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