeremy T. Stillings, Esq., Myja K. Kjaer, Esq., at Winston & Strawn LLP, represent the Debtors. Kurtzman Carson Consultants LLC serve as their notice, claims and balloting agent. The Official Committee of Unsecured Creditors has selected Jeffrey N. Pomerantz, Esq., and Jeffrey W. Dulberg, Esq., at Pachulski Stang Ziehl & Jones LLP, as its counsel. JAYS FOODS: Court Sets December 17 as General Claims Bar Date ------------------------------------------------------------- The Honorable Pamela S. Hollis of the U.S. Bankruptcy Court for the Northern District of Illinois set Dec. 17, 2007, as the last day for filing general proofs of claims against Jays Foods Inc. and Select Snacks Inc. Governmental unit have until April 8, 2008 to file their proofs of claim. Proofs of claims must be received on or before the bar date by: Select Snacks Inc., et al. Claims Processing c/o Kurtzman Carson Consultants LLC 2335 Alaska Avenue El Segundo, CA 90245 Chicago-based Jays Foods Inc. -- http://www.jaysfoods.com/-- wholesales confectionery products and manufactures snack chip products. Jays Foods leases real property, and owns certain equipment, in Chicago, Illinois where it operates a manufacturing facility that makes snacks mostly under the Jays, O-KE-DOKE and Krunchers brand names. Jays is 100% owned by Jays Holding Company, Inc. The company, then known as Jays Food LLC, first filed for chapter 11 protection on March 5, 2004 (Bankr. N.D. Ill. Case No. 04- 08681). David Missner, Esq., Marc I. Fenton, Esq. and Thomas Zwartz, Esq. at Piper Rudnick LLP were counsels to the Debtor. In the March 2004 case, a Section 363 sale took place and most of the assets of former Jays Foods were sold to Jays Foods Acquisition Inc., predecessor to Jays Foods Inc. The March 2004 case was closed on or about March 9, 2007. Select Snacks Inc., on the other hand, owns real property, improvements and equipment in Jeffersonville, Indiana where it operates a manufacturing facility that makes private label and co- manufactured snacks for its customers. Select Snacks is 100% owned by Select Snacks Holdings Company, Inc. Both Select Holding and Jays Holding are 100% owned by Ubiquity Brands LLC. As of the Oct. 11, 2007, the Debtors had approximately 943 employees of which Select has 262 (211 union employees and, 51 non-union employees) and Jays has 681 total employees (236 union employees and 445 non-union employees). Jays Foods and Select Snacks filed voluntary chapter 11 petitions on Oct. 11, 2007 (Bankr. N.D. Ill. Case Nos. 07-18768 and 07-18769). Mark K. Thomas, Esq., Brian I. Swett, Esq., Jeremy T. Stillings, Esq., Myja K. Kjaer, Esq., at Winston & Strawn LLP, represent the Debtors. Kurtzman Carson Consultants LLC serve as their notice, claims and balloting agent. The Official Committee of Unsecured Creditors has selected Jeffrey N. Pomerantz, Esq., and Jeffrey W. Dulberg, Esq., at Pachulski Stang Ziehl & Jones LLP, as its counsel. JOSEPH CHOAT: Case Summary & 15 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Joseph S. Choat dba Sterling Resource & Property Management 531 Cayuga Street Joliet, IL 60432 Bankruptcy Case No.: 07-22777 Chapter 11 Petition Date: December 4, 2007 Court: Northern District of Illinois (Chicago) Judge: Pamela S. Hollis Debtor's Counsel: Chris D Rouskey, Esq. Rouskey and Baldacci 151 Springfield Ave. Joliet, IL 60435 Tel: (815) 741-2118 Fax: (815) 741-0670 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Werner, Rogers, Doran & Ruzon miscellaneous bill $51,520 775 Essington Road Joliet, IL 60435 County of Will ordinance $22,000 C/O Will County State's violation judgment Attorney 121 N. Chicago Street Joliet, IL 60432 Andrew Boyer miscellaneous $8,841 915 W. Jefferson Street, #100 debt Joliet, IL 60435 Pentagroup Financial credit card $6,766 East Joliet Sanitary District unpaid utility $6,456 bill Equity Trust Company deficiency $6,270 City of Joliet Water Department unpaid utility $4,322 bill City of Joliet unpaid judgment $4,136 Card Service Center credit card $2,527 Armor Systems Corporation miscellaneous $2,368 C.B.C.S. miscellaneous $2,150 Account Solutions Group credit card $2,088 CitiCards credit card $1,318 Baron's Creditor's Services miscellaneous $1,170 Capital One credit card $1,058 KEVIN COOK: Case Summary & 14 Largest Unsecured Creditors --------------------------------------------------------- Lead Debtor: Kevin Preston Cook Phyllis Byers Cook 1020 Windlea Run Wilmington, NC 28409 Bankruptcy Case No.: 07-04602 Type of Business: The Debtors own and manage mortgage broker Carolina Home Mortgage Co. He also owns Office Holdings, L.L.C., which rents office space, and R.R.&D. Ltd. Phyllis Cook provides dental services too. Chapter 11 Petition Date: December 5, 2007 Court: Eastern District of North Carolina (Wilson) Debtor's Counsel: Algernon L. Butler, Jr. Butler & Butler, L.L.P. P.O. Box 38 Wilmington, NC 28402 Tel: (910) 762-1908 Total Assets: $12,067,767 Total Debts: $11,799,008 Debtor's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Guarantor of Office $830,000 Attention: Managing Holdings, L.L.C. Officer/Agent 100 North Tryon Street (M.C. N.C.1-007-18-01) Charlotte, NC 28255 Cape Fear Bank Third mortgage $510,383 Attention: Managing and security Officer/Agent interest in personal 1117 Military Cutoff Road property ($22,510.00) Wilmington, NC 28405 and personal residence; value of security: $1,540,000; value of senior lien: $1,575,682 Second mortgage $588,832 and security interest in personal property ($22,510.00) and personal residence; value of security: $1,540,000; value of senior lien: $986,850 Chase Credit card $24,475 Attention: Managing Officer/Agent P.O. Box 15298 Wilmington, DE 19850-5298 Adam Martin Rent deposit $1,800 Katie Greene Rent deposit $1,500 Verizon Wireless Telephone service $838 Adam Knox Rent deposit and $820 prepaid rent John Bryant Rent deposit and $820 prepaid rent Mark Britt Rent deposit and $820 prepaid rent Carolyn L. Portman Rent deposit and $811 prepaid rent Jillian Cleveland Rent deposit and $811 prepaid rent Lauren R. Waddey Rent deposit and $811 prepaid rent Maryann Ainulhayat Rent deposit and $811 prepaid rent Town of Carolina Beach Water, sewer and $422 storm water LEVITT AND SONS: Trustee Appoints Nine-Member Creditors Committee ----------------------------------------------------------------- Donald F. Walton, acting United States Trustee for Region 21, has appointed nine members to represent the Official Committee of Unsecured Creditors in Levitt and Sons LLC and its debtor- affiliates' Chapter 11 cases. The Creditors Committee is currently composed of: (1) Alfred D. Strack Strack, Inc. 125 Laser Ind. Court Fairburn, Georgia Tel. No.: 770-969-1591 Fax No.: 770-964-7889 (2) Todd Hunt, Controller Piedmont Landscape Contractors, LLC 5000 Kristie Way Chamblee, Georgia Tel. No.: 770-723-1889 Fax No.: 770-493-4608 (3) K. John Sweet, Corporate Credit Manager American Woodmark Corp., d/b/a Timberlake Cabinets 3102 Shawnee Drive Winchester, Virginia Tel. No.: 540-665-9184 Fax No.: 540-665-9142 (4) Stevan Kraguljac Sky General Contracting Inc. 13939 Wood Duck Circle Bradenton, Florida Tel. No.: 941-752-6355; 941-809-9979 Fax No.: 941-752-6355 (5) Jimmy Eagan, President JNJ Foundation Specialists Inc. 8870 Maple Run Tr. Gainesville, Georgia Tel. No.: 770-886-1807 Fax No.: 770-886-2480 (6) Richard Julius, Jr., Chief Financial Officer Georgia Floors, Inc. 1100 Cobb International Place Kennesaw, Georgia Tel. No.: 770-420-5663 Fax No.: 678-781-9172 (7) Dawn Durante, Manager Quality Construction Management of Georgia, Inc. 675 Mansell Road Suite 250 Roswell, Georgia Tel. No.: 770-667-6500 Fax No.: 770-667-6526 (8) John M. Bartley American Door & Mill Company 2801 West Airport Blvd. Sanford, Florida Tel. No.: 407-321-3667 Fax No.: 321-257-0304 (9) Susan McCulloch M&N Construction Services, Inc. 3300 Indian Trail Eustis, Florida Tel. No.: 352-589-0310 Fax No.: 352-483-3751 Mr. Strack is the temporary chairperson of the Creditors Committee. About Levitt and Sons Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the Debtors' parent company, did not file for Chapter 11 protection. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. (Levitt and Sons Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) LEVITT AND SONS: Wants to Hire Ruden McClosky as Special Counsel ---------------------------------------------------------------- Levitt and Sons LLC and its debtor-affiliates, excluding Levitt and Sons of South Carolina, LLC, Levitt and Sons of Horry County, and Levitt Construction - South Carolina, LLC, seek authority from the U.S. Bankruptcy Court for the Southern District of Florida to employ Ruden McClosky Smith Schuster & Russel, P.A., as their special counsel, nunc pro tunc to the Debtor's bankruptcy filing. Ruden represented certain of the Debtors before their bankruptcy in connection with closings and lien issues in Tennessee, Georgia and Florida. As a result, Ruden is familiar with these matters, and has already devoted numerous hours in addressing the issues, Paul Steven Singerman, Esq., at Berger Singerman, P.A., in Fort Lauderdale, Florida, says. The firm has extensive knowledge in these related fields and is well qualified to advise the Debtors, he adds. Mr. Singerman tells the Court that the firm's prior representation of the Debtors does not preclude its retention as special counsel pursuant to Section 327(e) of the U.S. Bankruptcy Code. Ruden will provide legal services in connection with closings and lien issues in Tennessee, Georgia and Florida. The Debtors have sought and obtained Court approval for the retention of Berger Singerman, P.A., as their general bankruptcy counsel in their Chapter 11 cases. Mr. Singerman assures the Court that the scope of services to be rendered by Ruden will not be duplicative of those services to be rendered by Berger Singerman, and the services of these counsel will not overlap. Mr. Singerman states that although, as of the date of bankruptcy, Ruden holds a prepetition claim against the Debtors for $56,264, the matters on which the firm is to be employed are unaffected by the fact of that claim. The Debtors will pay Ruden at its standard hourly rates, which are revised during January of each year, and will reimburse the firm for cash disbursements and for reasonable and necessary expenses. The firm's current rates are: Designation Hourly Rate ----------- ----------- Partners $255 - $525 Associates $190 - $415 Paralegals $60 - $195 Land Planners $150 - $210 Law Clerks $95 - $105 Barry E. Somerstein, a shareholder of Ruden, assures the Court that the firm does not hold or represent any interest adverse to the Debtors, their estates, or creditors in the matters upon which Ruden is proposed to be retained. About Levitt and Sons Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the Debtors' parent company, did not file for Chapter 11 protection. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. (Levitt and Sons Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) LEVITT AND SONS: Can Use Cash Collateral Until December 19 ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida again gave interim authority to Levitt and Sons LLC and its debtor-affiliates to use cash on hand from the date of bankruptcy through the Dec. 19, 2007 hearing. The Debtors may use the cash on hand to pay their ordinary and necessary business expenses as set forth in a budget, provided that the Debtors may exceed the line item amounts in the budget by no more than 10%. As adequate protection for the use of cash on hand, each of the lenders, KeyBank, N.A., RegionsBank, N.A., Wachovia Bank, N.A., AmTrust Bank, FSB, and Bank of America, the Court granted each a replacement lien on all postpetition property of the Debtors that is of the same nature and type as each lender's prepetition collateral. Before the December 19 Hearing, any lender may seek to terminate the Debtors' use of cash collateral on an emergency basis with expedited notice to the Debtors. All objections to the cash collateral motion not previously resolved are overruled by the Court. Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the Debtors' parent company, did not file for Chapter 11 protection. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. (Levitt and Sons Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) MARC HORTON: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Marc Steven Horton Debra Sue Burdyshaw-Horton 56 Carriage Lane Laguna Hills, CA 92653 Bankruptcy Case No.: 07-14111 Chapter 11 Petition Date: December 5, 2007 Court: Central District Of California (Santa Ana) Judge: Theodor Albert Debtor's Counsel: Vicki L Schennum, Esq. 2677 North Main Street, Suite 320 Santa Ana, CA 92805 Tel: (714) 542-1411 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its largest unsecured creditors. MCTYRE GRADING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: McTyre Grading and Pipe, Inc. 4818 Hill Road Powder Springs, GA 30127 Bankruptcy Case No.: 07-80627 Type of Business: The Debtor is a grading contractor. Chapter 11 Petition Date: December 5, 2007 Court: Northern District of Georgia (Atlanta) Judge: James Massey Debtor's Counsel: George M. Geeslin, Esq. Eight Piedmont Center, Suite 550 3525 Piedmont Road, Northeast Atlanta, GA 30305-1565 Tel: (404) 841-3464 Fax: (404) 816-1108 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Georgia Department of Revenue 1999 withholding $636,297 Bankruptcy Section P.O. Box 161108 Atlanta, GA 30321 S.A. White Oil Co., Inc. business debt $512,403 P.O. Box 1057 Marietta, GA 30061-1057 Internal Revenue Service 940- December 31, $190,496 Centralized Insolvency 2001; 2290- July 1, Operations 2004; 941- December P.O. Box 21126 31, 2003; 2290- July Philadelphia, PA 19114-0326 1, 2006 Yancey Brothers Co. business debt $114,013 American Express business credit $87,191 card Southeast Culvert, Inc. business debt $60,761 /Old N./P. Central Atlanta Tractor Sales business debt $55,266 Georgia Explosives, L.L.C. business debt $55,174 Mainline Supply/Way of the business debt $44,082 Cross J.B. Jones Drilling Co., Inc. business debt $34,524 E.F.S. Engineered Fabric business debts $30,091 Specialists Bob Grinding Equipment, L.L.C. business debt $28,080 L.&N. Supply Co., Inc. business debt $24,176 R.S.C. Rental Service Corp. business debt $24,112 Metro Concrete Products business debt $22,393 Georgia Department of Labor 4/2002, 2/2003, $21,789 3/2003, 4/2003, 1/2004, 2/2004, 3/2004, 4/2004 Smith Barney/Citistreet business debt $20,176 Coffey Brothers, Inc. business debt $20,000 Rachelson & White business debt $19,830 Nasser Heavy Equipment, Inc. business debt $15,970 MILDRED MIRAN : Case Summary & Nine Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Mildred Miran 21500 Miran Farm Lane Aldie, VA 20105 Bankruptcy Case No.: 07-13814 Chapter 11 Petition Date: December 5, 2007 Court: Eastern District of Virginia (Alexandria) Debtor's Counsel: Ann E. Schmitt, Esq. Culbert & Schmitt, P.L.L.C. 30C Catoctin Circle Southeast Leesburg, VA 20175 Tel: (703) 737-6377 Fax: (703) 737-6370 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's Nine Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Citibank Advantage V.I.S.A. $44,600 P.O. Box 6004 Sioux Falls, SD 57117 Capital One Services, Inc. $18,107 P.O. Box 85617 Richmond, VA 23285 Bank of America $12,549 A.Q.H.A. MasterCard P.O. Box 15726 Wilmington, DE 19886 Chase Marriott Rewards $9,483 V.I.S.A. Chase Mary Kay V.I.S.A. $9,221 Chase United Mileage Plus $9,969 V.I.S.A. Lowe's $2,140 Browning Equipment $1,838 Kohl's $738 MORGAN STANLEY: Minimal Paydown Cues Fitch to Hold Ratings ---------------------------------------------------------- Fitch Ratings has affirmed these classes of Morgan Stanley Capital I Trust 2007-Top25, commercial mortgage pass-through certificates: -- $60.1 million class A-1 at 'AAA'; -- $144.6 million class A-1A at 'AAA'; -- $77.7 million class A-2 at 'AAA'; -- $62.3 million class A-AB at 'AAA'; -- $784.4 million class A-3 at 'AAA'; -- $155.5 million class A-M at 'AAA'; -- $110.8 million class A-J at 'AAA'; -- Interest-only class X at 'AAA'; -- $27.2 million class B at 'AA'; -- $11.7 million class C at 'AA-'; -- $25.3 million class D at 'A'; -- $11.7 million class E at 'A-'; -- $13.6 million class F at 'BBB+'; -- $13.6 million class G at 'BBB'; -- $11.7 million class H at 'BBB-'; -- $3.9 million class J at 'BB+'; -- $3.9 million class K at 'BB'; -- $5.8 million class L at 'BB-'; -- $3.9 million class M at 'B+'; -- $1.9 million class N at 'B'; -- $3.9 million class O at 'B-'. Fitch does not rate the $15.5 million class P certificates. The rating affirmations are the results of stable performance and minimal paydown since issuance. As of the November 2007 remittance report, the transaction has paid down 0.4% to $1.55 billion from $1.56 billion at issuance. There are currently no delinquent or specially serviced loans in the transaction. Two loans, The London NYC Hotel Land Interest (1.7%) and Huron Estates (1.1%) maintain investment grade shadow ratings. The London NYC Hotel Land Interest, a 334,125 square foot parcel in New York City is ground leased to the London NYC Hotel and no variance in performance has been reported since issuance. Huron Estates, an 806 pad mobile home park located in Romulus, Michigan, is 98% occupied as of June 2007, compared to 97% occupancy at issuance. MOVIE GALLERY: Can Hire Ernst & Young as Tax Advisors ----------------------------------------------------- Movie Gallery Inc. and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Ernst & Young LLP as their independent auditors, accountants and tax advisors in their Chapter 11 cases. Acting on Movie Gallery, Inc.'s behalf, Page Todd, executive vice president, secretary and general counsel to the Debtors, entered into an audit services agreement and tax services agreement with Ernst & Young. Pursuant to the agreements, Ernst is expected to provide audit and accounting services, particularly: (a) annual audit procedures necessary to express an opinion on the Debtors' consolidated financial statements, and on the effectiveness of their internal controls over financial reporting, as of Jan. 6, 2008; (b) quarterly review services for timely reviews of the Debtors' consolidated quarterly financial information; (c) research and consultation regarding financial accounting, and reporting matters as, and when they arise; (d) communications with the Audit Committee of the Board of Directors of Movie Gallery, Inc., as required and scheduled; and (e) preparation of management letters to communicate to the Debtors and the Audit Committee any material weaknesses or significant deficiencies in internal controls over financial reporting, if any, as well as suggestions for improving any other deficiencies that do not rise to the level of a material weakness or significant deficiency. The firm is also expected to perform certain tax services, including: (a) routine on-call tax advice and assistance concerning issues as requested by Movie Gallery, Inc.'s tax department, provided that the projects are not covered by a separate project addendum and do not involve any significant tax planning or projects; and (b) consultation related to the Debtors' bankruptcy filing tax issues, including (i) effect of discharge of indebtedness, if any, (ii) tax attribution reduction, (iii) entitlement to refunds, (iv) analysis of Internal Revenue Service (IRS) proofs of claim, (v) assistance With advisory proceedings related to tax claims, and (vi) potential to discharge IRS claims. Ernst & Young will be paid based on its hourly rates: Designation Hourly Rate ----------- ----------- Partners, Principals and Directors US$600 Senior Managers US$500 Managers US$400 Seniors US$250 - US$275 Staff US$200 Alvin L. Winterroth, Esq., a partner at Ernst & Young, informed the Court that the Debtors made pre-bankruptcy payments for $521,306 and a retainer fee of approximately US$200,000 to his firm. As of the bankruptcy filing, Ernst & Young was owed $60,645 of prepetition payments by the Debtors. Upon the Court's approval of the firm's retention in the Debtors' Chapter 11 Cases, the firm will waive its right to receive any prepetition fees or expenses incurred on the Debtors' behalf. Mr. Winterroth assured the Court that Ernst & Young neither holds nor represents any interest adverse to the Debtors and their estates, and the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. About Movie Gallery Based in Dothan, Alabama, Movie Gallery Inc. -- http://www.moviegallery.com/-- is a home entertainment specialty retailer. The company owns and operates 4,600 retail stores that rent and sell DVDs, videocassettes and video games. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853. Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak Rock LLP, is the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. When the Debtors' filed for protection from their creditors, they listed total assets of $891,993,000 and total liabilities of $1,419,215,000. The Official Committee of Unsecured Creditors has selected Robert J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq., and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as its lead counsel, and Brian F. Kenney, Esq., at Miles & Stockbridge PC, as its local counsel. (Movie Gallery Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) The Debtors' spokeswoman Meaghan Repko said that the Plan will not be filed before November 27, and the company does not expect to exit bankruptcy protection before the second quarter of 2008. MOVIE GALLERY: Inks DIP Financing Pact Amendment w/ Goldman Sachs ----------------------------------------------------------------- Movie Gallery Inc. and its debtor-affiliates entered into an amendment to the Secured Senior-Priority DIP Credit and Guaranty Agreement with Goldman Sachs Credit Partners L.P., as syndication agent and documentation agent, and The Bank of New York, as administrative agent and collateral agent, Thomas D. Johnson, Jr., executive vice president and chief financial officer of Movie Gallery, Inc., informed the Securities and Exchange Commission. The amendment was done to comply with the final DIP financing order given by the Honorable Douglas O. Tice of the U.S. Bankruptcy Court for the Eastern District of Virginia. Pursuant to the amendment, Section 3.2(b) of the Credit Agreement, which required the Debtors to have been assigned and maintain a credit rating by Moody's and S&P, has been deleted in its entirety. In addition, Section 8.1(l)(iv) of the DIP Credit Agreement has been deleted and replaced in its entirety with: "(iv) granting any other relief that is materially adverse to Administrative Agent's, Syndication Agent's, Collateral Agent's or Lenders' interests under any Credit Document or their rights and remedies hereunder or their interest in the Collateral, provided that, in respect of the foregoing subclause (iv), if such relief was sought by parties other than Credit Parties, any of the Administrative Agent, Syndication Agent or Collateral Agent or any Lender shall have requested in writing that Credit Parties oppose the motion and the Credit Parties shall have failed to do so;." A full-text copy of the First Amended DIP Credit Agreement is available for free at http://researcharchives.com/t/s?2617 About Movie Gallery Based in Dothan, Alabama, Movie Gallery Inc. -- http://www.moviegallery.com/-- is a home entertainment specialty retailer. The company owns and operates 4,600 retail stores that rent and sell DVDs, videocassettes and video games. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853. Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak Rock LLP, is the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. When the Debtors' filed for protection from their creditors, they listed total assets of $891,993,000 and total liabilities of $1,419,215,000. The Official Committee of Unsecured Creditors has selected Robert J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq., and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as its lead counsel, and Brian F. Kenney, Esq., at Miles & Stockbridge PC, as its local counsel. (Movie Gallery Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) The Debtors' spokeswoman Meaghan Repko said that the Plan will not be filed before November 27, and the company does not expect to exit bankruptcy protection before the second quarter of 2008. MOVIE GALLERY: Wants Lease Termination Procedures Approved ---------------------------------------------------------- Movie Gallery Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Virginia to approve certain procedures relating to the termination of lease agreements, and consequently permit the Debtors to enter into lease termination agreements with certain lessors. The Debtors' proposed Procedures are: (1) In situations where the aggregate amount of the claims waived or cash consideration paid by a lessor as part of a lease termination agreement does not exceed $250,000, the Debtors are authorized to consummate the agreement that they determine to be in the best interest of their estates. (2) In situations where the aggregate amount of the claims waived or cash consideration paid by a Lessor as part of an agreement exceeds $250,000: -- the Debtors are authorized to consummate the agreement; and -- the Debtors will serve a notice of the agreement to all notice parties affected entities, including the lessor. Absent any written objections with respect to the agreement, the Debtors are authorized to immediately consummate the transaction; provided that the Parties will have an additional three business days to object. If any timely filed objection is not resolved within the period, the agreement will only be consummated upon Court order, except for multiple agreements that are the subject of the same notice. (3) The Debtors may effect set-offs without obtaining further Court approval. In the event that the Debtors have provided a cash security deposit, bond or similar financial instrument to secure their obligations under the lease, the lessor is permitted to effect an otherwise valid set-off when entering into the agreement, in accordance with Section 553 of the Bankruptcy Code. Kimberly A. Pierro, Esq., at Kutak Rock LLP, in Richmond, Virginia, relates that under the circumstances of the Debtors' Chapter 11 cases, allowing lease termination agreements pursuant to the Procedures "is supported by a sound business purpose." Specifically, she says, the Debtors will enter into LTAs to obtain value for their estates through several different avenues, specifically to store locations that are not currently profitable or are not projected to be profitable in the future. Accordingly, the Debtors intend to enter into LTAs with a lessor to terminate the lease in exchange for value, including but not limited to the the lessor's waiver of prepetition or postpetition claims and cash consideration, which permits the lessor to relet premises to third parties immediately upon the LTAs' effectiveness and regain certainty with respect to the lease. Ms. Pierro adds that absent the LTAs, the Debtors are deemed to be potentially burdened with unnecessary and additional obligations. The Debtors are left with four options with respect to unprofitable or potentially unprofitable store locations: (a) maintain the current lease; (b) assume the lease; (c) reject the lease; or (d) enter into LTAs with respect to the Lease, and subsequently obtain Court approval of the agreements. The Debtors anticipate that they will seek to enter into LTAs on a continuing basis to ensure that they do not unnecessarily incur administrative expenses for unnecessary or unprofitable Leases. If the Debtors were required to file a separate request, as opposed to acting with authority pursuant to Court-approved procedures, the Debtors will spend substantial sums preparing, filing and serving requests with the Court. LTA Procedures Must be Approved According to Ms. Pierro, the LTAs will minimize the Debtors' postpetition obligations, but will not come at the expense of counterparties' rights to the leases and other parties in interest, as each agreement entered into by the Debtors will require mutual consent from the lessor. Specifically, the Debtors will evaluate potential LTAs with the aid of their advisors, negotiate with the lessors, and enter into the agreements that represent commercially viable transactions. Hence, the transactions contemplated by the LTA Procedures will be conducted in good faith and at arm's-length, Ms. Pierro assures the Court. Furthermore, she adds, the LTA Procedures allow the Debtors and Lessors to mutually negotiate and consent to set off various obligations without further Court authority through an LTA thereby saving all parties substantial legal expense to effect otherwise valid set-offs. About Movie Gallery Based in Dothan, Alabama, Movie Gallery Inc. -- http://www.moviegallery.com/-- is a home entertainment specialty retailer. The company owns and operates 4,600 retail stores that rent and sell DVDs, videocassettes and video games. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853. Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak Rock LLP, is the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. When the Debtors' filed for protection from their creditors, they listed total assets of $891,993,000 and total liabilities of $1,419,215,000. The Official Committee of Unsecured Creditors has selected Robert J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq., and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as its lead counsel, and Brian F. Kenney, Esq., at Miles & Stockbridge PC, as its local counsel. (Movie Gallery Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) The Debtors' spokeswoman Meaghan Repko said that the Plan will not be filed before November 27, and the company does not expect to exit bankruptcy protection before the second quarter of 2008. NATIONAL FARM: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: National Farm Financial Corp. 900 Cherry Avenue, Suite 218 San Bruno, CA 94066 Tel: (650) 866-3999 Bankruptcy Case No.: 07-31580 Chapter 11 Petition Date: December 5, 2007 Court: Northern District of California (San Francisco) Judge: Thomas E. Carlson Debtor's Counsel: Brian Y. Lee, Esq. Winston & Strawn, L.L.P. 101 California Street 39th Floor San Francisco, CA 94111 Tel: (415) 398-4700 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its largest unsecured creditors. NATIONAL RETAIL: Fitch Lifts Rating on Preferred Stock from BB+ --------------------------------------------------------------- Fitch Ratings has upgraded these credit ratings of National Retail Properties, Inc.: -- Issuer Default Rating to 'BBB' from 'BBB-'; -- Unsecured line of credit to 'BBB' from 'BBB-'; -- Senior unsecured notes to 'BBB' from 'BBB-'; -- Senior unsecured convertible notes to 'BBB' from 'BBB-'; -- Preferred stock to 'BBB-' from 'BB+'. Fitch's action affects approximately $1 billion in securities. The Rating Outlook is Stable. Fitch's upgrades follow NNN's accomplishment of several goals over the past year that have strengthened the company's creditworthiness, particularly in light of Fitch resolving the company's Outlook. Fitch revised NNN's Rating Outlook to Positive from Stable in 2005, and in 2006, Fitch specifically identified the following factors in connection with resolving the Positive Outlook: NNN's ability to keep core earnings from commercial net leased properties at current or higher levels relative to debt- service requirements, maintain manageable risk-adjusted capitalization, remain disciplined with respect to build-for-sale activities that have been successful thus far, and continue diversifying an already broad tenant base. In 2007, through a sale-leaseback transaction with a large convenience store owner, the purchase of theater properties from a privately held theater operator, and other accretive acquisitions, NNN has been able to grow earnings from stabilized free standing retail properties. Fitch calculates that NNN's fixed charge coverage ratio was 2.7 times for the year-to-date period ending Sept. 30, 2007, improved from 2.1x for the comparable period in 2006. Given that 97% of NNN's assets are unencumbered by mortgage debt, unencumbered properties have performed in a way that provides ample downside protection to unsecured bondholders. With respect to capital, NNN's risk-adjusted capitalization is adequate for the 'BBB' senior unsecured debt level. Although NNN continues to invest modestly in higher-risk real estate assets such as mezzanine loans, mortgage residual interests in securitizations, and development properties through the company's taxable REIT subsidiary, which admittedly contribute to FFO growth and common stock dividend increases, the company's mostly unencumbered portfolio and leverage level provide evidence of appropriate risk-adjusted capitalization for the 'BBB' rating level. In addition, Fitch calculates that company's debt-to- recurring EBITDA ratio was 6.1x as of Sept. 30, 2007, improved from 6.9x as of Sept. 30, 2006. Fitch recognizes management's focus on asset sales as an element of active portfolio management and intention to generate approximately $80 million in core portfolio dispositions in 2008. However, with respect to offsetting factors, Fitch views cash flows from asset sales as a more volatile cash flow source than core operating earnings, and significantly discounts this cash flow. Another credit concern for Fitch is NNN's increased exposure to the convenience store industry, which is nevertheless a fragmented line of trade. Fitch does not believe that NNN's exposure to convenience store tenants will decline materially in the near term. Fitch's upgrade of NNN's preferred stock to investment-grade follows the redemption of $45 million 9% series A preferred stock in 2007 and common equity raises through the company's Dividend Reinvestment and Stock Purchase Plan and equity offering in April 2007. These financial transactions have materially improved the position of holders of NNN's $92 million 7.375% Series C preferred stock. The Stable Outlook centers on NNN's strong liquidity position and Fitch's expectation that funds from operations will grow modestly in 2008. Internally-generated liquidity, the ownership of a large pool of unencumbered assets, and the recent exercise of the accordion feature under NNN's revolving line of credit indicate a liquidity position appropriate for the 'BBB' IDR level. During the next 12-to-24 months, Fitch will monitor the performance of NNN's entire franchise, including the recently formed joint venture with an affiliate of Crow Holdings Realty Partners IV, L.P. Fitch will also monitor the broader retail environment, as Fitch believes that on a macroeconomic basis, comparable retail sales growth in 2008 will be weaker than 2007 levels. For NNN to remain a 'BBB' rated credit, Fitch will look to NNN to maintain fixed charge coverage ratios demonstrated in 2007 year- to-date, continue to limit its mezzanine lending business and mortgage residual investments, and continue to own a mostly unencumbered property portfolio. Formed in 1984, NNN is a fully-integrated real estate investment trust that owns free standing retail properties leased primarily to retail tenants under long-term net leases. As of Sept. 30, 2007, NNN owned 876 Investment properties, located in 43 states, as well as 36 Inventory properties. As of Sept. 30, 2007, NNN had approximately $2.4 billion in undepreciated book assets and approximately $1.3 billion in undepreciated book equity. NETBANK INC: Court Approves Rogers Towers as Panel's Local Counsel ------------------------------------------------------------------ The United States Bankruptcy Court for the Middle District of Florida authorized the Official Committee of Unsecured Creditors of NetBank Inc.'s Chapter 11 case to retain Rogers Towers P.A., as its local counsel, nunc pro tunc Nov. 6, 2007. As reported in the Troubled Company Reporter on Nov. 27, 2007, Rogers Towers is expected to: a) render legal advice regarding the Committee's organization, duties and powers in this case; b) assist the Committee in its investigation of the acts, conducts, assets, liabilities, and financial condition of the Debtor, the operation of the of the Debtor's business and the Debtor's business and the desirability of continuing the same, the potential sale of the Debtor's assets, and any other matter relevant to this case or the formulation and analysis of any plan of reorganization or plan of liquid ation; c) attend meetings of the Committee and meetings with the Debtor, its attorneys, and other professionals, as requested by the Committee; d) represent the Committee in hearings before the Court; e) assist the Committee in preparing all necessary motions, applications, responses, reports, and other pleadings in connection with the administration of this case; and f) provide other legal assistance as the Committee may deem necessary and appropriate. The firm's professionals and their compensation rates are: Professional Designation Hourly Rate ------------ ----------- ----------- Betsy C. Cox, Esq. Shareholder $325 J. Ellsworth Summers. Esq. Associate $240 Jacob J. Payne, Esq. Associate $200 Jim K. Farrar Paralegal $140 To the best of the Committee's knowledge the firm does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Jacksonville, Florida, NetBank Inc. -- http://www.netbank.com/-- is a financial holding company of Netbank, the United States' oldest Internet bank serving retail and business customers in all 50 states. NetBank Inc. does retail banking, mortgage banking, business finance, and providing ATM and merchant processing services. The company filed for Chapter 11 protection on Sept. 28, 2007 (Bankr. M.D. Fla. Case No. 07-04295). Alan M. Weiss, Esq., at Holland & Knight LLP. The U.S. Trustee for Region 21 appointed six creditors to serve on an Official Committee of Unsecured Creditors of the Debtor's case. As of Sept. 25, 2007, Debtor listed total assets at $87,213,942 and total debts at $42,245,857. NETBANK INC: Court OKs Kilpatrick Stockton as Committee's Counsel ----------------------------------------------------------------- The United States Bankruptcy Court for the Middle District of Florida gave the Official Committee of Unsecured Creditors in NetBank Inc.'s Chapter 11 case to retain Kilpatrick Stockton LLP as its attorney, nunc pro tunc Nov. 6, 2007. As reported in the Troubled Company Reporter on Nov. 27, 2007, Kilpatrick Stockton is expected to: a) render legal advice regarding the Committee's organization, duties and powers in this case; b) assist the Committee in its investigation of the acts, conducts, assets, liabilities, and financial condition of the Debtor, the operation of the of the Debtor's business and the Debtor's business and the desirability of continuing the same, the potential sale of the Debtor's assets, and any other matter relevant to this case or the formulation and analysis of any plan of reorganization or plan of liquid ation; c) attend meetings of the Committee and meetings with the Debtor, its attorneys, and other professionals, as requested by the Committee; d) represent the Committee in hearings before the Courtl; e) assist the Committee in preparing all necessary motions, applications, responses, reports, and other pleadings in connection with the administration of this case; and f) provide other legal assistance as the Committee may deem necessary and appropriate. Todd C. Meyers, a partner of the firm, will bill $525 per hour until Nov. 30, 2007. In Mr. Meyers' affidavit, he will charge $565 per hour commencing Dec. 1, 2007, for this engagement. To the best of the Committee's knowledge the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Court. Mr. Meyers can be reached at: Todd C. Meyers, Esq. Kilpatrick Stockton LLP 1100 Peachtree Street, Suite 2800 Atlanta, GA 30309-4530 Tel: (404) 815-6500 Fax: (404) 815-6555 http://www.kilpatrickstockton.com/ Headquartered in Jacksonville, Florida, NetBank Inc. -- http://www.netbank.com/-- is a financial holding company of Netbank, the United States' oldest Internet bank serving retail and business customers in all 50 states. NetBank Inc. does retail banking, mortgage banking, business finance, and providing ATM and merchant processing services. The company filed for Chapter 11 protection on Sept. 28, 2007 (Bankr. M.D. Fla. Case No. 07-04295). Alan M. Weiss, Esq., at Holland & Knight LLP. The U.S. Trustee for Region 21 appointed six creditors to serve on an Official Committee of Unsecured Creditors of the Debtor's case. As of Sept. 25, 2007, Debtor listed total assets at $87,213,942 and total debts at $42,245,857. NETBANK INC: Creditors Have Until Feb. 15 to File Proofs of Claim ----------------------------------------------------------------- The Honorable Jerry A. Funk of the United States Bankruptcy Court for the Middle District of Florida established Feb. 15, 2008, as the last day whithin which NetBank Inc.'s creditors may file their proofs of claims. All governmental units may file their proofs of claim on or before March 26, 2008. Proofs of claims must be filed at the clerk's office at this address: Clerk of the United States Bankruptcy Court for the Middle District of Florida 300 North Hogan Street Suite 3-350 Jacksonville, FL 32202 Headquartered in Jacksonville, Florida, NetBank Inc. -- http://www.netbank.com/-- is a financial holding company of Netbank, the United States' oldest Internet bank serving retail and business customers in all 50 states. NetBank Inc. does retail banking, mortgage banking, business finance, and providing ATM and merchant processing services. The company filed for Chapter 11 protection on Sept. 28, 2007 (Bankr. M.D. Fla. Case No. 07-04295). Alan M. Weiss, Esq., at Holland & Knight LLP. The U.S. Trustee for Region 21 appointed six creditors to serve on an Official Committee of Unsecured Creditors of the Debtor's case. As of Sept. 25, 2007, Debtor listed total assets at $87,213,942 and total debts at $42,245,857. NEW CENTURY: Court Approves Termination of Captive Policies ----------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware has authorized New Century Financial Corp. and its debtor- affiliates to terminate all of NCMC Insurance Corporation's remaining contractual obligations under the "captive" insurance policies, and directed NCMC Insurance to return the set-off amount to the Debtors. Accordingly, the automatic stay under Section 362 of the Bankruptcy Code is modified, to the extent necessary. In connection with NCMC Insurance's dissolution, the Court directed the Debtors to comply with the applicable requirements under Hawaii corporate and insurance law. The Court also directed the Debtors to notify James M. Trush, Esq., at Trush Law Office in Costa Mesa, Calif., of the Hawaii dissolution proceedings. Mr. Trush is counsel for Daniel J. Rubio, John Hicks, David Vizcarra. As reported in the Troubled Company Reporter on Nov. 22, 2007, Daniel J. Rubio, John Hicks, David Vizcarra, objected to the termination of the "captive" insurance policies, and asked the Court to deny the motion, or order that NCMC Insurance Corporation segregate $1,000,000 for paying their claims. Founded in 1995, Irvine, Calif.-based New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/-- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. The company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. The Official Committee of Unsecured Creditors selected Hahn & Hessen as its bankruptcy counsel and Blank Rome LLP as its co-counsel. When the Debtors filed for bankruptcy, they listed total assets of $36,276,815 and total debts of $102,503,950. The Debtors' exclusive period to file a plan expires on Dec. 20, 2007. (New Century Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NEW WORLD: Posts $731,079 Net Loss in Third Quarter --------------------------------------------------- New World Brands Inc. reported a net loss of $731,079 on net sales of $4.2 million for the third quater ended Sept. 30, 2007, compared with a net loss of $619,376 on net sales of $4.3 million in the corresponding period in 2006. At Sept. 30, 2007, the company's consolidated balance sheet showed $6.5 million in total assets, $1.8 million in total liabilities, and $4.7 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2619 Going Concern Doubt During the first three quarters of 2007, during the fiscal year 2006 and in prior years, the company incurred ongoing substantial losses and used cash from operating activities in 2006 and in prior years. These conditions raise substantial doubt about the company's ability to continue as a going concern without access to substantial additional capital or undertaking a restructuring or discontinuance of non-profitable business divisions or activities. About New World Brands Headquartered in Eugene, Ore., New World Brands Inc. (OTC BB: NWBD.OB) -- http://www.nwbtechnologies.com/-- is a telecommunications sales and service company, focusing on products and services utilizing Voice over Internet Protocol technology. As a result of the sale of the its former subsidiary, IP Gear Ltd.,, the company is no longer in the VoIP equipment research and development and manufacturing business, and instead currently focuses on two principal lines of business: (i) resale and distribution of VoIP and other telephony equipment, and related professional services, particularly as the exclusive North American distributor of TELES AG Informationstechnologien and IP Gear Ltd. products; and (ii) telephony service resale, direct call routing and carrier support. NEXIA HOLDINGS: Sept. 30 Balance Sheet Upside-Down by $685,025 -------------------------------------------------------------- Nexia Holdings Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $4.6 million in total assets, $5.2 million in total liabilities, $97,678 in minority interest, and $685,025 in total stockholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $532,062 in total current assets available to pay $2.6 million in total current liabilities. The company reported a net loss of $1.3 million on total revenue of $762,666 for the third quarter ended Sept. 30, 2007, compared with a net loss of $1.7 million on total revenue of $434,575 in the same period last year. The increase in total revenue is due to inclusion of sales revenues from the operations of the Landis Salon and Black Chandelier operations of Gold Fusion Laboratories Inc., which was acquired in September of 2006. Nexia recorded operating losses of $1.2 million for the three month period ended Sept. 30, 2007, compared to losses of $1.5 million for the comparable period in the year 2006. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?261b Going Concern Doubt De Joya Griffith & Company LLC, in Henderson, Nev., expressed substantial doubt about Nexia Holdings Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm reported that the company has incurred cumulative operating losses through Dec. 31, 2006, of $15,568,646, and has a working capital deficit of $990,123 at Dec. 31, 2006. About Nexia Holdings Inc. Headquartered in Salt Lake City, Utah, Nexia Holdings Inc. (OTC BB: NEXA) -- http://www.nexiaholdings.com/ -- is a diversified holdings company with operations in real estate, health & beauty, and fashion retail. NOVELL INC: SEC Inquiries Prompt Delay in 2007 Earnings Release --------------------------------------------------------------- Novell Inc. has decided to postpone its fourth quarter and full- year 2007 earnings release and conference call. The release of its fourth quarter and full-year results was initially scheduled Wednesday, Dec. 5, 2007. Novell received a comment letter from the Securities and Exchange Commission, dated Aug. 7, 2007, regarding Novell's Form 10-K for the fiscal year ended Oct. 31, 2006, and its Form 10-Q for the quarterly period ended April 30, 2007. Novell delivered a response letter to the SEC on Sept. 20, 2007. On Oct. 18, 2007, Novell received a second comment letter from the SEC indicating that the SEC had reviewed Novell's response to the Aug. 7, 2007, letter. The second comment letter was limited to certain accounting matters. Novell responded to the SEC's second comment letter on Nov. 7, 2007, and is awaiting a response. "We are confident of our accounting and are working diligently with the SEC to respond to their inquiries," said Dana C. Russell, chief financial officer of Novell. "In an abundance of caution, we have chosen to postpone our earnings release. We look forward to completing our dialogue with the SEC." Novell intends to release its fourth quarter and full-year 2007 earnings upon the completion of the SEC's review. Novell is unable to estimate when the process will be completed, but currently expects to file its Form 10-K for the fiscal year ended Oct. 31, 2007, on or before its due date of Dec. 31, 2007. Last May 23, 2007, Novell Inc. disclosed that it completed its self-initiated, voluntary review of the company's historical stock-based compensation practices and determined the related accounting impact. The scope of the review covered approximately 400 grant actions from Nov. 1, 1996, through Sept. 12, 2006. As a result of the review, Novell delayed the filing of its quarterly reports on Form 10-Q for the fiscal quarters ended July 31, 2006, and Jan. 31, 2007, and its annual report on Form 10-K for the fiscal year ended Oct. 31, 2006. The Audit Committee, together with its independent outside legal counsel, did not find any evidence of intentional wrongdoing by any former or current Novell employees, officers or directors. Novell determined, however, that it utilized incorrect measurement dates for some of the stock-based compensation awards granted during the review period. About Novell Inc. Headquartered in Waltham, Massachusetts, Novell Inc. (Nasdaq: NOVL) -- http://www.novell.com/-- delivers infrastructure software for the Open Enterprise. Novell provides desktop to data center operating systems based on Linux and the software required to secure and manage mixed IT environments. * * * Novell Inc.'s subordinated debt carries Moody's Investors Service's B1 rating. PAN AMERICAN: Foreclosure Protection Extended Until December 12 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas extended the automatic stay prohibiting Pan American General Hospital LLC from foreclosing until Dec. 12, 2007, Bill Rochelle of Bloomberg News reports. According to Bloomberg, the extension was prompted after the the Debtor earlier told the Court that it has an offer for $2.3 million that would more than pay the mortgage it holds in full. Headquartered in El Paso, Texas, Pan American General Hospital LLC -- http://www.pachosp.com/-- owns and operates a physician- owned hospital that is licensed for 100 beds and is fully accredited by the Joint Commission on Accreditation of Healthcare Organizations, Medicare, and the Texas Department of Health. The company filed for Chapter 11 protection on August 6, 2007 (Bankr. W. D. Tex. Case No. 07-30935). E.P. Bud Kirk, Esq. in El Paso, Texas serves as the Debtor's counsel. When the Debtor filed for bankruptcy, it listed total assets and debts between $1 million to $100 million. Glenn Grimsley was listed as the Debtor's largest unsecured creditor holding a claim of $1,088,063. PERFORMANCE TRANS: U.S. Trustee Picks Five-Member Creditors Panel ----------------------------------------------------------------- Diana G. Adams, the United States Trustee for Region 2, appointed five members to the Official Committee of Unsecured Creditors in the Chapter 11 cases of Performance Transportation Services Inc. and its debtor-affiliates. The Creditors Committee members are: 1. Central States Southeast & Southwest Areas Pension and Health and Welfare Funds Attn: Robert Coco Central States Law Department 9377 West Higgins Road Rosemont, IL 60018 2. Teamsters National Automobile Transporters Negotiating Committee Attn: Fred Zuckerman 25 Louisiana Avenue N.W. Washington, D.C. 20001 3. Relational LLC Attn: Dean Frankel 3701 Algonquin Road Suite 600 Rolling Meadows, IL 60008 4. Doremus Newark LLC Attn: Jon R. Levine 145 Rosemary Street Entry E Needham, MA 02494 5. Strategic Protection Group, Inc. Attn: David Clemons 25900 Greenfield Road Suite 144 Oak Park, MI 482377 Pursuant to Section 1103 of the Bankruptcy Code, the Creditors Committee may: -- consult with the Debtor concerning the administration of the bankruptcy case; -- investigate the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' business and the desirability of the continuance of the business, and any other matter relevant to the case or to the formulation of a plan of reorganization for the Debtors; -- participate in the formulation of a plan, advise its constituents regarding the Committee's determinations as to any plan formulated, and collect and file with the Court acceptances or rejections of the plan; -- request the appointment of a trustee or examiner; and -- perform other services as are in the interest of its constituents. The Creditors Committee may retain counsel, accountants, or other agents, to represent or perform services for the group. About Performance Transportation Performance Transportation Services Inc. is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, and operates under three key transportation business lines including: E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport. The company and 13 of its affiliates previously filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06- 00107). The Court confirmed the Debtors' plan on Dec. 21, 2006, and that plan became effective on Jan. 29, 2007. Garry M. Graber, Esq. of Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day represented the Debtors in their restructuring efforts. When the Debtor filed for protection from their creditors it reported more than $100,000,000 in total assets. It also disclosed owing more than $100,000,000 to at most 10,000 creditors, including $708,679 to Broadspire and $282,949 to General Motors of Canada Limited. The company and its debtor-affiliates filed their second Chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746 thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve as the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. (Performance Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PERFORMANCE TRANS: Taps Hodgson Russ as Bankruptcy Co-Counsel ------------------------------------------------------------- Performance Transportation Services Inc. and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the Western District of New York to employ Hodgson Russ LLP as co-counsel with Jones Day, nunc pro tunc to Nov. 19, 2007. John Stalker, chief financial officer of Performance Transportation Services Inc., and 13 other debtor-affiliates, says Hodgson Russ has participated in most of the large and complex Chapter 11 cases in the district. Mr. Stalker reminds the Court that Hodgson Russ was employed by the Debtors in their PTS I bankruptcy cases. Hodgson Russ will: (a) advise the Debtors of their rights, powers and duties as debtors and debtors-in-possession continuing to operate and manage their businesses and properties under Chapter 11 of the Bankruptcy Code; (b) prepare, on behalf of the Debtors, any necessary and appropriate applications, motions, draft orders, other pleadings, notices, schedules and other documents, and review financial and other reports to be filed in the Chapter 11 cases; (c) advise the Debtors concerning, and prepare responses to, applications, motions, other pleadings, notices and other papers that may be filed and served in the Chapter 11 cases; (d) advise the Debtors with respect to, and assist in the negotiation and documentation of, financing agreements, debt and cash collateral orders and related transactions; (e) review the nature and validity of any liens asserted against the Debtors' property and advise the Debtors concerning the enforceability of the liens; (f) advise the Debtors regarding their ability to initiate actions to collect and recover property for the benefit of their estates; (g) counsel the Debtors in connection with the formulation, negotiation and promulgation of a plan or plans of reorganization and related documents; (h) advise and assist the Debtors in connection with any potential property dispositions; (i) advise the Debtors concerning executory contract and unexpired lease assumptions, assignments and rejections and lease restructurings and recharacterizations; (j) assist the Debtors in reviewing, estimating and resolving claims asserted against the Debtors' estates; (k) commence and conduct any and all litigation necessary or appropriate to assert rights held by the Debtors, protect assets of the Debtors' chapter 11 estates or otherwise further the goal of completing the Debtors' successful reorganization; (l) provide general corporate, litigation, regulatory and other nonbankruptcy services as requested by the Debtors; and (m) appear in Court on behalf of the Debtors as needed in connection with the foregoing and otherwise; and (n) perform any other necessary or appropriate legal services in connection with the Chapter 11 cases for or on behalf of the Debtors. Mr. Stalker assures the Court that Hodgson Russ and Jones Day will function cohesively to ensure that legal services provided to the Debtors by each firm are complementary rather than duplicative. The Debtors will pay Hodgson Russ on an hourly basis in accordance with its ordinary and customary hourly rates: Professional Rate ------------ ---- Lawyers $130 - $575 Paralegals $75 - $195 The Debtors will reimburse the firm of its actual and necessary out of pocket expenses. Garry M. Graber, Esq., a partner at Hodgson Russ LLP, in Buffalo, New York, relates that during the period from the PTS I emergence date to the PTS II Petition Date, the Debtors have paid Hodgson Russ $65,784 as compensation and reimbursement for professional services performed and expenses. Mr. Graber assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code and as required by Section 327(a) of the Bankruptcy Code. About Performance Transportation Performance Transportation Services Inc. is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, and operates under three key transportation business lines including: E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport. The company and 13 of its affiliates previously filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06- 00107). The Court confirmed the Debtors' plan on Dec. 21, 2006, and that plan became effective on Jan. 29, 2007. Garry M. Graber, Esq. of Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day represented the Debtors in their retructuring efforts. When the Debtor filed for protection from their creditors it reported more than $100,000,000 in total assets. It also disclosed owing more than $100,000,000 to at most 10,000 creditors, including $708,679 to Broadspire and $282,949 to General Motors of Canada Limited. The company and its debtor-affiliates filed their second Chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746 thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve as the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. (Performance Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PERFORMANCE TRANS: Can Use All Cash Collateral of Secured Lenders ----------------------------------------------------------------- Performance Transportation Services Inc. and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Western District of New York to use all cash collateral of their secured lenders prior to the bankruptcy filing, provided that the use of the cash collateral will be limited to the types of expenditures contained in the Debtors' budget. The Hon. Lewis A. Kaplan held that the total disbursements for a particular week may not differ from the total contained in the Budget by more 10% and revenues may be less than indicated, provided that Net Cash Flow as set forth in the Budget, must not fall more than $400,000 below the amount indicated in any particular week or $800,000 cumulatively. Judge Kaplan said the secured lenders prior to bankruptcy filing, are entitled to adequate protection of their interest in the cash collateral, to the extent that their interests in the collateral constitute valid and perfected security interests and liens as of the bankruptcy filing, for and equal in amount to the aggregate diminution in value, if any, of the secured lenders' collateral. The Debtors' right to use Cash Collateral will automatically terminate without further Court order: (i) on Dec. 14, 2007, if the Final Cash Collateral Order has not been entered prior to that date; (ii) upon prior written notice to the Debtors if the Debtors use cash collateral in violation of the budget; (iii) if the Debtors fail to timely satisfy the Intermediate Milestones; or (iv) a trustee under chapter 7 or 11 of the Bankruptcy Code, or an examiner with powers relating to the operation of the business that is not acceptable to the First Lien Agent and the Second Lien Agent will be appointed in any of the chapter 11 cases and the order appointing that trustee, responsible officer or examiner is not vacated within 30 days. The Official Committee of Unsecured Creditors will have 60 days from the Petition Date to file, on behalf of the Debtors' estates objections or complaints respecting the validity, extent, priority, avoidability or enforceability of the Prepetition Debt or the Prepetition Secured Lenders' prepetition liens and security interests. About Performance Transportation Performance Transportation Services Inc. is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, and operates under three key transportation business lines including: E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport. The company and 13 of its affiliates previously filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06- 00107). The Court confirmed the Debtors' plan on Dec. 21, 2006, and that plan became effective on Jan. 29, 2007. Garry M. Graber, Esq. of Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day represented the Debtors in their retructuring efforts. When the Debtor filed for protection from their creditors it reported more than $100,000,000 in total assets. It also disclosed owing more than $100,000,000 to at most 10,000 creditors, including $708,679 to Broadspire and $282,949 to General Motors of Canada Limited. The company and its debtor-affiliates filed their second Chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746 thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve as the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. (Performance Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PETROQUEST ENERGY: Moody's Lifts Corp. Family Rating to B3 ---------------------------------------------------------- Moody's Investors Service upgraded PetroQuest Energy Inc.'s Corporate Family Rating to B3 from Caa1, its Probability of Default Rating to B3 from Caa1, and its senior unsecured note rating to Caa1 (LGD 4, 68%) from Caa2 (LGD 4, 68%). The rating outlook is stable. The ratings upgrade reflects PetroQuest's track record over the last couple of years of growing production and reserves and continued efforts by the company to diversify its portfolio mix away from the very short lived Gulf coast basin and the Gulf of Mexico shelf into longer lived properties. PetroQuest has successfully achieved material production growth over the last couple of years, with production levels in the first nine months of 2007, on average, 22% greater than 2006 levels. In addition, the company has grown proved developed reserves by about 41% over the past three years. PetroQuest's success in growing its production has resulted in improving trends in its financial leverage, as measured by debt/production. Debt/average daily production was $14,298 in the third quarter of 2007, down from $22,237 in 2005. While the company's financial leverage, as measured by debt/PD reserves, has remained high at $12.54/boe, Moody's expects increases in debt to be limited over the near- term, as the company is expected to maintain capital spending within cash flow in 2008. Management has continued to steadily diversify the company into longer lived properties, with the goal of having long lived reserves represent 40-50% of its production profile and 75% of its reserves. In 2002, 100% of the company's reserves and production were in the Gulf Coast and GOM, as compared to approximately 40% and 70%, respectively, as of Sept. 30, 2007. PetroQuest has allocated 36% of its capital budget in 2007 to the Arkoma basin, followed by 31% in East Texas, 19% in the Gulf of Mexico, and 15% in South Louisiana, and in 2008 expects to allocate over half of its capital budget to the Arkoma basin. PetroQuest expects that approximately 40% of its 2008 production will be generated from the Arkoma Basin and East Texas. Nevertheless, Moody's notes that PetroQuest's efforts to diversify its portfolio have resulted in an increased focus on unconventional resource plays, which tend to be capital intensive, and that the company remains in the very early learning stage on the Woodford and Fayetteville shales. Maintaining even flat production in unconventional plays can be highly capital intensive as a result of steep first year production declines. In addition to high capital commitments, the company also faces productivity and commercial risks associated with its non-producing acreage in these plays. The B3 Corporate Family Rating remains restrained by the company's small scale in terms of total proven developed reserves and production, which despite portfolio diversification efforts, continues to have material concentrations in the Gulf Coast and GOM shelf, with reliance on two offshore fields for approximately 48% of its production. The company's significant reliance on the Gulf Coast basin and GOM shelf results in a particularly short proved developed producing reserve life of about two years based on annualized third quarter 2007 production. Given the risks associated with the company's size and concentration, as well as its still early phase of evaluation and production results in the Woodford and Fayetteville shales, Moody's believes the B3 rating has minimal flexibility for any material increases in leverage. The stable rating outlook assumes the company will limit increases in financial leverage, as measured on a debt/PD reserve basis, and continue to mount production gains and successfully replace reserves at reasonable costs for the B3 rating. While unlikely over the near-term, positive rating action over the medium term would likely be a function of increased scale and diversification in tandem with the successful completion of its transition to longer-lived properties, including establishing a track record of consistent production and reserve growth at competitive costs. Acquisitions funded with sufficient equity that add diversification and durability to the existing property base without materially pressuring leverage on the PD reserve base could also be positive for the ratings. The ratings or outlook could be pressured if capital productivity deteriorates, if sequential quarterly production trends were to materially decline, or if leverage on PD reserves materially increases. PetroQuest Energy, Inc. is headquartered in Lafayette, Louisiana. PYRAMIDS CHILD: Case Summary & 25 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Pyramids Child Development Center 2155 Route 22B Morrisonville, NY 12962 Bankruptcy Case No.: 07-13344 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Dorsett-Felicelli, Inc. 07-13345 Type of Business: The Debtors provide child care, early intervention and education for preschool & special children. See http://pyramidscdc.org/ Chapter 11 Petition Date: December 5, 2007 Court: Northern District of New York (Albany) Judge: Robert E. Littlefield, Jr. Debtors' Counsel: Richard L. Weisz, Esq. Hodgson Russ, L.L.P. 677 Broadway Albany, NY 12207 Tel: (518) 465-2333 Total Assets Total Debts ------------ ----------- Pyramids Child Development $1,947,021 $1,154,664 Center Dorsett-Felicelli, Inc. $120,000 $986,797 A. Pyramids Child Development Center's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 941 Payment for $34,741 P.O. Box 2508 November, 2007 Cincinnati, OH 45201 941 Payment for $23,092 October, 2007 Excellus Health Insurance $61,062 Utica Business Park 12 Rhoads Drive Utica, NY 13502 New York State Electric & Gas Worker's $10,025 Corp. Compensation P.O. Box 5600 Ithaca, NY 14852-5600 Utilities $1,918 Jaime Reale Rent $4,000 Margi A. Carter Employee Wages $3,555 Assurant/Union Security Life Long-Term Disability $2,989 Insurance Co. of New York Insurance Innovative Risk Concepts, Inc. Worker's $2,924 Compensation Ausable Valley Central School Field Trip/Rent $2,660 District Adirondack Community Action Rent/Field Trip $2,456 Programs, Inc. Philadelphia Insurance Cos. Agent: Agency $2,153 Insurance Brokers, Inc. Northern Insuring Agency, Inc. Worker's $1,880 Compensation The Gourmet Gal, L.L.C. Kitchen Services $1,656 West & Company, CPA's, P.C. Accounting Services $1,525 N.O.V.A.T.E.C. Hardware $1,479 Consultant A.F.L.A.C. New York Employee Benefits $1,316 Canon Lease $1,188 Burgundy Room Conference Meetings and $1,039 Center Seminars Sunoco Corporate Card Gas $987 Processing Center B. Dorsett-Felicelli, Inc's Seven Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Champlain National Bank value of security: $955,000 Attention: Jon J. Cooper, $45,000 President and C.E.O. 3900 N.Y.S. Route 22 P.O. Box 130 Willsboro, NY 12996 Kroll Server Investigation $20,687 P.O. Box 30835 Newark, NJ 07188-0835 Robert Cohen, Esq. Legal $9,460 181 Wood Sale Drive Ballston Lake, NY 12019 New York State Insurance Fund Worker's $678 Compensation Ford Motor Credit Lease $518 Camelot Copy Center $412 N.Y.S. Department Taxation & Penalty for $43 Finance Late Withholding Payment REMY WORLDWIDE: Emerges from Chapter 11, Completes Sale of Knopf ---------------------------------------------------------------- Remy Worldwide Holdings Inc. has emerged from chapter 11 protection less than 59 days after filing its pre-packaged plan of reorganization and petitions. As reported in the Troubled Company Reporter on Nov. 21, 2007, the pre-packaged plan of reorganization was confirmed by the U.S. Bankruptcy Court for the District of Delaware on November 20. In conjunction with its emergence from chapter 11, Remy also disclosed that effective Dec. 6, the company has access to its exit financing facility of up to $330 million, including a $120 million revolving credit facility and term loans of $210 million. The company emphasized that this will provide Remy with the liquidity required to continue to meet its financial needs and operate its business in the coming years. In addition, the sale of Remy's M&M Knopf Auto Parts subsidiary was completed on Dec. 4, 2007. "[The Chapter 11 emergence] marks the start of a new chapter in Remy's history," John Weber, President and Chief Executive Officer of Remy, said. "In reaching this milestone Remy has effectively restructured its debt and its commercial arrangements with General Motors and as a result, strengthened its competitive position. We are excited to move forward as a revitalized and reenergized company." Based in Anderson, Indiana, Remy Worldwide Holdings Inc. acts as a holding company of all the outstanding capital stock of Remy International Inc. Remy International -- http://www.remyinc.com/ -- manufactures, remanufactures and distributes Delco Remy brand heavy-duty systems and Remy brand starters and alternators, locomotive products and hybrid power technology. The company also provides a worldwide component core-exchange service for automobiles, light trucks, medium and heavy-duty trucks and other heavy-duty, off-road and industrial applications. Remy has operations in the United Kingdom, Mexico and Korea, among others. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 8, 2007 (Bankr. D. Del. Cases No. 07-11481 to 07-11509). Douglas P. Bartner, Esq., Fredric Sosnick, Esq., and Michael H. Torkin, Esq., at Shearman & Sterling LLP, represent the Debtors' in their restructuring efforts. Pauline K. Morgan, Esq., Edmon L. Morton, Esq., and Kenneth J. Enos, Esq., at Young Conaway Stargatt & Taylor, LLP, serve as co-counsels to the Debtors. The Debtors' claims agent is Kurtzman Carson Consultants LLC and their restructuring advisor is AlixPartners, LLC. Greenbert Traurig, LLP is the Debtors' special corporate advisory and litigation counsel, and Ernst & Young LLP their accountant, auditor and tax services provider. At Sept. 30, 2006, Remy Worldwide's balance sheet showed total assets of $919,736,000 and total liabilities of $1,265,648,000. (Remy Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Extends $750 Million Debt Securities Offering ------------------------------------------------------------------ Residential Capital, LLC reported an extension of the early tender time for its cash tender offer for up to $750 million aggregate principal amount of its Floating Rate Notes due June 9, 2008, Floating Rate Notes due Nov. 21, 2008, 6.125% Notes due Nov. 21, 2008, and Subordinated Floating Rate Notes due April 17, 2009. The new early tender time is 5:00 p.m. EST on Dec. 12, 2007, unless extended by ResCap in its sole discretion. Holders must validly tender their notes prior to the early tender time in order to be eligible to receive the early tender premium of $30 per $1,000 principal amount of notes, which is included in the total consideration offered in the tender offer. The withdrawal deadline has not been extended and, accordingly, notes tendered in the tender offer may no longer be withdrawn. The tender offer expiration time remains 12:00 midnight EST on Dec. 19, 2007, unless extended by ResCap in its sole discretion. The tender offer is conditioned on the satisfaction of certain conditions. If any of the conditions are not satisfied or waived, ResCap is not obligated to accept for payment, purchase or pay for, and may delay the acceptance for payment of, any tendered notes, in each event, subject to applicable laws, and may terminate the tender offer. The terms and conditions of the tender offer are described in detail in the Offer to Purchase dated Nov. 21, 2007, and the related Letter of Transmittal, the terms and conditions of the tender offer set forth therein remain unchanged. Banc of America Securities LLC and Citi are the dealer managers for the tender offer. Global Bondholder Services Corporation is the information agent and depositary. Deutsche Bank Luxembourg S.A. is the Luxembourg tender agent for the tender offer. Persons with questions regarding the tender offer should contact the dealer managers: Banc of America Securities LLC toll-free at (866) 475-9886 or collect at (704) 386-3244 and Citi toll-free at (800) 558-3745 or collect at (212) 723-6106, or the information agent, toll-free at (866) 294-2200. About Residential Capital Residential Capital LLC -- http://www.rescapholdings.com/-- is a real estate finance company, focused primarily on the residential real estate market in the United States, Canada, Europe, Latin America and Australia. The company's diversified businesses cover the spectrum of the U.S. residential finance industry, from origination and servicing of mortgage loans through their securitization in the secondary market. It also provides capital to other originators of mortgage loans, residential real estate developers, and resort and timeshare developers. Residential Capital is the home mortgage unit of GMAC Financial Services, which is in turn wholly owned by GMAC LLC. * * * As reported in the Troubled Company Reporter on Nov. 5, 2007, Moody's downgraded to Ba3, from Ba1, its ratings on the senior debt of Residential Capital LLC. The outlook is negative. This concludes a rating review that was initiated on Aug. 16, 2007, at which time senior debt was downgraded from Baa3. This rating action follows ResCap's $2.3 billion loss in Q307. At the same time, Standard & Poor's Ratings Services removed its ratings on Residential Capital LLC from CreditWatch, where they were placed with negative implications on Oct. 17, 2007. S&P also lowered its long-term counterparty credit rating on Residential Capital LLC to 'BB+/B' from 'BBB-/A-3'. The outlook is negative. The company, as of Nov. 16, 2007, holds Fitch's B short-term ratings and BB+ long-term ratings. Fitch has placed the ratings under review for possible downgrade. REVLON INC: Stockholder to Refinance Unit's $170 Mil. Sub. Loan --------------------------------------------------------------- MacAndrews & Forbes Holdings Inc., Revlon Inc.'s stockholder, which is owned by Ronald O. Perelman, has agreed to provide Revlon Inc.'s operating subsidiary, Revlon Consumer Products Corporation, with a $170 million Senior Subordinated Term Loan. RCPC will use the proceeds of such term loan to repay in full the $167.4 million remaining aggregate principal amount of its 8-5/8% Senior Subordinated Notes, which matures on Feb. 1, 2008, and to pay fees and expenses incurred in connection with such transaction. RCPC expects to close and fund the $170 million Senior Subordinated Term Loan on Feb. 1, 2008. The $170 million Senior Subordinated Term Loan from MacAndrews & Forbes will bear interest at the rate of 11% per annum, which will be payable quarterly in cash, and will be unsecured and subordinated to RCPC's senior debt, with a final maturity of Aug. 1, 2009. MacAndrews & Forbes beneficially owns approximately 57% of the company's outstanding Class A common stock, 100% of the company's Class B common stock and 60% of the company's combined outstanding shares of Class A and Class B common stock, which together represent approximately 74% of the combined voting power of such shares. About Revlon Inc. Headquartered in New York City, Revlon Inc. (NYSE:REV) -- http://www.revlon.com/-- conducts its business through its direct wholly owned operating subsidiary, Revlon Consumer Products Corporation and its subsidiaries, which manufactures, markets and sells an array of cosmetics, skincare, fragrances, beauty tools, hair color and personal care products. The company is a mass- market cosmetics brand. * * * As reported in the Troubled Company Reporter on Nov. 8, 2007, The company's Sept. 30, 2007, consolidated balance sheet showed $882.4 million in total assets and $2.03 billion in total liabilities, resulting in a $1.15 billion in total shareholders' deficit. Net loss in the third quarter of 2007 was $10.4 million, compared with a net loss of $100.5 million in the third quarter of 2006. RH DONNELLEY: Board Authorizes $100 Mil. Common Stock Purchase -------------------------------------------------------------- R.H. Donnelley Corporation's board of directors has authorized the purchase of up to $100 million of its common stock over the next 12 months. These purchases will be made based on market conditions and other factors and may be made or suspended at any time. Headquartered in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp. -- http://www.rhdonnelley.com/ -- (NYSE: RHD) publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc. and Local Launch, Inc. are the company's only direct wholly owned subsidiaries. * * * As reported in the Troubled Company Reporter on Nov. 22, 2007, Fitch Ratings has affirmed the 'B+' issuer default ratings on R.H. Donnelley Corp, R.H. Donnelley Inc., Dex Media Inc., Dex Media East and Dex Media West. Fitch has also taken these actions on R.H. Donnelley Corp.: (i) IDR affirmed at 'B+'; (ii) Senior unsecured upgraded to 'B/RR5' from 'B-/RR6'. RITCHIE (IRELAND): Wants Auction Sale Deferred to January 9 ----------------------------------------------------------- Ritchie Risk-Linked Strategies Trading (Ireland) Ltd. and Ritchie Risk-Linked Strategies Trading (Ireland) II, Ltd. ask the U.S. Bankruptcy Court for the Southern District of New York to postpone the auction sale of their assets until Jan. 9, 2008, Bill Rochelle of Bloomberg News reports. According to Bloomberg, the Debtors are seeking the extension to give buyers more time to have all the information they need to evaluate how much to bid. The funds, Bloomberg says, are selling more than 1,000 life insurance policies in the total face amount of $2.7 billion. The public sale of the policies was previously moved from Nov. 9, 2007, to Dec. 10, 2008. As reported in the Troubled Company Reporter on Oct. 8, 2007, the Court approved the procedures proposed by the Debtors for the sale of those policies, which constitutes all or substantially all of the Debtors' assets. To participate in the auction, initial overbids must be in an amount of at least $1 million for any Ritchie I Asset Pool, $.5 million for any Ritchie II Asset Pool and $3 million for a bid on all the assets. The Debtors sought Houlihan Lokey Howard & Zukin Capital Inc.'s services in the sale process. Based in Dublin, Ireland, Ritchie Risk-Linked Strategies Trading (Ireland) Ltd. and Ritchie Risk-Linked Strategies Trading (Ireland) II Ltd. -- http://www.ritchiecapital.com/-- are Dublin- based funds of hedge fund group Ritchie Capital Management LLC. The Debtors were formed as special purpose vehicles to invest in life insurance policies in the life settlement market. The Debtors filed for Chapter 11 protection on June 20, 2007 (Bankr. S.D.N.Y. Case Nos. 07-11906 and 07-11907). Allison H. Weiss, Esq., David D. Cleary, Esq., and Lewis S. Rosenbloom, Esq., at LeBoeuf, Lamb, Greene & MacRae, LLP represent the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed to date. When the Debtors filed for bankruptcy, they listed estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a Chapter 11 plan expires on Jan. 16, 2008. RIVERSIDE CASINO: Good Operation Cues Moody's to Lift Ratings ------------------------------------------------------------- Moody's Investors Service upgraded Riverside Casino & Golf Resort, LLC's corporate family rating to B2 from B3 and senior secured bank term loan revolving credit facilities to B2 (LGD3, 35%) from B3 (LGD3, 35%). Moody's also raised the company's probability of default rating to B3 from Caa1. The rating outlook is stable. The upgrade reflects Riverside's better than expected operating results that have been sustained since the casino, hotel and resort opened in August 2006. Moody's expects year-end 2007 debt to EBITDA and EBITDA to interest to approximate 3.9x and 2.7x, respectively. Riverside's proximity to Cedar Rapids has enabled the property to establish a stable and growing customer base. Additionally, Riverside has been able to grow despite the addition of new gaming supply to the north (Isle of Capri-Waterloo) and several upgraded facilities at existing properties to the east. The stable ratings outlook anticipates continued modest growth in the central Iowa market and no material new competition in the foreseeable future. Moody's last rating on Riverside occurred on Feb. 20, 2007 when the rating outlook was revised to positive. Riverside Casino and Golf Resort, LLC is the single operating and wholly-owned subsidiary of Washington County Casino Resort, LLC. Riverside owns a casino, hotel and golf resort located in Washington County, Iowa. The property, which cost $110 million to construct, began operations on Aug. 31, 2006, and features a 58,000 square foot casino, a 200 room hotel, championship golf course, 1,200 seat convention center and 2,400 parking spaces. SCO GROUP: Court Approves Tanner LLC as Accountant -------------------------------------------------- The SCO Group Inc. and its affiliate, SCO Operations Inc., obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Tanner LC as their accountants. As reported in the Troubled Company Reporter on Nov. 8, 2007, Tanner LC is expected to perform an audit of the Debtors' consolidated financial statements for the year ending Oct. 31, 2007, and to assist the Debtors in reviewing their financial statements and other documents necessary for the Securities and Exchange Commission submissions. Kent M. Bowman, an auditor at Tanner LC, told the Court the Debtors agreed to pay an estimated amount of approximately $196,000. The firm's reviews of the 10-Q's will bill a fixed fee of $22,500 per 10-Q report. For all other services in connection with the services rendered, the firm will bill at the normal customary rate. To the best of the Debtors' knowledge, the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq: SCOX) fka Caldera International Inc. -- http://www.sco.com/-- provides software technology for distributed, embedded and network-based systems, offering SCO OpenServer for small to medium business and UnixWare for enterprise applications and digital network services. The company has office locations in Australia, Austria, Argentina, Brazil, China, Japan, Poland, Russia, the United Kingdom, among others. The company and its affiliate, SCO Operations Inc., filed for Chapter 11 protection on Sept. 14, 2007, (Bankr. D. Del. Lead Case No. 07-11337). Epiq Bankruptcy Solutions LLC, acts as the Debtors' claims and noticing agent. The U.S. Trustee failed to form an Official Committee of Unsecured Creditors in these cases due to insufficient response from creditors. The Debtors' exclusive period to file a chapter 11 plan expires on March 12, 2008. The Debtors' schedules of assets and liabilities showed total assets of $9,549,519 and total liabilities of $3,018,489. SCO GROUP: Court Permits CFO Solutions to Provide Company w/ CFO ---------------------------------------------------------------- The SCO Group Inc. and its affiliate, SCO Operations Inc., obtained authority from the U.S. Bankruptcy Court for the District of Delaware, to employ CFO Solutions LC to provide their company with a chief financial officer. As reported in the Troubled Company Reporter on Nov 8, 2007, CFO Solutions provides consulting services and temporary employees to staff CFO and other key financial positions in companies. CFO Solutions proposed the appointment of Ken Nielsen as the Debtors' chief financial officer. Mr. Nielsen is expected to assist the Debtors in financial and general management matters, including, evaluating and implementing strategic and tactical options through the restructuring process. Specifically, Mr. Nielsen will: a) develop and implement cash management strategies and reporting protocols; b) develop and evaluate various restructuring alternatives and negotiate with key creditors and other stakeholders; c) assist in day-to-day oversight and management of the Debtors' operations; and d) counsel and assist the Debtors through the marketing and sale process, or other reorganization strategies, including the identification of the highest and best transaction, and to assist with such other matters as may be requested that fall within the firm's expertise and mutually agreeable. The Debtors told the Court that the firm will charge $150 per hour. Of the total amount, Mr. Nielsen will receive $105 through the Debtors' payroll and $45 will be paid to the firm. The Debtors also related that they agreed to pay the firm an amount not to exceed 30% of Mr. Nilesen's annual salary, minus all amounts paid to the firm, as of the date of termination as a placement fee, if Mr. Nielsen will be terminated prior to the expiration of the six month term. Furthermore, the Debtors agreed to pay the firm $40,000 minus 70% of any severance amounts paid to Mr. Nielsen, if the Debtors terminate Mr. Nielsen, without cause, or if Mr. Nielsen is unable to perform the services. If the Court does not approve the hourly payments to the firm under the agreement, the Debtors have agreed to compensate the firm 30% of Mr. Nielsen's annual base salary, as a placement fee for a chief operating officer. To the best of the Debtors' knowledge, the Mr. Nielsen holds no interest adverse to the Debtors' and their estates and is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq: SCOX) fka Caldera International Inc. -- http://www.sco.com/-- provides software technology for distributed, embedded and network-based systems, offering SCO OpenServer for small to medium business and UnixWare for enterprise applications and digital network services. The company has office locations in Australia, Austria, Argentina, Brazil, China, Japan, Poland, Russia, the United Kingdom, among others. The company and its affiliate, SCO Operations Inc., filed for Chapter 11 protection on Sept. 14, 2007, (Bankr. D. Del. Lead Case No. 07-11337). Epiq Bankruptcy Solutions LLC, acts as the Debtors' claims and noticing agent. The U.S. Trustee failed to form an Official Committee of Unsecured Creditors in these cases due to insufficient response from creditors. The Debtors' exclusive period to file a chapter 11 plan expires on March 12, 2008. The Debtors' schedules of assets and liabilities showed total assets of $9,549,519 and total liabilities of $3,018,489. SOFA EXPRESS: Files for Chapter 11 Protection in Nashville ---------------------------------------------------------- Sofa Express Inc. filed for bankruptcy protection with the U.S. Bankruptcy Court for the Middle District of Tennessee in Nashville, Heath E. Combs and Cling Engel of Furniture Today report. According to Furniture Today, the company sent letters to government officials and its store managers this week, notifying them that they would close down their retail stores and terminate their services due to its financial condition, and to "secure its financial future". Based in Groveport, Ohio, Sofa Express Inc. dba Sofa Express and More -- http://www.sofaexpress.com/-- manufactures and retails home furniture, beds, and related accessories, and owns 44 retail stores in Ohio, Tennessee, Florida, and the Carolinas. The company ranks at number 40 on 2007's Furniture/Today Top 100 ranking of U.S. furniture stores based on sales. SOFA EXPRESS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Sofa Express, Inc. 4600 South Hamilton Road Groveport, OH 43125 Bankruptcy Case No.: 07-09024 Type of Business: The Debtor is a furniture retailer. Chapter 11 Petition Date: December 6, 2007 Court: Middle District of Tennessee (Nashville) Judge: George C. Paine, II Debtor's Counsel: William L. Norton, III Boult, Cummings, Conners & Berry P.L.C. P.O. Box 340025 Nashville, TN 37203 Tel: (615) 252-2397 Fax: (615) 252-6397 Estimated Assets: $10 Million to $50 Million Estimated Debts: $50 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Klaussner Industries, Inc. $18,050,490 Attention: Diane Croker 907 North Central Highway 49 South Asheboro, N.C. 27204 Spring Air Co. $334,994 Attention: John Baird 1111 Nicholas Boulevard Elk Grove, IL 60007 Liberty Furniture Industries $289,865 Attention: Lisa Brown 6195 Purdue Drive Atlanta, GA 30336 Steve Silver Co. $169,857 Stein World $139,866 Magnussen $123,195 Guardian Products $91,634 Powell $81,840 W.C.M.H. $79,262 Dalyn Rug $77,476 W.T.H.R. $69,101 W.J.W. Television $66,750 W.K.Y.C. $65,747 Tempo Lighting $64,209 W.B.N.S. $63,197 W.B.T.V. $56,567 Vertis, Inc. $55,453 W.S.M.V. $51,765 W.S.O.C. $49,852 Riverside Furniture $49,474 TECO ENERGY: Moody's Lifts Debt Rating to Baa3 from Ba1 ------------------------------------------------------- Moody's Investors Service upgraded the senior unsecured debt rating of TECO Energy, Inc. to Baa3 from Ba1 and upgraded the senior unsecured debt rating of TECO Finance, Inc., which is fully and unconditionally guaranteed by TECO, to Baa3 from Ba1. The rating outlook for TECO and TECO Finance is stable. This concludes the review of TECO's ratings initiated on Apr. 19, 2007. Moody's also affirmed the ratings of Tampa Electric Company (Baa2 senior unsecured) and changed its rating outlook to positive from stable. The upgrades are prompted by the closing of the sale of TECO's transport subsidiary for a purchase price of $405 million, subject to working capital adjustments, and the company's continued deleveraging at the parent company level. Net proceeds from the sale are expected to be approximately $375 million. "Proceeds from the TECO Transport sale will facilitate TECO's debt reduction program and contribute to an improvement in financial metrics to sustainable investment grade levels going forward," said Michael G. Haggarty, Vice President and Senior Credit Officer. The upgrade is also prompted by TECO's intention to retire an additional $300 million of parent company debt due 2010 with the sale proceeds through a tender and exchange offer for parent company debt. This debt reduction will be in addition to $357 million of parent company debt already retired in early 2007, as well as the repayment of $111 million of parent guaranteed TECO Transport debt at maturity in September 2007. "As a result of the tender and exchange offer, TECO will have a more manageable debt maturity profile over the next several years as it not only pays down debt, but also extends the maturity of $300 million of parent company debt due in 2011 and 2012 by five years," said Haggarty. The upgrade considers the reduced business risk throughout the TECO organization following both the sale of TECO Transport and the expiration of synfuel related tax credits at the end of 2007. These positive developments come after several years during which the company was proactive in exiting its merchant generating activities and putting renewed focus on its core businesses, which include the regulated utilities Tampa Electric and Peoples Gas, coal producer TECO Coal, and electric power subsidiary TECO Guatamala, which consists of a part ownership of a distribution utility and two power plants. TECO's remaining businesses are more reliable and less volatile sources of cash flow for the parent compared to the company's previous business mix. The stable outlook on the ratings of TECO and TECO Finance reflects Moody's expectation that lower debt levels at the parent company will allow the company to maintain credit metrics at low investment grade levels, including operating cash flow prior to changes in working capital interest coverage in the 4.0 times range and operating cash flow prior to changes in working capital to debt in the 20% range. The stable outlook also considers lower anticipated cash flow volatility from its remaining businesses and a large capital expenditure program at Tampa Electric, which will require some equity infusions from the parent company. The revision of the rating outlook of Tampa Electric to positive from stable reflects the utility's strong financial and operating performance; lower business risk and reduced debt levels at the parent company following the sale of TECO Transport and the expiration of synfuel tax credits; a constructive regulatory environment in the state of Florida; and the company's decision to indefinitely delay construction of an integrated gasification combined cycle or IGCC plant at its Polk County site. This decision will reduce the aggregate level of Tampa Electric's projected capital expenditures considerably over the next several years while lowering the risk and uncertainty associated with carbon capture and sequestration technology and potentially substantial project cost increases. A rating upgrade of the utility could be considered if there is additional clarity on the size and timing of its capital expenditure program and the magnitude and regulatory response to potential rate increases related to these capital expenditures. Ratings upgraded with a stable outlook include: * TECO Energy, Inc.'s senior unsecured debt, to Baa3 from Ba1. * TECO Finance Inc.'s senior unsecured debt, guaranteed by TECO Energy, to Baa3 from Ba1. Ratings affirmed with a positive outlook include: Tampa Electric's Baa2 senior unsecured debt and Issuer Rating. TECO Energy, Inc. is a diversified energy company headquartered in Tampa, Florida and the parent company of Tampa Electric Company and TECO Finance, Inc. THORPE INSULATION: ERC and Westport Oppose Employment of Firms -------------------------------------------------------------- The Employers Reinsurance Corporation and Westport Insurance Company, parties-in-interest, ask the U.S. Bankruptcy Court for the Central District of California to deny the request of Thorpe Insulation Company and Pacific Insulation Company to employ: a. Snyder Miller & Orton as special litigation counsel; b. Morgan Lewis & Bockius LLP as special insurance counsel; and c. the Honorable Charles B. Renfrew (ret.) as futures representative. The complainants' substantive memoranda in opposition is yet to be filed with the Court. As reported in the Troubled Company Reporter on Dec. 4, 2007, Pacific had asked the Court for permission to appoint Honorable Charles B. Renfrew to represent future asbestos claimants. Thorpe had also sought for permission to employ Morgan, Lewis & Bockius LLP as its special insurance counsel, effective as of Oct. 15, 2007. Morgan Lewis will represent the Debtors in connection with their pending insurance coverage litigation and related matters. Further, Thorpe had sought for authority to employ Snyder Miller & Orton LLP as their special litigation counsel. Thorpe expected Snyder to work in conjunction with Morgan, Lewis & Bockius LLP, in providing legal services to the Debtor in the management and resolution of its asbestos-related liabilities. Thorpe has signed a special fee agreement with Morgan dated Jan. 13, 2006, and executed by the Debtor on Jan. 16, 2006. Barry R. Ostrager, Esq., Deborah L. Stein, Esq., and Robert J. Pfister, Esq., at Simpson Thacher & Bartlett LLP represent the Employers Reinsurance Corporation and Westport Insurance Company in this case. About Thorpe Insulation Long Beach, California-based Thorpe Insulation Company, formerly Plant Insulation Company, was incorporated in April 10, 1948. It supplied and distributed asbestos thermal insulation in Southern California before about 1972. The company's products included pipe and boiler insulation, asbestos cloth and insulating mud. After 1972, some of Thorpe's operations also involved asbestos and lead abatement, including repairing insulation that contained asbestos at commercial and industrial sites. On or about Dec. 17, 2004, Thorpe's lender, Pacific Funding Group LLC, sold its collateral at a foreclosure sale to Farwest Insulation Consulting owned by Eric and David Fults. Following the foreclosure, Thorpe ceased operation of its business. To date, Thorpe has been subjected to about 12,000 claims and lawsuits related to asbestos. Thorpe filed for chapter 11 protection on Oct. 15, 2007 (Bankr. C.D. Calif. Case No. 07-19271). Jeremy V. Richards, Esq., and Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl & Jones, LLP, represent the Debtor. When the Debtor filed for protection from its creditors, it disclosed estimated assets and debts of more than $100 million. Los Angeles-based Pacific Insulation Company was incorporated in California by Thorpe on May 23, 2000, to be its wholly owned subsidiary. On Oct. 1, 2000, Pacific transferred 100% of its shares to Thorpe in exchange for Thorpe's materials division assets. Thorpe's sole shareholders and board members, Robert W. Fults and Linda Fults, own 50.1% and 49.9% of Pacific, respectively. Pacific is a southwest commercial and industrial insulation distributor and fabricator with locations in Southern and Northern California, Arizona, and Nevada. It provides pipe, air handling, fire barrier, board and blanket insulation as well as adhesives, mastics and sealants. Pacific has never installed or sold any materials containing asbestos. It currently has 55 full-time employees. Pacific filed for chapter 11 petition on Oct. 31, 2007 (Bankr. C.D. Calif. Case No. 07-20016) due to its alleged asbestos liability and the failure of Thorpe's insurers to pay asbestos claims asserted against Thorpe. John A. Lapinski, Esq., Leslie R. Horowitz, Esq., and Stephen R. Hyam, Esq., at Clark & Trevithick represent Pacific in its restructuring efforts. On Nov. 6, 2007, Pacific's case was jointly administered under Thorpe Insulation's bankruptcy proceeding. Caplin & Drysdale, Chartered and Heller Ehrman LLP are co-counsels to the Official Committee of Unsecured Creditors. THORPE INSULATION: Chicago Balks at Hamilton as Rep.'s Consultant ----------------------------------------------------------------- The Chicago Insurance Company, party-in-interest, wants the U.S. Bankruptcy Court for the Central District of California to deny the request of Charles B. Renfrew, proposed futures representative of Pacific Insulation Company, debtor-affiliate of Thorpe Insulation Company, to retain Hamilton, Rabinovitz & Associates as his expert consultants. In addition, Chicago wants the Court to defer any hearing on Mr. Renfrew's request to retain Fergus Law Firm as counsel, which was initially set for Dec. 12, 2007. Chicago relates that Mr. Renfrew's request to retain professionals to serve him are conditioned upon his appointment as futures representative, which has not yet been approved by the Court. Specifically, Chicago intends to oppose Thorpe's application to have Mr. Renfrew appointed as futures rep for both Thorpe and Pacific. Chicago contests that there is conflict of interest because Thorpe, Pacific and other Fults family-owned company, Farwest, had hired and paid Mr. Renfrew and his counsel prepetition to serve as contractual futures rep. Therefore, Chicago says, he is disqualified from appointment postpetition given the requirements that "a futures rep must be strictly independent of all entities whose interests are or may be adverse to those of future claimants". Mark d. Plevin, Esq., at Crowell & Morning LLP represents Chicago Insurance Company in this case. As reported in the Troubled Company Reporter on Dec. 5, 2007, Mr. Renfew relates that he requires the services of an expert who can provide an opinion with respect to the number and severity of anticipated future claims based upon the unique history of the company, its prior claiming history and peer reviewed epidemiological studies. Without this advice, it is not possible for the futures representative to evaluate whether any proposed plan of reorganization will provide "reasonable assurances that the trust will value, and be in a financial position to pay, present claims and future demands that involve similar claims in substantially the same manner." The TCR said on Dec. 4, 2007, that Pacific had asked the Court for permission to appoint Mr. Renfrew as its futures representative. Mr. Renfrew will represent future asbestos claimants. Mr. Renfew may retain attorneys and other professionals subject to Court approval. Compensation of Mr. Renfrew and his retained professionals will be payable subject to Court approval. About Thorpe Insulation Long Beach, California-based Thorpe Insulation Company, formerly Plant Insulation Company, was incorporated in April 10, 1948. It supplied and distributed asbestos thermal insulation in Southern California before about 1972. The company's products included pipe and boiler insulation, asbestos cloth and insulating mud. After 1972, some of Thorpe's operations also involved asbestos and lead abatement, including repairing insulation that contained asbestos at commercial and industrial sites. On or about Dec. 17, 2004, Thorpe's lender, Pacific Funding Group LLC, sold its collateral at a foreclosure sale to Farwest Insulation Consulting owned by Eric and David Fults. Following the foreclosure, Thorpe ceased operation of its business. To date, Thorpe has been subjected to about 12,000 claims and lawsuits related to asbestos. Thorpe filed for chapter 11 protection on Oct. 15, 2007 (Bankr. C.D. Calif. Case No. 07-19271). Jeremy V. Richards, Esq., and Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl & Jones, LLP, represent the Debtor. When the Debtor filed for protection from its creditors, it disclosed estimated assets and debts of more than $100 million. Los Angeles-based Pacific Insulation Company was incorporated in California by Thorpe on May 23, 2000, to be its wholly owned subsidiary. On Oct. 1, 2000, Pacific transferred 100% of its shares to Thorpe in exchange for Thorpe's materials division assets. Thorpe's sole shareholders and board members, Robert W. Fults and Linda Fults, own 50.1% and 49.9% of Pacific, respectively. Pacific is a southwest commercial and industrial insulation distributor and fabricator with locations in Southern and Northern California, Arizona, and Nevada. It provides pipe, air handling, fire barrier, board and blanket insulation as well as adhesives, mastics and sealants. Pacific has never installed or sold any materials containing asbestos. It currently has 55 full-time employees. Pacific filed for chapter 11 petition on Oct. 31, 2007 (Bankr. C.D. Calif. Case No. 07-20016) due to its alleged asbestos liability and the failure of Thorpe's insurers to pay asbestos claims asserted against Thorpe. John A. Lapinski, Esq., Leslie R. Horowitz, Esq., and Stephen R. Hyam, Esq., at Clark & Trevithick represent Pacific in its restructuring efforts. On Nov. 6, 2007, Pacific's case was jointly administered under Thorpe Insulation's bankruptcy proceeding. Caplin & Drysdale, Chartered and Heller Ehrman LLP are co-counsels to the Official Committee of Unsecured Creditors. TRUMAN CAPITAL: Fitch Junks Rating on Class B Certificates ---------------------------------------------------------- Fitch Ratings has taken rating actions on Truman Capital transactions: Series 2002-1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BB' from 'BBB+'; -- Class B downgraded to 'C/DR5' from 'CC/DR4'. Series 2002-2 -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BB-'from 'BBB-'; -- Class B remains at 'C/DR5'. The affirmations reflect a satisfactory relationship between credit enhancement and future loss expectations and affect approximately $17.5 million in outstanding certificates. The downgrades, affecting approximately $19.1 million, are the result of deterioration in the relationship between CE and expected losses. Both transactions have experienced monthly losses that have exceeded excess spread in at least 11 of the last 12 months, causing the overcollateralization amount to be at or near zero. As a result, the class B bonds have incurred principal writedowns, thus reducing the CE of the M-2 bonds. Series 2002-1 and 2002-2 have serious delinquencies (loans delinquent more than 60 days, inclusive of loans in foreclosure, bankruptcy, and real estate owned) of 46.79% and 50.89%, respectively, and current cumulative losses of 14.04% and 10.77%, respectively. The collateral for the above series consists of performing, sub- performing and re-performing fixed- and adjustable-rate mortgage loans, secured by first and second liens on residential properties. All of the loans are serviced by Select Portfolio Servicing, rated 'RSS2+' by Fitch. Truman Capital acquired the loans from various originators. Series 2002-1 and 2002-2 are seasoned 67 and 59 months, respectively, and their pool factors are approximately 15% and 14%, respectively. UNISYS CORP: Considers Offering $250 Million of Senior Notes ------------------------------------------------------------ Unisys Corporation intends to offer, subject to market and other conditions, $250 million of senior notes. The company plans to use the net proceeds to redeem, the $200 million of its 7-7/8% senior notes due April 2008 and for general corporate purposes. The offering will be marketed by a group of underwriters for which Bear, Stearns & Co. Inc., Banc of America Securities LLC and Citigroup Global Markets Inc., will act as joint book-running managers. A copy of the preliminary prospectus supplement, the accompanying prospectus and the final prospectus supplement, when available, is available free of charge by contacting: a) Bear, Stearns & Co. Inc. Attn: Prospectus Department 383 Madison Avenue New York, NY 10179 Tel (866) 803-9204 b) Banc of America Securities LLC Attn: Capital Markets Operations 3rd Floor, 100 West 33rd Street, New York, NY 10001 Tel (800) 294-1322 c) Citigroup Global Markets Inc. Attn: Prospectus Department 8th Floor, Brooklyn Army Terminal 140 58th Street Brooklyn, NY 11220 Tel (877) 858-5407 Headquartered in Blue Bell, Pennsylvania, Unisys Corporation (NYSE: UIS) -- http://www.unisys.com/-- is an information technology services and solutions company. The company provides consulting, systems integration, outsourcing and infrastructure services, combined with powerful enterprise server technology. Unisys reported a third-quarter 2007 net loss of $31.0 million. Tax expense in the quarter increased to $36.8 million from $16.0 million in the third quarter of 2006. The company's third- quarter 2007 results also included $19.3 million in other expense, compared with $400,000 of other income in the year-ago quarter. * * * As reported in the Troubled Company Reporter on Aug. 22, 2007, Moody's Investors Service placed the B2 corporate family and senior unsecured ratings for Unisys Corporation on review for possible downgrade. UNITEDHEALTH GROUP: Owns Up to Errors in Customer Service Relation ------------------------------------------------------------------ UnitedHealth Group Inc. has confessed to the mistakes it made in attending to problems relating to customer service, according to the Associated Press. However, the company is initiating improvements on its poor customer service by: * showing doctors and patients, on the day of a doctor's visit, how a claim will be paid, * paying doctors more quickly, * giving incentives to employees for quality and patient advocacy first, and productivity second. AP says insurance brokers and doctors have been grumbling about UnitedHealth's delays in resolving billing issues. In addition, the company admits that the acquisition of PacifiCare in 2005, which lost 145,000 members due to targeted re-positioning actions, contributed to the dissent of doctors and patients, AP relates. Based in Minneapolis, Minnesota, UnitedHealth Group Inc. (NYSE: UNH) -- http://www.unitedhealthgroup.com/-- is a diversified health and well-being company which offers offers a broad spectrum of products and services through six operating businesses: UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized Care Services and Ingenix. Through its family of businesses, UnitedHealth Group serves approximately 70 million individuals nationwide. * * * The company's 2-1/4% senior convertible debentures due 2023 holds Standard & Poor's BB+ rating. UNITEDHEALTH GROUP: Current & Former Execs Agree to Give Up $900MM ------------------------------------------------------------------ UnitedHealth Group Inc. disclosed that the Special Litigation Committee, an independent committee comprised of two former Minnesota Supreme Court Justices, has concluded its review of claims relating to the company's historical stock option practices brought against certain of the company's current and former officers and directors in federal and state derivative lawsuits. Based on its exhaustive, 15 month review, the SLC reached settlement agreements on behalf of the company with UnitedHealth Group's former Chairman and CEO William W. McGuire, M.D., former General Counsel David J. Lubben, and former Director William G. Spears. In addition, the SLC concluded that all claims against all named defendants in the derivative suits, including current and former UnitedHealth Group officers and directors should be dismissed. The SLC's conclusions are reflected in a final report delivered to the United States District Court for the District of Minnesota and the Hennepin County District Court, State of Minnesota. Under the McGuire settlement agreement, Dr. McGuire will: * surrender to UnitedHealth Group certain stock options to acquire 9,223,360 shares of company stock, which the SLC has valued at approximately $320 million; * surrender his interest in the company's Supplemental Executive Retirement Plan, valued at approximately $91 million; * surrender to the company approximately $8 million in his Executive Savings Plan Account; and * relinquish claims to other post-employment benefits under his Employment Agreement. The amounts, combined with a previous repricing of all stock options awarded to Dr. McGuire from 1994 to 2002, result in a total value to be relinquished by Dr. McGuire in excess of $600 million. Under the Lubben settlement agreement, Mr. Lubben will: * surrender to UnitedHealth Group his stock options to acquire 273,000 shares of Company stock, which the SLC has valued in excess of $3 million; and * repay to the company $20.55 million of the compensation realized by him as a result of his March 2007 exercise of stock options. These amounts, combined with a previous repricing of stock options awarded to Mr. Lubben, result in a total value relinquished by Mr. Lubben of approximately $30 million. Under the Spears settlement agreement, the fair settlement value of the company's claims against him will be determined by binding arbitration. The SLC has valued the total amounts to be relinquished pursuant to these settlement agreements, together with the value previously and voluntarily relinquished by current and former executives through the surrender and repricing of options, to be approximately $900 million. The settlement agreements and the dismissal of the derivative actions are subject to notice to the company's shareholders and Court approval. "The Board of Directors, on behalf of the company and its shareholders, would like to express its deep appreciation for the extraordinary work of Justices Blatz and Stringer, the members of the independent, special committee created by the Board, throughout this lengthy and thorough process," Richard Burke, Chairman of the Board of Directors, said. The SLC is comprised of two retired Minnesota State Supreme Court justices, former Chief Justice Kathleen Blatz and former Justice Edward Stringer. Pursuant to Minnesota law, the Board of Directors created the independent SLC and delegated to it complete authority to review the claims in the derivative litigation and determine whether those claims should be pursued on behalf of the company. A full-text copy of the Lubben Settlement Agreement is available for free at http://ResearchArchives.com/t/s?2624 A full-text copy of the McGuire Settlement Agreement is available for free at http://ResearchArchives.com/t/s?2625 About UnitedHealth Group Based in Minneapolis, Minnesota, UnitedHealth Group Inc. (NYSE: UNH) -- http://www.unitedhealthgroup.com/-- is a diversified health and well-being company which offers offers a broad spectrum of products and services through six operating businesses: UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized Care Services and Ingenix. Through its family of businesses, UnitedHealth Group serves approximately 70 million individuals nationwide. * * * The company's 2-1/4% senior convertible debentures due 2023 holds Standard & Poor's BB+ rating. UNIVERSAL PROPERTY: Posts $41.7 Million Net Loss in Third Quarter ----------------------------------------------------------------- Universal Property and Development Corp. reported a net loss of $41.7 million on total revenue of $12.3 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $1.4 million on total revenue of $141,217 in the same period last year. For the nine months ended Sept. 30, 2007, the company reported a net loss of $102.1 million on total revenues of $20.6 million, compared with a net loss of $2.1 million on total revenues of $343,848 in the same period last year. For the three and nine months ended Sept. 30, 2007, natural gas sales revenue was $446,880 and $711,622, compared to $35,528 and $70,005 for the same period during 2006. The revenues were the result of production in the Canyon Creek, Catlin and Heartland subsidiaries. The increase was primarily due to Catlin and Heartland production as in 2006 Catlin's Palo Pinto Acquisition and Heartland were not yet acquired. For the three and nine months ended Sept. 30, 2007, oil and condensate sales revenue was $11.8 million and $19.9 million compared to $105,689 and $273,843 for the same periods during 2006. The increase in revenue was primarily the result of the sale of condensate in the Continental subsidiary that was acquired in 2007. The primary reason for the increase in net loss for both the three and nine months ended Sept. 30, 2007, is the loss on settlement of notes payable for common stock on Continental. At Sept. 30, 2007, the company's consolidated balance sheet showed $22.8 million in total assets, $15.3 million in total liabilities, $839,106 in minority interest, and $6.7 million in total shareholders' equity. Going Concern Doubt KBL LLP, in New York expressed substantial doubt about Universal Property and Development Corporation's ability to continue as a going concern after auditing the company's consolidated financial statements as of the years ended Dec. 31, 2006 and 2005. The auditing firm reported that the company has suffered recurring losses from operations, and is dependent upon the sale of equity securities to provide sufficient working capital to maintain continuity. About Universal Property Headquartered in Juno Beach, Fla., Universal Property Development and Acquisition Corporation (OTC BB: UPDA.OB) is engaged in the oil and natural gas acquisition, production, and development industry. UPDA currently has operations in the State of Texas. URS CORP: Completed WGII Deal Cues Moody's to Cut Rating to Ba2 --------------------------------------------------------------- Moody's Investors Service downgraded the Corporate Family Rating of URS Corporation to Ba2 from Ba1 following the company's announcement it had completed the acquisition of Washington Group International, Inc. The ratings outlook is stable. This rating action concludes the review for possible downgrade initiated on May 30, 2007 following the announcement that URS had entered into a definitive agreement for the acquisition of Washington in a cash and stock transaction valued at approximately $2.6 billion. Additional instrument rating actions are detailed below. Moody's took these rating actions: -- Corporate Family Rating to Ba2 from Ba1 -- Probability of Default Rating to Ba2 from Ba1 These ratings which were prospectively assigned to debt issued at URS Corporation are now made definitive: -- $700 million senior secured first lien revolver due 2012, to Ba1 (LGD 3, 34%) from (P) Ba1 (LGD 3, 34%) -- $1,100 million senior secured first lien term loan A due 2012, to Ba1 (LGD 3, 34%) from (P) Ba1 (LGD 3, 34%) -- $300 million senior secured first lien term loan B due 2013, to Ba1 (LGD 3, 34%) from (P) Ba1 (LGD 3, 34%) -- The Speculative Grade Liquidity Rating to SGL-2 from SGL-1 These ratings are withdrawn: -- $300 million senior secured revolver due 2010, Baa3 (LGD 2, 20%) (facility cancelled); -- $350 million senior secured term loan B due 2011, Baa3 (LGD 2, 20%) (facility repaid); The rating outlook for URS is stable. The downgrade of the Corporate Family Rating to Ba2 following the completion of the transaction reflects the weakened credit metrics, change in operating profile, and integration risk associated with the acquisition of Washington Group International. The credit metrics will be weak for the rating category and the rating contemplates significant debt reduction, synergy savings and substantial realization of the contract backlog over the intermediate term as well as an absence of unexpected costs relating to integration. Strengths in URS's pro-forma competitive profile include annual revenues of approximately $8.4 billion, increasing breadth of services offered and exposure to Washington Group's fast-growing global markets. The acquisition will also add additional diversity to URS's end markets and increase the company's industry-leading global scale and nuclear power capability. Based in San Francisco, California, URS Corporation is an engineering firm that provides a range of professional planning, design, program and construction management, and operations and maintenance services. Revenues for the twelve months ended Sept. 30, 2007 were approximately $4.7 billion. Based in Boise, Idaho, Washington Group International, Inc. provides design, engineering, construction, facilities and operations management, environmental remediation, and mining services to public and private sector clients in the United States and internationally. It operates through six segments: Power, Infrastructure, Mining, Industrial/Process, Defense, and Energy & Environment. Revenues for the twelve months ended Sept. 30, 2007 were approximately $3.7 billion. Following the acquisition, Washington Group became a division of URS Corporation (Washington Division). VALENTEC SYSTEMS: Sept. 30 Balance Sheet Upside-Down by $8.1 Mil. ----------------------------------------------------------------- Valentec Systems Inc.'s consolidated balance sheet showed $24.3 million in total assets and $32.4 million in total liabilities, resulting in an $8.1 million total stockholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $15.9 million in total current assets available to pay $32.1 million in total current liabilities. The company reported a net loss of $2.5 million on revenues of $2.9 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $1.9 million on revenues of $2.2 million in the same period of 2006. Loss from operations increased to $1.7 million during the three months ended Sept. 30, 2007, compared with loss from operations of $935,953 in the 2006 quarter, mainly as a result of an increase in cost of goods sold as a percentage of revenues and increased operating expenses. Revenues for the nine months ended Sept. 30, 2007, were $9.8 million compared to $13.0 million for the nine months ended Sept. 30, 2006, a decrease of $3.2 million or 24.6%. The decrease in revenues is due to program delays experienced by Valentec's subcontractors on the AMMO and Keshet Contacts as well as delays caused by the fire on the company's 40mm manufacturing facility on Aug. 14, 2006. The company had a net loss for the nine months ended Sept. 30, 2007 of $5.9 million compared to a net loss of $4.0 million for the nine months ended Sept. 30, 2006. This was due primarily to an increase in interest and financing expenses to support the foreign military programs, an increase in cost of goods sold as a result of resolving sub-tier supplier issues on specific contracts, and delay in restarting of its 40mm manufacturing facility as a result of the fire. Liquidity and Capital Resources For the nine months ended Sept. 30, 2007, the company had a negative cash flow from operations of $1.2 million as compared to a negative cash flow from operations of $4.9 million for the nine months ended Sept. 30, 2006. At Sept. 30, 2007, the company had outstanding borrowings from non-related parties of $13.5 million. The company has entered into a Master Factoring Agreement with Rockland Credit Finance as an additional source of financing. A credit line of $10,000,000 was established to provide additional working capital. At Sept. 30, 2007, $8,378,343 was outstanding under this line of credit. Under the terms of the agreement, Rockland Credit Finance has the option to increase the credit line to $15,000,000 if the company has the collateral of accounts receivable and unbilled accounts receivable to support the increase. In addition, the company has other lines of credit of $4,500,000 in the aggregate. At Sept. 30, 2007, $4,430,000 was outstanding under these lines of credit. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2612 Going Concern Doubt As reported in the Troubled Company Reporter on May 24, 2007, Webb & Company, P.A., of Boynton Beach, Florida, expressed substantial doubt about Valentec Systems Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditor pointed to the company's working capital deficiency and negative cash flows from operations. The company currently does not have enough cash to continue operations for twelve months. About Valentec Systems Minden, Louisiana-based Valentec Systems, Inc. -- (OTC BB: VSYNE) -- http://www.valentec.net/-- is a supplier of mission-critical conventional ammunition, pyrotechnic and related defense products. The company markets its products to the United States Army, Israeli Defense Forces and other Ministries of Defense in friendly nations around the world. VERIFONE INC: To Restate 2007 Quarterly Financial Statements ------------------------------------------------------------ Following a review by and on the recommendation of management, VeriFone Holdings, Inc., has concluded that its unaudited interim consolidated financial statements for the three months ended Jan. 31, 2007, the three and six months ended April 30, 2007 and the three and nine months ended July 31, 2007 should no longer be relied upon, principally due to errors in accounting related to the valuation of in-transit inventory and allocation of manufacturing and distribution overhead to inventory, each of which affects VeriFone's reported costs of net revenues. The restatements are anticipated to correct errors that overstated previously reported inventories in material amounts as of Jan. 31, 2007, April 30, 2007 and July 31, 2007, and understated cost of net revenues in material amounts for the three month periods ended Jan. 31, 2007, April 30, 2007, and July 31, 2007. Accordingly, investors are cautioned not to rely on VeriFone's historical financial statements and earnings press releases and similar communications for the periods ended Jan. 31, 2007, April 30, 2007, and July 31, 2007. Based on its review to date, management currently anticipates that the restatement will result in reductions to previously reported inventories of approximately $7.7 million, $16.5 million and $30.2 million as of Jan. 31, 2007, April 30, 2007 and July 31, 2007, respectively, and reductions to previously reported pre tax income of approximately $8.9 million, $7.0 million and $13.8 million for the three month periods ended Jan. 31, 2007, April 30, 2007 and July 31, 2007, respectively. VeriFone is currently evaluating the anticipated effect of the restatement on after-tax income for those periods. These estimates include corrections of other unrelated errors detected in the course of VeriFone's review to date, are based on currently available information and are subject to change during the course of the company's restatement process. While VeriFone is not currently aware of other accounting errors requiring adjustment to any prior period financial statements, there can be no assurances that VeriFone or its independent registered public accounting firm will not find additional accounting errors requiring further adjustments in those or earlier periods. VeriFone expects to report total revenues for the three and twelve months ended Oct. 31, 2007, of approximately $238 million and $904 million, respectively. VeriFone's management and the Audit Committee of its Board of Directors have determined to delay the release of full fourth quarter 2007 financial results that were scheduled to be released on Dec. 6, 2007, pending completion of the assessment of these errors and the restatements. "I am very disappointed to have to bring you this news and am committed to ensuring that we promptly and thoroughly remedy this situation and move forward with the business of delivering value to our shareholders," Douglas G. Bergeron, Chairman and Chief Executive Officer, said. "I am committed to regaining your confidence in VeriFone." VeriFone concluded that a restatement of its interim unaudited financial statements is required as a result of an internal review of in-transit inventory balances conducted in preparation for VeriFone's fiscal 2007 audit. Upon completion of its assessment of these errors, VeriFone intends to file amended Quarterly Reports on Form 10-Q for the periods that will restate the previously issued financial statements included therein. VeriFone currently estimates that it will file these amended quarterly reports, together with its Annual Report on Form 10 K for the fiscal year ended Oct. 31, 2007, in January 2008. However, VeriFone cannot be certain how much time will ultimately be required for it to complete the restatement process. About VeriFone Holdings Headquartered in San Jose, California, VeriFone Holdings, Inc. (NYSE: PAY) -- http://www.verifone.com/-- provides expertise, solutions and services that add value to the point of sale with merchant-operated, consumer-facing and self-service payment systems for the financial, retail, hospitality, petroleum, government and healthcare vertical markets. VeriFone's secure electronic payment solutions are designed to meet the needs of merchants, processors and acquirers in developed and emerging economies worldwide. * * * As reported in the Troubled Company Reporter on Sept. 18, 2007, Standard & Poor's Ratings Services revised its outlook on VeriFone Inc. to positive from stable, following continued positive operating trends. Ratings on the company, including the 'BB-' corporate credit rating, were affirmed. VERIFONE INC: Financial Restatement Cues Moody's Ratings Review --------------------------------------------------------------- Moody's Investors Service placed the corporate family and senior secured debt ratings of Verifone, Inc. under review for possible downgrade following the company's recent announcement that it will restate prior financial statements for the first three quarters of the fiscal year 2007 due to accounting errors associated with its valuation of inventories, prompting the company to issue a statement of non-reliance on prior financial reports. In addition, Verifone also announced that it will delay announcement of its Q4 2007 financial results. The review reflects the uncertainty surrounding the possible financial restatements related to the accounting errors, indicating material weaknesses in the company's disclosure and internal control over financial reporting, as well as the potential impact on its liquidity position. The company said the restatement is principally due to errors in accounting related to an overstatement of reported inventories and understated cost of net revenues, which is anticipated to result in reductions of previously reported GAAP pre-tax income by approximately $29.7 million for the first nine months of 2007, which is approximately 80% of its previously reported GAAP pre-tax income of $37 million. GAAP pre-tax income also includes expenses related to amortization of purchased intangible assets and in- process research and development. Verifone is still evaluating the impact of the restatement on net income for those periods. As per the management, there can be no assurances that Verifone or its independent registered public accounting firm will not find any additional accounting errors, requiring further adjustments. In its review, Moody's will assess the progress of Verifone's ability to timely file financial statements ahead of reporting requirements; its internal review of the accounting errors and subsequent impact on gross margins, profitability and inventory valuation; the materiality of financial charges/restatements; and any potential liquidity issues. In addition, the review will also assess Verifone's capital structure stemming from the company's issuance of unrated $316 million of 1.375% senior convertible notes and its impact to the existing senior secured debt ratings. The ratings could be downgraded if any of these occurs: 1. The outcome of the internal investigation is materially detrimental to the company's cash flows and/or financial position 2. Identification of pervasive control weaknesses that cannot be remediated. 3. Liquidity position deteriorates due to business operations and/or acceleration of bank debt and/or convertible notes. The ratings could be stabilized at the existing level, if the outcome of the accounting review and financial restatements is not materially different from what the company has stated publicly to date and the company is current on its financial statement filing requirements with respect to its credit agreement and convertible note indenture. Moody's notes that Verifone maintains a cash and equivalents balance of $213 million as of July 31, 2007, and has good market position in the point of sale electronic payment solution market. As of July 31, 2007, the company had $238 million of senior secured term loan and $316 million of senior convertible notes outstanding. These ratings were placed on review for possible downgrade: -- B1 for Corporate Family Rating -- B2 for Probability of Default Rating -- B1 (LGD 3, 31%) for $40 million senior secured (first lien) revolving credit facility -- B1 (LGD 3, 31%) $500 million senior secured (first lien) term loan facility Headquartered in Santa Clara, California, Verifone, Inc. is the global market leader in the development and marketing of point-of- sale electronic payment solutions. WESTGATE FUNDING: Moody's Rates $19MM Class C Notes at Ba3 ---------------------------------------------------------- Moody's Investors Service rated asset backed notes issued by Westgate Funding 2007, LLC, which is a securitization program for the timeshare receivables of Westgate Resorts, Ltd. The complete rating action was as: Issuer: Westgate Resorts 2007, LLC Initial Servicer: Westgate Resorts, Ltd. -- $83 million Class A Asset Backed Notes, rated A2 -- $33 million Class B Asset Backed Notes, rated Baa2 -- Approximately $19 million Class C Asset Backed Notes, rated Ba3 All three classes of notes carry fixed rate coupons. At the time of closing, there is 8% over-collateralization and a 2% cash reserve. Wen V. Zhang, an Assistant Vice President in Moody's Structured Finance Group, explained that the ratings are based on the credit characteristics of the pool and the transaction's structural protections. Moody's said that the Westgate timeshare receivables have historically higher charge-off rates when compared to larger competitors. Compared with larger competitors in the timeshare market such as Marriott, the credit quality of the timeshare purchasers and the more limited number of resort locations within the Westgate family contribute to the riskier credit profile of the pool of loans. The loans in this pool are based on selection criteria that are relatively more stringent than those used in some past Westgate transactions, and this, to some extent, is one of the mitigating factors in this pool. Timeshare receivables are loans to purchase deeded intervals at vacation resorts. The credit risk for this asset class must be analyzed in light of the borrower's ability and willingness to pay the loan. The lack of significant underwriting standards and the high loan-to-sale price ratios are additional risk factors relative to other types of consumer assets. Westgate owns and operates 28 timeshare resorts in 11 states. The loans in this transaction were generated from its resorts in Florida, its Flamingo Bay project in Las Vegas, the Westgate Smoky Mountain Resorts in Gatlinburg, Tennessee, the Westgate Historic Williamsburg in Williamsburg, Virginia, and the Westgate Park City Resort in Park City, Utah. Although the majority of the units in the Westgate resorts are in the Orlando, Florida area, Westgate has executed an Affiliation Agreement with Interval International, one of the two major timeshare exchange companies, which gives timeshare owners the flexibility to go to other locations for their vacation. Westgate Resorts is wholly owned by Central Florida Investments, Inc. which has been in the timeshare business since the 1980s and is based in Orlando, Florida. * Fitch Expects Improved Credit Quality for Packaging Industry -------------------------------------------------------------- Fitch Ratings expects improving credit quality for the North American packaging & containers industry in 2008. Firms should benefit from improved pricing, productivity and operational efficiencies achieved in the past year, and in some cases asset sales which have strengthened balance sheets going into 2008. Raw materials and energy costs remain the key risk facing the industry, and Fitch expects that cost inflation, particularly for energy, will pose a challenge to nearly all companies in 2008. In key packaging end-markets, Fitch sees sustained demand and stable volumes in 2008. Cost inflation in raw material inputs, production, and delivery has forced packagers to focus on productivity, operational efficiency, and in some cases asset realignment during 2007. Fitch expects this trend to continue in 2008, and some companies in the industry are likely to reduce capacity or divest less profitable or commoditized businesses. The primary focus will continue to be cost containment and rationalization or surcharges as inflation pressures remain a concern. Contractual price adjustments alone will not overcome margin pressure in all cases. Fitch expects volume growth for most segments of the industry will be 2%-4%, slightly ahead of a weakening U.S. GDP forecast, which Fitch projects to be about 1.7% in 2008. Stability in the key food, beverage, and home and personal care markets should sustain modest volume growth, even as discretionary spending may become challenged. Of course, higher than expected inflation or a slower economic environment could challenge this outlook, and a variety of risks could materialize to curtail growth in specific segments. Packagers with global capacity such as Owens-Illinois (61% of 2006 revenues derived outside North America) and Crown Holdings (72% outside the U.S.) should benefit from international growth particularly in developing economies where GDP growth rates are still projected to be anywhere from 5%-10% in 2008. Those positioned in these markets should continue to capture robust volume growth. Credit Fundamentals: Fitch expects improving credit metrics for several packaging firms in 2008. Cash flows and internal liquidity are likely to improve generally; margins should stabilize and could expand if firms continue to achieve pricing objectives and execute operating efficiencies; and debt balances will likely remain stable for most firms. Major balance sheet restructuring is less likely in 2008, even for the most highly leveraged issuers. Current liquidity is solid in the industry and cash deployment has begun to lean toward share repurchases for some companies, such as Crown Holdings. Other priorities for cash will be global footprint expansion, restructuring, and capacity rationalization in some cases. Credit metrics for several Fitch rated issuers improved during 2007 as better operating performance led to improved cash flows for some firms while others engaged in divestitures or asset sales to deleverage their balance sheets. Firms such as Owens-Illinois and Solo Cup achieved substantial debt reduction through divestitures during the year and are now better positioned to improve cash flows and credit metrics in 2008. Other firms such as Ball Corp. and Graham Packaging improved cash flows through operational improvements, streamlining assets, or reducing capital expenditures. However, in Fitch's view, both Ball and Graham may need to address performance issues with plastic beverage packaging in 2008, perhaps through rationalization or divestiture. Some forms of this type of packaging have become less profitable in recent years as competition has increased. As the U.S. dollar depreciated by over 10% versus the Euro during the year, U.S.-based global packaging firms benefited from favorable currency exchange, but, to the extent they carry foreign-denominated debt, higher translated debt balances lessened the potential effect on leverage metrics. Further decline in the dollar in 2008 is not likely to have real economic impact on most packaging firms with the important exception that the dollar's value could affect the pricing or trade flows of oil, natural gas, and various raw material feedstocks and inputs. The weaker dollar may spur foreign-led acquisition in the U.S. in 2008 with transactions more likely in the fragmented plastic packaging segment. Credit Markets and the Economy: Fitch sees limited risk to most packaging companies in 2008 in the wake of less liquid credit markets in the second half of 2007. The liquidity position and debt maturity profile for many highly leveraged packagers indicates sufficient financial flexibility and low refinancing risk in most cases. However, the tighter credit conditions will likely lead to a slower M&A environment in 2008. Fitch expects less interest in the sector from financial sponsors as the balance likely shifts to M&A that is strategically motivated in 2008. There is some risk that companies wishing to divest businesses or assets will have greater difficulty in 2008 than in the past several years, and valuations may fall as a result. Two large transactions could take place next year with the sale of Alcan's and Alcoa's packaging businesses still pending. Both businesses are global in nature and serve a variety of end-markets. Alcoa's assets are valued at around $2 billion, while Alcan's could be closer to $4 billion. Interest from global companies and private equity firms has been reported. Given the current credit market conditions, transactions may be delayed but are still possible in 2008, especially if cash-rich strategic interests enter the market. Another pending transaction is the ultimate financing arrangement for Hindalco's bridge facility which was put in place in 2007 to fund the acquisition of Novelis. The financing totals about $3 billion and is expected to be finalized in late 2007 or early 2008, but conditions in the global credit markets could affect the timing of the transaction. Fitch continues to believe that a potential recession in the U.S. poses greater risk to smaller companies and those that derive a greater share of business in North America. However, the packaging and containers sector in general is less sensitive to a broad economic slowdown. During the recession of 2001-2002, most packaging firms did not see a material deterioration in credit metrics, although some did show a modest contraction in profitability. Outlook for Major End-Markets: The packaged food industry could experience a further change in landscape in the coming year. Restructuring activities have led to a number of assets and brands changing hands as these companies seek to stimulate growth and improve profitability. Packaging strategies will continue to play an important role in the food and beverage categories. The rapid pace of conversion from glass and metal to plastics in some categories seems to have slowed somewhat in 2007. Even so, innovations such as Graham Packaging's new clear polypropylene resealable food container could spur additional conversions given it's transparent and light-weight properties. Flexible food packaging such as stand-up pouches should continue to show solid growth. As prices for agricultural commodities and food ingredients have been climbing, packaged food makers and the food service industry in general have been forced to raise prices to pass on cost inflation. A key question is whether packaging firms will also be able to continue to achieve pricing power, given the multiple sources of cost inflation - from cattle feed to energy and fuel - that the food industry is coping with. To date, higher costs have been absorbed through productivity improvements, margin erosion in some cases, and price increases, throughout the packaging and food industry value chains. However, there is some risk that demand could at some point become sensitive to price, even in the stable food and beverage markets. For example, one area to watch in the coming year in particular is the dairy segment. With retail milk prices soaring by nearly 18% in the first nine months of 2007, dairy-based products have met elasticity in consumer demand, and firms have seen a material weakening in unit volumes. The lower volumes are in turn affecting firms that supply dairy product packaging, such as milk and yogurt containers. In the beverage categories, carbonated soft drinks continue to lose share to healthier options such as isotonic beverages and bottled water, a trend which is likely to continue in 2008. Isotonic beverages saw softer volumes in 2007, which Fitch believes could continue in 2008, although there is some evidence that a focus on promotion may be stimulating growth again. The beer category remains very competitive. Specialty and niche products are stimulating demand and producing high growth rates with glass packaging benefiting the most so far. It is difficult to predict trends in substrate use in the food and beverage markets. Consumer preference, raw materials pricing, and cost to deliver are part of the complex formula that contributes to the packaging decision. In the home and personal care categories, product innovation has bolstered demand and unit volumes. Innovative, value-added packaging should continue to garner higher margins in some categories. Some household-product makers are anticipating higher costs for packaging in 2008, as resin prices continue to be passed through by converters. In some cases though, Fitch anticipates the packagers will face pressure as products move to smaller or lighter plastic packaging in response to environmental or cost concerns. Outlook for Raw Materials: Robust global demand for commodities is likely to support elevated prices for packaging inputs such as steel tin plate, aluminum, and soda ash. Although prices for metals such as aluminum stabilized through 2007, helped in part by less speculative activity, Fitch expects the general raw materials trend to be stable, with little chance of meaningful price declines in 2008. Resin prices in North America have been trending higher in the second half of 2007, spurred by rising oil prices and robust export demand. Further price increases are scheduled for many resin types in the remainder of the year. Fitch expects resin prices to moderate somewhat in 2008, although further appreciation in crude oil prices could dampen the expected softening. Several large polyethylene capacity additions in 2007 and 2008 should begin to affect pricing for PET, HDPE, and LDPE particularly in the second half of 2008 and more materially in 2009. This is a list of Fitch-rated issuers and their current Issuer Default Ratings in the North American packaging sector: -- Ball Corp. ('BB'; Outlook Stable) -- Crown Holdings, Inc. ('B+'; Outlook Stable) -- Graham Packaging Company, L.P. ('B-'; Outlook Stable) -- Graphic Packaging Corp. ('B'; on Rating Watch Evolving) -- Novelis, Inc. ('B'; Outlook Negative) -- Owens-Illinois, Inc. ('B'; Outlook Positive) -- Solo Cup Company ('B-'; Outlook Stable) -- Smurfit-Stone Container Corp. ('B+'; Outlook Negative) * Fitch Expects Improvement for US Healthcare Sector in 2008 ------------------------------------------------------------ Fitch Ratings expects that the U.S. Healthcare sector will face an operating environment in 2008 that is similar to 2007, with strong demand and cost containment efforts offsetting pressure from pricing and product issues. Fitch's 2008 outlook for the U.S. Healthcare sector is stable. Healthcare demand in the U.S. remains strong due to the aging demographic of its population along with the industry's growing ability to treat a wide range of health issues with new innovative products and technology. This strength in demand is a key foundation upon which Fitch expects the industry to support steady revenue growth in spite of competitive and regulatory pressures that can have a negative impact on pricing and costs. Pricing pressure remains the largest offset to strong demand growth in driving revenue growth. While Fitch expects that the U.S. Healthcare industry will generate revenue growth in 2008 at a rate that approximates 2007, many of the same pricing pressures remain. For example, the generic drug industry will experience strong volume growth from the loss of patent exclusivity of branded pharmaceuticals representing greater than $8 billion of annual U.S. revenues. Additionally, the growing popular desire to control healthcare costs is leading to ever greater and more rapid generic drug substitution. Branded pharmaceutical companies have been the most negatively affected by the growth in generics and this trend is expected to continue in 2008 and accelerate in 2010 with the patent expiration of a variety of very popular drugs. Interestingly, the generic drug pharmaceutical companies also face pricing pressure as generics move even more quickly to commodity pricing levels with the increasing legitimacy of low-cost producers in the U.S. market, including foreign manufacturers. Similarly, Fitch expects medical device companies to continue to face pricing and volume challenges associated with drug-eluting stents and cardiac rhythm management. These challenges will lead to continued soft revenue growth for those companies in 2008 and make it more important that new product development and acquisitions be successful to meet the profitability void left by DES and implantable cardioverter defibrillators. In contrast to the above, Fitch expects that favorable pricing trends and continued acquisitions will offset weak patient volumes and continued problems in uncompensated care in the for-profit hospital segment in 2008. Fitch anticipates that the U.S. Healthcare industry will produce EBITDA growth in 2008 comparable to 2007. In spite of general pricing pressure, EBITDA margins will be supported by on-going cost containment and various restructuring activities of some participants. Fitch believes that capital spending will be relatively flat in 2008 compared to 2007 and that this will lead to stable free cash flow generation. While shareholder-friendly activities are expected to continue in 2008, Fitch believes that this will continue at a lesser extent due to decreased leverage buyout pressure associated with a tightening credit environment. Acquisition activity is generally high in the U.S. Healthcare industry due to the need to fill product pipeline gaps, acquire manufacturing capabilities, or to scale existing business segments. While acquisition activity was very strong for the sector in 2007, Fitch believes this will continue in 2008 with further industry consolidation and a focus on 'bolt-on' acquisitions. Nevertheless, Fitch expects that debt totals will remain relatively stable for the industry in 2008. Finally, Fitch notes that sector performance could be significantly affected by the enactment of any regulatory reform. Fitch expects that many topics of interest will receive national attention during the 2008 election year, including: universal healthcare, a pathway for generic biologics, patent reform, and direct government pricing negotiations. However, despite the increased attention to regulatory topics in 2008, Fitch believes that meaningful changes to policy are unlikely to occur until after the presidential election. Fitch believes that credit ratings for most U.S. Healthcare companies will be stable in 2008. Additionally, Recovery Ratings, which apply to speculative grade operators, should be relatively stable as underlying operational or asset values are expected remain unchanged and debt levels are expected to be steady. Pharmaceutical Manufacturers: Fitch expects that the U.S. pharmaceutical industry will see a stable outlook in 2008 and will face an environment characterized by sustained pressure on branded prescription drug pricing while maintaining solid investment toward R&D programs. Companies' efforts to broaden product portfolios will be challenged by increased regulatory agency scrutiny of adverse effects, particularly those pertaining to the heart and kidney. The total of FDA approvals of new molecular entities in the coming year could be near the low experienced in 2007. Prescription drug cost control by managed care and third-party payers, with emphasis on generic substitution, will exacerbate revenue losses and possibly pressure margins for those firms with looming U.S. drug patent expiries in the following year, specifically Merck (with Fosamax), Abbott (with Depakote), and J&J (with Risperdal and Topamax). Margin support in 2008 will be derived from the commercialization of higher-margin specialty drugs, especially oncology products, and continued cost containment initiatives. Fitch expects margins for brand-name pharmaceutical manufacturers to hold relatively constant during 2008 despite the difficult industry conditions. Fitch anticipates that consolidation of the generic pharmaceutical industry will continue as generic firms attempt to gain leverage with managed care and third-party payers in light of pricing pressure. Typically industry margins may remain as pressure from generic drug pricing and low-margin authorized generic agreements may be more or less offset by increased volumes and commercialization of semi-exclusive generic pharmaceuticals. Generally, cash flows for both generic and brand-name drug companies are expected to cover capital requirements in 2008, especially as firms continue to rationalize portfolios of research and manufacturing facilities. The pharmaceutical industry, historically shareholder-friendly, is anticipated to devote significant operating cash flow to raising dividends and satisfying share repurchase programs, which could be accelerated by the absence of viable acquisition opportunities. Medical Devices: Although demographics and advancements in medical technology are expected to drive long-term growth for medical device companies, Fitch, in general, has a negative outlook on this sector. A challenging environment for DES and ICD are expected to weigh on the sector's profitability and cash flow generation in the near term. ICD and DES each account for approximately 15% of the medical device market and carry relatively high margins. Early on, both platforms were expected to offer significant growth opportunities, and companies built infrastructure to support this expected growth. However, safety questions regarding blood clots associated with the use of DES has resulted in significant and rapid revenue declines over the past year. Similarly, product performance issues have had a strong negative impact on the sales of ICD. This situation has led companies to reduce their cost structures to reflect the present reality of the lack of success associated with DES and ICD. Fitch believes that ICD sales could experience the start of a rebound in 2008 barring any additional product performance setbacks. Additionally, Fitch believes that it is nearly impossible to determine whether there will be any sales recovery associated with DES, because of the perception problems associated with this product. For-Profit Hospital Operators: Fitch's outlook for the for-profit hospital industry in 2008 is stable. Uncompensated care - bad debt plus charity care and discounts to the uninsured - and weak volumes were key challenges for the sector in 2007 and are expected to remain so in 2008. Fitch believes that providers will continue to experience high levels of uncompensated care which will pressure EBITDA margins, although there may be some moderation in the growth of bad debt. In addition to bad debt, Fitch predicts providers will continue to be challenged by weak volumes. In Fitch's opinion, for-profit hospital operators have been facing increased competition from non-profit hospitals and from entrepreneurial physicians, which have moved in-patient business into specialty hospitals, outpatient facilities, or even the doctor's office. Fitch expects this trend to continue in 2008, and for providers to experience little growth in inpatient admissions. Although providers will be challenged by uncompensated care and weak volumes, Fitch expects favorable pricing and acquisitions to support credit metrics for the sector. Managed care pricing is largely set for 2008, and Fitch expects continued mid- to high- single-digit pricing increases, on average. Fitch believes the new Medicare IPPS rules may be more of a challenge, particularly for rural operators. The adoption of the MS-DRGs, behavioral offset, and other changes will result in rate increases below the average experienced for the past couple of years. However, Medicare pricing is still expected to increase in 2008. In addition to pricing, Fitch believes growth will be driven by acquisitions, with certain providers, such as Universal Health Services and LifePoint, expected to be more active than others, such as Community Health Systems and Tenet. Fitch currently rates the healthcare sector as: -- Abbott Laboratories ('AA-', Outlook Negative) -- Allergan, Inc. ('A-', Outlook Stable) -- AmerisourceBergen Corp. ('BBB', Outlook Stable) -- Baxter International, Inc. ('A', Outlook Stable) -- Beckman Coulter, Inc. ('BBB', Outlook Stable) -- Boston Scientific Corp. ('BB+', Outlook Negative) -- Bristol-Myers Squibb Co. ('A+', Outlook Stable) -- Cardinal Health, Inc. ('BBB+', Outlook Stable) -- Community Health Systems, Inc. ('B', Outlook Stable) -- Covidien Ltd. ('A', Outlook Stable) -- DaVita Inc. ('BB-', Outlook Stable) -- Eli Lilly & Co. ('AA', Outlook Stable) -- Express Scripts Inc. ('BBB', Outlook Stable) -- HCA, Inc. ('B', Outlook Stable) -- Health Management Associates ('BB-', Outlook Negative) -- Johnson & Johnson ('AAA', Outlook Stable) -- LifePoint Hospitals, Inc. ('BB-', Outlook Stable) -- McKesson Corp. ('BBB+', Outlook Stable) -- Medco Health Solutions Inc. ('BBB', Outlook Stable) -- Merck & Co. ('AA-', Outlook Stable) -- Owens & Minor Inc. ('BBB-', Outlook Stable) -- Pfizer, Inc. ('AAA', Outlook Stable) -- Schering-Plough Corp. ('BBB+', Outlook Stable) -- Tenet Healthcare Corp. ('B-', Outlook Stable) -- Thermo Fisher Scientific, Inc. ('BBB+', Outlook Stable) -- Universal Health Services ('BBB', Outlook Stable) -- Watson Pharmaceuticals Inc. ('BBB-', Outlook Stable) -- Wyeth ('A-', Outlook Stable) * Fitch Has Positive Outlook For NA Commc'l Aerospace Industry -------------------------------------------------------------- Fitch Ratings has a positive outlook for credit quality in the North American commercial aerospace industry in 2008, and a stable outlook for credit quality in the North American defense sector. The favorable outlook for commercial aerospace is based on demand outside of North America, which has resulted in large order books and strength in all commercial product segments. Concerns about economic weakness have increased in recent months, but Fitch estimates that only a global recession would change the positive outlook for commercial aerospace. The defense credit outlook continues to be supported by high Department of Defense spending levels, although spending growth in the core budget should slow. Supplemental defense spending to support operations in Iraq and Afghanistan will likely continue through 2008, and any impact from lower supplemental spending would not be significant for several years due to the need to reset and modernize equipment. The outcome of the U.S. presidential elections is not likely to affect core defense spending until FY2011. Global Exposure Limits Impact of U.S. Economic Slowdown U.S. economic weakness could test the strength of the current commercial aerospace upturn, but Fitch believes the industry would pass that test because of the global diversity of commercial aerospace demand. For example, at least 75% of the current large commercial aircraft backlog is from customers outside North America. In Fitch's view, there would need to be a substantial amount of contagion leading to a global economic downturn for the commercial aerospace outlook to become negative. The sector is not exhibiting signs of weakness at this time, as illustrated by the strong orders for LCA and business jets in the past two-three months. The most significant concern would be that high fuel prices and higher interest rates combine to compress already thin airline profit margins. Fitch will continue to monitor several key items for signs of a change in commercial aerospace trends. The business jet market would likely be the first segment to show weakness, in Fitch's opinion, because of substitute forms of travel and higher exposure to North America demand. Other data that will be watched include global passenger traffic, global cargo traffic, global airline profitability, delivery deferrals, and order cancellations. Fitch does not believe lower orders in 2008 would be a warning sign of commercial aerospace weakness because of the high orders in the past three years and the large backlogs in the industry. There has been no noticeable impact on the aircraft finance market from the 'credit crunch' at this point, but it is an area to watch in 2008. Given the large backlog in the commercial aerospace industry (more than 6,000 LCA), there will be several hundred billion dollars of new aircraft to be financed and insured over the next several years. Commercial aircraft have been a strong asset class over the past few years, attracting a significant amount of capital. There were several capital market aircraft transactions in 2007, but the market still mainly consists of leasing companies and banks. Fitch expects this to continue in 2008. The healthy aircraft finance market has benefited some manufacturers with finance subsidiaries which have been able to reduce financing assets, raising free cash flow. Commercial Aerospace Fitch expects all segments of the commercial aerospace industry to deliver solid growth in 2008, and this growth should continue into 2009. Orders have exceeded expectations again in 2007, and Fitch now projects that most parts of the commercial aerospace industry will not reach a delivery peak until 2009 or 2010. Substantial order backlogs provide a cushion to delivery estimates, particularly in the LCA segment. Markets outside of North America continue to drive the strong demand for commercial aerospace products, and the current demand is a mix of both a cyclical upturn in some markets and secular growth in other markets. Risks to the outlook include exogenous shocks, changes in global economic activity, supply chain pressures, execution on new programs, production increases, and labor negotiations. These expectations for some key commercial segments are incorporated into Fitch's credit ratings: -- Large Commercial Aircraft: Fitch expects LCA deliveries from Boeing and Airbus to rise to approximately 980-1000 aircraft (up 11%) in 2008 from approximately 890 aircraft in 2007, which is up about 7% from 2006 deliveries. Fitch expects deliveries to rise to more than 1100 aircraft in 2009, with further increases in 2010. Deliveries in 2008 should be split nearly equally between the two manufacturers (with a slight edge possible to Airbus), and the mix between wide-body and narrow-body aircraft should be about the same in 2008 as in 2007, before shifting in favor of wide-body deliveries in 2009 as 787 production increases. Orders have exceeded expectations for the third consecutive year, totaling more than 2,100 aircraft year-to-date. Fitch expects orders to decline in 2008, but the book-to-bill ratio could still approach 1:1 in 2008 given some pending aircraft campaigns. The order backlog at the end of 2007 should exceed 6,100 aircraft, or more than six years worth of production at expected 2008 production rates. The large backlog supports the rising delivery outlook, as does the production restraint exhibited by Boeing and Airbus so far in this upturn. Orders from U.S. legacy airlines in the next several years could add further support to the upturn, although the likelihood of U.S. orders could be reduced by a U.S. recession or airline consolidation. Substantial order backlogs provide a cushion to the upturn, and Fitch estimates that cancellation of even 15- 20% of existing orders would still leave the industry with enough backlog to support modest delivery increases for several years. Risks to Fitch's outlook include supply chain constraints, execution of production increases and new aircraft programs (787 and A380), exogenous shocks such as terrorist attacks and disease pandemic, economic weakness, and labor issues (Boeing contract renewals and potential further cuts at Airbus with Power8). Key events in 2008 will include 787 first flight (late first quarter), 787 first delivery (November/December), and the potential expansion of Airbus' Power8 restructuring program. -- The business jet market should continue to show strong growth in 2008, with expected deliveries up 14%-15%, excluding some VLJ deliveries which would bring growth rates up further. Aircraft delivered in 2008 should exceed 1,200 units, up from more than 1,000 units in 2007, which is up 18-20% over 2006. The key development in this segment continues to be the increasing percentage of orders from outside North America, with most manufacturers reporting that 50% or more of orders are coming from overseas. Other drivers of the strong market include healthy corporate profits and liquidity, as well as replacement demand. It now appears that the peak of the business jet cycle is in 2009 at the earliest. Risks to the outlook include supply chain constraints, new entrants, and economic growth. Fitch believes that the business jet market would be the first commercial aerospace segment to exhibit weakness in the face of an economic slowdown because there are substitute forms of travel and the segment has a higher exposure to North America than some other aerospace segments. -- The regional aircraft market rebounded in 2007 from a trough in 2006, and growth should continue in 2008. It is useful to divide this segment into regional jets and turboprops. RJ deliveries by Bombardier and Embraer will likely rise 18-20% in 2008 to 220-225 units after rising an estimated 9-10% in 2007, when Embraer's higher deliveries offset Bombardier's production decline. There continues to be a shift to larger RJ's, while the 50-seat market has disappeared. RJ orders have been strong in 2007, and a key development has been the turnaround in Bombardier's orders, which more than doubled. Turboprops from Bombardier and ATR are benefiting from high fuel prices, and deliveries should rise 45-50% in 2007 to approximately 110 aircraft and around 20% in 2008. New entrants are a key development to watch in this segment. The first flight of the Sukhoi Superjet 100 could occur in late 2007 or early 2008, and Mitsubishi's launch decision for the MRJ is expected in the first half of 2008. Bombardier's decision on whether to launch its CSeries airplane in the lower part of the LCA market will be an important event in 2008. -- Aftermarket/Services growth should be in the mid-to-high single digits in 2008, slightly above projected growth in global air traffic. This high-margin segment is an attractive business, and it could be the focus of some M&A activity. Drivers of longer-term growth in this segment include the aging of the regional jet and Airbus fleets, global air traffic growth, the growth of low cost carriers, and outsourcing by airlines and governments. Risks to the outlook include lower air traffic caused by economic weakness or shocks, leading to the parking of older aircraft. A longer-term issue to watch is the growth of Parts Manufacture Approval material, which could cut into revenues and margins of original equipment aftermarket providers. Defense Sector High DoD spending levels continue to be the foundation of solid credit quality in the defense sector. DOD spending levels are very high after strong growth in the past 10 years. The recently enacted FY2008 DoD appropriations budget and expected supplemental funds for the War on Terror could bring DoD spending in FY2008 to more than $670 billion, including about $176 billion for modernization (procurement and RDT&E, the most relevant parts of the budget for defense contractors) spending in the core budget. Fitch's assumption for modernization spending growth over the next few years is in the low to mid single digits, excluding supplemental funding for the War on Terror. Spending in other addressable markets such as Intelligence and NASA, as well as good orders and rising backlogs in the first three quarters of 2007, also support the outlook for 2008. Concerns for the defense sector include shareholder focused cash deployment, program performance, program risks within the budget, and Congressional pressure. However, the spending environment is less favorable than it has been in the past several years. In addition to flatter growth, the defense industry is getting more scrutiny from Congress, which has begun to challenge spending growth on large programs. The lead systems integrator trend is also being questioned. Supplemental budgets have clouded the analysis of defense spending in the past few years, but these supplemental budgets have protected the core DoD budget from cuts, and they are increasingly including some modernization funds that benefit the prime defense contractors. An important question is what impact the end of operations in Iraq and Afghanistan would have on defense spending. The most likely scenario is that spending would continue for several years to 'reset' the military to full operational status. Some important events for the defense industry in 2008 include the submission of the FY2009 defense budget request (early February), the award of the USAF tanker contract (early 2008), and the elections in November. The outcome of the presidential election could have an impact on supplemental spending in 2009, but it is not likely to have an impact on core defense spending for several years. Due to the timing and complexity of the DoD budgeting process, the new President will not have a full impact on the budget process until the FY2011 budget, although there could be a modest impact on the FY2010 budget. Cash Deployment, Debt Levels, M&A Cash deployment will continue to be a key factor in North American aerospace & defense rating trends. Fitch calculates that the top 15 North American A&D companies had approximately $30 billion of cash on hand at the end of the third quarter, which should be augmented by typically strong fourth quarter cash generation and solid free cash flow in 2008. Most investment grade companies in the sector are at or near their rating targets, and they generally have strong credit metrics for their ratings. As a result, Fitch expects that debt reduction will not be a cash deployment priority for most investment grade A&D companies in 2008. Fitch expects significant spending on share repurchases and pension contributions, as well as for acquisitions and dividend increases. Fitch also expects that this spending will be executed using free cash flow and existing cash balances. Non-investment grade companies in the sector will focus on debt reduction and acquisitions. Overall, Fitch expects the amount of outstanding debt in the A&D sector will decline in 2008, barring any large, debt-funded acquisitions. M&A activity in the A&D sector could increase in 2008 because of lower valuations and less competition from private equity firms. Fitch expects the size of most transactions will be less than several billion dollars. This is a list of Fitch-rated issuers and their current Issuer Default Ratings in the North American aerospace/defense sector. -- Alliant Techsystems Inc. ('BB'; Outlook Stable); -- Boeing Company (The) ('A+'; Outlook Positive); -- Bombardier Inc. ('BB-'; Rating Watch Positive); -- DRS Technologies, Inc. ('B+'; Outlook Stable); -- General Dynamics Corporation ('A'; Outlook Stable); -- Goodrich Corporation ('BBB'; Outlook Positive); -- Honeywell International Inc. ('A+'; Outlook Stable); -- L-3 Communications Corporation ('BB+'; Outlook Stable); -- Lockheed Martin Corporation ('A-'; Outlook Stable); -- Northrop Grumman Corporation ('BBB+'; Outlook Positive); -- Raytheon Company ('BBB+'; Outlook Stable); -- Rockwell Collins, Inc. ('A'; Outlook Stable); -- Textron Inc. ('A-'; Outlook Positive); -- Transdigm Group ('B'; Outlook Negative); -- United Technologies Corporation ('A+'; Outlook Stable). * Fitch Says Issuers Have Capacity to Maintain Fin'l Measures ------------------------------------------------------------- Most companies in the U.S. diversified industrial sector have benefited from a sustained period of strong domestic and international demand. As a result, financial results have been solid and issuers have used the opportunity to shore up their operating and financial profiles where necessary. Fitch Ratings believes issuers have the capacity to maintain appropriate financial measures in 2008 even in the event of weaker economic conditions or continued volatility in the capital markets. Stable Credit Trends: The majority of diversified companies demonstrate solid credit metrics within their respective rating categories, largely reflecting the impact of favorable economic conditions in recent years. Not surprisingly, the number of rating upgrades and downgrades during this period has been evenly balanced. In some cases, financial leverage is below expected long-term levels which is not uncommon near the top of a credit cycle. If economic conditions deteriorate in the future, there could potentially be an increase in rating downgrades. However, many diversified companies have effectively streamlined their operations and financial flexibility and would be well-situated to cope with a downturn. In addition, diversified companies by their nature usually do not have large exposures to any single industry sector. Certain companies such as Parker-Hannifin and Dover, for instance, are diverse even within business segments, further broadening the companies' market exposure. As a result, swings in financial performance tend to be more subdued than for companies concentrated in one industry. Growth at diversified companies during the top of an economic cycle may lag other sectors but, on the flip side, the impact of an economic downturn on financial results can normally be expected to be less dramatic. Potential Credit Concerns: Economic Slowdown - There are growing concerns about the direction of the U.S. economy. Operating results have remained near historically high levels although the pace of growth has slowed. Corporate profits, for instance, grew only 2.7% in the third quarter on a year-over-year basis and are on a declining trend. GDP in the third quarter grew 4.9% but future growth is widely expected to be substantially lower. Some markets have been strong and are expected to remain so at least through 2008, particularly energy-related markets and the aerospace and defense sector. Exposure to these markets varies widely among diversified companies, but some of the companies that are benefiting include Ametek, Eaton, Honeywell, ITT, Parker- Hannifin and Textron. High order rates and backlog levels in the strongest market sectors should help to mitigate the impact of an economic slowdown if it occurs. So far, any weakness has been largely limited to markets related to the U.S. homebuilding and auto sectors. Given the expanding presence in international markets by diversified companies, the impact of these weak sectors has so far been limited. There has also been a trend in recent years toward reducing exposure to the U.S. auto industry due to its long term challenges. Even so, the impact of the homebuilding and auto markets could continue to affect certain end-markets in 2008 with respect to residential lighting (Hubbell), residential air conditioners (United Technologies) and domestic auto production (Eaton). Certain non-residential construction markets have remained solid, but there are indications of potential weakness such as the decline in non-residential construction in October 2007 reported by the U.S. Department of Commerce. The risk of deteriorating conditions in the U.S. is partly offset by continued economic growth in overseas markets which represent the source of fastest growth for diversified companies for the foreseeable future. Exposure to the U.S. is further mitigated by actions taken by diversified companies to locate operations overseas to be close to customers and suppliers. A number of companies rated by Fitch already generate at least half of revenue overseas including Harsco (62%) United Technologies (60%) and Eaton (50%). Other companies derive a smaller, but still significant portion of sales from international customers including Parker-Hannifin (40+%), Honeywell (37%) and ITT (35%). However, shorter-term risks should be recognized. First, the perception that overseas markets are not as closely linked to the U.S. economy as they were in the past may be accurate, but the links have not disappeared. Should the U.S. experience a recession, demand in overseas markets could be negatively affected. Second, the economies in developing regions likely remain more fragile and volatile than the U.S. An economic downturn in these regions could behave in unanticipated ways and create challenges for companies that have a significant presence. Volatile Credit Markets - As mentioned above, diversified companies have coped relatively well with challenges in the capital markets. Fitch anticipates this will continue to be the case in 2008. However, market conditions can change quickly and in unpredictable ways. It remains to be seen how the sub-prime mortgage situation will eventually be resolved and, until credit markets stabilize, liquidity will represent a meaningful potential risk. Inflation - Inflation has not been a significant problem for the U.S. economy for many years but the risk of higher inflation has been increasing. Strong global economic growth has contributed to higher commodity prices that could potentially filter through to the rest of the economy. In the manufacturing sector, the pass- through of higher costs has become routine but core inflation in the overall economy still appears to remain within the Federal Reserve's comfort range. However, any future increase in inflation would give policy makers less room to maneuver as they use fiscal and monetary policy to influence the economy. Sufficient Financial Flexibility: Liquidity - Despite tighter conditions in credit markets during the past several months, diversified companies have been less affected than financial firms and liquidity typically has not been a significant concern. Diversified companies have continued to be active issuers of long term debt and the availability of bank credit does not appear to have tightened noticeably. By comparison, however, the commercial paper market has been more volatile, and even some F1 issuers have occasionally experienced higher rates and shorter maturities. Potential credit concerns about further turmoil in the credit markets are partly mitigated by generally conservative debt structures that support financial flexibility across the diversified industrial sector. The issue of liquidity risks for diversified companies is discussed more fully in an Oct. 10 Fitch report 'U.S. Industrials: Limited Impact of Liquidity Concerns'. Discretionary spending - Unless the growth in earnings and cash flow across the diversified sector reverses materially in 2008, Fitch anticipates that companies will continue to deploy discretionary cash for acquisitions and share repurchases. Strategic buyers, which continue to actively pursue acquisitions, may even see less competition from financial buyers, at least temporarily, until credit markets stabilize. On the other hand, if the economy deteriorates there is a risk that prices paid for recent acquisitions could have a negative impact on leverage. A downturn could potentially hurt operating results and impair the ability of companies to fund expenditures and manage their debt levels. However, Fitch anticipates that in such a scenario, most diversified companies would have the flexibility to reduce discretionary spending, including share repurchases, to maintain appropriate financial measures. Focused Operating Strategies: The current economic expansion, particularly in international markets, has encouraged diversified companies to focus on their core businesses. They have exited non-core or low growth businesses and made acquisitions as a way to enter attractive product and geographic markets. Furthermore, in response to high raw material costs, movements in currency exchange rates, and the increasing integration of the global economy, diversified companies continue to rationalize their operations to improve productivity and control costs. Some of the specific actions commonly taken include consolidating internal functions such as purchasing, moving operations closer to customers, outsourcing the production of commodity products, and upgrading and consolidating information technology. Such actions support the ability of diversified companies to react quickly to changing market conditions and to maintain their competitive positions. These are the list of Fitch-rated issuers and their current Issuer Default Ratings in the U.S. diversified industrial sector. -- AMETEK ('BBB'; Outlook Stable) -- Cooper Industries ('A'; Outlook Stable) -- Dover ('A'; Outlook Stable) -- Eaton ('A'; Outlook Stable) -- Flowserve ('BB'; Outlook Stable) -- Fluor ('A-'; Outlook Stable) -- Harsco ('A-'; Outlook Stable) -- Honeywell ('A+'; Outlook Stable) -- Hubbell ('A'; Outlook Stable) -- IDEX ('BBB+'; Outlook Stable) -- ITT Corporation ('A-'; Outlook Stable) -- Johnson Controls ('A-'; Outlook Positive) -- Kennametal ('BBB'; Outlook Stable) -- Parker-Hannifin ('A'; Outlook Stable) -- Rockwell Automation ('A'; Outlook Stable) -- SPX ('BB+; Outlook Stable) -- Textron ('A-'; Outlook Positive) -- Thomas & Betts ('BBB'; Outlook Stable) -- Tyco ('BBB'; Outlook Stable) -- United Technologies ('A+'; Outlook Stable) * BOOK REVIEW: American Economic History ---------------------------------------- Author: Seymour E. Harris Publisher: Beard Books Paperback: 572 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/158798136X/internetbankrupt American Economic History edited by Seymour E. Harris presents different points of view by a number of experts and is a valuable addition for any economic history collection. This eclectic tome is an anthology of 15 chapters by 20 notable contributors discussing and analyzing American economic history from about 1800 to the late 1950s. Each subject undertaken falls under one of four major rubrics: major issues, broad issues of policy, determinants of income, and regional growth. Specific topics include fiscal policy, patterns of employment, unionism, economic fluctuations, population and immigration, natural resources policies, etc. All of them bolster Arthur Schlesinger, Jr.'s statement in the opening chapter: "The economic experience of the United States provides a compact example of the growth of an underdeveloped country into a great and rich industrial state." ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Jason A. Nieva, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Joseph Medel C. Martirez, and Peter A. Chapman, Editors. Copyright 2007. 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. 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