/raid1/www/Hosts/bankrupt/TCR_Public/080215.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, February 15, 2008, Vol. 12, No. 39
Headlines
ACE MORTGAGE: Fitch Chips Ratings on $1.2 Billion Certificates
AEGIS MORTGAGE: Wants Removal of Civil Actions Extended to May 12
AEGIS MORTGAGE: Says Banks Can File Foreclosure Actions Anytime
AFFILIATED COMPUTER: Ct. Says No Default Occurred Under Debenture
ALLIED SERVICES: Fitch Withdraws 'BB' Rating on Revenue Bonds
AMAZON.COM: S&P Puts 'BB' Corporate Rating on Positive CreditWatch
AMBAC FINANCIAL: Rejects Bailout Offer from Warren Buffett
ARCADIA RESOURCES: Posts $3.7MM Net Loss in Quarter Ended Dec. 31
ARGENT SECURITIES: Four Classes of Certs. Get S&P's Junk Ratings
ATM FINANCIAL: Case Summary & 20 Largest Unsecured Creditors
AVENSYS CORP: Terminates License Agreement with Former Supplier
BANC OF AMERICA: S&P Chips Rating on Class L Certificates to 'BB'
BELDEN INC: Moody's Raises Corporate Family Rating to 'Ba1'
BUILDING MATERIALS: Moody's Reviews B1 Corp. Rating on Weak Sales
CATHOLIC CHURCH: Fairbanks to File for Bankruptcy Soon
C-BASS MORTGAGE: Fitch Junks Ratings on 38 Certificate Classes
CARINA CDO: S&P Puts Ratings of Notes at D on Liquidation
CELLEGY PHARMA: Inks Buyout Deal with Adamis Pharmaceuticals
CHARYS HOLDING: Files for Chapter 11 to Implement Creditor Deal
CHARYS HOLDING: Case Summary & 41 Largest Unsecured Creditors
CHOICE HOTELS: December 31 Balance Sheet Upside-Down by $157 Mil.
CHRYSLER LLC: Court to Decide Fate of Tooling Dispute on Feb. 19
CHRYSLER LLC: Insists That It Owns Tooling Equipment
CONSUMER PORTFOLIO: Earnings Drop to $3.5MM in Qtr. Ended Dec. 31
COOKSON SPC: S&P Slashes Ratings on Class D and E Notes to 'CC'
COOKSON SPC: S&P Puts Two 2007 Note Series on Negative Watch
CREDIT SUISSE: Fitch Junks Ratings on 25 Certificate Classes
CROSSWINDS AT LONE: Wants Until March 5 to File Schedules
CULVER SARKAP: Case Summary & Six Largest Unsecured Creditors
DAVE & BUSTER: Reported Sale Won't Affect S&P's 'B-' Rating
DIRECTV GROUP: Reports $348 Mil. Earnings for 2007 Fourth Quarter
DISCOVERY INSURANCE: A.M. Best Lifts FS Rating to B- from C++
E*TRADE FINANCIAL: Selling RAA Wealth Assets to PHH Investments
FGIC CORP: Warren Buffett Presents $800MM Bailout Plan
FGIC CORP: Moody's Cuts Insurance Financial Strength Rating to A3
FIELDSTONE MORTGAGE: Moody's Cuts and Reviews 18 Tranches' Ratings
FIRST FRANKLIN: Moody's Junks Ratings on 21 Certificates
FIRSTLINE SECURITY: Wants to Hire Prince Yeates as Bankr. Counsel
FMC DEVELOPMENT: Voluntary Chapter 11 Case Summary
FORD MOTOR: Fitch Holds 'B' IDRs, Retains Negative Outlook
FOREST LAKE: Case Summary & 20 Largest Unsecured Creditors
FREESCALE SEMICON: Fitch Holds CCC+ Notes Rating, Revises Outlook
FRIEDMAN'S INC: Committee Balks at DIP Facility from CIT Group
GENSOLLEN LLC: Section 341(a) Meeting Slated for February 21
GLOBAL HOME: Judge Gross Confirms Joint Amended Chapter 11 Plan
GMAC COMMERCIAL: Fitch Holds 'B-' Rating on $4.3MM Class M Certs.
GOLDEN STATE: Case Summary & 11 Largest Unsecured Creditors
GREATER MIAMI: To Request Court Permission for Asset Sale
GREENPOINT MORTGAGE: Moody's Junks Ratings on Five Certs.
GROVE PARK: Case Summary & Largest Unsecured Creditor
HANGER ORTHOPEDIC: Earns $6.6 Million in Quarter Ended December 31
HANOVER INSURANCE: Moody's Lifts Sr. Debt Rating to Baa3 From Ba1
HARVEY ELECTRONICS: Committee Opposes Final Approval of DIP Loan
HOLLEY PERFORMANCE: Plan Confirmation Hearing Slated for March 19
INTEGRITY CONSTRUCTION: Case Summary & 20 Largest Unsec. Creditors
JETBLUE AIRWAYS: Board Appoints Edward Barnes as New CFO
KELLWOOD CO: Sun Capital's Unit Completes Shares Tender Offering
KEVIN MALONEY: Voluntary Chapter 11 Case Summary
KNOLL INC: Lynn M. Utter Named Knoll North America's President/COO
LANGUAGE LINE: S&P Changes Outlook to Negative; Retains 'B' Rating
LARRY VAUGHN: Voluntary Chapter 11 Case Summary
LATHAM MANUFACTURING: Moody's Downgrades Corporate Rating to 'B3'
LEGENDS GAMING: Covenant Violations Cue S&P to Junk Corp. Rating
LIGHTWAVE COMMS: Case Summary & 16 Largest Unsecured Creditors
L TERSIGNI: Examiner Says Four Asbestos Case Samples Overbilled
MAJESTIC STAR: S&P Places 'B-' Rating on CreditWatch Negative
MARYLAND DEVELOPMENT: Section 341(a) Meeting Set February 25
MARYLAND DEVELOPMENT: Gets Court Permission to Use Cash Collateral
MARYLAND DEVELOPMENT: Taps Linowes and Blocher as Legal Counsel
MARYLAND DEVELOPMENT: May 27 Deadline Set for Filing Claims
MERGE TECH: To Cut 28% of Its Workforce on Rightsizing Initiative
MERRILL LYNCH: DBRS Confirms 'B' Ratings on Two Cert. Classes
MICHAEL ROYCE: Case Summary & 13 Largest Unsecured Creditors
MORTGAGE LENDERS: Asks Court to Extend Removal Period to June 11
MORTGAGE LENDERS: Wants to Expand Hilco Real's Consulting Services
MORTGAGE LENDERS: Can Enter Into Services Pact with Green Planet
MOTOR COACH: Moody's Cuts Corporate Family Rating to Ca From Caa2
MOUNT AIRY: Tight Liquidity Cues Moody's to Junk 'B3' Rating
NEUMANN HOMES: Wants Court OK to Implement Employee Incentive Plan
NEW YORK RACING: Gets 25-Year Franchise Deal from State
NWT URANIUM: Cures Defaults of Northern Quebec Uranium Properties
OLIN CONSTRUCTION: Case Summary & Seven Largest Unsec. Creditors
ORBIT PETROLEUM: Case Summary & 20 Largest Unsecured Creditors
ORCHARD COVE: S&P Cuts Rating on Revenue Bonds to 'BB-' From BBB-
PFP HOLDINGS: To Sell Assets T2 Homes for $61.15 Million
PLASTECH ENGINEERED: Court to Decide Fate of Dispute on Feb. 19
PLASTECH ENGINEERED: Chrysler Insists That It Owns Tooling
PLASTECH ENGINEERED: Wants to Hire Allard & Fish as Local Counsel
PLASTECH ENGINEERED: Taps Jones Day as Special Counsel
PMA CAPITAL: Moody's Holds 'Ba3' Sr. Debt Rating on Expected Sale
PMA CAPITAL: A.M. Best Puts Ratings on Review on Planned Disposal
POPE & TALBOT: Asks CCAA Court to Extend Stay Period to April 4
POPE & TALBOT: Asks Court to Set April 3 as Claims Bar Date
POPE & TALBOT: Obtains Waivers to DIP Credit & Security Agreement
PRIMUS TELECOM: Dec. 31 Balance Sheet Upside Down by $452 Million
PROPEX INC: Committee Selects Baker Donelson as Counsel
PROPEX INC: Requests Court to Set July 7 as Claims Bar Date
QUIKSILVER INC: CEO Robert McKnight Resumes Role as President
QUIKSILVER INC: S&P's BB- Rating Unmoved by Planned Asset Sale
R&J REAL PROPERTIES: Voluntary Chapter 11 Case Summary
RICHARD RANDALL: Case Summary & 10 Largest Unsecured Creditors
ROYAL MANOR: Case Summary & 19 Largest Unsecured Creditors
SCO GROUP: Secures $100 Million to Finance Plan of Reorganization
SEARS HOLDINGS: Plans to Reduce Workers at Headquarters by 4%
SENIOR HOUSING: Fitch Holds and Withdraws 'BB+' Trust Ratings
SIRVA INC: Asks Court to Employ Ernst & Young as Accountants
SIRVA INC: MLF Investments Discloses Ownership of Shares
SIRVA INC: Allowed to Continue Receivables Purchase Program
SIRVA INC: Trustee Objects to Employment of Conflicts Counsel
SIRVA INC: Files Supplements to Chapter 11 Plan
SMARTALK TELESERVICES: Gets $30.5MM Settlement Payment from PWC
SOLUTIA INC: Challenges DuPont's $1,394,718 Administrative Claim
SOLUTIA INC: Settles Dispute on Bayer/Lanxess Claims' Treatment
TABS 2006: S&P Ratings on Nine Classes of Notes Tumble to 'D'
TEMBEC INC: Posts $60 Mil. Net Loss in Quarter Ended December 29
TRIBUNE CO: Sam Zell Discloses Company-Wide Restructuring
TRONOX WORLDWIDE: Weak Performance Prompts Moody's Rating Reviews
TY COBB: Fitch Affirms 'BB' Rating on $17.4MM Revenue Certificates
UMMA RESOURCES: KES Wants Stay Lifted to Pursue $3.5 Mil. Lawsuit
UNITEDHEALTH GROUP: N.Y. Attorney General to File Fraud Case
VILLAGEEDOCS INC: Secures Up to $1.5M Asset-Based Line of Credit
VOLT INFORMATION: Expects to Incur $12 Mil. Loss on Telecomm Srvs.
VONAGE HOLDINGS: Dec. 31 Balance Sheet Upside-Down by $72 Million
WARNER MUSIC: Moody's Cuts Corp. Rating to B1 on Decline in Sales
WILLIAM VERNER: Case Summary & 12 Largest Unsecured Creditors
WORNICK COMPANY: Files for Chapter 11 Protection in Ohio
WORNICK CO: Case Summary & 29 Largest Unsecured Creditors
WYNN RESORTS: Earns $258.1 Million in Year Ended Dec. 31
XYIENCE INC: Zyen/Zuffa DIP Fund and License Pacts Get Final Nod
* S&P Downgrades 66 Tranches' Ratings From 10 Cash Flows and CDOs
* S&P Confirms Ratings on 38 Classes From Five Reperforming RMBS
* Fitch Says Equipment Lease Securities Delinquencies Soar in Dec.
* Fitch Says 2008 is Adjustment Year for US Airport Industry
* Fitch Says US Credit Markets Stability Might Return in 3Q'08
* President Bush Signs New $168 Billion Stimulus Package Into Law
* Bankruptcy Filings in Arizona Up 63.4% in January vs. 2007
* Barbara Hart & Anne Penachio Join Lowey Dannenberg as Partners
* Chadbourne's George Smith Receives Spirit of Excellence Award
* Beard Audio Conferences on Bankruptcy Examiners & Identity Theft
* BOOK REVIEW: A Legal History of Money in the United States
*********
ACE MORTGAGE: Fitch Chips Ratings on $1.2 Billion Certificates
--------------------------------------------------------------
Fitch Ratings has taken these rating actions on Ace mortgage pass-
through certificates. Unless stated otherwise, any bonds that
were previously placed on Rating Watch Negative are now removed.
Affirmations total $250.4 million and downgrades total
$1.2 billion. Additionally, $751.8 million remains on Rating
Watch Negative. Break Loss percentages and Loss Coverage Ratios
for each class are included with the rating actions as:
Ace 2006-HE1
-- $260.1 million class A-1A rated 'AAA', remains on Rating
Watch Negative (BL: 57.58, LCR: 1.77);
-- $185.3 million class A-1B1 rated 'AAA', remains on Rating
Watch Negative (BL: 61.54, LCR: 1.89);
-- $52.3 million class A-1B2 rated 'AAA', remains on Rating
Watch Negative (BL: 99.59, LCR: 3.06);
-- $37.1 million class A-2A affirmed at 'AAA',
(BL: 95.40, LCR: 2.93);
-- $127.7 million class A-2B affirmed at 'AAA',
(BL: 66.95, LCR: 2.06);
-- $88.6 million class A-2C downgraded to 'AA' from 'AAA'
(BL: 56.30, LCR: 1.73);
-- $78.5 million class A-2D downgraded to 'AA' from 'AAA'
(BL: 51.26, LCR: 1.58);
-- $101.4 million class M-1 downgraded to 'BB' from 'AA+'
(BL: 45.08, LCR: 1.39);
-- $92.6 million class M-2 downgraded to 'B' from 'AA+'
(BL: 38.76, LCR: 1.19);
-- $57.1 million class M-3 downgraded to 'B' from 'AA'
(BL: 34.76, LCR: 1.07);
-- $48.2 million class M-4 downgraded to 'CCC' from 'AA'
(BL: 31.36, LCR: 0.96);
-- $45.6 million class M-5 downgraded to 'CCC' from 'A-'
(BL: 28.13, LCR: 0.86);
-- $41.8 million class M-6 downgraded to 'CCC' from 'BBB+'
(BL: 25.11, LCR: 0.77);
-- $40.6 million class M-7 downgraded to 'CC' from 'BBB-'
(BL: 22.10, LCR: 0.68);
-- $36.8 million class M-8 downgraded to 'CC' from 'BB+'
(BL: 19.42, LCR: 0.6);
-- $26.6 million class M-9 downgraded to 'CC' from 'BB-'
(BL: 17.49, LCR: 0.54);
-- $31.7 million class M-10 downgraded to 'C' from 'B+'
(BL: 15.63, LCR: 0.48).
Deal Summary
-- Originators: Fremont (75%), OwnIt (10%)
-- 60+ day Delinquency: 37.19%
-- Realized Losses to date (% of Original Balance): 2.02%
-- Expected Remaining Losses (% of Current balance): 32.54%
-- Cumulative Expected Losses (% of Original Balance): 20.28%
Ace 2006-HE2
-- $217.1 million class A-1 downgraded to 'AA' from 'AAA',
remains on Rating Watch Negative (BL: 49.87, LCR: 1.59);
-- $24.4 million class A-2A affirmed at 'AAA',
(BL: 93.23, LCR: 2.97);
-- $61.2 million class A-2B affirmed at 'AAA',
(BL: 63.60, LCR: 2.02);
-- $42.4 million class A-2C downgraded to 'AA' from 'AAA'
(BL: 53.92, LCR: 1.72);
-- $37.1 million class A-2D downgraded to 'AA' from 'AAA',
remains on Rating Watch Negative (BL: 48.96, LCR: 1.56);
-- $38.1 million class M-1 downgraded to 'BB' from 'AA+'
(BL: 42.94, LCR: 1.37);
-- $34.8 million class M-2 downgraded to 'B' from 'AA'
(BL: 37.22, LCR: 1.18);
-- $20.7 million class M-3 downgraded to 'B' from 'AA-'
(BL: 33.80, LCR: 1.08);
-- $17.4 million class M-4 downgraded to 'CCC' from 'A+'
(BL: 30.92, LCR: 0.98);
-- $16.9 million class M-5 downgraded to 'CCC' from 'A'
(BL: 28.10, LCR: 0.89);
-- $16.4 million class M-6 downgraded to 'CCC' from 'A-'
(BL: 25.32, LCR: 0.81);
-- $14.6 million class M-7 downgraded to 'CC' from 'BBB+'
(BL: 22.73, LCR: 0.72);
-- $13.6 million class M-8 downgraded to 'CC' from 'BBB-'
(BL: 20.15, LCR: 0.64);
-- $9.4 million class M-9 downgraded to 'CC' from 'BB+'
(BL: 18.27, LCR: 0.58);
-- $8.5 million class M-10 downgraded to 'CC' from 'BB'
(BL: 16.62, LCR: 0.53);
-- $9.4 million class M-11 downgraded to 'C' from 'B+'
(BL: 15.07, LCR: 0.48).
Deal Summary
-- Originators: Argent (34%), Chapel (11%)
-- 60+ day Delinquency: 31.82%
-- Realized Losses to date (% of Original Balance): 1.40%
-- Expected Remaining Losses (% of Current balance): 31.44%
-- Cumulative Expected Losses (% of Original Balance): 21.55%
The rating of the A-1B2 class from Ace 2006-HE1 is supported by a
financial guaranty policy provided by CIFG (Insurer Financial
Strength rated 'AAA' and on Rating Watch Negative by Fitch).
The rating actions are based on changes that Fitch has made to its
subprime loss forecasting assumptions. The updated assumptions
better capture the deteriorating performance of pools from 2007,
2006 and late 2005 with regard to continued poor loan performance
and home price weakness.
AEGIS MORTGAGE: Wants Removal of Civil Actions Extended to May 12
-----------------------------------------------------------------
Aegis Mortgage Corporation and its debtor-affiliates seek an
extension of the deadline by which they may file notices of
removal with respect to civil actions pending as of the bankruptcy
filing, to and including May 12, 2008.
James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones, LLP,
in Wilmington, Delaware, asserts it is prudent to seek an
extension so to protect the Debtors' right to remove the actions.
Since the bankruptcy filing, the Debtors have been occupied with
matters of immediate importance to their Chapter 11 cases,
Mr. O'Neill explains. The Debtors, he says, focused on the
orderly wind down of their businesses and the sale of their
remaining assets.
"Accordingly, the Debtors have not had an opportunity to
appropriately review actions to determine whether there are any
that may need to be removed," Mr. O'Neill says.
Mr. Mr. O'Neill points out that moving the deadline would allow
the Debtors to make fully-informed decisions concerning removal
of any action and would assure that the Debtors do not forfeit
valuable rights under 28 U.S.C. Section 1452. He notes that the
rights of the Debtors' adversaries will not be prejudiced by the
extension because any party to an action that is removed may seek
to have it remanded to the state court.
About Aegis Mortgage
Headquartered in Houston, Texas, Aegis Mortgage Corporation --
http://www.aegismtg.com/-- offers a variety of mortgage loan
products to brokers through its subsidiaries.
The company together with 10 affiliates filed for chapter 11
protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119)
Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones,
Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, &
Jones, L.L.P., serve as counsel to the Debtors. The Official
Committee of Unsecured Creditors is represented by Landis Rath &
Cobb LLP. In schedules filed with the Court, Aegis disclosed
total assets of $138,265,342 and total debts of $4,125,470. The
Debtors' exclusive period to file a plan of reorganization expires
on April 9, 2008.
(Aegis Bankruptcy News, Issue No. 16, Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
AEGIS MORTGAGE: Says Banks Can File Foreclosure Actions Anytime
---------------------------------------------------------------
Aegis Mortgage Corporation and its debtor-affiliates inform the
U.S. Bankruptcy Court for the District of Delaware that the
request of various financial institutions to lift the bankruptcy
stay to initiate foreclosure actions on various real properties,
are based on the erroneous assumption that one or more of the
Debtors may hold a junior lien on the real properties, in which
the parties allegedly hold an interest.
The Debtors inform the Court that the financial institutions need
not seek the Court's permission to commence foreclose actions.
The financial institutions are:
-- Wells Fargo Bank, N.A.;
-- Countrywide Home Loans Inc.;
-- Deutsche Bank National Trust Company;
-- The Bank of New York;
-- Mortgage Electronic Registration Systems, Inc.;
-- Sovereign Bank;
-- U.S. Bank National Association, as Trustee; and
-- GRP Financial Services, Inc.
James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones, LLP,
in Wilmington, Delaware, state that any junior lien on the real
property subject to the intended foreclosure actions is not a
property of the Debtors' estate pursuant to Section 541 of the
Bankruptcy Code. "None of the Debtors currently own any loan
secured by the properties . . . or act as a servicer with respect
to the loan," Mr. O'Neill clarifies.
About Aegis Mortgage
Headquartered in Houston, Texas, Aegis Mortgage Corporation --
http://www.aegismtg.com/-- offers a variety of mortgage loan
products to brokers through its subsidiaries.
The company together with 10 affiliates filed for chapter 11
protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119)
Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones,
Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, &
Jones, L.L.P., serve as counsel to the Debtors. The Official
Committee of Unsecured Creditors is represented by Landis Rath &
Cobb LLP. In schedules filed with the Court, Aegis disclosed
total assets of $138,265,342 and total debts of $4,125,470. The
Debtors' exclusive period to file a plan of reorganization expires
on April 9, 2008.
(Aegis Bankruptcy News, Issue No. 16, Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
AFFILIATED COMPUTER: Ct. Says No Default Occurred Under Debenture
-----------------------------------------------------------------
Affiliated Computer Services Inc. disclosed that on Feb. 12, 2008,
the United States District Court for the Northern District of
Texas, Dallas Division, granted the company's Motion for Summary
Judgment in the declaratory relief action and entered a judgment
that no default has occurred under Section 4.03(a) of the
Indenture.
The company had filed this lawsuit because certain holders of its
4.70% Senior Notes due June 1, 2010, and its 5.20% Senior Notes
due June 1, 2015, sent various notices alleging that the company
was in default of its covenants under the related Indenture dated
June 6, 2005, along with any Supplemental Indentures, as the
result of the company's failure to timely file its Annual Report
on Form 10-K for the period ending June 30, 2006, by Sept. 13,
2006.
Subsequently, those certain holders declared an acceleration of
the Senior Notes, as a result of the company's failure to remedy
the purported default set forth in their earlier notices and
demanded payment of all amounts owed in respect of the Senior
Notes.
About Affiliated Computer
Headquartered in Dallas, Texas, Affiliated Computer Services Inc.
(NYSE:ACS) -- http://www.acs-inc.com/-- provides business process
outsourcing and information technology services to commercial and
government clients. The company has two segments based on the
clients it serves: commercial and government. The company
provides services to a variety of clients including healthcare
providers and payers, manufacturers, retailers, wholesale
distributors, utilities, entertainment companies, higher education
institutions, financial institutions, insurance and transportation
companies.
* * *
As reported in the Troubled Company Reporter on Jan. 30, 2008,
Moody's Investors Service confirmed Affiliated Computer Services'
Ba2 corporate family rating with a stable rating outlook. This
rating confirmation concludes a review for possible downgrade
initiated on March 20, 2007. The ratings of ACS remained under
review for possible downgrade.
ALLIED SERVICES: Fitch Withdraws 'BB' Rating on Revenue Bonds
-------------------------------------------------------------
Fitch Ratings has withdrawn the 'BB' rating on the Scranton
Lackawanna Health and Welfare Authority, Pennsylvania (Allied
Services Hospitals Project) hospital revenue bonds, series 1994,
issued on behalf of Allied Services Rehabilitation Hospitals. The
bonds were defeased in January 2008 from bank loan proceeds.
AMAZON.COM: S&P Puts 'BB' Corporate Rating on Positive CreditWatch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its [BB] ratings on
Seattle, Washington-based Amazon.com on CreditWatch with positive
implications. This action reflects the strong results for fourth-
quarter 2007 and the announcement of authorization to repurchase
all of the outstanding 4.75% convertible subordinated notes and
6.875% PEACS.
The outstanding principal amount was $899 million on the
convertible subordinated notes and EUR240 million on the PEACS.
Completion of this authorization would result in a substantial
deleveraging of Amazon's balance sheet. "We will continue to
monitor the ratings as additional information becomes available,"
said Standard & Poor's credit analyst David Kuntz.
AMBAC FINANCIAL: Rejects Bailout Offer from Warren Buffett
----------------------------------------------------------
The International Herald Tribune reports that Ambac Financial
Group Inc. rejected a bailout offer from Warren Buffett's
Berkshire Hathaway Group to rescue the three ailing monoline bond
insurers by reinsuring $800 million of their municipal bonds
portfolios.
The proposal would not free up enough capital, according to a
statement from Ambac spokesman, Peter Poillon, the Herald Tribune
relates. The proposal would have required Ambac to pay Buffett
about $4.5 billion to assume the obligations, Herald Tribune says.
For Ambac, accepting Buffett's offer would mean a sign of
desperation on their part, an Ambac executive told The Wall Street
Journal.
MBIA Inc., the largest bond insurer, also indicated it is equipped
to survive the slump in prices of mortgage securities and
dismissed suggestions that the industry needs a rescue or stronger
federal oversight, Bloomberg News reports.
"A bailout of highly credit-worthy companies who, at most, are at
risk of losing the very highest ratings available, is misplaced,"
MBIA Chief Financial Officer Charles Chaplin said in prepared
remarks delivered Thursday at a hearing at the White House
Financial Services subcommittee on capital markets in Washington,
Bloomberg relates.
Bloomberg says Mr. Chaplin and Ambac Chief Executive Officer
Michael Callen were to make their presentations on Capitol Hill as
they try to fend off credit rating downgrades from Moody's, Fitch
Ratings and Standard & Poor's, and critics who say the companies
may be headed for bankruptcy.
Financial Guaranty Insurance Co. has yet to respond to the offer.
Berkshire Hathaway owns roughly 19% stake in Moody's and is the
ratings firm's largest shareholder.
Buffett's move on Tuesday to reinsure the municipal bonds and take
on $5 billion in liabilities curbed fears among investors that the
rating agencies' downgrades of insurers could force the insurers
to scramble selling their municipal bonds, Reuters reports. The
bonds in this market have recently been plummeting in value.
But the offer comes at a price. According to the Journal,
Berkshire Hathaway will charge, in return for Buffett's offer,
150% of the unearned policy premiums of Ambac Financial Group
Inc., MBIA Inc., and Financial Guaranty Insurance Co., which
collectively handle $2.4 trillion of municipality-issued debt.
Buffett's offer drew mixed opinions. Russell Croft, a manager at
a Baltimore-based investment company, told WSJ that it renewed
afresh the market's confidence. "We could definitely test some
more lows going forward but there was a pretty good drop-off there
again and I think people are trying to take advantage of it to get
some quality stocks at cheaper prices."
"Within the municipal-bond market it would be a positive . . .
[T]he market is trading right now as if there is no value to the
insurance, and if [Mr. Buffett] came in and reinsured them, then
they would have their triple-A rating back," WSJ cites Dan
Solender, a Lord Abbett & Co. head, as saying.
New York State Insurance Department head Eric Dinallo was pleased
with the offer, and that the move further protects bond insurers,
says WSJ.
However, Fitch Ratings director Thomas Abruzzo told WSJ that the
Buffett's stint "doesn't address their problems." "It's going to
cost them a significant penny, money out the door, and net-net,
the benefit of the offsetting reduction in risk may not help the
companies at all," WSJ quotes Mr. Abruzzo as saying.
Len Blum, Westwood Capital director, told Reuters, "We haven't
seen all the losses. Even if you have some investors willing to
bottom fish, or very sophisticated investors like Warren Buffett
willing to invest at this point, the financial sector is still
really sick."
The Herald Tribune reports that investor Wilbur Ross Jr. told CNBC
cable financial network that Buffett's offer would not do anything
to rid the "toxic waste" in their portfolios but it would
"intensify the pressure on the rating agencies and the regulators
to convince the financial guarantee people to resolve their
issues."
According to the Herald Tribune, Ross said he did not think the
offer would be accepted, adding that "it really fines them by
detracting their best business, turning over control of the whole
municipal bond insurance industry to Warren."
About MBIA
Based in Armonk, New York, MBIA Inc. (NYSE:MBI) --
http://www.mbia.com-- provides financial guarantee insurance,
investment management services, and municipal and other services
to public finance and structured finance clients on a global
basis. The company conducts its financial guarantee business
through its wholly owned subsidiary, MBIA Insurance Corporation
and provides investment management products and financial services
through its wholly owned subsidiary MBIA Asset Management, LLC.
MBIA manages its activities primarily through two principal
business operations: insurance and investment management services.
In February 2007, MBIA Corp. formed a new subsidiary, MBIA Mexico,
S.A. de C.V. During the year ended Dec. 31, 2006, MBIA
discontinued its municipal services operations. These operations
included MBIA MuniServices Company. On Dec. 5, 2006, the company
completed the sale of MBIA MuniServices Company.
* * *
As reported in the Troubled Company Reporter on Jan. 21, 2008,
Moody's Investors Service placed the Aaa insurance financial
strength ratings of MBIA Insurance Corporation and its affiliated
insurance operating companies on review for possible downgrade.
In the same rating action, Moody's also placed the surplus note
rating of MBIA Insurance Corporation (Aa2-rated) and the ratings
of the holding company, MBIA, Inc. (senior debt at Aa3), on review
for possible downgrade. This rating action reflects Moody's
growing concern about the potential volatility in ultimate
performance of mortgage and mortgage-related CDO risks, and the
corresponding implications for MBIA's risk-adjusted capital
adequacy. Prior to this rating action, the rating outlook for
MBIA was negative.
About FGIC
Financial Guaranty Insurance Co. -- http://www.fgic.com/-- has
enjoyed a reputation for financial strength, underwriting
discipline and superior client service. As a leading financial
guaranty insurance company, FGIC provides credit enhancement on
infrastructure finance and structured finance securities
worldwide, enabling bond issuers to obtain capital cost
effectively and enhancing their access to the capital markets.
* * *
As reported in the Troubled Company Reporter on Feb. 11, 2008,
Fitch Ratings downgraded its ratings of Financial Guaranty
Insurance Company's insurer financial strength to 'AA' from 'AAA',
on Jan. 30, 2008. This rating remains on Rating Watch Negative.
About Ambac Financial
Ambac Financial Group, Inc., headquartered in New York City, is a
holding company whose affiliates provide financial guarantees and
financial services to clients in both the public and private
sectors around the world. For the nine months ended Sept. 30,
2007, Ambac reported net income of $26 million. As of Sept. 30,
2007, Ambac had shareholders' equity of approximately $5.65
billion. On Jan. 18, Fitch Ratings downgraded Ambac to double-A
after the insurer put off plans to raise equity capital.
ARCADIA RESOURCES: Posts $3.7MM Net Loss in Quarter Ended Dec. 31
-----------------------------------------------------------------
Arcadia Resources Inc. reported financial results for the fiscal
third quarter and nine months ended Dec. 31, 2007.
The company reported net loss of $3.70 million in the third
quarter compared to net loss of $3.71 million for the same period
in the prior year.
For the nine month period, net loss was $20.31 million compared to
net loss of $4.61 million for the same period in the previous
year.
During the 2nd and 3rd quarters of 2008, the company disposed of
its retail clinics, certain Durable Medical Equipment business
operations, including its retail DME operations and under
performing operations in Florida. The financial results of those
operations, consisting of losses of $1.4 million and $10.1 million
for the third quarter and nine months ended Dec. 31, 2007, are
reported in discontinued operations for those periods. The prior
period results have been recast for consistency. Clinics
accounted for $6.4 million of the loss from discontinued
operations for the first nine months of fiscal 2008.
"We took several steps to deliver on our business goals," Marvin
R. Richardson, president and chief executive officer, said. "Most
recently, we were able to complete an extension of approximately
$15.5 million of short-term debt held by affiliates of Jana
Partners LLC and a $17 million line of credit held by Comerica
Bank in two separate transactions. Our third quarter was also
highlighted by the addition of Matthew Middendorf to our
leadership team as chief financial officer."
"Additionally, we successfully launched a major DailyMed -
initiative as we are committed to establishing a market leading
position with our medication compliance program," Mr. Richardson,
continued. "A cornerstone of this program is our proprietary
DailyMed pharmacy packaging system, which will drive our major
initiative with the State of Indiana as we introduce this
innovative program to 70,000 lives in the coming months. DailyMed
and related medication compliance products and services give us
the opportunity to generate up to $40 million of new revenue for
fiscal 2009 in this business segment. This opportunity
demonstrates the great potential of our DailyMed compliance
pharmacy packaging system and will be a major source of future
profitable growth for Arcadia."
At Dec. 31, 2007, the company's balance sheet showed total assets
of $100.27 million, total liabilities of $47.90 million and
total stockholders' equity $52.37 million.
About Arcadia Resources
Headquartered in Indianapolis, Arcadia Resources Inc. (AMEX: KAD)
-- http://www.arcadiaresourcesinc.com/ -- is a national provider
of alternate site healthcare services and products, including
respiratory and durable medical equipment; non-medical and medical
staffing, including travel nursing; comprehensive central fill and
licensed pharmacy services including its proprietary DailyMed(TM)
Pharmacy program and a catalog of healthcare-oriented products.
Going Concern Doubt
As reported in the Troubled Company Reporter on July 4, 2007,
BDO Seidman LLP, in Troy, Michigan, expressed substantial doubt
about Arcadia Resources Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years ended March 31, 2007, and 2006. The
auditing firm pointed to the company's recurring losses from
operations.
ARGENT SECURITIES: Four Classes of Certs. Get S&P's Junk Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 19
classes of certificates from eight Argent Securities Inc. series.
Concurrently, S&P affirmed its ratings on the remaining classes
from these transactions.
The lowered ratings reflect the deterioration of available credit
support for these transactions in combination with projected
credit support percentages--based on the amount of loans in the
delinquency pipeline--that are insufficient to maintain the
ratings at their previous levels. Based on the current collateral
performance of these transactions, S&P projects future credit
enhancement will be significantly lower than the original credit
support for the former ratings. The failure of excess interest to
cover monthly losses has resulted in an overcollateralization
(O/C) deficiency for each of these transactions. As of the
Jan. 25, 2008, distribution date, the O/C deficiencies ranged from
$1.259 million (series 2003-W4), or 36% below its O/C target, to
$4.947 million (series 2003-W3), or 44% below its O/C target.
During the previous six remittance periods, monthly losses have
exceeded excess interest on average by 2.54x. As of the January
2008 distribution period, cumulative losses for these transactions
ranged from 1.23% (series 2003-W4) to 1.90% (series 2004-W6) of
their original pool balances. Total delinquencies and severe
delinquencies (90-plus days, foreclosures, and REOs) ranged from
15.99% (series 2003-W3) to 25.27% (series 2004-W8) and from 9.46%
(series 2003-W3) to 18.09% (series 2004-W8) of their current pool
balances, respectively.
The affirmations reflect current and projected credit support
percentages that are sufficient to maintain the current ratings.
As of the January 2008 remittance report, credit support for these
classes ranged from 11.10% (series 2004-W6) to 98.25% (series
2003-W3) of the current pool balances. In comparison, current
credit enhancement ranged from 1.06x (series 2004-W6) to 3.99x
(series 2003-W3) of the original enhancements. As of January
2008, total delinquencies for these transactions ranged from
15.99% (series 2003-W3) to 25.27% (series 2004-W8) of the current
pool balances, with severe delinquencies ranging from 9.46%
(series 2003-W3) to 18.09% (series 2004-W8) of the current pool
balances. Cumulative realized losses ranged from 1.23% (series
2003-W4) to 1.90% (series 2004-W6) of the original pool balances.
A combination of subordination, excess interest, and O/C provide
credit enhancement for these transactions. The collateral
supporting these series consists of subprime pools of fixed- and
adjustable-rate mortgage loans secured by first liens on one- to
four-family residential properties.
Ratings Lowered
Argent Securities Inc.
Mortgage Pass-through Certificates
Rating
------
Series Class To From
------ ----- -- ----
2003-W1 MV-6, MF-6 BB- BBB-
2003-W2 M-6 B BBB-
2003-W3 M5 BB- BBB
2003-W3 MV-6, MF-6 CCC BBB-
2003-W4 M3 BBB A
2003-W4 M4 B BBB
2003-W4 M5 CCC BBB-
2003-W8 M5 BB- BBB
2003-W8 M6 CCC BBB-
2003-W9 M5 BB+ BBB
2003-W9 M6 B BBB-
2004-W6 M6 BB+ BBB-
2004-W6 M7 B BB+
2004-W8 M6 BBB- A-
2004-W8 M7 B+ BBB+
2004-W8 M9 B BBB-
2004-W8 M10 CCC BBB-
Ratings Affirmed
Argent Securities Inc.
Mortgage Pass-through Certificates
Series Class Rating
------ ----- ------
2003-W1 M-1 AA
2003-W1 M-2 A
2003-W1 M-3 A-
2003-W1 M-4 BBB+
2003-W1 M-5 BBB
2003-W2 M-2 A
2003-W2 M-3 A-
2003-W2 M-4 BBB+
2003-W2 M-5 BBB
2003-W3 AF-6 AAA
2003-W3 M-1 AA
2003-W3 M-2 A
2003-W3 M-3 A-
2003-W3 M-4 BBB+
2003-W4 M-1 AAA
2003-W4 M-2 AA+
2003-W8 M-1 AA
2003-W8 M-2 A
2003-W8 M-3 A-
2003-W8 M-4 BBB+
2003-W9 M-1 AAA
2003-W9 M-2 AA
2003-W9 M-3B, M-3 AA-
2003-W9 M-4B A
2004-W6 AV-2, AV-5, AF AAA
2004-W6 M-1 AA
2004-W6 M-2 A
2004-W6 M-3 A-
2004-W6 M-4 BBB+
2004-W6 M-5 BBB
2004-W8 A-2, A-5 AAA
2004-W8 M-1 AA+
2004-W8 M-2 AA
2004-W8 M-3 AA-
2004-W8 M-4 A+
2004-W8 M-5 A
ATM FINANCIAL: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: ATM Financial Services, LLC
Post Office Box 490510
Leesburg, FL 34748
Bankruptcy Case No.: 08-00969
Type of Business: The Debtor provides automated teller machines.
See: http://www.atmdoctor.com/
Chapter 11 Petition Date: February 12, 2008
Court: Middle District of Florida (Orlando)
Debtors' Counsel: Peter N. Hill, Esq.
Wolff Hill McFarlin & Herron PA
1851 West Colonial Drive
Orlando, FL 32804
Tel: (407) 648-0058
Fax: (407) 648-0681
http://www.phill@whmh.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
Consolidated Debtors' List of 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Jack Henry & Associates $37,000
663 W. Highway 60
Monett, NY 65708
Granite Telecommunications $9,979
P.O. Box 1405
Lewiston, ME 04243-1405
Womble Carlyle Sandridge & Rice $6,000
One West Forth Street
Winston-Salem, NC 27101
Brinks $4,588
Vance Moore $4,357
AT&T $4,184
FedEx $3,288
Thomas Harvey $2,540
Expo Experts LLC $2,195
Philip Lackey $2,183
C.H. Robinson Company Inc. $1,981
Estek Inc. $1,210
Sprint $1,017
Solvort LLC $900
Scott Guthrie $858
Diane Reed $815
Neal Baker $801
Steven Westbrook $783
Michael Touchon $742
Jennifer Tew $734
AVENSYS CORP: Terminates License Agreement with Former Supplier
---------------------------------------------------------------
Avensys Corp. disclosed that on Feb. 6, 2008, the Technology
License Agreement between its wholly owned subsidiary, C-Chip
Technologies Corp. and its former supplier has been terminated.
The agreement to terminate the Technology License Agreement
stipulates that, subsequent to Dec. 31, 2007, no further royalties
would be payable to C-Chip from devices sold.
It also stipulates that, at Dec. 31, 2007, the outstanding balance
of the C-Chip loan with the former supplier, would be forgiven.
As a result, the company will recognize a gain of $355,734, during
the third quarter, on the forgiveness of the loan, which
represented the outstanding balance of the loan at Dec. 31, 2007.
Royalties payable to C-Chip based on devices sold continued to
accrue up to and including Dec. 31, 2007, and were applied against
the loan balance.
The former supplier would continue to assume exclusive
responsibility for the manufacturing costs, sales, servicing and
other incidental costs related to the production and marketing of
the devices sold in the sub-prime used vehicle market.
About Avensys Corp.
Avensys Corp. fka. Manaris Corp. -- http://www.manariscorp.com/--
operates through its wholly owned subsidiaries, Avensys Inc. and
C-Chip Technologies Corp.
Avensys Inc. develops optical components and sensors and provides
environmental monitoring solutions. AVI sells its optical
products and services primarily in North America, Asia and Europe
to the telecommunications, aerospace, and oil and gas industries.
Environmental monitoring services and solutions are primarily
targeted at public sector organizations across Canada. Prior to
the termination of the Technology License Agreement with its
former supplier, C-Chip earned royalties with respect to the
devices sold by the licensee to the credit management marketplace.
Going Concern Doubt
As reported in the Troubled Company Reporter on Oct. 4, 2007,
Montreal, Canada-based Raymond Chabot Grant Thornton LLP expressed
substantial doubt about Manaris Corp. nka. Avensys Corp.'s ability
to continue as a going concern after auditing the company's
consolidated financial statements for the year ended June 30,
2007. The auditor pointed to the company's significant losses
since inception and reliance on non-operational sources of
financing to fund operations.
BANC OF AMERICA: S&P Chips Rating on Class L Certificates to 'BB'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the
class L commercial mortgage pass-through certificates from Banc of
America Large Loan Inc.'s series 2005-MIB1 to 'BB' from 'BBB-' and
removed it from CreditWatch with negative implications, where it
was placed on Nov. 2, 2007.
S&P had placed the class L certificates on CreditWatch negative
due to the deterioration in net cash flow of the fifth-largest
loan in the pool, Liberty Properties. At the time of S&P's last
review on Nov. 28, 2007, S&P noted that several properties may be
released from the trust in early 2008. This would have resulted
in principal payments in excess of the properties' allocated loan
amounts, reducing the loan-to-value ratio. These releases did not
take place. In addition, S&P recently received full-year 2007
financial data indicating that the weak operating performance of
the properties has continued. As a result, S&P lowered the rating
on class L.
The Liberty Properties loan is secured by a 54,700-sq.-ft.
suburban office building, a 319,200-sq.-ft. industrial/office
building, and three industrial/warehouse buildings totaling 1.1
million sq. ft. in Worcester and Dedham, Massachusetts. The
$52.7 million whole-loan balance consists of a $40.2 million
senior note that represents 5% of the trust balance and a
$12.5 million subordinate note held outside of the trust. In
addition, there is a $20.1 million mezzanine loan secured by the
borrower's equity interests. The loan matures in March 2008 and
has two one-year extension options remaining.
The reported effective gross income from the properties for year-
end 2007 had declined due to a decrease in occupancy to 70% from
81% at issuance. The master servicer reported a debt service
coverage of 1.71x for the year ended Dec. 31, 2007. The borrower
is actively marketing the vacant space. Standard & Poor's used a
stabilized approach to revalue the loan collateral. S&P's
analysis assumed a stabilized occupancy of 81%, the same as at
issuance, and considered local market conditions. The results of
S&P's analysis support its revised rating.
BELDEN INC: Moody's Raises Corporate Family Rating to 'Ba1'
-----------------------------------------------------------
Moody's Investors Service upgraded Belden Inc.'s corporate family
ratings to Ba1 from Ba2 and upgraded certain debt facilities as
outlined below. Moody's had placed a positive outlook on the Ba2
rating in March 2007. The upgrade was based on the management
team's improvement in operations and successful integration of
three recent acquisitions. The acquisitions, Hirschmann
Automation and Control GmbH, LTK Wiring Co. Ltd.,and Lumberg
Automation Components were closed in 2007, and have brought
further customer, geographic and product line diversification.
The ratings outlook is stable
These ratings were upgraded:
-- Corporate family rating to Ba1 from Ba2
-- Probability of default to Ba1 from Ba2
-- $350 million senior secured revolving credit facility due
2011 to Baa2, LGD2 16% from Baa3, LGD2
-- $350 million senior subordinated notes due 2017 to Ba1 LGD4
62% from Ba2, LGD4
-- $110 million subordinated convertible notes due 2023 to Ba2,
LGD6 93% from B1, LGD6
The Ba1 corporate family rating reflects the company's leading
market positions in several niches within the electronic cable and
connector industries, strong credit metrics and strong cash flow
generating capability. The credit metrics, particularly pro forma
debt to EBITDA of under 2x and Free Cash Flow to Debt, are strong
for the rating category and suggestive of a higher rating. The
ratings are constrained, however, by the cyclical nature of the
cable and connector industries, recent increases and volatility in
raw material prices and inherent risks with the company's
acquisition strategy. Although management has been prudent in its
choice of acquisitions and financing approach, the potential for
an economic downturn magnifies the effect of any increases in
leverage or business risk at this time.
The stable ratings outlook reflects Moody's view that the
management team will continue to improve operations and margins
over the near to medium term. The company continues to
rationalize its global manufacturing operations and will likely
see an improved cost structure and stronger margins in 2008. The
outlook accommodates a modest degree of economic softness and
acquisition activity. Material debt financed acquisitions or a
pronounced economic downturn however, could result in changing the
outlook to negative or a downgrade in the rating.
Belden Inc. is a leading designer and manufacturer of advanced
connectivity products for the global network communication and
specialty electronic marketplaces with trailing twelve month
revenues of approximately $2.0 billion. The company is
headquartered in St. Louis, Missouri.
BUILDING MATERIALS: Moody's Reviews B1 Corp. Rating on Weak Sales
-----------------------------------------------------------------
Moody's Investors Service placed the ratings of Building Materials
Holding Corporation, including its B1 corporate family rating, its
B2 probability-of-default rating, and its first-lien bank credit
facility rating of B1 (LGD3, 38%) under review for possible
downgrade.
The rating review is prompted by BMHC's declining sales,
deteriorating credit metrics, and the need for bank covenant
relief. Moody's expects weak homebuilding market conditions
throughout 2008, potentially extending into 2009, to exert further
pressure on the company's operating performance and credit
profile. Credit availability will likely remain tight throughout
this period.
The review will focus on the company's ability to generate cash
from operations through a prolonged downturn, secure sufficient
liquidity to meet its cash needs, and cut costs to mitigate
revenue declines. The review will balance intermediate term
credit pressures against the company's longer term prospects as
one of the nation's largest providers of residential construction
services and building materials.
Headquartered in San Francisco, California, BMHC, a Fortune 1000
company, is one of the largest providers of residential
construction services and building materials in the United States.
BMHC serves the homebuilding industry through two subsidiaries:
SelectBuild provides construction services to high-volume
production homebuilders in key growth markets across the country;
and BMC West distributes building materials and manufactures
building components for professional builders and contractors in
the western and southern states.
CATHOLIC CHURCH: Fairbanks to File for Bankruptcy Soon
------------------------------------------------------
The Roman Catholic Diocese of Fairbanks in Alaska announced plans
to seek protection under Chapter 11 of the Bankruptcy Code, after
negotiations to settle sexual abuse claims failed, the Fairbanks
Daily News-Miner reports.
"I am legally and morally bound to both fulfill our mission and to
pursue healing for those injured," Bishop Donald J. Kettler said
in a statement about his decision. He anticipates filing for
bankruptcy protection within five weeks.
Bishop Kettler also cited high legal expenses as a reason for
filing bankruptcy. He noted that only eight of the 46 parishes
within the Diocese are financially self-sufficient, requiring the
Diocese to rely on the generosity of donors.
"While filing for [bankruptcy] is not my first choice, I believe
that at this time this is the best way to bring all parties
together and to provide for fair and equitable treatment of all
who have been harmed," Bishop Kettler said in the statement.
The Associated Press reports that more than 150 claims were filed
against the Diocese, alleging abuse by clergy or church workers
between the 1950s and 1980s.
Bishop Kettler discloses that negotiations have been ongoing since
last summer. However, settlement talks failed because the
Diocese's unnamed insurance carrier has not participated
meaningfully in the process, the AP says.
In November 2007, the Oregon Province of the Society of Jesus
agreed to pay $50,000,000 to more than 100 Alaska natives, who
alleged sexual abuse by Jesuit priests. The settlement was the
largest against a Catholic religious order, according to the AP.
The settlement, however, did not include cases against the
Diocese, which owned and managed the churches in the villages in
rural Alaska, where the alleged abusive Jesuit priests were
assigned.
Ken Roosa, Esq., in Anchorage, Alaska, who represents a group of
the abuse victims, called Bishop Kettler's decision proper, if
overdue.
"This is the phase that we hope can ultimately result in
resolution for so many people," Mr. Roosa told the News-Miner.
Robert Hannon, a special assistant to Bishop Kettler, said that
the decision to move toward bankruptcy court is not a direct
result of the January 2008 ruling of a state judge, who ruled that
the Diocese is liable for a former worker's past abuse, the News-
Miner says. Mr. Hannon explained that the decision is the product
of a six-year analysis of the mounting legal claims and a
financial situation compounded by the January court decision.
Mr. Hannon declared that the Diocese has no plans to lay off
staff, although, it will need to spend frugally in the future.
The Roman Catholic Diocese of Fairbanks -- http://www.cbna.info/
-- is comprised of the northern regions of the state of Alaska.
It is led by a prelate bishop which serves as pastor of the mother
church, Cathedral of the Sacred Heart in the City of Fairbanks.
The diocese is a suffragan of the Archdiocese of Anchorage.
Five dioceses of the Roman Catholic Church in the United States
have sought Chapter 11 bankruptcy protection since 2004 due to
clergy abuse claims. The Archdiocese of Portland in Oregon filed
on July 6, 2004, and emerged from bankruptcy three years, after a
consensual bankruptcy plan was confirmed April 17, 2007. The
Roman Catholic Church of the Diocese of Tucson, which filed for
bankruptcy Sept. 20, 2004 in Arizona, had its plan declared
effective exactly a year later.
The Catholic Diocese of Spokane, in Spokane, Washington, filed
December 6, 2004. After a protracted battle with sexual abuse
claimants that resulted into the filing of a competing plan by its
creditors, Spokane obtained confirmation of a consensual
bankruptcy plan and emerged from bankruptcy protection May 31,
2007.
The Diocese of Davenport, in Davenport, Iowa, filed October 10,
2006, in the Southern District of Iowa. The Davenport Diocese is
currently seeking confirmation of a bankruptcy plan that has the
support of the official committee of unsecured creditors appointed
in its case.
The Roman Catholic Bishop of San Diego, in San Diego, California,
filed for bankruptcy in the Southern District of California (San
Diego), Feb. 27, 2007. The case was dismissed November 1, 2007,
after the Diocese struck a settlement with its clergy abuse
claimants.
The Roman Catholic Episcopal Corporation of St. George's, aka
the Diocese of St. George's, in Newfoundland, Canada, filed on
March 8, 2005, a Notice of Intent to Make a Proposal pursuant to
the Bankruptcy and Insolvency Act (Canada) with the Official
Receiver's Office, Office of the Superintendent of Bankruptcy
Canada. St. George's filed a Proposal on May 6, 2005. Ernst &
Young, Inc., serves as trustee of the Proposal.
C-BASS MORTGAGE: Fitch Junks Ratings on 38 Certificate Classes
--------------------------------------------------------------
Fitch Ratings has taken these rating actions on C-BASS Mortgage
Loan Asset-Backed pass-through certificates. Unless stated
otherwise, any bonds that were previously placed on Rating Watch
Negative are now removed. Affirmations total $1.8 billion and
downgrades total $2.1 billion. Additionally, $1.1 billion remains
on Rating Watch Negative. Break Loss percentages and Loss
Coverage Ratios for each class are included with the rating
actions as:
Securitized Asset Backed Receivables LLC Trust 2006-CB1 Aggregate
Pool
-- $21.7 million class AF-1 affirmed at 'AAA',
(BL: 88.40, LCR: 4.67);
-- $114.2 million class AF-2 affirmed at 'AAA',
(BL: 45.28, LCR: 2.39);
-- $14.4 million class AF-3 affirmed at 'AAA',
(BL: 43.25, LCR: 2.28);
-- $34.4 million class AF-4 affirmed at 'AAA',
(BL: 42.93, LCR: 2.27);
-- $102.5 million class AV-1 affirmed at 'AAA',
(BL: 44.99, LCR: 2.37);
-- $27.5 million class M-1 affirmed at 'AA+',
(BL: 37.88, LCR: 2);
-- $25.9 million class M-2 downgraded to 'BBB' from 'AA+'
(BL: 32.99, LCR: 1.74);
-- $15.8 million class M-3 downgraded to 'BBB' from 'AA'
(BL: 29.98, LCR: 1.58);
-- $14.6 million class M-4 downgraded to 'BB' from 'AA'
(BL: 27.17, LCR: 1.43);
-- $13.7 million class M-5 downgraded to 'BB' from 'A+'
(BL: 24.51, LCR: 1.29);
-- $12.5 million class M-6 downgraded to 'B' from 'A'
(BL: 22.02, LCR: 1.16);
-- $11.3 million class B-1 downgraded to 'B' from 'A-'
(BL: 19.65, LCR: 1.04);
-- $10.5 million class B-2 downgraded to 'CCC' from 'BBB+'
(BL: 17.51, LCR: 0.92);
-- $8.1 million class B-3 downgraded to 'CCC' from 'BBB'
(BL: 15.94, LCR: 0.84);
-- $10.9 million class B-4 downgraded to 'CC' from 'BBB-'
(BL: 13.78, LCR: 0.73);
-- $8.5 million class B-5 downgraded to 'CC' from 'BB'
(BL: 12.21, LCR: 0.64).
Deal Summary
-- Originators: Lime Financial (19.53%), Encore Credit Corp.
(19.44%), ResMAE Mortgage Corporation (17.90%);
-- 60+ day Delinquency: 19.81%;
-- Realized Losses to date (% of Original Balance): 0.67%;
-- Expected Remaining Losses (% of Current balance): 18.95%;
-- Cumulative Expected Losses (% of Original Balance): 11.54%.
C-BASS 2006-CB2
-- $28.6 million class AF-1 affirmed at 'AAA',
(BL: 94.92, LCR: 5.41);
-- $120.9 million class AF-2 affirmed at 'AAA',
(BL: 50.56, LCR: 2.88);
-- $25.6 million class AF-3 affirmed at 'AAA',
(BL: 45.08, LCR: 2.57);
-- $40.5 million class AF-4 affirmed at 'AAA',
(BL: 45.33, LCR: 2.59);
-- $151.4 million class AV affirmed at 'AAA',
(BL: 47.68, LCR: 2.72);
-- $31.9 million class M-1 affirmed at 'AA+',
(BL: 39.41, LCR: 2.25);
-- $30 million class M-2 downgraded to 'A' from 'AA+'
(BL: 34.29, LCR: 1.96);
-- $18.1 million class M-3 downgraded to 'A' from 'AA'
(BL: 31.14, LCR: 1.78);
-- $16.7 million class M-4 downgraded to 'BBB' from 'AA-'
(BL: 28.20, LCR: 1.61);
-- $15.7 million class M-5 downgraded to 'BB' from 'A+'
(BL: 25.42, LCR: 1.45);
-- $14.7 million class M-6 downgraded to 'BB' from 'A'
(BL: 22.75, LCR: 1.3);
-- $13.8 million class M-7 downgraded to 'B' from 'A-'
(BL: 20.15, LCR: 1.15);
-- $15.7 million class B-1 downgraded to 'CCC' from 'BBB+'
(BL: 17.30, LCR: 0.99);
-- $10 million class B-2 downgraded to 'CCC' from 'BBB'
(BL: 15.51, LCR: 0.88);
-- $8.6 million class B-3 downgraded to 'CCC' from 'BB+'
(BL: 14.03, LCR: 0.8).
Deal Summary
-- Originators: New Century (18.98%); Encore Credit (18.29%);
Accredited (14.17%);
-- 60+ day Delinquency: 19.26%;
-- Realized Losses to date (% of Original Balance): 0.91%;
-- Expected Remaining Losses (% of Current balance): 17.53%;
-- Cumulative Expected Losses (% of Original Balance): 11.29%.
Citigroup Mortgage Loan Trust 2006-CB3
-- $36.1 million class AV-1 affirmed at 'AAA',
(BL: 95.38, LCR: 4.4);
-- $97.7 million class AV-2 affirmed at 'AAA',
(BL: 62.84, LCR: 2.9);
-- $127.8 million class AV-3 affirmed at 'AAA',
(BL: 47.36, LCR: 2.18);
-- $94.5 million class AV-4 downgraded to 'AA' from 'AAA'
(BL: 41.31, LCR: 1.9);
-- $29.1 million class M-1 downgraded to 'BBB' from 'AA+'
(BL: 35.25, LCR: 1.63);
-- $25.7 million class M-2 downgraded to 'BB' from 'AA'
(BL: 30.17, LCR: 1.39);
-- $16 million class M-3 downgraded to 'B' from 'AA-'
(BL: 26.99, LCR: 1.24);
-- $13.9 million class M-4 downgraded to 'B' from 'A+'
(BL: 24.19, LCR: 1.12);
-- $12.6 million class M-5 downgraded to 'B' from 'A'
(BL: 21.62, LCR: 1);
-- $10.5 million class M-6 downgraded to 'CCC' from 'A-'
(BL: 19.39, LCR: 0.89);
-- $10.1 million class B-1 downgraded to 'CCC' from 'BBB'
(BL: 17.02, LCR: 0.78);
-- $9.7 million class B-2 downgraded to 'CC' from 'BBB-'
(BL: 14.72, LCR: 0.68).
Deal Summary
-- Originators: OwnIt (17.59%), New Century (17.49%), Encore
Credit Corp. (17.27%);
-- 60+ day Delinquency: 21.37%;
-- Realized Losses to date (% of Original Balance): 0.67%;
-- Expected Remaining Losses (% of Current balance): 21.69%;
-- Cumulative Expected Losses (% of Original Balance): 13.62%.
C-BASS 2006-CB4
-- $70.4 million class AV-1 affirmed at 'AAA',
(BL: 71.31, LCR: 2.83);
-- $56.7 million class AV-2 affirmed at 'AAA',
(BL: 57.17, LCR: 2.27);
-- $74.7 million class AV-3 rated 'AAA', remains on Rating Watch
Negative (BL: 46.92, LCR: 1.86);
-- $44.1 million class AV-4 downgraded to 'AA' from 'AAA',
remains on Rating Watch Negative (BL: 42.99, LCR: 1.7);
-- $18.2 million class M-1 downgraded to 'BBB' from 'AA+'
(BL: 37.97, LCR: 1.51);
-- $17.2 million class M-2 downgraded to 'BB' from 'AA'
(BL: 33.13, LCR: 1.31);
-- $10.2 million class M-3 downgraded to 'B' from 'AA-'
(BL: 30.25, LCR: 1.2);
-- $8.9 million class M-4 downgraded to 'B' from 'A+'
(BL: 27.73, LCR: 1.1);
-- $8.9 million class M-5 downgraded to 'B' from 'A'
(BL: 25.20, LCR: 1);
-- $8.1 million class M-6 downgraded to 'CCC' from 'A-'
(BL: 22.82, LCR: 0.9);
-- $9.6 million class B-1 downgraded to 'CCC' from 'BBB+'
(BL: 19.90, LCR: 0.79);
-- $8.1 million class B-2 downgraded to 'CC' from 'BBB'
(BL: 17.42, LCR: 0.69);
-- $5.2 million class B-3 downgraded to 'CC' from 'BBB-'
(BL: 15.78, LCR: 0.63);
-- $3.6 million class B-4 downgraded to 'CC' from 'BB+'
(BL: 14.73, LCR: 0.58).
Deal Summary
-- Originators: Encore (19.83%), Ownit (17.07%); Ameriquest
(12.91%), First NLC (12.75%);
-- 60+ day Delinquency: 23.76%;
-- Realized Losses to date (% of Original Balance): 1.45%;
-- Expected Remaining Losses (% of Current balance): 25.22%;
-- Cumulative Expected Losses (% of Original Balance): 18.52%.
C-BASS 2006-CB5
-- $57.8 million class A-1 affirmed at 'AAA',
(BL: 74.59, LCR: 3);
-- $54.8 million class A-2 affirmed at 'AAA',
(BL: 58.93, LCR: 2.37);
-- $82.5 million class A-3 rated 'AAA', remains on Rating Watch
Negative (BL: 46.95, LCR: 1.89);
-- $52.7 million class A-4 downgraded to 'AA' from 'AAA',
remains on Rating Watch Negative (BL: 42.15, LCR: 1.7);
-- $20.6 million class M-1 downgraded to 'BB' from 'AA+'
(BL: 36.48, LCR: 1.47);
-- $18.1 million class M-2 downgraded to 'BB' from 'AA'
(BL: 31.38, LCR: 1.26);
-- $11.1 million class M-3 downgraded to 'B' from 'AA-'
(BL: 28.22, LCR: 1.14);
-- $9.5 million class M-4 downgraded to 'B' from 'A+'
(BL: 25.51, LCR: 1.03);
-- $9.2 million class M-5 downgraded to 'CCC' from 'A'
(BL: 22.85, LCR: 0.92);
-- $8.3 million class M-6 downgraded to 'CCC' from 'A-'
(BL: 20.32, LCR: 0.82);
-- $8.1 million class B-1 downgraded to 'CC' from 'BBB+'
(BL: 17.34, LCR: 0.7);
-- $6.4 million class B-2 downgraded to 'CC' from 'BB-'
(BL: 15.03, LCR: 0.6);
-- $4.2 million class B-3 downgraded to 'CC' from 'B+'
(BL: 13.52, LCR: 0.54).
Deal Summary
-- Originators: Fremont (63.43%);
-- 60+ day Delinquency: 20.19%;
-- Realized Losses to date (% of Original Balance): 1.09%;
-- Expected Remaining Losses (% of Current balance): 24.86%;
-- Cumulative Expected Losses (% of Original Balance): 16.90%.
C-BASS 2006-CB6
-- $36.2 million class A-I downgraded to 'AA' from 'AAA'
(BL: 42.40, LCR: 1.91);
-- $110.9 million class A-II-1 affirmed at 'AAA',
(BL: 66.64, LCR: 2.99);
-- $70.8 million class A-II-2 affirmed at 'AAA',
(BL: 56.68, LCR: 2.55);
-- $138.7 million class A-II-3 affirmed at 'AAA',
(BL: 44.72, LCR: 2.01);
-- $42.1 million class A-II-4 downgraded to 'AA' from 'AAA'
(BL: 42.54, LCR: 1.91);
-- $25.8 million class M-1 downgraded to 'BBB' from 'AA+'
(BL: 37.95, LCR: 1.71);
-- $30.8 million class M-2 downgraded to 'BB' from 'AA'
(BL: 32.53, LCR: 1.46);
-- $12.1 million class M-3 downgraded to 'BB' from 'AA-'
(BL: 30.38, LCR: 1.37);
-- $12.9 million class M-4 downgraded to 'BB' from 'A+'
(BL: 28.10, LCR: 1.26);
-- $12.1 million class M-5 downgraded to 'B' from 'A'
(BL: 25.93, LCR: 1.17);
-- $10.5 million class M-6 downgraded to 'B' from 'A-'
(BL: 23.99, LCR: 1.08);
-- $10.1 million class M-7 downgraded to 'CCC' from 'BBB+'
(BL: 21.94, LCR: 0.99);
-- $6.6 million class M-8 downgraded to 'CCC' from 'BBB'
(BL: 20.56, LCR: 0.92);
-- $10.5 million class B-1 downgraded to 'CCC' from 'BBB-'
(BL: 18.25, LCR: 0.82).
Deal Summary
-- Originators: Ameriquest (19.84%), New Century Mortgage
Corporation (26.03%), OwnIt Mortgage Solutions, Inc. (15.84%)
and Wilmington Finance Inc. (15.80%);
-- 60+ day Delinquency: 19.42%;
-- Realized Losses to date (% of Original Balance): 0.80%;
-- Expected Remaining Losses (% of Current balance): 22.26%;
-- Cumulative Expected Losses (% of Original Balance): 16.94%.
C-BASS 2006-CB7
-- $273.1 million class A1 downgraded to 'AA' from 'AAA'
(BL: 43.74, LCR: 1.75);
-- $120.8 million class A2 affirmed at 'AAA',
(BL: 71.89, LCR: 2.88);
-- $23.4 million class A3 affirmed at 'AAA',
(BL: 66.05, LCR: 2.65);
-- $67.8 million class A4 rated 'AAA', remains on Rating Watch
Negative (BL: 50.03, LCR: 2);
-- $39.1 million class A5 downgraded to 'AA' from 'AAA', remains
on Rating Watch Negative (BL: 42.72, LCR: 1.71);
-- $28.6 million class M1 downgraded to 'BBB' from 'AA+'
(BL: 38.87, LCR: 1.56);
-- $40.8 million class M2 downgraded to 'BB' from 'AA'
(BL: 33.22, LCR: 1.33);
-- $14.5 million class M3 downgraded to 'BB' from 'AA-'
(BL: 31.12, LCR: 1.25);
-- $14.1 million class M4 downgraded to 'B' from 'A+'
(BL: 29.05, LCR: 1.16);
-- $15 million class M5 downgraded to 'B' from 'A'
(BL: 26.79, LCR: 1.07);
-- $10 million class M6 downgraded to 'B' from 'A-'
(BL: 25.24, LCR: 1.01);
-- $9.1 million class M7 downgraded to 'CCC' from 'BBB+'
(BL: 23.74, LCR: 0.95);
-- $8.2 million class M8 downgraded to 'CCC' from 'BBB'
(BL: 22.34, LCR: 0.89);
-- $14.1 million class B1 downgraded to 'CCC' from 'BBB-'
(BL: 19.80, LCR: 0.79);
-- $13.6 million class B2 downgraded to 'CC' from 'BB+'
(BL: 17.39, LCR: 0.7).
Deal Summary
-- Originators: Ameriquest (28.84%), New Century Mortgage
Corporation (25.61%);
-- 60+ day Delinquency: 19.23%;
-- Realized Losses to date (% of Original Balance): 0.76%;
-- Expected Remaining Losses (% of Current balance): 24.96%;
-- Cumulative Expected Losses (% of Original Balance): 20.90%.
C-BASS 2006-CB8
-- $134.1 million class A1 downgraded to 'AA' from 'AAA',
remains on Rating Watch Negative (BL: 49.53, LCR: 1.7);
-- $102.5 million class A2A affirmed at 'AAA',
(BL: 73.23, LCR: 2.51);
-- $29.9 million class A2B affirmed at 'AAA',
(BL: 63.32, LCR: 2.17);
-- $38.4 million class A2C downgraded to 'AA' from 'AAA',
remains on Rating Watch Negative (BL: 50.80, LCR: 1.74);
-- $10.8 million class A2D downgraded to 'AA' from 'AAA',
remains on Rating Watch Negative (BL: 48.15, LCR: 1.65);
-- $22.3 million class M1 downgraded to 'BBB' from 'AA+'
(BL: 43.65, LCR: 1.5);
-- $30 million class M2 downgraded to 'BB' from 'AA+'
(BL: 37.35, LCR: 1.28);
-- $11.4 million class M3 downgraded to 'B' from 'AA'
(BL: 34.92, LCR: 1.2);
-- $11.7 million class M4 downgraded to 'B' from 'AA-'
(BL: 32.42, LCR: 1.11);
-- $13.7 million class M5 downgraded to 'B' from 'A+'
(BL: 29.43, LCR: 1.01);
-- $8 million class M6 downgraded to 'CCC' from 'A'
(BL: 27.63, LCR: 0.95);
-- $10.6 million class M7 downgraded to 'CCC' from 'A-'
(BL: 25.05, LCR: 0.86);
-- $2.9 million class M8 downgraded to 'CCC' from 'BBB+'
(BL: 24.30, LCR: 0.83);
-- $15.4 million class B1 downgraded to 'CC' from 'BBB'
(BL: 20.26, LCR: 0.7);
-- $10.6 million class B2 downgraded to 'CC' from 'BBB-'
(BL: 17.62, LCR: 0.6);
-- $9.7 million class B3 downgraded to 'CC' from 'BB'
(BL: 15.47, LCR: 0.53).
Deal Summary
-- Originators: Ameriquest (29.26%), OwnIt (29.11%), NC Capital
Corporation (13.28%);
-- 60+ day Delinquency: 23.77%;
-- Realized Losses to date (% of Original Balance): 0.68%;
-- Expected Remaining Losses (% of Current balance): 29.13%;
-- Cumulative Expected Losses (% of Original Balance): 25.15%.
C-BASS 2006-CB9
-- $236.9 million class A1 rated 'AAA', remains on Rating Watch
Negative (BL: 51.74, LCR: 1.94);
-- $72.1 million class A2 rated 'AAA', remains on Rating Watch
Negative (BL: 47.31, LCR: 1.78);
-- $116.9 million class A3 downgraded to 'AA' from 'AAA',
remains on Rating Watch Negative (BL: 41.65, LCR: 1.56);
-- $82.5 million class A4 downgraded to 'A' from 'AAA', remains
on Rating Watch Negative (BL: 38.85, LCR: 1.46);
-- $28.3 million class M1 downgraded to 'BB' from 'AA+'
(BL: 34.75, LCR: 1.31);
-- $22.9 million class M2 downgraded to 'B' from 'AA'
(BL: 31.27, LCR: 1.17);
-- $13.8 million class M3 downgraded to 'B' from 'AA-'
(BL: 29.12, LCR: 1.09);
-- $11.8 million class M4 downgraded to 'B' from 'A+'
(BL: 27.18, LCR: 1.02);
-- $12.2 million class M5 downgraded to 'CCC' from 'A'
(BL: 25.11, LCR: 0.94);
-- $9.6 million class M6 downgraded to 'CCC' from 'A-'
(BL: 23.39, LCR: 0.88);
-- $9.2 million class M7 downgraded to 'CCC' from 'BBB+'
(BL: 21.65, LCR: 0.81);
-- $8.8 million class M8 downgraded to 'CC' from 'BBB'
(BL: 19.81, LCR: 0.74);
-- $6.1 million class M9 downgraded to 'CC' from 'BBB-'
(BL: 18.55, LCR: 0.7);
Deal Summary
-- Originators: NC Capital Corporation (29.45%), Ameriquest
(28.43%), OwnIt (24.16%), AIG Federal Savings Bank (11.98%);
-- 60+ day Delinquency: 18.71%;
-- Realized Losses to date (% of Original Balance): 0.32%;
-- Expected Remaining Losses (% of Current balance): 26.62%;
-- Cumulative Expected Losses (% of Original Balance): 23.66%.
The rating actions are based on changes that Fitch has made to its
subprime loss forecasting assumptions. The updated assumptions
better capture the deteriorating performance of pools from 2007,
2006 and late 2005 with regard to continued poor loan performance
and home price weakness.
CARINA CDO: S&P Puts Ratings of Notes at D on Liquidation
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 20
classes of notes from two collateralized debt obligation
transactions- Carina CDO Ltd. and TABS 2006-5 Ltd.- to 'D' and
removed five of the lowered ratings from CreditWatch with negative
implications. The lowered ratings follow notices from the
trustees of the two deals that they are in the final stages of the
liquidation process and that the sale proceeds from the cash
collateral, along with the proceeds in the collateral principal
collection account, super-senior reserve account, credit default
swap reserve account, and other sources, will likely not
be adequate to cover the required termination payments to the CDS
counterparty.
The trustees have indicated that they anticipate that proceeds
will be insufficient to cover the funded portion of the super-
senior swap in full, and that it is likely that proceeds will not
be available for distribution to the notes junior to super-senior
swap in the capital structure of both of these transactions.
Both Carina CDO Ltd. and TABS 2006-5 Ltd. are hybrid CDOs of
asset-backed securities collateralized in large part by mezzanine
tranches of residential mortgage-backed securities and other
structured finance transactions.
S&P previously lowered the ratings assigned to all of the notes
from Carina CDO Ltd., on Nov. 8, 2007, following notice from the
trustee of the controlling class' intent to liquidate. This
notice followed a previous notice declaring an event of default
as of Oct. 22, 2007, under section 5.1(h) of the indenture. For
TABS 2006-5, S&P had previously lowered the ratings assigned to
all the notes on Dec. 19, 2007, following notice from the trustee
of the controlling class' intent to liquidate. This notice
followed a previous notice declaring an EOD as of Nov. 1, 2007,
under section 5.1(h) of the indenture.
Ratings Lowered and Removed From CreditWatch Negative
Rating
------
Transaction Class To From
----------- ----- -- ----
Carina CDO Ltd. A-1 D BB/Watch Neg
Carina CDO Ltd. A-2 D CCC-/Watch Neg
Carina CDO Ltd. B-1 D CCC-/Watch Neg
TABS 2006-5 Ltd. A1S D BB/Watch Neg
TABS 2006-5 Ltd. A1J D CCC-/Watch Neg
Ratings Lowered
Rating
------
Transaction Class To From
----------- ----- -- ----
Carina CDO Ltd. B-2 D CC
Carina CDO Ltd. C-1 D CC
Carina CDO Ltd. C-2 D CC
Carina CDO Ltd. D-1 D CC
Carina CDO Ltd. D-2 D CC
Carina CDO Ltd. D-3 D CC
Carina CDO Ltd. X-1 D CC
Carina CDO Ltd. X-2 D CC
TABS 2006-5 Ltd. A2 D CC
TABS 2006-5 Ltd. A3 D CC
TABS 2006-5 Ltd. B1 D CC
TABS 2006-5 Ltd. B2 D CC
TABS 2006-5 Ltd. B3 D CC
TABS 2006-5 Ltd. C D CC
TABS 2006-5 Ltd. I Sub nts D CC
CELLEGY PHARMA: Inks Buyout Deal with Adamis Pharmaceuticals
------------------------------------------------------------
Cellegy Pharmaceuticals Inc. entered into a definitive merger
agreement providing for the acquisition of Cellegy by Adamis
Pharmaceuticals Corporation.
Adamis' chief executive officer, Dr. Dennis Carlo, is expected to
become the chief executive officer of the combined company.
Dr. Carlo is a veteran of the pharmaceutical and biotechnology
industry, having served as CEO of publicly traded Immune Response
Corporation, president of Telos Pharmaceuticals, and vice
president of research and development and therapeutic
manufacturing of Hybritech Inc. prior to its acquisition by Eli
Lilly & Co.
The transaction was unanimously approved by the boards of
directors of both companies and is anticipated to close during the
second or third quarter of 2008, subject to the filing of a
registration statement and proxy statement with the Securities and
Exchange Commission, the approval of Adamis' and Cellegy's
stockholders at stockholder meetings distribution of a definitive
proxy statement, and other customary closing conditions.
Holders of approximately 40% of Cellegy's outstanding common stock
have entered into voting agreements pursuant to which they agreed
to vote their shares in favor of the transaction. The combined
company expects to continue to be publicly traded after completion
of the merger, although under a different corporate name.
"The merger of Cellegy and Adamis will create a new specialty
pharmaceutical company focused on the development and
commercialization of therapeutic products for a variety of viral
diseases, including influenza," Mr. Williams, Cellegy's CEO, said.
"We like the fact that in addition to technologies in development
that we believe are promising, Adamis has allergy and respiratory
products already being sold in the U.S. marketplace, and a
contract packaging company that provides a source of current
revenue and the potential for future revenue and income growth,"
Mr. Williams said.
"This merger allows us to fulfill our strategic objective of
building a publicly traded company that combines biopharmaceutical
research and development with the financial stability of a company
producing immediate revenues from the sale of specialty
pharmaceutical products and from the packaging of drugs for major
pharmaceutical distributors," Dr. Carlo said. "We believe the
concept makes sense both financially and operationally."
Cellegy estimates that its stockholders will hold between
approximately 4% to 6% of the total number of outstanding shares
immediately after the merger, and Adamis' stockholders are
expected to hold in excess of 94% of the total number of
outstanding shares of the combined companies.
If the transaction is approved by the stockholders, before the
closing of the merger Cellegy will implement a reverse stock split
of its common stock so that the outstanding Cellegy shares will be
converted into a number of shares equal to the sum of 3 million
plus the amount of Cellegy's net working capital at the time of
the closing of the merger divided by $0.50.
It is estimated based on assumptions that the reverse split will
be between 8.5 to 1 and 9.945 to 1. The actual amounts and
percentages will depend on many factors, and actual amounts and
percentages could be higher or lower. There are approximately
29.8 million outstanding Cellegy shares.
At the effective time of the merger, each outstanding share of
Adamis common stock will be converted into the right to receive
one, post-reverse stock split, share of Cellegy common stock,
excluding in all cases dissenting shares, subject to cash payment
in lieu of the issuance of fractional shares. Adamis has
approximately 50 million outstanding shares of common stock,
excluding options, warrants and convertible securities.
In connection with the signing of the merger agreement, Cellegy
also provided a loan to Adamis in the amount of $500,000 to
provide additional funds to Adamis during the pendency of the
merger transaction.
The companies anticipate that in connection with the closing of
the transaction, directors selected by Adamis would assume a
majority of the positions on the combined company's board of
directors. Richard C. Williams, Cellegy's chairman and interim
chief executive officer, and Cellegy directors John Q. Adams and
Robert B. Rothermel are expected to continue as directors of the
combined company.
The merger is intended to qualify for federal income tax purposes
as a tax-free reorganization under the provisions of Section
368(a) of the U.S. Internal Revenue Code of 1986, as amended.
Adamis Pharmaceuticals Corporation
Adamis is a privately held specialty pharmaceutical company
engaged in the research, development and commercialization of
prescription medicines for the treatment of viral infections,
including influenza. Adamis also markets several prescription
allergy and respiratory products in the United States and is
developing additional product candidates in the allergy and
respiratory field. Adamis also owns a specialty packaging company
that provides packaging for pharmaceutical and nutraceutical
products.
About Cellegy Pharmaceuticals
Headquartered in Quakertown, Pennsylvania, Cellegy Pharmaceuticals
Inc. (OTC BB: CLGY.OB) -- is a specialty biopharmaceutical
company. Following the company's decision to eliminate its direct
research activities and the sale of its assets to ProStrakan in
late 2006, the company's operations currently relate primarily to
the ownership of its intellectual property rights relating to the
Biosyn product candidates and the evaluation of its remaining
options and alternatives with respect to its future course of
business.
Going Concern Doubt
As reported in the Troubled Company Reporter on Oct. 23, 2007,
Mayer Hoffman McCann PC, in Plymouth Meeting, Pennsylvania,
expressed substantial doubt about Cellegy Pharmaceuticals Inc.'s
ability to continue as a going concern after auditing company's
financial statements ended Dec. 31, 2006. The auditing firm
pointed to the company's recurring losses from operations and
limited working capital to pursue its business alternatives.
CHARYS HOLDING: Files for Chapter 11 to Implement Creditor Deal
---------------------------------------------------------------
Charys Holding Company, Inc. filed a voluntary petition for relief
under Chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the District of Delaware to implement certain
pre-negotiated agreements in principle with its largest creditors
that will reduce debt, rationalize its capital structure and
provide a platform for future profitability.
Crochet & Borel Services, Inc., a non-operating subsidiary of
Charys, also filed a Chapter 11 case. Charys' operating
subsidiaries were not included in the Chapter 11 filings.
Chief Executive Officer and Chairman of the Board of Directors,
Billy V. Ray, Jr. has resigned and Michael Oyster, Executive Vice
President and Director, has been appointed as the Chief Executive
Officer and President of Charys. David Gergacz, the Chairman of
the Audit Committee of the Board, has been elected Chairman of the
Board.
Charys has been engaged in substantive discussions with its
largest creditors and has reached an agreement in principle with
certain holders -- or managers of accounts that hold --
approximately 62% of the approximately $201 million in principal
amount of Charys' 8.75% Senior Convertible Notes due 2012. The
agreement in principle forms the basis of a Chapter 11 plan of
reorganization under which, among other things:
(a) in excess of $160 million of the Convertible Notes would be
converted into a substantial majority of the common equity
of the reorganized company, and
(b) existing subordinated debt and existing equity interests in
Charys each would be canceled, and the holders would
receive no distribution or consideration.
Charys also has reached agreements in principle to eliminate more
than $72 million in debt obligations arising out of the
acquisition of its largest operating subsidiaries and to provide
for the continued critical leadership and other services by key
management within the organization. Charys will utilize the
Chapter 11 process to implement the terms of such agreements.
The implementation of the agreements in principle is dependent
upon a number of factors, including final documentation, the
filing of a plan of reorganization, the approval of a disclosure
statement and confirmation and consummation of the plan of
reorganization in accordance with the provisions of the Bankruptcy
Code.
"The agreements with our key creditors allow Charys to continue
focusing on our business and for us to emerge a stronger, more
viable company with a healthy balance sheet," said Michael Oyster,
Charys CEO.
Charys emphasized that normal operations will continue at its
subsidiaries during the restructuring process. "The operating
businesses are well-managed, competitive, and expected to
experience high growth opportunities in the near term," said
Oyster.
About Charys Holding Company
Headquartered in Atlanta, Georgia, Charys (Pink Sheets: CHYS) --
http://www.charys.com/-- is a publicly traded company providing
infrastructure services in two primary markets. In the
remediation and reconstruction markets, Charys services include
emergency planning and coordination, response to catastrophic
losses, reconstruction and restoration and environmental
remediation. In the wireless communications and data
infrastructure markets, Charys provides an array of services
including engineering, program management, construction,
installation and maintenance, tower services, radio and advanced
technology implementation and integration services to large
service providers and other business enterprises.
CHARYS HOLDING: Case Summary & 41 Largest Unsecured Creditors
-------------------------------------------------------------
Lead Debtor: Charys Holding Co., Inc.
aka Spiderboy International, Inc.
aka Rogers Hardware and Lumber Co.
117 Perimeter Center West, Suite N415
Atlanta, GA 30338
Bankruptcy Case No.: 08-10289
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Crochet & Borel Services, Inc. 08-10290
Type of Business: The Debtors provide remediation & reconstruction
and wireless communications & data
infrastructure. The remediation and
reconstruction business line includes emergency
planning and coordination, response to
catastrophic losses, reconstruction and
restoration and environmental remediation. The
wireless communications and data infrastructure
business line provides an array of
telecommunications infrastructure services to
services providers and other business
enterprises. See http://www.charys.com/
Chapter 11 Petition Date: February 14, 2008
Court: District of Delaware (Delaware)
Judge: Brendan Linehan Shannon
Debtors' Counsel: Chun I. Jang, Esq.
Mark D. Collins, Esq.
Paul Noble Heath, Esq.
Richards, Layton & Finger, P.A.
920 North King Street
P.O. Box 551
Wilmington, DE 19899
Tel: (302) 651-7700
Fax: (302) 651-7701
Debtors' Consolidated Financial Condition:
Total Assets: $245,000,000
Total Debts: $255,000,000
A. Charys Holding Co., Inc's 21 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
The Bank of New York indenture trustee for $201,000,000
Attention: Corporate Trust 8.75% senior
Administration-Atlanta convertible notes due
Trust Co., N.A. as Trustee 2012 (the "Notes")
D.M.G.-G.E.O.
101 Barclay Street
New York, NY 10286
with a copy to:
The Bank of New York Trust
Co., N.A.
Attention: Corporate Trust
Department
100 Ashford Center North,
Suite 520
Atlanta, GA 30338
Q.V.T. Associates G.P., L.L.C. note unknown
Q.V.T. Financial, L.P.
Q.V.T. Fund, L.P.
1177 Avenue of the Americas,
9th Floor
New York, NY 10036
Morgan Stanley and Co., Inc. note unknown
1585 Broadway
New York, 10036
Aristeia International, Ltd. note unknown
Aristeia Partner, L.P.
Aristeia Special Investments
Master L.P.
136 Madison Avenue, 3rd Floor
New York, NY 10016
J.P. Morgan Securities, Inc. note unknown
277 Park Avenue
New York, NY 10072
Highbridge Convertible note unknown
Arbitrage Master Fund, L.P.
Highbridge International,
L.L.C.
9 West 57th Street, 27th Floor
New York, NY 10019
Quattro Fund, Ltd. note unknown
Quattro Multi-Strategy Master
Fund, L.P.
546 Fifth Avenue, 19th Floor
New York, NY 10036
T.Q.A. Master Fund, Ltd. note unknown
T.Q.A. Master Plus Fund, Ltd.
T.Q.A. Special Opportunities
Master Fund, Ltd.
Institutional Benchmark
Master Fund L.D.G., Ltd.
333 Ludlow Street
Stamford, CT 06902
Ionic Capital Master Fund, note unknown
Ltd.
I.C.M. Business Trust
366 Madison Avenue, 9th Floor
New York, NY 10017
Tenor Opportunity Master Fund, note unknown
Ltd.
National Bank of Canada
1180 Avenue of the Americas,
Suite 1940
New York, NY 10036
E.B.F. note unknown
601 Carlson Parkway, Suite 200
Minnetionka, MN 55305
A.Q.R. note unknown
Two Greenwich Plaza, 1st Floor
Greenwich, CT 06830
Enable Growth Partners, L.P. note unknown
Enable Opportunity Partners,
L.P.
One Ferry Building, Suite 255
San Francisco, CA 94111
Silvercreek II, Ltd. note unknown
Silvercreek, L.P.
1670 Bayview Avenue, Suite 308
Toronto M4G 3C2, Canada
Fort Mason Master, L.P. note unknown
Fort Mason Partners, L.P.
Four Embarcadero Center,
Suite 2050
San Francisco, CA 94111
Basso Fund, Ltd. note unknown
Basso Holdings, Ltd.
Basso Multi-Strategy Holdings
Fund, Ltd.
1266 East Main Street
Stamford, CT 06902
S.A.C. Arbitrage Fund, L.L.C. note unknown
540 Madison Avenue
New York, NY 10022
Harvest Capital, L.P. note unknown
Harvest Master Enhanced, Ltd.
Harvest Offshore Investors,
Ltd.
600 Madison Avenue
New York, NY 10022
Silverback note unknown
1414 Raleigh Road, Suite 250
Chapel Hill, NC 27517
Penn Cap note unknown
457 Haddonfield Road,
Suite 210
Cherry Hill, NJ 08002
Paul Hastings, Janofsky & professional services $1,274,977
Walker, L.L.P.
600 Peachtree Street,
Suite 2400
Atlanta, GA 30308
B. Crochet & Borel Services, Inc's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
The Bank of New York indenture trustee for $201,000,000
Attention: Corporate Trust 8.75% senior
Administration-Atlanta convertible notes due
Trust Co., N.A. as Trustee 2012 (the "Notes")
D.M.G.-G.E.O.
101 Barclay Street
New York, NY 10286
with a copy to:
The Bank of New York Trust
Co., N.A.
Attention: Corporate Trust
Department
100 Ashford Center North,
Suite 520
Atlanta, GA 30338
L.V.I. Environmental Services, trade debt $10,636,205
Inc.
80 Broad Street, 3rd Floor
New York, NY 1004
Statewide Disaster trade debt $1,938,995
Restoration, Inc.
22310 Telegraph Road
Southfield, MI 48034
Gulf Star Rental Solutions trade debt $523,234
3425 West Cardinal Drive
Beaumont, TX 77705
Bay Area Disaster Kleenup trade debt $352,626
Attention: Mark Spicola
P.O. Box 1887
Oldsmar, FL 34677
Loss Mitigation Services, Inc. trade debt $227,991
Pro Tech Plumbing, L.L.C. trade debt $219,103
The Restoration Co., Inc. trade debt $76,162
A.R.&R. Risk Management Group, trade debt $57,650
Inc.
Robinson, Biggs, Ingram, Solop trade debt $46,169
& Farris, P.L.L.C.
Correro, Fishman, Haygood, trade debt $43,612
Phelps, Walmsley & Casteix,
L.L.P.
Clean Response, Inc. trade debt $33,969
Orgain, Bell & Tucker, L.L.P. professional services $32,548
Davis, Staton & Co., L.L.P. trade debt $26,315
Fowler Rodriguez trade debt $25,436
Snider & Byrd Law Firm, L.L.P. professional services $21,469
High Tech Carpets, Inc. trade debt $15,679
Sheldon, Dunham & Edwardson, professional services $11,718
L.L.P.
American International trade debt $11,508
Recovery
Mabry and Mabry, Ltd. trade debt $10,000
CHOICE HOTELS: December 31 Balance Sheet Upside-Down by $157 Mil.
-----------------------------------------------------------------
Choice Hotels International Inc.'s balance sheet at Dec. 31, 2007,
showed total assets of $328.38 million and total liabilities of
$485.44 million, resulting to a total shareholders' deficit of
$157.06 million.
The company reported the financial results for the fourth quarter
and full-year ended Dec. 31, 2007.
For three months, the company reported $27.95 million net income
compared with $24.63 million net income for the same period in the
previous quarter.
For full-year 2007, the company generated $111.30 million net
income, compared to $112.79 million net income in 2006.
"2007 was another very strong year for the company, as we
continued to successfully execute our strategy of profitably
growing our franchise system and domestic market share of branded
hotel rooms," Charles A. Ledsinger, Jr., vice chairman and chief
executive officer, said. "We achieved another record year for new
domestic hotel franchise contract sales, which highlights our
ability to attract owners to our family of ten powerful brands by
leveraging our size, scale, and distribution to deliver guests
and create opportunities for our franchisees to achieve
exceptional returns on their investment."
Use of Free Cash Flow
For the year ended Dec. 31, 2007, the company paid $40.1 million
of cash dividends to shareholders. The annual dividend rate per
common share is $0.68.
For the three months ended Dec. 31, 2007, the company purchased
approximately 0.8 million shares of its common stock at an average
price of $36.16 for a total cost of $28.7 million under its share
repurchase program.
For the year ended Dec. 31, 2007, the company purchased
approximately 4.9 million shares of its common stock at an average
price of $37.47 for a total cost of $184 million. At Dec. 31,
2007, the company had authorization to purchase up to an
additional 3.2 million shares under the share repurchase program.
Repurchases will continue to be made in the open market and
through privately negotiated transactions subject to market
and other conditions. No minimum number of shares has been fixed.
Since Choice disclosed its stock repurchase program on June 25,
1998, the company has repurchased 38.6 million shares of its
common stock for a total cost of $895.9 million through December
31, 2007. Considering the effect of a two-for-one stock split in
October 2005, the company has repurchased 71.5 million shares
under the share repurchase program at an average price of $12.52
per share.
About Choice Hotels International Inc.
Based in Silver Spring, Maryland, Choice Hotels International Inc.
(NYSE:CHH) -- http://www.choicehotels.com/-- franchises more than
5,500 hotels, representing more than 450,000 rooms, in the United
States and 37 countries and territories. As of Dec. 31, 2007,
1,004 hotels are under development in the United States,
representing 79,342 rooms, and an additional 89 hotels,
representing 8,640 rooms, are under development in more than 15
countries and territories. The company's Comfort Inn, Comfort
Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay
Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn
brands serve guests worldwide.
CHRYSLER LLC: Court to Decide Fate of Tooling Dispute on Feb. 19
----------------------------------------------------------------
The Honorable Phillip Shefferly of the U.S. Bankruptcy Court for
the Eastern District of Michigan will rule on the tooling dispute
between Plastech Engineered Products Inc. and its debtor-
affiliates, and Chrysler LLC, on Feb. 19, 2008, Reuters reports.
For the meantime, Judge Shefferly urged the parties to reach an
interim agreement for the next few days, since the last interim
tooling agreement expires today. He told the parties he would be
"very disappointed" if they do not reach a temporary accord over
the weekend, relates Reuters.
Chrysler said it was not sure when it could talk with Plastech
about extending the interim pact, Reuters says, citing Kevin
Frazier, a Chrysler representative.
As reported in the Troubled Company Reporter on Feb. 14, 2008, the
parties threw objection after objection against each other in a
two-day hearing before the Court, with Plastech challenging
Chrysler to prove its "ownership" of the tooling parts.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive supplier
of interior, exterior and underhood components. It designs and
manufactures blow-molded and injection-molded plastic products
primarily for the automotive industry. Plastech's products
include automotive interior trim, underhood components, bumper and
other exterior components, and cockpit modules. Plastech's major
customers are General Motors, Ford Motor Company, and Toyota, as
well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000.
About Chrysler LLC
Based 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. S&P
said the outlook is negative.
CHRYSLER LLC: Insists That It Owns Tooling Equipment
----------------------------------------------------
Chrysler LLC reacted to Plastech Engineered Products Inc. and its
debtor-affiliates' argument that the tooling equipment the
carmaker is trying to recover is property of the Debtors' estate.
Chrysler asks the U.S. Bankruptcy Court for the Eastern District
of Michigan to lift the automatic stay so it can immediately
possess the Tooling.
Chrysler argues that the objections of the Debtors and various of
the Debtors' lenders, which share a common theme -- that
Chrysler's entitlement to possession of the Tooling is somehow
conditioned on Chrysler proving "ownership" of the Tooling -- miss
the mark.
"Possession of the Tooling, not ownership, is the issue before
the Court," Chrysler's counsel, Michael C. Hammer, Esq., at
Dickinson Wright PLLC, in Ann Arbor, Michigan, asserts.
Mr. Hammer points out that none of the objections to Chrysler's
lift stay request contest the fact that the accommodation
agreements entered between the Debtors and their customers,
including Chrysler, require the Debtors to deliver possession of
the Tooling to Chrysler.
The Financial Accommodation Agreement, Mr. Hammer further points
out, provides that "[Chrysler] . . . shall have the right to take
immediate possession of the [Tooling] at any time, without
payment of any kind from [Chrysler] to Plastech. The rights and
obligations contained in this Section shall continue
notwithstanding the expiration or termination of this Agreement."
Mr. Hammer also tells the Court that Chrysler has paid valuable
consideration for the right to immediate possession of the
Tooling under the FAAs.
If the Court does not enforce Chrysler's request for immediate
possession of the Tooling, the Debtors will have another
opportunity to hold Chrysler hostage for extraordinary financial
accommodations, Mr. Hammer says. If Chrysler refuses to pay the
ransom that the Debtors said they will demand, Mr. Hammer adds
that Chrysler will again be forced to idle its plants and lay off
its workers.
Chrysler says that it does not object to preserving any lien
rights of the Debtors' prepetition lenders. Chrysler says it
will pay approximately $13,726,389 into escrow for the remaining
unpaid contract price, if any, with respect to any Tooling.
Mr. Hammer says any lien in the Unpaid Tooling can be transferred
to the proceeds and the Court can decide how those proceeds
should be divided amount competing lien claimants.
Chrysler also agrees that removal of the Tooling should be done
in a manner most reasonably calculated to cause the least
interruption of the Debtors' businesses.
As reported in the Troubled Company Reporter on Feb. 14, 2008,
rival carmakers General Motors Corp. and Ford Motor Co. showed
support to Chrysler LLC and its pursuit in recovering the tooling
equipment held up at the Debtors' plants.
Representatives for GM and Ford as well as for auto supplier
Johnson Controls Inc. told the Court they believe Chrysler has the
right to reclaim their own equipment under their contracts with
Plastech.
"GM is not taking a position regarding whether the court should
grant Chrysler the relief it is seeking," GM spokesman Frank
Sopata said, according to the Associated Press. "But GM does
strongly support Chrysler's position regarding the tooling since
we have entered into the same agreement as Chrysler and the other
major customers of Plastech to reclaim our tooling should it be
necessary."
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive supplier
of interior, exterior and underhood components. It designs and
manufactures blow-molded and injection-molded plastic products
primarily for the automotive industry. Plastech's products
include automotive interior trim, underhood components, bumper and
other exterior components, and cockpit modules. Plastech's major
customers are General Motors, Ford Motor Company, and Toyota, as
well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
About Chrysler LLC
Based 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. S&P
said the outlook is negative.
CONSUMER PORTFOLIO: Earnings Drop to $3.5MM in Qtr. Ended Dec. 31
-----------------------------------------------------------------
Consumer Portfolio Services Inc. reported earnings for its fourth
quarter and year ended Dec. 31, 2007.
Net income for the fourth quarter of 2007 was $3.5 million
compared to net income of $30.9 million for the year-ago quarter.
Net income for the 2006 period included a net tax benefit of
$26.4 million related to the reversal of most of the valuation
allowance against the deferred tax asset on the company's books.
Without the tax gain, and assuming the tax rate that was in effect
in 2006, net income for the fourth quarter of 2006 would have been
$2.7 million.
Pretax income for the fourth quarter of 2007 increased to
$6 million, compared to pretax income of $4.5 million for the
fourth quarter of 2006.
Net income for the year ended Dec. 31, 2007 was $13.9 million
compared to net income of $39.6 million for the year ended
Dec. 31, 2006. Net income for 2006 included a net tax benefit of
$26.4 million. Without the tax gain, and assuming the tax rate
that was in effect in 2006, net income for 2006 would have been
$7.8 million.
Pretax income for the full year 2007 increased to $24 million,
compared to pretax income of $13.2 million for 2006.
At Dec. 31, 2007, the company's balance sheet showed total assets
of $2.28 billion, total liabilities of $2.17 billion and total
shareholders' equity of $0.11 billion.
About Consumer Portfolio
Consumer Portfolio Services Inc., headquartered in Irvine,
California, (NasdaqGM: CPSS) -- http://www.consumerportfolio.com/
-- is a specialty finance company engaged in purchasing and
servicing new and used retail automobile contracts originated
primarily by franchised automobile dealerships and to a lesser
extent by select independent dealers of used automobiles in the
United States. The company serves as an alternative source of
financing for dealers, facilitating sales to sub-prime customers,
who have limited credit history, low income or past credit
problems and who otherwise might not be able to obtain financing
from traditional sources.
* * *
Consumer Portfolio Services Inc. continues to carry Fitch's CCC-
subordinated debt rating which was placed in December 2001.
COOKSON SPC: S&P Slashes Ratings on Class D and E Notes to 'CC'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class D and E notes from Cookson SPC's series 2007-31 to 'CC'.
The transaction's indenture contains computational guidance for a
full capital structure of which only classes D and E were issued.
The indenture included an event of default based on the class A-1
overcollateralization test, which entitles the swap counterparty
to terminate the transaction.
The lowered ratings reflect the termination notice received on the
credit default swap confirmation. Standard & Poor's expects that
the class D and E notes will have a principal shortfall when the
termination occurs on Feb. 15, 2008.
Ratings Lowered
Cookson SPC
Series 2007-31
Rating
------
Class To From
----- -- ----
D CC BB+
E CC BB
COOKSON SPC: S&P Puts Two 2007 Note Series on Negative Watch
------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the notes
issued by Cookson SPC's series 2007-1LAC and 2007-2LAC on
CreditWatch with negative implications.
The rating actions reflect the Jan. 30, 2008, placement of the
ratings on the class B floating-rate deferrable interest secured
notes due 2046 and class C floating-rate deferrable interest
secured notes due 2046 issued by Lacerta ABS CDO 2006-1 Ltd. on
CreditWatch negative.
Cookson SPC series 2007-1LAC is a credit-linked note transaction
and the rating of the notes is based on the lower of:
(i) the reference obligations, Lacerta ABS CDO 2006-1 Ltd.'s
class C floating rate deferrable interest secured notes
due 2046 ('CCC-/Watch Neg'); and
(ii) the rating on the swap counterparty, Citibank N.A.
('AA/A-1+').
Cookson SPC's series 2007-2LAC also is a credit-linked note
transaction and the rating of the notes is based on the lower of:
(i) the reference obligations, Lacerta ABS CDO 2006-1 Ltd.'s
class B floating-rate deferrable interest secured notes
due 2046 ('BB-/Watch Neg'); and
(ii) the rating on the swap counterparty, Citibank N.A.
('AA/A-1+').
Ratings Placed on CreditWatch Negative
Cookson SPC Series 2007-1LAC
EUR24 million Series 2007-1LAC Notes Due 2046
Rating
------
Class To From
----- -- ----
Notes CCC-/Watch Neg CCC-
Cookson SPC Series 2007-2LAC
EUR10 million Series 2007-2LAC Notes Due 2046
Rating
------
Class To From
----- -- ----
Notes BB-/Watch Neg BB-
CREDIT SUISSE: Fitch Junks Ratings on 25 Certificate Classes
------------------------------------------------------------
Fitch Ratings has taken these rating actions on Credit Suisse
First Boston Mortgage Securities Corp. Home Equity Mortgage Trust
mortgage pass-through certificates. Affirmations total
$535.2 million and downgrades total $784.5 million. In addition,
$66.9 million were placed on Rating Watch Negative. Break Loss
percentages and Loss Coverage Ratios for each class, rated 'B' or
higher, are included with the rating actions as:
CSFB HEMT 2005-2
-- $4.0 million class M-2 affirmed at 'AA'
(BL: 98.64, LCR: 4.99);
-- $11.5 million class M-3 affirmed at 'AA-'
(BL: 93.78, LCR: 4.75);
-- $11.7 million class M-4 affirmed at 'A+'
(BL: 83.20, LCR: 4.21);
-- $11.5 million class M-5 affirmed at 'A'
(BL: 70.82, LCR: 3.59);
-- $10.8 million class M-6 affirmed at 'A-'
(BL: 59.04, LCR: 2.99);
-- $10.8 million class M-7 affirmed at 'BBB+'
(BL: 47.17, LCR: 2.39);
-- $10.8 million class M-8 affirmed at 'BBB'
(BL: 29.25, LCR: 1.48);
-- $7.6 million class M-9 rated 'BBB-' (BL: 25.95, LCR: 1.31),
placed on Rating Watch Negative;
-- $7.9 million class B-1 downgraded to 'CCC/DR2' from 'BB-',
removed from Rating Watch Negative;
-- $3.6 million class B-2 downgraded to 'C/DR5' from 'B',
removed from Rating Watch Negative;
Deal Summary
-- Originators: Various
-- 60+ day Delinquency: 9.6%;
-- Realized Losses to date (% of Original Balance): 4.01%;
-- Expected Remaining Losses (% of Current Balance): 19.75%;
-- Cumulative Expected Losses (% of Original Balance): 7.89%.
CSFB HEMT 2005-3
-- $20.6 million class M-1 affirmed at 'AA+'
(BL: 90.24, LCR: 2.80);
-- $10.8 million class M-2 affirmed at 'AA'
(BL: 80.53, LCR: 2.50);
-- $18.8 million class M-3 affirmed at 'A+'
(BL: 62.10, LCR: 1.93);
-- $9.8 million class M-4 affirmed at 'A'
(BL: 52.43, LCR: 1.63);
-- $10.0 million class M-5 downgraded to 'BBB' from 'A-'
(BL: 42.46, LCR: 1.32);
-- $8.8 million class M-6 downgraded to 'B' from 'BBB+'
(BL: 33.50, LCR: 1.04);
-- $9.0 million class M-7 downgraded to 'C/DR5' from 'BB+';
-- $6.7 million class M-8 downgraded to 'C/DR6' from 'BB';
-- $7.1 million class B-1 revised to 'C/DR6' from 'C/DR5';
-- $1.5 million class B-2 revised to 'C/DR6' from 'C/DR5';
Deal Summary
-- Originators: Various
-- 60+ day Delinquency: 18.1%;
-- Realized Losses to date (% of Original Balance): 6.58%;
-- Expected Remaining Losses (% of Current Balance): 32.24%;
-- Cumulative Expected Losses (% of Original Balance): 14.74%.
CSFB HEMT 2005-4
-- $37.0 million class A-3 affirmed at 'AAA'
(BL: 93.85, LCR: 3.42);
-- $19.9 million class A-4 affirmed at 'AAA'
(BL: 86.94, LCR: 3.17);
-- $32.9 million class M-1 affirmed at 'AA+'
(BL: 71.12, LCR: 2.59);
-- $33.6 million class M-2 affirmed at 'AA'
(BL: 55.17, LCR: 2.01);
-- $12.8 million class M-3 affirmed at 'AA-'
(BL: 49.10, LCR: 1.79);
-- $15.0 million class M-4 downgraded to 'A' from 'A+'
(BL: 41.95, LCR: 1.53);
-- $13.1 million class M-5 downgraded to 'BBB' from 'A'
(BL: 35.74, LCR: 1.30);
-- $10.5 million class M-6 downgraded to 'B' from 'BBB'
(BL: 29.96, LCR: 1.09);
-- $11.5 million class M-7 downgraded to 'C/DR6' from 'BBB';
-- $8.6 million class M-8 downgraded to 'C/DR6' from 'BB';
-- $5.8 million class M-9F downgraded to 'C/DR6' from 'B+';
-- $4.7 million class M-9A downgraded to 'C/DR6' from 'B+';
-- $5.1 million class B-1 downgraded to 'C/DR6' from 'B';
Deal Summary
-- Originators: Various
-- 60+ day Delinquency: 14.0%;
-- Realized Losses to date (% of Original Balance): 6.63%;
-- Expected Remaining Losses (% of Current Balance): 27.44%;
-- Cumulative Expected Losses (% of Original Balance): 15.55%.
CSFB HEMT 2005-5
-- $41.6 million class A-1A rated 'AAA' (BL: 70.75, LCR: 1.85),
placed on Rating Watch Negative;
-- $23.9 million class A-1F1 affirmed at 'AAA'
(BL: 85.17, LCR: 2.22);
-- $17.6 million class A-1F2 rated 'AAA' (BL: 70.75, LCR: 1.85),
placed on Rating Watch Negative;
-- $20.0 million class A-2F downgraded to 'A' from 'AA'
(BL: 59.62, LCR: 1.56);
-- $13.9 million class A-2A downgraded to 'A' from 'AA'
(BL: 59.62, LCR: 1.56);
-- $22.3 million class M-1 downgraded to 'BBB' from 'A'
(BL: 49.70, LCR: 1.30);
-- $20.9 million class M-2 downgraded to 'B' from 'BBB+'
(BL: 40.27, LCR: 1.05);
-- $10.5 million class M-3 downgraded to 'C/DR5' from 'BBB-';
-- $10.8 million class M-4 downgraded to 'C/DR6' from 'BB+';
-- $8.9 million class M-5 downgraded to 'C/DR6' from 'BB-';
-- $7.3 million class M-6 downgraded to 'C/DR6' from 'B+';
-- $7.3 million class M-7 revised to 'C/DR6' from 'C/DR5';
-- $6.9 million class M-8 remains at 'C/DR6';
-- $8.3 million class M-9 remains at 'C/DR6';
Deal Summary
-- Originators: Various
-- 60+ day Delinquency: 12.8%;
-- Realized Losses to date (% of Original Balance): 8.75%;
-- Expected Remaining Losses (% of Current Balance): 38.32%;
-- Cumulative Expected Losses (% of Original Balance): 27.14%.
CSFB HEMT 2006-1
-- $16.5 million class A-1A2 affirmed at 'AAA'
(BL: 79.13, LCR: 2.35);
-- $27.7 million class A-1B affirmed at 'AAA'
(BL: 79.13, LCR: 2.35);
-- $33.0 million class A-1F affirmed at 'AAA'
(BL: 79.13, LCR: 2.35);
-- $50.0 million class A-2 downgraded to 'AA' from 'AAA'
(BL: 65.45, LCR: 1.95);
-- $37.1 million class A-3 downgraded to 'A' from 'AA+'
(BL: 56.21, LCR: 1.67);
-- $28.1 million class M-1 downgraded to 'BBB' from 'A+'
(BL: 46.54, LCR: 1.38);
-- $26.1 million class M-2 downgraded to 'BB' from 'BBB+'
(BL: 37.51, LCR: 1.12);
-- $10.6 million class M-3 downgraded to 'B' from 'BBB'
(BL: 33.80, LCR: 1.00);
-- $12.6 million class M-4 downgraded to 'C/DR5' from 'BBB-';
-- $11.2 million class M-5 downgraded to 'C/DR6' from 'BB';
-- $8.6 million class M-6 downgraded to 'C/DR6' from 'B+';
-- $9.2 million class M-7 downgraded to 'C/DR6' from 'B';
-- $7.1 million class M-8 remains at 'C/DR6';
-- $8.3 million class M-9 remains at 'C/DR6';
Deal Summary
-- Originators: Various
-- 60+ day Delinquency: 10.2%;
-- Realized Losses to date (% of Original Balance): 6.88%;
-- Expected Remaining Losses (% of Current Balance): 33.63%;
-- Cumulative Expected Losses (% of Original Balance): 23.76%.
CSFB HEMT 2006-3
-- $116 million class A-1 downgraded to 'BB' from 'A+'
(BL: 62.77, LCR: 1.19);
-- $38 million class A-2 downgraded to 'CC/DR3' from 'BBB+';
-- $20 million class A-3 downgraded to 'C/DR5' from 'BBB';
-- $17 million class M-1 downgraded to 'C/DR6' from 'BB+';
-- $13.8 million class M-2 downgraded to 'C/DR6' from 'BB-';
-- $13.8 million class M-3 downgraded to 'C/DR6' from 'B';
-- $8.6 million class M-4 remains at 'C/DR6';
-- $7.6 million class M-5 remains at 'C/DR6';
-- $7.8 million class M-6 remains at 'C/DR6';
-- $7 million class M-7 remains at 'C/DR6';
Deal Summary
-- Originators: Various;
-- 60+ day Delinquency: 13.7%;
-- Realized Losses to date (% of Original Balance): 12.03%;
-- Expected Remaining Losses (% of Current Balance): 52.78%;
-- Cumulative Expected Losses (% of Original Balance): 45.13%.
CSFB HEMT 2006-4
-- $166.1 million class A-1 affirmed at 'A'
(BL: 60.35, LCR: 1.50);
-- $47 million class A-2 downgraded to 'BB' from 'BBB+'
(BL: 48.35, LCR: 1.20);
-- $31.7 million class A-3 downgraded to 'B' from 'BBB-'
(BL: 40.85, LCR: 1.01);
-- $23.6 million class M-1 downgraded to 'C/DR6' from 'BB';
-- $24.9 million class M-2 downgraded to 'C/DR6' from 'B+';
-- $9.1 million class M-3 downgraded to 'C/DR6' from 'B';
-- $10.7 million class M-4 remains at 'C/DR6';
-- $10.5 million class M-5 remains at 'C/DR6';
-- $7.8 million class M-6 remains at 'C/DR6';
Deal Summary
-- Originators: Various;
-- 60+ day Delinquency: 10.9%;
-- Realized Losses to date (% of Original Balance): 11.68%;
-- Expected Remaining Losses (% of Current Balance): 40.36%;
-- Cumulative Expected Losses (% of Original Balance): 37.31%.
The rating actions are based on deterioration in the relationship
between credit enhancement and expected losses and reflect
continued poor loan performance and home price weakness. Minimum
LCR's specifically for subprime second lien transactions are:
'AAA': 2.00; 'AA': 1.75; 'A': 1.50; 'BBB': 1.30; 'BB' 1.10; 'B':
1.00.
CROSSWINDS AT LONE: Wants Until March 5 to File Schedules
---------------------------------------------------------
Crosswinds at Lone Star Ranch 1000, Ltd., asks the United States
Bankruptcy Court for the Eastern District of Texas to extend,
until March, 5, 2008, the period within which it may file its
schedules of assets and liabilities and statement of financial
affairs.
The Debtor tells the Court that it needs sufficient time to
assemble all of the requisite financial data -- books, records and
documents -- required by the schedules.
The collection of this information will require substantial time
and effort, the Debtor points out.
Headquartered in Novi, Michigan, Crosswinds at Lone Star Ranch
1000, Ltd., owns and develops real estate. The company filed
for Chapter 11 protection on February 4, 2008. Frank J. Wright,
Esq., at Wright, Ginsberg & Brusilow P.C., represents the Debtor
in its restructuring efforts. No Official Committee of Unsecured
Creditors has been appointed in this case to date. When the
Debtor file for protection against it creditors, it list total
asset of $115,000,000 and total debts of $79,100,000.
CULVER SARKAP: Case Summary & Six Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Culver Sarkap, L.L.C.
5855 Green Valley Circle, Suite 312
Culver City, CA 90230
Tel: (310) 647-1273
Bankruptcy Case No.: 08-11832
Chapter 11 Petition Date: February 12, 2008
Court: Central District Of California (Los Angeles)
Judge: Alan M. Ahart
Debtor's Counsel: William H. Brownstein, Esq.
1250 Sixth Street, Suite 205
Santa Monica, CA 90401
Tel: (310) 458-0048
Fax: (310) 576-3581
Total Assets: $1 Million to $10 Million
Total Debts: $1 Million to $10 Million
Debtor's Six Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Stuart F. Cooper $1,239
1565 East 23rd Street
Los Angeles, CA 90011
Alan W. Kapilow $563,098
2923 Ocean Front Walk
Venice, CA 90291
Abrams & Eyster Architecture, architectural $60,665
Inc. services
216 Pico Suite 9
Santa Monica, CA 90405
Mollenhauer Group accounting services $12,244
Armbruster & Goldsmitn, L.L.P. attorney fees $11,520
Sirius Environmental environmental service $925
DAVE & BUSTER: Reported Sale Won't Affect S&P's 'B-' Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services said that an unsubstantiated
report about Dave & Buster's Inc. (B-/Stable/--) possible sale to
another private equity firm has no immediate effect on the
company's rating or outlook.
It was reported that the company's private equity sponsors,
Wellsping Capital Management, has hired Jeffries & Co. to conduct
a strategic review that may result in the sale of the Dallas-based
company. A sale may increase debt and worsen credit ratios. At
this time, however, S&P cannot accurately assess the likelihood of
a sale and what the resulting capital structure would be. A
transaction would likely mean that the company would have to
refinance its existing capital structure because of the
"Fundamental Changes" covenant of Dave & Buster's senior secured
credit facility and because of the "Change of Control" covenant in
the indenture of the company's senior unsecured notes.
Currently S&P's lease-adjusted debt to EBITDA calculation for the
company is 6x and EBITDA interest coverage is 1.7x at the end of
the company's third quarter of 2007 (ended Nov. 4, 2007). If
there are confirmed discussions, we will respond to them as
appropriate.
DIRECTV GROUP: Reports $348 Mil. Earnings for 2007 Fourth Quarter
-----------------------------------------------------------------
The DirecTV Group Inc. has reported net income of $348 million for
fourth quarter ended Dec. 31, 2007 compared to $356 million net
income of fourth quarter 2006.
For 2007 full fiscal year ended Dec. 31, 2007, net income is
$1.4 billion, approximately similar to the net income of fiscal
2006.
Fourth Quarter Results
For the three months ended Dec. 31, 2007, the company generated
revenues of $4.9 billion, compare to the revenue generated for the
same quarter of the previous year at $4.2 billion.
Operating profit before depreciation and amortization increased
21% to $1.10 billion and operating profit increased 4% to
$617 million primarily due to the gross profit associated with the
higher revenues discussed above, partially offset by higher
acquisition and upgrade costs at DirecTV mostly due to the
increased number of new and existing customers adding HD and DVR
services. Operating profit was also impacted by higher
depreciation and amortization principally due to increased
capitalization of customer equipment under the DirecTV lease
program implemented in March 2006.
Cash flow before interest and taxes of $512 million increased 53%
compared to the fourth quarter 2006 primarily due to the higher
operating profit before depreciation and amortization and lower
capital expenditures, partially offset by lower cash provided by
working capital. In addition, free cash flow was impacted by
higher tax payments and higher net interest expense in the fourth
quarter of 2007. The quarter also included share repurchases of
$479 million.
Full Year Results
For fiscal 2007, total revenues are $17.2 billion, in comparison
to $14.7 billion revenues generated for fiscal 2006.
Operating profit before depreciation and amortization in 2007
increased 23% to $4.17 billion due to the higher gross profit
associated with the higher revenues and the capitalization of
customer equipment under the lease program implemented in March
2006 at DirecTV , as well as the consolidation of Sky Brazil's
results. These improvements were partially offset by higher
acquisition and upgrade costs at DirecTV related to the increased
number of new and existing customers adding HD and DVR services.
Also impacting the comparison were two non-cash pre-tax gains
totaling $118 million recorded in 2006 for the completion of
DirecTV Latin America's Sky Mexico transaction and the DirecTV
Brazil and Sky Brazil merger.
Operating profit of $2.49 billion in 2007 increased 5% compared
with 2006 as the higher operating profit before depreciation and
amortization was partially offset by higher depreciation and
amortization resulting primarily from the increased capitalization
of customer equipment under the DirecTV lease program, as well as
the merger with Sky Brazil.
Cash flow before interest and taxes increased 13% to $1.48 billion
in 2007 as higher operating profit before depreciation and
amortization was partially offset by increased capital
expenditures. Capital expenditures were higher primarily at
DirecTV due to the implementation of the equipment lease program
in March 2006, higher costs for the increased number of new and
existing customers adding HD and DVR services, and greater
infrastructure costs associated with the rollout of additional HD
channels. Free cash flow declined to $953 million primarily
because the increase in cash flow before interest and taxes was
more than offset by higher tax payments made in 2007. Other uses
of cash in 2007 were for share repurchases of $2.03 billion, the
purchase of Darlene's interest in DirecTV Latin America for
$325 million and the repayment of $210 million of outstanding debt
at Sky Brazil.
As of Dec. 31, 2007, the company's consolidated balance sheet
reflected total assets of $15.1 billion, total debts of
$8.8 billion and a total stockholder's equity of $6.3 billion.
"DirecTV's content and service leadership continue to drive
superior results in a tougher marketplace that reflects increasing
competition and a slowing economy," Chase Carey, president and
chief executive officer of The DirecTV Group Inc, said. "Advanced
services--including the launch of the industry's best HD
programming--played an increasingly important role in DirecTV
U.S.'s top-line and bottom-line results."
"Strong net subscriber additions of 275,000 were punctuated by the
lowest monthly churn rate in eight years," Mr. Carey stated.
"This 15 basis point reduction in monthly churn to 1.42% was
largely due to the significant growth in customers with HD and DVR
services--increasing from about 30% of our subscriber base last
year to over 40% this year--as well as tighter credit policies."
"The continued strong subscriber growth coupled with an 8.3%
increase in ARPU drove revenues up 14% to $4.38 billion," Mr.
Carey continued. "As with churn, the strong ARPU growth reflects
the improving quality of our customers who are purchasing an array
of new services."
"DirecTV U.S. OPBDA increased 14% to $1.00 billion primarily due
to the gross profit generated from the strong revenue growth," Mr.
Carey went on to say. "OPBDA margin of 23% in the quarter was
unchanged from the prior year as operating efficiencies gained in
subscriber services and G&A were offset by higher acquisition and
upgrade costs associated with the significant increase in new and
existing customers purchasing advanced services."
"DirecTV's operating momentum continued in Latin America as these
businesses also had very strong fourth quarter results," Mr. Carey
added. "An 82% increase in gross subscriber additions plus
continued low monthly churn of 1.35% drove a more than doubling of
net additions to 199,000 in the fourth quarter."
"In addition, DirecTV Latin America's revenues increased 41% to
$499 million and OPBDA more than doubled to $114 million mostly
due to the continued strong subscriber and ARPU growth, as well as
favorable exchange rates, primarily in Brazil," Mr. Carey also
stated.
"We exit 2007 with tremendous operating and financial momentum,"
Mr. Carey concluded. "We believe we are delivering on our goal to
provide the best television experience, including the most
extensive HD programming in America."
"With the launch of our next satellite in a couple of months, we
will extend DirecTV's leadership by introducing even more local
and national HD channels," Mr. Carey conveyed. "With full
awareness of an industry that will be characterized by increasing
competition and a slowing economy, we're continuing to target
extremely strong results in 2008 highlighted by a material
increase in free cash flow driven by DirecTV's brand and content
leadership, along with improved operating scale and efficiencies."
About DirecTV Group
Headquartered in El Segundo, California, The DirecTV Group Inc.
(NASDAQ:DTV) -- http://www.DirecTV.com/-- provides digital
television entertainment in the United States and Latin America.
The company's two business segments, DirecTV U.S. and DirecTV
Latin America, are engaged in acquiring, promoting, selling and/or
distributing digital entertainment programming via satellite to
residential and commercial subscribers. DirecTV Holdings LLC and
its subsidiaries are a provider of direct-to-home digital
television services and a provider in the multi-channel video
programming distribution industry in the United States. DTVLA is
a provider of DTH digital television services throughout Latin
America. In January 2007, the company acquired Darlene
Investments LLC's 14.1% equity interest in DirecTV Latin America,
LLC. DirecTV Latin America LLC is a multinational company, which,
as a result of this transaction, became a wholly owned subsidiary
of the company.
* * *
In April 2007, Standard and Poor's Ratings Services assigned a
'BB+' Rating on The DirecTV Group Inc.'s long-term foreign and
local issuer credit rating with a stable outlook. This rating
action still holds to date.
DISCOVERY INSURANCE: A.M. Best Lifts FS Rating to B- from C++
-------------------------------------------------------------
A.M. Best Co. upgraded the financial strength rating to B-(Fair)
from C++(Marginal) and the issuer credit rating to "bb-" from "b+"
of Discovery Insurance Company. The outlook for the ratings is
stable.
These rating actions reflect Discovery's adequate capitalization
and favorable operating performance in recent years. The
improvement in risk-adjusted capitalization and operating
performance has been driven by the rate increases obtained on the
company's affiliated workers' compensation business, the reduction
in written premiums and the exit from writing third party workers'
compensation business.
Offsetting these positive rating factors is the historical
volatility of operating results partially attributed to adverse
loss reserve development and the subsequent impact on risk-
adjusted capitalization. The outlook reflects management's
initiatives to return Discovery to profitability, improving loss
reserve development trends and expectations for capitalization to
remain supportive of the company's risks. Nevertheless,
Discovery's capitalization remains sensitive to potential adverse
loss reserve development as well as premium and reserve growth,
which could also impact its operating performance.
E*TRADE FINANCIAL: Selling RAA Wealth Assets to PHH Investments
---------------------------------------------------------------
E*Trade Financial Corporation signed an asset purchase agreement
to sell substantially all of the assets of RAA Wealth Management
LLC to PHH Investments Ltd.
This transaction and unrelated definitive and other transactions
under contract, are subject to normal closing conditions, which
when satisfied are anticipated to be completed within the next
90 days; as a result, the company expects to generate
approximately $80 million in proceeds.
As outlined in the details of its Turnaround Plan, the company is
working to improve capital and liquidity. Management has
identified non-core assets with high market demand that will
create value for the franchise through the orderly sale of such
assets. The company has also streamlined certain corporate
functions to reduce expenses and will allocate these savings, as
planned, to growth initiatives for its core retail business.
"We have taken swift action and are generating results to maximize
the value of our assets," R. Jarrett Lilien, acting chief
executive officer, E*Trade Financial Corporation, said.
"Effective execution of our turnaround plan will be measured by
our continued ability to monetize assets, reduce balance sheet
risk, streamline expenses and re-invest in growth that strengthens
the overall franchise and best meets the needs of our customers."
Providing advice to E*Trade Financial customers remains an
integral component of the E*TRADE value proposition. E*Trade will
continue to offer investment and financial planning advice to its
core retail and Corporate Services clients. The RAA deal is
expected to close in April 2008.
About PHH Investments Ltd.
Headquartered in Plano, Texas, PHH Investments --
http://www.phhinvestments.com/-- is a registered investment
advisor specializing in providing services to airline crewmember
clients.
About E*TRADE Financial
Based in New York City, E*Trade Financial Corporation (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.
FGIC CORP: Warren Buffett Presents $800MM Bailout Plan
------------------------------------------------------
Warren Buffett's Berkshire Hathaway Group on Tuesday offered to
rescue the three ailing monoline bond insurers by reinsuring $800
million of their municipal bonds portfolios.
Buffett's move to reinsure the municipal bonds and take on
$5 billion in liabilities curbed fears among investors that the
rating agencies' downgrades of insurers could force the insurers
to scramble selling their municipal bonds, Reuters reports. The
bonds in this market have recently been plummeting in value.
But the offer comes at a price. According to The Wall Street
Journal, Berkshire Hathaway will charge, in return for Buffett's
offer, 150% of the unearned policy premiums of Ambac Financial
Group Inc., MBIA Inc., and Financial Guaranty Insurance Co., which
collectively handle $2.4 trillion of municipality-issued debt.
The International Herald Tribune reports that Ambac rejected the
offer. The proposal would not free up enough capital, according
to a statement from Ambac spokesman, Peter Poillon, the Herald
Tribune relates. The proposal would have required Ambac to pay
Buffett about $4.5 billion to assume the obligations, Herald
Tribune says.
For Ambac, accepting Buffett's offer would mean a sign of
desperation on their part, an Ambac executive told WSJ.
MBIA Inc., the largest bond insurer, also indicated it is equipped
to survive the slump in prices of mortgage securities and
dismissed suggestions that the industry needs a rescue or stronger
federal oversight, Bloomberg News reports.
"A bailout of highly credit-worthy companies who, at most, are at
risk of losing the very highest ratings available, is misplaced,"
MBIA Chief Financial Officer Charles Chaplin said in prepared
remarks delivered Thursday at a hearing at the White House
Financial Services subcommittee on capital markets in Washington,
Bloomberg relates.
Bloomberg says Mr. Chaplin and Ambac Chief Executive Officer
Michael Callen were to make their presentations on Capitol Hill as
they try to fend off credit rating downgrades from Moody's, Fitch
Ratings and Standard & Poor's, and critics who say the companies
may be headed for bankruptcy.
Financial Guaranty Insurance Co. has yet to respond to the offer.
Berkshire Hathaway owns roughly 19% stake in Moody's and is the
ratings firm's largest shareholder.
Buffett's offer drew mixed opinions. Russell Croft, a manager at
a Baltimore-based investment company, told WSJ that it renewed
afresh the market's confidence. "We could definitely test some
more lows going forward but there was a pretty good drop-off there
again and I think people are trying to take advantage of it to get
some quality stocks at cheaper prices."
"Within the municipal-bond market it would be a positive . . .
[T]he market is trading right now as if there is no value to the
insurance, and if [Mr. Buffett] came in and reinsured them, then
they would have their triple-A rating back," WSJ cites Dan
Solender, a Lord Abbett & Co. head, as saying.
New York State Insurance Department head Eric Dinallo was pleased
with the offer, and that the move further protects bond insurers,
says WSJ.
However, Fitch Ratings director Thomas Abruzzo told WSJ that the
Buffett's stint "doesn't address their problems." "It's going to
cost them a significant penny, money out the door, and net-net,
the benefit of the offsetting reduction in risk may not help the
companies at all," WSJ quotes Mr. Abruzzo as saying.
Len Blum, Westwood Capital director, told Reuters, "We haven't
seen all the losses. Even if you have some investors willing to
bottom fish, or very sophisticated investors like Warren Buffett
willing to invest at this point, the financial sector is still
really sick."
The Herald Tribune reports that investor Wilbur Ross Jr. told CNBC
cable financial network that Buffett's offer would not do anything
to rid the "toxic waste" in their portfolios but it would
"intensify the pressure on the rating agencies and the regulators
to convince the financial guarantee people to resolve their
issues."
According to the Herald Tribune, Ross said he did not think the
offer would be accepted, adding that "it really fines them by
detracting their best business, turning over control of the whole
municipal bond insurance industry to Warren."
About MBIA
Based in Armonk, New York, MBIA Inc. (NYSE:MBI) --
http://www.mbia.com-- provides financial guarantee insurance,
investment management services, and municipal and other services
to public finance and structured finance clients on a global
basis. The company conducts its financial guarantee business
through its wholly owned subsidiary, MBIA Insurance Corporation
and provides investment management products and financial services
through its wholly owned subsidiary MBIA Asset Management, LLC.
MBIA manages its activities primarily through two principal
business operations: insurance and investment management services.
In February 2007, MBIA Corp. formed a new subsidiary, MBIA Mexico,
S.A. de C.V. During the year ended Dec. 31, 2006, MBIA
discontinued its municipal services operations. These operations
included MBIA MuniServices Company. On Dec. 5, 2006, the company
completed the sale of MBIA MuniServices Company.
* * *
As reported in the Troubled Company Reporter on Jan. 21, 2008,
Moody's Investors Service placed the Aaa insurance financial
strength ratings of MBIA Insurance Corporation and its affiliated
insurance operating companies on review for possible downgrade.
In the same rating action, Moody's also placed the surplus note
rating of MBIA Insurance Corporation (Aa2-rated) and the ratings
of the holding company, MBIA, Inc. (senior debt at Aa3), on review
for possible downgrade. This rating action reflects Moody's
growing concern about the potential volatility in ultimate
performance of mortgage and mortgage-related CDO risks, and the
corresponding implications for MBIA's risk-adjusted capital
adequacy. Prior to this rating action, the rating outlook for
MBIA was negative.
About Ambac Financial
Ambac Financial Group, Inc., headquartered in New York City, is a
holding company whose affiliates provide financial guarantees and
financial services to clients in both the public and private
sectors around the world. For the nine months ended Sept. 30,
2007, Ambac reported net income of $26 million. As of Sept. 30,
2007, Ambac had shareholders' equity of approximately $5.65
billion. On Jan. 18, Fitch Ratings downgraded Ambac to double-A
after the insurer put off plans to raise equity capital.
About FGIC
Financial Guaranty Insurance Co. -- http://www.fgic.com/-- has
enjoyed a reputation for financial strength, underwriting
discipline and superior client service. As a leading financial
guaranty insurance company, FGIC provides credit enhancement on
infrastructure finance and structured finance securities
worldwide, enabling bond issuers to obtain capital cost
effectively and enhancing their access to the capital markets.
* * *
As reported in the Troubled Company Reporter on Feb. 11, 2008,
Fitch Ratings downgraded its ratings of Financial Guaranty
Insurance Company's insurer financial strength to 'AA' from 'AAA',
on Jan. 30, 2008. This rating remains on Rating Watch Negative.
FGIC CORP: Moody's Cuts Insurance Financial Strength Rating to A3
-----------------------------------------------------------------
Moody's Investors Service has downgraded to A3, from Aaa, the
insurance financial strength ratings of the operating subsidiaries
of FGIC Corporation, including Financial Guaranty Insurance
Company and FGIC UK Limited. Moody's has also downgraded the
senior debt rating of the holding company, FGIC Corporation to Ba1
from Aa2, and the contingent capital securities ratings of Grand
Central Capital Trusts I-VI to Baa3 from Aa2.
FGIC Corp.'s Ba1 is a junk-level rating, The Wall Street Journal
says.
The rating actions reflect Moody's assessment of FGIC's
meaningfully weakened capitalization and business profile
resulting, in part, from its exposures to the US residential
mortgage market. These ratings remain on review for possible
downgrade, reflecting continuing uncertainty about the firm's
strategic and capital plans. An unfavorable outcome in those
areas could lead to a lower financial strength rating most likely
to the Baa level.
These rating actions result from Moody's ongoing assessment of
ratings in the financial guaranty insurance sector, and follow the
downgrade on Feb. 7, 2008 of XL Capital Assurance Inc., from Aaa
to A3. Among primary financial guarantors, Moody's ratings of
MBIA and Ambac remain under review for possible downgrade, with
those reviews expected to conclude within the next few weeks.
Although further analysis remains to be completed before those
reviews can be brought to conclusion, Moody's believes that, in
contrast to XL Capital Assurance and FGIC, MBIA and Ambac are
better positioned from a capitalization and business franchise
perspective.
Impact on Ratings of Insured Obligations
Moody's ratings on securities that are guaranteed or "wrapped" by
a financial guarantor are maintained at a level equal to the
higher of:
a) the rating of the guarantor or
b) the published underlying rating.
Using this modified "credit substitution" approach, and following
this rating action, the Moody's-rated securities that are
guaranteed or "wrapped" by FGIC are also downgraded to A3, and
remain on review for further downgrade, except those with higher
published underlying ratings.
In the period since the initiation of Moody's rating review of
FGIC, the rating agency has received limited requests from issuers
to publicly disclose underlying ratings on FGIC's wrapped
securities. Moody's notes, however, that this rating action could
precipitate additional requests for disclosure of underlying
ratings of FGIC wrapped securities, and that certain ratings on
associated securities could be upgraded as a consequence, based on
the modified credit substitution approach outlined above.
Overview of Rating Approach
As outlined in Moody's Rating Methodology for Financial
Guarantors, Moody's has evaluated FGIC along five key rating
factors:
1) franchise value and strategy,
2) insurance portfolio characteristics,
3) capital adequacy,
4) profitability, and
5) financial flexibility.
Of these factors, capital adequacy is given particular emphasis.
To estimate capital adequacy, Moody's has applied its traditional
portfolio risk model for determining stress losses on the non-
mortgage related portion of FGIC's insured portfolio, and
alternative stress tests for the mortgage and mortgage-related CDO
exposure. For mortgage-related exposures, stress losses were
estimated using assumptions consistent with a scenario where 2006
subprime first-lien mortgages realize an average of 21% cumulative
pool losses, with other vintages and products stressed
accordingly. Stress-level losses for RMBS transactions were
assessed on a transaction-by-transaction basis, while loss
estimates for ABS CDOs were derived using a stochastic simulation
model which applied stress to specific underlying collateral
tranches within the CDOs. Estimated tranche-level losses were
computed based on the structure of those tranches (e.g.,
attachment and detachment points) and estimates of their
performance relative to the average.
Losses estimated under the approach described above were present-
valued to reflect estimates of the payout pattern that would
emerge, based on the collateral type. For ABS CDOs, consideration
was given to specific contractual features within associated CDS
contracts. These factors resulted in aggregate present value
discounts to principal loss estimates of approximately 6% for RMBS
and 27% for ABS CDOs. Non-mortgage risks are discounted within
the portfolio model based on estimates of payout patterns as well.
In view of the expected correlation between the prospective
experience of FGIC and its reinsurers, and given the recent
reviews for possible downgrade of RAM Reinsurance Company Ltd.
(Aa3) and BluePoint Re Limited (Aa3), Moody's has also, for
purposes of estimating capital adequacy, considered the
sensitivity of stress-case loss estimates to different haircuts
for reinsurance credit.
In comparing estimated stress losses to claims paying resources
and associated rating levels, Moody's combines an estimated loss
distribution for mortgage risks with one for non-mortgage risks,
assuming a correlation between the two that ranges from 90% (for
Aaa) down to 30% (for Baa3). Claims paying resources are then
compared to the indicated capital need, at the target benchmark
(1.3x capital needed to cover stress-case losses).
Key Rating Factors: Capital Adequacy
Based on the risks in FGIC's portfolio, as assessed by Moody's
according to the approach outlined above, estimated capitalization
required to cover stress-case losses at the Aaa target level would
be in the range of $9 billion. This compares to Moody's estimate
of FGIC's claims paying resources of approximately $5 billion,
which Moody's considers to be more consistent with capitalization
at the single-A rating level. Moody's further noted that it
estimates FGIC's insured portfolio will incur lifetime losses on a
most likely basis of approximately $2 billion in present value
terms.
FGIC is currently pursuing several capital management and
restructuring initiatives that, according to Moody's, could reduce
but would not likely eliminate the company's capital shortfall at
the Aaa rating level if successfully executed. Moody's further
commented that capitalization, and the prospect for improvements
in capitalization, were considered in the context of the rating
agency's opinion about the guarantor's ongoing business and
financial profile, as summarized further below.
Key Rating Factors: Business and Financial Profile
In Moody's opinion, FGIC's significant exposure to mortgage-
related risk has had consequences for its business and financial
profile beyond the associated impact on capitalization, and
affects Moody's opinion about FGIC's other key rating factors.
Moody's believes that FGIC's historically strong franchise,
particularly in the municipal segment, has weakened significantly
relative to the other large financial guarantors, as has its
prospects for future profitability and financial flexibility.
With respect to underwriting and risk management, Moody's believes
that FGIC's relatively significant exposure to the mortgage sector
is indicative of a risk posture somewhat greater than the peer
group overall and reflects the company's aggressive portfolio
growth and capital management since its ownership change in
December, 2003. FGIC's participation in higher risk segments of
direct RMBS and ABS CDO segments in 2006 and 2007, in particular,
contributed to this view. Going forward, Moody's believes FGIC's
strategic direction may change meaningfully, introducing further
uncertainty into FGIC's credit profile.
FGIC's profitability is likely to remain depressed in the near to
intermediate term as losses on mortgage related exposures are
incurred. While Moody's expects the company will continue to earn
premiums on its inforce book for many years, as well as investment
income on its investment portfolio, Moody's believes premium
volume on new business production will diminish significantly and
operating expenses will become a greater burden on earnings over
time.
In terms of financial flexibility, FGIC, like other financial
guarantors, benefits from paying loss claims only over an extended
period of time, typically scheduled interest and principal at
maturity. Moody's has also considered in its rating review the
potential for calls on liquidity at FGIC in the context of
available resources, including the investment profile of the main
operating company. FGIC's financial leverage profile is likely to
increase as incurred losses erode shareholders' equity. In
Moody's opinion, FGIC's current access to capital is weak, as
evidenced by the reluctance to date of its investor group to
commit to investing additional capital in the company. Additional
debt in the capital structure would further increase leverage and
place greater demands on the main operating company to service
fixed charges. Furthermore, weaker operating prospects at the
insurance company could result in lower earnings and cash flow
coverage, which takes on greater importance due to the tightly
regulated nature of financial guaranty insurance. For these
reasons, Moody's has widened the notching between the operating
company's insurance financial strength rating and the preferred
stock rating associated with its contingent capital securities to
three notches from two. In addition, to reflect the subordinated
position of holding company instruments, Moody's has widened the
notching between the insurance financial strength rating of the
operating company and the senior debt of the holding company to
four notches from two.
Consideration of Ongoing Capital Management Efforts
Moody's is aware of a number of capital initiatives and
restructuring efforts currently being considered by FGIC. Moody's
believes the ultimate impact of these efforts on the credit
profile of the financial guarantor is uncertain, and could be
negative, Moody's said, leading to the continuation of the review
for possible downgrade. At this time, however, Moody's believes
that FGIC's business position and franchise strength are
consistent with an operating company insurance financial strength
rating in the single-A range.
List of Rating Actions
These ratings have been downgraded, and remain on review for
possible downgrade:
-- Financial Guaranty Insurance Company: insurance financial
strength to A3, from Aaa;
-- FGIC UK Limited: insurance financial strength to A3, from
Aaa;
-- FGIC Corporation: senior unsecured debt to Ba1, from Aa2; and
-- Grand Central Capital Trusts I-VI: contingent capital
securities to Baa3, from Aa2.
Overview of FGIC Corporation
FGIC Corporation is a holding company whose primary operating
subsidiaries, Financial Guaranty Insurance Corporation and FGIC UK
Limited, provide credit enhancement and protection products to the
public finance and structured finance markets throughout the
United States and internationally. FGIC Corporation is privately
owned by an investor group consisting of The PMI Group, GE and
private equity firms Blackstone, Cypress and CIVC. For the nine
months ended Sept. 30, 2007, FGIC reported net operating income
available to common shareholders of $62.4 million. As of Sept.
30, 2007, FGIC had shareholders' equity of approximately
$2.4 billion.
FIELDSTONE MORTGAGE: Moody's Cuts and Reviews 18 Tranches' Ratings
------------------------------------------------------------------
Moody's Investors Service downgraded and placed under review for
possible downgrade eighteen tranches from 4 deals issued by
Fieldstone Mortgage Investment Trust in 2004 and 2005. The
actions are based on the analysis of the credit enhancement
provided by subordination, overcollateralization and excess spread
relative to expected losses. The transactions are backed by
primarily first lien adjustable subprime mortgage loans originated
by Fieldstone Mortgage Company.
Fieldstone Mortgage Investment Trusts 2004-3, 2004-4 and 2004-5
had pool factors of 9.5%, 10.5% and 13.5% respectively as of
December 2007. The stepping down and continuous losses have left
all three deals with thin credit enhancement levels and made them
more vulnerable to pool deterioration in the tail ends of the
deals' lives.
Complete rating actions are:
Issuer: Fieldstone Mortgage Investment Trust 2004-3
-- Cl. M -5; Currently A3 on review for possible downgrade
-- Cl. M -6; Currently Baa1 on review for possible downgrade
-- Cl. M -7; Currently Baa2 on review for possible downgrade
-- Cl. M -8; Currently Baa3 on review for possible downgrade
Issuer: Fieldstone Mortgage Investment Trust 2004-4
-- Cl. M-2; Currently A2 on review for possible downgrade
-- Cl. M-3; Currently A3 on review for possible downgrade
-- Cl. M-4; Currently Baa1 on review for possible downgrade
-- Cl. M-5; Currently Baa2 on review for possible downgrade
-- Cl. M-6; Downgraded to Caa1 from Baa3
Issuer: Fieldstone Mortgage Investment Trust 2004-5
-- Cl. M-2; Currently A2 on review for possible downgrade
-- Cl. M-3; Currently A3 on review for possible downgrade
-- Cl. M-4; Currently Baa1 on review for possible downgrade
-- Cl. M-5; Currently Baa2 on review for possible downgrade
-- Cl. M-6; Downgraded to B3 from Baa3 and put on review for
possible downgrade
Issuer: Fieldstone Mortgage Investment Trust 2005-1
-- Cl. M -6; Currently A3 on review for possible downgrade
-- Cl. M -7; Currently Baa1 on review for possible downgrade
-- Cl. M -8; Currently Baa2 on review for possible downgrade
-- Cl. M -9; Currently Baa3 on review for possible downgrade
FIRST FRANKLIN: Moody's Junks Ratings on 21 Certificates
--------------------------------------------------------
Moody's Investors Service downgraded 35 certificates and placed on
review for downgrade 9 certificates from seven deals issued by
First Franklin Mortgage Loan Trust.
The actions are based on the analysis of credit enhancement
provided by subordination, overcollateralization (OC) and excess
spread relative to expected losses. The transactions have pool
factors ranging between 5% and 24% and are backed by first-lien
fixed and adjustable rate subprime mortgage loans. With the
exception of 2002-FF3 and 2003-FF5, the collateral pools also
consist of high LTV mortgage loans.
The actions are driven by complete erosion of OC (or near complete
erosion in the case of 2002-FF3), leaving some of the more
subordinate certificates exposed to future losses and many of the
tranches sequentially above them in a weaker position.
The complete rating actions are:
Issuer: First Franklin Mortgage Loan Trust 2002-FF3
-- Cl. M1, Placed on Review for Possible Downgrade,
currently Aa2
-- Cl. M2, Downgraded to B3 from Baa3
-- Cl. M3, Downgraded to Ca from B1
Issuer: First Franklin Mortgage Loan Trust 2003-FF5
-- Cl. M-1, Placed on Review for Possible Downgrade,
currently Aa2
-- Cl. M-2, Downgraded to Baa3 from A2
-- Cl. M-3, Downgraded to Ba3 from A3
-- Cl. M-4, Downgraded to Caa2 from Baa1
-- Cl. M-5, Downgraded to Ca from Ba3
-- Cl. M-6, Downgraded to C from B2
Issuer: First Franklin Mortgage Loan Trust 2003-FFH1
-- Cl. M-1, Placed on Review for Possible Downgrade,
currently Aa2
-- Cl. M-2, Downgraded to B3 from A2
-- Cl. M-3, Downgraded to Ca from Baa2
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from Caa3
Issuer: First Franklin Mortgage Loan Trust 2003-FFH2
-- Cl. M-1A, Placed on Review for Possible Downgrade,
currently Aa2
-- Cl. M-1B, Placed on Review for Possible Downgrade,
currently Aa2
-- Cl. M-2, Downgraded to B3 from Baa1
-- Cl. M-3, Downgraded to Ca from Ba2
-- Cl. M-4, Downgraded to C from Caa1
-- Cl. M-5, Downgraded to C from Ca
Issuer: First Franklin Mortgage Loan Trust 2004-FFH2
-- Cl. M-2, Placed on Review for Possible Downgrade,
currently Aa2
-- Cl. M-3, Placed on Review for Possible Downgrade,
currently Aa3
-- Cl. M-4, Downgraded to Baa1 from A1
-- Cl. M-5, Downgraded to Baa3 from A2
-- Cl. M-6, Downgraded to Ba3 from A3
-- Cl. M-7, Downgraded to B3 from Baa3
-- Cl. M-8, Downgraded to Ca from Ba2
-- Cl. M-9, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Ca
Issuer: First Franklin Mortgage Loan Trust 2004-FFH3
-- Cl. M-2, Placed on Review for Possible Downgrade,
currently Aa2
-- Cl. M-3, Placed on Review for Possible Downgrade,
currently Aa3
-- Cl. M-4, Downgraded to Baa2 from A1
-- Cl. M-5, Downgraded to Baa3 from A2
-- Cl. M-6, Downgraded to Ba3 from A3
-- Cl. M-7, Downgraded to B2 from Baa3
-- Cl. M-8, Downgraded to Caa1 from Ba2
-- Cl. M-9, Downgraded to Ca from B3
-- Cl. B-1, Downgraded to C from Caa1
-- Cl. B-2, Downgraded to C from Caa3
Issuer: First Franklin Mortgage Loan Trust 2004-FFH4
-- Cl. M-9, Downgraded to B3 from Ba3
-- Cl. M-10, Downgraded to Ca from B2
-- Cl. M-11, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa1
-- Cl. B-2, Downgraded to C from Caa3
FIRSTLINE SECURITY: Wants to Hire Prince Yeates as Bankr. Counsel
-----------------------------------------------------------------
Firstline Security Inc. seeks permission from the U.S. Bankruptcy
Court for the District of Utah to employ Prince Yeates and
Geldzahler PC as counsel.
The Debtor relates that Prince Yeates provides services related to
insolvency, reorganization and bankruptcy, and litigation, and is
best qualified to represent the Debtor in this case.
Adam S. Affleck, a member at Prince Yeates and Geldzahler, tells
the Court that Prince Yeates professionals' rates are:
Professionals Hourly Rates
------------- ------------
Shareholders $185 - $290
Associates $125 - $180
Para-professionals $90 - $140
Mr. Affleck also relates that Prince Yeates will seek
reimbursement for actual and out-of-pocket costs incurred in
rendering services related to this case.
Mr. Affleck says that prior to bankruptcy filing, the Debtor paid
Prince Yeates a retainer fee of $45,500. $11,960 of this retainer
was paid for pre-filing services rendered including consultation
and preparation regarding bankruptcy and attendance of the
depositions of the Debtor's CEO and CFO. An additional $1,309
from this retainer was used to pay the Debtors' Chapter 11 filing
fee.
Mr. Affleck assured the Court that the firm is "disinterested" as
that term is defined in Section 101(14) of the Bankruptcy Code.
Mr. Affleck can be reached at:
Prince Yeates & Geldzahler PC
175 East 400 South
Salt Lake City, UT 84111
Tel (801) 524-1000
Fax (801) 524-1098
Headquartered in Orem, Utah, Firstline Security Inc. --
http://www.getfirstline.com/-- aka First Line Security and 1st-
Line Security provides telecommunications services. The Debtor
filed for Chapter 11 protection on Jan. 25, 2008, (Bankr. D. Utah
Case No.: 08-20418.) Adam S. Affleck, Esq. of Prince Yeates &
Geldzahler represent the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it has
estimated assets and debts of $10 million to $50 million.
FMC DEVELOPMENT: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: F.M.C. Development, L.L.C.
1517 Voorhies Avenue
Brooklyn, NY 08510
Bankruptcy Case No.: 08-12537
Chapter 11 Petition Date: February 13, 2008
Court: District of New Jersey (Trenton)
Debtor's Counsel: M. SimmsParris, Esq.
SimmsParris, Maldonado, Tehauno, L.L.P.
1444 Queen Anne Road
Teaneck, NJ 07666
Tel: (201) 837-0173
Total Assets: $1 Million to $10 Million
Total Debts: $1 Million to $10 Million
The Debtor did not file a list of its largest unsecured creditors.
FORD MOTOR: Fitch Holds 'B' IDRs, Retains Negative Outlook
----------------------------------------------------------
Fitch Ratings affirmed the Issuer Default Ratings of Ford Motor
Company and Ford Motor Credit Company at 'B', and maintained the
Rating Outlook at Negative. Ford continues to make steady
progress on its restructuring actions, but continued weakness in
the North American auto market, combined with industry cost,
pricing and supplier pressures continue to limit the impact of
structural cost improvements on the bottom line. International
operations have shown steady improvement, benefiting the company's
consolidated credit profile.
Liquidity remains healthy, and sufficient to weather a significant
downturn in 2008 U.S. industry sales, but will decline through at
least 2008. Cash outflows in 2008 will be material as a result of
operating losses in North America, restructuring costs, and higher
net interest expense. The funding of the UAW VEBA will also
impact liquidity in 2008, although the benefits from healthcare
savings will not be realized until 2010. The Negative Rating
Outlook is expected to remain in place until a firmer path to
positive free cash flow is established.
Fitch has affirmed these ratings with a Negative Rating Outlook:
Ford Motor Co.
-- Long-term IDR at 'B';
-- Senior secured credit facility at 'BB/RR1';
-- Senior secured term loan at 'BB/RR1';
-- Senior unsecured at 'B-/RR5'.
Ford Motor Credit Co.
-- Long-term IDR at 'B';
-- Short-term IDR at 'B';
-- Senior unsecured at 'BB-/RR2';
-- Commercial paper at 'B'.
In North America, revenues will remain under pressure,
particularly in the first half, due to economic conditions, the
impact of the housing market on pickup sales, projected lower
fleet sales and the trend to lower-priced, fuel-efficient
vehicles. The new UAW contract has provided the OEMs with greater
flexibility to cut production and manage inventories in response
to weaker market demand - a factor that will also result in
increased production cyclicality going forward.
Ford has made material improvement in its cost structure, although
higher product and commodity costs have limited the impact on the
bottom line. Ford's earlier buyout program extended through the
third quarter of 2007, indicating that the full realization of
these cost savings will continue to flow through reported results
over the next several quarters. Together with Ford's new buyout
program that is weighted to the first quarter of 2008 and the
gradual growth in Tier-2 wage employees, Ford is positioned to
show demonstrable fixed cost savings through 2008. Although
commodity costs are not expected to wane, the rate of growth
should slow substantially, allowing structural cost savings to
become more evident.
Continued improvement in material, engineering and other product
costs should augment margin improvement projected from labor
savings. North American hourly workers could be reduced by more
than 40% over the period from yearend 2005-2009, with incremental
wage and benefit savings realized from the implementation of Tier-
2 wages. The reduction in personnel at the former Visteon assets,
the outsourcing of certain non-production functions and the
conversion of several plants to 100% Tier 2 wage levels will also
benefit Ford's cost structure. Tier 2 wage levels incorporate
meaningful reductions in long-term benefit accruals through the
lack of retiree health care and enrollment in defined contribution
pension plans.
Ford also faces the expiration of the Canadian Auto Workers
contract in September 2008. Given the terms of the recent UAW
agreement, the Detroit Three will certainly be targeting
additional wage, benefit and other cost-saving opportunities in
Canada. The Detroit Three may be seeking different goals under a
new contract, and talks may not be as smooth as the recent UAW
talks
Ford showed healthy revenue growth in the third and fourth
quarters of 2007, aided by easy comparisons with 2006 and support
from a number of vehicle models. Ford's focus on managing
production and inventory levels has benefited results through
progress on pricing and residual values. Overall results were
severely impacted by a 13% reduction in high-margin pickup sales.
Although Ford has shown decent balance across segments, the
company's product portfolio remains misaligned with market trends
that favor smaller, more fuel-efficient vehicles. The transition
to a more market-weighted product portfolio, along with the
efficiencies of fewer platforms and higher number of products per
platform, will not be achieved through 2010. Although Ford's cost
reduction programs are in line with expectations, achievement of
viable long-term operating margins will require market share
stability and eventual growth in revenues. Achievement of these
margin levels is not expected through 2010. Ford has also made
clear strides in quality, which should benefit the company's
market acceptance and pricing if the trend is maintained. The
company's Sync dashboard technology, developed with Microsoft, has
also benefited the company in terms of progressive technology.
Ford's international operations continue to show healthy
improvement. European operations have shown modest share gains,
improved pricing and growing profitability, resulting from
structural cost improvements and well-received product
introductions. Latin America has shown very strong profitability,
which is expected to continue although perhaps not at the heights
achieved in 2007. Further growth is also expected in developing
markets including China and Russia. In total, Ford's
international operations have transitioned from a key risk factor
several years ago into a moderate positive for the company's
credit position.
While FMCC has been profitable, Fitch believes that operating
performance will remain under pressure due to lower contract
volume and asset quality deterioration which is affecting all auto
lenders. Slower portfolio growth will tend to inflate credit
metrics further. Fitch also believes that FMCC access to
liquidity via the securitization markets will come at a higher
cost as the continual credit market dislocation widens.
A downgrade could result if Ford experiences:
-- A material problem with the launch of the new F-150.
-- A decline in U.S. industry sales below 14.5 million units
combined with lack of projected fixed cost reductions that
result in a material deferral of the anticipated timeline to
positive free cash flow.
-- Ford Credit experiences restricted access to the
securitization market.
-- A significant decline in the U.S. market combined with a
reversal of operating profits across Ford's international
operations.
A return to a Stable Rating Outlook would be anticipated in the
event that a clear path to positive free cash flow is established.
This scenario would include continued stability in the company's
retail market share, a solid F-150 launch, realization of expected
fixed cost reductions in North America, stability or continued
growth in the company's international operations and maintenance
of healthy liquidity. A projected return to positive cash flow
will likely require stabilization of the housing market, due to
the impact of pickup sales on Ford's operating results.
Ford will continue to face increased cost and potential supply
disruptions from its stressed supply chains. Although most Tier-1
suppliers have ample liquidity during 2008 due to timely accessing
of the leveraged loan market, lower-tier suppliers are more
exposed to projected production declines at the Detroit Three,
pricing and commodity cost pressures, and lack of access to
capital. The higher risk of production disruptions or supplier
liquidations will cause the OEM's and Tier-1 suppliers to incur
additional costs in order to address particular situations.
Ford's liquidity has been boosted by substantial debt issuance
over the past eighteen months. Total automotive debt, including
$6.3 billion of new debt associated with the UAW VEBA agreement,
is approximately $33 billion (following a $2.6 billion reduction
in debt through two equity-for-debt transactions). Total debt is
now roughly $20 billion more than at year end 2002. Net interest
expense, augmented by the expected decline in cash holdings and
the associated decline in interest income, will continue to
represent a more material claim on consolidated cash flows than in
the past. Fitch expects that even in a relatively harsh downturn
in 2008, liquidity would remain well above the level needed to
finance Ford's operations and its restructuring requirements.
Ford has a light maturity schedule over the next three years, and
is unlikely to require external capital, although Ford may seek
opportunities to further boost liquidity if the markets become
receptive. The company may also continue to seek opportunities to
exchange equity for debt. The company retains access to
$11.5 billion in credit lines, which contain no financial tests.
Access is subject to a borrowing base, which would be expected to
reduce availability in the event of further deterioration in
operating results. Recovery ratings remain in the same range, as
a decrease in healthcare liabilities has been offset by an
increase in debt. Fixed cost reductions that were anticipated to
be realized in a bankruptcy scenario have been partially achieved
through the new UAW contract. Recoveries from international
operations have also increased.
Fitch has affirmed these ratings with a Negative Rating Outlook:
Ford Motor Co.
-- Long-term IDR at 'B';
-- Senior secured credit facility at 'BB/RR1';
-- Senior secured term loan at 'BB/RR1';
-- Senior unsecured at 'B-/RR5'.
Ford Motor Co. Capital Trust II
-- Trust preferred stock at 'CCC+/RR6'.
Ford Holdings, Inc.
-- Long-term IDR at 'B';
-- Senior unsecured at 'B-/RR5'.
Ford Motor Co. of Australia
-- Long-term IDR at 'B';
-- Senior unsecured at 'B-/RR5'.
Ford Motor Credit Co.
-- Long-term IDR at 'B';
-- Short-term IDR at 'B';
-- Senior unsecured at 'BB-/RR2';
-- Commercial paper at 'B'.
FCE Bank Plc
-- Long-term IDR at 'B';
-- Senior unsecured at 'BB-/RR2';
-- Short-term IDR at 'B';
-- Commercial paper at 'B';
-- Short-term deposits at 'B'.
Ford Capital B.V.
-- Long-term IDR at 'B';
-- Senior unsecured at 'BB-/RR2'.
Ford Credit Canada Ltd.
-- Long-term IDR at 'B'.
-- Short-term IDR at 'B';
-- Commercial paper at 'B';
-- Senior unsecured at 'BB-/RR2'.
Ford Credit Australia Ltd.
-- Long-term IDR at 'B';
-- Senior unsecured at 'BB-/RR2';
-- Short-term IDR at 'B';
-- Commercial paper at 'B'.
PRIMUS Financial Services (Japan)
-- Long-term IDR at 'B';
-- Short-term IDR at 'B'.
Ford Credit de Mexico, S.A. de C.V.
-- Long-term IDR at 'B';
-- Senior unsecured at 'BBB+'.
Ford Credit Co S.A. de CV
-- Long-term IDR at 'B'.
-- Senior unsecured at 'BB-/RR2'.
Ford Motor Credit Co. of New Zealand
-- Long-term IDR at 'B';
-- Senior unsecured at 'BB-/RR2';
-- Short-term IDR at 'B';
-- Commercial paper at 'B'.
Ford Motor Credit Co. of Puerto Rico, Inc.
-- Short-term IDR at 'B'.
FOREST LAKE: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Forest Lake Ford, Inc.
dba Forest Ford, Inc.
231 - 19th Street S.W.
Forest Lake, MN 55025
Bankruptcy Case No.: 08-30573
Type of Business: The Debtor sells car.
See: http://forestlakeford.dealerconnection.com/
Chapter 11 Petition Date: February 11, 2008
Court: District of Minnesota (St Paul)
Judge: Robert J. Kressel
Debtors' Counsel: Michael L. Meyer, Esq.
Ravich Meyer Kirkman McGrath Nauman
4545 IDS Center
80 South Eighth Street
Mineapolis, MN 55402
Tel: (612) 317-4745
Fax: (612) 332-8302
http://www.ravichmeyer.com/
Total Assets: $9,322,691
Total Debts: $9,322,691
Consolidated Debtors' List of 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
American Express credit card $3,836,200
Glenn P. Berger, Esq.
600 Third Avenue
New York, NY 10016
Tel: (212) 687-3000
WIPFLI accounting services $24,950
P.O. BOX 8010
Wausau, WI 54402
Walden Properties lease $22,500
Susan Miller
500 FORD ROAD
Minneapolis, MN 55426 500
Tel: (617) 555-5000
Ford Motor Company services $12,036
Nelson, Lowelle rent $8,000
Washington County property taxes $7,933
Parts Midwest Inc. services $6,827
ADP Dealer Services services $6,228
Connexus Energy utilities $5,036
ECM Publishing services $4,979
Sentry Insurance insurance $3,900
Cox Auto Trader services $3,000
Novaks GM Center rent $2,850
US Bank lease $2,716
Holiday services $2,175
American Tire services $1,780
ROC Inc. services $1,698
ADP Commercial Leasing lease $1,264
Aramark Uniform services $1,198
Hitch-It Inc. services $1,095
FREESCALE SEMICON: Fitch Holds CCC+ Notes Rating, Revises Outlook
-----------------------------------------------------------------
Fitch Ratings revised the Rating Outlook on Freescale
Semiconductor Inc. to Negative from Stable and affirmed these
ratings:
-- Issuer Default Rating at 'B+';
-- Senior secured bank revolving credit facility at 'BB+/RR1';
-- Senior secured term loan at 'BB+/RR1';
-- Senior unsecured notes at 'B/RR5';
-- Senior subordinated notes at 'CCC+/RR6'.
Fitch's actions affect approximately $9.5 billion of total debt.
The revision of the Rating Outlook to Negative reflects:
-- Fitch's expectations that revenue growth and profitability
from Freescale's automotive unit will be challenged
throughout 2008 due to the anticipated collective ongoing
market share erosion of the Big 3 United States-based car
makers, as well as production level cuts, although some of
these pressures should be offset by the company's design wins
in Asia-Pacific and the trend of increasing electronics
content per vehicle;
-- Fitch's belief that the delayed turnaround of Motorola Inc.'s
('Motorola', currently rated 'BBB'/F2 on Negative Rating
Watch by Fitch) mobile devices business until 2009 (from the
first half of 2008) will be accompanied by a limited number
of new product introductions over the near-term, which is
likely to lead to lower average selling prices and/or further
market share erosion for Motorola, both of which are expected
to pressure profitability for Freescale's cellular business;
some event risk exists as well as Motorola has announced that
it is exploring strategic alternatives for its mobile devices
business;
-- A meaningfully more cautious view on the wireless
infrastructure market for 2008, driven by recent weaker than
anticipated outlooks and reduced capital spending budgets
across a number of key customers, as well as less
enthusiastic demand prospects for WiMax; and
-- Uncertainty related to the company's strategic direction
following the recent resignation of Michel Mayer, Freescale's
Chief Executive Officer since the company was spun-off from
Motorola at the end of 2004.
While Fitch believes Freescale's product, customer, and end market
diversification, in all segments but Cellular, will continue to
limit significant volatility in the company's operating
performance, the meaningfully weaker than previously anticipated
operating environment in 2008 will thwart profitability expansion
in each of its key businesses and further pressure the company's
relatively weak credit protection measures over the near-term.
For 2007, Fitch estimates leverage was at nearly 7 times, interest
coverage was less than 2x, and free cash flow/total debt was just
over 1%. However, despite minimal debt amortization requirements
over the intermediate-term, Freescale is expected to have more
than $500 million of proceeds from the Motorola settlement and
equipment sales available for debt reduction.
Fitch may downgrade Freescale if:
-- Credit protection measures deteriorate due to meaningful
erosion in the company's profitability or free cash flow;
-- Management does not execute on its restructuring efforts,
including successful site consolidation, asset sales, and
meaningful improvement in the company's cash conversion
cycle.
Conversely, Fitch may stabilize the ratings if Freescale:
-- Improves its operating margin profile and free cash flow ]
characteristics via successful expansion of higher-margin
products along with a successful design win at another
significant wireless handset manufacturer;
-- Utilizes the aforementioned anticipated proceeds from
equipment sales and its settlement with Motorola to
materially reduce debt.
Fitch believes Freescale's liquidity was adequate as of Dec. 31,
2007 and supported by approximately $751 million of cash and cash
equivalents, approximately half of which is located in the U.S.,
and an undrawn $750 million revolving bank credit facility
expiring Dec. 1, 2012; Fitch anticipates annual free cash flow
will be break even to $200 million annually over the next few
years, modestly supporting liquidity. With no borrowings
outstanding under the revolving bank credit facility, Freescale's
only debt amortization until 2013 is 1% per annum under the term
loan facility, or approximately $35 million per year.
At Dec. 31, 2007, total debt was approximately $9.5 billion and
Fitch believes consisted primarily of:
i)$3.5 billion of senior secured term loan expiring Dec. 1, 2013;
ii) $500 million of floating rate senior notes due 2014;
iii) $1.5 billion of 9.125% PIK-election senior notes due 2014;
iv) $2.35 billion of 8.875% senior notes due 2014; and
v) $1.6 billion of 10.125% senior subordinated notes due 2016.
The Recovery Ratings for Freescale reflect Fitch's recovery
expectations under a distressed scenario, as well as Fitch's
expectation that the enterprise value of Freescale, and hence
recovery rates for its creditors, will be maximized in a
restructuring scenario rather than a liquidation scenario. In
deriving a distressed enterprise value, Fitch applies a 35%
discount to Fitch's estimate of Freescale's 2007 operating EBITDA
of approximately $1.4 billion. The discount is equivalent to
Fitch's estimate of maintenance capital spending, rent expense,
and total interest expense for Freescale, assuming the company
exercises its option to pay in kind interest expense on the above
referenced $1.5 billion PIK-election senior notes.
Fitch then applies a 6 times distressed EBITDA multiple, which
considers that a stress event would likely result in a contraction
to Freescale's current multiple. As is standard with Fitch's
recovery analysis, the revolver is assumed to be fully drawn and
cash balances fully depleted to reflect a stress event. The 'RR1'
for Freescale's secured bank facility and term loan reflects
Fitch's belief that 91%-100% recovery is likely. The 'RR5' for
Freescale's senior notes reflects Fitch's belief that 11%-30%
recovery is realistic. The 'RR6' for Freescale's senior
subordinated debt reflects Fitch's belief that 0%-10% recovery is
realistic.
FRIEDMAN'S INC: Committee Balks at DIP Facility from CIT Group
--------------------------------------------------------------
The Official Committee of Unsecured Creditors in the bankruptcy
cases of Friedman's Inc. and Crescent Jewelers wants to file an
objection with the U.S. Bankruptcy Court for the District of
Delaware relating to the Debtors' debtor-in-possession financing
motion, Bill Rochelle of Bloomberg News reports.
According to the news, the Committee asserts that the Debtors do
not need the DIP fund because their future cash sales are enough
to sustain their operations until they are sold.
In addition, the Committee relates that senior lender, CIT
Group/Business Credit Inc. in New York, merely wants "to convert
its prepetition debt into a fully cross-collateralized
postpetition" debt, Mr. Rochelle notes.
The Debtors, Mr. Rochelle relates, asked the Court's permission to
secure $75 million revolving loan from CIT and $17.2 million term
loan from junior lender, Harbinger Capital Partners Master Fund I
Ltd.
As of the bankruptcy filing, the Debtors owed $57.9 million to the
senior lender, $10.3 million to the junior lender, and $27 million
to unsecured creditors related to Friedman's acquisition of
Crescent.
About Friedman's Inc.
Addison, Texas-based Friedman's Inc. -- http://www.friedmans.com/
-- and -- http://www.crescentonline.com/-- is the parent company
of a group of companies that operate fine jewelry stores located
in strip centers and regional malls in the southeastern United
States. Friedman's and eight its affiliates filed for chapter 11
protection on Jan. 14, 2005 (Bankr. S.D. Ga. Case No. 05-40129).
On Sept. 22, 2005, the Bankruptcy Court entered an order approving
the Debtors' Disclosure Statement explaining their Amended Joint
Plan of Reorganization. On Nov. 23, 2005, the Court confirmed the
Debtors' Amended Plan and that Plan became effective on Dec. 9,
2005.
Crescent Jewelers, the largest jewelry retailer on the West Coast,
filed for Chapter 11 protection on Aug. 12, 2004 (Bankr. N.D.
Calif. Case No. 04-44416). On June 15, 2006, the California
Bankruptcy Court approved Crescent Jewelers' Second Amended
Disclosure Statement its Second Amended Plan of Reorganization.
The Court confirmed that Plan on July 13, 2006. Crescent Jewelers
was acquired by Friedman's and became a wholly-owned subsidiary in
2006. In Jan. 22, 2008, five parties, which declared claims
aggregating $9,081,199.07, filed an involuntary Chapter 7 petition
against Friedman's. The parties that filed the involuntary
petition were Rosy Blue, Inc.; Rosy Blue Jewelry Inc.; Jay Gems,
Inc., dba Jewelmark; Simply Diamonds Inc.; and Paul Winston-
Eurostar LLC.
As of Jan. 28, 2008, Friedman's operated 388 stores in 19 states
with over 2,890 employees while Crescent Jewelers operated 85
stories in 3 states with over 600 employees. Friedman's and
Crescent Jewelers filed for chapter 11 protection on Jan. 28, 2008
(Bankr. D. Del. Case Nos. 08-10161 and 08-10179).
Athanasios E. Agelakopoulos, Esq., at Kilpatrick Stockton LLP, and
Jason M. Madron, Esq., and Michael Joseph Merchant, Esq., at
Richards, Layton & Finger PA represent the Debtors in their
restructuring efforts. As of Dec. 28, 2007, the Debtors listed
total assets of $245,787,000 and total liabilities of
$171,877,000.
GENSOLLEN LLC: Section 341(a) Meeting Slated for February 21
------------------------------------------------------------
The U.S. Trustee for Region 3, will convene a meeting of creditors
in Gensollen LLC's Chapter 11 case, on Feb. 21, 2008, at
11:00 a.m., at Suite 102, Bridge View Building, 800 Cooper Street,
Camden, New Jersey.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in the Debtors' case.
All creditors are invited, but not required, to attend. The
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible officer of the
Debtors under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Galloway, New Jersey, Gensollen LLC owns and
operates a restaurant and a night club. The Debtor filed for
Chapter 11 protection on Jan. 17, 2008, (Bankr. D. N.J. Case No.:
08-10782.) John J. Hutt, Esq. represent the Debtor in its
restructuring effort. When the Debtor filed for protection from
its creditors, it has estimated assets of $1 million to
$100 million. The Debtor's debt is unknown.
GLOBAL HOME: Judge Gross Confirms Joint Amended Chapter 11 Plan
---------------------------------------------------------------
The Honorable Kevin Gross of the United States Bankruptcy Court
for the District of Delaware confirmed Global Home Products LLC
and its debtor-affiliates' Joint Amended Chapter 11 Plan of
Reorganization.
According to Bloomberg News reporter, Dawn McCarty, Cerberus
Home Products Investors LLC, an affiliate of Cerberus Capital
Management LP in New York, will retain 98.7% of the Debtors' stock
under the Plan.
General Unsecured creditors will expect to recover between 1% and
1.5% of their claims, Bloomberg says.
Treatment of Claims
The Plan contemplates the distribution of about $8,500,000 in cash
to creditors by the Debtors and provides for the pro rata
distribution of:
-- up to $1,000,000 to the General Unsecured Claims plus
a percentage of certain Chapter 5 litigation recoveries;
and
-- $3.5 million to all Allowed 503(b)(9) Claim holders.
The remaining balance will be used to pay the allowed
Administrative and Priority Claims, and, to the extent possible,
Other Secured Claims.
A holder of a Non-GHPI Equity Interest who holds 1% of the equity
in the Debtors can retain its equity, if and only if, they
contribute 1% of $8,500,000.
Previous Asset Sale
Bloomberg reports that the Debtors have sold glassmaker Anchor
Hocking for $75 million in cash and assumed debts of about $20
million to Monomoy Capital Partners, while album manufacturer
Burne Operation Co. was sold to C.R. Gibson for $33.5 million and
WearEver for $21 million.
A full-text copy of the Debtors' Joint Amended Chapter 111 Plan of
Reorganization is available for free at:
http://ResearchArchives.com/t/s?2802
About Global Home
Headquartered in Westerville, Ohio, Global Home Products LLC
-- http://www.anchorhocking.com/and http:/www.burnesgroup.com/
-- sells houseware and home products and manufactures high
quality glass products for consumers and the food services
industry. The company also designs and markets photo frames,
photo albums and related home decor products. The company and
16 of its affiliates, including Burnes Puerto Rico, Inc., and
Mirro Puerto Rico, Inc., filed for Chapter 11 protection on
April 10, 2006 (Bankr. D. Del. Case No. Lead 06-10340).
Laura Davis Jones, Esq., David Bertenthal, Esq., Bruce Grohsgal,
Esq., and Joshua Fried, Esq, at Pachulski Stang Ziehl & Jones LLP,
represent the Debtors. Attorneys at Dinsmore & Shohl, LLP, and
Frost Brown Todd LCC are the Debtors' special counsel. Epiq
Bankruptcy Solutions, LLC acts as the Debtors' claims agent.
Ronald F. Stengel, Conway Del Genio Gries & Co., LLC, is the
Debtors' chief restructuring officer. Plante & Moran is the
Debtors' 401(k) plan auditors. PricewaterhouseCoopers LLP and
Deloitte Tax LLP provide tax services. Houlihan Lokey Howard &
Zukin Capital is Debtors' the investment bankers while Johnson
Associates Inc. is the special compensation advisor
Sharon Levine, Esq., and Bruce Buechler, Esq., at Lowenstein
Sandler PC; and David M. Fournier, Esq., at Pepper Hamilton LLP,
represent the Official Committee of Unsecured Creditors.
Attorneys at Basham, Ringer y Correa, SC is the Committee's
special counsel. Huron Consulting Services LLC acts as the
Committee's financial advisors.
Jesse H. Austin, III, Esq., at Paul, Hastings, Janofsky & Walker
LLP, and Robert J. Dehney, Esq., at Morris, Nichols, Arsht &
Tunnell LLP, represent Medeleine LLC. Global Home Products
Investors LLC, Cerberus Partners, LP, and Cerberus Capital
Management, LP, is represented in these bankruptcy proceedings by
Lawrence V. Gelber, Esq., and Sophie S. Kim, Esq., at Schulte Roth
& Zabel LLP; and Adam G. Landis, Esq., and Kerri Mumford, Esq., at
Landis Rath & Cobb LLP.
GMAC COMMERCIAL: Fitch Holds 'B-' Rating on $4.3MM Class M Certs.
-----------------------------------------------------------------
Fitch Ratings upgraded two classes of GMAC Commercial Mortgage
Securities, Inc.'s mortgage pass-through certificates, series
2001-C1, as:
-- $13 million class F to 'AAA' from 'AA+';
-- $13 million class G to 'AA-' from 'A+'.
In addition, Fitch has affirmed these classes:
-- $2.5 million class A-1 at 'AAA';
-- $546.8 million class A-2 at 'AAA';
-- Interest-only class X-1 at 'AAA';
-- Interest-only class X-2 at 'AAA';
-- $41 million class B at 'AAA';
-- $32.4 million class C at 'AAA';
-- $13 million class D at 'AAA';
-- $17.3 million class E at 'AAA'
-- $25.9 million class H at 'BB+';
-- $6.5 million class J at 'BB';
-- $6.5 million class K at 'BB-';
-- $13 million class L at 'B+';
-- $4.3 million class M at 'B-'.
Classes N remains at 'CCC/DR1' and class O remains at 'C/DR6'.
The upgrades reflect additional defeasance and pay down since the
last Fitch rating action. As of the January 2008 distribution
date, the pool's aggregate principal balance has been reduced
14.7% to $737.4 million from $864.1 million at issuance. Thirty-
six loans (42.4%) have defeased, including four (16.1%) of the ten
largest loans. There are currently no delinquent or specially
serviced loans.
Fitch has designated fifteen loans (14.43%) as Fitch Loans of
Concern. This includes the second largest loan in the pool
(5.1%), an office property located in Grand Rapids, Michigan. The
servicer reported year-end 2006 debt service coverage ratio was
1.06 times, down 26.9% since underwriting. The property has 28%
lease rollover during the next three years; however, at below
market rents of almost half of the current local market rents.
Fitch Loans of Concern include loans exhibiting low debt service
coverage ratios, low occupancy and other performance issues.
Eight (55.3%) of the Fitch Loans of Concern mature in 2010 while
the remaining six (44.7%) mature in 2011. The weighted average
note rate of these Loans of Concern is 7.86%.
GOLDEN STATE: Case Summary & 11 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: Golden State Investments, L.P.
4900 Hopyard Road, Suite 202
Pleasanton, CA 94588
Bankruptcy Case No.: 08-40689
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Pegasus-M.H. Ventures I, L.L.C. 08-40690
Chapter 11 Petition Date: February 14, 2008
Court: Northern District of California (Oakland)
Judge: Edward D. Jellen
Debtor's Counsel: Matthew J. Shier, Esq.
Pinnacle Law Group, L.L.P.
425 California Street, Suite 1800
San Francisco, CA 94104
Tel: (415) 394-5700
Golden State Investments, LP's Estimated Financial Condition:
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $10 Million to $50 Million
A. Golden State Investments, LP's Largest Unsecured Creditor:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bowles & Verna, L.L.P. $140,000
2121 North California
Boulevard, Suite 875
Walnut Creek, CA
94596
B. Pegasus-M.H. Ventures I, LLC's 10 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Compass Financial Partners, value of security: $21,703,110
L.L.C. $12,000,000; value of
333 Seventh Avenue, 3rd Floor senior lien:
New York, NY 10001 $7,426,080
Integrated Financial $1,350,000
Associates
7785 West Sahara Avenue,
Suite 100
Las Vegas, NV 89117
Scripps Investments & Loans, $955,000
Inc.
484 Prospect Street
La Jolla, CA 92037
Maple, Dell & McClelland, $552,643
L.L.P.
1656 North California Street,
Suite 300
Walnut Creek, CA 94596
Siegfried Engineering, Inc. $301,573
4045 Coronado Avenue
Stockton, CA 95204
Siegfreid Engineering, Inc. $301,573
4045 Coronado Avenue
Stockton, CA 95204
Hoge, Fenton, Jones & Appel, $200,000
Inc.
Dvaid Gates & Associates $162,810
Bowles & Verna, L.L.P. $130,000
Kimmel & Associates $62,568
GREATER MIAMI: To Request Court Permission for Asset Sale
---------------------------------------------------------
Greater Miami Neighborhoods, Inc. and its debtor-affiliates intend
to seek approval from the U.S. Bankruptcy Court for the Southern
District of Florida to sell their assets to Preservation of
Affordable Housing, Inc.
GMN will also seek to obtain financing from POAH, according to
papers filed in Court.
The Debtors have determined that a Court-approved sale of their
assets is in the best interest of their estates and creditors. To
effectuate the orderly sale, the Debtors have entered into a
Purchase and Sale Agreement, dated as of January 17, 2008, with
POAH. The deal is subject to court approval.
Headquartered in Miami, Florida, Greater Miami Neighborhoods Inc.
-- http://www.greatermiami.org/-- has developed or assisted in
the development of more than 5,000 units of rental and
homeownership housing valued in excess of $300 million. It also
operates a property management company and provides homeownership
counseling in conjunction with other resident services to
encourage economic self-sufficiency for low and moderate income
residents.
The company and eight of its affiliates filed for chapter 11
bankruptcy protection on Jan. 22, 2008 (Bankr. S.D. Florida,
Miami, Case No. 08-10694). Jonathan C. Vair, Esq. at Stearns,
Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A. represents
the Debtors in its restructuring efforts. No Official Committee
of Unsecured Creditors has been appointed in the case to date.
When the company filed for protection against it creditors, it
listed between $1 million and $10 million in total assets, and
between $10 million to $50 million in total debts.
GREENPOINT MORTGAGE: Moody's Junks Ratings on Five Certs.
---------------------------------------------------------
Moody's Investors Service downgraded two certificates and placed
on review for possible downgrade four certificates from two
Greenpoint deals issued in 2005: Greenpoint Mortgage Funding Trust
2005-HE2 and Greenpoint Mortgage Funding Trust 2005-HE4.
The transactions are backed by Home Equity Line of Credit loans,
and have seen recent losses that have far exceeded the excess
spread available. The actions are based on the analysis of the
credit enhancement provided by subordination,
overcollateralization and excess spread relative to the expected
loss.
Complete rating actions are:
Issuer: Greenpoint Mortgage Funding Trust 2005-HE2
-- Cl. M-2, Placed on Review for Possible Downgrade,
currently A3
-- Cl. M-3, Placed on Review for Possible Downgrade,
currently Baa2
-- Cl. B-1, Downgraded to Caa1 from Ba2
Issuer: Greenpoint Mortgage Funding Trust 2005-HE4
-- Cl. M-2, Placed on Review for Possible Downgrade,
currently Aa2
-- Cl. M-3, Placed on Review for Possible Downgrade,
currently Aa3
-- Cl. M-4, Downgraded to A3 from A1
-- Cl. M-5, Downgraded to Baa2 from A2
-- Cl. M-6, Downgraded to Ba1 from A3
-- Cl. M-7, Downgraded to B1 from Baa1
-- Cl. M-8, Downgraded to Caa3 from Baa2
-- Cl. M-9, Downgraded to C from Baa3
-- Cl. M-10, Downgraded to C from Ba1
-- Cl. M-11, Downgraded to C from Ba2
GROVE PARK: Case Summary & Largest Unsecured Creditor
-----------------------------------------------------
Debtor: Grove Park Homes, LLC
aka Grove Parks Homes
3062 Chandler Avenue
Lincoln Park, MI 48146
Bankruptcy Case No.: 08-43090
Type of Business: The Debtor builds houses.
Chapter 11 Petition Date: February 12, 2008
Court: Eastern District of Michigan (Detroit)
Judge: Thomas J. Tucker
Debtors' Counsel: Donald C. Darnell, Esq.
Darnell & Lulgjuraj
311 Weiser Way
Chelsea, MI 48118
Tel: (734) 433-0816
http://www.dsl-law.com/
Estimated Assets: $1 million to $100 million
Estimated Debts: $1 million to $100 million
Consolidated Debtor's Largest Unsecured Creditor:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Joseph Koenig promissory note $1,003,000
3062 Chandler Avenue
Lincoln Park, MI 48146
HANGER ORTHOPEDIC: Earns $6.6 Million in Quarter Ended December 31
------------------------------------------------------------------
Hanger Orthopedic Group Inc. reported financial results for fourth
quarter and year ended Dec. 31, 2007.
The company reported net income for the quarter of $6.6 million, a
35% increase compared to $4.5 million in 2006.
In the fourth quarter of 2007, cash flow from operations, improved
by $5.5 million to $21.4 million, compared to $15.9 million in the
prior year.
For the full year net income for the year was $17.6 million, a
31% increase compared to pro-forma net income of $14.5 million
in the prior year. The pro-forma results for the year ended
Dec. 31, 2006, exclude the $17 million cost of extinguishment
of debt incurred in connection with the refinancing and assumes
that the new capital structure was in place on Jan. 1, 2006.
Including the costs of the refinancing, the net loss applicable to
common stock was $4.1 million for the year ended Dec. 31, 2006.
Cash flow from operations for the year ended Dec. 31, 2007,
improved by $22.3 million to $51.7 million, compared to the prior
year's pro-forma of $29.4 million, excluding the cost of the
refinancing. The increase was due to improved earnings and a
reduction in working capital.
Including the effect of the refinancing, cash flow from operations
for the year ended Dec. 31, 2006, was $24 million.
At Dec. 31, 2007, the company's balance sheet showed total debt
of
$410.89 million and shareholders' equity of $190.54 million.
"Fiscal 2007 was a year of solid progress and the fourth quarter
marks our eighth consecutive quarter of meeting or beating
consensus estimates," Ivan R. Sabel, chairman and chief executive
officer of Hanger Orthopedic Group, commented.
"Our patient care centers reported same center sales growth of 5%,
their best performance since 2001, and our distribution business
was able to generate over 9% sales growth in 2007 after reporting
over 22% growth in 2006," Mr. Sabel added. "These efforts
resulted in earnings per share growth of 35% for the quarter and
31% for the year and allowed us to finish the year with over $34
million in cash on the balance sheet. Our performance in 2007
proved that our focused growth strategies have helped us build a
solid foundation for future growth."
About Hanger Orthopedic
Headquartered in Bethesda, Maryland, Hanger Orthopedic Group Inc.
(NYSE: NYSE: HGR) -- http://www.hanger.com/-- provides orthotic
and prosthetic patient care services. Hanger owns and operates
636 patient care centers in 46 states including the District of
Columbia, with over 3,500 employees including 1,060 practitioners
as of Dec. 31, 2007.
* * *
Hanger Orthopedic Group Inc. continues to carry Moody's Investor
Service's 'B2' long term corporate family rating which was
assigned on April 2007.
HANOVER INSURANCE: Moody's Lifts Sr. Debt Rating to Baa3 From Ba1
-----------------------------------------------------------------
Moody's Investors Service upgraded the senior debt rating of The
Hanover Insurance Group, Inc. to Baa3 from Ba1 and the insurance
financial strength rating of Hanover Insurance Company to A3 from
Baa1, both with a stable outlook. This rating action concludes a
review for possible upgrade that was initiated on Jan. 16, 2008.
The Ba1 insurance financial strength rating and stable outlook on
the run-off life insurance subsidiary, First Allmerica Financial
Life Insurance Co., remain unaffected by these rating actions.
According to Moody's, the upgrade reflects continued strengthening
of risk-adjusted capitalization at the property-casualty
subsidiaries and Moody's expectation that the company will manage
its capital structure and business expansion prudently. Capital
adequacy at the property-casualty subsidiaries has improved in the
past several years due to improved operating earnings and
retention of capital by those subsidiaries; this is evidenced by
an improvement in operating leverage from 2.3x to 1.4x between
2003 and 2007. Furthermore, business prospects appear to be more
stable, as the company has been able to weather past concerns of
independent agents as evidenced by a rebound in retention rates
and policy counts, particularly over the past year.
Notwithstanding these improvements, key challenges remain for the
company. Most notably, it is concentrated in a limited number of
states that have either been historically challenging for insurers
and/or are vulnerable to natural catastrophes. In particular,
Michigan, Massachusetts, New York, New Jersey, Louisiana and
Florida make up the company's top six states and represent over
70% of total direct written premiums. Its narrow geographic
footprint, in Moody's view, limits further upward pressure on the
ratings in the medium term. In light of these challenges, Moody's
expects the company to maintain adjusted financial leverage below
30% (currently 23% as of Dec. 31, 2007, including under-funded
pension liabilities and operating lease commitments), sufficient
holding company cash to cover twice the sum of annual interest
expense ($40 million) and common dividends ($21 million), and EBIT
coverage of interest expense above 4x. The last rating action on
The Hanover Insurance Group, Inc. occurred on Jan. 16, 2008 when
Moody's placed the ratings on review for possible upgrade.
These ratings have been upgraded with a stable outlook:
The Hanover Insurance Group, Inc.
-- senior unsecured debt rating at Baa3; commercial paper rating
at Prime-3; AFC Capital Trust I
-- preferred stock rating at Ba1;
Hanover Insurance Co.
-- insurance financial strength at A3.
These rating has been affirmed with a stable outlook:
First Allmerica Financial Life Insurance Co.
-- insurance financial strength at Ba1.
The Hanover Insurance Group, formerly Allmerica Financial
Corporation, is a holding company for its insurance subsidiaries,
which collectively rank among the top 35 property and casualty
insurers in the United States. THG operates as The Hanover
Insurance Company, except in Michigan and other Midwest states
where it does business as Citizens Insurance Company of America.
It offers a range of property and casualty insurance products to
individuals and business owners through its network of over 2,000
independent agents. For full year 2007, THG reported net premiums
written of $2.4 billion and net income of $253 million. As of
December 31, 2007, shareholders' equity was $2.3 billion.
HARVEY ELECTRONICS: Committee Opposes Final Approval of DIP Loan
----------------------------------------------------------------
The Official Committee of Unsecured Creditors in the bankruptcy
case of Harvey Electronics Inc. tells the Hon. Allan L. Gropper of
the U.S. Bankruptcy Court for the Southern District of New York to
deny final approval to the Debtor's request to obtain $1.5 million
debtor-in-possession financing from Yorkville Advisors LLC, The
Associated Press reports, citing Committee counsel, Jay Indyke,
Esq.
As reported in the Troubled Company Reporter on Jan. 7, 2008,
The Hon. Allan L. Gropper of the Southern District of New York
gave Harvey Electronics Inc. interim approval to access
$1.5 million in postpetition financing from an undisclosed lender.
The DIP financing will be used to pay the Debtor's employees and
other operational expenses and to fund its reorganization.
Judge Gropper was set to convene a final hearing on the DIP
financing on Jan. 25, 2008, but will postpone the hearing to
Feb. 22, 2008, due to the Committee's objection, Mr. Indyke tells
AP.
The Debtor had said it expects to emerge from bankruptcy in
spring.
Harvey defended the terms of the DIP loan stating there were
"virtually non-existent" lenders who are willing to extend them
postpetition funds.
The Debtor owe $3.7 million in prepetition loan to Yorkville, Mr.
Indyke told AP. He added the Committee is concerned that the new
loan from Yorkville would wipe out recovery for the unsecured
creditors, AP reports.
About Harvey Electronics
Based in New York City, Harvey Electronics Inc. --
http://www.harveyonline.com/-- retails, services and custom
installs audio, video and home theater equipment. The equipment
includes high-fidelity components and systems, digital versatile
disc players, digital video recorders, high definition television,
plasma flat screen and liquid crystal display flat-panel
television sets, integrated remote controls, media servers,
audio/video furniture, conventional telephones, moving picture
experts group layer-3 audio players, iPods, satellite and analog
radios, service contracts and related accessories. It operates
nine locations comprising eight Harvey specialty retail stores
and one separate Bang & Olufsen branded store. It also retails
brands manufactured by Bang & Olufsen, Crestron, Marantz,
McIntosh, NAD, Vienna Acoustics, Sonus Faber, Krell, Boston
Acoustics, Martin Logan and Fujitsu.
The company filed for chapter 11 protection on Dec. 28, 2007
(Bankr. S.D.N.Y. Case No. 07-14051). Harold S. Berzow, Esq., and
Jeffrey A. Wurst, Esq., at Ruskin, Moscou, Faltischek PC,
represents the Debtor in its restructuring efforts. An Official
Committee of Unsecured Creditors has been appointed in the case.
When the Debtor filed for bankruptcy, it listed total assets of
$9,930,468 and total debts of $10,368,513.
HOLLEY PERFORMANCE: Plan Confirmation Hearing Slated for March 19
-----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
will hold a hearing March 19, 2008, to consider confirmation of
Holley Performance Products Inc.'s prepackaged chapter 11 plan of
reorganization.
Holley Performance Products could be in and out of Chapter 11
inside of seven weeks under the schedule approved by the Court,
William Rochelle at Bloomberg News reports.
As reported by the Troubled Company Reporter on Feb. 12, 2008, the
company's plan contemplates on swapping bank debt for equity and
paying trade lenders and general unsecured lenders in full.
The plan, according to The Associated Press, offers 90% ownership
in the company's stock to holders of 12.5% second-lien secured
notes due 2009 with an aggregate amount of $146 million. Second-
lien noteholders will also receive $50 million worth of newly
issued notes under the plan.
The disclosure statement says the second-lien noteholders should
recover 48.5%, Mr. Rochelle says.
Meanwhile, the plan will grant holders of $4.2 million in 12.25%
senior unsecured notes either $100 cash for every $1,000 worth of
bonds, or warrants to buy equity in the reorganized company,
reports say.
Before the Chapter 11 filing, all of the second-lien secured
noteholders voted for the plan while more than 85% of the
unsecured noteholders gave assent, according to Mr. Rochelle.
The company's Chief Financial Officer Thomas W. Tomlinson told
Bloomberg News through a telephone interview that Holley's debt
will be reduced by $100 million under the plan.
Mr. Tomlinson said Holley's efforts to expand operations in 1990
collapsed and resulted in the piling of its debt.
Reports say that in 2007, Holley negotiated the terms of its
obligations under a 12.5% note. At that time, major shareholder,
Kohlberg & Co. LLC, ended its financial support to repay the
Debtor's interest, reports relate.
About Holley Performance
Bowling Green, Kentucky-based Holley Performance Products Inc. --
http://www.holley.com/-- was was founded in 1903 by brothers
George and Earl Holley. It currently employs 390 workers in
Kentucky, California and Mississippi. It is the parent company of
various companies offering the Holley brands, including Hooker,
FlowTech and Nitrous Oxide Systems. Holley carburetors power
every NASCAR(R) Sprint(R) Cup team and every NHRA(R) Pro-Stock
champion. The Holley line also includes performance fuel pumps,
fuel injection, intake manifolds, cylinder heads & engine dress-up
products for street performance, race and marine applications.
The company filed for Chapter 11 protection on February 11, 2008
(Bankr. Del. Case No.08-10256). Evelyn J. Meltzer, Esq., and
David B. Stratton, Esq., at Pepper Hamilton, L.L.P., represents
the Debtors' in their restructuring efforts. No Official
Committee of Unsecured Creditors has been appointed in these cases
to date. When the Debtors filed for protection against their
creditors, it listed total assets of $106,000,000 and total debts
of $243,000,000.
INTEGRITY CONSTRUCTION: Case Summary & 20 Largest Unsec. Creditors
------------------------------------------------------------------
Debtor: Integrity Construction & Development, Inc.
1406 Vetrans Drive
Elkhorn, NE 68022
Bankruptcy Case No.: 08-80318
Type of Business: The Debtor remodels houses and interiors.
Chapter 11 Petition Date: Feb. 12, 2008
Court: Nebraska U.S. Bankruptcy Court (Omaha Office)
Debtors' Counsel: Robert V. Ginn, Esq.
Blackwell Sanders Peper Martin LLP
1620 Dodge Street, Suite 2100
Omaha, NE 68102
Tel: (402) 964-5000
Fax: (402) 964-5050
http://www.blackwellsanders.com/
Estimated Assets: $1 million to $100 million
Estimated Debts: $1 million to $100 million
Consolidated Debtors' List of 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Gateway Homes Inc. $124,685
1406 Veterans
Elkhorn, NE 68022
Lee Coe Contractors Inc. $6,672
15406 Windsor Drive
Omaha, NE 68154
Seal-Rite Insulation $6,168
13710 North 47th Street
Omaha, NE 68152
Excel Cabinets & Interiors $5,957
Christensen Lumber Inc $5,276
Lutz & Company, PC $5,311
D&M Decorating $4,555
Elite Glass Services Inc. $2,525
Marathon Electric Inc. $3,662
Lamson Dugan & Murray LLP $1,883
Hendrix Construction LLC $1,795
Jerry's Waterproofing Inc. $1,463
Ground Effects $1,185
Lumberman's Brick & Supply $929
Co.
American Family Insurance $382
Harrison Woods LLC $330
Thompson Dreessen & $288
Dorner Inc.
Quality Containers $270
Classic Cleaning & $155
Maintenance
Cassem Tierney Adams $116
Gotch & Douglas
JETBLUE AIRWAYS: Board Appoints Edward Barnes as New CFO
--------------------------------------------------------
JetBlue Airways Corporation's Board of Directors appointed Edward
Barnes as the company's chief financial officer and executive vice
president. Mr. Barnes had been serving as interim chief financial
officer since November 2007. Mr. Barnes will continue to serve as
the company's principal accounting officer.
Mr. Barnes, age 43, joined the company in October 2006 as vice
president, cost management and financial analysis. He previously
served as vice president-controller of JDA Software from April
2005 through September 2006. Mr. Barnes is a certified public
accountant and a member of the AICPA.
About JetBlue Airways Corporation
Based in Forest Hills, New York, JetBlue Airways Corporation
(Nasdaq:JBLU) -- http://www.jetblue.com/-- is a passenger
airline that provides customer service on point-to-point routes.
As of Feb. 14, 2007, JetBlue operated approximately 502 daily
flights. The company serves 50 destinations in 21 states, Puerto
Rico, Mexico and the Caribbean. The company operates a fleet of
98 Airbus A320 and 23 Embraer 190 aircrafts. The company's
operations primarily consists of transporting passengers on its
aircraft, with domestic United States operations, including Puerto
Rico, accounting for approximately 97.1% of its capacity during
the year ended
Dec. 31, 2006.
* * *
Moody's Investor Service placed JetBlue Airways Corporation's
long-term corporate family and probability rating at 'B3' and its
senior unsecured debt rating at 'Caa2' in May 2007. The ratings
still hold to date with a negative outlook.
KELLWOOD CO: Sun Capital's Unit Completes Shares Tender Offering
----------------------------------------------------------------
Sun Capital Securities Group LLC disclosed the completion of
Cardinal Integrated LLC's cash tender offer for the outstanding
shares of Kellwood Company, which expired at 12:00 midnight New
York City time, on Feb. 12, 2008.
As of the close of the offer, approximately 15.8 million Kellwood
shares have been validly tendered, and not properly withdrawn,
representing approximately 70.5% of the outstanding shares of
Kellwood. When added to Sun Capital's existing 11.4% stake, this
represents approximately 81.9% of Kellwood's total outstanding
shares.
Additional shares were guaranteed to be delivered within the next
three business days which, if added to the tendered shares and Sun
Capital's existing stake, would represent in excess of 90% of
Kellwood's total outstanding shares.
All shares validly tendered and not properly withdrawn prior to
the expiration of the offer have been accepted for purchase by
Cardinal Integrated, and Cardinal Integrated expects to promptly
pay for all such shares.
Sun Capital also disclosed that Cardinal Integrated has commenced
a subsequent offering period for all of the remaining untendered
shares that will expire at 12:00 midnight New York City time,
today, Feb. 15, 2008. During this subsequent offering period,
Kellwood shareholders who did not tender their shares into the
offer may do so and will promptly receive $21 per share cash
consideration, as was paid during the initial offering period.
Shares tendered during the subsequent offering period may not be
withdrawn.
After expiration of the subsequent offering period, as the final
step of the acquisition process, a subsidiary of Cardinal
Integrated will be merged with and into Kellwood and each share
not previously purchased in the tender offer will be converted,
subject to appraisal rights, into the right to receive $21 per
share in cash.
Consummation of the merger is expected to occur soon as
practicable after the expiration of the subsequent offering
period. After the merger, Kellwood will become a wholly-owned
subsidiary of Cardinal Integrated, and Kellwood's common stock
will be delisted and will cease to trade on the New York Stock
Exchange.
Shareholders with questions regarding tendering their shares can
cointact D.F. King & Co. Inc. at (800) 269-6427.
About Kellwood Company
Headquartered in St. Louis, Missouri, Kellwood Company (NYSE: KWD)
-- http://www.kellwood.com/-- markets apparel and consumer soft
goods. The company specializes in branded as well as private
label products, and markets to all channels of distribution with
product specific to a particular channel.
Smart Shirts is a manufacturer, marketer, seller and distributor
of woven and knit garments - men's shirts. While a manufacturer
for private brands, this business also designs, makes, and sells
licensed brands of men's shirts including Nautica, Claiborne,
Axcess A Claiborne Company, Concepts by Claiborne, O Oscar, an
Oscar de la Renta Company, and Perry Ellis. Smart Shirts has 14
manufacturing facilities located in the People's Republic of
China, Hong Kong, Sri Lanka and the Philippines.
* * *
As reported in the Troubled Company Reporter on Feb. 14, 2008,
Standard & Poor's Ratings Services said that its ratings on
women's apparel designer and marketer Kellwood Co. (BB-/Watch
Neg/--) would remain on CreditWatch with negative implications
until the completion of Sun Capital Securities LLC's tender offer
to Kellwood's shareholders. Sun Capital, through an affiliate, is
the majority holder of Kellwood's common stock.
KEVIN MALONEY: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Kevin P. Maloney
110 Martinak Lane
Fayette City, PA 15438
Bankruptcy Case No.: 08-20867
Chapter 11 Petition Date: February 13, 2008
Court: Western District of Pennsylvania (Pittsburgh)
Debtor's Counsel: Stephen M. Otto, Esq.
409 Broad Street, Suite 270
Sewickley, PA 15143
Tel: (412) 741-1200
Fax: (412) 291-1012
Total Assets: $500,000 to $1 Million
Total Debts: $1 Million to $10 Million
The Debtor did not file a list of its largest unsecured creditors.
KNOLL INC: Lynn M. Utter Named Knoll North America's President/COO
------------------------------------------------------------------
Knoll Inc. appointed Lynn M. Utter as Knoll North America's new
president and chief operating officer. Ms. Utter will officially
join the company on or about March 3, 2008, and will report to the
company's chief executive officer, Andrew B. Cogan.
Preceding her appointment, Ms. Utter, age 45, served as the chief
strategy officer at Coors Brewing Company, a business unit of
Molson Coors Brewing Company. Ms. Utter also is currently a
Director of WESCO International Inc.
Resignation of Kathleen G. Bradley:
Ms. Utter replaces Kathleen G. Bradley, who will retire from her
position, effective May 23, 2008.
About Knoll
Based in East, Greenville, Pennsylvania, Knoll Inc. (NYSE:KNL) --
http://www.knoll.com/-- designs and manufactures office furniture
products and textiles. Knoll offers a portfolio of office
furniture, textiles and leather across five product categories:
office systems, which are typically modular and moveable
workspaces with functionally integrated panels, work surfaces,
desk components, pedestal and other storage units, power and data
systems and lighting; specialty products, including high-image
side chairs, sofas, desks and tables for the office and home,
textiles, accessories and leathers and related products; seating;
files and storage, and desks, casegoods and tables. The company
sells its products primarily in North America. In October 2007,
Knoll Inc. completed the acquisition of Teddy and Arthur Edelman,
Limited.
* * *
Standard & Poor's placed Knoll Inc.'s long-term foreign and local
issuer credit ratings at 'BB' in July 2006. The ratings still
hold to date with a stable outlook.
LANGUAGE LINE: S&P Changes Outlook to Negative; Retains 'B' Rating
------------------------------------------------------------------
Standard & Poor's Ratings Services said it revised its outlook on
Language Line Holdings Inc. to negative from stable.
"[The] rating action is based on the company's thin margin of
covenant compliance and further covenant step-downs to come over
the next two quarters," explained Standard & Poor's credit analyst
Andy Liu.
S&P also affirmed the 'B' corporate credit rating on the company.
Monterey, California-based Language Line had total debt of
$470.8 million as of Sept. 30, 2007.
At the same time, S&P revised the loan and recovery ratings on
Language Line Inc.'s senior secured credit facilities. S&P raised
the bank loan ratings on the outstanding $222.3 million senior
secured credit facilities to 'BB-' (two notches above the
corporate credit rating on Language Line Holdings Inc.) from 'B+'.
The recovery rating was revised to '1' (indicating S&P's
expectation of very high (90%-100%) recovery in the event of a
payment default) from '2'. The change in the bank loan and
recovery ratings reflects S&P's revised assumption on the debt
level at the time of default as well as the company's improving
profitability.
The outlook revision reflects S&P's concern that Language Line may
have to seek bank covenant waivers and amendments over the
intermediate term because of aggressive covenant step-downs over
the next two quarters. The current margin of compliance with bank
covenants is already thin. Furthermore, with the U.S. economy
teetering on the edge of a recession, S&P is uncertain how
Language Line's clients would behave in such an environment and
whether call volume growth can be sustained.
LARRY VAUGHN: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Larry F. Vaughn
1158 Mansfield Avenue
Indiana, PA 15701-4514
Bankruptcy Case No.: 08-70137
Chapter 11 Petition Date: February 13, 2008
Court: Western District of Pennsylvania (Pittsburgh)
Debtor's Counsel: Mary Bower Sheats, Esq.
1310 Allegheny Building,
429 Forbes Avenue
Pittsburgh, PA 15219
Tel: (412) 281-7266
Fax: (412) 391-0308
Total Assets: $1 Million to $10 Million
Total Debts: $1 Million to $10 Million
The Debtor did not file a list of its largest unsecured creditors.
LATHAM MANUFACTURING: Moody's Downgrades Corporate Rating to 'B3'
------------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating
and probability of default rating of Latham Manufacturing Corp. to
B3 from B2. It also downgraded the rating of its senior secured
revolver and senior secured term loan B to B2 from B1.
LEGENDS GAMING: Covenant Violations Cue S&P to Junk Corp. Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating for Legends Gaming LLC to 'CCC+' from 'B-'. The ratings
remain on CreditWatch with negative implications, where they were
initially placed Dec. 20, 2007.
"The downgrade and continued CreditWatch listing follow the
company's announcement that it has violated certain financial
covenants under its credit agreements," said Standard & Poor's
credit analyst Ariel Silverberg.
The administrative agent for the first-lien lenders responded with
a letter, acknowledging the violation, and reserving the rights
and remedies of the first-lien lenders under the loan documents
arising from the defaults. Lenders have stated their intent to
continue discussions with the company, as well as their hope that
these discussions will result in the completion of a successful
amendment to the credit agreements.
"We believe, however, that there exist heightened risks that a
satisfactory resolution will be reached given current credit
market conditions, and given our expectation for weak near-term
performance of Legends' properties related to current economic
conditions," noted Ms. Silverberg.
In resolving the CreditWatch listing, S&P will continue to monitor
Legends' liquidity position, which has been negatively affected by
its inability to request further loans under the first-lien credit
agreement while the defaults exist. In addition, S&P will monitor
management's progress in negotiating amendments to its credit
agreements, as well as the near-term operating prospects for its
properties.
LIGHTWAVE COMMS: Case Summary & 16 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Lightwave Communications, LLC
14504 Greenview Drive, Suite 300
Laurel, MD 20708
Bankruptcy Case No.: 08-11877
Type of Business: The Debtor provides telecommunication
services.
See: http://www.lightwavellc.com/
Chapter 11 Petition Date: February 11, 2008
Court: District of Maryland (Greenbelt)
Judge: Thomas J. Catliota
Debtors' Counsel: Bradford F. Englander, Esq.
Linowes and Blocher LLP
7200 Wisconsin Avenue, Suite 800
Bethesda, MD 20814-4842
Tel: (301) 961-5125
Fax: (301) 654-2801
http://www.linowes-law.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
Consolidated Debtors' List of 16 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Verizon Services Corp. services $650,000
1310 N. Courthouse Road
Arlington, VA 22201
Bingham McCutchen LLP legal fees $97,348
P.O. Box 3486
Boston, MA 02241-3486
Klein Law Group legal fees $79,939
4800 Montgomery Lane
Suite 700
Bethesda, MD 20814
Qwest Communications services $42,717
Hofheimer Gartlier & legal fees $21,712
Gross LLP
Customcall Data Systems legal fees $20,134
Universal Service services $10,507
Adminstration
VeriSign Inc. insurance $7,108
Bay Area Insurance Agency insurance $5,776
Inc.
TelCove Operations services $2,600
Capital One F.S.B. credit card $2,127
CDW Direct LLC trade vendor $1,878
Zayo Bandwith services $1,755
Arlington County Treasurer tax $1,440
Cavalier services $1,350
Maryland Public Svc administrative fee $991
L TERSIGNI: Examiner Says Four Asbestos Case Samples Overbilled
---------------------------------------------------------------
Hugh M. Ray, as examiner of the Chapter 11 case of L. Tersigni
Consulting CPA, P.C., told Judge Alan Shiff of the U.S.
Bankruptcy Court for the District of Connecticut that he has
reviewed reports prepared by each of the law firm Heller Ehrman
LLP and the office of the U.S. Trustee for Region 3.
According to the Examiner, Lawrence Zweifach, Esq., author of the
Heller Ehrman Report, conducted its independent investigation on
behalf of the Tersigni firm before November 13, 2007, the date
when the accounting firm filed for bankruptcy.
The Heller Ehrman Report analyzed billings in four of the 20
asbestos cases sampling over a one-year period. The Heller
Ehrman Report concludes a total of $546,106 was overbilled to
four asbestos cases during a one-year period.
The Examiner related that he conducted an initial interview with
Mr. Zweifach. According to the Examiner, Mr. Zweifach said he
met several obstacles that impeded his investigation, including:
(a) Loreto Tersigni's e-mails have been deleted;
(b) There are gaps in the Tersigni firm's books and records
concerning employees' time entries;
(c) The physical drafts of the billing statements reviewed and
edited by Dottie Collins, an employee of the Tersigni
firm, appear to be missing, as are all of her time
records;
(d) There are more significant information gaps as to the
Debtors' older books and records; and
(e) Ms. Collins, who appears to be the only living witness to
the overbilling practices and is the employee with the
most direct knowledge of the Tersigni firm's books and
records, did not cooperate with Mr. Zweifach.
The Examiner said he has obtained and reviewed the preliminary
investigation done by the office of the U.S. Trustee for Region 3
regarding the overbilling issues. The U.S. Trustee's
investigation concluded that at least $197,078 of overbilling by
the Tersigni firm occurred for the work of three Tersigni
employees in the asbestos cases of Armstrong, Owens-Corning,
Congoleum Corp., and G-I Holdings, Inc.
The Examiner told Judge Shiff that he will prepare a preliminary
report and recommendations by April 20, 2008.
About L. Tersigni
Based in Stamford, Connecticut, L. Tersigni Consulting CPA, P.C.
was engaged in the business of accounting and financial advisor to
various constituencies in matters relating to claims asserted
primarily in asbestos litigation and asbestos related bankruptcy
cases.
The company filed for chapter 11 protection on Nov. 14, 2007
(Bankr. D. Conn. Case No. 07-50702). Carol A. Felicetta, Esq., at
Reid and Riege, P.C., represents the Debtor in its restructuring
efforts. No Official Committee of Unsecured Creditors has been
appointed in this case to date. The Debtor's schedules listed
total assets of $2,229,659 and total debts of $246,564.
The U.S. Justice Department's Office of the U.S. Trustee has named
Hugh M. Ray, a partner with Andrews Kurth, as the Examiner to
investigate the billing practices and related conduct of L.
Tersigni Consulting, subject to Court approval.
MAJESTIC STAR: S&P Places 'B-' Rating on CreditWatch Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Las
Vegas-based Majestic Star Casino LLC, including the 'B-' corporate
credit rating, on CreditWatch with negative implications.
"The CreditWatch placement conveys our heightened concern about
Majestic Star's liquidity position, including its ability to
remain in compliance with financial covenants given existing and
anticipated trends in the operating performance of its
properties," stated Standard & Poor's credit analyst Ben Bubeck.
"Operating performance for many gaming properties has been -- and
we expect it to continue to be -- negatively affected by weak
economic conditions and, in the case of Majestic's Indiana
properties, increased competition."
According to data released by the State of Indiana, Majestic
Star's gaming revenue was flat year over year for the three months
ended Dec. 31, 2007 (fourth quarter), and down about 5% in the
month of January 2008 versus January 2007. Majestic's Indiana
properties generate about 75% of the company's EBITDA.
S&P expects that a weak economy and greater competition will
affect the performance of Majestic's Indiana properties in the
near term. In addition, three of Majestic's competitors in the
Chicagoland market (Ameristar's Resorts East Chicago, Boyd's Blue
Chip, and Harrah's Horseshoe Hammond) will likely complete the
planned improvements and expansions to their properties in 2008.
Also, the Four Winds property by Pokagon Gaming continues to
affect the market at the margin. Given Majestic's highly
leveraged capital structure and tight financial covenants
(limiting its ability to invest in its properties and absorb the
impact of competitor marketing programs), S&P has heightened
concerns about the company's operating prospects.
In resolving the CreditWatch listing, S&P will review Majestic
Star's near-term liquidity position and operating plans. A rating
downgrade is possible in the absence of an equity infusion to the
company and/or asset sales that meaningfully bolster its liquidity
position.
MARYLAND DEVELOPMENT: Section 341(a) Meeting Set February 25
------------------------------------------------------------
The U.S. Trustee for Region 4 will convene a meeting of creditors
in Maryland Development Co. LLC's Chapter 11 case, on Feb. 25,
2008, at 11:00 a.m., at 6305 Ivy Lane, 6th Floor in Greenbelt,
Maryland.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in the Debtors' case.
All creditors are invited, but not required, to attend. The
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible officer of the
Debtors under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Rockville, Maryland, Maryland Development Company
LLC, operates as a real estate developer. The company filed for
Chapter 11 bankruptcy protection on Jan. 22, 2008 (Bankr. D. M.D.,
Case No. 08-10938). James A. Vidmar, Jr., Esq. at Linowes and
Blocher represents the Debtor in its restructuring efforts. When
the company filed for protection against its creditors, it listed
between $10 million and $50 million in total assets and between
$10 million and $50 million in total.
MARYLAND DEVELOPMENT: Gets Court Permission to Use Cash Collateral
------------------------------------------------------------------
Maryland Development Company LLC obtained authority from the U.S.
Bankruptcy Court for the District of Maryland to use proceeds from
the sale of three development projects in Montgomery County for 90
days.
The development projects are known as Oakmont Manor, Potomac's
Edge, and Potomac Run. The net proceeds from the sale are
encumbered by a confessed judgment filed in Montgomery County and
entered on December 12, 2007, arising from a guaranty in favor of
Sandy Spring Bank. The bank's judgment attaches to the Oakmont
Manor, Potomac's Edge and Potomac Run projects. Because of the
recording of the confessed judgment, the Debtor has received no
portion of the Proceeds from recent sales.
The Debtor needs immediate access to the cash collateral to
sustain operations on an interim basis. If the Debtor is not
permitted to use the Proceeds, the Debtor will not be able to meet
its postpetition expenses.
Headquartered in Rockville, Maryland, Maryland Development Company
LLC, operates as a real estate developer. The company filed for
Chapter 11 bankruptcy protection on Jan. 22, 2008 (Bankr. D. M.D.,
Case No. 08-10938). James A. Vidmar, Jr., Esq. at Linowes and
Blocher represents the Debtor in its restructuring efforts. When
the company filed for protection against its creditors, it listed
between $10 million and $50 million in total assets and between
$10 million and $50 million in total.
MARYLAND DEVELOPMENT: Taps Linowes and Blocher as Legal Counsel
---------------------------------------------------------------
Maryland Development Company LLC asks the U.S. Bankruptcy Court
for the District of Maryland to employ Linowes and Blocher LLP as
bankruptcy counsel.
The Debtor requests the Court to hire Linowes and Blocher to
advise, counsel and represent the Debtor in its Chapter 11 case,
and:
(a) to advise Debtor with respect to its powers and duties as
a debtor-in-possession in the continued management of its
financial affairs;
(b) to represent Debtor in proceedings instituted by or
against Debtor;
(c) to prepare any necessary applications, orders, reports,
and other legal papers;
(d) to assist Debtor in the preparation of its schedules and
statement of financial affairs and any amendments thereto
that Debtor may be required to file in this case;
(e) to assist Debtor in the preparation, presentation and
confirmation of a plan of reorganization and disclosure
statement, including negotiations with creditors and
other parties in interest with respect thereto; and
(f) to perform any other legal services necessary or
appropriate to assist Debtor in discharging its duties as
a debtor-in-possession.
The Debtor will pay Linowes and Blocher $40,000 as a retainer for
services to be rendered to Debtor in this Chapter 11 case.
The Debtor will pay Linowes and Blocher for its services at these
rates:
Designation Hourly Rate
----------- -----------
James A. Vidmar, Jr. (Partner) $355.00
Gabriell M. Duvall (Associate) $290.00
Katy J. Le Vie (Paralegal) $150.00
To the best of Debtor's knowledge, Linowes and Blocher has no
connection with Debtor, its creditors or any other party-in-
interest, other than as set in the Verified Statement of Linowes
and Blocher partner James A. Vidmar.
Mr. Vidmar verified that he is a "disinterested person" as defined
in section 101(14) of the Bankruptcy Code. He stated that neither
Linowes and Blocher nor he has any connection with the Debtor, its
creditors or parties-in-interest in this case, except that in the
several weeks leading up to the filing of the case, Linowes and
Blocher had discussions with Debtor's principal Theodore Smart
regarding actions taken by Sandy Spring Bank on his guaranty of
the debt of Simpson's Farm, LLC.
In addition, Linowes and Blocher discussed the ramifications of
the claims of Sandy Spring Bank on Simpson's Farm, LLC. Linowes
and Blocher will not represent these parties going forward except
pursuant to further order of the court.
Mr. Vidmar can be reached at:
Linowes and Blocher LLP
7200 Wisconsin Ave., Suite 800
Bethesda, Maryland 20814
Phone: (301) 961-5126
Fax: (301) 654-2801
Headquartered in Rockville, Maryland, Maryland Development Company
LLC, operates as a real estate developer. The company filed for
Chapter 11 bankruptcy protection on Jan. 22, 2008 (Bankr. D. M.D.,
Case No. 08-10938). James A. Vidmar, Jr., Esq. at Linowes and
Blocher represents the Debtor in its restructuring efforts. When
the company filed for protection against its creditors, it listed
between $10 million and $50 million in total assets and between
$10 million and $50 million in total.
MARYLAND DEVELOPMENT: May 27 Deadline Set for Filing Claims
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Maryland set May 27,
2008, as the final date for creditors of Maryland Development
Company LLC to file proofs of claim.
The Court also established July 21, 2008, as the deadline for
governmental units to file proofs of claim.
Headquartered in Rockville, Maryland, Maryland Development Company
LLC, operates as a real estate developer. The company filed for
Chapter 11 bankruptcy protection on Jan. 22, 2008 (Bankr. D. M.D.,
Case No. 08-10938). James A. Vidmar, Jr., Esq. at Linowes and
Blocher represents the Debtor in its restructuring efforts. When
the company filed for protection against its creditors, it listed
between $10 million and $50 million in total assets and between
$10 million and $50 million in total.
MERGE TECH: To Cut 28% of Its Workforce on Rightsizing Initiative
-----------------------------------------------------------------
Merge Technologies Incorporated disclosed a right-sizing
initiative and the planned timing of the issuance of its third
quarter 2007 financial results and business operations.
Details of the Rightsizing
Total worldwide headcount at Sept. 30, 2007 was approximately 600
persons and the company anticipates total headcount at March 31,
2008 to be approximately 440 persons, a reduction of 160
personnel, including consultants, with a further estimated
reduction from anticipated attrition during 2008 of approximately
20 people, net, for a total reduction from Sept. 30, 2007 of 180
persons.
Reduction of approximately 45 jobs in North America and Canada and
approximately 115 positions offshore, including consultants, or
28% of its current workforce. Most of the reductions are
effective immediately, with a small number to be completed prior
to March 31, 2008. The company will recognize a charge in its
financial statements for the first quarter ending March 31, 2008
of approximately $2.0 million, consisting of approximately
$1.3 million in severance costs and approximately $0.7 million in
other costs including, primarily, legal fees and future lease
payments on its Burlington, Massachusetts office, which it has
completely vacated. The estimated annual cost savings of these
actions is approximately $7.0 million.
Additional terminations prior to this rightsizing statement that
have occurred since Sept. 30, 2007 aggregate approximately
$3.0 million in annual cost savings.
Based on the company's historical attrition run-rate, it
anticipates additional voluntary terminations during the remainder
of 2008 with annual cost savings of between $1.0 and $2.0 million.
The aggregate estimated net reduction in the company's annual
recurring operating costs, including compensation, software
development and customer support costs, and office lease costs is
approximately $10.0 million per year plus an additional $1.0 to
$2.0 million of anticipated savings based on historical attrition.
"As we addressed earlier, the impacts of the deficit reduction
act, the two financial statement restatements, and ongoing legal
expenses associated with litigation and the SEC investigation have
been quite significant and have necessitated the recent
rightsizing initiative," Ken Rardin, the company's president and
chief executive officer, commented. "In this effort, we have been
particularly cautious to ensure that we continue to deliver timely
products and appropriate service and support to our customers."
"We are making changes to our cost structure with the intention of
enabling our company to focus on our core business and return to
positive operating results," Mr. Rardin added.
About Merge Technologies
Headquartered in Milwaukee, Wisconsin, Merge Technologies
Incorporated (NASDAQ:MRGE) -- http://www.merge.com-- develops
medical imaging and information management software, and delivers
related services. Its diagnostic imaging workflow applications
are categorized as picture archiving and communication systems,
radiology information systems and clinical applications, which
include software that supports medical imaging in many specialized
areas. It has three business units: Merge healthcare North
America, which primarily sells directly to the end-user healthcare
market that consists of hospitals and specialty clinics located in
the United States and Canada and also distributes certain products
through the internet; Cedara software, the company's original
equipment manufacturer business unit, which primarily sells to
original equipment manufacturers and value-added resellers,
consists of companies that develop, manufacture or resell medical
imaging software or devices, and Merge healthcare EMEA, which
sells to the end-user healthcare market in Europe, the Middle East
and Africa.
MERRILL LYNCH: DBRS Confirms 'B' Ratings on Two Cert. Classes
-------------------------------------------------------------
DBRS upgraded the ratings of two classes of Merrill Lynch
Financial Assets, Inc. Commercial Mortgage Pass-Through
Certificates, Series 2002-Canada 7 as:
-- Class C upgraded to AA from AA (low)
-- Class D upgraded to "A" from A (low)
In addition, DBRS has confirmed eight classes of Merrill Lynch
2002-Canada 7 as:
-- Class A-1 at AAA
-- Class A-2 at AAA
-- Class B at AAA
-- Class X at AAA
-- Class E at BBB (high)
-- Class F at BB (high)
-- Class G at BB
-- Class H at B
-- Class J at B (low)
The trends on all classes remain Stable.
The rating action reflects positive credit events that occurred in
2007. While the positive events were substantial the upgrades
were tempered by the specially serviced loans. The pool's
performance improved dramatically in 2007, with ten loans (15% of
the issuance pool balance) maturing, and three loans (14% of the
issuance pool balance) defeasing. Most of the remaining loans
continue to amortize and exhibit stable financial performance.
The pool, which has a remaining balance of $211,988,136, has
reduced by 25% since issuance. Thirty-nine loans remain in the
pool, of which the collateral for five loans, 34% of the current
pool balance, has been substituted with Government of Canada
Securities.
The deal is concentrated in loans secured by properties located in
the provinces of Québec (29.4% of the pool) and Ontario (23.7% of
the pool). It is also concentrated in the retail property type
which accounts for 29.5% of the pool. Due to the significant
amount of collateral maturity that took place in the past 12
months, the pool is becoming increasingly concentrated with the
top ten loans representing 60.5% of the total pool balance. Four
of the largest ten loans however have been defeased.
Aside from three loans of concern, the financial performance of
the pool is very stable. The WADSCR has improved from 1.40x at
issuance to 1.48x as of YE2006. The WALTV of the pool is 63.6%.
There is one loan that has remained on the DBRS HotList since
mid-2006; however, the loan only represents 0.7% of the
transaction. There are two loans, together 6% of the current pool
balance, that are currently in special servicing. These loans are
discussed in detail in DBRS's associated rating report.
MICHAEL ROYCE: Case Summary & 13 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Michael Royce Montrief
21370 Andalucia Lane
Huntington Beach, California 92648
Bankruptcy Case No.: 08-10652
Chapter 11 Petition Date: February 13, 2008
Court: Central District of California (Santa Ana)
Judge: Theodor Albert
Debtor's Counsel: Warren G. Enright, Esq.
25219 Terreno Drive
Mission Viejo, California 92961
Tel: 949-419-6895
Fax: 949-419-6875
Estimated Assets: $1,000,001 to $10 million
Estimated Debts: $1,000,001 to $10 million
Debtor's list of its 13 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
John Metzger loan $500,000
16048 Hidden Creek Ln.
Anchorage, AK 99516
Jan Munoz loan $250,000
31844 South Coast Highway
Laguna Beach, CA 92651
Internal Revenue Service taxes $180,000
P.O. Box 21126
Philidelphia, PA 19114
American Express credit card $115,000
Matthew Boltz lawsuit $60,000
Bank of America credit card $40,000
David Ward legal fees $20,000
HSBC credit card $15,000
Trans Environmental professional $8,000
services
Stephen Meade loan $6,000
Mike Downing professional $5,000
services
State Board of Equilization taxes $4,000
Discover credit card $1,000
MORTGAGE LENDERS: Asks Court to Extend Removal Period to June 11
----------------------------------------------------------------
Mortgage Lenders Network USA Inc. seeks permission from the
U.S. Bankruptcy Court for the District of Delaware to:
(a) extend through and including June 11, 2008, the period
within which it may remove actions initiated prior to the
bankruptcy filing;
(b) extend the period, within which the Debtor may remove
actions initiated after the bankruptcy filing to the later
of:
-- June 11, 2008; and
-- the time period specified in Rules 9027(a)(3)(A)
and (B) of the Federal Rules of Bankruptcy Procedure
which provide for the shorter of:
* 30 days after receipt of a copy of the initial
pleading setting forth the claim or cause of
action to be removed; or
* 30 days after receipt of the summons, if the
initial pleading has been filed with the Court
but not served with the summons; and
(c) approve an extension, without prejudice to the Debtor's
right to seek further extensions of the applicable
deadline.
The Debtor relates that it is prudent to seek an extension of
period to file notices of removal to protect its right to remove
the Actions.
Since the bankruptcy filing, the Debtor has directed substantially
all of its efforts, and all of the efforts of its professionals,
towards the liquidation of its hard assets and remaining
servicing operations, Laura Davis Jones, Esq., at Pachulski Stang
Ziehl & Jones LLP, in Wilmington, Delaware, relates.
Ms. Jones says the Debtor has also engaged in numerous contested
matters and adversary proceedings to protect its rights as
debtor-in-possession, and to maximize the value of its bankruptcy
estate for the benefit of its creditors. Accordingly, the
Debtor, she tells the Court, has not had an opportunity to
thoroughly review the Actions to determine whether there are any
that may need to be removed.
The extension sought will afford the Debtor the opportunity
necessary to make fully-informed decisions concerning removal of
any Action and will assure that the Debtor does not forfeit
valuable rights under Section 1452, Ms. Jones asserts.
She assures the Court that the Debtor's adversaries will not be
prejudiced by the extension because any party to an Action that
is removed may seek to have it remanded to the state court
pursuant to Section 1452(b).
The Court will commence a hearing on Feb. 21, 2008, at 11:00 a.m.,
Eastern Time, to consider the request.
About Mortgage Lenders Network USA Inc.
Middletown, Connecticut-based Mortgage Lenders Network USA Inc. --
http://www.mlnusa.com/-- is a privately held company offering a
full range of Alt-A/Non-Conforming and Conforming loan products
through its retail and wholesale channels. The company filed for
chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07-
10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor.
Blank Rome LLP represents the Official Committee of Unsecured
Creditors. In the Debtor's schedules of assets and liabilities
filed with the Court, it disclosed total assets of $464,847,213
and total debts of $556,459,464. The Debtor has until Feb. 22,
2008, to exclusively file a plan of reorganization.
(Mortgage Lenders Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-
7000).
MORTGAGE LENDERS: Wants to Expand Hilco Real's Consulting Services
------------------------------------------------------------------
Mortgage Lenders Network USA Inc. seeks the U.S. Bankruptcy Court
for the District of Delaware's authority to expand the scope of
services to be provided Hilco Real Estate LLC, and pay Hilco for
those services, which include the marketing of a 98-year lease.
Previously, the Court approved the Debtor's motion to employ Hilco
Real Estate, LLC as special real estate consultant, nunc pro tunc
to Oct. 18, 2007, to assist with the marketing and sale of the
Option, pursuant to Sections 327 and 328 of the Bankruptcy Code.
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware, relates that Hilco was employed to assist
with the marketing and sale of an option to purchase a certain
real estate property at the town of Wallingford, in New Haven
County, Connecticut.
Upon investigation, Hilco has determined that the Option is
inexorably tied to a 98-year lease on the Property, and that the
Option and Lease will have the greatest value to the bankruptcy
estate if sold together to a single buyer. Hence, the Debtor
wants Hilco to assist with the sale of the Lease, in addition to
the sale of the Option.
As special real estate consultant, Hilco will:
-- design and implement a marketing plan for the Option and
Lease;
-- identify potential purchases for the Option and Lease;
-- negotiate purchase or assignment documents; and
-- manage the sale process and closing of sale.
Hilco will earn a percentage of the gross proceeds upon sale of
the Option and Lease in accordance with this incentive scale:
Gross Sale Proceeds Earnings
------------------- --------
From $0 to $5,000,000 3.75%
From $5,000,000 to $6,000,000 3.50%
From $6,000,000 to $7,000,000 3.25%
Above $7,000,000 2.75%
Ms. Jones says that if a participating broker introduces a buyer
for the Option or Lease, then 1% will be added to the fees, and
Hilco will be responsible for sharing its fees, if appropriate,
with the broker.
Joseph A. Malfitano, vice president and the assistant general
counsel of Hilco, assures the Court that Hi1co has not been
retained to assist any entity or person, other than the Debtor,
on matters relating to, or in connection with the Chapter 11
case. He says that Hilco is "disinterested" as defined in
Section 101(14) of Bankruptcy Code.
Middletown, Connecticut-based Mortgage Lenders Network USA Inc. --
http://www.mlnusa.com/-- is a privately held company offering a
full range of Alt-A/Non-Conforming and Conforming loan products
through its retail and wholesale channels. The company filed for
chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07-
10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor.
Blank Rome LLP represents the Official Committee of Unsecured
Creditors. In the Debtor's schedules of assets and liabilities
filed with the Court, it disclosed total assets of $464,847,213
and total debts of $556,459,464. The Debtor has until Feb. 22,
2008, to exclusively file a plan of reorganization.
(Mortgage Lenders Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-
7000).
MORTGAGE LENDERS: Can Enter Into Services Pact with Green Planet
----------------------------------------------------------------
Mortgage Lenders Network USA Inc. sought and obtained permission
from the U.S. Bankruptcy Court for the District of Delaware to
enter into an Agreement for Services with Green Planet Servicing
LLC.
In past years, the Debtor hired third-party entities to prepare
and send out forms 1098 and 1099 from the Internal Revenue
Service. The two IRS forms, which are for the loans that the
Debtor serviced, need to have an 800 telephone number to assist
the loan borrowers with questions or inquiries.
On Nov. 19, 2007, the Court approved the Debtor's agreement
with Balance Consulting LLC to prepare and mail the IRS forms for
2007. Balance Consulting, however, cannot include its 800 number
in the IRS forms and cannot respond to calls from the borrowers.
Consequently, the Debtor engaged Green Planet's services to
provide the 800 number and to respond to calls.
The Debtor intends to print the IRS forms with Green Planet's
phone number because the Debtor does not have the capacity or
resources to process borrower inquiries, Laura Davis Jones, Esq.,
at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware,
says. She notes that borrower calls could be as high as
5,000 calls per month.
Aside from responding to inquiries, the Agreement also provides
that Green Planet (i) corrects the Debtor's servicing records, as
needed, and (ii) issues corrected IRS forms.
Green Planet will be paid $4,000 per 30-day period based on a
benchmark call volume of 1,500 calls per period. Green Planet
will also be paid for additional calls received.
Middletown, Connecticut-based Mortgage Lenders Network USA Inc. --
http://www.mlnusa.com/-- is a privately held company offering a
full range of Alt-A/Non-Conforming and Conforming loan products
through its retail and wholesale channels. The company filed for
chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07-
10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor.
Blank Rome LLP represents the Official Committee of Unsecured
Creditors. In the Debtor's schedules of assets and liabilities
filed with the Court, it disclosed total assets of $464,847,213
and total debts of $556,459,464. The Debtor has until Feb. 22,
2008, to exclusively file a plan of reorganization.
(Mortgage Lenders Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-
7000).
MOTOR COACH: Moody's Cuts Corporate Family Rating to Ca From Caa2
-----------------------------------------------------------------
Moody's Investors Service downgraded the probability of default
and corporate family ratings of Motor Coach Industries
International, Inc. to Ca from Caa2, the outlook remains negative.
The rating on MCII's Guaranteed Senior Subordinate Notes due May
2009 has been lowered to C, LGD-6 from Ca, LGD-6.
The downgrades reflect the magnitude of MCII's debt service
requirements. As of September 2007 MCII's balance sheet had
$537 million of debt and $353 million of tangible assets. In
Moody's opinion, the outlook for 2008 remains relatively weak, as
does liquidity through the near term. The company's first, second
and third lien credit facilities mature in December 2008.
Although absent a refinancing or restructuring the company is, in
Moody's view, not viable, should the capital structure be right-
sized, the ratings would be revisited.
-- Probability of default to Ca from Caa2
-- Corporate family to Ca from Caa2
-- $59.1 million guaranteed senior subordinate notes due May
2009 to C LGD6, 96% from Ca LGD6, 92%
Headquartered in Schaumburg, Illinois, Motor Coach Industries
International, Inc. is a leading designer, manufacturer and
marketer of inter-city coaches and related replacement parts for
the North American market. The Company is majority owned by
affiliates of Joseph Littlejohn & Levy. Last twelve month
September 2007 revenues were approximately $700 million.
MOUNT AIRY: Tight Liquidity Cues Moody's to Junk 'B3' Rating
------------------------------------------------------------
Moody's Investors Service downgraded Mount Airy #1, LLC's
Corporate Family Rating to Caa1 from B3. The ratings remain on
review for possible downgrade.
The downgrade reflects the company's tight liquidity position
given loss of access to its $25 million revolving credit facility
during its seasonally slow operating period due to several
covenant defaults. Certain defaults relate to the suspension of
the Principle License of Louis A. DeNaples, sole owner of the
Mount Airy Casino Resort as a consequence of his indictment for
perjury. The PGCB has appointed a trustee to oversee operations.
Additionally, it remains unclear at this time what course of
action the lenders may pursue with respect to existing defaults.
The review for downgrade will focus on the company's negotiations
with its bank lenders, near term liquidity and the potential
negative impact on operations from legal and operational
uncertainties created by these circumstances.
Moody's last rating action occurred on Jan. 31, 2008 when Mount
Airy's CFR was downgraded to B3.
Ratings downgraded and remaining on review:
-- Corporate family rating to Caa1 from B3
-- Probability of default rating to Caa2 from Caa1
-- $25 million senior secured first lien revolving credit
facility to Caa1 (LGD 3, 35%) from B3 (LGD 3, 35%)
-- $395 million senior secured first lien term loan to Caa1 (LGD
3, 35%) from B3 (LGD 3, 35%)
Ratings downgraded and to be withdrawn
-- $60 million senior secured delayed draw term loan to Caa1
(LGD 3, 35%) from B3 (LGD 3, 35%)
Mount Airy #1, LLC was formed in 2004 to construct and operate the
Mount Airy Casino Resort. Mount Airy was awarded one of five
Category 2 slot machine licenses in Pennsylvania which allows for
a maximum of 5,000 slot machines.
NEUMANN HOMES: Wants Court OK to Implement Employee Incentive Plan
------------------------------------------------------------------
Neumann Homes Inc. and its debtor-affiliates seek authority from
the United States Bankruptcy Court for the Northern District of
Illinois to implement their Key Employee Severance and Incentive
Plan pursuant to Sections 363(b)(1) and 105(a) of the Bankruptcy
Code.
George N. Panagakis, Esq., at Skadden, Arps, Slate, Meagher &
Flom LLP, in Chicago, Illinois, tells Judge Wedoff that the
proposed program is necessary to assure the ongoing availability
and active participation of their remaining full-time employees
during the Debtors' Chapter 11 cases. He adds that this will
also provide financial incentives for certain senior employees to
undertake extraordinary work load necessary to achieve the
Debtors' objectives.
The Debtors have reduced their headcount from over 500 people in
the year before the Petition Date, to 15 people, including the
chief executive officer, 12 full-time employees, 10 non-executive
employees, and two part-time employees.
The Incentive Plan
The proposed Incentive Plan, which costs about $142,000, is
comprised of (i) the general severance program for the Key
Employees, excluding the part-time employees, and (ii) an
executive incentive compensation program.
According to Mr. Panagakis, the severance component of the
Incentive Plan merely seeks to reinstitute a modified version of
the Debtors' prior policy to provide a limited salary
continuation for the Key Employees upon their separation from the
Debtors.
Before the Petition Date, the Debtors maintained a discretionary
severance policy pursuant to which they paid severance benefits
to employees upon the termination of their employment. The
Debtors, however, temporarily suspended the severance policy
during the months leading up to the Petition Date due to their
financial condition at the time.
The Debtors propose this severance payment structure under the
Incentive Plan:
(a) Non-executive Key Employees would be entitled to a
severance payment equal to two weeks of base salary, with
a total estimated expenses of about $32,000.
(b) Executive level Key Employees would be entitled to a
severance payment equal to one month of base salary, with
a total estimated expenses of about $30,000.
(c) The Debtors' portion of taxes applicable to the severance
payments is estimated to be about $10,000.
(d) Severance Payments would be earned by the Key Employees
only upon their termination by the Debtors, other than
for cause, and would be paid subject to the Debtors
having available cash, provided that earned but unpaid
severance payments would be entitled to administrative
priority status.
(e) Estimated total cost of the Severance Payments is about
$72,000, inclusive of the Debtors' portion of taxes.
With respect to their incentive compensation component, the
Debtors propose that:
(1) Executive level Key Employees would be entitled to an
aggregate incentive bonus equal to two months of base
salary.
(2) Incentive bonuses would be earned in installments upon
the consummation of transaction disposing of the Debtors'
real property, with the amount of each installment to be
calculated based upon the amount of senior secured debt
on the real property as of the Petition Date, in relation
to the aggregate amount of senior secured debt as of the
Petition Date, on all of the Debtors' real property
remaining as of February 1, 2008.
(3) Incentive bonuses would be paid as earned subject to the
Debtors having available cash, provided that earned but
unpaid incentive bonuses would be entitled to
administrative priority status.
(4) Estimated total cost of the incentive bonuses, if fully
earned, is about $70,000, inclusive of taxes.
Mr. Panagakis notes that Kenneth P. Neumann, the Debtors' chief
executive officer, will not participate in the Incentive Plan or
is entitled to a severance payment and incentive bonus.
Mr. Panagakis further says that the cost of the proposed
Incentive Plan is relatively small in actual dollars and as a
percentage of the Debtors' total salary expenditure. He adds
that it has been carefully constructed and narrowly tailored to
enhance the Debtors' ability to achieve their strategic
objectives.
Headquartered in Warrenville, Illinois, Neumann Homes Inc. --
http://www.neumannhomes.com/-- develops and builds residential
real estate throughout the Midwest and West US. The company is
active in the Chicago area, southeastern Wisconsin, Colorado, and
Michigan. The company have built more than 11,000 homes in some
150 residential communities. The company offer formal business
training to employees through classes, seminars, and computer-
based training.
The company filed for Chapter 11 protection on Nov. 1, 2007
(Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at
Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the
Debtors to represent them in these cases. The Official Committee
of Unsecured Creditors has selected Paul, Hastings, Janofsky &
Walker LLP, as its counsel in these bankruptcy proceeding. When
the Debtors filed for protection against its creditors, they
listed assets and debts of more than $100 million.
The Debtors have the exclusive right to file a plan of
reorganization until February 29, and the exclusive right to
solicit acceptances of that plan until April 29.
(Neumann Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000)
NEW YORK RACING: Gets 25-Year Franchise Deal from State
-------------------------------------------------------
The New York Racing Association Inc. obtained a long-term
extension of its franchise after operating under a short-term deal
that expired yesterday, various sources report.
NYRA will continue to operate horse racing at the Aqueduct,
Belmont and Saratoga race tracks in New York for another 25 years,
the Associated Press says.
According to NYRA's counsel, Brian Rosen, Esq., this is the first
step toward confirmation of the bankruptcy plan, Bloomberg News
reports.
NYRA will receive $105 million from the state to exit from
bankruptcy; provided, however, NRYA must drop any ownership claim
on the race track properties.
According to Bloomberg, $75 million will fund NYRA's bankruptcy
claim, while $30 million for operating cost.
About New York Racing
Based in Jamaica, New York, The New York Racing Association
Inc. aka NYRA -- http://www.nyra.com/-- operates racing tracks in
Aqueduct, Belmont Park and Saratoga. The company filed for
chapter 11 protection on Nov. 2, 2006 (Bankr. S.D.N.Y. Case No.
06-12618). Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP,
Henry C. Collins, Esq., at Cooper, Erving & Savage LLP, and
Irena M. Goldstein, Esq., at Dewey Ballantine LLP represent the
Debtor in its restructuring efforts. Jeffrey S. Stein of The
Garden City Group Inc. serves as the Debtor's claims and noticing
agent. The U.S. Trustee for Region 2 appointed an Official
Committee of Unsecured Creditors and Edward M. Fox, Esq., Eric T.
Moser, Esq., and Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart
Preston Gates Ellis LLP, represent the Committee. When the Debtor
sought protection from its creditors, it listed more than
$100 million in total assets and total debts.
NWT URANIUM: Cures Defaults of Northern Quebec Uranium Properties
-----------------------------------------------------------------
NWT Uranium Corp. has cured the defaults in Azimut Exploration
Inc.'s notice of default dated Dec. 17, 2007, with respect to the
North Rae and Daniel Lake uranium properties located in the Ungava
Bay region in northern Quebec.
In its curative notice, delivered on Jan. 30, 2008, in response to
Azimut's notice of default, NWT disputed that it was in default.
According to Azimut, the documentation and data provided by NWT in
its curative notice has adequately resolved the issues raised by
the notice of default.
"We are pleased that this dispute has been resolved and that we
can now move forward with Azimut on the continued exploration of
North Rae and Daniel Lake, which we believe represent a new
uranium district in Canada," Marek J. Kreczmer, president and CEO
of NWT, said. "We trust that continued cooperation between our
two companies will result in significant benefits for our
shareholders through the aggressive development of our joint
properties."
NWT has the right to acquire up to 65% interest from Azimut in the
North Rae Uranium Project, where results to date have revealed the
potential for a new uranium district. NWT also has an option to
acquire up to 65% ownership in the Daniel Lake Uranium Project,
which neighbors North Rae. North Rae and Daniel Lake cover a
total area of more than 300,000 acres or 123,500 hectares.
Azimut notice of default
As reported in the Troubled Company Reporter on Dec. 19, 2007,
Azimut Exploration Inc. has delivered a notice of default to NWT
Uranium Corporation regarding a number of NWT's specific
obligations that have not been complied with pursuant to the terms
of the North Rae and Daniel Lake property option agreements.
Azimut holds 100% of the North Rae and Daniel Lake properties, and
NWT holds an option to earn an initial 50% interest therein over a
5-year period and a second option to earn an additional 15%
interest. NWT is the operator on both properties.
About Azimut Exploration
Azimut Exploration Inc. is a mineral exploration company using
cutting-edge targeting methodologies to discover major ore
deposits. Azimut has 20 active option agreements representing an
aggregate work commitment of $65 million from partners on uranium,
gold and nickel properties in Quebec.
About NWT Uranium
NWT Uranium Corporation, (TSXV: NWT; OTCBB: NWURF) --
http://www.nwturanium.com/-- formerly Northwestern Mineral
Ventures Inc. is engaged in acquiring, exploring and developing
uranium bearing mineral properties located in Canada and Niger.
The company's properties are at the exploratory stage and thus
non-producing. Its exploration activities consist in exploration
and drilling of its properties to further assess the mineral
potential and to develop more detailed exploration programs. The
company has a portfolio of properties around the world, including
a 38.5% stake in Niger Uranium Ltd.; a binding Letter of Intent to
acquire up to 65% interest in the North Rae Uranium Project in the
Ungava Bay region in northern Quebec, Canada; an option to acquire
up to 65% interest in the Daniel Lake Uranium Project; and an
option to earn up to 75% ownership of the Waterbury Project.
OLIN CONSTRUCTION: Case Summary & Seven Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: Olin Construction Co., Inc.
P.O. Box 180190
Tallahassee, FL 32318
Bankruptcy Case No.: 08-40084
Type of Business: The Debtor custom-builds homes and pre-owned
homes. See http://www.olincc.com/
Chapter 11 Petition Date: February 13, 2008
Court: Northern District of Florida (Tallahassee)
Debtor's Counsel: Thomas B. Woodward, Esq.
P.O. Box 10058
Tallahassee, FL 32302
Tel: (850) 222-4818
Fax: (850) 561-3456
Total Assets: $3,853,500
Total Debts: $4,377,428
Debtor's Seven Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Wakulla Bank real estate $1,912,500
P.O. Box 610 value of security:
Crawfordville, FL 32327 $600,000
line of credit $20,635
Superior Bank real estate; value of $891,000
Loan Admin. security: $610,000
17 20th Street, North
Birmingham, AL 35203
Olin Grantham loan $422,000
2600 Lucerne Drive
Tallahassee, FL 32303
Olin Properties, Inc. loan $337,870
P.O. Box 180190
Tallahassee, FL 32318
Ameris Bank properties and cost $133,555
deficiency
Capital City Bank real property short $68,000
sale
Lonnie Meirer and Linda $39,554
Humphries Arbitration Award
ORBIT PETROLEUM: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Orbit Petroleum, Inc.
fdba Tipton Enterprises, Inc.
fdba Tipton Oil and Gas Acquistions
fdba Gilbert lease Services
fdba T.O.G.A. Well Services
fdba Black Rock Transportation
1131 East Britton Road
Oklahoma City, OK 73131
Bankruptcy Case No.: 08-10408
Type of Business: The Debtor is a developmental micro cap oil and
gas company. See http://www.orbitpetro.com/
Chapter 11 Petition Date: February 13, 2008
Court: District of New Mexico
Debtor's Counsel: Daniel J. Behles, Esq.
226-A Cynthia Loop Northwest
Albuquerque, NM 87114-1100
Tel: (505) 217-2764
Fax : 505-217-2766
Estimated Assets: Less than $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Enhanced Oil Resources $959,986
One Riverway, Suite 610
Houston, TX 77056
A.K.T.D.R. $500,000
20 Blue water Circle
Holliday Island, AR 72632
Basic Energy Services $341,857
P.O. Box 841903
Dallas, TX 75284-1903
D.V.C. Consulting $300,000
12608 Redstone Court
Oklahoma City, OK 73142
Patel Family Trust $260,000
12608 Redstone Court
Oklahoma City, OK 73142
I.R.S. $237,725
Tessco $177,512
New Mexico Taxation & Revenue $141,982
Department
Patriot Pipe and Supply, Ltd. $123,383
Queen Oil Co. $115,000
Thomas Petroleum, Ltd. $106,220
Arvin Pipe and Supply $99,908
Crain Hot Oil & Acidizing $74,741
Precision Pump & Supply $48,273
S.O.S., a Division of W.A.L.S. $45,351
Gandy Corp. $34,212
E.D. walton Construction Co., $29,872
Inc.
Roadrunner Chemical, L.L.C. $28,676
Napa Auto Parts $28,506
York Tire Co. $27,028
ORCHARD COVE: S&P Cuts Rating on Revenue Bonds to 'BB-' From BBB-
-----------------------------------------------------------------
Standard & Poor's Rating Services lowered its rating on
Massachusetts Development Finance Agency's revenue bonds, issued
for Orchard Cove Inc., a subsidiary of Hebrew SeniorLife, to 'BB-'
from 'BBB-'. The lower rating reflects Orchard Cove's significant
indirect construction, fill-up, and debt repayment risks
associated with a project underway for another HSL affiliate,
Newbridge on the Charles. The outlook is negative.
"The outlook will likely remain negative until at least the end of
2009 when management expects the construction of the project to be
largely complete and Newbridge plans to repay the first part of
its series 2007 bonds (approximately $175 million) in 2010," said
Standard & Poor's credit analyst Jennifer Soule. "While Orchard
Cove is not obligated under financing terms for the Newbridge on
the Charles project, the organization is controlled by HSL and
could be forced to provide liquidity to other HSL affiliates in a
worst-case scenario, which creates an indirect credit risk. We
also expect Orchard Cove's losses to diminish and liquidity to
increase."
The 'BB-' rating for Orchard Cove reflects its high levels of
liquidity, consistently high occupancy at each of its residency
options, and favorable relationship with HSL, which is a
nationally renowned leader in geriatric care, research, and
education. HSL also provides Orchard Cove with guidance on
significant strategic, financial, and operational matters via a
management agreement.
Orchard Cove's operating and excess performance has been negative
since the organization's inception, which is not unusual for a
continuing care retirement community. Fiscal 2007 reflected a
slight improvement in operations, with an operating loss of
$609,000, or a negative 3.3% margin. This was an improvement over
the operating margin of 6.8% for fiscal 2006.
PFP HOLDINGS: To Sell Assets T2 Homes for $61.15 Million
--------------------------------------------------------
PFP Holdings Inc., upon filing for bankruptcy on Jan. 31, signed a
contract to sell its assets for $61.15 million to T2 Homes LLC,
William Rochelle at Bloomberg News reports.
PFP will ask the U.S. Bankruptcy Court for the District of Arizona
to authorize sale procedures requiring the submission of competing
bids 10 days before the yet-to-be-scheduled auction and sale
approval hearing, Mr. Rochelle says.
PFP, Mr. Rochelle relates, doesn't want its secured bank creditors
to be permitted to bid at the auction unless their offer includes
enough cash to pay the expenses of the Chapter 11 case.
PFP disclosed owing $115.6 million to secured lenders, not
including $29 million on preferred securities and $15 million on a
private debt placement, Mr. Rochelle notes, citing papers filed in
Court. Contractors could put about $4 million in liens on
finished and uncompleted homes, Mr. Rochelle relates.
PFP Holdings Inc., is a homebuilder based in Phoenix, Arizona.
The company does business under names including Trend Homes and
Regency. Papers filed in Court indicate that the Debtor generated
$309 million in revenue during 2007 while delivering almost 1,100
homes.
PFP filed for Chapter 11 bankruptcy protection on Jan. 31, 2008,
before the U.S. Bankruptcy Court for the District of Arizona (Case
No. 08-00899). Robert J. Miller, Esq., at Bryan Cave, L.L.P.,
represents the Debtor. Upon its bankruptcy filing, it listed $50
million to $100 million in estimated assets and debts.
PLASTECH ENGINEERED: Court to Decide Fate of Dispute on Feb. 19
---------------------------------------------------------------
The Honorable Phillip Shefferly of the U.S. Bankruptcy Court for
the Eastern District of Michigan will rule on the tooling dispute
between Plastech Engineered Products Inc. and its debtor-
affiliates, and Chrysler LLC, on Feb. 19, 2008, Reuters reports.
For the meantime, Judge Shefferly urged the parties to reach an
interim agreement for the next few days, since the last interim
tooling agreement expires today. He told the parties he would be
"very disappointed" if they do not reach a temporary accord over
the weekend, relates Reuters.
Chrysler said it was not sure when it could talk with Plastech
about extending the interim pact, Reuters says, citing Kevin
Frazier, a Chrysler representative.
As reported in the Troubled Company Reporter on Feb. 14, 2008, the
parties threw objection after objection against each other in a
two-day hearing before the Court, with Plastech challenging
Chrysler to prove its "ownership" of the tooling parts.
About Chrysler LLC
Based 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. S&P
said the outlook is negative.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive supplier
of interior, exterior and underhood components. It designs and
manufactures blow-molded and injection-molded plastic products
primarily for the automotive industry. Plastech's products
include automotive interior trim, underhood components, bumper and
other exterior components, and cockpit modules. Plastech's major
customers are General Motors, Ford Motor Company, and Toyota, as
well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000.
PLASTECH ENGINEERED: Chrysler Insists That It Owns Tooling
----------------------------------------------------------
Chrysler LLC reacted to Plastech Engineered Products Inc. and its
debtor-affiliates' argument that the tooling equipment the
carmaker is trying to recover is property of the Debtors' estate.
Chrysler asks the U.S. Bankruptcy Court for the Eastern District
of Michigan to lift the automatic stay so it can immediately
possess the Tooling.
Chrysler argues that the objections of the Debtors and various of
the Debtors' lenders, which share a common theme -- that
Chrysler's entitlement to possession of the Tooling is somehow
conditioned on Chrysler proving "ownership" of the Tooling -- miss
the mark.
"Possession of the Tooling, not ownership, is the issue before
the Court," Chrysler's counsel, Michael C. Hammer, Esq., at
Dickinson Wright PLLC, in Ann Arbor, Michigan, asserts.
Mr. Hammer points out that none of the objections to Chrysler's
lift stay request contest the fact that the accommodation
agreements entered between the Debtors and their customers,
including Chrysler, require the Debtors to deliver possession of
the Tooling to Chrysler.
The Financial Accommodation Agreement, Mr. Hammer further points
out, provides that "[Chrysler] . . . shall have the right to take
immediate possession of the [Tooling] at any time, without
payment of any kind from [Chrysler] to Plastech. The rights and
obligations contained in this Section shall continue
notwithstanding the expiration or termination of this Agreement."
Mr. Hammer also tells the Court that Chrysler has paid valuable
consideration for the right to immediate possession of the
Tooling under the FAAs.
If the Court does not enforce Chrysler's request for immediate
possession of the Tooling, the Debtors will have another
opportunity to hold Chrysler hostage for extraordinary financial
accommodations, Mr. Hammer says. If Chrysler refuses to pay the
ransom that the Debtors said they will demand, Mr. Hammer adds
that Chrysler will again be forced to idle its plants and lay off
its workers.
Chrysler says that it does not object to preserving any lien
rights of the Debtors' prepetition lenders. Chrysler says it
will pay approximately $13,726,389 into escrow for the remaining
unpaid contract price, if any, with respect to any Tooling.
Mr. Hammer says any lien in the Unpaid Tooling can be transferred
to the proceeds and the Court can decide how those proceeds
should be divided amount competing lien claimants.
Chrysler also agrees that removal of the Tooling should be done
in a manner most reasonably calculated to cause the least
interruption of the Debtors' businesses.
As reported in the Troubled Company Reporter on Feb. 14, 2008,
rival carmakers General Motors Corp. and Ford Motor Co. showed
support to Chrysler LLC and its pursuit in recovering the tooling
equipment held up at the Debtors' plants.
Representatives for GM and Ford as well as for auto supplier
Johnson Controls Inc. told the Court they believe Chrysler has the
right to reclaim their own equipment under their contracts with
Plastech.
"GM is not taking a position regarding whether the court should
grant Chrysler the relief it is seeking," GM spokesman Frank
Sopata said, according to the Associated Press. "But GM does
strongly support Chrysler's position regarding the tooling since
we have entered into the same agreement as Chrysler and the other
major customers of Plastech to reclaim our tooling should it be
necessary."
About Chrysler LLC
Based 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. S&P
said the outlook is negative.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive supplier
of interior, exterior and underhood components. It designs and
manufactures blow-molded and injection-molded plastic products
primarily for the automotive industry. Plastech's products
include automotive interior trim, underhood components, bumper and
other exterior components, and cockpit modules. Plastech's major
customers are General Motors, Ford Motor Company, and Toyota, as
well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
PLASTECH ENGINEERED: Wants to Hire Allard & Fish as Local Counsel
-----------------------------------------------------------------
Plastech Engineered Products Inc. and its debtor-affiliates ask
the U.S. Bankruptcy Court for the Eastern District of Michigan for
authority to employ Allard & Fish P.C., as their local bankruptcy
counsel, nunc pro tunc to Feb. 1, 2008.
Peter Smidt, chief financial officer of Plastech Engineered
Products, Inc., relates that the Debtors selected Allard & Fish
as their local counsel because of the firm's expertise and
experience in bankruptcy and automotive insolvency.
Additionally, Allard & Fish has acted as counsel in numerous
automotive insolvency cases including the representation of tier
one automotive suppliers in the Bankruptcy Court for the Eastern
District of Michigan.
As local counsel, the firm will:
(a) advise the Debtors regarding their various relationships
with vendors, existing supply contracts, continuity of
supply issues and related matters, and negotiate and
deal with vendors;
(b) advise the Debtors on matters relating to the evaluation
of the assumption, rejection or assignment of unexpired
leases and executory contracts;
(c) advise the Debtors with respect to their powers and
duties as debtors in possession in the continued
management and operation of their business and properties;
(d) attend meetings and negotiate with representatives of
creditors and other parties in interest;
(e) take all necessary action to protect and preserve the
Debtors' estates, including prosecuting actions on the
their behalf, defending any action commenced against the
Debtors and representing their interests in negotiations
concerning all litigation in which the Debtors are
involved, including, objections to claims filed against
the estates;
(f) prepare motions, applications, answers, orders, reports,
and papers necessary to the administration of the Debtors'
estates;
(g) take any necessary action on behalf of the Debtors to
obtain confirmation of the Debtors' proposed plan of
reorganization;
(h) represent the Debtors in connection with obtaining post
petition loans if necessary;
(i) advise the Debtors in connection with any potential
sale of assets;
(j) appear before the Bankruptcy Court, any appellate courts
and the United States Trustee, and protect the interests
of the Debtors' estates before those courts and the U.S.
Trustee; and
(k) perform all other necessary legal services and provide
all other legal advice to the Debtors in connection with
the Debtors' Chapter 11 cases.
Allard & Fish will exert efforts to avoid duplication of its
services with those of the Debtors' proposed lead bankruptcy
counsel, Skadden, Arps, Slate, Meagher & Flom LLP, or the
Debtors' proposed special corporate and litigation counsel, Jones
Day.
Allard & Fish intends to apply for compensation for professional
services rendered to the Debtors in connection with their
Chapter 11 cases, subject to the Court's approval and in
compliance with applicable provisions of the Bankruptcy Code
and the Local Rules and orders of the Court.
For the contemplated services, Allard & Fish will be paid based
on the firm's hourly rates:
Designation Hourly Rate
----------- -----------
Attorney $375
Expert Witness $450
Paraprofessionals $80
Deborah L. Fish, Esq., a member of Allard & Fish, relates that
the firm received a $30,000 retainer.
Ms. Fish assures the Court that Allard & Fish is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code and does not hold or represent any interest
adverse to the Debtors' estates.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive supplier
of interior, exterior and underhood components. It designs and
manufactures blow-molded and injection-molded plastic products
primarily for the automotive industry. Plastech's products
include automotive interior trim, underhood components, bumper and
other exterior components, and cockpit modules. Plastech's major
customers are General Motors, Ford Motor Company, and Toyota, as
well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
PLASTECH ENGINEERED: Taps Jones Day as Special Counsel
------------------------------------------------------
Plastech Engineered Products Inc. and its debtor-affiliates ask
the U.S. Bankruptcy Court for the Eastern District of Michigan for
authority to employ Jones Day as their special litigation and
corporate counsel nunc pro tunc to Feb. 1, 2008.
Peter Smidt, chief financial officer of Plastech Engineered
Products, Inc., says that before the date of bankruptcy, Jones Day
represented the Debtors as their outside counsel for several
important banking and finance transactions, litigation and other
complex matters.
Consequently, Jones Day has acquired extensive knowledge of the
Debtors' business operations and is familiar with their capital
structure, credit facilities and certain prepetition litigation
matters, relates Mr. Smidt.
Mr. Smidt says that the Debtors have also separately filed an
application to employ Skadden, Arps, Slate, Meagher & Flom LLP as
their general bankruptcy counsel.
As the Debtors' special litigation and corporate counsel, Jones
Day will:
(a) advise the Debtors and assist Skadden Arps in connection
with postpetition financing and cash collateral
arrangements and the negotiation, preparation and
prosecuting of all necessary motions, orders and
documentation relating to the postpetition financing and
cash collateral arrangements;
(b) advise the Debtors and assist Skadden Arps in connection
with any amendment, waiver, modification and refinancing
of some or all of the Debtors' prepetition credit
facilities and the negotiation, preparation and
prosecuting of all necessary motions, orders and
documentation relating to those actions;
(c) advise the Debtors and assist Skadden Arps in connection
with any other related or ancillary financing matters; and
(d) advise and represent the Debtors in connection with
certain non-bankruptcy litigation that was pending as of
the Petition Date.
In exchange for Jones Day's services, the Debtors will pay
the firm based on its applicable hourly rates:
Professional Hourly Rates
------------ ------------
Partners $525 - $700
Associates $275 - $450
Robert J. Graves, Esq., a partner at Jones Day, assures the Court
that his firm does not hold or represent any interest adverse to
the Debtors or their estates.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive supplier
of interior, exterior and underhood components. It designs and
manufactures blow-molded and injection-molded plastic products
primarily for the automotive industry. Plastech's products
include automotive interior trim, underhood components, bumper and
other exterior components, and cockpit modules. Plastech's major
customers are General Motors, Ford Motor Company, and Toyota, as
well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
PMA CAPITAL: Moody's Holds 'Ba3' Sr. Debt Rating on Expected Sale
-----------------------------------------------------------------
Moody's Investors Service affirmed the Ba3 senior debt rating of
PMA Capital Corporation and the Baa3 insurance financial strength
ratings of its active subsidiaries after the company announced
that it expects to execute an agreement to sell its run-off
operations which include the reinsurance subsidiary, PMA Capital
Insurance Company. Moody's has placed the B1 insurance financial
strength rating of PMACIC under review for possible downgrade,
pending further details about the buyer's intentions for the run-
off business.
According to the rating agency, the expected sale of the run-off
operations does not alter Moody's view of the ratings on the
parent company and its active subsidiaries. Those ratings are
largely based on the standalone creditworthiness of the active
subsidiaries and already contemplate an orderly run-off of PMACIC
without funding from the parent company. The ratings also include
the expectation that the parent company would maintain sufficient
cash and short-term investments to cover at least two years' worth
of interest expense. An important limiting factor on the ratings
continues to be the company's significant fixed charges relative
to modest earnings at the active operations. Moody's expects
earnings to strengthen as rebuilding efforts continue. Sale of
the run-off operations will further help to reassure agents and
customers.
Factors that could lead to an upgrade include: continued
improvement in the operating results of PMAIG as measured by
stable retention rates, new business flow and EBIT interest
coverage above 3x, improved levels of capitalization at PMAIG, and
holding company financial leverage consistently less than 30%.
Factors that could lead to a downgrade include: adverse reserve
development at PMAIG greater than 3% of beginning net loss
reserves over a twelve month period, holding company cash below 1
times annual interest expense, or EBIT interest coverage less than
1x.
The last rating action occurred on Nov. 2, 2007 when Moody's
affirmed the ratings on PMA Capital Corporation and its
subsidiaries after the company recorded a $14.3 million after-tax
reserve charge related to its run-off reinsurance subsidiary.
These ratings have been affirmed with a stable outlook:
PMA Capital Corporation: senior unsecured debt at Ba3, prospective
senior unsecured debt at (P)Ba3, prospective subordinated debt at
(P)B1 and prospective preferred stock at (P)B2;
PMA Capital Trust I: prospective preferred securities at (P)B1;
PMA Capital Trust II: prospective preferred securities at (P)B1;
Manufacturers Alliance Insurance Company: insurance financial
strength at Baa3;
Pennsylvania Manufacturers' Association Insurance Company:
insurance financial strength at Baa3; and
Pennsylvania Manufacturers Indemnity Company: insurance financial
strength at Baa3.
These rating has been placed under review for possible downgrade:
PMA Capital Insurance Company: insurance financial strength at B1.
PMA Capital Corporation, headquartered in Philadelphia,
Pennsylvania, is an insurance holding company whose operating
subsidiaries provide specialty risk management products and
services, particularly workers' compensation insurance, to
customers in the United States. As of Sept. 30, 2007,
shareholders' equity was $407 million.
Moody's insurance financial strength ratings are opinions of the
ability of insurance companies to repay punctually senior
policyholder claims and obligations.
PMA CAPITAL: A.M. Best Puts Ratings on Review on Planned Disposal
-----------------------------------------------------------------
A.M. Best Co. has placed the financial strength rating of B(Fair)
and issuer credit rating of "bb" of PMA Capital Insurance Company
under review with negative implications following the announcement
that its parent, PMA Capital Corporation has entered into a letter
of intent with a third party to divest its run-off operations.
The ICR of "bb" of PMA Capital and the FSR of A-(Excellent) and
ICRs of "a-" of PMA Insurance Group (Blue Bell, PA) and its
members are unchanged. Additionally, the debt and indicative
ratings of PMA Capital and PMA Capital Trust I and II are
unchanged. The outlook for these ratings is stable.
The placing of PMACIC's ratings under review reflects the planned
sale to a third party of its discontinued, run-off operations,
which consist of former reinsurance and excess and surplus lines.
While the sale includes PMA Re Management Company, including the
key management personnel handling the run off, the under review
status reflects A.M. Best's concern with the lack of future
commitment from PMA Capital to support run-off operations,
uncertainty with the level of commitment of the new parent to
sustain operations and with the execution risk associated with
managing the run-off plan.
POPE & TALBOT: Asks CCAA Court to Extend Stay Period to April 4
---------------------------------------------------------------
The British Columbia Supreme Court has ruled that until and
including Feb. 15, 2008, no proceeding or enforcement process
in any court or tribunal will be commenced or continued against
or in respect of the Pope & Talbot Inc. and its debtor-affiliates,
the Partnerships or PricewaterhouseCoopers Inc., the Court-
appointed Monitor, or affecting the Applicants' business or
property except with the written consent of the Applicants, the
Partnerships and the Monitor, or with leave of the CCAA Court.
All proceedings currently under way against or in respect of the
Applicants or the Partnerships are stayed and suspended pending
further Court order.
Kathy L. Mah, Esq., at Stikeman Elliott LLP, in Toronto, Canada,
tells the CCAA Court that the Applicants are insolvent, and are
not expected to be able to reorganize pursuant to the CCAA.
Rather, Ms. Mah clarifies, the object of the Applicants' CCAA
filing is to attempt to sell as much of their operations as going
concerns as possible; to maximize recoveries for their creditors;
and to minimize the impact on their stakeholders, including their
employees.
Ms. Mah also informs the Court that once the sale process of the
Applicants' operating assets is completed, the Applicants and the
Monitor will require additional time to conduct a claims process.
The Applicants are working diligently and in good faith to pursue
the sales of their business and assets in accordance with the
requirements of the DIP Credit Agreement and Court-approved sales
processes, Ms. Mah states.
Accordingly, the Applicants ask the CCAA Court to extend the Stay
Period to April 4, 2008.
As reported in the Troubled Company Reporter on Jan. 28, 2008,
PricewaterhouseCoopers Inc. recommended to the CCAA Court that the
Applicants' request for an extension of the Stay Period to
Feb. 15, 2008, be granted.
Headquartered in Portland, Oregon, Pope & Talbot Inc. (Other OTC:
PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products
business. Pope & Talbot was founded in 1849 and produces market
pulp and softwood lumber at mills in the US and Canada. Markets
for the company's products include the US, Europe, Canada, South
America and the Pacific Rim.
The company and its U.S. and Canadian subsidiaries applied for
protection under the Companies' Creditors Arrangement Act of
Canada on Oct. 28, 2007. The Debtors' CCAA Stay expired
on Jan. 16, 2008.
The company and fourteen of its debtor-affiliates filed for
Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case
No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy
counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl
& Jones L.L.P. represents the Debtors as bankruptcy co-counsel.
The Official Committee of Unsecured Creditors selected Fried,
Frank, Harris, Shriver & Jacobson LLP as its bankruptcy counsel.
When the Debtors filed for bankruptcy, they listed total assets of
$681,960,000 and total debts of $601,090,000.
The Debtors' exclusive period to file a plan expires on March 18,
2008.
Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21,
2007, filed an application for relief under Belgian bankruptcy
laws in the commercial court in Brussels. If the Belgian court
grants Pope & Talbot Europe's application, it is expected it will
be liquidated through the bankruptcy proceeding.
(Pope & Talbot Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
POPE & TALBOT: Asks Court to Set April 3 as Claims Bar Date
-----------------------------------------------------------
To address the potential inconsistency between the treatment of
claims incurred but not paid by Pope & Talbot Inc. and its debtor-
affiliates between the October 28 Canadian Filing Date and the
November 19 Chapter 11 Petition Date, the Debtors obtained the
permission of the U.S. Bankruptcy Court for the District of
Delaware to pay Gap Claims in the same manner as if the Claims had
arisen after the Petition Date.
The Debtors do not believe that any Gap Claims remain unpaid,
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
in Wilmington, Delaware, states. "The Debtors expect to sell all
of their operating assets by the end of the first quarter of
2008. Although it is not yet clear how much the Debtors will
realize from the sale of their assets, the Debtors anticipate
that the proposed sales will enable them to provide a distribution
to their unsecured creditors pursuant to a plan of liquidation."
Rule 3003(c)(2) of the Federal Rules of Bankruptcy Procedure
provides that any creditor whose claim is not scheduled or whose
claim is scheduled as disputed, contingent or unliquidated must
file a proof of claim.
By this motion, the Debtors ask the Court to establish:
-- April 3, 2008, as the deadline for creditors to assert
claims arising on or before the Petition Date against the
Debtors to file original, written proofs of claim; and
-- May 19, 2008, as the last day by which governmental units
must file claims against any of the Debtors.
According to Ms. Jones, creditors should be required to submit
proofs of claim only with respect to claims that arose prior to
the Oct. 28, 2008 Canadian Filing Date, and not the Chapter 11
Petition Date. "Utilization of the Canadian Filing Date is
appropriate to facilitate coordination of the Insolvency
Proceedings," she maintains.
The Debtors propose that the Bar Dates should not apply to the
certain categories of claims or interests, including:
(a) Administrative expenses,
(b) GAP Claims,
(c) Properly Scheduled Claims,
(d) Previously filed claims,
(e) Interests,
(f) Previously Allowed Claims,
(g) Intercompany Claims,
(h) Claims arising on account of Notes,
(i) Paid Claims,
(j) Claims Against Non-Debtor Affiliates,
(k) Claims relating to rejected executory contracts, and
(l) Prepetition Agents' claims on non-default interest.
Claims Protocol
Coordination of the claims process is essential and should, among
other things, maximize the efficiency of the claims process,
reduce the associated costs, and avoid duplication of effort on
the part of the British Columbia Supreme Court and the Bankruptcy
Court, the Debtors, and the Debtors' creditors, Ms. Jones points
out.
The Debtors propose that any of their creditor or equity security
holder may file a proof of claim or interest with either Kurtzman
Carson Consultants LLC, the Debtors' claims agent, or the Monitor
in the Canadian Proceedings. If a creditor files a claim
with both KCC and the Monitor, the last timely filed claim will
govern.
The Bankruptcy Court will be the forum to determine all claims
asserted against the Debtors arising principally out of their
operations in the United States, and the CCAA Court will be the
forum to determine all claims asserted against the Applicants,
arising principally out of their operations in Canada.
KCC and the Monitor will seek to establish a common list of
creditor claims in respect of each of the Debtors as far as
reasonably practicable.
In resolving disputes relating to the terms, intent or application
of the Claims Protocol, the Bankruptcy and CCAA Courts will hold a
joint hearing to resolve any dispute, unless all parties involved
consent to the resolution of the dispute by a single Court.
As reported in the Troubled Company Reporter on Dec. 5, 2007, the
Debtors asked the U.S. Bankruptcy Court for authority to implement
a proposed cross-border insolvency protocol to govern the
administration of the Debtors' dual proceedings between the
Bankruptcy Court and the CCAA Court.
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, in
Wilmington, Delaware, said that a cross-border protocol is needed
to ensure that:
-- the Debtors' Chapter 11 cases and the CCAA insolvency
proceedings are coordinated to avoid inconsistent,
conflicting or duplicative activities;
-- all parties are informed adequately of key issues in the
Chapter 11 cases and the CCAA proceedings;
-- the substantive rights of all parties are protected; and
-- the jurisdictional integrity of the Bankruptcy Court and
the CCAA Court is preserved.
As reported in the The Troubled Company Reporter on Dec. 27, 2007,
the Debtors' proposed cross-border insolvency protocol was
approved by both the U.S. Bankruptcy Court and the CCAA Court.
Headquartered in Portland, Oregon, Pope & Talbot Inc. (Other OTC:
PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products
business. Pope & Talbot was founded in 1849 and produces market
pulp and softwood lumber at mills in the US and Canada. Markets
for the company's products include the US, Europe, Canada, South
America and the Pacific Rim.
The company and its U.S. and Canadian subsidiaries applied for
protection under the Companies' Creditors Arrangement Act of
Canada on Oct. 28, 2007. The Debtors' CCAA Stay expired
on Jan. 16, 2008.
The company and fourteen of its debtor-affiliates filed for
Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case
No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy
counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl
& Jones L.L.P. represents the Debtors as bankruptcy co-counsel.
The Official Committee of Unsecured Creditors selected Fried,
Frank, Harris, Shriver & Jacobson LLP as its bankruptcy counsel.
When the Debtors filed for bankruptcy, they listed total assets of
$681,960,000 and total debts of $601,090,000.
The Debtors' exclusive period to file a plan expires on March 18,
2008.
Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21,
2007, filed an application for relief under Belgian bankruptcy
laws in the commercial court in Brussels. If the Belgian court
grants Pope & Talbot Europe's application, it is expected it will
be liquidated through the bankruptcy proceeding.
(Pope & Talbot Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
POPE & TALBOT: Obtains Waivers to DIP Credit & Security Agreement
-----------------------------------------------------------------
In a regulatory filing with the United States Securities and
Exchange Commission, Pope & Talbot Inc. disclosed that on Jan. 22,
2008, they entered into a fifth waiver to their DIP Credit and
Security Agreement with Ableco Finance LLC, Wells Fargo Financial
Corporation Canada and certain other lenders. The Debtors
entered into a sixth waiver to the DIP Credit Agreement on
January 25.
R. Neil Stuart, vice president and chief financial officer of
Pope & Talbot Inc., stated that under the Waivers, the Lenders
waived any default or event of default under the DIP Agreement,
resulting from the occurrence of a material adverse deviation
from the budget during certain prior periods with respect to
payroll taxes and benefits, chemical payments, tax payments,
lease payments, utilities payments and management incentive
payments, pension contributions and insurance payments as set
forth in a budget.
A full-text copy of the Fifth Waiver to the DIP Credit and
Security Agreement is available for free at the SEC:
http://researcharchives.com/t/s?2801
A full-text copy of the Sixth Waiver to the DIP Credit and
Security Agreement is available for free at the SEC:
http://researcharchives.com/t/s?276f
Mr. Stuart reported in a separate regulatory SEC filing dated
Feb. 11, 2008, that the same parties entered into a seventh
waiver to the DIP Credit Agreement on February 1.
Under the Seventh Waiver, the Lenders waived any default or event
of default under the DIP Agreement, resulting from:
-- the occurrence of a material adverse deviation from the
budget during certain prior periods with respect to payroll
taxes and benefits, chemical payments, tax payments,
utility payments and cash receipts set forth in the budget;
and
-- the failure to consummate the sale of the Debtors' wood
products business prior to January 31, 2008, in accordance
with the DIP Agreement.
A full-text copy of the Seventh Waiver to the DIP Credit and
Security Agreement is available for free at the SEC:
http://researcharchives.com/t/s?2803
Headquartered in Portland, Oregon, Pope & Talbot Inc. (Other OTC:
PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products
business. Pope & Talbot was founded in 1849 and produces market
pulp and softwood lumber at mills in the US and Canada. Markets
for the company's products include the US, Europe, Canada, South
America and the Pacific Rim.
The company and its U.S. and Canadian subsidiaries applied for
protection under the Companies' Creditors Arrangement Act of
Canada on Oct. 28, 2007. The Debtors' CCAA Stay expired
on Jan. 16, 2008.
The company and fourteen of its debtor-affiliates filed for
Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case
No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy
counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl
& Jones L.L.P. represents the Debtors as bankruptcy co-counsel.
The Official Committee of Unsecured Creditors selected Fried,
Frank, Harris, Shriver & Jacobson LLP as its bankruptcy counsel.
When the Debtors filed for bankruptcy, they listed total assets of
$681,960,000 and total debts of $601,090,000.
The Debtors' exclusive period to file a plan expires on March 18,
2008.
Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21,
2007, filed an application for relief under Belgian bankruptcy
laws in the commercial court in Brussels. If the Belgian court
grants Pope & Talbot Europe's application, it is expected it will
be liquidated through the bankruptcy proceeding.
(Pope & Talbot Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
PRIMUS TELECOM: Dec. 31 Balance Sheet Upside Down by $452 Million
-----------------------------------------------------------------
PRIMUS Telecommunications Group Inc.'s balance sheet as of
Dec. 31, 2007 total assets of $449.1 million, total liabilities of
$901.1 million, resulting to a stockholder's deficit of
$452.0 million.
PRIMUS reported fourth quarter 2007 net revenue of $223.5 million,
down $15 million from $239.3 million in the fourth quarter 2006.
The company reported a $4.7 million net loss for the quarter,
compared to the net loss of $2.4 million in the fourth quarter
2006.
Full year 2007 net revenue was $0.9 billion, a decline from
$1.0 billion in 2006. The company reported $9 million of net
income in 2007, compared to the net loss for 2006 of
$237.9 million.
"Our investment strategy in sales and marketing and broadband,
data center and IP infrastructure projects is beginning to have a
positive impact on curtailing the rate of revenue decline and
generating steadily expanding margins," K. Paul Singh, chairman
and chief executive officer of PRIMUS, said. "Despite a
significant decline in revenue in 2007, primarily attributable to
declines in wholesale and prepaid services, we were successful in
improving overall margins, both as a percentage and in absolute
terms, and delivering 13% growth in full year Adjusted EBITDA."
"Net revenue less cost of revenue has increased for the third
consecutive quarter, while Adjusted EBITDA has shown consistent
and gradual improvement," Mr. Singh added. "These favorable
trends reflect a combination of sequential growth in our high
margin products (6% sequential increase, reaching annualized net
revenue of $233 million), continued pruning of low-margin revenue
streams and further improvement in our network service
capabilities and cost structure, driven by recent capital
expenditures and increased on-net migrations."
Steady growth of its high margin products has enabled PRIMUS
gradually to reduce the rate of quarterly sequential quarterly
declines in retail revenue. As the company continues to implement
its strategy throughout 2008, it expects to see continued gradual
improvement in the retail revenue trends.
"Our 2008 plan is fully funded with current cash resources, and we
plan to continue its implementation with prudent investments
throughout the year," Mr. Singh stated. "Our objective, over
time, is to generate sufficient increased contribution from growth
products such that it exceeds the corresponding declines in legacy
voice and dial-up Internet products."
"Through execution of our plan in 2008, we expect year over year
revenue to decline, in the range of 2% to 5%, about half of the
10% revenue decline experienced in 2007, primarily as a result of
increased investment in sales and marketing," Mr. Singh added.
"We expect margin expansion to continue as a result of our capital
expenditures in the network infrastructure."
"While we are pursuing potential sales of assets in 2008 to
generate $50 million or more in cash proceeds, the prevailing
capital market turbulence combined with a weak overall economic
outlook may force us to extend our time horizon if valuation
multiples are not at acceptable levels," Mr. Singh concluded.
Liquidity and Capital Resources
PRIMUS ended the fourth quarter 2007 with a cash balance of
$91 million as compared to $118 million as of Sept. 30, 2007. The
$27 million decrease in cash is comprised of $15 million for
capital expenditures primarily to fund the previously disclosed
second half 2007 Australian DSLAM network expansion and the
Canadian data center expansion, $14 million for interest payments,
$7 million to purchase and retire a portion of the company's
outstanding 12 3/4% senior notes, $5 million for an early payment
in full of a capital lease obligation, and $4 million for
scheduled principal reductions.
Capital expenditures for the full year 2007 were $45 million at
the high end of the company's prior guidance range of between
$40 million and $45 million.
Free cash flow for the fourth quarter 2007, as calculated in the
attached schedule, was negative $12 million as compared to
negative $10 million in the prior quarter and negative $5 million
in the year-ago quarter.
The principal amount of PRIMUS's long-term debt obligations as of
Dec. 31, 2007 was $664 million, as compared to $679 million at
Sept. 30, 2007.
About PRIMUS Telecom
Headquartered in McLean, Virginia, Primus Telecommunications Group
(OTC:PRTL) -- http://www.primustel.com-- is an integrated
telecommunications services provider offering a portfolio of
international and domestic voice, wireless, Internet, voice-over
internet protocol, data and hosting services to business and
residential retail customers and other carriers located primarily
in the United States, Australia, Canada, the United Kingdom and
Western Europe. The services Primus Telecommunications offers can
be classified into three main product categories: voice,
data/internet and VOIP services. The company's operations are
organized into four geographic areas: United States, Canada,
Europe and Asia-Pacific. The United States and Canadian operating
markets are the significant portions of its North America market,
and the Australian market is the substantial portion of the Asia-
Pacific market.
* * *
Moody's Investor's Service, on December, 2006, assigned PRIMUS
Telecom a 'Caa3' long-term corporate family rating, 'Ca' senior
unsecured debt rating, 'Ca' subordinated debt rating and 'Caa3'
probability of default rating with a negative outlook. This
rating action still holds to date.
PROPEX INC: Committee Selects Baker Donelson as Counsel
-------------------------------------------------------
The Official Committee of Unsecured Creditors seek the Court's
authority to retain Baker, Donelson, Bearman, Caldwell &
Berkowitz, as its counsel in connection with the Debtors' Chapter
11 cases, effective Jan. 31, 2008.
Stephen Cooke, chairperson of the Committee, relates that the
Committee selected Baker Donelson as its counsel because of the
firm's experience and knowledge in the field of bankruptcy and
business reorganizations under the U.S. Bankruptcy Code, as well
as in other areas of law related to the Debtors' bankruptcy
cases.
As the Committee's counsel, Baker Donelson will:
* provide legal advice with respect to the Committee's powers
and duties in these cases;
* prepare, on behalf of the Committee, all necessary
applications, answers, orders, reports and other legal
papers;
* represent the Committee in any and all matters involving
contests with the Debtors, alleged secured creditors, and
other third parties;
* negotiate consensual plans of liquidation or reorganization;
* assist the Committee in analyzing the claims of the Debtors'
creditors and the Debtors' capital structure and in
negotiating with holders of claims and equity interests;
* assist the Committee's investigation of the acts, conduct,
assets, liabilities and financial condition of the Debtors
and of the operations of the Debtors' businesses;
* assist and advise the Committee as to its communications to
the general creditor body regarding significant matters in
the Debtors' cases;
* review and analyze all applications, orders statements of
operations and schedules filed with the Court and advise the
Committee as to their propriety; and
* perform all other legal services for the Committee which may
be necessary and proper in these cases and related
proceedings.
Seven Baker Donelson professionals are presently expected to have
primary responsibility for providing services to the Committee:
Professional Hourly Rates
------------ ------------
Richard B. Gossett $375
John H. Rowland $340
Nelwyn W. Inman $335
Justin M. Sveadas $240
William M. B. Carter, Jr. $195
Sharon L. Simmons $140
Charity J. Martin $120
Baker Donelson intends to apply for compensation for professional
services it will render and reimbursement of expenses it will
incur in connection with the Debtors' Chapter 11 cases.
Richard B. Gossett, Esq., a partner at Baker Donelson, in
Chattanooga, Tennessee, assures the Court that his firm is a
"disinterested person," as the term is defined in Section 101(14)
of the Bankruptcy Code.
About Propex Inc.
Headquartered in Chattanooga, Tennessee, Propex Inc. --
http://www.propexinc.com/-- produces geosynthetic, concrete,
furnishing, and industrial fabrics and fiber. It is produces
primary and secondary carpet backing. Propex operates in North
America, Europe, and Brazil.
The company and its debtor-affiliates filed for Chapter 11
protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249).
The debtors' has selected Edward L. Ripley, Esq., Henry J. Kaim,
Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston,
Texas, to represent them. As of Sept. 30, 2007, the debtors'
balance sheet showed total assets of $585,700,000 and total debts
of $527,400,000. The Debtors' exclusive period to file a plan of
reorganization expires on May 17, 2008. (Propex Bankruptcy News,
Issue No. 5; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
PROPEX INC: Requests Court to Set July 7 as Claims Bar Date
-----------------------------------------------------------
Pursuant to Rule 3003(c)(3) of the Federal Rules of Bankruptcy
Procedure, the bankruptcy court must fix the time within which
claims must be filed in Chapter 11 cases. Rule 3003(c)(2)
provides that any creditor whose claim is not scheduled or whose
claim is scheduled as disputed, contingent, or unliquidated must
file a claim.
Accordingly, Propex Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Eastern District of Tennessee to
establish July 7, 2008, at 5:00 p.m. prevailing Eastern Time, as
the bar date for the submission of claims in their bankruptcy
cases.
The Debtors seek that each person or entity that asserts a claim
against them that arose prior to the Petition Date be required to
file an original, written proof of claim that substantially
conforms to Form B10 so as to be received by Epiq Bankruptcy
Solutions LLC, the Debtors' claims agent on or before the Bar
Date.
"The fixing of the date as the Bar Date will enable the Debtors
to receive, process, and begin their analysis of creditors' claim
in a timely and efficient manner," Mark W. Wege, Esq., at King &
Spalding, LLP, in Houston, Texas, points out.
The Debtors propose that these individuals or entities will not
be required to file a claim on or before the Bar Date:
* Any person or entity that has already properly filed, with
Epiq, or the Clerk of the Court, a claim using a claim form
that substantially conforms to Form B10.
* Any person or entity (i) whose claim is listed on the
Statements of Financial Affairs, Schedules of Assets and
Liabilities, and other related papers, (ii) whose claim is
not described as disputed, contingent, or unliquidated, and
(iii) who does not dispute the amount or nature of the
claim.
* Any person asserting a claim under Section 507(a)(2) of the
Bankruptcy Code as an administrative expense of the Debtors'
Chapter 11 cases, except as otherwise provided by separate
order of the Court.
* Any director, officer, or employee of the Debtors as of the
Petition Date that has or may have claims against the
Debtors for indemnification, contribution, subrogation, or
reimbursement.
* Any person or entity that holds claims that has been allowed
by an order of the Court entered on or before the Bar Date.
The Debtors also propose that for any person or entity that holds
a claim that arises from the rejection of an executory contract
or unexpired lease, that person or entity must file a claim
based on the rejection on or before the Bar Date, unless
otherwise stated in the order authorizing the rejection.
If a person or entity failed to file a timely claim on or before
the Bar Date, that person or entity will not be treated as a
creditor of the Debtors for the purpose of voting upon any plan
or Plans of Reorganization of the Debtors. Moreover, that
person or entity will not be entitled to receive any payment or
distribution of property from the Debtors and will be barred from
asserting claims against the Debtors, their estates, or their
successors or assigns.
Additionally, the Debtors ask the Court to allow Epiq to
distribute a combined, single notice of both the Section 341
Creditors Meeting and the Bar Date to:
a. the office of the United States Trustee;
b. those persons on the master service list;
c. each member of the Official Committee of Unsecured
Creditors and its attorneys;
d. all state and local government authorities where the
Debtors maintain assets or conducted business operations on
the Petition Date or within three years prior to the
Petition Date;
e. all known potential holders of claims at the addresses
stated on the creditors' matrix; and
f. the district director of Internal Revenue for the Eastern
District of Tennessee.
The first meeting of creditors required under Section 341(a) of
the Bankruptcy Code is set for March 4, 2008, at 10:00 a.m., in
Chattanooga, Tennessee.
The proposed Bar Date Notice contains information regarding who
must file a proof of claim, the procedure for filing a proof of
claim, and the consequences for failing to timely file a proof of
claim.
The Debtors inform the Court that they intend to complete the
mailing of the Bar Date Notice, together with proof of claim
forms, to the parties on the matrix listing no later than
Feb. 15, 2008.
About Propex Inc.
Headquartered in Chattanooga, Tennessee, Propex Inc. --
http://www.propexinc.com/-- produces geosynthetic, concrete,
furnishing, and industrial fabrics and fiber. It is produces
primary and secondary carpet backing. Propex operates in North
America, Europe, and Brazil.
The company and its debtor-affiliates filed for Chapter 11
protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249).
The debtors' has selected Edward L. Ripley, Esq., Henry J. Kaim,
Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston,
Texas, to represent them. As of Sept. 30, 2007, the debtors'
balance sheet showed total assets of $585,700,000 and total debts
of $527,400,000. The Debtors' exclusive period to file a plan of
reorganization expires on May 17, 2008. (Propex Bankruptcy News,
Issue No. 5; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
QUIKSILVER INC: CEO Robert McKnight Resumes Role as President
-------------------------------------------------------------
Quiksilver Inc. disclosed that Robert McKnight resumed his role as
president of Quiksilver and remains both chairman of the board and
chief executive officer. Mr. McKnight will again direct the
company's operational initiatives.
The company also announced that Bernard Mariette has resigned from
his position as president and as a director of the company in
order to pursue other interests, which may include attempting to
acquire the Rossignol group. As previously announced, J.P. Morgan
is conducting a process on behalf of the company to reduce its
exposure to the winter sports equipment business, including a
possible sale.
"Bernard Mariette has, for fifteen years, been invaluable to the
growth and success of this company," Robert B. McKnight, Jr.,
chairman of the board, president, and chief executive officer of
Quiksilver, Inc., commented. "He took Quiksilver Europe from its
development stage in 1994 and grew it to a EUR250 million business
by 2001 when he became president of the entire company."
"Since 2001 Quiksilver has almost quadrupled in size and, under
Bernard's leadership, has established an infrastructure to
globalize Quiksilver's historically regional businesses and
cemented its position as a leading global lifestyle company," Mr.
Mcknight added. "[Mr. Mariett] will be truly missed and we wish
him the best in the many accomplishments that lie ahead for him."
"Our business objectives today are clear," Mr. McKnight continued.
"We will focus our attention on our Quiksilver, Roxy and DC
businesses, both to continue their healthy growth and to improve
their operating results."
"At the same time, we will seek to further reduce our exposure to
the winter sports equipment businesses we acquired in 2005,
including pursuing a sale of the businesses and we will work to
improve our balance sheet," Mr. McKnight stated. "As we move
forward, our entire organization is deeply committed to executing
this plan."
"We have many strengths, including tremendous untapped growth
opportunities in our core apparel and footwear brands," Mr.
McKnight further commented. "Our great brands, our global
operating platform and our leadership position in this fragmented
market are all among them."
"The two most important sources of strength, however, are a deeply
ingrained and powerful corporate culture and a tremendous
management team," Mr. McKnight went on to say. "I am confident
that each of these will serve us, as they always have, as a
deciding factor in our success."
The company noted that Mr. McKnight will have three corporate
officers and three regional presidents reporting directly to him
under the company's new management structure. Charlie Exon, who
serves as a director and the company's general counsel will also
assume the title of chief administrative officer, recognizing his
broader role in the areas of global communications and human
resources. David Morgan, chief operating officer, will continue
in his role, including overseeing the company's global sourcing
initiative and also serving as president of the company's
Rossignol subsidiary through a transition period. Joe Scirocco,
the company's chief financial officer, will continue to oversee
global finance initiatives and also report directly to Mr.
McKnight.
Mr. McKnight's three remaining direct reports will be responsible
for overseeing the company's regional businesses, which operate
the core brands of Quiksilver, Roxy and DC. Marty Samuels will
continue to lead Quiksilver Americas as its president from
headquarters in Huntington Beach, California. Pierre Agnes will
continue to serve as president of Quiksilver Europe, based in St.
Jean de Luz, France. Craig Stevenson, who currently serves as
global brand leader for the Quiksilver brand, will assume
additional responsibilities as president of Quiksilver South
Asia/Pacific, based in Torquay, Australia. All three executives
are long term employees of the company.
Under the terms of his separation agreement, Mr. Mariette will
remain available for a period of one year to advise on
transitional issues involving all aspects of the company's brands
and operations other than those of the Rossignol Group.
"Over the last 15 years at Quiksilver, it has been my pleasure and
honor to work with great people and see amazing athletes showcase
their natural talents," Mr. Mariette commented. "Under Bob
McKnight's leadership, we've been able to develop the best outdoor
brands in the world."
"I'm confident that Quiksilver is well positioned for future
success with its leadership, its lifestyle focus, and its brands,"
Mr. Mariette continued. "While I will miss Bob and my colleagues,
I know that they will enjoy fantastic success in the future."
"I have great confidence in our team, in our plan, and in our
ability to fully capitalize on the many opportunities that exist
for us," Mr. McKnight concluded. "I am proud and excited to lead
this effort on behalf of our many partners, most particularly our
shareholders, who I thank for their loyalty, input, patience and
understanding."
About
Quicksilver
Quiksilver, Inc. is a globally diversified company that designs,
produces and distributes branded apparel, wintersports equipment,
footwear, accessories and related products. Its products are sold
in over 90 countries in a range of distribution channels,
including surf shops, ski shops, skateboard shops, snowboard
shops, its Boardriders Club shops, other specialty stores and
select department stores. The Company has three operating
segments, the Americas, Europe and Asia/Pacific. The Americas
segment includes revenues primarily from the United States and
Canada. The European segment includes revenues primarily from
Western Europe. The Asia/Pacific segment includes revenues
primarily from Australia, Japan, New Zealand and Indonesia. In
October 2007, the Company entered into an agreement to sell its
golf equipment business. This transaction was completed in
December 2007.
QUIKSILVER INC: S&P's BB- Rating Unmoved by Planned Asset Sale
--------------------------------------------------------------
Standard & Poor's Ratings Services said its ratings and outlook on
apparel company Quiksilver Inc. (BB-/Negative/--) are unaffected
by the company's announcement that its president has resigned and
that it is exploring a potential sale of its ski equipment
business.
Robert McKnight, chairman, CEO, and founder of the company, will
assume the role of president. S&P expects the company's operating
strategies and financial policies to remain the same following the
change in management. The company also said that it has retained
J.P. Morgan to assist with reducing its exposure to the hard good
equipment business, including selling its Skis Rossignol S.A.
operations, which it acquired in 2005 for about $303 million.
(This included a majority interest in Cleveland Golf, which was
sold in December 2007). If a sale is consummated, S&P expects
most of the proceeds would be used to repay debt; S&P estimates
leverage would improve toward the 4.3x-4.5x area postdivestiture.
For the fiscal year ended Oct. 31, 2007, leverage (as measured by
total debt to EBITDA) was high at 5.2x; yet adjusted for the
December 2007 sale of Cleveland Golf, this ratio declines to about
4.7x.
S&P believes that a sale of the ski equipment business will allow
management to focus on its legacy apparel brands (Quiksilver,
Roxy, and DC Shoes). The Rossignol business is capital intensive
and provided a drag on operating results because of an extremely
poor winter season and weakening economic trends. While S&P views
the potential sale and debt reduction as positive factors, the
impact of a softening retail environment on the company's apparel
business remains a concern. S&P will review the current negative
outlook once a transaction is announced. A more favorable
revision would be dependent on the actual proceeds and debt
reduction, as well as the operating performance of Quiksilver's
apparel business.
R&J REAL PROPERTIES: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: R.&J. Real Properties, L.L.C.
105 Route 70
Medford, NJ 08055
Bankruptcy Case No.: 08-12550
Type of Business: The Debtor owns and manages real estate.
Chapter 11 Petition Date: February 13, 2008
Court: District of New Jersey (Trenton)
Debtor's Counsel: Robert W. Cusick, Esq.
701 Route 73 South, Suite 410
Marlton, NJ 08053
Tel: (856) 985-2380
Fax: (856) 964-0156
Total Assets: $1 Million to $10 Million
Total Debts: Unknown
The Debtor did not file a list of its largest unsecured creditors.
RICHARD RANDALL: Case Summary & 10 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Richard J. Randall III
6013 Niagara Drive
Elkridge, Maryland
Bankruptcy Case No.: 08-11912
Chapter 11 Petition Date: February 11, 2008
Court: District of Maryland
Judge:
Debtor's Counsel: Jeffrey M. Sirody, Esq.
Sirody Freiman & Feldman
1777 Reisterstown Road
Suite 360 E
Baltimore, Maryland 21208
Tel: 410-415-0445
Fax: 410-415-0744
Estimated Assets: less than $50,000
Estimated Debts: $1,000,001 to $10 million
Debtor's list of its 10 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
The Washington Savings Bank real estate $203,000
4201 Mitchellville Road
Suite 100
Bowie, MD 20716
Green Point Savings 4106 Eierman $45,000
4160 Main Street
Flushing, NY 11355
Bank of America Credit card $5,500
PO Box 27025 purchases
Richmond, VA 23261
Provident Bank Loan $4,919
Fair Finance Collection $2,476
account charge
off
Arrow Financial Service A.F.S. Assignee $2,476
of Household B
Bradford Bank Foreclosed $1,000
Property
Deficiency
Sprint services $534
Suntrust Bank services $355
The Home Depot Credit card $92
purchases
ROYAL MANOR: Case Summary & 19 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Royal Manor Management, Inc.
3864 Center Road, Suite A-2
Brunswick, OH 44212
Tel: (330) 225-9080
Bankruptcy Case No.: 08-50421
Type of Business: The Debtor owns and manages real estate.
Chapter 11 Petition Date: February 12, 2008
Court: Northern District of Ohio (Akron)
Judge: Marilyn Shea-Stonum
Debtor's Counsel: Mark Schlachet, Esq.
2nd Floor
3637 South Green Road
Beachwood, OH 44122
Tel: (216) 896-0714
Total Assets: $7,357
Total Debts: $15,066,772
Debtor's 19 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
David Hochman Trustee for P.F. judgment $5,559,515
Family Trust
Dinn, Hochman & Potter
5910 Landerbrook Drive,
Suite 200
Cleveland, OH 44124
Orion Care Services, L.L.C. credit line $3,007,978
315 East Eisenhower Parkway,
Suite 212
Ann Arbor, MI 48108
BankFirst loan $720,000
P.O. Box 458
Toronto, SD 57268
American Express $821,480
P.O. Box 1270
Newark, NJ 07101-1270
National City Bank loan $672,221
P.O. Box 400177
Pittsburgh, PA 15268
New York Commercial Bank loan $342,015
960 Avenue of the America's,
11th Floor
New York, NY 10001
McKesson Medical Minnesota goods $316,501
Supply
P.O. Box 630693
Cincinnati, OH 45274
Benesch Friedlander services $300,681
2300 B.P. Tower
200 Public Square
Cleveland, OH 44114
Lorain County Board M.R.D.D. summons of complaint $118,338
Joseph & Lauren Pilla judgment $75,000
North Coast Architects services $65,272
Porsche Financial Services vehicle lease $57,114
Donald G. Bohning & Associates services $52,883
Chase complaint $51,909
Bank of America $50,657
Chase Cardmember Services $40,400
Kevin Rotenberry judgment $40,000
Damon Industries injunction against $32,112
asset sale
Meyers, Roman, Friedberg & services $28,870
Lewis
SCO GROUP: Secures $100 Million to Finance Plan of Reorganization
-----------------------------------------------------------------
Stephen Norris Capital Partners and its partners from the Middle
East have agreed to provide up to $100 million to finance a plan
of reorganization for The SCO Group Inc.
As part of the financing, SNCP will take a controlling interest in
the company, while taking it private. As a result, SCO is poised
to emerge from Chapter 11 of the United States Bankruptcy Code in
the coming year. The board of directors of SCO has unanimously
determined that this financing and plan of reorganization is in
the best long-term interest of SCO and its subsidiaries, well as
its customers, shareholders, creditors and employees.
"Not only will this deal position us to emerge from Chapter 11,
but it also marks an exciting future for our business," said Jeff
Hunsaker, president and chief operating officer of SCO Operations.
"This significant financial backing is positive news for SCO's
customers, partners and resellers who continue to request upgrades
and rely upon SCO's UNIX services to drive their business
forward."
SNCP has developed a business plan for SCO that includes unveiling
new product lines aimed at global customers. This reorganization
plan will also enable the company to see SCO's legal claims
through to their full conclusion.
"We saw a tremendous investment opportunity in SCO and its vast
range of products and services, including many new innovations
ready or soon to be ready to be released into the marketplace,"
Stephen Norris, managing partner for SNCP, said. "We expect to
quickly develop these opportunities, and to stand behind SCO's
existing base of customers and partners."
About SCO Group
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 United States 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.
* * *
As reported in the Troubled Company Reporter on Feb. 1, 2008,
Tanner LC in Salt Lake City, Utah, expressed substantial doubt
about The SCO Group Inc.'s ability to continue as a going concern
after auditing the company's financial statements for the year
ended Oct. 31, 2007. The auditing firm reported that the company
is a debtor-in-possession under Chapter 11 of the U.S. Bankruptcy
Code, has experienced significant and continuing net losses, and
is faced with substantial contingent liabilities as a result of
certain adverse legal rulings.
SEARS HOLDINGS: Plans to Reduce Workers at Headquarters by 4%
-------------------------------------------------------------
Some 200 of the 5,000 workers at Sears Holdings Corporation's
headquarters will lose their jobs, The Associated Press reports,
based on a Tuesday memo issued by Interim chief executive officer
W. Bruce Johnson. The job cut at Sears' headquarters is part of
Chairman Edward Lampert's plan to cut expenses owed to the decline
in revenues, AP relates.
Sears spokesman, Chris Brathwaite told AP that the the jobs to be
cut are in the Support arm. Sears, AP recalls, had previously
disclosed a plan to spin off into five separate companies, and
Support is among the five spun off companies. Mr. Brathwaite
refused to the specific support positions to be cut but said that
among them are marketing, store operations, customer strategy and
finance, AP reveals.
Sears' job cut disclosure follows that of Macy's Inc.'s, J.C.
Penney Co.'s and Home Depot Inc.'s.
About Sears Holdings
Based in Hoffman Estates, Illinois, Sears Holdings Corporation
(NASDAQ: SHLD) - http://www.searsholdings.com/-- parent of Kmart
and Sears, Roebuck and Co., is a broadline retailer with
approximately 3,800 full-line and specialty retail stores in the
United States and Canada.
* * *
As reported in the Troubled Company Reporter on Jan. 30, 2008,
Sears Holdings Corp.'s (BB/Stable/--) announcement that Aylwin
Lewis (currently CEO and president) will leave the company has no
immediate impact on Sears' credit rating or outlook. W. Bruce
Johnson (currently executive vice president, supply chain and
operations) has been appointed interim CEO and president. Led by
Edward Lampert, chairman of Sears and CEO of ESL Investments Inc.,
which owns approximately 42% of Sears' common stock (as of Feb. 3,
2007), a search has begun for a permanent CEO.
SENIOR HOUSING: Fitch Holds and Withdraws 'BB+' Trust Ratings
-------------------------------------------------------------
Fitch Ratings affirmed and simultaneously withdrew the ratings of
Senior Housing Properties Trust as:
Senior Housing Properties Trust
-- Issuer Default Rating affirmed and withdrawn at 'BB+';
-- Senior unsecured notes affirmed and withdrawn at 'BB+';
-- Unsecured Revolving Credit facility affirmed and withdrawn at
'BB+'
The Ratings Outlook is Stable.
Fitch will no longer provide analytical coverage of this issuer.
SIRVA INC: Asks Court to Employ Ernst & Young as Accountants
------------------------------------------------------------
SIRVA Inc. and its debtor-affiliates seek the authority of the
U.S. Bankruptcy Court for the Southern District of New York to
employ Ernst & Young LLP as their accountants, auditors, and tax
advisors in connection with their Chapter 11 cases, nunc pro tunc
to their Chapter 11 protection filing.
Eryk J. Spytek, senior vice president, general counsel and
secretary of SIRVA, Inc., tells the Court that Ernst & Young is a
national professional services firm, with more than 1,600
partners and over 17,000 professional staff. Significantly,
Ernst & Young has extensive experience in delivering accounting,
auditing, and tax services in Chapter 11 cases.
Mr. Spytek adds that the Debtors have previously employed Ernst &
Young for audit, accounting, and tax services, allowing the firm
to gain considerable knowledge and familiarity in the Debtors'
business affairs.
The Debtors disclose that 90 days immediately preceding the
Petition Date, they paid Ernst & Young $1,574,573 in fees. As of
the Petition Date, the Debtors did not owe the firm any amount in
respect of prepetition services.
Also, as of the Petition Date, Ernst & Young held a retainer of
$330,726. Upon approval of Ernst & Young's retention, the firm
will waive its right to receive any prepetition fees or expenses
incurred.
Ernst & Young has agreed to provide accounting, auditing, and tax
services, including integrated audit services; internal control
audit services; financial statement audit services; tax advisory
services relating to the Debtors' Chapter 11 filings; tax
compliance services; services relating to an earnings and profit
and basis study of the Debtors' foreign subsidiaries; services
relating to an Israel withholding tax project; and miscellaneous
tax advisory services.
In exchange for accounting and auditing services, the Debtors
will pay Ernst & Young:
Professional Hourly Rate
------------ -----------
Partners and Principals $600
Executive Directors $525
Senior Managers $495
Managers $375
Seniors $285
Staff $195
For tax compliance assistance services, the Debtors will pay:
Professional Hourly Rate
------------ -----------
Executive Director/ $470-$560
Principal/Partner
Senior Manager $445-$470
Manager $400-$445
Senior Staff $295-$320
Staff $130-$190
Client Serving Associate $85-$100
For earnings and profits, and basis study services, the Debtors
will pay:
Professional Hourly Rate
------------ -----------
National Executive/ $700-$925
Principal/Partner
Executive Director/ $550-$730
Principal/Partner
Manager/Senior Manager $460-$580
Senior/Staff $150-$370
James J. Doyle, a partner at Ernst & Young, assures the Court
that the firm is a "disinterested person," as the term is defined
in Section 101(14) of the Bankruptcy Code.
About SIRVA Inc.
Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets :
SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation
solutions to a well-established and diverse customer base. The
company handles all aspects of relocation, including home purchase
and home sale services, household goods moving, mortgage services
and home closing and settlement services. SIRVA conducts more
than 300,000 relocations per year, transferring corporate and
government employees along with individual consumers. SIRVA's
brands include Allied, Allied International, Allied Pickfords,
Allied Special Products, DJK Residential, Global, northAmerican,
northAmerican International, Pickfords, SIRVA Mortgage, SIRVA
Relocation and SIRVA Settlement.
The company and 61 of its affiliates filed separate petitions for
Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No.
08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is
representing the Debtor. At its bankruptcy filing, the company
reported total assets of $924,457,299 and total debts of
$1,232,566,813 for the quarter ended Sept. 30, 2007.
(Sirva Inc. Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
SIRVA INC: MLF Investments Discloses Ownership of Shares
--------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission dated February 11, 2008, Matthew L. Feshbach, managing
member of MLF Investments, LLC, disclosed that as of February 8,
2008:
* MLF Offshore Portolio Company, L.P., owned 349,541 shares of
SIRVA, Inc., common stock aggregating $403,370, and
4,795,666 shares issuable upon conversion of 8% of SIRVA,
Inc.'s convertible perpetual preferred stock aggregating
$14,387,348. The funds used to purchase the shares and
convertible preferred stock came from MLF Offshore's working
capital.
* MLF Partners 100, L.P., owned 9,425 shares aggregating
$10,876 and convertible preferred stock convertible into
an additional 204,333 shares, aggregating $612,652. The
funds used to purchase the shares and convertible preferred
stock came from MLF Partners 100's working capital.
At the close of business on February 8, 2008, Mr. Feshbach, MLF
Investments, MLF Holdings, LLC, and MLF Capital Management, L.P.,
owned 5,358,965 shares -- including MLF Offshore's 4,795,666
shares and 204,333 shares issuable upon the conversion of MLF
Partners 100's convertible preferred stock -- constituting
approximately 6.6% of the outstanding shares.
MLF Offshore and MLF Cayman GP, Ltd., owned 5,145,207 shares --
including MLF Offshore's 4,795,666 shares, issuable upon the
conversion of preferred stock within 60 days -- constituting
approximately 6.4% of the outstanding shares.
MLF Partners 100 owned 213,758 shares -- including 204,333 shares
issuable upon the conversion of its preferred stock within 60
days -- constituting less than one percent of the outstanding
shares.
MLF Investments, MLF Holdings, MLF Capital and Mr. Feshbach share
the power to vote and dispose of or to direct the vote and
disposition of 5,358,965 shares, or 6.6%, of the outstanding
shares. MLF Offshore and MLF Cayman has the power over 5,145,207
shares, or 6.4%, of the outstanding shares. MLF Partners 100 has
the power over 213,758 Shares, or less than one percent, of the
outstanding shares.
In a separate SEC filing dated February 6, 2008, MLF Investments
disclosed that it disposed a total of 8,663,798 shares of common
stock at $0.01 par value.
A total of 75,858,757 shares of SIRVA's common stock are
outstanding as of November 1, 2007.
About SIRVA
Inc.
Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets :
SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation
solutions to a well-established and diverse customer base. The
company handles all aspects of relocation, including home purchase
and home sale services, household goods moving, mortgage services
and home closing and settlement services. SIRVA conducts more
than 300,000 relocations per year, transferring corporate and
government employees along with individual consumers. SIRVA's
brands include Allied, Allied International, Allied Pickfords,
Allied Special Products, DJK Residential, Global, northAmerican,
northAmerican International, Pickfords, SIRVA Mortgage, SIRVA
Relocation and SIRVA Settlement.
The company and 61 of its affiliates filed separate petitions for
Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No.
08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is
representing the Debtor. At its bankruptcy filing, the company
reported total assets of $924,457,299 and total debts of
$1,232,566,813 for the quarter ended Sept. 30, 2007.
(Sirva Inc. Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
SIRVA INC: Allowed to Continue Receivables Purchase Program
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized SIRVA Inc. and its debtor-affiliates to assume their
obligations and continue performing under a Receivables Purchase
Program; and to enter into a waiver and first amendment to the
Receivables Sale Agreement.
Since June 2004, one or more of the Debtors and their non-debtor
affiliate, SIRVA Relocation Credit, LLC have maintained a
receivables purchase program with LaSalle Bank National
Association, as agent for certain purchasers participating in the
program.
Specifically, the Purchasers are LaSalle Bank; General Electric
Capital Corporation; Wells Fargo Bank; and Citizens Bank.
As of December 22, 2006, the Debtors that sell Receivables, their
related collections, and the proceeds of the Program are SIRVA
Relocation LLC, Executive Relocation Corporation, and SIRVA
Global Relocation, Inc -- the Originators.
The Originators, as servicers, also continue to service the
Receivables and remit the Collections to SRC. Under the Program,
the Originators sell to SRC their right, title, and interest in
the Receivables, related collections and proceeds. Until the
earlier of September 30, 2008, or the occurrence of certain
termination events, the Purchasers agree to simultaneously
purchase the Interests in the Receivables from SRC.
The Program allows the Originators to convert the Receivables to
cash earlier than if the Originators awaited payment on the
Receivables under their stated terms. This provides the
Originators and the Debtors with a crucial source of liquidity.
In its absence, the Debtors will be forced to increase borrowing
elsewhere. The Program also decreases the Originators' credit
risk by shifting to the Purchasers the risk of nonpayment arising
from the bankruptcy, or other insolvency related problems, of the
obligors on the Receivables.
The Receivables arise from the Originators making loans and
advancing expenses to the customers' employees in connection with
the Relocation Services business.
Specifically, the Receivables generally consist of loans or other
payments that an Originator makes as pasrt of its Relocation
Services business. The loans and payments are used to cover
moving expenses, the employee's down payment on a new home, as
well as to advance certain reimbursable expenses of the employee.
Generally, the corporate customer reimburses the Originator the
amounts paid, and indemnifies the Originator for losses arising
from a relocating employee's failure to repay owed amounts to the
Originator. In addition, many of the loans and equity payments
are supported by a deed to the home out of which the employee is
moving as part of the relocation.
Program Mechanics
The Program involves two complementary sets of transactions: (1)
the Originators sell the Receivables to SRC, and (2) the
Purchasers purchase interests in pools of those Receivables from
SRC.
The Originators sell the Receivables on a daily basis to SRC
pursuant to a Purchase Agreement. Under the Purchase Agreement
and a Receivables Sale Agreement, the Servicers agree to service
the Receivables, for which they are paid a fee. As the
Receivables are collected by the Servicers, those Collections are
deposited in a "Collection Account." The Agent may then invest
certain amounts in the Collection Account in approved
investments, which are deposited in an "Investment Account."
The Purchase Agreement expressly states that the transfers of
Receivables from each Originator to SRC are intended to be true
sales of the Receivables, and not merely an extension of credit
by SRC to the Originator secured by a pledge of the Receivables.
Under the Receivables Sale Agreement, SRC sells undivided
ownership interests in the Receivables to the Purchasers, which
are unaffiliated third parties.
The Receivables Sale Agreement has two tranches:
(a) the Aggregate Class A Commitment, which provides for
advances of up to 85% of the face value of the Receivable
pools purchased by the Purchasers, and has an aggregate
limit of $163,000,000; and
(b) the Aggregate Class B Commitment, which provides advance
rates of up to 95% of the face value of the Receivable
pools purchased by the Purchasers and has an aggregate
limit of $19,500,000.
The Purchasers commit up to $182,500,000 to purchase Receivables
from the Originators. Although the outstanding principal amount
of Receivables varies, depending on the state of the Originators'
business, the outstanding amounts advanced to the Debtors from
SRC is approximately $164,000,000. The principal balance of the
Receivables sold to SRC as of December 31, 2007, net of
ineligible Receivables, was approximately $184,000,000.
Debtors Worldwide and North American Van Lines, Inc. -- indirect
parent companies of the Originators -- have guaranteed the
performance of the Originators' obligations under the Purchase
Agreement and the Receivables Sale Agreement, pursuant to a
Second Amended and Restated Guaranty in favor of SRC, dated as of
December 22, 2006.
The Guaranty covers, among other things, the Originators'
servicing obligations; obligation to pay SRC for deemed
collections -- Receivables or portions of Receivables that are
purchased by SRC that do not comply with certain eligibility
requirements; and contractual indemnification obligations.
However, the Guaranty does not extend to credit-related losses on
the Receivables.
The Amendments
Prior to the Petition Date, the Guarantors, the Originators, SRC,
LaSalle Bank, and the Purchasers engaged in extensive arm's-
length negotiations to continue the Program, subject to certain
amendments.
The Amendments were negotiated to provide the Purchasers
assurance that the Program would continue to be treated in
accordance with the parties' intent -- as a true sale
transaction -- and to provide protection from the uncertainty of
a chapter 11 case.
The Amendments include:
(1) The Purchasers will waive the Termination Date triggered
by the filing of the bankruptcy cases and related
Termination Events;
(2) The Aggregate Class B Commitment must be fully repaid in
cash by the effective date of the Plan of Reorganization;
(3) The Plan must become effective by April 30, 2008, or a
Termination Date will occur under the Receivables Sale
Agreement, and the Program will terminate unless the
Purchasers will waive the Termination Date;
(4) SIRVA Relo, in its capacity as the Master Servicer, has
agreed to pay certain fees to SRC upon the occurrence of
certain servicing deficiencies;
(5) The frequency of inspections that the Agent is entitled to
schedule is doubled to four a year, with the next
inspection scheduled for April 2008, provided that the
Agent may request an unscheduled audit at any time, in its
sole discretion, with the costs payable by SRC;
(6) SRC is obligated to purchase all Receivables owed by an
individual obligor if it has previously purchased any
Receivables owed by that obligor;
(7) The Debtors have agreed to certain information sharing
guidelines in the Chapter 11 cases;
(8) Changes to the Proposed DIP Facility, the proposed exit
facility, and the Plan of Reorganization without the
consent of the Agent and the Purchasers;
(9) Various other events can cause the Program to go into
amortization, including defaults under the Proposed DIP
Facility or under the exit facility, which will be cross-
defaulted to the Receivables Sale Agreement; and
(10) The Amendments' effectiveness is conditioned on a variety
of matters, including payment of various fees, affirmative
votes from at least two-thirds in amount and one-half in
number of the prepetition lenders that vote on the Plan
of Reorganization, and delivery of certain legal opinions.
Judge James M. Peck authorized the Debtors to:
(i) to assume their obligations and continue performing under
the Purchase Program in accordance with the terms of the
the Receivables Sale Agreement, the Guaranty, and any
related transaction documents; and
(ii) to enter into a waiver and first amendment to the
Receivables Sale Agreement.
Judge Peck ruled that:
(1) the Originators, the Servicers and the Guarantors are
authorized to continue performing under the Receivables
Sale Agreement, the Guaranty, and related Transaction
Documents, as amended;
(2) the parties are authorized to enter into the Amendments;
(3) there is good faith under Sections 363(m) and 364(e) of
the Bankruptcy Code, in the event that the sales of
Receivables are recharacterized as financings;
(4) all amounts advanced to the Debtors from the Collection
Account or the Investment Account after the Petition Date
not exceeding $19,500,000 are granted a superpriority
administrative expense claim as adequate protection, under
Section 364(c)(1);
(5) the Receivables are granted a security interest under
Section 364(c)(2), in case the transactions are
recharacterized as financings;
(6) the relevant Debtors will assume all the Transaction
Documents to which they are parties, subject to a
challenge provision;
(7) the prepetition transactions were true sales, subject to a
challenge provision; and
(8) all of the claims of SRC, the Agent and Purchasers will be
treated under the documents against the relevant Debtors
as administrative expense claims, under Section 503,
subject to a challenge provision.
A full-text copy of the First Amendment to the Third Amended and
Restated Receivables Sale Agreement is available for free at
http://bankrupt.com/misc/Sirva1stAmendedRSA.pdf
About SIRVA Inc.
Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets :
SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation
solutions to a well-established and diverse customer base. The
company handles all aspects of relocation, including home purchase
and home sale services, household goods moving, mortgage services
and home closing and settlement services. SIRVA conducts more
than 300,000 relocations per year, transferring corporate and
government employees along with individual consumers. SIRVA's
brands include Allied, Allied International, Allied Pickfords,
Allied Special Products, DJK Residential, Global, northAmerican,
northAmerican International, Pickfords, SIRVA Mortgage, SIRVA
Relocation and SIRVA Settlement.
The company and 61 of its affiliates filed separate petitions for
Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No.
08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is
representing the Debtor. At its bankruptcy filing, the company
reported total assets of $924,457,299 and total debts of
$1,232,566,813 for the quarter ended Sept. 30, 2007.
(Sirva Inc. Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
SIRVA INC: Trustee Objects to Employment of Conflicts Counsel
-------------------------------------------------------------
The U.S. Trustee for Region 2 objects to the employment of Togut
Segal & Segal LLP as conflicts counsel for Sirva Inc. and its
debtor-affiliates in their Chapter 11 cases, nunc pro tunc to
their bankruptcy filing.
"[T]he Debtors have not disclosed any conflicts necessitating the
employment of conflicts counsel," Diana G. Adams, United States
Trustee for Region 2, tells the Court.
Togut Segal & Segal LLP seeks to perform services upon the
approval of its retention, which at this juncture would solely be
to enable to stay ahead of the learning curve to obviate the need
for them to come up to speed later in the case if an actual
conflict is disclosed, Paul K. Schwartzberg, Esq., trial attorney
for the U.S. Trustee, says.
Mr. Schwartzberg argues that the determinative question in
approving the employment of a professional is whether it is
reasonably necessary to have that professional employed.
Togut Segal is a reputable law firm with experienced lawyers, and
can quickly come up to speed if the need arises, Mr. Schwartzberg
points out.
The U.S. Trustee believes that retention of conflicts counsel
does not appear necessary at this time, and the Debtors' estate
should not bear Togut Segal's auditing costs until an actual
conflict occurs.
According to Mr. Schwartzberg, a Court order approving a
professionals' retention does not establish a right to be paid
from the debtor's estate. The professional must demonstrate that
it's services were necessary and made a beneficial contribution
to the estate.
In the event the Court grants the application, the U.S. Trustee
reserves all rights to object to Togut Segal's fees, including
those fees for services prior to the disclosure of an actual
conflict.
Motion to Hire TS&S as Conflicts
Counsel
As reported in the Troubled Company Reporter on Feb. 13, 2008, the
Debtors propose that Togut Segal will perform services on matters
that the Debtors may encounter which are not appropriately handled
by Kirkland & Ellis LLP, the Debtors' proposed counsel, and other
professionals because of a potential conflict of interest or,
alternatively, which can be more efficiently handled by the firm.
Eryk J. Spytek, senior vice president, general counsel and
secretary of SIRVA, points out that Togut Segal will not perform
the usual scope of services, other than to maintain a familiarity
with the case and progress of the Debtors' reorganization. In the
event there is a conflict of interest requiring immediate
attention, the firm is able to assume its duties without impeding
the progress of the bankruptcy case.
In exchange for the contemplated services, the Debtors will pay
Togut Segal based on the firm's applicable hourly rates:
Professional Hourly Rates
------------ ------------
Partners US$725 - US$845
Paralegals/Associates US$125 - US$625
Counsel US$630 - US$650
Albert Togut, Esq., a partner at Togut Segal, assures the Court
that the firm is a "disinterested person," as the term is defined
in Section 101(14) of the Bankruptcy Code.
About SIRVA Inc.
Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets :
SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation
solutions to a well-established and diverse customer base. The
company handles all aspects of relocation, including home purchase
and home sale services, household goods moving, mortgage services
and home closing and settlement services. SIRVA conducts more
than 300,000 relocations per year, transferring corporate and
government employees along with individual consumers. SIRVA's
brands include Allied, Allied International, Allied Pickfords,
Allied Special Products, DJK Residential, Global, northAmerican,
northAmerican International, Pickfords, SIRVA Mortgage, SIRVA
Relocation and SIRVA Settlement.
The company and 61 of its affiliates filed separate petitions for
Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No.
08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is
representing the Debtor. At its bankruptcy filing, the company
reported total assets of $924,457,299 and total debts of
$1,232,566,813 for the quarter ended Sept. 30, 2007.
(Sirva Inc. Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
SIRVA INC: Files Supplements to Chapter 11 Plan
-----------------------------------------------
Sirva Inc. and its debtor-affiliates delivered to the U.S.
Bankruptcy Court for the Southern District of New York exhibits to
their Chapter 11 Plan of Reorganization.
A. Exit Financing Terms and Conditions
The Debtors' Debtor-in-Possession Credit Agreement contains an
option for the Debtors to convert the DIP Financing into an exit
financing facility after they exit Chapter 11.
The Debtors have included, as an exhibit to their Plan, a summary
of terms and conditions for the proposed revolving credit and
term loan exit facilities. The document is deemed confidential
and for discussion purposes only -- not a commitment to lend.
The salient terms of the revolving credit and term loan exit
facilities are:
1. Reorganized SIRVA Worldwide, Inc., will be the borrower.
Reorganized SIRVA, Inc., CMS Holding, LLC, RS Acquisition
Holding, LLC, and other parties to the Debtor-in-Possession
Credit Agreement will be the guarantors.
2. JPMorgan Chase Bank, N.A. will serve as as administrative
agent for the revolving credit and term loan exit
facilities. J.P. Morgan Securities Inc. will serve as sole
lead arranger and sole bookrunner for the Exit Facility.
The Lenders will consist of a syndicate of financial
institutions, to be arranged by J.P. Morgan Securities.
3. The Exit Facility will be up to $215,000,000, comprised of
a term loan facility of up to $85,000,000, and a revolving
credit facility of up to $130,000,000. The Exit Facility
will have a sublimit of $20,000,000 for swingline loans,
and $60,000,000 for letters of credit. Standby letters of
credit that are outstanding on the closing of the Exit
Facility under the DIP Credit Agreement or the Prepetition
Credit Agreement will be deemed to be issued under the Exit
Facility.
4. Proceeds of Exit Facility will be:
(i) deemed to repay in full all amounts outstanding on
the Exit Closing Date under the Borrower's existing
DIP Credit Agreement;
(ii) used to fund distributions under the Plan on the Exit
Closing Date; and
(iii) used for working capital and general corporate
purposes of the Borrower and its subsidiaries.
The Debtors note that the Exit Credit Agreement will contain
representations and warranties; covenants -- including a covenant
to deliver to the Agent, no later than September 30, 2008; a
five-year business plan which reflects new management's view and
is reasonably acceptable to the Agent and the Exit Lenders;
mandatory prepayment events and events of default -- based on the
DIP Credit Agreement -- customary for exit financings and
otherwise reasonably deemed appropriate by the Exit Lenders.
The pricing, terms and structure contained in the Term Sheet are
subject to modification to ensure a successful syndication of the
Exit Facility.
A full-text copy of the Summary of Terms and Conditions of the
Exit Credit Agreement is available for free at:
http://bankrupt.com/misc/SirvaExitFinancingTerms.pdf
B. Financial Projections
The Debtors' financial projections predict the company will
have a shareholders' deficit through the end of the projections
in 2012.
The financial projections show that completing the prepackaged
Chapter 11 reorganization on March 31, 2008, will result in a
balance sheet with assets of $951,300,000 and debt totaling
$1,081,400,000, with stockholders' deficit of $130,200,000.
The deficit will be reduced to $103,000,000 by 2012.
A full-text copy of the Debtors' Financial Projections is
available for free at
http://bankrupt.com/misc/SirvaFinancialProjections.pdf
C. Liquidation Analysis
The Debtors' liquidation analysis is based on the consolidated
forecasted assets and liabilities of the Debtors as of
November 30, 2007, and estimates the net proceeds available for
distribution if the Debtors were liquidated under Chapter 7 of
the Bankruptcy Code.
(In Thousands)
Recovery
Nov. 2007 ------------------
Net Asset Percent Amount
--------- ------- --------
Current Assets
Cash & Equivalents $20,358 100% $20,358
Investments-ST 38,120 29% 11,210
Net A/R
Relocation A/R 54,905 52% 28,354
Moving A/R 155,333 39% 59,816
Corporate & Other A/R (339 0% -
--------- ------- --------
$210,238 42% $88,170
Relo Properties Receivables 103 0% -
Relo Mortgages Held For Sale 2,758 0% -
Relo Properties Held For Resale 36,522 17% 6,152
Deferred Income Tax-ST 509 0% -
DO-Assets Held For Sale 219 60% 131
Other Current Assets 27,552 13% 3,554
--------- ------- --------
Total Current Assets $336,379 39% $129,575
Long Term Assets
Property, Plant and Equipment
Relocation $9,970 10% $1,002
Moving NA 17,562 24% 4,239
Corporate 15,052 31% 4,721
--------- ------- --------
$42,585 23% $9,963
Intangible Assets 153,558 9% 14,334
Other Long-Term Assets 52,916 85% 45,140
Goodwill 227,193 0% -
--------- ------- --------
Total Long Term Assets 476,252 15% 69,436
--------- ------- --------
Gross Liquidation Proceeds $812,631 24% $199,011
--------- ------- --------
Liquidation Costs
Wind-Down/Liquidation Expense $1,500
Trustee Fees 5,360
Professional Fees and Commissions 8,000
--------
Total Liquidation Costs 14,860
--------
Net Liquidation Proceeds $184,152
--------
Chapter 7 Administrative & Priority Claims
Post-Petition Transactions $2,340
Post-Petition Salaries, Wages, and Benefits 14,784
Post-Petition Lease Obligations 2,824
Post-Petition Other Executory Contracts -
Post-Petition Taxes and Other 300
--------
Total Chapter 7 Admin. & Priority Claims 20,248
--------
Proceeds Available for Distribution
to Senior Lenders $163,904
--------
Total Senior Bank Debt $487,000
--------
Net Recovery to Senior Lenders 34%
========
A full-text copy of the Debtors' Liquidation Analysis Summary is
available for free at
http://bankrupt.com/misc/SirvaLiquidationAnalysis.pdf
About SIRVA Inc.
Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets :
SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation
solutions to a well-established and diverse customer base. The
company handles all aspects of relocation, including home purchase
and home sale services, household goods moving, mortgage services
and home closing and settlement services. SIRVA conducts more
than 300,000 relocations per year, transferring corporate and
government employees along with individual consumers. SIRVA's
brands include Allied, Allied International, Allied Pickfords,
Allied Special Products, DJK Residential, Global, northAmerican,
northAmerican International, Pickfords, SIRVA Mortgage, SIRVA
Relocation and SIRVA Settlement.
The company and 61 of its affiliates filed separate petitions for
Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No.
08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is
representing the Debtor. At its bankruptcy filing, the company
reported total assets of $924,457,299 and total debts of
$1,232,566,813 for the quarter ended Sept. 30, 2007.
(Sirva Inc. Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
SMARTALK TELESERVICES: Gets $30.5MM Settlement Payment from PWC
---------------------------------------------------------------
Goldin Associates LLC has settled a lawsuit brought on behalf of
SmarTalk Teleservices Inc. against the accounting firm
PriceWaterhouseCoopers for its role in the failure of the once
promising telecommunications company. Under the terms of the
settlement, PriceWaterhouseCoopers will pay the trustee
$30.5 million.
Goldin, a financial restructuring and turnaround advisory firm,
was appointed by the U.S. Bankruptcy Court in 2001 to oversee the
liquidation of the failed company.
In the late 1990s, SmarTalk was a rapidly growing publicly-traded
company engaged in the prepaid long-distance telephone calling-
card business. The company pursued a strategy of "rolling up"
other prepaid calling-card companies and ultimately became the
market leader.
In August of 1998, SmarTalk disclosed that it would have to delay
release of its second quarter earnings and restate its financial
results for the prior year. In the aftermath of the disclosure,
the market value of SmarTalk stock plunged and the company lost
access to the capital markets and the financial resources
necessary to fund its business.
The company ran out of money and filed for bankruptcy in Delaware
early the following year. SmartTalk's assets were ultimately sold
in bankruptcy to AT&T, which merged the business into its own
prepaid calling-card business.
PriceWaterhouseCoopers was auditor to SmarTalk and also provided
accounting advice in connection with SmarTalk's acquisitions and
the preparation of its financial statements. Creditors of
SmarTalk sued the accounting firm on behalf of the company for
malpractice relating to its accounting advice, its audit services
and the handling of the financial restatement, among other
matters.
The lawsuit has been pursued since 2001 by Goldin as trustee for
the Worldwide Direct Liquidation Trust, the successor to SmarTalk.
The lawsuit is pending in the United States District
Court for the Northern District of Texas, Dallas Division.
The settlement resolves the last of the various lawsuits brought
in the aftermath of SmarTalk's failure. The funds will be
distributed to former creditors of SmarTalk holding allowed claims
approved by the Bankruptcy Court. The accounting firm will also
release more than $1 million of claims it filed against the
company. The settlement is subject to the approval of the
Bankruptcy Court overseeing SmarTalk's
liquidation.
The settlement will enable Goldin, as trustee, to wind up the
affairs of the Trust and make final distributions to SmarTalk's
former creditors. Creditors of SmarTalk have thus far received
payment of 44.5% on $232.4 million of allowed general unsecured
claims.
Goldin was represented in the SmarTalk litigation by the law firms
Jones Day and Munsch Hardt Kopf and Harr.
About Smartalk Teleservices Inc.
Headquartered in Dublin in Ohio, Smartalk Teleservices, Inc.,
provides prepaid telecommunications products and services. The
Company filed for Chapter 11 protection on Jan. 19, 1999 (Bankr.
Del. Case No.99-00109). James L. Patton, Esq., at Young, Conaway,
Stargartt & Taylor, represents the Debtor. When it filed for
protection against its creditors, it listed assets of $406.3
million and debts of $226.9 million.
SOLUTIA INC: Challenges DuPont's $1,394,718 Administrative Claim
----------------------------------------------------------------
E.I. DuPont de Nemours and Company, Inc., sought payment of a
$1,394,718 administrative claim, based on a contract pursuant to
which DuPont sold certain product on an exclusive basis to Solutia
Inc.
Representing the Debtors, Thomas L. Kent, Esq., at Paul,
Hastings, Janofsky & Walker LLP, in New York, stated that
DuPont's Claim is invalid because DuPont's basis for the Claim
is without merit. He insisted that Solutia complied with the
requirements of the parties' contract and the second amendment to
that contract is not "null and void."
Although the Second Amendment was subject to the satisfactory
conclusion of a third party auditor that the terms of the "Meet
or Release" clause of the Contract were met, neither the Second
Amendment nor any other agreement entered into between the
parties provided that BDO Seidman, LLP's -- the third party
auditor -- report was final and binding and not subject to court
review, Mr. Kent argued.
Until the Debtors have an opportunity to conduct discovery and
have an opportunity to challenge Dupont's Claim, the U.S.
Bankruptcy Court for the Southern District of New York should
not allow it, Mr. Kent asserted.
In the alternative, the Debtors asked the Court to set a discovery
schedule to allow the Debtors to collect the necessary
information to challenge BDO Seidman's finding.
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) --
http://www.solutia.com/-- and its subsidiaries, engage in the
manufacture and sale of chemical-based materials, which are used
in consumer and industrial applications worldwide.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949).
When the Debtors filed for protection from their creditors, they
listed $2,854,000,000 in assets and $3,223,000,000 in debts.
Solutia is represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP,
in New York, as lead bankruptcy counsel, and David A. Warfield,
Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St.
Louis Missouri, as special counsel. Trumbull Group LLC is the
Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira
S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss
Hauer & Feld LLP represent the Official Committee of Unsecured
Creditors, and Derron S. Slonecker at Houlihan Lokey Howard &
Zukin Capital provides the Creditors' Committee with financial
advice. The Official Committee of Retirees of Solutia, Inc., et
al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke,
Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne,
LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E.
Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter
Young & Rediker, LLC, in Birmingham, Alabama.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007,
the Debtor re-filed a Consensual Plan & Disclosure Statement and
on Nov. 29, 2007, the Court confirmed the Debtors' Consensual
Plan. (Solutia Bankruptcy News, Issue No. 118; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
* * *
As reported in the Troubled Company Reporter on Dec. 10, 2007,
Standard & Poor's Ratings Services assigned its 'B+' loan rating
to Solutia Inc.'s (D/--/--) proposed $1.2 billion senior secured
term loan and a '3' recovery rating, indicating the likelihood of
a meaningful (50%-70%) recovery of principal in the event of a
payment default. The ratings are based on preliminary terms and
conditions. S&P also assigned its 'B-' rating to the company's
proposed $400 million unsecured notes.
Standard & Poor's expects to assign its 'B+' corporate credit
rating to Solutia if the company and its subsidiaries emerge from
Chapter 11 bankruptcy proceedings in early 2008 as planned. S&P
expect the outlook to be stable.
SOLUTIA INC: Settles Dispute on Bayer/Lanxess Claims' Treatment
---------------------------------------------------------------
Bayer Corporation acquired Monsanto Company's styrenics business
pursuant to an Asset Purchase Agreement dated Dec. 31, 1995.
Monsanto later assigned the APA to Solutia Inc. in September
1997, as part of Solutia's spin off from Monsanto.
Solutia and Bayer were parties to a Resimene Lease and Operating
Agreement dated July 29, 1999. Solutia terminated the Resimene
Agreement on June 28, 2000, with a termination fee of $2,922,300,
payable to Bayer in 18 monthly installments. As of the bankruptcy
filing, Solutia owed $432,761 to Bayer for the two remaining
installment payments.
Bayer and Monsanto were also parties to an Indian Orchard Lease
and Services Agreement dated Oct. 31, 1995. The agreement was
assigned to Solutia as part of the Spin Off. Bayer terminated
the Indian Orchard Agreement, and Solutia agreed to a termination
fee of $1,191,101, payable by Bayer in 18 monthly installments.
As of the bankruptcy filing, Bayer owed $397,034 for the six
remaining installment payments.
As of the bankruptcy filing, Bayer also owed Solutia $295,771 for
certain purchases of adipic acid.
Since the bankruptcy filing, LANXESS Corporation, Bayer AG, Bayer
MaterialScience LLC, and Bayer, have undergone corporate
reorganizations, and as a result, Lanxess currently holds certain
claims of Bayer and MaterialScience.
Solutia objected to these Bayer/Lanxess Parties Claims:
(a) Claim No. 14473 for $432,751 for damages arising out of
Solutia's termination of the Resimene Agreement;
(b) Claim No. 14483 in an unliquidated amount for any and all
damages arising under the APA;
(c) Claim No. 14480 in an unliquidated amount for any and all
damages arising under the APA;
(d) Claim No. 14479 in an unliquidated amount for any and all
damages arising under the APA; and
(e) Claim No. 14475 in an unliquidated amount for any and all
damages arising under the APA.
Solutia also filed Schedule No. 10115234 for $339,771, for
amounts owed by Solutia to Bayer Polymers LLC, now known as
MaterialScience.
Following arm's-length negotiations regarding the resolution and
treatment of the Claims, the parties have agreed, among other
things, that:
* Bayer and Lanxess will be entitled to recoup or offset
$372,034 against the $397,034 owed to Solutia for the
Indian Orchard Termination Fee;
* the Bayer/Lanxess parties will pay Solutia $320,771,
representing the $25,000 balance of the Indian Orchard
Termination Fee after giving effect to the Set-Off, plus
the $295,771 owed for adipic acid purchases;
* upon approval of the Stipulation, Claim No. 14473 will be
treated as an Allowed General Unsecured Claim in Class 13
in the reduced amount of $60,727;
* upon approval of the Stipulation, the Bayer/Lanxess Parties
will waive and release the remainder of the Claims, without
impact to (i) the treatment of Claim Nos. 14474, 14476,
14477 and 14478, all of which have been classified as
Legacy Site and Retained Site Environment Liability Claims
under the Debtors' confirmed Fifth Amended Plan of
Reorganization, and (ii) Claim No. 7075 filed by Lanxess
subsequently sold and assigned to a third party;
* pursuant to a separate agreement between Solutia and the
claim buyer, Claim No. 7075 will be allowed as a general
unsecured non-priority claim of $322,656; and
* Solutia's Objection will be deemed withdrawn with respect
to the Claims; and
* upon approval of the Stipulation, Solutia will be required
to reserve the amount of the Allowed Claim in the Disputed
Claims Reserve on account of the Claims.
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) --
http://www.solutia.com/-- and its subsidiaries, engage in the
manufacture and sale of chemical-based materials, which are used
in consumer and industrial applications worldwide.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949).
When the Debtors filed for protection from their creditors, they
listed $2,854,000,000 in assets and $3,223,000,000 in debts.
Solutia is represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP,
in New York, as lead bankruptcy counsel, and David A. Warfield,
Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St.
Louis Missouri, as special counsel. Trumbull Group LLC is the
Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira
S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss
Hauer & Feld LLP represent the Official Committee of Unsecured
Creditors, and Derron S. Slonecker at Houlihan Lokey Howard &
Zukin Capital provides the Creditors' Committee with financial
advice. The Official Committee of Retirees of Solutia, Inc., et
al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke,
Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne,
LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E.
Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter
Young & Rediker, LLC, in Birmingham, Alabama.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007,
the Debtor re-filed a Consensual Plan & Disclosure Statement and
on Nov. 29, 2007, the Court confirmed the Debtors' Consensual
Plan. (Solutia Bankruptcy News, Issue No. 118; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
* * *
As reported in the Troubled Company Reporter on Dec. 10, 2007,
Standard & Poor's Ratings Services assigned its 'B+' loan rating
to Solutia Inc.'s (D/--/--) proposed $1.2 billion senior secured
term loan and a '3' recovery rating, indicating the likelihood of
a meaningful (50%-70%) recovery of principal in the event of a
payment default. The ratings are based on preliminary terms and
conditions. S&P also assigned its 'B-' rating to the company's
proposed $400 million unsecured notes.
Standard & Poor's expects to assign its 'B+' corporate credit
rating to Solutia if the company and its subsidiaries emerge from
Chapter 11 bankruptcy proceedings in early 2008 as planned. S&P
expect the outlook to be stable.
TABS 2006: S&P Ratings on Nine Classes of Notes Tumble to 'D'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 20
classes of notes from two collateralized debt obligation
transactions- Carina CDO Ltd. and TABS 2006-5 Ltd.- to 'D' and
removed five of the lowered ratings from CreditWatch with negative
implications. The lowered ratings follow notices from the
trustees of the two deals that they are in the final stages of the
liquidation process and that the sale proceeds from the cash
collateral, along with the proceeds in the collateral principal
collection account, super-senior reserve account, credit default
swap reserve account, and other sources, will likely not
be adequate to cover the required termination payments to the CDS
counterparty.
The trustees have indicated that they anticipate that proceeds
will be insufficient to cover the funded portion of the super-
senior swap in full, and that it is likely that proceeds will not
be available for distribution to the notes junior to super-senior
swap in the capital structure of both of these transactions.
Both Carina CDO Ltd. and TABS 2006-5 Ltd. are hybrid CDOs of
asset-backed securities collateralized in large part by mezzanine
tranches of residential mortgage-backed securities and other
structured finance transactions.
S&P previously lowered the ratings assigned to all of the notes
from Carina CDO Ltd., on Nov. 8, 2007, following notice from the
trustee of the controlling class' intent to liquidate. This
notice followed a previous notice declaring an event of default
as of Oct. 22, 2007, under section 5.1(h) of the indenture. For
TABS 2006-5, S&P had previously lowered the ratings assigned to
all the notes on Dec. 19, 2007, following notice from the trustee
of the controlling class' intent to liquidate. This notice
followed a previous notice declaring an EOD as of Nov. 1, 2007,
under section 5.1(h) of the indenture.
Ratings Lowered and Removed From CreditWatch Negative
Rating
------
Transaction Class To From
----------- ----- -- ----
Carina CDO Ltd. A-1 D BB/Watch Neg
Carina CDO Ltd. A-2 D CCC-/Watch Neg
Carina CDO Ltd. B-1 D CCC-/Watch Neg
TABS 2006-5 Ltd. A1S D BB/Watch Neg
TABS 2006-5 Ltd. A1J D CCC-/Watch Neg
Ratings Lowered
Rating
------
Transaction Class To From
----------- ----- -- ----
Carina CDO Ltd. B-2 D CC
Carina CDO Ltd. C-1 D CC
Carina CDO Ltd. C-2 D CC
Carina CDO Ltd. D-1 D CC
Carina CDO Ltd. D-2 D CC
Carina CDO Ltd. D-3 D CC
Carina CDO Ltd. X-1 D CC
Carina CDO Ltd. X-2 D CC
TABS 2006-5 Ltd. A2 D CC
TABS 2006-5 Ltd. A3 D CC
TABS 2006-5 Ltd. B1 D CC
TABS 2006-5 Ltd. B2 D CC
TABS 2006-5 Ltd. B3 D CC
TABS 2006-5 Ltd. C D CC
TABS 2006-5 Ltd. I Sub nts D CC
TEMBEC INC: Posts $60 Mil. Net Loss in Quarter Ended December 29
----------------------------------------------------------------
Tembec Inc. generated a net loss of $60 million in the first
quarter ended Dec. 29, 2007, compared to net earnings of
$138 million in the corresponding quarter ended Dec. 30, 2006, and
net earnings of $22 million in the previous quarter.
The December 2006 quarterly financial results included an after-
tax gain of $185 million relating to the recovery of lumber
duties.
After adjusting for this item and certain other items, the Company
would have generated net earnings of $23 million. This compares
to a net loss of $87 million in the quarter ended Dec. 29,
2007, and a net loss of $51 million in the previous quarter.
Recapitalization Plan and Liquidity
On Dec. 19, 2007, the company proposed a recapitalization plan
with these key financial elements:
-- conversion of $1.2 billion of Tembec's unsecured senior
notes into new equity;
-- implementation of a new 4-year term loan of US $300 million
to provide additional liquidity;
-- reduction of Tembec's annual interest expense by
approximately $67 million.
Tembec's trade creditors, well as its obligations to employees,
including under its pension and benefit plans, are unaffected by
the recapitalization and will continue to be paid or satisfied in
the ordinary course of business.
Noteholders holding, in aggregate approximately $795 million of
the outstanding notes, representing approximately 66% of the
outstanding notes, have executed support agreements and have
agreed to vote in favor of and support the recapitalization.
Liquidity at the end of December 2007 was $128 million, consisting
of $22 million of cash and $106 million of unused operating lines
of credit. Immediately after the end of the December quarter, on
Dec. 30, 2007, the company made a $15 million interest payment on
the $350 million unsecured senior notes due June 2009.
Under the terms of the recapitalization, accrued interest to
Dec. 31, 2007, totalling $26 million on the $500 million unsecured
senior notes due February 2011 and the $350 million unsecured
senior notes due March 2012 will be paid on the date the
recapitalization is implemented. The company anticipates that the
recapitalization will be implemented on or about Feb. 29, 2008.
At Dec. 29, 2007, the company's balance sheet showed total assets
of $2.59 billion, total liabilities of $2.08 billion and total
shareholders' equity of $0.51 million.
About Tembec
Headquartered in Montreal Quebec, Tembec Inc. (TSC:TBC) --
http://www.tembec.com -- operates an integrated forest products
business. The company's operations consist of four business
segments: forest products, pulp, paper and chemicals. The forest
products segment consists primarily of forest and sawmills
operations, which produce lumber and building materials. The pulp
segment includes the manufacturing and marketing activities of a
number of different types of pulps. The paper segment consists
primarily of production and sales of newsprint and bleached board.
The chemicals segment consists primarily of the transformation and
sale of resins and pulp by-products. As of Sept. 29, 2007, Tembec
operated manufacturing facilities in New Brunswick, Quebec,
Ontario, Manitoba, Alberta, British Columbia, the states of
Louisiana and Ohio, as well as in Southern France.
* * *
Standard & Poor's placed Tembec Inc.'s long-term foreign and local
issuer credit ratings at 'CC' in Dec. 20, 2007.
TRIBUNE CO: Sam Zell Discloses Company-Wide Restructuring
---------------------------------------------------------
Tribune Co. will lay off about 400 to 500 workers, or 2%, in a
company-wide restructuring prompted by decreasing sales sometime
in March, various reports relate.
Tribune spokesperson told reporters that each of Tribune Co.'s
nine newspapers will decide "its own mix of cuts" but the cuts
will be focused on corporate staff and support services. David D.
Hille at The LA Times said that some 100 to 150 workers will lose
their jobs while Scott Smith of The Chicago Tribune said it will
lay off around 100 workers. Chigago Tribune stated that it's
their first blow since Sam Zell took Tribune Co. private through
an $8.2 billion deal.
Sam Zell told workers in a memo that "significant declines in
advertising volume" are damaging the company's earnings, hence the
lay offs, based on the reports.
Mr. Zell added that he can't assure workers there won't be further
lay offs in the future, reports say.
About Tribune Company
Headquartered in Chicago, Tribune Company (NYSE: TRB) --
http://www.tribune.com/-- is a media company, operating
businesses in publishing, interactive and broadcasting. It
reaches more than 80% of U.S. households and is the only media
organization with newspapers, television stations and websites in
the nation's top three markets. In publishing, Tribune's leading
daily newspapers include the Los Angeles Times, Chicago Tribune,
Newsday (Long Island, New York), The Sun (Baltimore), South
Florida Sun-Sentinel, Orlando Sentinel and Hartford Courant. The
company's broadcasting group operates 23 television stations,
Superstation WGN on national cable, Chicago's WGN-AM and the
Chicago Cubs baseball team.
* * *
As reported in the Troubled Company Reporter on Feb. 12, 2008,
Standard & Poor's Ratings Services placed its ratings on Tribune
Co., including the 'B' corporate credit rating, on CreditWatch
with negative implications.
TRONOX WORLDWIDE: Weak Performance Prompts Moody's Rating Reviews
-----------------------------------------------------------------
Moody's Investors Service placed the ratings of Tronox Worldwide
LLC (corporate family rating of Ba3) under review for possible
downgrade following the fourth quarter earnings announcement that
reflected weaker than expected performance along with the
announcement that management has successfully agreed with its bank
group to relax the debt covenants on its credit facilities. While
the willingness of the banks to work with management to provide
covenant relief is positive for Tronox's liquidity, the need for
such relief, reflecting weakness in the ability to generate free
cash flow, is a concern. Tronox's and the industry's pricing
power has been adversely affected by a downturn in the North
American housing industry, which Moody's feels may be prolonged.
Major end uses for Tronox's Ti02 include architectural paints and
coatings and PVC. This review is expected to be resolved by the
end of March 2008. Moody's review will examine the company's
ratings given the lack of improvement in financial metrics over
the past year, the potential impact of a slowdown in the US
economy in 2008, potential further weakness in the company's
titanium dioxide businesses, understanding of other possible
strategic options, and the likelihood of other means of generating
cash.
On Review for Possible Downgrade:
Issuer: Tronox Worldwide LLC
-- Probability of Default Rating, Placed on Review for Possible
Downgrade, currently Ba3
-- Corporate Family Rating, Placed on Review for Possible
Downgrade, currently Ba3
-- Senior Secured Bank Credit Facility, Placed on Review for
Possible Downgrade, currently Ba1
-- Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Downgrade, currently B1
Outlook Actions:
Issuer: Tronox Worldwide LLC
-- Outlook, Changed To Rating Under Review From Negative
In September of 2007, Moody's Investors Service affirmed Tronox's
Ba3 corporate family rating and revised the company's outlook to
negative as Moody's expected continued weakness in Ti02 pricing,
which would likely diminish free cash flow from operations over
the next 12-18 months. Moody's also lowered Tronox's SGL rating
to SGL-3 from SGL-2 reflecting adequate liquidity but also
acknowledging the prospect of weaker cash flows along with an
increased need to utilize bank facilities to fund ongoing cash
needs. S&P also indicated that the prospect of weaker cash flows
could create a need for further amendments over time.
Tronox Worldwide LLC is the third-largest global producer of TiO2,
a white pigment used in a wide range of products for its ability
to impart whiteness, brightness and opacity. TiO2 is used in a
variety of products including paints and coatings, plastics, paper
and consumer products. The company commands a 13% global market
share in TiO2, reporting sales of $1.4 billion for the twelve
months ended Dec. 31, 2007.
TY COBB: Fitch Affirms 'BB' Rating on $17.4MM Revenue Certificates
------------------------------------------------------------------
Fitch Ratings has affirmed the rating on approximately
$17.4 million outstanding Hospital Authority of the City of
Royston, Georgia revenue anticipation certificates (Ty Cobb
Healthcare System, Inc. Project) series 1999 at 'BB'. The Rating
Outlook is Stable.
The rating affirmation is based on Ty Cobb Healthcare System's
favorable liquidity position, strong market share and the
successful progress in implementing its strategic plan. However,
this is offset by historically negative operating trends and an
unfavorable payor mix. Through the nine-month interim period
ending Sept. 30, 2007, Ty Cobb had 248.6 days cash on hand
($37.1 million in unrestricted cash), up from 228.3 days
($33.2 million in unrestricted cash) in fiscal 2006.
Furthermore, Ty Cobb's cushion ratio and cash to debt of 19.6
times and 176.0% are well above Fitch's 2007 below investment
grade category medians of 3.7x and 37.9%. The organization
maintains a dominant inpatient market position of approximately
65%-68% in its primary service area. In addition, management
continues to implement the system's strategic plan by making
significant capital commitments and successfully executing its
physician recruitment plan. In December 2007, the expansion
project to improve service and to ease patient access at Hart
County Hospital was completed on time and under budget. Ty Cobb
also recruited 12 new physicians covering services such as
obstetrics/gynecology, general surgery, pediatrics, and primary
care. Furthermore, Ty Cobb added a physician to its new service
line in internal medicine.
Credit concerns include Ty Cobb's poor operating performance, weak
payor mix and remaining challenges relating to the implementation
of its strategic plan. At Dec. 31, 2006, Ty Cobb recorded a
$3.8 million loss from operations resulting in a negative 6.8%
operating margin. For the 2007 nine-month interim period ending
on Sept. 30, Ty Cobb had a negative 5.8% operating margin.
Located in northeast Georgia and operating in Hart and Franklin
counties, Ty Cobb had a high percentage of gross revenues coming
from Medicaid in fiscal 2007, 14.1%, which has principally lead to
its operating losses. Ty Cobb's high Medicaid load exposes the
organization to further revenue pressure if reimbursement cuts are
made at the state level. Although its inpatient market share is
strong, Ty Cobb must continue to prudently execute its strategic
plan specifically through its physician recruitment efforts to
enhance and broaden its complement of services, with the intent to
retain profitable patient volume and offset its exposure to
governmental payors.
The Stable Outlook is based on the continued implementation of
organization's strategic plan to maintain current liquidity and
leverage levels. Over the near term, Fitch expects operating
measures to be relatively consistent with recent results.
Ty Cobb Healthcare System consists of two hospitals and three
long-term care facilities. The two hospitals capture
approximately 65%-68% of admissions in the service area. The
system had $55.6 million in total operating revenue in fiscal
2006. While there is no covenant to do so in their bond
documents, management discloses to the Nationally Recognized
Municipal Securities Information Repositories quarterly and annual
audited financial information.
UMMA RESOURCES: KES Wants Stay Lifted to Pursue $3.5 Mil. Lawsuit
-----------------------------------------------------------------
Key Energy Services, Inc. asks the U.S. Bankruptcy Court for the
Southern District of Texas to lift the automatic stay imposed in
Umma Resources LLC's Chapter 11 case, in order for the parties to
pursue a jury trial in a state court forum.
Key Energy relates to the Court that it has an ongoing dispute
with the Debtor over the quality of services provided, related
servicing issues, and claims arising from the dispute.
Key Energy contends that it has materially and substantially
performed the services required by its contract with the Debtor,
and further asserts that it has given the Debtor all credits
required by law. Key Energy agreed to absorb the costs associated
with getting the Debtor's well back to the depth it was at when
the pipe became stuck in May 2004, amounting to a $2,627,401
credit to the Debtor's account.
In addition, Key Energy says that it agreed to issue an additional
credit to the Debtor of $100,000 for a diesel spill occurring on
the well site at the end of the job. Thus, the total credits Key
agreed to issue the Debtor was $2,727,410. It submitted invoices
to the Debtor in the amount of $6,313,301. Net of these credits,
the Debtor owes Key the remaining $3,585,891, but has failed and
refused to make payment, relates Key Energy.
In April 2005, the Debtor filed an action against Key Energy in
the District Court of McMullen County, Texas. Key Energy relates
that after almost three years of extensive written discovery,
expert discovery, numerous fact depositions, and receipt of the
rulings by the State Court on the summary judgment and continuance
motions, the two week jury trial in this case was set to commence
on Jan. 28, 2008. However, the trial was set back by the Debtor's
bankruptcy filing.
Counsel for Key Energy argues that it is entitled to prompt relief
from the automatic stay because:
1) lifting the stay will not prejudice the Debtor, as Debtor
chose the state forum, requested a jury in that forum, and
has prosecuted its claims in that court for almost three
years;
2) delaying the State Court Lawsuit will be costly and
prejudicial to Key, because it prepared for the scheduled
trial and appeared before the State Court on Jan 2008, fully
prepared to commence trial; and
3) there is a probability that Key Energy will prevail in the
State Court Lawsuit, as evidenced by the State Court's
rulings in favor of Key.
The Court set a final hearing on the matter on March 10, 2008, at
2:00 p.m.
Based in Portland, Texas, UMMA Resources, LLC, sells oil and gas.
The company filed for Chapter 11 protection on January 27, 2008
(Bankr. S.D. Tex. Case No. 08-20037). Harlin C. Womble, Jr.,
Esq., at Jordan, Hyden, Womble, Culbreth & Holzer, P.C.,
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 protection against it
creditors, it listed assets between $50 million to $100 million
and debts between $1 million to $10 million.
UNITEDHEALTH GROUP: N.Y. Attorney General to File Fraud Case
------------------------------------------------------------
New York's Attorney General, Andrew M. Cuomo, Esq., told reporters
Wednesday that he is planning to file a case against UnitedHealth
Group Inc. and some of its subsidiaries after his review on the
companies' alleged manipulation of reimbursement rates to
customers.
Mr. Cuomo spent six months investigating the fraud case of
UnitedHealth and sent subpoenas to 16 of the United States'
largest health insurers, including Aetna Inc., Cigna Corp., and
Empire Cross Blue Shield related to fraud, reports relate.
According to the reports, Mr. Cuomo claims that UnitedHealth's
Ingenix runs a defective database used by insurers as basis in
reimbursement rates for medical costs outside the network. Mr.
Cuomo also found that two of UnitedHealth's units conscentiously
undervalued the doctors' fees of customers who are not members of
the insurance network, and made them pay higher share of the fees.
The reports speculate a looming tightening of regulations in the
health insurance sector due to the recent findings.
UnitedHealth Responds to NY Attorney General
UnitedHealth issued on its Web site Wednesday a response to the
announcement made by the office of the New York Attorney General.
UnitedHealth says it advocates fair and appropriate payment for
New York physicians and consumers and believes in delivering high
quality, dependable database tools.
The company asserts that it is in the midst of on-going
discussions with the Attorney General's office and we will
continue to cooperate fully. UnitedHealth Group recognizes the
excellent health care delivered to patients by the physicians of
New York and is committed to fair and appropriate payment for
physicians, the state's other health care providers and consumers.
The company also believes in delivering high quality and
dependable database tools.
The reference data is rigorously developed, geographically
specific, comprehensive and organized using a transparent
methodology that is very common in the health care industry,
UnitedHealth says. It believes these reference tools add
substantial value to the health care system by providing all
participants -- providers, payers and consumers -- with a long-
standing transparent, consistent, and neutral line of sight into
the health care market, its costs and performance.
The company adds that health plans and other health care payers
use these reference tools to independently negotiate their own
reimbursement schedules, establish fees for out-of-network care,
negotiate provider service contracts and review claims for their
members and consumers.
Ingenix Inks Strategic Alliance with ACS
As reported in the Troubled Company Reporter on Jan. 9, 2008,
Affiliated Computer Services Inc. and Ingenix, a UnitedHealth
Group Inc. subsidiary, have disclosed a strategic alliance to
provide Medicaid Management Information Systems decision support
solutions to state governments.
Under the terms of the alliance agreement, the two companies
will work with each other to supply decision support solutions
for Affiliated Computer's state Medicaid Systems initiatives.
About Ingenix
Ingenix, -- http://www.ingenix.com/-- a wholly owned subsidiary
of UnitedHealth Group Inc. (NYSE: UNH), transforms organizations
and improves health care through information and technology.
Organizations rely on its innovative products, services and
consulting to improve the delivery and operations of their
business.
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.
VILLAGEEDOCS INC: Secures Up to $1.5M Asset-Based Line of Credit
----------------------------------------------------------------
VillageEDOCS Inc. disclosed in a regulatory filing Monday that it
has entered into agreement for an asset-based line of credit with
The Private Bank of The Peninsula, up to a maximum commitment
amount of $1.5 million. Advances will generally be limited to 85%
of eligible domestic accounts receivable. The interest rate is
floating and is calculated at Wall Street Journal prime plus 3% on
the cash borrowed. Interest on outstanding borrowings is payable
monthly
A facility fee of $15,000 is payable to the Bank in connection
with the Line. A finder's fee in the amount of $50,000 is payable
by the company to Dragonfly Capital Partners LLC in addition to a
warrant to purchase 2,419,355 shares of its restricted common
stock at an exercise price of $0.062 per share through Feb. 6,
2013.
Outstanding advances under the Line will be secured by a first
lien position on all of company's accounts receivable, contract
rights, chattel paper, documents, and payment and by a second lien
on its inventory, intellectual property, and equipment.
About VillageEDOCS
VillageEDOCS Inc. (OTC BB: VEDO) -- http://www.villageedocs.com/-
- through its MessageVision subsidiary, is a provider of
comprehensive business-to-business information delivery services
and products for organizations with mission-critical needs,
including major corporations, government agencies and non-profit
organizations. Through its Tailored Business Systems subsidiary,
VillageEDOCS provides accounting and billing solutions for county
and local governments. Through its Resolutions subsidiary,
VillageEDOCS provides products for document management, document
imaging, electronic forms, document archiving, and e-mail
archiving. Through its GoSolutions subsidiary, VillageEDOCS
provides enhanced voice and data delivery services.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 19, 2007,
KMJ Corbin & Company LLP expressed substantial doubt about
VillageEDOCS Inc.'s ability to continue as a going concern after
auditing the company's financial statements for the years ended
Dec. 31, 2006, and 2005. The auditing firm pointed to the
company's recurring losses and working capital deficit.
VOLT INFORMATION: Expects to Incur $12 Mil. Loss on Telecomm Srvs.
------------------------------------------------------------------
Volt Information Sciences Inc. reported that it anticipates
incurring a charge in its Telecommunications Services segment for
the first quarter of its 2008 fiscal year that ended Jan. 27,
2008, which it estimates will not exceed $12 million on an after
tax basis.
The company learned that it may not be reimbursed for certain work
performed under an installation contract. The charge is to
establish a reserve for certain costs included in inventory
related to work performed and for additional costs expected to be
incurred to complete that work under the contract. The charge
includes a provision for contract add-ons, out of scope work and
rework.
While the company relates that it is entitled to be compensated
for a certain portion of the amount included in the reserve, it
cannot at this time determine the amount for which it will be
reimbursed.
The company noted that it traditionally reports approximately
break even results for the first quarter of its fiscal years and,
therefore, will report a pre-tax loss for the first quarter of its
2008 fiscal year. The company has not yet determined whether any
of the charge relates to its prior fiscal year which ended
Oct. 28, 2007. However, since the company does not record revenues
until job completion and customer acceptance of the work,
recognized revenues will not be impacted.
The company emphasized that its estimate is based on its present
analysis of the information available to it, and is preliminary.
"The company is in the process of taking the necessary steps to
assure that the situation is corrected," Steven A. Shaw, president
of Volt, stated.
About Volt Information
Headquartered in New York City, Volt Information Sciences Inc.
(NYSE: VOL) -- http://www.volt.com/-- provides national Staffing
Services and Telecommunications and Information Solutions with a
Fortune 100 customer base. Operating through a network of over
300 Volt Services Group branch offices, the Staffing Services
segment fulfills IT and other technical, commercial and industrial
placement requirements of its customers, on both a temporary and
permanent basis. The Telecommunications and Information Solutions
businesses, which include the Telecommunications Services,
Computer Systems and Telephone Directory segments, provide
complete telephone directory production and directory publishing;
a full spectrum of telecommunications construction, installation
and engineering services; and advanced information and operator
services systems for telephone companies.
* * *
Volt Information Sciences Inc. continues to carry Fitch Ratings'
'BB' issuer default rating rating, which was placed in June 2006.
VONAGE HOLDINGS: Dec. 31 Balance Sheet Upside-Down by $72 Million
-----------------------------------------------------------------
Vonage Holdings Corp. reported Wednesday results for the quarter
and year ended Dec. 31, 2007.
At Dec. 31, 2007, the company had $465.0 million in total assets
and $537.4 million in total liabilities, resulting in a
$72.4 million total stockholders' deficit.
For the fourth quarter of 2007, the company reported a net loss of
$11.0 million. Excluding certain charges, net loss narrowed to
$9.0 million, down from $65.0 million reported in the fourth
quarter 2006. Adjusted operating income excluding certain charges
was $6.0 million in the quarter, a significant improvement from a
loss of $53.0 million in the year-ago quarter.
Revenue for the fourth quarter 2007 increased to $216.0 million,
up 19.0% from $181.0 million in the fourth quarter 2006, driven by
an increase in subscriber lines.
Jeffrey Citron, Vonage chairman, said, "Although 2007 was a
difficult period marked by numerous legal challenges, Vonage
maintained its focus on improving the business. We improved our
marketing efficiency, reduced our cost structure and for the first
time in our history, generated positive adjusted operating income
in the fourth quarter. Looking to 2008, we are confident in our
ability to grow the business profitably and provide customers
innovative, feature-rich and cost-effective communications
services."
In the fourth quarter 2007, direct cost of telephony services was
$54.0 million, up from $52.0 million a year ago and in line with
the third quarter 2007.
Direct cost of goods sold for the quarter was $17.0 million, up
from $12.0 million in the year-ago quarter and in line with the
prior quarter. Direct margin increased to 67.0% of revenues from
65.0% in the year-ago quarter.
Selling, general and administrative expense excluding certain
charges was $77.0 million, down from $82.0 million in the year-ago
quarter, and $81.0 million sequentially.
Pre-marketing operating income excluding certain charges was
$81.0 million, up from $49.0 million in the year-ago quarter and
$71.0 million sequentially.
Marketing expense for the quarter was $63.0 million, or 29.0% of
revenue, down sharply from $96.0 million, or 53.0% of revenue a
year ago. Marketing expense was up slightly from the third
quarter 2007.
Vonage added 56,000 net subscriber lines during the quarter to end
the year at nearly 2.6 million lines.
Excluding certain charges, adjusted income from operations was
$6.0 million in the fourth quarter 2007, up from a loss of
$53.0 million in the year ago quarter and a loss of
$1.0 million sequentially. The company generated $3.0 million in
adjusted operating income in the fourth quarter 2007. John Rego,
Vonage chief financial officer said, "This is a significant
accomplishment for the company and reflects our ability to grow
while effectively managing costs. We reached this milestone ahead
of plan, and did so in a turbulent year."
Current cash and marketable securities and restricted cash on
Dec. 31, 2007 was $190.0 million. This includes $39.0 million in
restricted cash used as collateral for routine business
operations. The change in cash from the prior quarter was driven
by settlement payments of $202.0 million, capital expenditures of
$9.0 million, cash provided from operations of $15.0 million and
an $8.0 million increase in restricted cash.
Year-End 2007 Results
Revenue for 2007 increased to $828.0 million, up 36.0% from
$607.0 million in 2006. Adjusted loss from operations excluding
certain charges narrowed to $46.0 million from $238.0 million in
2006. Net loss excluding certain charges in 2007 narrowed to
$90.0 million from $286.0 million the prior year. GAAP net loss
was $265.0 million in 2007.
Vonage added 356,000 net subscriber lines in 2007 and finished the
year with nearly 2.6 million lines in service, 16.0% above the
year-ago level of 2.2 million lines.
Convertible Debt Refinancing Update
The company with its financial advisors is currently in
discussions with several parties regarding a refinancing of its
$253.0 million convertible debt.
Restatement
Vonage disclosed that the company's management, in consultation
with the company's Audit Committee and independent registered
public accounting firm, will be restating the company's financial
statements for the second and third quarters of 2007 in order to
correct the amount of non-cash stock compensation expenses
recorded by the company for those periods. Accordingly, the
company's financial statements for such periods should not be
relied on.
Due to the departure of the company's former chief executive
officer, certain senior executives and personnel impacted by the
company's reduction in force during the second and third quarters
of 2007, there was a corresponding forfeiture of a large number of
stock awards, and the company determined that actual forfeitures
as a result of these actions exceeded previous estimates. As a
result, non-cash stock compensation expense should have been
reduced concurrent with the resignation of these employees and an
adjustment of stock-based compensation as required by SFAS 123R
should have been recorded at that time.
About Vonage Holdings
Headquartered in Holmdel, New Jersey, Vonage Holdings Corp.
(NYSE:VG) -- http://www.vonage.com/-- provides broadband
telephone services with nearly 2.6 million subscriber lines. The
company's Residential Premium Unlimited and Small Business
Unlimited calling plans offer consumers unlimited local and long
distance calling, and features like call waiting, call forwarding
and voicemail for a flat monthly rate. Vonage's service is sold
on the web and through national retailers including Best Buy,
Circuit City, Wal-Mart Stores Inc. and Target and is available to
customers in the U.S., Canada and the United Kingdom.
WARNER MUSIC: Moody's Cuts Corp. Rating to B1 on Decline in Sales
-----------------------------------------------------------------
Moody's Investor Services lowered Warner Music Group Corp.'s
corporate family rating and probability of default rating to B1
from Ba3 and changed the rating outlook to stable from developing.
In addition, Moody's lowered WMG Holdings Corp.'s senior discount
notes rating to B3 (LGD6, 95%) from B2 (LGD6, 95%) as well as the
ratings of WMG Acquisition Corp.'s senior secured loan to Ba3
(LGD3, 30%) from Ba2 (LGD2, 29% ) and WMG Acquisition Corp.'s
senior subordinated notes to B3 (LGD5, 84%) from B2 (LGD5, 84%).
Moody's also lowered WMG's speculative grade liquidity rating to
SGL-3 from SGL-2.
This rating actions reflect the ongoing challenges within the
recorded music industry, most-notably, the rapid decline in
physical sales which is outpacing digital growth. "While the
music industry has shown weakness for some time, the decline in
physical sales exceeds Moody's prior expectations and, as a
consequence, has led to weaker credit protection measures for WMG
than Moody's had previously anticipated (including higher leverage
and less free cash flow)", noted Senior Vice President, Christina
Padgett. The B1 rating incorporates Moody's view that WMG will
continue to experience deterioration in its recorded music
business but will modestly benefit from growth in digital music
sales as well as from the greater stability and profitability it
continues to derive from its music publishing assets. Further,
the rating action reflects the acquisitive nature of the company
in light of the ongoing consolidation in the music industry and
its potential impact on financial flexibility.
WMG's SGL-3 speculative grade liquidity rating reflects a
significant decline in balance sheet cash in Q1 2008, which
reflects in part an increase in accounts receivable due to holiday
sales that occurred toward the end of Q1 2008, and the prospect of
reduced flexibility under the company's financial covenants. The
SGL-3 rating also reflects Moody's belief that WMG will remain in
compliance with its financial covenants throughout the fiscal
year, although the leverage covenant in particular may be tight.
However, Moody's notes that future step downs will likely require
an amendment, potentially as early as 2009.
The stable outlook reflects Moody's expectation that WMG will
generate sufficient EBITDA and cash flows to maintain credit
metrics at current levels and remain in compliance with its Credit
Agreement. S&P's outlook also assumes a continued challenging
climate as the recorded-music industry is further negatively
impacted by steady declines in CD sales, piracy, lack of
compelling new artists and artist migration. Moody's believes
that there is sufficient room in the current rating for the
company to continue pursuing modest acquisitions without negative
pressure.
Warner Music Group Corp., headquartered in New York, is a leading
music content company, with domestic and international operations
in recorded music and music publishing.
WILLIAM VERNER: Case Summary & 12 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: William L. Verner, III
6213 Condon Avenue
Los Angeles, California 90056
Bankruptcy Case No.: 08-11853
Chapter 11 Petition Date: February 13, 2008
Court: Central District of California (Los Angeles)
Judge: Sheri Bluebond
Debtor's Counsel: Steven R. Fox, Esq.
17835 Ventura Boulevard Ste 306
Encino, California 91316
Tel: 818-774-3545
Fax: 818-774-3707
Estimated Assets: $500,001 to $1 million
Estimated Debts: $1,000,001 to $10 million
Debtor's list of its 12 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Countrywide Home Lending conventional $555,977
Attn: Bankruptcy real estate
Correpondence, mortgage;
P.O. Box 5170 value of
Simi Valley, CA 93062 security:
unknown
Washington Mutual Mortgage real estate; $515,546
Washington Mutual, value of
Attn: Bankruptcy security:
7255 Bay Meadows Way unknown
Jacksonville, FL 32256
Us Bank automobile $32,049
Attn: Bankruptcy Dept. value of
P.O. Box 5227 security:
Cincinnati, OH 45226 unknown
Bmw Financial Services automobile $27,589
Wells Fargo credit card $11,346
Cmre Financial Services Inc collection $5,974
Glendale
Adventist
Med Center
Capital 1 Bank credit card $1,948
Healthcare Recovery So medical debt $781
Centinela
Freeman Memorial
Security Collection Bu Colection $667
Glandale
Adventist
Med. Center
Cba Collecttion Bureau collection
$368
comcast
Cb Services collection $250
centinela
radiology-Df-Msm
American Express credit card unknown
WORNICK COMPANY: Files for Chapter 11 Protection in Ohio
--------------------------------------------------------
The Wornick Company has reached an agreement with its senior
secured working capital lender and holders of approximately 85% of
its senior secured notes on the terms of a restructuring to reduce
the Company's long term debt. The parties intend to implement the
restructuring through a plan of reorganization under the U.S.
Bankruptcy Code and, accordingly, the Company has filed a
voluntary petition for relief under Chapter 11 of the U.S.
Bankruptcy Code in the Bankruptcy Court for the Southern District
of Ohio in Cincinnati.
In conjunction with the Chapter 11 filing, the Company filed a
plan of reorganization setting forth the terms of the
restructuring. This restructuring contemplates that all trade
creditors and suppliers will be paid in full, and that a new
entity formed by the members of the Bondholder Group will purchase
the equity of the reorganized Company, subject to higher and
better offers.
The Company also filed a motion seeking approval of certain bid
procedures that will govern the solicitation of competing offers
as well as customary buyer protections. The pre-negotiated plan
of reorganization is subject to approval by creditors and the
Bankruptcy Court, and contemplates that the Company will emerge
from Chapter 11 by July of this year.
DDJ Capital $35 Million DIP financing
The Company has received a commitment for up to $35 million in
debtor-in-possession financing from certain funds and accounts
managed by DDJ Capital Management, LLC. Upon Court approval,
which the Company has sought and expects to obtain, the DIP
financing, combined with the Company's operating cash, will
provide sufficient liquidity to refinance the existing senior
secured working capital facility, meet ongoing obligations and
ensure that normal operations continue without interruption. DDJ
has also agreed to provide exit financing to reorganized Wornick
in the event the plan of reorganization is approved and the equity
of the reorganized Company is sold to the Bondholder Group.
"This is a positive step that is in the best interests of the
Company and our employees, customers, suppliers and other
constituents," said Jon Geisler, Chief Executive Officer of The
Wornick Company. "This process will allow us to restructure our
debt to address the financial obstacles that inhibit our ability
to grow while we continue to operate our business. The
restructuring plan provides the least amount of impact to our
customers, employees and suppliers while providing the appropriate
value to our investors"
Mr. Geisler emphasized that the Company expects its day-to-day
operations to continue normally during the Chapter 11 proceedings
and sale process. "We do not anticipate that customers and
suppliers will experience any change in the way we do business
with them," Mr. Geisler said.
"We have taken steps to provide that suppliers get paid in full
in the ordinary course of business for all goods and services
provided, and that customers continue to receive the same quality
products and services to which they are accustomed." The Company
has sought Court authorization to pay suppliers in the ordinary
course of business for pre-petition and post-petition
goods and services.
In addition, the Company has sought Court approval to continue
payment of employee wages, salaries and benefits in the ordinary
course of business, including any wages or benefits relating
to the pre-filing period. The Company anticipates that the Court
will approve this request in the next day or two, thereby ensuring
that employees will be paid and benefits will continue without
interruption or delay.
"We appreciate the ongoing loyalty and support of our employees,"
said Mr. Geisler. "Their dedication and hard work are critical to
our success and integral to the future of the Company. I
would also like to thank our customers, suppliers and business
partners for their continued support during this process."
Mr. Geisler acknowledged that the Company's high level of debt has
been an obstacle to achieving profitability. "Wornick has been
operating with a highly leveraged balance sheet since July of
2004. The high leverage became a problem in 2006 with lower than
expected revenues and significant expenses related to the wind
down and consolidation of our McAllen, Texas facility. These
factors put a strain on our liquidity and we simply cannot
continue to operate effectively with our high debt level," Mr.
Geisler said.
During the past year the Company has made a number of operational
improvements and refocused on its core businesses. "These efforts
have resulted in exceptional delivery performance to our customers
and significant reductions in manufacturing costs," Mr. Geisler
said. "We have been successful in stabilizing our operations and
retaining our workforce. This stabilization has allowed us to not
only retain our customers, but also to continue working with
them on long term projects and business expansion."
"Having already made great strides in strengthening our
operations, we expect to emerge from Chapter 11 with a
strengthened balance sheet and the resources to invest in the
Company," Mr. Geisler said. " In turn, that will allow us to take
advantage of the fundamental strength of the business and our
leading market position."
About The Wornick Company
The Wornick Company is a leading supplier of individual and group
military field rations to the Department of Defense. In addition
the company continues to extend its core capabilities to
commercial markets where its customers include, but are not
limited to, Kraft Foods, Inc., Gerber Products Company, as well as
retail and grocery outlets including Walgreens Co., 7-Eleven, The
Kroger Co., Publix Super Markets and Meijer.
Wornick specializes in the production, packaging, and distribution
of shelf-life, shelf-stable, and frozen foods in flexible pouches
and semirigid products. The firm's two main lines of business are
military rations (approximately 70% of revenues) and co-
manufacturing for leading food brands (30%). The company produces
both individual (including MRE) and group rations (including
Unitized Group Rations-A or UGR-A) for the U.S. military. MREs
comprise about 65% of military revenues.
WORNICK CO: Case Summary & 29 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: The Wornick Company
4700 Creek Road
Cincinnati, OH 45242
Bankruptcy Case No.: 08-10654
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
TWC Holding Corp. 08-10655
TWC Holding LLC 08-10656
Right Away Management Corp. 08-10657
The Wornick Company 08-10658
Right Away Division
The Wornick Company 08-10659
Right Away Division, L.P.
Type of Business: The Debtor group is a major supplier of MREs
(Meals, Ready-to-Eat) and UGR-As (Unitized Group
Rations-A) to the U.S. Department of Defense.
It also produces commercial emergency
preparedness meal kits.
See http://www.wornick.com/
Chapter 11 Petition Date: February 14, 2008
Court: Southern District of Ohio (Cincinnati)
Judge: J. Vincent Aug, Jr.
Debtors' Counsel: Donald W. Mallory, Esq.
Kim Martin Lewis , Esq.
Patrick Burns, Esq.
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Tel: (513) 977-8200
Fax: (513) 977-8141
Estimated Assets: $100 Million to $500 Million
Estimated Debts: $100 Million to $500 Million
Debtors' consolidated list of their 29 Largest Unsecured
Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Rexam containers Trade Debt $1,291,945
22551 Network Place
Chicago, IL 60673-1225
Bruce PAC Trade Debt $703,409
P.O. Box 712609
cincinnati, OH 45271-2609
CBS Personnel Services Trade Debt $624,484
Location 00464
Cincinnati, OH 45264-0464
Xpedx - Atlanta Trade Debt $536,804
P.O. Box 403565
Atlanta, GA 30384-3565
Caraustar Custom Packaging Group Trade Debt $524,302
7806 Collection Drive
Chicago, IL 60693
Alacan Packaging Company Trade Debt $424,897
23069 Network Place
Chicago, IL 60673-1069
International Paper Trade Debt $420,842
990 Reading Road
Mason, OH 45040
Gerber Products Company Trade Debt $352,303
405 State Street
Fremont, MI 49412
Cadillac Products, Inc. Trade Debt $304,219
2005 South Main Street
Paris, IL 61944
Karn Meats, Inc. Trade Debt $288,034
Dept. L-1717
Columbus, OH 43260-1717
M.I. Resources Development Trade Debt $252,648
4667 MacArthur Boulevard
Suite 204
Newport Beach, CA 92660
Ohio Bureau of Workers' Tax $241,000
Compensation
Transpackers Services Trade Debt $237,609
Missa Bay Trade Debt $235,177
Floeter, Inc. Trade Debt $207,886
Dakota Growers Pasta Company Trade Debt $191,482
LC Industries Trade Debt $185,011
Huhtamaki Trade Debt $181,057
Airgas Great Lakes Trade Debt $173,106
Skidmore Sales & Distributing Trade Debt $167,581
Duke Energy Trade Debt $163,163
JSB Industries/SJR Foods Trade Debt $159,420
Northlake Trading Co. Trade Debt $156,812
Cuisine Solutions, Inc. Trade Debt $140,272
CFA Staffing Trade Debt $132,216
Xpedx - Pittsburgh Trade Debt $127,687
Sterling Foods, Inc. Trade Debt $124,070
Burke Corporation Trade Debt $118,267
Curwood Inc. Trade Debt $112,128
WYNN RESORTS: Earns $258.1 Million in Year Ended Dec. 31
--------------------------------------------------------
Wynn Resorts Limited reported Tuesday financial results for the
fourth quarter and year ended Dec. 31, 2007.
Net income for the year was $258.1 million, compared to
$628.7 million in 2006. Net income for 2006 was positively
influenced by approximately $741.9 million due to the completion
of the sale of a subconcession in Macau, a non-recurring item.
Adjusted net income for 2007 was $329.4 million, compared to an
adjusted net income of $49.4 million in 2006.
Net income for the fourth quarter of 2007 was $65.5 million,
compared to a net loss of $55.4 million in the fourth quarter of
2006. Adjusted net income in the fourth quarter of 2007 was
$82.6 million, compared to an adjusted net income of
$57.1 million in the fourth quarter of 2006. Adjusted net income
is net income before pre-opening costs, property charges and
other, and other non-cash non-operating income and expenses.
Net revenues for the fourth quarter of 2007 were $711.3 million,
compared to $563.6 million in the fourth quarter of 2006. Net
revenues for 2007 were $2.7 billion, an 87.6% increase over 2006.
The revenue increase was driven primarily by the ramp up in the
company's operations in Macau and strong performance in Las Vegas.
Consolidated adjusted property EBITDA was $196.9 million for the
fourth quarter of 2007 compared to $159.7 million in the fourth
quarter of 2006. Adjusted property EBITDA for 2007 was
$781.1 million, a 98.5% increase compared to 2006.
Adjusted property EBITDA is earnings before interest, taxes,
depreciation, amortization, pre-opening costs, property charges
and other, corporate expenses, stock-based compensation, contract
termination fee, and other non-operating income and expenses.
Interest expense, net of $15.5 million in capitalized interest,
was $35.9 million for the fourth quarter of 2007. For the full
year 2007, interest expense, net of capitalized interest of
$44.6 million, was $143.8 million compared to $148.0 million, net
of capitalized interest of $29.5 million, for the year ended
Dec. 31, 2006. Depreciation and amortization expenses were
$60.5 million during the quarter. For the full year, depreciation
and amortization expenses were $219.9 million and pre-opening
expenses were $7.1 million. Corporate expense and other was
$15.3 million in the fourth quarter, and $63.9 million for the
full year 2007, including $4.0 million and $18.5 million,
respectively, in stock based compensation.
Balance Sheet and Capital Expenditures
The company's total cash balances at the end of the quarter were
$1.8 billion, including unrestricted cash balances of $1.3 billion
and restricted cash balances of $531.0 million. Total debt
outstanding at the end of the quarter was $3.5 billion, including
approximately $2.0 billion of Wynn Las Vegas debt, and
$550.0 million of Wynn Macau-related debt. Capital expenditures
during the fourth quarter of 2007, net of changes in construction
payables and retention, totaled approximately $303.3 million,
primarily attributable to Encore.
On Oct. 3, 2007, the company completed a secondary common stock
offering of 4,312,500 shares with net proceeds of $154 per share
or a total of $664.1 million.
On Nov. 6, 2007, the company issued, in a private offering,
$400.0 million aggregate principal amount of 6 5/8% First Mortgage
Notes due 2014 at a price of 97.25% of the principal amount.
These notes were issued under the same indenture as the First
Mortgage Notes issued on Dec. 14, 2004.
On Nov. 20, 2007, the company's Board of Directors declared a cash
distribution of $6.00 per common share which was paid on Dec. 10,
2007.
About Wynn Resorts
Headquartered in Las Vegas, Wynn Resorts Limited (Nasdaq: WYNN) --
http://www.wynnresorts.com/-- owns and operates Wynn Las Vegas
and Wynn Macau.
* * *
As reported in the Troubled Company Reporter on Nov. 5, 2007,
Standard & Poor's Ratings Services assigned its issue-level and
recovery ratings to the proposed $400 million first mortgage notes
to be co-issued by Wynn Las Vegas LLC and Wynn Las Vegas Capital
Corp. The loan was rated 'BBB-' (two notches higher than the 'BB'
corporate credit rating on parent company Wynn Resorts Ltd.) with
a recovery rating of '1', indicating the expectation for very high
(90%-100%) recovery in the event of a payment default. Proceeds
from the proposed $400 million notes will be used to fund WLV's
future capital expenditures, including Encore at Wynn Las Vegas,
scheduled to open in early 2009.
Also, Standard & Poor's affirmed its 'BBB-' issue-level rating on
the entities' existing $1.3 billion first mortgage notes; the '1'
recovery rating on this debt remains unchanged.
XYIENCE INC: Zyen/Zuffa DIP Fund and License Pacts Get Final Nod
----------------------------------------------------------------
The Hon. Mike K. Nakagawa of the U.S. Bankruptcy Court for the
District of Nevada gave Xyience Incorporated permission to secure
debtor-in-possession financing from Zyen LLC on a final basis,
John G. Edwards writes for the Las Vegas Review-Journal. The
Court also approved the license agreement between Zuffa Marketing
LLC and the Debtor.
The final approval came amid objections from the Ad Hoc Committee
Holding Unsecured Claims formed in the case.
Ad Hoc Committee Objections
The Ad Hoc Committee told Sherdog.Com this week that the
postpetition financing will only "benefit Zyen" and is not in the
best interest of the Debtor's creditors. The group informed the
Court, Sherdog reported, that the DIP facility agreement will
grant Frank and Lorenzo Fertita control over the Debtor. The
Fertitas own Zuffa and Zyen companies.
In October 2007, a $12 million financing from the Fertitas was
disclosed together with an extension of Xyience's sponsorship of
Zuffa's Ultimate Fighting Championship for three years.
Sherdog cited a court document that the $12 million loan had a 15%
interest, maturing a year after, and secured by Xyience's assets.
Failed payment will grant the Fertitas warrants to buy 10% of the
Debtor's capital at $0.01, plus 50% equity, Sherdog said.
The Ad Hoc Committee also opposes the license agreement between
the Debtor and Zuffa and asserted that the Zuffa and the Debtor
are only seeking "adequate protection for a non-cash collateral"
that doesn't have value, Sherdog related. The agreement, the
shareholder group contested, is Zuffa's means to obtain waivers
from avoidance action since it received a sum of $6.5 million from
the Debtor on Oct. 5, 2007, Sherdog reveals.
Interim Approval for DIP Fund and License Pact
Effective Jan. 23, 2008, the Court granted the Debtor permission,
on an interim basis, to use Zyen's cash collateral and DIP
financing in the maximum amount of $1,000,000, initial
postpetition financing, and upon final approval, an aggregate
amount not to exceed $2,690,620.
The Debtor told the Court that it required immediate financing to
satisfy critical operations matters.
The Court awarded Zyen LLC valid, perfected, and enforceable new
first priority replacement lien.
Licensing Agreement with Zuffa
Zuffa informed the Court in a filing that Cott Corp. manufactures
Xenergy(R) beverages and the Zuffa's UFC logo is printed on each
Xenergy(R) drink. On the bankruptcy date, Cott had stored 169,599
cases of Xenergy(R) beverages, all of which will be bought by the
Debtor through a DIP financing. The Debtor intends to sell the
beverages and generate sales estimated at $3,816,000. Cott has
also manufactured 9.4 million unfilled drink cans with the UFC
logo and the Debtor estimated that those cans have a value of
$1.1 million.
Xyience, Zuffa related, is looking to produce an additional 26,700
cases of Xenergy(r) for its Canadian market, which will result in
gross revenue in the amount of $800,000.
Zuffa told the Court that the Debtor will lose revenue of over
$8,000,000 if the Zuff agreement is not granted final approval.
Hence, the ability to use the Zuffa trademarks is critical to the
Debtor and that the trademarks have significant value with UFC
being the largest mixed martial arts promoter in the world.
Zuffa related to the Court that the license agreement will enable
the Debtor to generate more assets, as the shareholder group is
hopelessly out of money and do not have stake in the case. The
Debtor's schedules, Zuffa recalled, has over $42 million in
liabilities and only $5.2 million in assets. Without the Zuffa
agreement, the Debtor will have no inventory to sell and no cash
to generate.
Apparently, Zuffa said, the shareholder group would rather have
the Debtor destroy its inventory and shut its doors rather than
maximizing value for the estate.
About Zyen and Zuffa
Zuffa Marketing LLC is a subsidiary of Zuffa LLC dba Ultimate
Fighting Championship holds mixed martial arts fights through its
UFC, World Extreme Cagefighting, and Pride Fighting Championship.
UFC is one of the largest mixed martial arts organization. UFC is
Zuffa's flagship brand and the primary contributor to consolidated
revenues and cash flow. Mixed martial arts are the second-most
popular sporting event for men ages 18 to 34, following the NFL.
Zyen LLC is controlled by Frank and Lorenzo Fertitta, majority
owners of UFC's parent company, Zuffa.
Brett A. Axelrod, Esq., and Micaela L. Rustia, Esq., at Lewis and
Roca LLP represent Zuffa Marketing LLC.
About Xyience Incorporated
Xyience Incorporated -- http://www.xyience.com/-- manufactures
sports nutrition products and related commodities, like an apparel
line. Xyience sells its energy drink through 230 convenience and
grocery stores, mostly in the Southwest. Known for its Xenergy
energy drink, Xyience is an Ultimate Fighting Championship sponsor
and signed a $15 million sponsorship agreement with the UFC for
2007.
Founder and former CEO Russell Pike, together with Prosperity
Investments Alliance LLC and other creditors filed involuntary
Chapter 11 petition against the Debtor on Jan. 3, 2008 (Bankr. D.
Nev. Case No. 08-10049). Mr. Pike listed $2,157,516 and
Prosperity listed $1,102,500 in unsecured claims. Marjorie A.
Guymon, Esq., at Goldsmith & Guymon PC represents Mr. Pike and the
other creditors in the involuntary bankrupty petition.
The Debtor filed a voluntary petition under Chapter 11 on Jan. 18,
2008 (Bankr. D. Nev. Case No. 08-10474). Laurel E. Davis, Esq., at
Fennemore Craig PC represents the Debtor in its restructuring
efforts. An Ad Hoc Committee Holding Unsecured Claims has been
appeared in this case and is represented by Jason C. Farrington,
Esq., at DLA Piper US LLP. The Debtor listed total assets of
$5,285,722 and total debts of $42,342,831.
* S&P Downgrades 66 Tranches' Ratings From 10 Cash Flows and CDOs
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 66
tranches from 10 U.S. cash flow and hybrid collateralized debt
obligation transactions and removed them from CreditWatch with
negative implications. Additionally, S&P affirmed two ratings
at 'AAA' and removed them from CreditWatch negative. The
downgraded tranches have a total issuance amount of
$6.751 billion. All of the affected transactions are mezzanine
structured finance CDOs of asset-backed securities, which are CDOs
of ABS collateralized in large part by mezzanine tranches of
residential mortgage-backed securities and other SF securities.
This CDO downgrades reflect a number of factors, including credit
deterioration and recent negative rating actions on subprime U.S.
RMBS securities.
To date, including the CDO tranches listed below and including
actions on both publicly and confidentially rated tranches, S&P
has lowered its ratings on 1,567 tranches from 434 U.S. cash flow,
hybrid, and synthetic CDO transactions as a result of stress in
the U.S. residential mortgage market and credit deterioration of
U.S. RMBS. In addition, 2,305 ratings from 589 transactions are
currently on CreditWatch negative for the same reasons. In all,
the affected CDO tranches represent an issuance amount of
$343.625
billion.
Standard & Poor's will continue to monitor the CDO transactions it
rates and take rating actions, including CreditWatch placements,
when appropriate..
Rating and CreditWatch Actions
Rating
------
Transaction Class To From
----------- ----- -- ----
Brookville CDO I Ltd. A-1 BB- AAA/Watch Neg
Brookville CDO I Ltd. A-2 CCC AAA/Watch Neg
Brookville CDO I Ltd. A-3 CC AA-/Watch Neg
Brookville CDO I Ltd. B CC BBB/Watch Neg
Brookville CDO I Ltd. C CC BB/Watch Neg
Brookville CDO I Ltd. D CC B/Watch Neg
Brookville CDO I Ltd. E CC B-/Watch Neg
C-BASS CBO XVII Ltd. A B+ AAA/Watch Neg
C-BASS CBO XVII Ltd. B CCC+ AA/Watch Neg
C-BASS CBO XVII Ltd. C CCC- A/Watch Neg
C-BASS CBO XVII Ltd. D CC BBB/Watch Neg
C-BASS CBO XVII Ltd. E CC BB/Watch Neg
Centre Square CDO Ltd. A-1 BBB- AAA/Watch Neg
Centre Square CDO Ltd. A-2A CCC AAA/Watch Neg
Centre Square CDO Ltd. A-2B CCC AAA/Watch Neg
Centre Square CDO Ltd. A-3 CCC- AAA/Watch Neg
Centre Square CDO Ltd. B CC AA/Watch Neg
Centre Square CDO Ltd. C CC AA-/Watch Neg
Centre Square CDO Ltd. D CC A/Watch Neg
E*Trade ABS CDO V Ltd. A-1J B+ AAA/Watch Neg
E*Trade ABS CDO V Ltd. A-1S BB+ AAA/Watch Neg
E*Trade ABS CDO V Ltd. A-2 B- AA-/Watch Neg
E*Trade ABS CDO V Ltd. A-3 CCC- BB+/Watch Neg
E*Trade ABS CDO V Ltd. B CC CCC-/Watch Neg
Gemstone CDO V Ltd. A-1 AAA AAA/Watch Neg
Gemstone CDO V Ltd. A-2 A- AAA/Watch Neg
Gemstone CDO V Ltd. A-3 BB+ AA+/Watch Neg
Gemstone CDO V Ltd. A-4 BB+ AA+/Watch Neg
Gemstone CDO V Ltd. B B+ BBB+/Watch Neg
Gemstone CDO V Ltd. C CCC+ BB+/Watch Neg
Lexington Capital Funding
V Ltd. A-1 B AAA/Watch Neg
Lexington Capital Funding
V Ltd. A-2 CCC+ AAA/Watch Neg
Lexington Capital Funding
V Ltd. A-3 CCC- AA+/Watch Neg
Lexington Capital Funding
V Ltd. B CC A-/Watch Neg
Lexington Capital Funding
V Ltd. C CC BB/Watch Neg
Lexington Capital Funding
V Ltd. D CC B-/Watch Neg
Lexington Capital Funding
V Ltd. E CC CCC/Watch Neg
Montauk Point CDO II Ltd. A1J BB+ AAA/Watch Neg
Montauk Point CDO II Ltd. A1S BBB AAA/Watch Neg
Montauk Point CDO II Ltd. A2 B AA/Watch Neg
Montauk Point CDO II Ltd. A3 B- A+/Watch Neg
Montauk Point CDO II Ltd. A4 CCC- A-/Watch Neg
Montauk Point CDO II Ltd. B CC BB+/Watch Neg
Montauk Point CDO II Ltd. C CC BB/Watch Neg
Montauk Point CDO II Ltd. Combo sec AAA AAA/Watch Neg
Nordic Valley 2007-1 CDO Ltd. A-1 B- AAA/Watch Neg
Nordic Valley 2007-1 CDO Ltd. A-2a CCC AAA/Watch Neg
Nordic Valley 2007-1 CDO Ltd. A-2b CCC- AAA/Watch Neg
Nordic Valley 2007-1 CDO Ltd. A-X B- AAA/Watch Neg
Nordic Valley 2007-1 CDO Ltd. B CCC- AA/Watch Neg
Nordic Valley 2007-1 CDO Ltd. C CC A/Watch Neg
Nordic Valley 2007-1 CDO Ltd. D CC BBB+/Watch Neg
Nordic Valley 2007-1 CDO Ltd. E CC BBB/Watch Neg
Pyxis ABS CDO 2007-1 Ltd. A-1 BB- AAA/Watch Neg
Pyxis ABS CDO 2007-1 Ltd. A-2 CCC+ AA+/Watch Neg
Pyxis ABS CDO 2007-1 Ltd. B CCC- A+/Watch Neg
Pyxis ABS CDO 2007-1 Ltd. C CC BBB-/Watch Neg
Pyxis ABS CDO 2007-1 Ltd. D-1 CC CCC+/Watch Neg
Pyxis ABS CDO 2007-1 Ltd. D-2 CC CCC/Watch Neg
Pyxis ABS CDO 2007-1 Ltd. E CC CCC-/Watch Neg
Pyxis ABS CDO 2007-1 Ltd. S CCC+ AA+/Watch Neg
STATIC Residential CDO 2006-B
Ltd. A-1(a) B- AAA/Watch Neg
STATIC Residential CDO 2006-B
Ltd. A-1(b) CCC- AAA/Watch Neg
STATIC Residential CDO 2006-B
Ltd. A-2 CC A+/Watch Neg
STATIC Residential CDO 2006-B
Ltd. B-1 CC BBB+/Watch Neg
STATIC Residential CDO 2006-B
Ltd. B-2 CC BBB-/Watch Neg
STATIC Residential CDO 2006-B
Ltd. C CC BB-/Watch Neg
STATIC Residential CDO 2006-B
Ltd. D CC CCC+/Watch Neg
Other Outstanding Ratings
Transaction Class Rating
----------- ----- ------
E*Trade ABS CDO V Ltd. C CC
Gemstone CDO V Ltd. D CC
Gemstone CDO V Ltd. E CC
Pyxis ABS CDO 2007-1 Ltd. F CC
* S&P Confirms Ratings on 38 Classes From Five Reperforming RMBS
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 38
classes of pass-through certificates from five U.S. reperforming
residential mortgagebacked securities transactions issued by four
issuers.
The affirmations reflect adequate actual and projected credit
support percentages. As of the January 2008 remittance period,
cumulative losses, as a percentage of the original pool balances,
ranged from 0.33% (CWMBS Reperforming Loan REMIC Trust 2005-R2) to
1.30% (ACE Securities Corp. Home Equity Loan Trust 2006-SD3).
Severe delinquencies (90-plus days, foreclosures, and REOs) ranged
from 17.22% (CWMBS Reperforming Loan REMIC Trust 2004-R2) to
26.32% (ACE Securities Corp. Home Equity Loan Trust 2006-SD3) of
the current pool balances. These deals are seasoned between 13
months (ACE Securities Corp. Home Equity Loan Trust 2006-SD3 and
CSMC Trust 2006-CF3) and 37 months (CWMBS Reperforming Loan REMIC
Trust 2004-R2) and have between 44.94% (CWMBS Reperforming Loan
REMIC Trust 2004-R2) and 69.94% (Citigroup Mortgage Loan Trust
Inc. 2006-SHL1) of their original pool principal balances
outstanding.
Subordination provides credit support for CWMBS Reperforming Loan
REMIC Trust's series 2004-R2 and 2005-R2. Subordination, O/C, and
excess spread provide credit support for the remaining deals. The
collateral for these transactions primarily consists of
reperforming mortgage loans secured by first liens on one- to
four-family residential properties.
Ratings Affirmed
ACE Securities Corp. Home Equity Loan Trust
Asset-backed pass-through certificates
Series Class Rating
------ ----- ------
2006-SD3 A AAA
2006-SD3 M-1 AA
2006-SD3 M-2 A
2006-SD3 M-3 BBB+
2006-SD3 M-4, M-5 BBB
Citigroup Mortgage Loan Trust Inc.
Asset-backed Pass-through Certificates
Series Class Rating
------ ----- ------
2006-SHL1 A AAA
2006-SHL1 M-1 AA+
2006-SHL1 M-2 AA-
2006-SHL1 M-3 A
2006-SHL1 M-4 A-
2006-SHL1 M-5 BBB
2006-SHL1 M-6 BBB-
CSMC Trust
Mortgage Pass-through Certificates
Series Class Rating
------ ----- ------
2006-CF3 A-1, R AAA
2006-CF3 M-1 AA
2006-CF3 M-2 AA-
2006-CF3 M-3 A
2006-CF3 M-4 BBB+
2006-CF3 M-5 BBB
2006-CF3 M-6 BBB-
2006-CF3 B-1 BB
CWMBS Reperforming Loan REMIC Trust
CWMBS reperforming loan REMIC trust certificates
Series Class Rating
------ ----- ------
2004-R2 1A-F1, 1A-F2, 1A-S AAA
2004-R2 M AA
2004-R2 B-1 A
2004-R2 B-2 BBB
2005-R2 1A-F1, 1A-F2, 1A-S AAA
2005-R2 2A-IO, 2A-1, 2A-2 AAA
2005-R2 2A-3, 2A-4 AAA
2005-R2 M AA
2005-R2 B-1 A
* Fitch Says Equipment Lease Securities Delinquencies Soar in Dec.
------------------------------------------------------------------
Delinquencies in U.S. equipment lease asset-backed securities
climbed further in December across both the small/mid-ticket and
heavy metal portfolios. Year-end delinquencies are following
historical seasonal trends experienced in prior years, whereby
delinquency rates generally increase during the fourth quarter.
Although delinquencies have continued to increase, albeit at
minimal levels, transaction specific performance across both
portfolios continue to perform with in expectations. As a result,
near-term negative rating actions are not expected.
Small/Mid-Ticket Portfolio Performance
In the small/mid-ticket portfolio, delinquencies across all
buckets increased from November levels. 30-60 day delinquencies
were 1.46% in December compared to 1.28% in November, and higher
than the 0.89% rate in October. The 60-90 day bucket increased
slightly to 0.38%, which is comparable to November and October
rates of 0.36% and 0.34%, respectively. Similar to early-stage
delinquencies, late-stage delinquencies increased in December to
0.65% from 0.54% and 0.57% in November and October, respectively.
Although the pace of delinquencies has increased across all the
buckets, overall transaction specific performance remains within
Fitch's expectations.
Heavy Metal Portfolio Performance
Similar to the small/mid-ticket portfolio, delinquencies have
continued to increase during the fourth quarter, following
historical seasonal trends. The 60+ day bucket increased to 0.45%
from 0.37% and 0.33% November and October levels, respectively.
Although month over month 4th quarter delinquencies have continued
to increase, the 2007 4th quarter average of 0.38% is below 3rd
quarter average of 0.43%, and comparable to 2006 4th quarter
average of 0.36%. In spite of the slight upticks in
delinquencies, overall transaction specific performance remains
within Fitch's expectations, resulting in sufficient credit
enhancement support across transactions.
Equipment lease delinquencies and losses have increased steadily
over the past six months. As a result, Fitch expects the rate of
upgrades to diminish in 2008. Negative rating actions, however,
are expected to be limited as current levels of losses and
delinquencies remain within historical levels, resulting in
sufficient credit enhancement support. Fitch expects the
increasing delinquency trend to continue into 2008 and will
continue to actively monitor its portfolio for any signs of
significant deterioration.
* Fitch Says 2008 is Adjustment Year for US Airport Industry
------------------------------------------------------------
According to Fitch Ratings, 2008 will be a year of adjustment for
the U.S. airport industry after coming off a period of economic
stability that translated into improving credit fundamentals for
the past few years. In the special report '2008 U.S. Airport
Credit Outlook,' Fitch says while it is possible the strong
operating environment experienced in 2007 will generate additional
credit improvement at individual airports, changes in the domestic
economic climate suggest travel demand could weaken in 2008
leading to a stabilization, or possibly slight deterioration, in
industry credit trends. Other factors that could affect the
financial health of the airport industry include the financial
condition of the airlines and potential for industry
consolidation, movement on the financial reauthorization of the
Federal Aviation Administration, actions to confront the growing
congestion in the air transport system, and the advancement of
airport capital programs.
"The health of the economy will be the key driver in determining
how the domestic airport industry will perform in 2008," said
Peter Stettler, senior director in Fitch's Global Infrastructure
group. "Potential declining demand for air service, increasing
fares because of the run-up in oil prices and increasing
congestion in air traffic are all factors expected to challenge
the success of airports this year. In addition to these issues,
possible domestic airline consolidation could influence the
industry by altering hub and spoke networks."
According to the report, the most significant change facing U.S.
airports is the potential decline in air service demand.
Passenger activity is closely correlated to economic activity,
which Fitch forecasts will slow in 2008 to a 1.7% annual growth
rate as measured by gross domestic product. Fitch expects
passenger activity to be flat or slightly down in 2008 with
leisure travel possibly being affected should consumers restrain
spending due to problems in the residential real estate market.
As a result, airlines may reassign aircraft to more business
oriented routes in search of higher returns but business travel
may also be affected by a downturn in the economy, which could
further weaken airline performance.
Fitch believes consolidation in the domestic airline industry
could lay the foundation for more rational capacity decision-
making in highly competitive domestic markets and should mitigate
the impact of economic cycles on airline cash flow. Furthermore,
should two network carriers announce plans to combine, Fitch
expects the remaining carriers to quickly seek partners of their
own.
2007 was one of the worst years in terms of air traffic delays
experienced by the industry. An aging air traffic control system
and lack of investment in airport capacity are leading causes of
the challenge, as airlines continue to strive to meet the schedule
demands of the traveling public. With the FAA not expected to
fully implement its new air traffic control system for at least 15
to 20 years, Fitch expects congestion in the nation's airways to
become an increasingly prominent problem. Without action to
improve the current state of the nation's air service network, the
domestic carriers could see demand for travel begin to decline,
increased calls for regulation of schedules, and/or see increased
competition from other modes of travel.
* Fitch Says US Credit Markets Stability Might Return in 3Q'08
--------------------------------------------------------------
Stability in the U.S. credit markets is not expected to return
until third quarter-2008 or later, while stability in the housing
market is likely even further off, according to the latest Fitch
Ratings/Fixed Income Forum Survey of institutional investors.
This survey is conducted by Fitch semi-annually in partnership
with the Fixed Income Forum and received responses from 88
institutional investors.
Viewed as most critical to restoring stability to the credit
markets was 'confidence in financial disclosure of mark-to-market
losses.' 'Investors are clearly concerned about financial firms
exposure to the current downdraft in securities prices, and want
clarity as to the market losses experienced to date,' said
Managing Director James Batterman. Also viewed as important were
'home price stabilization' and 'further fed easing', while
'government driven remedies' were viewed as potentially harmful or
simply not important.
A weakening economy is viewed as the greatest risk to the credit
markets among U.S. institutional investors. Other risk factors
include 'housing market disruptions', failure of a financial
institution or hedge fund, and geopolitical risk. The results are
a significant reversal of investor sentiment since Fitch's June
2007 survey when shareholder-friendly activities were cited as the
biggest threat, and the broader economy was not generally
considered to be a large risk factor.
Respondents were nearly unanimous (99%) in their belief that the
risk of a U.S. recession is either moderate or high, while fully
100% of respondents expect the default rate to increase at least
moderately in 2008, with about half of these expecting the rate to
move significantly higher. This is an abrupt change from the 2007
mid-year survey, in which a very small minority expected to see a
significant increase in defaults. 'Softening economic growth and
the credit crunch are weighing heavily on the minds of investors
and understandably so,' said Managing Director and head of Credit
Market Research Mariarosa Verde. 'Investors realize that current
gloomy conditions, especially if prolonged, will provide more than
enough fuel for rising defaults.'
Respondents voiced concern over the threat to credit markets from
diminished liquidity. In a sharp reversal from prior surveys,
respondents stressed a 'decline in banks and other investors'
willingness to lend as the greatest risk currently posed to the
leveraged loan market. 'The lack of investor demand in this
market will make it hard for high risk borrowers to get fresh
capital or refinance existing obligations in 2008,' said Senior
Director William May.
The biannual Fitch Ratings/Fixed Income Forum Survey is designed
to provide insight into the opinions of professional money
managers on the state of the U.S. credit markets. In carrying out
this survey, a wide range of senior investment personnel were
queried with respect to matters involving the broader economy,
fundamental credit conditions across various asset classes and
industrial sectors, corporate strategies, and other relevant
topics.
Surveys are sent out to members of the Fixed Income Forum, an
institutional private membership group of investment executives
from a wide variety of firms, including insurance companies,
pension funds, traditional asset management companies and hedge
funds.
* President Bush Signs New $168 Billion Stimulus Package Into Law
-----------------------------------------------------------------
President George W. Bush signed a two-year, $168 billion stimulus
bill designed to boost the U.S. economy and stave off a possible
U.S. economic recession, various reports say.
HR 5140 -- the Recovery Rebates and Economic Stimulus for the
American People Act of 2008 -- doles out $600 in tax rebates to
individuals, rebates of $1,200 for married couples, and $300 for
their children, relates Reuters. The tax rebates would be given
out in May
Additionally, Congress incorporated a late-suggested feature of
the bill that lets small businesses enjoy tax deductions on their
capital investments, and consequently letting these businesses
purchase more and better equipment.
"I wanted to make sure we balanced the consumer spending side with
incentivizing business-to-business investments," Chicago Business
cites U.S. Rep. Melissa Bean, who made the suggestion, as saying.
Stimulus Champions Small Businesses
On the signing of the stimulus bill, Steve Preston, administrator
of the U.S. Small Business Administration, said:
"This bill is a win for small businesses in three major ways: tax
rebates will stimulate short term consumer spending, some of which
will flow to smaller companies; a 50 percent bonus deduction on
new equipment that normally would be depreciated over the long
term; and, it increases the limit on expenses that small
businesses can deduct from annual income.
"Small businesses create 2/3 of the new jobs in our economy and
account for half of non-farm GDP. It is vital for the nation that
small businesses stay healthy and growing. HR 5140 will give them
a much-needed boost which will enable them to expand their
companies and create new jobs.
"On behalf of small business, I applaud the President for his
leadership and Congress for moving with such swiftness and
bipartisanship.
"We continue to urge Congress to proceed with other vital small
business issues such as permitting health insurance pooling and
deductibility, opening up new markets with Colombia, Peru and
South Korea, and guaranteeing that taxes on small business
earnings and investment don't rise."
President Bush remarked at the signing conference, "Over the past
seven years, this system has absorbed shocks recession,
corporate scandals, terrorist attacks, global war. Yet the genius
of our system is that it can absorb such shocks and emerge even
stronger."
* Bankruptcy Filings in Arizona Up 63.4% in January vs. 2007
------------------------------------------------------------
The East Valley Tribune reported Tuesday that statewide,
bankruptcy January filings increased dramatically to 967, up 63.4%
from 592 in January 2007, citing the U.S. Bankruptcy Court for the
District of Arizona. In the Phoenix-area, filings increased 78.0%
to 708.
Chapter 7 filings in January rose 73.4% statewide compared with
the same month of 2007. In the Valley January Chapter 7 filings
increased 91.6% compared with the same month last year.
Statewide, bankruptcy filings totaled 10,570 in 2007.
According to The Arizona Republic, total bankruptcies in the
United States gained just 30.0% in January from January 2007,
citing the American Bankruptcy Institute.
* Barbara Hart & Anne Penachio Join Lowey Dannenberg as Partners
----------------------------------------------------------------
Lowey Dannenberg welcomed Barbara J. Hart and Anne Penachio to the
firm. Ms. Hart's reputation and accomplishments are reflected in
the firm's new name: Lowey Dannenberg Cohen & Hart.
A nationally-recognized litigator, Mr. Hart concentrates her
practice in complex class action litigation, representing
institutional clients in a range of matters with particular
emphasis on securities and antitrust litigation. Ms. Hart will
lead the firm's securities litigation practice.
Ms. Hart has recovered in excess of one billion dollars on behalf
of her clients, and gained national acclaim as lead counsel in
precedent-setting securities class action cases, including In re
Waste Management Securities Litigation, which settled for
$457 million, and In re El Paso Corporation Securities Litigation,
which settled for $285 million.
In 2007, Ms. Hart was lead trial counsel for the Connecticut
Retirement Plans and Trust Funds in the JDS Uniphase Securities
Litigation case. She is co-lead counsel in the In re Air Cargo
Antitrust Litigation, which alleges an international cartel among
freight carriers.
A frequent lecturer, Ms. Hart has spoken before the Council of
Institutional Investors, The Federalist Society, the New York Bar
Association, The Institute for Law and Economic Policy, the Public
Funds Forum and the Practicing Law Institute.
Ms. Hart earned her undergraduate degree from Vanderbilt
University, B.A., 1982, and a master's degree from the University
of North Carolina, 1987. She graduated from Fordham University
School of Law in 1992 where she was a member of the Law Review.
Anne Penachio is a bankruptcy and commercial litigation attorney
who will lead the firm's new bankruptcy and creditor's rights
practice.
Ms. Penachio is a former law clerk to the Honorable Howard
Schwartzberg, United States Bankruptcy Judge for the Southern
District of New York. Thereafter, she was associated with Curtis,
Mallet-Prevost, Colt & Mosle before opening a solo practice.
Some of the notable bankruptcy proceedings she has worked on
include these: In re Thomson McKinnon Securities and Thomson
Advisory Group, Inc.; In re Fundamental Brokers, Inc.; In re Park
South Securities, LLC; In re McClelland Food Management Group,
LLC; and Metromedia Fiber National Network et al.
Ms. Penachio is a 1991 graduate of Fordham College, B.A., cum
laude, 1988, and Fordham Law School, J.D. 1991.
"We are thrilled to grow our law firm through the addition of two
such accomplished lawyers," Lowey Dannenberg founder and chairman
Stephen Lowey, said. "Barbara Hart is well known among the top
echelons of the commercial litigation bar nationally for her many
significant accomplishments. To have a lawyer of her stature and
experience is an enormous plus for our law firm."
"Anne Penachio brings new capabilities to our firm," Lowey added.
"So much of modern commercial litigation requires bankruptcy law
abilities and knowledge and now we have one of best lawyers in the
field."
About Lowey Dannenberg
Located in White Plains, New York and West Conshohocken
Pennsylvania Lowey Dannenberg -- http://www.lowey.com/-- has
represented sophisticated clients in complex litigation for more
than 40 years. The firm's principal fields of practice are
investor representation, healthcare cost recovery, antitrust,
bankruptcy and creditors rights, and consumer protection.
* Chadbourne's George Smith Receives Spirit of Excellence Award
---------------------------------------------------------------
The Hon. George Bundy Smith, a partner of the international law
firm of Chadbourne & Parke, was a recipient of the Spirit of
Excellence Award from the American Bar Association's Commission on
Racial and Ethnic Diversity. He received the award on Feb. 9,
2008, at the Hyatt Regency Century Plaza in Los Angeles.
"I'm deeply honored by this recognition by the ABA," Judge Smith,
said. "After serving for 14 years as an Associate Judge on the
Court of Appeals, New York's highest court, Judge Smith joined
Chadbourne in December 2006 as a partner in the litigation
practice, with an additional focus on appeals and arbitration. It
inspires me to continue to speak out for social justice.
Judge Smith's judicial service began in May 1975, when he was
named to the Civil Court of New York City. He was a Justice of
the Supreme Court of the State of New York from 1980 to 1986, and
an Associate Justice of the Supreme Court, Appellate Division,
First Department, from 1987 to 1992.
He was appointed to the Court of Appeals by Governor Mario Cuomo,
and served until his retirement in September 2006.
First as a student and then a young lawyer, Judge Smith labored to
advance the cause of civil rights. In 1961, he joined other
students in the Freedom Rides to Montgomery, Alabama, where the
National Guard was needed to protect the students from hostile
mobs.
After graduating from Yale Law School, Judge Smith served as an
attorney for the NAACP Legal Defense and Educational Fund. He
later became a judicial law secretary in the New York state
courts, and from 1974 to 1975 was the administrator of New York
City's Model Cities Program.
The Spirit of Excellence Award celebrates the efforts and
accomplishments of lawyers and judges who work to promote a more
racially and ethnically diverse legal profession. The ABA's
Commission on Racial and Ethnic Diversity provides a voice to
identify and tackle issues of discrimination, racism and bigotry,
and to inspire the ABA and the profession to value differences, to
be sensitive to prejudice and to reflect the society they serve.
About Chadbourne & Parke LLP
Headquartered in New York City, Chadbourne & Parke LLP --
http://www.chadbourne.com/-- provides a full range of legal
services, including mergers and acquisitions, securities,
project finance, private funds, corporate finance, energy,
communications and technology, commercial and products liability
litigation, securities litigation and regulatory enforcement,
special investigations and litigation, intellectual property,
antitrust, domestic and international tax, insurance and
reinsurance, environmental, real estate, bankruptcy and financial
restructuring, employment law and ERISA, trusts and estates and
government contract matters. Major geographical areas of
concentration include Central and Eastern Europe, Russia and the
CIS, the Middle East and Latin America. The firm has offices in
New York, Washington, DC, Los Angeles, Houston, London, Moscow,
St. Petersburg, Warsaw, Kyiv, Almaty, Dubai and Beijing.
* Beard Audio Conferences on Bankruptcy Examiners & Identity Theft
------------------------------------------------------------------
The Beard Group Law and Business Publishers and the Troubled
Company Reporter announce two live, 90-minute teleconferences,
each with unlimited enrollment per call-in site.
Examining the Examiners:
Pros and Cons of Using Examiners in Chapter 11 Proceedings
Wednesday, February 27, 2008
1:30 p.m. -- 3:00 p.m. Eastern Time
Do examiners help or hinder a restructuring case? Are their
costs justified? This live, interactive program will be led
by nationally renowned restructuring attorney Tom Salerno,
who will discuss the latest developments in the use of
bankruptcy case examiners. He'll also review the basic roles
and responsibilities of examiners and examine both sides of
the question of their cost-benefit. Save $50 if you register
by February 20. Learn more by visiting:
http://ResearchArchives.com/t/s?2807
New "Red Flag" Identify Theft Rules:
Assessing Your Risks and Managing Your Liabilities
Thursday, February 28, 2008
1:30 p.m. -- 3:00 p.m. Eastern Time
New federal rules -- called the "Red Flag Regulations" --
require all financial institutions as well as providers of
credit to adopt extensive identity theft policies and
programs. These sweeping new rules impact all businesses
that extend, renew or continue credit. Are you ready for
these rules? Attend this live, interactive program and hear
noted privacy expert Luis Salazar explain your new
responsibilities and provide real-world compliance
strategies for minimizing your latest risks and liabilities.
Save $100 if you register by February 21. For more
information, visit:
http://ResearchArchives.com/t/s?2808
Can't make the scheduled date and time?
Order the Audio CD recording of either conference. Or get the
CONFERENCE PLUS option that allows you to attend the audio
conference AND get the Audio CD recording at a discounted price.
For either option, visit http://www.beardaudioconferences.com or
call (240) 629-3300.
HOW TO REGISTER:
1. Call 240-629-3300 and charge your tuition investment to a
major credit card, or
2. Visit http://www.beardaudioconferences.comfor fast and
convenient online registration.
3. Mail your check payable to Beard Audio Conferences to:
Beard Group, P.O. Box 4250, Frederick, MD 21705-4250
(checks must be received 48 hours prior to conference).
Continuing Education Credit:
Training is accredited for 1.50 MCLEs in California, and
applications are pending in the states of Texas and Tennessee. New
York has reciprocity with California and Tennessee. For non-
attorneys and attorneys practicing in other states, Certificates
of Attendance are available upon request.
Press Release
Contact: Martin L. Heavner
martin@beard.com
* BOOK REVIEW: A Legal History of Money in the United States
------------------------------------------------------------
Author: James Willard Hurst
Publisher: Beard Books
Paperback: US$34.95
Review by Gail Owens Hoelscher
Order your personal copy today and one for a colleague at:
http://amazon.com/exec/obidos/ASIN/1587980983/internetbankrupt
This book chronicles the legal elements of the history of the
system of money in the United States from 1774 to 1970. It
originated as a series of lectures given by James Hurst at the
University of Nebraska in 1973. Mr. Hurst is quick to say that
he , as a historian of the law, took care in this book not to
make his own judgments on matters outside the law. Rather, he
conducted an exhaustive literature review of economics, economic
history, and banking to recount the development of law over the
operations of money. He attempted to "borrow the opinions of
qualified specialists outside the law in order to provide a
meaningful context in which to appraise what the law has done or
failed to do."
Mr. Hurst define money, for the purposes of this books, as "a
distinct institutional instrument employed primarily in
allocating scarce economic resources, mainly through government
and market processes," and not shorthand for economic, social,
or political power held through command of economic assets."
>From the beginning, public and legal policy in the U.S. centered
on the definition of legitimate uses of both law affecting
money, and allocation of power over money among official
agencies, both federal and state. The foundations of monetary
policy were laid between 1774 and 1788. Initially, individual
state legislatures and the Continental Congress issued paper
currency in the form of bills of credit. The Constitutional
Convention later determined that ultimate control of the money
supply should be at the federal level. Other issues were not
clearly defined and were left to be determined by events.
The author describes how law was used to create and maintain a
system of money capable of servicing the flow of resource
allocations in an economy of broadly dispersed public and
private decision making. Law defined standard money units and
made those units acceptable for use in conducting transactions.
Over time, adjustment of the money supply was recognized as a
legitimate concern of law. Private banks were delegated
expansive monetary action powers throughout the 1900s and
private markets for gold and silver were allowed to affect the
money supply until 1933-34. Although the Federal Reserve Act
was not aimed clearly at managing money for goals of major
economic adjustment, it set precedents by devaluing the dollar
and restricting the use of gold.
Mr. Hurst devotes a large part of his book to key issues of
monetary policy involving the distribution of power over money
between the nation and the states, between legal and market
processes, and among major agencies of the government. Until
about 1860, all major branches of government shared in making
monetary policy, with states playing a large role. Between 1908
and 1970, monetary policy became firmly centralized at the
national level, and separation or powers questions arose between
the Federal Reserve Board, the White House (The Council of
Economic Advisors), and the Treasury.
The book was an enormous undertaking and its research
exhaustive. It includes 18 pages of sources cited and 90 pages
of footnotes. Each era of American legal history is treated
comprehensively. The book makes fascinating reading for those
interested in the cause and effect relationship between legal
processes and economic processes and t hose concerned with
public administration and the separation of powers.
James Willard Hurst (1910-1997) is widely regarded as the
grandfather of American legal history. He graduated from
Harvard Law School in 1935 and taught at the University of
Wisconsin-Madison for 44 years.
*********
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. Joseph Medel C. Martirez, Shimero R. Jainga, Ronald C. Sy,
Joel Anthony G. Lopez, Cecil R. Villacampa, Melanie C. Pador,
Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin,
Philline P. Reluya, Ma. Cristina I. Canson, Christopher G.
Patalinghug, Frauline S. Abangan, and Peter A. Chapman, Editors.
Copyright 2008. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***