T R O U B L E D C O M P A N Y R E P O R T E R Thursday, February 21, 2008, Vol. 12, No. 44 Headlines ACA CAPITAL: Counterparties Waive Rights and Claims Until April 23 ACCENTIA BIOPHARMA: Dec. 31 Balance Sheet Upside-Down by $74.6 M. ADAM AIRCRAFT: Files Ch. 7 Petition in Colorado and Cuts 800 Posts ADVANCED LIVING: Hires Focus Management as Financial Advisor AEGIS MORTGAGE: Wells Fargo Wants Equity Title's Suit Dismissed AGILYSYS INC: Acquires Eatec Corporation for $23.2 Million Cash AMERICAN HOME: Withdraws Request to Hire Deloitte as Tax Experts AMERICAN HOME: Court Denies CB Richard as Real Estate Broker AMERICAN SOIL: McKennon Wilson Expresses Going Concern Doubt AMERICAN WENSHEN: Losses Cue Kabani to Raise Going Concern Doubt ATLANTIC EXPRESS: S&P Junks Corp. Credit and Secured Debt Ratings AVETA INC: S&P Puts 'CCC' Credit Rating Under Positive Creditwatch BANC OF AMERICA: Stable Performance Cues Fitch to Hold Ratings BENJAMIN ELLIS: Voluntary Chapter 11 Case Summary BEXAR COUNTY HOUSING: Moody's Affirms 'B1' Rating on Revenue Bonds BLACKHAWK AUTOMOTIVE: Wants Court's OK to Sell Assets for $20.7MM BLACKHAWK AUTOMOTIVE: Wants Plan Filing Deadline Moved to May 19 BUFFETS HOLDINGS: $385 Mil. DIP Facility Hearing Moved to Feb. 22 CHAMPION ENTERPRISES: Posts $6MM Net Loss in Quarter Ended Dec. 29 CHIQUITA BRANDS: Posts $26 Mil. Net Loss in Qtr. Ended December 31 COACH AMERICA: Profit Pressues Prompt S&P to Cut Rating to B- CONGOLEUM CORP: Court Approves Disclosure Statement CORNERSTONE-CAMERON: White Eagle Wins Bid for Apartments at $16MM CORPORATE EXPRESS: S&P Puts 'BB-' Credit Rating Under Pos. Watch CROSSFIRE ENERGY: Lender to Ask Alberta Court to Name Receiver CRYOPORT INC: Posts $1.2M Net Loss in 3rd Qtr. Ended Dec. 31 DELPHI CORP: Hearing to Consider Bearings Biz Sale Set Today DELPHI CORP: Wants to Strike Non-Conforming Cure Objections DELPHI CORP: Cuts CEO Rodney O'Neal's Emergence Incentive to $1MM DURA AUTOMOTIVE: Backstop Rights Deal with Pacificor LLC Expires DURA AUTOMOTIVE: Wants Court to Approve Amended 2008 KMIP ELITE PHARMA: Posts $2.8M Net Loss in 3rd Qtr. Ended Dec. 31 ESSENTIAL INNOVATION: Peterson Sullivan Raises Going Concern Doubt EUROFRESH INC: Moody's Rating Unmoved by Deal to Refinance Debt F.C.D.C. COAL: Involuntary Chapter 11 Case Summary FIRST MAGNUS: Seeks Court's Approval of Settlement Pact with UBS FIRST MAGNUS: Court Grants Allegra's Request for Deposition FIRST MAGNUS: Court Orders WNS' Subpoena for Arizona Bank Quashed FIRST NLC: Court Appoints Berger Singerman as Counsel FORTUNOFF: May Pay Up to $3 Million Prepetition Delivery Charges FORTUNOFF: El-Kam Realty and Century Road Demand Lease Payments FREEPORT-MCMORAN: Moody's Lifts Ratings on Strong Earnings FRONTLINE CAPITAL: Wants Plan Filing Deadline Moved to May 2 GE CAPITAL: Moody's Affirms B3 Rating on $5.944MM Class O Certs. GE CAPITAL: Moody's Junks Ratings on Two Certificate Classes GEN CON: Says Bankruptcy Won't Interrupt Operations and Events GENER8XION ENTERTAINMENT: Farber Hass Raises Going Concern Doubt GENERAL DATACOMM: Dec. 31 Balance Sheet Upside-Down by $32.3 Mil. G-I HOLDINGS: Court Approves Dewey & Lebeouf as Counsel GS MORTGAGE: Moody's Chips Rating on $28.18MM Class G Certs. to B1 GS MORTGAGE: S&P Junks Two Certs. Ratings, Removes Neg. Watch HDB LLC: Lenders Ask Court to Appoint Chapter 11 Trustee HOLLEY PERFORMANCE: Taps Epiq as Claims and Noticing Agent ICC WORLDWIDE: Holtz Rubenstein Expresses Going Concern Doubt INTRAOP MEDICAL: Dec. 31 Balance Sheet Upside-Down by $1.4M INTREPID TECH: Posts $731T Net Loss in 2nd Qtr. Ended Dec. 31 IWT TESORO: Judge Glenn Sets March 17 as Claims Bar Date KESSELRING HOLDING: Posts $1.3 Mil. Net Loss in Qtr. Ended Dec. 31 KIMBALL HILL: Gets Limited Access to Loan Facility Until March 14 KKR FINANCIAL: Gets Extension of SLN Maturity Date to March 3 KRONOS ADVANCED: Dec. 31 Balance Sheet Upside-Down by $2M LB COMMERCIAL: Moody's Cuts Ratings on $30.937 Mil. Certificates LEVITT & SONS: Wachovia Says It Is Not Obligated to Release Homes LEVITT AND SONS: SHR Bonita Wants Deed & Escrow Pact Approved LILLIAN VERNON: Case Summary & 30 Largest Unsecured Creditors MARCAL PAPER: Settles Federal Environmental Claims with EPA MBIA INC: Former CEO Returns to Lead Company Through Challenges MERRILL LYNCH: Moody's Holds Low-B Ratings on Two Cert. Classes MERRILL LYNCH: Moody's Holds B3 Rating on $3.513MM Class K Certs. MOHEGAN TRIBAL: $1 Bil. Credit Facility Amendment Gets Lenders OK MEDQUEST INC: $177MM Notes Redemption Cues S&P to Withdraw Ratings M/I HOMES: S&P Slashes Preferred Stock Rating to CCC+ from B- MORGAN STANLEY: S&P Affirms Low-B Ratings on Five Cert. Classes NAISER ADVERTISING: Case Summary & 11 Largest Unsecured Creditors NEW YORK RACING: Court Extends Exclusive Plan Filing Period NASH FINCH: Seeks $18 Mil. in Damages from Roundy's Supermarkets NOWAUTO GROUP: Dec. 31 Balance Sheet Upside-Down by $584T ORBIT PETROLEUM: Files for Chapter 11 Reorganization in New Mexico PEOPLE'S CHOICE: Fitch Chips Ratings on 15 Certificate Classes PLASTECH ENGINEERED: Johnson Controls Mulled on Acquiring Plastech PLASTECH ENGINEERED: Taps Lazard Freres as Financial Advisor PLASTECH ENGINEERED: To Hire Skadden Arps as Bankruptcy Counsel POLAR MOLECULAR: Case Dismissal Hearing Slated for March 13 PROSPECT MEDICAL: Inks Forbearance Arrangements with Lenders QUEBECOR WORLD: Quebec Court Extends CCAA Protection Until May 12 QUEBECOR WORLD: Joint Administrators Close British Printing Plant QUEBECOR WORLD: Franklin Resources Holds 1,105 Sub. Voting Shares QUEBECOR WORLD: New Pact with Clients to Yield $75 Mil. Annually REBECCA CARTEE: Case Summary & Three Largest Unsecured Creditors RED MILE: Posts $2.8M Net Loss in 3rd Quarter Ended Dec. 31 REMOTEMDX INC: Posts $2.3M Net Loss in 1st Qtr. Ended Dec. 31 RESIDENTIAL FUNDING: Fitch Junks Ratings on 22 Certificate Classes RESMAE MORTGAGE: Fitch Cuts Ratings on $421.4 Million Certificates ROUNDY'S SUPERMARKETS: Claims Nash Finch Violated APA Terms SANMINA-SCI: Inks Assets Sale Agreement with Foxteq Holdings SHARPER IMAGE: Files for Bankruptcy Protection SHARPER IMAGE CORP: Case Summary & 20 Largest Unsecured Creditors SITEL WORLDWIDE: Weak Profitability Cues S&P to Lower Rating to B SOLERA HOLDINGS: S&P Lifts Rating on Improved Credit Metrics SOTER 2007-GSC: S&P Slashes Notes Rating to B- from AAA SPACEHAB INC: Buying 55,000 Series D Pref. Shares for $5.5 Million SQUARED CDO: Moody's Downgrades Ratings on Six Note Classes to Ca ST. JOE COMPANY: Mulls Slashing 780 Out of 980 Direct Positions SYNOVICS PHARMACEUTICALS: Miller Ellin Raises Going Concern Doubt TEKNI-PLEX INC: Credit Amendment Cues S&P to Affirm 'CC' Rating TITAN GLOBAL: Board OKs Split into Four Separate Public Companies TYSON FOODS: Expects Business Success Despite Costs Challenges UAL CORPORATION: Various Entities Disclose Stake Ownership UNITED ENERGY: Posts $594T Net Loss in 3rd Qtr. Ended Dec. 31 UNITED SUBCONTRACTORS: Moody's Cuts Corporate Family Rating to B3 UPSNAP INC: Posts $80T Net Loss in 1st Quarter Ended Dec. 31 URSTADT BIDDLE: Secures $50 Mil. Unsec. Revolving Credit Facility VICTOR PLASTICS: Committee Taps Kalina Wills as Bankruptcy Counsel VICTOR PLASTICS: U.S. Trustee Appoints 5-Member Creditors Panel WALTER INDUSTRIES: To Close 36 Jim Walter Homes Sales Centers WESTSHORE GLASS: Files Schedules of Assets and Liabilities WESTMORELAND COAL: Inks Deal to Refinance Roanoke Valley Project WHOLE FOODS: Earns $39.1 Million in Quarter Ended January 20 WICKES FURNITURE: U.S. Trustee Appoints 7-Member Creditors Panel WICKES FURNITURE: Taps Greenberg Traurig as Bankruptcy Counsel WILLOW CREEK FUELS: Voluntary Chapter 11 Case Summary WORNICK COMPANY: Asks Court to Approve $35MM DIP Credit Facility WORNICK COMPANY: Asks Court to Approve Asset Sale to Viren ZIM CORPORATION: Earns $156T in Third Quarter Ended Dec. 31 * Fitch Says Equipment Lease Delinquencies Rise Slightly in 2007 * Real Estate Prices Drop to 1.5% in Dec., Moody's Report Shows * Moody's Sees Neg. Outlook for U.S. Gaming and Lodging Sectors * Moody's Says Fin'l Guarantors' Credit Risks Might Affect Banks * Moody's Says Failures in Auction Rate Markets May Press Ratings * S&P Lowers Ratings on 125 Tranches from 18 U.S. Hybrid CDOs *Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* ACA CAPITAL: Counterparties Waive Rights and Claims Until April 23 ------------------------------------------------------------------ ACA Capital Holdings Inc. entered into a third forbearance agreement with its Structured Credit and other similarly situated counterparties. This agreement, which is of longer term than the two preceding agreements, will remain effective through 6:00 p.m., New York City local time, on April 23, 2008. Under the agreement, the counterparties will continue to waive all collateral posting requirements, termination rights and policy claims relating to the rating of ACA Financial Guaranty Corporation, ACA Capital's financial guaranty insurance subsidiary, under their respective transaction documents including any credit support annexes and similar agreements. The extended forbearance period will permit the company and its counterparties to continue their productive discussions to develop a lasting solution for the company's capital and liquidity issues. During this period, the company plans to work with its financial advisor, The Blackstone Group, to further build upon the significant progress achieved since early December 2007. The company seeks to finalize the terms of a solution by the end of this extended forbearance period and to proceed to closing as soon as practicable thereafter. About ACA Capital ACA Capital Holdings Inc. (NYSE: ACA) (OTC BB: ACAH.PK) -- http://www.aca.com/-- is a holding company that provides financial guaranty insurance products to participants in the global credit derivatives markets, structured finance capital markets and municipal finance capital markets. It also provides asset management services to specific segments of the structured finance capital markets. The company participates in its target markets both as a provider of credit protection through the sale of financial guaranty insurance products, for risk-based revenues, and as an asset manager, for fee-based revenues. ACA Capital has offices in New York, London, and Singapore. ACA Capital, through ACA Financial Guaranty Corporation, provides credit protection products. ACA Financial insures the principal and interest of bonds issued in the public finance market and targets the low investment grade ("BBB-") to high non-investment grade ("BB") portion of the public finance market. Typically, ACA Financial is paid one payment for insurance, up-front, based on the total amount of principal and interest insured. The payments received are held in reserve and earn out over the life of the related financial guaranty, nominally 30 years. At Sept. 30, 2007, ACA Financial had $7.0 billion of gross par exposure in its public finance business. * * * ACA Capital's balance sheet as of Sept. 30, 2007, showed total assets of $4.9 billion, total liabilities of $5.8 billion, and minority interest of $9.5 million, resulting in total stockholders' deficit of $883.3 million. ACCENTIA BIOPHARMA: Dec. 31 Balance Sheet Upside-Down by $74.6 M. ----------------------------------------------------------------- Accentia Biopharmaceuticals Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $37.8 million in total assets, $107.5 million in total liabilities, and $4.9 million in non- controlling interest in variable interest entities, resulting in a $74.6 million total stockholders' deficit. At Dec. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $18.7 million in total current assets available to pay $76.7 million in total current liabilities. Accentia's first quarter net loss, on a fully consolidated basis, including Biovest International Inc., was $24.8 million, compared to $30.6 million reported for the same three month period in fiscal 2007. Of this loss, $17.6 million, or approximately 71.0% was the result of non-cash charges such as accretion of capitalized finance cost, derivative loss and loss on extinguishment of debt. On a fully consolidated basis, net sales for the three months ended Dec. 31, 2007, were $4.3 million, compared with $5.9 million for the same period ended Dec. 31, 2006. This decrease was primarily attributed to a decrease of $1.3 million in net sales in the company's Specialty Pharmaceuticals segment primarily due to the divestiture of its Xodol and Histex product lines, the discontinuance of its Respi-Tann G product line, product returns and, to a lesser extent, a decrease in net sales of its Analytica subsidiary. Consolidated research and development costs were $3.8 million for the first fiscal quarter, compared with $4.4 million for the same fiscal quarter in 2007. This 13.0% decrease was largely due to the company's Biovest subsidiary reducing R&D expenses as its clinical trial costs have declined considerably in advance of the pending interim analysis of Phase 3 results for BiovaxID(TM). Biovest expects to file for conditional approval for BiovaxID in the U.S. and Europe, assuming positive results. The Biovest decrease in R&D expenses of $2.0 million was partially offset by an increase of $1.4 million in the Phase 3 clinical trial expense for SinuNase. At Dec. 31, 2007, Accentia had approximately $629,518 of cash and cash equivalents, and approximately $5.0 million in restricted cash, of which $3.2 million was attributed to Biovest. As previously reported, Biovest secured an $8.5 million financing in December. Subsequent to December 31, Accentia received proceeds from a private placement of approximately $8.7 million of convertible preferred stock. The company expects to have access to additional sources of capital following the unblinding of the SinuNase and BiovaxID Phase 3 clinical trials data, including through potential corporate collaborations and licensing agreements. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2842 Going Concern Doubt Aidman, Piser & Company P.A., in Tampa, Florida, expressed substantial doubt about Accentia Biopharmaceuticals Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Sept. 30, 2007, and 2006. The auditing firm reported that the company incurred cumulative net losses of approximately $164.1 million during the three years ended Sept. 30, 2007, $57.8 million of which was attributable to their 76% owned subsidiary, and, as of that date, had a working capital deficiency of approximately $53.1 million. About Accentia Biopharmaceuticals Based in Tampa, Florida, Accentia BioPharmaceuticals Inc. (Nasdaq: ABPI) -- http://www.accentia.net/-- is a vertically integrated biopharmaceutical company focused on the development and commercialization of drug candidates that are in late-stage clinical development and typically are based on active pharmaceutical ingredients that have been previously approved by the FDA for other indications. The company's lead product candidate is SinuNase(TM), a novel application and formulation of a known therapeutic to treat chronic rhinosinusitis. Additionally, the company has acquired the majority ownership interest in Biovest International Inc. and a royalty interest in Biovest's lead drug candidate, BiovaxID(TM) and any other biologic products developed by Biovest. The company also has a specialty pharmaceutical business, which markets products focused on respiratory disease and an analytical consulting business that serves customers in the biopharmaceutical industry. ADAM AIRCRAFT: Files Ch. 7 Petition in Colorado and Cuts 800 Posts ------------------------------------------------------------------ Adam Aircraft Inc. filed for chapter 7 liquidation with the U.S. Bankruptcy Court for the District of Colorado on Feb. 15, 2008, Rocky Mountain News and Denver Business Journal relate, citing court documents. Adam Aircraft's 500 workers in Colorado and 300 in Utah will be laid off while chairman and chief executive officer, John Wolf, left his post effective as of the bankruptcy filing, Bizjournal reports. Rocky Mountain reveals the Debtor listed assets between $1 million and $10 million, and debts between $50 million and $100 million in a court filing. According to the filing, the Debtor owes money to almost a thousand creditors, Rocky Mountain adds. Colorado Biz Suspended As reported in the Troubled Company Reporter on Feb. 13, 2008, Adam Aircraft Inc. said on its Web site that it suspended operations Monday at its facilities in Colorado. Adam Aircraft said the move was "difficult but necessary." The measure, according to the company, was required due to its inability to come to terms with their lender for funding necessary to maintain business operations. At that time, the company was currently exploring all of its alternatives and will provide further guidance when decisions are made. Need for Financing The TCR related on Jan. 25, 2008, that Adam Aircraft must secure two financing transactions otherwise it would be forced to liquidate, as stated in a letter by CEO John Wolf to stockholders. Although the company had already secured $5.5 million in December 2007, it needed to obtain $30.5 million by the end of January. According to the letter, the company must successfully complete the $30.5 million transaction in order for the company to obtain at least a $100 million equity financing led by Citibank sometime in May 2008. The Debtor had tried to lure investors by offering 49.9% equity interest in a newly formed subsidiary in exchange for funding needed in January. About Adam Aircraft Denver, Colorado-based Adam Aircraft Inc., aka Adam Aircraft Industries -- http://www.adamaircraft.com/-- designs and manufactures advanced aircraft for civil and government markets. The A500 twin-engine piston aircraft has been Type Certified by the FAA, and the A700, which is currently undergoing flight test and development. ADVANCED LIVING: Hires Focus Management as Financial Advisor ------------------------------------------------------------ Focus Management Group has been appointed Financial Advisor to Advanced Living Technologies, Inc. under an Order entered by the United States Bankruptcy Court for the Western District of Texas, San Antonio Division effective Jan. 9, 2008. Advanced Living Technologies Inc. is a not for profit owner of nursing homes and rehabilitation centers. ALT owns and operates six facilities throughout southeast Texas. ALT filed a petition for voluntary reorganization under Chapter 11 in the Western District of Texas United States Bankruptcy Court on Jan. 9, 2008. Focus Management Group is providing ALT with advisory services in the planning of its Chapter 11 filing and is assisting the Company in the preparation of its Plan of Reorganization and the internal administration of its Chapter 11 case. The Focus restructuring and bankruptcy advisory team is led by James Hopwood, a managing director of Focus Management Group with over 20 years of experience supporting under-performing businesses in diverse industries including healthcare. Mr. Hopwood is a restructuring specialist with extensive leadership experience in Chapter 11 reorganizations, financial restructuring and operational turnarounds in the healthcare industry. He can be reached at (773) 724-2082. About Advanced Living Headquartered in Austin, Texas, Advanced Living Technologies, Inc., owns and operates nursing homes. The company filed for Chapter 11 protection on January 9, 2008 (Bankr. W.D. Tex. Case. No.08-50040). Patricia Baron Tomasco, Esq., at Brown McCarroll, L.L.P., represents the Debtor. When the company filed for protection from its creditors, it listed between $1 million and $10 million in assets and debts. AEGIS MORTGAGE: Wells Fargo Wants Equity Title's Suit Dismissed --------------------------------------------------------------- Wells Fargo Bank, N.A., formerly known as Wells Fargo Home Mortgage Inc., asks the U.S. Bankruptcy Court for the District of Delaware to dismiss a complaint filed by Equity Title of Nevada, in its entirety. Karen C. Bifferato, Esq., at Connolly Bove Lodge & Hutz LLP, in Wilmington, Delaware, contends that the Court cannot enter a declaratory judgment with respect to the disbursements made by Equity Title to Wells Fargo since the bank did not receive any property from Aegis Mortgage Corporation or its debtor-affiliates. Equity Title Lawsuit Equity Title sued Aegis Wholesale Corporation in September 2007 to recover certain payments Equity Title made before the Debtors filed for bankruptcy. Equity Title acted as agent for a sale transaction between Bernard and Gloria Rubins, and Joseph and Evelyn Reyeses in Nevada. The Reyeses intended to buy from the Rubinses certain real estate property. Aegis Wholesale acted as lender in the transaction and established a $199,000 loan. The Debtor allegedly provided the Reyeses a check for $199,954 to fund the loan. At the time of the transaction, Wells Fargo Home Mortgage, Inc. and Community One Federal Credit Union maintained secured loans with respect to the property, which amount to $58,481 and $94,287. Pursuant to the transaction, a promissory note naming the Debtor as payee, and a Deed of Trust with the Debtor as beneficiary, were executed and recorded. On August 1, 2007, Equity Title deposited the funding check into its trust account so that it could disburse the funds. The loan was used to pay the balances with Wells Fargo and Community One, and to pay certain closing costs. The Rubinses were paid the balance of the funds, which amounts to $20,681. Equity Title said it wasn't aware at that time that the Debtor has ceased all mortgage activity, closed its business and terminated its employees. After Equity Title disbursed the loan as it was required to do under the transaction, the funding check was returned for insufficient funds. Prior to the bankruptcy filing, the funding check was dishonored by the Debtor's bank. Consequently, the Loan was never funded by the Debtor. The Debtor refused Equity Title's requests to fund the loan or acknowledge that it does not own the loan due to its failure to provide funding. Wells Fargo and Community One, Equity Title says, refused to return the amounts paid to them pursuant to the transaction despite their knowledge that the loan was not funded by the Debtor. Aegis Wholesale has argued that the loan is a property of its bankruptcy estate despite the fact that there was no consideration for the loan. In its complaint, Equity Title asked the Court to declare that the loan and its proceeds are not property of Aegis Wholesale's estate, and that the loan and the transaction are invalid because the Debtor failed to provide consideration for the loan. Wells Fargo's Arguments "By Equity Title's own allegations, the funds used to make the disbursements came from Equity Title and not the Debtor. Because the money paid to Wells Fargo did not come from the Debtor, the disbursements cannot be considered property of the Debtor, or consequently, its estate," Ms. Bifferato points out. She adds that the Court does not have jurisdiction over non-estate property and thus, cannot enter a declaratory judgment. "[Equity Title] does not have a standing to challenge or rescind the loan or the [sale transaction]. It has failed to allege any facts that suggest it was a contracting party to either the loan or the transaction," Ms. Bifferato says. She points out that Equity Title can only ask for rescission of the loan and the transaction if the Court finds that it does not have any rights or interests in the loan. "In this case, it appears that [Equity Title] ended up simply loaning money to the Debtor. This makes [Equity Title] a creditor of the Debtor, not a contractual party to the loan or to the transaction," Ms. Bifferato argues. According to Ms. Bifferato, the proper remedy is monetary damages to Equity Title and not rescission since the loan and the transaction have been substantially performed. "Similarly, [Equity Title] cannot rescind the loan and the transaction if third party rights have vested," Ms. Bifferato points out, adding that the seller's debt to Wells Fargo was paid as part of the sale transaction. "Therefore, to the extent that Wells Fargo may be considered a beneficiary of the loan or the transaction, the [bank's] rights have vested," Ms. Bifferato argues. "Once vesting has occurred, the original parties to the contract are both bound to perform the contract, and any effort by a party to the contract to rescind or modify [it] is void." Rescission based on mutual mistake should not be permitted, Ms. Bifferato asserts, saying that Equity Title assumed the risk that the loan would not actually be funded by the Debtor by making disbursements and recording the deed of trust and promissory note before the funding check cleared. "Equity Title has failed to allege any facts in the complaint that address mistake by all parties to the transaction so that it should be rescinded," Ms. Bifferato notes. "Wells Fargo did not care or know what the source was or supposed to be of the disbursements that were made to the bank in the transaction." Aegis Disputes Equity Title Allegations In a separate filing, Aegis Mortgage Corporation asks the Court to issue a decision avoiding any interest Equity Title may have in the mortgage loan. James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, argues that any interest of Equity Title would be subject to: (a) a creditor that extends credit to the debtor at the time of the commencement of the case, and that obtains a judicial lien on all property, which a creditor on a simple contract could have obtained the judicial lien; and (b) a creditor that extends credit to the debtor at the time of the commencement of the case, and obtains an execution against the debtor that is returned unsatisfied at that time, whether or not the creditor exists. Mr. O'Neill further argues that the complaint failed to state facts sufficient to constitute a claim against Aegis Mortgage. He adds that Equity Title's claims are barred by the doctrine of set-off of claims Aegis Mortgage held against Equity Title. Equity Title Refutes Debtor's Counterclaim Equity Title says the mortgage loan is not property of the Debtors' estates. The Debtors, it notes, have mere legal title to the Loan, but Equity Title has equitable title to the Loan. Equity asks the Court to dismiss the Debtors' counterclaim with prejudice. 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, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AGILYSYS INC: Acquires Eatec Corporation for $23.2 Million Cash --------------------------------------------------------------- Agilysys Inc. acquired Eatec Corporation for a purchase price of $23.2 million, net of cash. The acquisition will be funded with the company's cash on hand. Eatec's software, EatecNetX, is a recognized, open architecture- based, inventory and procurement management system. It provides customers with the data and information necessary to increase sales, reduce product costs, improve back-office productivity and increase profitability. Eatec customers include restaurants, hotels, stadiums and entertainment venues in North America and around the world well as many public service institutions. EatecNetX's core functions include purchasing, inventory, recipe, forecasting, production and sales analysis. Additionally, the solution offers catering, restaurant, concessions, manufacturing, retail/merchandising and airline catering modules in one integrated solution. "This acquisition further enhances our position as a leading inventory and procurement solution provider to the hospitality and foodservice markets," Arthur Rhein, chairman, president and chief executive officer of Agilysys, said. "Similar to our previous acquisitions of Visual One Systems and InfoGenesis, the Eatec acquisition complements and expands our offerings, allowing us to better serve our customers." In addition to being a stand-alone software application, EatecNetX will be interfaced with Agilysys' point-of-sale offerings to create a complete end-to- end solution for customers in the foodservice industry. Agilysys hospitality solution offerings are among the most comprehensive in the market, with solutions to cover the hospitality industry's information technology needs. Agilysys hospitality solutions include property management, inventory procurement, point-of-sale, golf management, club management, condo accounting, spa, sales and catering, dining reservations, business analytics and document management. About Eatec Corporation Eatec Corporation -- http://www.eatec.com/-- is a privately held developer and marketer of inventory and procurement software. with U.S. headquarters in Emeryville, California. About Agilysys Inc. Based in Mayfield Heights, Ohio, Agilysys Inc. (Nasdaq: AGYS) -- http://www.agilysys.com/-- is one of the distributors and resellers of enterprise computer technology solutions. The company is delivering complex server and storage hardware, software and services to resellers, large and medium-sized corporate customers, well as public-sector clients across a diverse set of industries. In addition, the company provides customer-centric software applications and services focused on the retail and hospitality markets. Agilysys has sales offices throughout the United States and Canada. * * * Standard and Poor's placed Agilysys Inc.'s long-term foreign and local issuer credit ratings at "BB-" in October 2004. The ratings still hold to date. AMERICAN HOME: Withdraws Request to Hire Deloitte as Tax Experts ---------------------------------------------------------------- American Home Mortgage Investment Corp. has withdrawn its request before the U.S. Bankruptcy Court for the District of Delaware, to employ Deloitte Tax LLP as their tax experts. The Debtors did not state the basis of the withdrawal Kelly Beaudin Stapleton, United States Trustee for Region 3, had objected to the Application saying that, among other things, Deloitte Tax is not a "disinterested person" because it has an interest materially adverse to both the interests of the Debtors' bankruptcy estates and a class of their equity security holders by reason of Deloitte & Touche LLP's prepetition connections with the Debtors. Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP, represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on March 3, 2008. (American Home Bankruptcy News, Issue No. 26, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Court Denies CB Richard as Real Estate Broker ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware denied American Home Mortgage Investment Corp.'s request to employ CB Richard Ellis Inc., as real estate broker. Kelly Beaudin Stapleton, United States Trustee for Region 3, previously questioned why, as a threshold matter, the Debtors are seeking to employ CB Richard Ellis to market a property, which is not property of the bankruptcy estates. Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP, represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on March 3, 2008. (American Home Bankruptcy News, Issue No. 26, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN SOIL: McKennon Wilson Expresses Going Concern Doubt ------------------------------------------------------------ McKennon Wilson & Morgan LLP in Ervine, Calif., raised substantial doubt about the ability of American Soil Technologies Inc., to continue as a going concern after it audited the company's financial statements for the year ended Sept. 30, 2007. The auditing firm stated that the company has incurred losses in recent history, and has significant working capital and accumulated deficits. The company posted a net loss of $3,112,030 on total revenues of $764,591 for the nine months ended Sept. 30, 2007, as compared with a net loss of $3,203,173 on total revenues of $586,003 in the year ended Dec. 31, 2006. At Sept. 30, 2007, the company's balance sheet showed $3,942,044 in total assets and $4,424,499 in total liabilities, resulting in $482,455 stockholders' deficit. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $378,904 in total current assets available to pay $2,672,426 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?282e About American Soil Based in Pacoima, California, American Soil Technologies Inc. (SOYLE.OB) -- http://www.americansoiltech.com-- develops, manufactures, and markets polymer soil amendments to the agricultural, turf, and horticulture industries in North America. It manufactures three primary products: Agriblend, a soil amendment developed for agriculture; Soil Medic, a slow release liquid fertilizer; and Nutrimoist, developed for homes, parks, golf courses, and other turf related applications. The company was founded in 1993. AMERICAN WENSHEN: Losses Cue Kabani to Raise Going Concern Doubt ---------------------------------------------------------------- Kabani & Company, Inc., raised substantial doubt about the ability of American Wenshen Steel Group, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Sept. 30, 2007. The auditor pointed to the company's significant operating losses and insufficient capital The company posted a net loss of $595,290 on net sales of $1,162,555 for the year ended Sept. 30, 2007, as compared with a net loss of $117,544 on net sales of $93,707 in the prior year. At Sept. 30, 2007, the company's balance sheet showed $5,271,804 in total assets, $532,997 in total liabilities and $4,738,807 stockholders' equity. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?282c About American Wenshen American Wenshen Steel Group, Inc. (OTC BB: AWSH.OB), through its subsidiary, Chaoyang Liaogang Special Steel Co., Ltd., manufactures tungsten carbide steel, stainless steel, and die steel in the People's Republic of China. Its tungsten carbide steel is used for tools, dies, and precision measuring instruments, as well as gears and bearings. The company produces stainless steel primarily for the cookware and tableware industry. The company was founded in 2004 and is based in New York City. ATLANTIC EXPRESS: S&P Junks Corp. Credit and Secured Debt Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating and senior secured debt ratings on Atlantic Express Transportation Corp. to 'CCC+' from 'B-' and placed the ratings on CreditWatch with negative implications. "The rating actions and CreditWatch placement reflect worse-than-expected operating performance, a deteriorating financial profile, and increasing liquidity constraints," said Standard & Poor's credit analyst Funmi Afonja. "The CreditWatch also reflects our expectations of continued earnings and cash flow pressures due to rising fuel prices at a time when the company does not hedge for its fuel cost, and higher labor costs trends that are likely to continue over the next 6 to 12 months." Atlantic Express is one of the larger providers of school bus transportation in the U.S. and the leading provider in New York City. School bus services account for about 88% of revenues. The company also provides paratransit services for disabled passengers, and other services, including express commuter lines and tour buses. Atlantic Express's liquidity is tightly constrained and may not be adequate to meet debt service requirements over the next year. At Dec. 31, 2007, the company had $1.2 million of cash, $10.5 million available under its $35 million revolving credit facility, and modest availability under its $10 million letter-of-credit facility. The revolving credit facility and the LOC facility both expire in 2011. The credit facility has a financial covenant requirement of minimum last-12-months EBITDA of $26 million, which will only be tested if excess availability falls below a certain threshold. Under the newest covenant amendment which expires on Feb. 19, 2009, excess availability at Dec. 31, 2007, was above the threshold. However, the senior lender recently increased borrowing base reserves for the company's interest rate swap agreements, further exacerbating liquidity constraints as the company approaches its peak borrowing requirement during the fiscal (Sept. 30, 2008) quarter. A continuation of or increase in these reserves would have a significant adverse effect on the company's liquidity over the next several months. S&P will assess the company's operating prospects and liquidity in resolving the CreditWatch. S&P could lower ratings further if liquidity constraints increase. AVETA INC: S&P Puts 'CCC' Credit Rating Under Positive Creditwatch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'CCC' counterparty credit rating on Aveta Inc. on CreditWatch with positive implications. "The rating was placed on CreditWatch positive in connection with improved financial performance that is likely to result in better earnings quality and enhanced financial flexibility," said Standard & Poor's credit analyst Joseph Marinucci. For most of 2007, Aveta focused strongly on key remediation initiatives that included new senior executives, network recontracting, and buildup of medical management infrastructure. The 'CCC' rating on Aveta still best reflects the ongoing uncertainty about the company's credit profile. The rating could be raised by one or two notches in second-quarter 2008 if year-end 2007 results were to be in line with earnings and cash flow trends that have emerged throughout the second-half of 2007. S&P also expect Aveta to be compliant with all financial covenants for the first-quarter 2008 filing period. S&P intend to meet with Aveta's management soon to review year-end 2007 financial results and further discuss its prospective capital and strategic plans. Following the review, the ratings could be raised by as a much as two notches with a stable or positive outlook. BANC OF AMERICA: Stable Performance Cues Fitch to Hold Ratings -------------------------------------------------------------- Fitch Ratings affirmed Banc of America Commercial Mortgage Inc.'s commercial mortgage pass-through certificates, series 2001-1, as: -- $462.6 million class A-2 at 'AAA'; -- $43.8 million class A-2F at 'AAA'; -- Interest-only class X at 'AAA'; -- $35.6 million class B at 'AAA'; -- $21.3 million class C at 'AAA'; -- $19 million class D at 'AAA'; -- $9.5 million class E at 'AAA'; -- $9.5 million class F at 'AAA'; -- $19 million class G at 'AA'; -- $14.2 million class H at 'A-'; -- $13.3 million class J at 'BBB'; -- $23.5 million class K at 'BB'; -- $2.1 million class L at 'BB-'; -- $5.5 million class M at 'B+'; -- $6.8 million class N at 'B-/DR1'; -- $5.6 million class O at 'C/DR6'. Class A-1 has been paid in full. The affirmations are due to the stable performance of the transaction since Fitch's last rating action. As of the January 2008 distribution date, the pool's aggregate balance has decreased 27.1% to $691.2 million from $948.1 million at issuance. Thirty- eight loans (36.2%) have defeased since issuance. Fitch has designated 22 loans (17.1%) as Fitch Loans of Concern. These include the three specially serviced assets (2.6%) and four of the top ten loans in the transaction, as well as loans with low cash flow and occupancy. The largest Fitch Loan of Concern, which is the second largest loan (2.4%) in the pool, is an office property in Phoenix, Arizona, which has been performing poorly since 2003 due to occupancy issues and a competitive market. The loan remains current, and occupancy has increased to 88% as of June 2007 from 82% at year-end 2006. The second largest Loan of Concern (2.2%) is an office property Bellevue, Washington which has experienced a decline in cash flows due to fluctuations in occupancy. Occupancy as of September 2007 was 93% with a debt-service coverage ratio of 0.98 times. The two largest specially serviced assets (2.2%) are real-estate owned multi-family properties in Columbia, Missouri. The properties were transferred to special servicing due to monetary default. The third largest specially serviced asset (0.4%) is an REO office property in Greenville, South Carolina. The special servicer is working to stabilize the property before marketing the property. Fitch expected losses are anticipated to impact class O. BENJAMIN ELLIS: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtors: Benjamin Joseph Ellis Christine T.D. Ellis 553 North Kimberlee Way Chandler, AZ 85225 Bankruptcy Case No.: 08-01521 Chapter 11 Petition Date: February 19, 2008 Court: District of Arizona (Phoenix) Debtors' Counsel: Gary V. Ringer, Esq. 7303 West Boston Street Chandler, AZ 85226 Tel: (480) 705-7550 Fax: (480) 705-7503 garyvringler@earthlink.net Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million The Debtors do not file a list of their 20 largest unsecured creditors. BEXAR COUNTY HOUSING: Moody's Affirms 'B1' Rating on Revenue Bonds ------------------------------------------------------------------ Moody's Investors Service affirmed the ratings on Bexar County Housing Finance Corporation Multifamily Housing Revenue Bonds (American Opportunity for Housing - Colinas LLC Project) at Ba1 for Series 2001A and at B1 for Series 2001C. The affirmations are reflective of debt service coverage levels in 2006 that are in-line with the benchmarks for the current rating categories. The outlook on both Series is stable due to improved financial performance in 2007, balanced with weak occupancy at Las Colinas. The bonds are secured by the revenues from three cross collateralized properties, Las Colinas Apartments, Huebner Oaks Apartments and Perrin Crest Apartments, as well as by funds and investments pledged to the trustee under the indenture as security for the bonds. Las Colinas is a 232-unit garden style apartment complex built in 1978, composed of 30 two-story buildings and is located approximately 20 miles north west of the San Antonio central business district. Huebner Oaks is a 344-unit garden style apartment complex built in 1984, composed of 23 two-story buildings and is located approximately 12 miles north west of the San Antonio central business district. Perrin Crest is a 200-unit garden style apartment complex built in 1985, composed of 13 two- story buildings and is located approximately 12 miles north east of the San Antonio central business district. Legal Security: The bonds are limited obligations payable solely from the revenues, receipts and security pledged in the Trust Indenture. Credit Strengths -- Debt service reserves are fully funded as of 12/17/2007. -- Excess cash in the surplus fund of $319,895 as of 12/17/2007. -- Interim financial statements for 2007 indicate improved debt service coverage. Credit Challenges -- Weighted occupancy for the three projects is 90.6% in February 2008. -- Debt service coverage declined to 1.18x for Series 2001A and 1.01x for 2001C in 2006; interim financial statements indicate improvement in 2007. Recent Developments/Results: Debt service coverage ratios, derived from 2006 audited financial statements, are thin, but appropriate for the current rating categories, at 1.18 for 2001A and 1.01for 2001C. Weighted average monthly occupancy averaged 91% in 2007, with the weakness being relatively evenly distributed amount the three properties. February 2008 weighted average occupancy is 90.6%, with Las Colinas the weakest at 86%. Management credits the low occupancy to recent move-outs of students due to a semester change at a nearby university. The less than optimum occupancy is balanced by improved debt service coverage levels for 2007 - 1.32 for seniors and 1.13 subs. However, typically DSCR's for audited statements are lower than those from interim statements. Torto Wheaton Research forecasts rent growth of 2.3% in 2008 and 2.0% in 2009 for the Huebener Oaks' and Las Colinas' submarket. Occupancy in the submarket is forecasted to decline from 95.2% in 2007 to 94% in 2008. Perrin Crest's submarket is forecasted to under perform with 0.5% rent growth in 2008 and 1.3% in 2009. Occupancy is forecasted to decline to 92.2% in 2008. What could change the rating - Up -- Stable weighted average occupancy, improved debt service coverage and a fully funded debt service funds. What could change the rating - Down -- Declines in debt service coverage levels; or weakened occupancy; or the tapping of debt service reserves. Outlook The outlook for the bonds is stable as weakened occupancy is balanced by improved financial performance in 2007. BLACKHAWK AUTOMOTIVE: Wants Court's OK to Sell Assets for $20.7MM ----------------------------------------------------------------- Blackhawk Automotive Plastics Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Northern District of Ohio for permission to sell substantially all of their assets to Flex-N-Gate LLC for $20,768,000,under an asset purchase agreement. Specifically, the Debtors are selling their operating assets, including equipment, inventory and certain leasehold rights, located at 800 Pennsylvania Avenue in Salem, Ohio, and at 4219 U.S. Rt. 42 in Mason, Ohio. As reported in the Troubled Company Reporter on Dec. 18, 2007, the Court approved the bidding procedure proposed by the Debtors for the public sale of their assets. Sale Protocol Qualified bidders must deliver their offers no later than 5:00 p.m., on Feb. 29, 2008, at: W.Y. Campbell & Company, c/o Ty T. Clutterbuck 1 Woodward Avenue, 26th Floor Detroit, MI 48226 An auction will take place March 3, 2008, at 11:00 a.m., at the offices of Honigman, Miller, Schwartz & Cohn LLP in Detroit, Michigan. During the auction, qualified bidders may submit bids in increments of at least $100,000. A sale hearing has been set on March 5, 2008, at 10:00 a.m., to consider approval of the Debtors' request. About Blawkhawk Automotive Salem, Ohio-based Blackhawk Automotive Plastics Inc., formerly Warren Molded/Custom Plastics, manufactures injection molded plastic products and motor vehicle parts and accessories. BAP's customers include General Motors, Delphi, Lear, Chrysler, Honda, Navistar, and Visteon. BAP employs about 1,574 workers domestically, and generated $136 million in sales in 2006. BAP owns Canadian subsidiary, Blackhawk Automotive Plastics Ltd. which operated a manufacturing facility in Ontario until Johnson Controls Inc. bought BAP Canada's assets in May 2005. BAP Canada's remaining assets consist primarily of net operating loss carryforwards for Canadian tax purposes. The NOLs had a book value of about $8.2 million as of December 2005. BAP also owns a plant in Upper Sandusky, Ohio, which ceased operations in 2006. The company filed for chapter 11 protection on Oct. 22, 2007 (Bankr. N.D. Ohio, Case No. 07-42671). Its parent company, Tier e Automotive Group Inc., filed a separate chapter 11 petition on the same day (Bankr. N.D. Ohio, Case No. 07-42673). Tier e acquired BAP from Worthington Industries Inc. in 1999. Tier e also owns 49% stake in Nescor Holdings Inc., a holding company for Nescor Plastics Corporation, also an automotive plastics supplier. William I. Kohn, Esq., David M. Neumann, Esq., Stuart A. Laven, Jr., Esq., at Benesch, Friedlander, Coplan & Aronoff LLP, represent the Debtors in their restructuring efforts. Donlin Recano & Company Inc. provides the Debtors with claims, noticing, balloting and distribution services. The Debtors' schedules disclosed total assets of $58,665,229 and total liabilities of $51,244,592. As of bankruptcy filing, BAP's aggregate debt to its senior facility lenders was about $33 million. BLACKHAWK AUTOMOTIVE: Wants Plan Filing Deadline Moved to May 19 ---------------------------------------------------------------- Blackhawk Automotive Plastics Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Northern District of Ohio to further extend their exclusive period to file a Chapter 11 plan until May 19, 2008. The Debtors also ask the Court to further extend their exclusive period to solicit acceptances of that plan until July 18, 2008. William E. Schonberg, Esq., at Benesch, Friedlander, Coplan & Aronoff LLP in Cleveland, Ohio, says that the Debtors are in the midst of the sale process and the termination of the exclusivity before March 14 deadline to consummate a sale may unduly prejudice their creditors. The sale is part of the Debtors' postpetition financing agreement with certain of their lenders, Mr. Schonberg says. The Debtors' exclusive right to file a plan expired on Feb. 19, 2008. About Blawkhawk Automotive Salem, Ohio-based Blackhawk Automotive Plastics Inc., formerly Warren Molded/Custom Plastics, manufactures injection molded plastic products and motor vehicle parts and accessories. BAP's customers include General Motors, Delphi, Lear, Chrysler, Honda, Navistar, and Visteon. BAP employs about 1,574 workers domestically, and generated $136 million in sales in 2006. BAP owns Canadian subsidiary, Blackhawk Automotive Plastics Ltd. which operated a manufacturing facility in Ontario until Johnson Controls Inc. bought BAP Canada's assets in May 2005. BAP Canada's remaining assets consist primarily of net operating loss carryforwards for Canadian tax purposes. The NOLs had a book value of about $8.2 million as of December 2005. BAP also owns a plant in Upper Sandusky, Ohio, which ceased operations in 2006. The company filed for chapter 11 protection on Oct. 22, 2007 (Bankr. N.D. Ohio, Case No. 07-42671). Its parent company, Tier e Automotive Group Inc., filed a separate chapter 11 petition on the same day (Bankr. N.D. Ohio, Case No. 07-42673). Tier e acquired BAP from Worthington Industries Inc. in 1999. Tier e also owns 49% stake in Nescor Holdings Inc., a holding company for Nescor Plastics Corporation, also an automotive plastics supplier. William I. Kohn, Esq., David M. Neumann, Esq., Stuart A. Laven, Jr., Esq., at Benesch, Friedlander, Coplan & Aronoff LLP, represent the Debtors in their restructuring efforts. Donlin Recano & Company Inc. provides the Debtors with claims, noticing, balloting and distribution services. The Debtors' schedules disclosed total assets of $58,665,229 and total liabilities of $51,244,592. As of bankruptcy filing, BAP's aggregate debt to its senior facility lenders was about $33 million. BUFFETS HOLDINGS: $385 Mil. DIP Facility Hearing Moved to Feb. 22 ----------------------------------------------------------------- Buffets Holdings Inc. and its debtor-affiliates agreed with the request filed by the Official Committee of Unsecured creditors to postpone the hearing on their motion to incur $385,000,000 in postpetition financing. The Committee said it needed additional time to analyze the DIP Facility and its impact on the Debtors' restructuring and creditors, reports Bloomberg News. The Hon. Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware continued the hearing to consider final approval of the DIP Facility to Feb. 22, 2008. More Parties Objects (a) WP East End The Debtors are parties to a certain lease agreement with WP East End Associates LP's predecessor-in-interest for the lease of about 10,000 square feet of space located in the East End Shopping Center in Wilkes-Barre, Pennsylvania. Same as with the other objecting landlords, WP East objects to the provision in the Debtors' request to obtain postpetition financing that would allow the DIP lenders to obtain a de facto assignment of lease agreements in an event of default. Jason W. Staib, Esq., at Blank Rome LLP, in Wilmington, Delaware, contends that all transfers of WP East's Lease Agreement must be subjected to a further hearing where any proposed assignee would be required to meet the strict terms and conditions of Section 365 of the Bankruptcy Code, including providing the Landlord with adequate assurance of future performance. Mr. Staib tells the Court that it should not grant any relief that allows the DIP Lenders to use a "drop dead" provision upon the the occurrence of a default under Section 362 to vitiate the Landlord's rights under Section 365. He says automatic relief from the stay under Section 362 would allow the DIP Lenders under the guise of Section 364 financing to void the Landlord's rights under Section 365. He argues that statutory construction of the Bankruptcy Code requires the Court to give meaning to both Sections. Accordingly, WP East asks the Court to modify the final order to be entered with respect to the Debtor's request to obtain postpetition financing. (b) HSBC HSBC Bank USA, National Association, as Indenture Trustee of $300,000 Principal Amount of 12-1/2% Senior notes due 2014, asks the Court to deny the Debtors' request. HSBC says the DIP Facility is not favorable to the Debtors and their creditors. HSBC argues that the DIP Facility is structured more to fix apparent collateral problems of prepetition senior lenders. The $300,000,000 roll-up is inappropriate as it will only enhance the position of prepetition lenders to the detriment of unsecured creditors. Pursuant to the roll-up, $300,000,000 of the $385,000,000 will be used to repay nearly half of Prepetition Lenders' claims. HSBC notes that the Debtors have failed to establish that the proposed roll-up is necessary. (c) Committee On behalf of the Official Committee of Unsecured Creditors, Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, contends that: -- the roll-up of the prepetition financing and the cross- collateralization of debt is inappropriate as the structure of the DIP Facility is solely for the benefit of the Lenders; -- the milestone restructuring covenants are inappropriate; -- the relief sought precludes the Committee from properly performing its duties on behalf of general unsecured creditors; -- the proposed waiver of Section 506(c) of the Bankruptcy Code is inappropriate; and -- the granting of superpriority liens and claims attaching to the proceeds of avoidance actions improperly transfers to the Lenders assets that are intended for the benefit of the estates. In addition, Ms. Jones mentions other objectionable provisions of the proposed financing including: (a) the budget; (b) payments to the Prepetition Lenders and the Postpetition Lenders; (c) the Lenders' professional fees; (d) events of default; (e) provisions which prevent challenge to the Debtors' sale lease back transactions; (f) inadequate notice upon default provisions; (g) the lease and real property rights given to the Lenders; (h) the prohibition of seeking the appointment of a responsible person, trustees and examiners with expanded powers, without triggering defaults; and (i) the "good faith" finding notwithstanding the insufficiency of any sworn factual record in support. In a separate request, the Committee asks the Court for authority to file its detailed objection under seal in order to maintain the confidentiality of information. Ms. Jones tells the Court that the Committee's detailed objection contain confidential information concerning the Debtors' business and operations. Headquartered in Eagan, Minnesota, Buffets Holdings Inc. -- http://www.buffet.com/-- is the parent company of Buffets, Inc., which operates 626 restaurants in 39 states, comprised of 615 steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse restaurants, and franchises sixteen steak-buffet restaurants in six states. The restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain brands. Buffets, Inc. employs approximately 37,000 team members and serves approximately 200 million customers annually. The company and all of its subsidiaries filed Chapter 11 protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). The Debtors' balance sheet as of Sept. 19, 2007, showed total assets of $963,538,000 and total liabilities of $1,156,262,000. (Buffets Holdings Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000) CHAMPION ENTERPRISES: Posts $6MM Net Loss in Quarter Ended Dec. 29 ------------------------------------------------------------------ Champion Enterprises Inc. reported results for fourth quarter and fiscal year ended Dec. 29, 2007. The company reported a net loss for the quarter of $6 million compared to net income of $3.6 million for the same period of the prior year. The loss before income taxes in the fourth quarter of 2007 included these items: -- $6.4 million of expense recorded in connection with the earn out provisions of the 2006 acquisition of Calsafe Group (Holdings) Ltd.; -- loss on debt retirement of $4.5 million as a result of the company's changes to its debt structure; and -- charges totaling $3.6 million related to the closure of a manufacturing facility. Pre- tax income for the fourth quarter of 2006 was reduced by a $0.4 million loss on debt retirement. Net income for 2007 totaled $7.2 million compared to net income of $138.3 million in 2006. Net income in 2006 included $101.9 million of income from the reversal of the recorded deferred tax valuation allowance and $4.7 million of pre-tax gains from property sales. "While our earnings continue to be pressured by deteriorating conditions in the U.S. housing markets, our efforts to diversify and build a strong international platform continue to mitigate these pressures," William Griffiths, chairman, president and chief executive officer of Champion Enterprises Inc., stated. "Our non- U.S. revenues increased 135% in 2007, contributing over 30% of our total revenues and strong cash returns. "Thanks to the focused work of our operations both in North America and internationally, our free cash flow improved over 60% to $69 million in 2007 despite a decline in reported earnings for the year," Mr. Griffiths added. "As a result, our cash position continued to improve, ending 2007 at $135 million. This, coupled with the successful refinancing we completed during the fourth quarter, leaves Champion well positioned to continue to execute its growth and diversification strategies." About Champion Enterprises Inc. Based in Auburn Hills, Michigan, Champion Enterprises Inc. (NYSE: CHB) -- http://www.championhomes.com/-- operates 31 manufacturing facilities in North America and the United Kingdom working with independent retailers, builders and developers. The Champion family of builders produces manufactured and modular homes, as well as modular buildings for government and commercial applications. * * * As reported in the Troubled Company Reporter on Dec. 12, 2007, Standard & Poor's Ratings Services raised its ratings on Champion Enterprises Inc.'s senior notes due 2009 and on Champion Home Builders Co.'s senior secured credit facility to 'B+' from 'B'. At the same time, S&P upgraded the recovery ratings on the senior notes and the credit facility to '3' from '5'. Concurrently, S&P affirmed the 'B+' corporate credit ratings. The outlook for both entities is stable. CHIQUITA BRANDS: Posts $26 Mil. Net Loss in Qtr. Ended December 31 ------------------------------------------------------------------ Chiquita Brands International Inc. released financial and operating results for the fourth quarter and full-year ended Dec. 31, 2007. The company reported a net loss of $26 million including a charge of $26 million related to the company's restructuring plan. In the year-ago period, the company reported a net loss of $42 million including a $25 million accrual related to the settlement of a U.S. Department of Justice investigation. The company's fourth quarter operating loss of $11 million was on the favorable end of the estimated operating loss range of $10-20 million provided in the company's preliminary selected results release on Jan. 28, 2008. For the full year, the company reported a net loss of $49 million, compared to a net loss of $96 million in 2006. "Our results reflect the proactive steps we took throughout the year to position us to transform and grow our business," said Fernando Aguirre, chairman and chief executive officer. "We have continued to focus on pricing in bananas and recovery in value- added salads to help offset persistent external cost challenges." "In 2008, we will be focused on maintaining our premium brands, improving North American profitability and completing the restructuring we implemented in October," Mr. Aguirre added. "We also will invest in the development of new value-added products to extend our brands, expand consumption and drive growth in higher- margin distribution channels and profitable geographies. We believe that these strategies will help us to achieve our vision of becoming the global leader in healthy, fresh and convenient foods." Business Restructuring The restructuring plan, disclosed in October 2007, is on track to generate new, sustainable cost savings of approximately $60-80 million this year. The savings are being generated from a reduction in compensation related expenses, which is already implemented, and consolidation of processing and distribution facilities, which will be completed at the end of the first quarter 2008. The plan is designed to accelerate the company's long-term strategy to become the leader in healthy, fresh foods well as to improve profitability and efficiency through consolidation of operations and simplification of overhead structure. The restructuring will drive greater integration and efficiency across business units and geographies, resulting in one relationship manager for customers, a supply chain, and an innovation program with targeted priorities and better execution. As reported, the company incurred a $26 million one-time charge in the fourth quarter 2007 related to severance costs and certain asset write-downs under the restructuring plan. Refinancing Progress The company also reported continued progress in a refinancing expected to lower interest expense, extend debt maturities and add significant additional covenant flexibility. After the consent solicitation from the holders of the company's 7-1/2% Senior Notes due 2014, the company issued $200 million aggregate principal amount of 4.25% Convertible Senior Notes due 2016. Net proceeds of approximately $194 million have been used to repay a portion of the outstanding amounts under the company's Term Loan C of its senior secured credit facility. The Notes are convertible, under certain circumstances, at an initial conversion rate of 44.5524 shares of common stock per $1,000 original principal amount of Notes, equivalent to an initial conversion price of approximately $22.45 per share of Chiquita common stock, subject to adjustment. This represents a premium of approximately 32.5% to the last reported sale price of Chiquita's common stock on Feb. 6, 2008 of $16.94. The company has also entered into a fully underwritten commitment with Cooperatieve Centrale Raiffeisen - Boerenleenbank B.A., "Rabobank Nederland," New York branch to refinance the company's existing $200 million revolving credit facility and the remaining portion of the company's Term Loan C. Pursuant to the terms of the commitment letter Rabobank has committed to provide to the company a six-year senior secured credit facility including a $200 million revolving credit facility and a $200 million term loan. The company expects to close the new facility by March 31, 2008. About Chiquita Brands International Inc. Cincinnati, Ohio-based Chiquita Brands International, Inc. (NYSE: CQB) -- http://www.chiquita.com/-- markets and distributes fresh food products including bananas and nutritious blends of green salads. The company markets its products under the Chiquita(R) and Fresh Express(R) premium brands and other related trademarks. Chiquita employs approximately 25,000 people operating in more than 70 countries worldwide, including Belgium, Columbia, Germany, Panama, Philippines, among others. * * * Chiquita Brands International Inc. continues to carry Moody's Investors Service's B3 long term corporate family and Caa2 senior unsecured debt ratings which were placed on Nov. 6, 2006. The outlook is negative. COACH AMERICA: Profit Pressues Prompt S&P to Cut Rating to B- ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Dallas, Texas-based Coach America Holdings Inc. to 'B-' from 'B'. All ratings were removed from CreditWatch, where they were placed with negative implications on Oct. 30, 2007. The outlook is now negative. "The downgrade reflects Coach America's recent profit pressures," said Standard & Poor's credit analyst Funmi Afonja. "While management is undertaking various actions to improve operating performance -- and we believe that this will result in improved results over time -- we still expect the financial profile to remain weaker than previously expected, at least over the near term," she added. At the same time, Standard & Poor's lowered the senior secured debt ratings to 'B', one notch above the corporate credit rating, while leaving the recovery rating unchanged at '2', indicating expectations of a substantial (70%-90%) recovery in the event of a payment default. Also, Standard & Poor's lowered the second-lien credit facility rating to 'CCC', two notches below the corporate credit rating, while leaving the recovery rating unchanged at '6', indicating expectations of a negligible (0%-10%) recovery in the event of a payment default. Coach America is the largest charter bus operator and the second- largest motorcoach services provider in the U.S. The company was formed in 2003 from the divestiture of the Western and South Central regional businesses of Coach USA to a private equity group. CONGOLEUM CORP: Court Approves Disclosure Statement --------------------------------------------------- The Honorable Kathryn C. Ferguson of the U.S. Bankruptcy Court for the District of New Jersey approved Congoleum Corp. and its debtor-affiliates' Disclosure Statement that describes their Chapter 11 Plan of Reorganization. Judge Ferguson said that the Debtors' Disclosure Statement contains adequate information within the meaning of Section 1125 of the U.S. Bankruptcy Code. As reported in the Troubled Company Reporter on Feb. 11, 2008, the Official Committee of Bondholders and the Committee of Asbestos Claimants in the Debtors' cases have agreed to support the Debtors' amended plan of reorganization. Congoleum's amended Chapter 11 reorganization plan was filed by the future claimants' representative in its Chapter 11 proceedings. If the plan is approved by the court and accepted by the requisite creditor constituencies, it will permit Congoleum to exit Chapter 11 free of liability for existing or future asbestos claims. Under the terms of the amended plan, a trust will be created that assumes the liability for Congoleum's current and future asbestos claims. That trust will receive the proceeds of various settlements Congoleum has reached with a number of insurance carriers, and will be assigned Congoleum's rights under its remaining policies covering asbestos product liability. The trust will also receive 50.1% of the newly issued common stock in reorganized Congoleum when the plan takes effect. Holders of Congoleum's $100 million in 8.625% senior notes due in August 2008 will receive on a pro rata basis $80 million in new 9.75% senior secured notes that mature five years from issuance. The new senior secured notes will be subordinated to the working capital facility that provides Congoleum's financing upon exiting reorganization. In addition, holders of the $100 million in 8.625% senior notes due in August 2008 will receive 49.9% of the common stock in reorganized Congoleum. Congoleum's obligations for the $100 million in 8.625% senior notes due in August 2008, including accrued interest -- which amounted to $44.6 million at Dec. 31, 2007 -- will be satisfied by the new senior secured notes and the common stock issued when the plan takes effect. Under the terms of the amended plan, existing Class A and Class B common shares of Congoleum will be cancelled when the plan takes effect and holders of those shares, including the current controlling shareholder American Biltrite will not receive anything on account of their cancelled shares. Congoleum expects existing management will continue post-reorganization. The insurers in the Debtors' cases are instructed to file and serve briefs as to whether they have standing with regard to confirmation of the proposed plan by Feb. 29, 2008. Responses shall be filed and served by March 14, 2008. No reply papers may be filed. Court will hold a hearing on the briefs on March 25, 2008 at 2:30 p.m. About Congoleum Corp. Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S. Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander & DeLuca, LLP, represent the Debtors. At March 31 2007, Congoleum reported $180,091,000 in total assets and $226,990,000 in total liabilities, resulting in a stockholders' deficit $46,899,000. The Asbestos Claimants' Committee is represented by Peter Van N. Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drydale, Chtd. The Bondholders' Committee is represented by Michael S. Stamer, Esq., and james R. Savin, Esq., at Akin Gump Strauss Hauer & Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC, represents the Official Committee of Unsecured Creditors. R. Scott Williams, Esq., of Haskell Slaughter Young & Rediker, LLC, the Court-appointed Futures Claimants Representative, is represented by Roger Frankel, Esq., Richard Wyron, Esq., and Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC. American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum, is represented by Matthew Ward, Esq., Mark S. Chehi, Esq., Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden Arps Slate Meagher & Flom. CORNERSTONE-CAMERON: White Eagle Wins Bid for Apartments at $16MM ----------------------------------------------------------------- Two apartment complexes acquired in 1997 by bankrupt Cornerstone- Cameron & Stonegate Inc. are about to be sold to White Eagle Properties for $16 million, Andy Meek of The Daily News reports. The apartments, Stonegate Apartments in Raleigh and Autumnwood Apartments in Southeast Memphis, have a total of 532 units and is currently valued at $14.4 million, Daily News says. According to the report, White Eagle outbid 53 other interested buyers. Blake Pera at CB Richard Ellis, which serves as broker, told Daily News that they have been marketing the apartment complexes upon the order of the U.S. Bankrutpcy Court for the Western District of Tennessee. The Bank of New York Trust Co., indenture trustee of the bonds secured by the properties, asked Judge David S. Kennedy to approve the sale, Daily News reveals. The Debtor bought the properties from the proceeds of bonds issued by the Health, Educational and Housing Facility Board of Shelby County for $22 million in the aggregate, Daily News says. Background to Bankruptcy Filing The Daily News recalls that Cornerstone-Cameron was facing a lawsuit demanding the sale of the apartments, which was put on hold by the bankruptcy proceedings. Revenues from the apartments had been declining partly because of the crime problem and gang fights within the vicinity, Daily News quotes Douglas Margerum at Equity Management Inc. as saying. About Cornerstone-Cameron Laurel, Maryland-based Cornerstone-Cameron & Stonegate Inc. is a charitable organization engaged in housing development, construction and management. The Debtor filed for chapter 11 on Aug. 20, 2007 (Bankr. W.D. Tenn. Case No. 07-27849). Judge David S. Kennedy handles the case. Steven N. Douglass, Esq., at Harris Shelton Hanover Walsh, PLLC serves as counsel to the Debtor. When the Debtor filed for bankruptcy, it listed assets and debts between $1 million and $100 million. CORPORATE EXPRESS: S&P Puts 'BB-' Credit Rating Under Pos. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BBB+' corporate credit and all other ratings on Framingham, Massachussetts-based Staples Inc. on CreditWatch with negative implications. The CreditWatch action follows the company's announcement that it made a cash offer to acquire all the outstanding shares of Netherlands-based office products distributor Corporate Express N.V.'s ordinary stock for a per share consideration of 7.25, representing a total enterprise value of approximately 2.5 billion ($3.7 billion). "Although specific financing details have not yet been disclosed regarding a potential transaction, we believe that in the event Corporate Express shareholders ultimately accept an offer, a substantial portion of the acquisition would be debt-financed," said Standard & Poor's credit analyst Stella Kapur, "which we expect would weaken Staples' credit protection measures below levels appropriate for the current ratings." At the same time, Standard & Poor's placed its 'BB-' corporate credit rating on Corporate Express on CreditWatch with positive implications. "Corporate Express' CreditWatch placement reflects the possibility that we could raise the ratings on the company if a potential transaction materializes," said Standard & Poor's credit analyst Mark Salierno, "given the stronger credit profile of Staples." Although Staples' offer has been initially rejected by Corporate Express, we believe there is a reasonable possibility that Staples could continue to pursue this acquisition. Standard & Poor's will seek to resolve or update the CreditWatch listings within 90 days. S&P will monitor developments and meet with the Staples and Corporate Express management teams to evaluate each company's respective financial policy and the potential impact that such an acquisition would have on both companies' credit profiles. CROSSFIRE ENERGY: Lender to Ask Alberta Court to Name Receiver -------------------------------------------------------------- Crossfire Energy Services Inc. received notice from its principal lender that the company is in default with respect to its financial covenants in its credit facility. Further, the Lender has made demand for immediate payment of the remaining balance under the credit facility. The Lender has notified it will proceed with the enforcement of its security should such payment not be made. In that regard, the Lender has advised that it will make application to the Court of Queen's Bench of Alberta for the appointment of a receiver to manage the company's affairs. The company will consent to this application. The company will issue further statements regarding the status of its affairs with its principal lender and other stakeholders in due course. The company also disclosed that the directors and officers have resigned their respective positions with the company. About Crossfire Energy Services Inc. Headquartered in Calgary, Alberta, Crossfire Energy Services Inc. (CVE:CFE) -- http://www.crossfireenergy.ca/-- fka Crossfire Energy Services, is a full-service provider of fabrication, construction, installation and maintenance for oilfield facilities and pipelines. The company also fabricates piping and process equipment for oil sands projects. It has fabrication, construction and maintenance facilities in Calgary, Edmonton, Grande Prairie and Zama City. CRYOPORT INC: Posts $1.2M Net Loss in 3rd Qtr. Ended Dec. 31 ------------------------------------------------------------ CryoPort Inc. reported a net loss of $1,217,193 on net sales of $9,678 for the third quarter ended Dec. 31, 2007, compared with a net loss of $399,348 on net sales of $27,931 in the corresponding period ended Dec. 31, 2006. Gross loss for the three month period ended Dec. 31, 2007, increased to $91,761 compared to a gross loss of $17,110 for the three month period ended Dec. 31, 2006. The increase in the gross loss is mainly attributable to increased manufacturing overhead costs incurred as the company added personnel and incurred additional equipment maintenance and repair costs related to the planning and preparation for production of the CryoPort Express(R) One-Way Shipper and to the production shut-down as a result of the relocation and restructuring of the company's production operations in Lake Forest, California, initiated in mid-September 2007. Selling, general and administrative expenses increased $153,021 to $461,358 for the three month period ended Dec. 31, 2007, as compared to $308,337 for the three month period ended Dec. 31, 2006. Interest expense increased $598,591 to $652,578 for the three month period ended Dec. 31, 2007, as compared to $53,997 for the three month period ended Dec. 31, 2006. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $4,159,145 in total assets, $3,215,152 in total liabilities, and $943,993 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?283e Going Concern KMJ Corbin & Company LLP, in Irvine, California, expressed substantial doubt about CryoPort 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 reported that the company has incurred recurring losses, and has a stockholders' deficit of $2,287,832 and negative working capital of $478,396 at March 31, 2007. About CryoPort Inc. Headquartered in Lake Forest, California, CryoPort Inc. (OTC BB: CYRX.OB) -- http://www.cryoport.com/-- develops proprietary, technology-driven shipping and storage products for use in the rapidly growing global biotechnology and biopharmaceutical cold chain. The products developed by CryoPort are essential components of the infrastructure required for the testing, research and end user delivery of temperature-sensitive medicines and biomaterials in an increasingly complex logistical environment. DELPHI CORP: Hearing to Consider Bearings Biz Sale Set Today ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York will consider approval of Delphi Corp. and its debtor-affiliates' Bearings Business Sale today, Feb. 21, 2008, at 10:00 a.m., prevailing Eastern time. Stalking horse bidder ND Acquisition Corp., a wholly owned subsidiary of private equity investment firm Resilience Capital Partners LLC, has proposed to buy the Debtors' Bearings Business for $44,200,000. Lease Assumption Objections Certain parties had opposed the assumption of their executory contracts in connection with the sale of the Debtors' global wheel bearings business. Barnes Group Inc. and Freudenberg-NOK General Partnership objected to the zero cures for the assumption of their executory contracts. The parties related that they have not yet completed their review of the Assumed Contracts. Barnes also objected to the zero cures to the extent it is limited to prepetition amounts owed by the Debtors. Cure obligations are not limited to prepetition defaults, Barnes reminds the Court, citing Section 365(b) of the Bankruptcy Code. Barnes asserts that the Debtors should be required to cure, or provide adequate assurance of prompt cure, of any postpetition defaults under the Assumed Contracts. The Timken Company and Timken U.S. Corp. complained that the Debtors have not provided them with sufficient information to identify the Assumed Contracts. Timken believes that some of the contracts may be related to a long-term agreement that the Debtors have not identified for assumption or assignment. According to Freudenberg-NOK and Timken, the Debtors have not demonstrated that the proposed contract assignees are capable of performing under the Assumed Contracts. S&Z Metal Works Ltd. asserts that the Debtors should pay it at least $163,451 for the assumption of its contracts. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 112; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned thes ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. As reported in the Troubled Company Reporter on Jan. 11, 2008, Standard & Poor's Ratings Services expects to assign its 'B' corporate credit rating to Delphi Corp. upon the company's emergence from Chapter 11 bankruptcy protection, which may occur by the end of the first quarter of 2008. S&P expects the outlook to be negative. In addition, Standard & Poor's expects to assign these issue-level ratings: a 'B+' issue rating (one notch above the corporate credit rating), and '2' recovery rating to the company's proposed $3.7 billion senior secured first-lien term loan; and a 'B-' issue rating (one notch below the corporate creditrating), and '5' recovery rating to the company's proposed $825 million senior secured second-lien term loan. DELPHI CORP: Wants to Strike Non-Conforming Cure Objections ----------------------------------------------------------- Delphi Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to strike, pursuant to Section 105(a) of the Bankruptcy Code and Rule 9010 of the Federal Rules of Bankruptcy Procedure: (a) returned cure amount notices that do not conform with the Cure Claim Procedures; and (b) objections that were filed for which no cure amount notices were returned. The Debtors are party to thousands of executory contracts, many of which are with the Debtors' trade suppliers. In accordance with the confirmed First Amended Joint Plan of Reorganization and the Court-approved procedures relating to the assumption of executory contracts, the Debtors embarked on a process to assume ongoing prepetition Material Supply Agreements. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, relates that the Debtors served a total of 1,669 cure amount notices on contract counterparties stating their intent to assume, or assume and assign, the parties' contracts and to provide cure for the assumption of the contracts. The Notices gave each Counterparty, among other things, the right to elect to be paid the proposed cure amounts in cash or Plan currency, and described certain Court-approved procedures for the Counterparties to object to the assumption of their contracts or to the proposed cure amounts. The Cure Claim Procedures require the Counterparties to sign and return the original Cure Amount Notices served on them. In contravention of the specific instructions on the Cure Amount Notices, however, a number of parties-in-interest submitted nonconforming Cure Amount Notices to the Debtors. The Debtors received more than 100 nonconforming Cure Amount Notices. Certain purchasers of claims also executed and returned self-made forms designed to appear identical in form to the Court-approved notices served by the Debtors, Mr. Butler tells the Court. "In fact, certain of these self-made forms were returned by purchasers of claims even though no cure amounts were owed to the purported assignors." The Debtors, he points out, imprinted unique bar codes upon the original Cure Amount Notices to prevent the submission of self-made forms. The Debtors have also been inundated with requests to deviate from the Court-approved Cure Claim Procedures, Mr. Butler relates. He notes that in early January, the Ad Hoc Committee of Delphi Trade Claim Holders sought but failed to convince the Court to exempt them from certain provisions of the Cure Claim Procedures, including enabling their committee members to execute cure amount notices and directing the Debtors to make cure payments directly to their members instead of paying the underlying contract counterparties. Judge Drain held that the Trade Committee's request was contrary to the Cure Claim Procedures and interferes with the Debtors' relationships with their trade suppliers, which are important to the Debtors' ongoing businesses. Specifically, the Debtors wish to strike: * cure amount notices that include instructions to pay a party other than the counterparty; * cure amount notices that were executed by a third party (rather than the contract counterparty), which third party did not satisfy the requirements of Bankruptcy Rule 9010; * cure amount notices from parties who failed to return an executed original cure amount notice and instead returned a self-made form for which a related assumable contract exists or a copy of the cure amount notice; * cure amount notices from parties who failed to return an executed original cure amount notice for which no related assumable contract exists; * objections that were filed to cure by parties who failed to return the cure amount notice; and * cure amount notices that were returned after the 7:00 p.m. prevailing Eastern time deadline on Jan. 11, 2008. To the extent the Court grants the Debtors' request with respect to a specific party, the Debtors ask the Court to entitle the applicable counterparty to receive only the default cure election treatment or the Plan currency to be distributed to holders of allowed general unsecured claims in the cure amount listed in the cure amount notice. A list of the Debtors' proposed cure amounts is available for free at: http://bankrupt.com/misc/Delphi_PlanCures.pdf Cure & Assumption Objections On Jan. 29, 2008, the Debtors delivered to the Court a list of proposed cures for the assumption and assignment of certain executory contracts as provided in the confirmed First Amended Plan and the First Amended Disclosure Statement. A number of parties-in-interest complain that the proposed cures for the assumption of their contracts are understated. Several objectors assert that they have not been given adequate assurance of any proposed assignee's performance under the Assumed Contracts. A dozen objectors assert that they should be paid these cures: Debtors' Objector's Proposed Proposed Cure Objector Cure Amt. Cure Amt. ------------- --------- ---------- Ambrake Corp. $113,072 $347,716 Citation Corp., et al. 577,482 595,681 Furukawa Electric Company Ltd. 31,308 58,992 Furukawa Electric North America APD 2,664,471 2,832,655 MacArthur Corp. 18,074 38,708 Magneti Marelli Powertrain USA Inc. - 29,435 Master Automatic, Inc. - 7,613 McGill Manufacturing Company Inc. - 36,493 Metal-Matic Inc. 43,080 86,009 PBR Columbia LLC - 195,469 Quasar Industries, Inc. - 528,714 Tinnerman Palnut Engineered Products 7,229 271,401 SKF USA Inc. contends that it is entitled to payment in full and in cash of all outstanding postpetition invoices under its contracts. SKF USA also points out that certain of its contracts have expired and are, thus, no longer executory contracts that can be assumed. United Plastics Group De Mexico, S. De R.L. De C.V., relates that its books and records do not show a contract with the account number ascribed by the Debtors. Accordingly, UPG Mexico has no way of determining whether or not the Debtors' proposed zero cure amount for the alleged UPG Contract is correct. UPG Mexico asserts that it is owed no less than $136,482 under its agreements with Delphi Automotive Systems LLC. Barnes Group Inc., Daewoo International Corp., DGC-Plastic Molding Inc., Freudenber-NOK General Partnership, and Hayes Lemmerz International, Inc., relate that they have not yet completed their review of the Assumed Contracts. Barnes objects to the proposed cures for its contracts to the extent the Debtors' cure obligations are limited to prepetition amounts. Furukawa relates that the Debtors have not provided it with sufficient information to identify two of the Assumed Contracts, thus, it is unable to verify whether the proposed cures are correct. AT&T Corp. and XM Satellite Radio Inc. note that the First Amended Plan provides for the assumption of all contracts not specifically rejected by the Debtors. The Debtors have not rejected, or proposed to reject, the parties' executory contracts. AT&T and XM Satellite assert that the Debtors must cure all defaults under their contracts before those contracts may be assumed and assigned. According to AT&T, the Debtors owe it $8,255,577 under the parties' contracts. XM Satellite asserts that $1,017,448 is outstanding under its contracts with the Debtors. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue 112; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. As reported in the Troubled Company Reporter on Jan. 11, 2008, Standard & Poor's Ratings Services expects to assign its 'B' corporate credit rating to Troy, Michigan-based automotive supplier Delphi Corp. upon the company's emergence from Chapter 11 bankruptcy protection, which may occur by the end of the first quarter of 2008. S&P expects the outlook to be negative. In addition, Standard & Poor's expects to assign these issue-level ratings: a 'B+' issue rating (one notch above the corporate credit rating), and '2' recovery rating to the company's proposed $3.7 billion senior secured first-lien term loan; and a 'B-' issue rating (one notch below the corporate creditrating), and '5' recovery rating to the company's proposed $825 million senior secured second-lien term loan. DELPHI CORP: Cuts CEO Rodney O'Neal's Emergence Incentive to $1MM ----------------------------------------------------------------- As disclosed in a 10-K filing with the U.S. Securities and Exchange Commission, Delphi Corp. and its debtor-affiliates slashed the bonus payable to CEO Rodney O'Neal upon the company's emergence from bankruptcy protection, from $5.3 million to $1 million. Aside from receiving an emergence cash award value of $1,011,621, Mr. O'Neal will obtain an emergence equity award valued at $10,500,000. As reported in the Troubled Company Reporter on Jan. 24, 2008, the Honorable Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York said he will approve the Debtors' First Amended Joint Plan of Reorganization on the condition that the total payout of cash bonuses to top executives is reduced. "I am prepared to enter the confirmation order, provided the management compensation plan is changed," Judge Drain said at a confirmation hearing. The Court wanted the bonus for Delphi's officers reduced to $16.5 million in the aggregate from the $87.9 million that Delphi had proposed to award to 500 managers upon emergence. But the United Auto Workers and the International Union of Electronic Workers- Communications Workers of America objected to the payments, citing, among other things, that while unionized Delphi employees suffered pay-cuts, the managers, who are already adequately compensated, are given generous bonuses. The management compensation plan sought to grant an $8.3 million "performance payment" to Executive Chairman Robert Miller; and a $5.3 million cash emergence payment to Mr. O'Neal. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. * * * As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. As reported in the Troubled Company Reporter on Jan. 11, 2008, Standard & Poor's Ratings Services expects to assign its 'B' corporate credit rating to Troy, Michigan-based automotive supplier Delphi Corp. upon the company's emergence from Chapter 11 bankruptcy protection, which may occur by the end of the first quarter of 2008. S&P expects the outlook to be negative. In addition, Standard & Poor's expects to assign these issue-level ratings: a 'B+' issue rating (one notch above the corporate credit rating), and '2' recovery rating to the company's proposed $3.7 billion senior secured first-lien term loan; and a 'B-' issue rating (one notch below the corporate creditrating), and '5' recovery rating to the company's proposed $825 million senior secured second-lien term loan. DURA AUTOMOTIVE: Backstop Rights Deal with Pacificor LLC Expires ---------------------------------------------------------------- DURA Automotive Systems, Inc., disclosed in a regulatory filing with the U.S. Securities and Exchange Commission, that its Backstop Purchase Agreement with Pacificor, LLC, was terminated as of Jan. 31, 2008. As a result of the termination, Pacificor has no further obligations under the agreement with respect to its backstop commitment, C. Timothy Trenary, DURA's vice president and chief financial officer, said. As reported in the Troubled Company Reporter on Jan. 7, 2008, Pacificor, under the Backstop Agreement, committed to purchase up to $160,000,000 in reorganized DURA by buying shares of new common stock that were not purchased in an equity rights offering. The Pacificor commitment, which expired Jan. 31, 2008, was contingent upon DURA obtaining the exit financing prior to that date. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The company has three locations in Asia -- China, Japan and Korea. &nb