T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 22, 2008, Vol. 12, No. 45 Headlines ACANDS INC: Creditor Says Trust Has Too Much Power Under Plan ADVANCED COMM: December 31 Balance Sheet Upside-Down by $3.7 Mil. AIRTRAN HOLDINGS: Chief Financial Officer to Leave on April 30 ALON USA: Closes Texas Petroleum Refinery After Explosion ALON USA: Moody's Gives Developing Outlook After Plant Explosion ALON USA: S&P Puts B+ Corporate Rating on Negative CreditWatch AMERICAN COLOR: S&P Retains 'SD' Rating After Waiver Extensions AMERISERV FINANCIAL: Fitch Lifts Issuer Default Rating to BB AMERICAN CASINO: Moody's Withdraws All Ratings on Note Redemption ASH & STATE: Case Summary & 5 Largest Unsecured Creditors ATLANTIC EXPRESS: S&P Junks Corporate Rating on Poor Performance ATM FINANCIAL: Biz Partner Wants Ch. 11 Trustee for Bankr. Case AVITAR INC: Dec. 31 Balance Sheet Upside-Down by $11M BEAR STEARNS: Fitch Affirms 'BB+' Rating on $18.7MM Class L Certs. BILTMORE CDO: Moody's Downgrades Ratings on $500MM Notes BIOVEST INT'L: Dec. 31 Balance Sheet Upside-Down by $36.6 Million BUFFALO THUNDER: S&P Changes Outlook to Negative; Holds 'B' Rating BUILDING MATERIALS: Names Stanley Wilson as President and COO CAPPOLA CAPITAL: Case Summary & 17 Largest Unsecured Creditors CASELLA WASTE: Moody's Alters Outlook to Negative; Holds B1 Rating CDC MORTGAGE: Eroding Credit Support Cues S&P to Cut Ratings CHESTNUT HILL: Case Summary & 60 Largest Unsecured Creditors CHIQUITA BRANDS: S&P Assigns 'B+' Rating on $400 Mil. Senior Loan CHRYSLER LLC: Plastech Considers Other Restructuring Alternatives CHRYSLER LLC: Plastech to Continue Supplying Parts Until Feb. 27 CHRYSLER LLC: Plastech Needs Tooling to Keep Afloat, Court Says CHRYSLER LLC: Magna's Hopes of Acquiring Tooling Fade CITIZENS REPUBLIC: Fitch Chips Subordinated Debt Rating to BB+ CONGOLEUM CORP: Plan Confirmation Hearing to Commence on June 26 CORONA BOREALIS: Five Note Classes Acquire Moody's Junk Ratings CPG INT'L: Posts $2 Million Net Loss in Quarter Ended December 31 CREDIT SUISSE: Fitch Puts 'CCC'-Rated $7.2MM Class P Loans on DR1 CREDIT SUISSE: S&P Junks Class L's Rating on Weak Credit Support CROWN PLAZA: Case Summary & Nine Largest Unsecured Creditors DOMAIN INC: Gets Court OK to Use $6 Mil. Facility of Wells Fargo DELPHI CORP: Hephaestus Unit Wins Bearings Business Auction DELPHI CORP: Gets Court Nod for $2.7 Bil. Steering Business Sale DELTA AIR: Air France KLM Eyes Stake in Any Deal with Northwest E*TRADE FINANCIAL: Ex-Citigroup COO to Serve on E*Trade Board ELECTRO-CHEMICAL: Inks $2.3 Mil. Intellectual Property Sale Deal ENERLUME ENERGY: Dec. 31 Balance Sheet Upside-Down by $3.7M FEDERAL-MOGUL: Says Objections to Plan A Changes Are Meritless FIRST NLC: U.S. Trustee Appoints 5-Member Creditors Committee FREEHAND SYSTEMS: Dec. 31 Balance Sheet Upside-Down by $6.8M GENERAL ELECTRIC: Fitch Holds Low-B Ratings on Three Cert. Classes GEORGIA GULF: Poor Fin'l Performance Cues Fitch to Revise Outlook GOLF TRUST: Remains in Compliance with AMEX Listing Standards GREENMAN TECH: December 31 Balance Sheet Upside-Down by $8 Million GS & N: Case Summary & 19 Largest Unsecured Creditors HEARTLAND AUTO: Panel Can Retain Cadwalader as Bankruptcy Counsel HEARTLAND AUTO: Committee Can Hire Munsch Hardt as Co-Counsel HILLTOP INC: Case Summary & 20 Largest Unsecured Creditors HOLLINGER INC: Dec. 31 Balance Sheet Upside-Down by CDN$139.5 Mil. HOST HOTELS: S&P Changes Outlook to Stable; Maintains 'BB' Rating HRP MYRTLE: Moody's Puts Probability of Default Rating at Caa1 INDYMAC BANK: Three Classes of Certs. Get S&P's Junk Ratings IXIS ABS: Declining Credit Quality Prompts Moody's Rating Reviews JOHNSON RUBBER: Gets Final OK to Access JPMorgan's $10MM Facility KIMBALL HILL: Pact Violations Cues S&P to Cut Corp. Rating to 'CC' KNIGHT INC: S&P Lifts Ratings to 'BB' on 80% Equity Interest Sale LAND O'LAKES: Inks Amendment to Sale Agreement with Golden Oval LBREP/L SUNCAL: S&P Withdraws Junk Ratings at Borrower's Request LEHMAN BROTHERS: Fitch Places 'BB+' Rating Under Neg. CreditWatch LILLIAN VERNON: Files for Bankruptcy; Looks at Possible Sale LNR CFL: Fitch Holds 'BB+' Ratings on Three Certificate Classes LOADING ZONE: Case Summary & Seven Largest Unsecured Creditors LONG BEACH: Fitch Downgrades Ratings on $5 Billion Certificates NATIONAL RV: Committee Taps XRoads Solution as Financial Advisor MEDCOM USA: Dec. 31 Balance Sheet Upside-Down by $5.4M MERRILL LYNCH: S&P Downgrades Ratings on Two Cert. Classes to 'B' METALDYNE CORP: Weak Performance Cues Moody's to Junk Corp. Rating MORGAN STANLEY: Fitch Lifts Rating on $8.4MM Certs. to B from B- MUELLER WATER: Moody's Changes Outlook to Stable; Keeps B1 Rating NATIONAL AUTOMOTIVE: A.M. Best Upgrades FS Rating to B from B- NETTIME SOLUTIONS: Dec. 31 Balance Sheet Upside-Down by $878T NEW YORK RACING: Wants Court's OK to Sell Ancillary Property NOMURA ASSET: Fitch Retains 'CCC/DR2' Rating on $25.4MM Certs. NORTHWEST AIR: Air France KLM Eyes Stake in Any Deal with Delta ORANGE COUNTY: SIV's Receivership Threatens $80 Million Funds OWNIT MORTGAGE: S&P Downgrades Ratings on Class B-3 Certs. to 'D' PENN TREATY: A.M. Best Downgrades Ratings on Poor Performance PETROLEOS DE: Moody's B1 Rating Unaffected by Court Injunctions PLASTECH ENGINEERED: Considers Other Restructuring Alternatives PLASTECH ENGINEERED: To Continue Supplying Parts Until February 27 PLASTECH ENGINEERED: Needs Tooling to Keep Afloat, Court Says PLASTECH ENGINEERED: Magna's Hopes of Acquiring Tooling Fade PNC COMMERCIAL: Fitch Chips Rating on $6.9MM Certs. to CC/DR4 PRECISION OPTICS: Posts $693,460 Net Loss in Fiscal 2008 2nd Qtr. PREFERRED VOICE: Dec. 31 Balance Sheet Upside-Down by $953T PROGRESSIVE GAMING: Posts $12MM Net Loss in Qtr. Ended December 31 RAMP SERIES: Moody's Reviews 37 Tranches' Ratings for Likely Cuts RENAISSANCE HOME: S&P Downgrades Rating on Class B Certs. to 'D' RESIDENTIAL ASSET: S&P Downgrades Ratings on 10 Classes of Certs. RITCHIE MULTI-STRATEGY: Parent Files Suit to Silence Investors ROBERT HOULE: Case Summary & Ten Largest Unsecured Creditors SAGITTARIUS RESTAURANTS: Moody's Junks Corp. Family Rating SALOMON HOME: Two Certificate Classes Obtain S&P's Junk Ratings SALRECON LLC: Case Summary & 20 Largest Unsecured Creditors SANMINA-SCI: Inks Sale of Certain Assets With Forteq Holdings SANMINA-SCI: PC Business Exit Won't Affect S&P's B+ Rating SASKATCHEWAN WHEAT: S&P Assigns Positive Outlook; Holds BB Rating SHIMASE LLC: Case Summary & Five Largest Unsecured Creditors SOLIDUS NETWORKS: Court Approves Auction of Three Businesses SOLIDUS NETWORKS: U.S. Trustee Amends Creditors Committee SOLIDUS NETWORKS: Submits Schedules of Assets and Liabilities SOLIDUS NETWORKS: May Access Plainfield Asset's $13.5MM DIP Fund SPACEHAB INC: Thomas B. Pickens III Elected as New Board Chairman STRUCTURED ASSET: Fitch Holds 'BB+' Rating on $67.2MM Cl. I Certs. SUMMIT GLOBAL: Court Appoints Examiner to Probe $56.5MM Sale Deal TEKNI-PLEX INC: Dec. 28 Balance Sheet Upside-Down by $403 Million TRINITY INDUSTRIES: Warehouse Facility Increased to $600 Million UNISYS CORP: On Fitch's Neg. Watch Due to Rationalization Plan US CONCRETE: Expects $78MM After-Tax Non-cash Charge in 4th Qtr. US DRY CLEANING: Completes Buyout of California's Dry Cleaning Biz VESTA INSURANCE: Court Okays FSIA's Amended Disclosure Statement VESTA INSURANCE: Court Approves FSIA's Solicitation Procedures VESTA INSURANCE: Plan Trustee Settles with XL Specialty, et al. WALTER INDUSTRIES: Earnings Rise to $40MM in Qtr. Ended Dec. 31 WARP 9 INC: Dec. 31 Balance Sheet Upside-Down by $323,451 WASHINGTON MUTUAL: Fitch Junks Ratings on Six Certificate Classes WEST CORP: S&P's B+ Rating Unaffected by Offer to Acquire Genesys WHX CORP: Bairno and H&H Ink Amendments to Credit Agreements WOND WOSSEN: Case Summary & 12 Largest Unsecured Creditors WORNICK CO: Files Chapter 11 Plan of Reorganization WORNICK COMPANY: Asks Court to Employ Dinsmore & Shohl as Counsel WORNICK COMPANY: Asks Court to Employ Kroll Zolfo as Advisor * Speculative-Grade Firms Continue to Struggle, Moody's Reports * S&P Puts Ratings on 84 Tranches on Negative CreditWatch * S&P Downgrades 95 Tranches' Ratings From 13 Cash Flows and CDOs * DBRS Downgrades Ratings on 42 Classes of NIM Notes * DBRS Chips Ratings on 202 Classes from 40 RMBS Transactions * Fitch Chips Ratings on 24 Tranches of Total Rate Return CLOs * Lawmakers Pass Foreclosure Prevention Bill of 2008 * Md. Passes Emergency Regulations to Address Mortgage Crisis * SEC Launches Financial Explorer Feature on Web Site * Fried Frank Names New Partner in Real Estate Department * Christopher B. Hockett Joins Davis Polk-Menlo Park as Partner * BOOK REVIEW: Bankruptcy Investment: How to Profit from Distress ********* ACANDS INC: Creditor Says Trust Has Too Much Power Under Plan ------------------------------------------------------------- Owens-Illinois Inc., a creditor in ACandS Inc.'s Chapter 11 case, objects to the Debtor's Second Amended Plan of Reorganization, saying that a trust created under the plan has "overly broad powers". As reported in the Troubled Company Reporter on Jan. 10, 2008, the Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware approved the adequacy of the Debtor's Second Amended Disclosure Statement explaining its Second Amended Chapter 11 Plan of Reorganization. The Amended Plan provides for the issuance of injunctions under Section 524(g) of the Bankruptcy Code that result in channeling of certain asbestos-related liabilities of the Debtor into a trust. The Debtor says that its $449,000,000 insurance claim against Travelers Casualty and Surety Company is its most valuable asset. The Debtor also says that a Trust will be created which will (i) possess the status and features of a "qualified settlement fund" for the purposes of Section 468B of the IRC, (ii) assume the Debtor's liabilities with respect to all Asbestos Personal Injury Claims, and (iii) use Trust Assets and income to pay Asbestos Personal Injury Claims, as provided in the Plan and Trust Documents. Owens-Illinois objects to the confirmation of the Plan for several reasons. William F. Taylor Jr., Esq., at McCarter & English LLP, says that, as an alleged joint tortfeasor who has contribution and indemnity rights against the Debtors, Owens-Illinois' interests are unrepresented in the Trust. Owens-Illinois opposes the volitional delay provisions in the Trust Documents and the Confidentiality Provision that effectively usurp each and every State Court's authority as well as the due process rights of the defendants. Mr. Taylor notes that the plaintiff lawyers are running the Trust and determining the distribution of assets, and as such, there is an undeniable lack of representation on behalf of contribution and indemnification claimants. Equally as important is the Plan's proposed regulation of certain state rights, says Mr. Taylor. If approved as written, the proposed Trust will not only deprive certain creditors of their due process rights under state law, but will also subvert the power of state courts to regulate their own dockets. Mr. Taylor cautions the Court that the manner in which the Court resolves the Plan will have a profound effect on the future course of asbestos litigation in this country. Counsel for the asbestos plaintiffs have steered the course of the case to the detriment of all other creditors, and at the expense of the Debtors' fiduciary duty to all creditors, he argues. "The Plan cannot be confirmed with the provisions... because it has not been proposed in good faith and it will violate certain state law rights of the creditors," Mr. Taylor concludes. About AcandS Inc. Based in Lancaster, Pennsylvania, ACandS Inc. was an insulation contracting company, primarily engaged in the installation of thermal and mechanical insulation. In later years, the Debtor also performed a significant amount of asbestos abatement and other environmental remediation work. The company filed for chapter 11 protection on Sept. 16, 2002 (Bankr. Del. Case No. 02- 12687). Laura Davis Jones, Esq., Curtis A. Hehn, Esq., James E. O'Neill, Esq., and Michael Paul Migliore, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, P.C., represent the Debtor in its restructuring efforts. Kathleen Campbell Davis, Esq., Aileen F. Maguire, Esq., Mark T Hurford, Esq., and Marla Rosoff Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. At Dec. 31, 2006, the Debtor disclosed that it had book assets of approximately $11.78 million and book liabilities, including liabilities for the payment of asbestos-related and other claims of $11.78 million. At June 30, 2007, net book assets before liabilities for asbestos-related and other claims was approximately $9,010,000. The Court set April 21, 2008 to consider confirmation of the Debtors Second Amended Chapter 11 Plan of Reorganization. ADVANCED COMM: December 31 Balance Sheet Upside-Down by $3.7 Mil. ----------------------------------------------------------------- Advanced Communications Technologies Inc.'s balance sheet at Dec. 31, 2007, showed total assets of $40.94 million and total liabilities of $44.64 million, resulting to a total shareholders' deficit of $3.70 million. The company reported financial results for the second fiscal quarter and the six months ended Dec. 31, 2007. For the three month ended Dec. 31, 2007, net loss amounted to $338,989 compared to net loss of $211,901 on a generally accepted accounting principles basis. For the six month periods ended Dec. 31, 2007, net loss amounted to $799,000 compared to net loss of $296,000 in 2006 on a GAAP basis. For the three and six month periods ended Dec. 31, 2007, the company reported record revenue of $16.5 million and $25.6 million, compared to $2 million and $4.2 million, for the comparable periods. The increase in revenue is attributable to the acquisition of Vance Baldwin Electronics, which was completed on Aug. 17, 2007. "While Vance Baldwin will essentially continue to be managed and operated as a separate stand-alone business, we continue to be pleased with the pace of the integration of its management team and operations with those of Advanced Communications and Cyber- Test, specifically with the cross-selling of services and the offering of new integrated service capabilities to all of our customers and the overall market." Wayne Danson, president and chief executive officer of Advanced Communications, said. "With improving results turned in for the second quarter and year to date, and the particularly strong start to the third quarter, I am pleased with the performance of both Vance Baldwin and Cyber-Test in terms of generating revenue and managing expenses." Mr. Danson stated that management believes that, with its integrated services, the company is strongly positioned to take advantage of market opportunities that otherwise would not be available to either a distribution or service/repair business on a stand-alone basis. "We are excited about a number of extraordinary sales opportunities we anticipate closing before the end of the fiscal year, which will clearly demonstrate the uniqueness of our service capabilities," Mr. Danson added. "At Vance Baldwin, we are seeing a pickup in sales in a number of areas compared to last year, especially sales volume from new programs such as those with third-party administrators," said Steve Miller, chief operating officer of ACT. "Meanwhile, Cyber- Test is benefiting from the addition of another major customer this year, as well as volume increases from its two major customers and increased scalability of its business." About Advanced Communications Based in New York, Advanced Communications Technologies Inc. (OTC BB: ADVC) -- http://www.advancedcomtech.net/-- is a public holding company specializing in the consumer electronic aftermarket service and supply chain, known as reverse logistics. Its wholly-owned subsidiary and principal operating unit, Encompass Group Affiliates Inc. acquires and operates businesses that provide office and consumer electronics repair services. Encompass owns Cyber-Test Inc., an office and consumer electronic equipment repair company based in Florida and the company's principal operating business. Encompass ceased the operations of PMIC in California effective June 30, 2006. The company currently operates in one business segment, the repair and refurbishment component of the reverse logistics industry. AIRTRAN HOLDINGS: Chief Financial Officer to Leave on April 30 ------------------------------------------------------------- Stan Gadek, senior vice president and chief financial officer of Airtran Holdings Inc. subsidiary AirTran Airways Inc., will leave the company effective April 30, 2008, after eight years of service to the airline. AirTran Airways management and its board of directors have already started a search for his successor. "Stan has guided the company through some key milestones, from financing the new Boeing aircraft to managing unit cost reductions each year," said Robert L. Fornaro, president and chief executive officer of AirTran Airways. "On behalf of the Crew Members of AirTran Airways, we thank Stan for his contributions to the airline and wish him the best of luck in his new endeavors." Headquartered in Orlando Florida, AirTran Holdings Inc. (NYSE: AAI) -- http://www.airtran.com/-- a Fortune 1000 company, is the parent company of AirTran Airways Inc., which offers more than 700 daily flights to 56 U.S. destinations. * * * To date, AirTran Holdings Inc. carries Moody's Investors Service 'B3' long-term corporate family and 'Caa2' senior unsecured debt ratings. Outlook is Stable. ALON USA: Closes Texas Petroleum Refinery After Explosion --------------------------------------------------------- Alon USA Energy, Inc. experienced an explosion and fire at its Big Spring refinery on Monday, causing the company to temporarily shut down production at the 70,000-barrel-a-day facility. The cause of the explosion, which occurred in the area around the propylene splitter unit, has not yet been determined. However, the fire has been extinguished, allowing the investigation to begin as soon as reasonably possible, Alon USA said in a regulatory filing with the Securities and Exchange Commission. The extent of the damage is still being evaluated, but an initial assessment showed that the propylene recovery unit was destroyed and equipment in the alkylation and gas concentration units were damaged in the fire. All but one of the four workers injured in explosion have been released from the hospital. The one remaining employee is being treated for burns and is believed to be in stable condition. Jeff D. Morris, Alon's president and chief executive officer, said, "We are developing contingency supply plans for our customers and expect to have those in place in the next few days. We are also in the process of developing an operating plan for repairing the facility and bringing the refinery back into operation as soon as possible. Based on our preliminary assessment, our goal is to resume partial operations in approximately two months. "The Company has property damage and business interruption insurance in place which we believe will be adequate to address the damages associated with this incident." David Wiessman, Alon's executive chairman and chairman of Alon Israel Oil Company Ltd, the company's majority shareholder, added, "The entire Board of Directors and Alon Israel stand behind the Company and its management team and will support them as they take all necessary actions to resume operations at the refinery." MyWestTexas.com reports that in a news conference outside the International Union of Operating Engineers, Local No. 351 where Alon has set up temporary quarters, executives said plans are to return to partial operations in less than two months. MyWestTexas.com says the U.S. Occupational Health and Safety Administration will be investigating the accident. Alon's Big Spring refinery is located 290 miles west of Dallas in West Central Texas. It employs approximately 170 people and is one of four Alon's refineries. On December 12, 2007, the company's affiliate, Alon USA, L.P., entered into a five-year agreement to lease Plains Pipeline, L.P.'s Big Spring to Midland Products Pipeline System, located in the counties of Howard, Martin, and Midland in Texas. Alon agreed to pay $550,000 per year for the lease and maintain during the performance of the lease a contractual liability insurance for bodily injury and property damage. The limits of liability of the insurance will not be less that $10,000,000 combined single limit per occurrence. Alon will release fourth quarter 2007 earnings results on March 5, 2008, after the market closes. Alon will hold a conference call the next day. About Alon USA Energy Inc. Alon USA Energy, Inc., headquartered in Dallas, Texas, is an independent refiner and marketer of petroleum products, operating primarily in the South Central, Southwestern and Western regions of the United States. The Company owns and operates four sour and heavy crude oil refineries in Texas, California and Oregon, with an aggregate crude oil throughput capacity of approximately 170,000 barrels per day. Alon markets gasoline and diesel products under the FINA brand name and is a leading producer of asphalt. Alon also operates more than 300 convenience stores in West Texas and New Mexico primarily under the 7-Eleven and FINA brand names and supplies motor fuels to these stores from its Big Spring refinery. In addition, Alon supplies approximately 800 additional FINA branded locations. ALON USA: Moody's Gives Developing Outlook After Plant Explosion ---------------------------------------------------------------- Moody's Investors Service changed Alon USA Energy, Inc.'s outlook to developing from positive. Alon's corporate family rating is B2 and its $450 million first-lien senior secured term loan facility rating is B1 (LGD 2, 29%). Moody's does not rate Alon's $240 million and $300 million revolving credit facilities. The developing outlook reflects Alon's Big Spring refinery shutdown on February 18 following an explosion at the plant. This rating action is taken as a precautionary move during the extended time frame in which Alon and its suppliers, insurance providers, governmental and regulatory bodies, and potential plaintiffs identify and remedy the full financial, operational, environmental, and other litigation impacts of the refinery break down that caused the shut down of Alon's flagship refinery at Big Spring. Big Spring is a major source of cash flow to Alon as it contributes as much as 60% of the total company EBITDA (approximately $380 million for LTM ended Sept. 30, 2007). Although refining margins have been weaker since the second half of 2007, the company is still generating cash flow from the California refinery operations, its asphalt operations and its retail operations that consist of 307 owned and leased retail sites in Central and West Texas and New Mexico. In resolving the developing outlook, Moody's will assess Alon's ongoing liquidity requirements for operational and escalated refinery capital spending needs as it relates to the repair work to be done. Moody's estimates that Alon's liquidity is at least as good as Sept. 30, 2007 when Alon had cash of approximately $150 million, approximately $100 million (net of L/C usage) of availability under its $240 million senior secured revolving credit facility with Israel Discount Bank, and $180 million of availability (net of L/C usage) under another $300 million senior secured revolving credit facility. Liquidity is also helped by the absence of interfering crack spread hedges as well as ongoing cash flow generated from the company's other businesses. In addition, Alon USA's majority owner, Alon Israel, has publicly stated that it will support Alon USA while Big Spring is down, which Moody's anticipates will include financial support if needed. Resolution of the developing outlook will also consider the extent of the damage at Big Spring, and the timing and cost of completing the repairs to the plant as well as the amount and timing of insurance proceeds from the company's business interruption and property and casualty policies. Alon carries adequate property damage and business interruption insurance (subject to customary deductibles) on its Big Spring refinery. The positive outlook could be re-instated if it appears this will have only a modest impact on the overall financial profile of the company and that Big Spring is fully back to pre-shutdown levels. A stable outlook would assume that the Big Spring unit is at least partially up and running and is trending towards pre-shutdown levels, that Alon's financial position is not significantly weaker, and that there appears to be no material litigation exposure as a result of this accident. However, a downgrade or a review for downgrade could occur if it appears that Big Spring will be down for longer than the two month partial start-up goal the company has stated. The ratings could also be downgraded if the cost to repair Big Spring puts pressure on liquidity, particularly if the collection of insurance proceeds is delayed. In addition, the ratings would face downward pressure if litigation exposure becomes significant and is likely to put pressure on the overall financial profile. In addition, if it appears that Alon Israel is not willing to provide support, including financial support, the ratings would be downgraded. Alon USA Energy, Inc. is an independent refiner and marketer of petroleum products and owner and operator of convenience stores in the Southwestern and South Central U.S. The company owns and operates a complex sour crude oil refinery in Big Spring, Texas with a nelson complexity rating of 10.2 and crude oil throughput capacity of 70,000 barrels per day, lower complexity crude oil refinery in Paramount, California with a nelson complexity rating of 6.1 and crude oil throughput capacity of 90,000 barrels per day and an asphalt topping refinery in Willbridge, Oregon with a nelson complexity rating of 1.3 and crude oil throughput capacity of 12,000 barrels per day. The company also operates 307 convenience stores in West Texas and New Mexico, under the 7- Eleven and FINA brand names. After completing an IPO in 2005, the company remains majority owned (about 72%) by Alon Israel Oil Company, an Israel based company. ALON USA: S&P Puts B+ Corporate Rating on Negative CreditWatch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including the 'B+' corporate credit rating, on oil and gas refining and marketing company Alon USA Energy Inc. on CreditWatch with negative implications. "The CreditWatch action reflects potentially lower liquidity and cash flows following Monday's explosion and fire at the company's Big Spring refinery," said Standard & Poor's credit analyst Paul B. Harvey. S&P estimates that the refinery in Big Spring, Texas, accounted for more than 70% of operating income from refining operations through the nine months ended Sept. 30, 2007. S&P is concerned that if the extent of the damage and loss to the Big Spring refinery are more severe than Alon's current estimates, liquidity could weaken and lead us to lower the ratings. The incident comes at a time of weaker refining margins in the West Coast region, where Alon's other refineries operate. S&P intends to resolve the CreditWatch listing when S&P can sufficiently assess the extent of the damage and its full financial impact. If the damage from the explosion is more severe than currently estimated, S&P could lower the ratings. AMERICAN COLOR: S&P Retains 'SD' Rating After Waiver Extensions --------------------------------------------------------------- Following the 10-Q report filed by American Color Graphics Inc. on Feb. 15, 2008, which announced the extension of certain waivers by its lenders, Standard & Poor's Ratings Services maintained its issuer rating of SD (selective default) on the company. ACG announced that lenders again agreed to amend its credit agreement and receivables facility to temporarily waive through and including March 13, 2008, any default resulting from noncompliance with the first-lien coverage ratio covenant as of Sept. 30 and Dec. 31, 2007. Among other provisions, the amendment waived through March 13, 2008, the requirement that ACG repay the $5 million supplemental term loan, which was consummated on Nov. 14, 2007. ACG paid consenting lenders an amendment fee of $650,000. The company believes that it will have sufficient liquidity to meets its forecasted requirements through March 13, 2008, provided it generates adequate cash flow from operations. In the nine months ended Dec. 31, 2007, ACG's cash flow from operations was negative $2.4 million. S&P will continue to monitor the company's liquidity position and its compliance with financial covenants. The rating on ACG was lowered to 'SD' from 'CC' on Nov. 15, 2007, after the company announced that it had received consents from holders of at least 90% of the principal amount of its 10% notes to defer the semi-annual payment of cash interest on the notes held by consenting holders to March 15, 2008. This interest payment was previously due Dec. 15, 2007. (Standard & Poor's considers a default to have occurred when a payment related to an obligation is not made in accordance with the original terms--even with investor agreement--and when the nonpayment is a function of the borrower being under financial stress.) ACG had also stated that its credit agreement and receivables facility were amended to: (1) provide for an additional $5 million term loan to ACG under the 2005 term loan facility; and (2) temporarily waive until Feb. 15, 2008, any default under the bank credit facilities resulting from noncompliance with the first-lien interest coverage ratio covenant as of Sept. 30 and Dec. 31, 2007. AMERISERV FINANCIAL: Fitch Lifts Issuer Default Rating to BB ------------------------------------------------------------ Fitch Ratings has upgraded these ratings of AmeriServ Financial, Inc.: -- Long-Term Issuer Default Rating to 'BB' from 'BB-'; -- Individual Rating to 'C/D' from 'D'. In addition, Fitch has affirmed these ratings of ASRV: -- Short-Term IDR at 'B'; -- Support Rating at '5'; -- Support Floor at 'NF' The Rating Outlook is Stable. The upgrade reflects ASRV's improved financial flexibility. Strengthened holding company liquidity, the reduction in outstanding trust preferred securities, and dividend capacity available at the bank without regulatory approval, have improved the company's ability to service its debt, thereby significantly reducing the likelihood of a deferral on the trust preferred dividend. The holding company maintains sufficient liquidity at $4.1 million in liquid securities, which covers 3 times its debt service. The balance sheet restructuring actions taken over the last two years have led to a better financial position and good momentum in operating performance. With the MOU and most of the restructuring initiatives completed, management has focused more on the execution of its strategic goals to grow core earnings and improve financial performance. Recent results continue to reflect positive trends, albeit at modest levels. For 2007, net income grew by 30% to $3 million compared to $2.2 million for 2006. Earnings were boosted by a 14.5% increase in non-interest income derived mainly from trust and investment advisory fees. ASRV's acquisition of West Chester Capital Advisors contributed $974k in fee revenue for the full- year. During 2007, ASRV also experienced strong commercial & industrial loan growth up 39% compared to YE06. Controlled operating expenses and low credit costs also continue to support the bottom line. Capital levels have remained solid. Overall, capitalization measures have benefited from the completed private placements, improved retained earnings and modest asset growth. Fitch believes positive earnings momentum is sustainable given the strengthen balance sheet and financial profile. That said, a potentially more difficult economic environment could inhibit progress. Factors that would drive progress on the ratings front would be enhanced core earnings, solid capital and maintaining stable asset quality through the credit cycle. Fitch has upgraded these rating: AmeriServ Capital Trust I -- Preferred stock to 'B+' from 'B'; Fitch has affirmed these ratings with a Stable Outlook: AmeriServ Financial Bank -- Long-term IDR rating at 'BB'; -- Long-term deposits at 'BB+''; -- Short-term IDR at 'B'; -- Short-term deposits at 'B' -- Support at '5; -- Support Floor at 'NF'. -- Individual at 'C/D'; AMERICAN CASINO: Moody's Withdraws All Ratings on Note Redemption ----------------------------------------------------------------- Moody's Investors Service has withdrawn all of its ratings on American Casino & Entertainment Properties LLC, including the B3 rating on the $215 million 7.85% senior secured notes, the B2 probability of default rating and the B2 corporate family rating. The ratings withdrawal follows the redemption of the senior secured notes in conjunction with the acquisition of ACEP by W2007/ACEP Managers Voteco, LLC, an affiliate of the Whitehall Street Real Estate Funds, a series of real estate investment funds sponsored and managed by The Goldman Sachs Group Inc. ASH & STATE: Case Summary & 5 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Ash & State L.L.C. 701 Island Avenue San Diego, California 92101 Bankruptcy Case No.: 08-01200 Type of Business: single asset real estate Chapter 11 Petition Date: February 18, 2008 Court: Southern District of California (San Diego) Judge: Laura S. Taylor Debtor's Counsel: Judith A. Descalso, Esq. 960 Canterbury Place Suite 340 Escondido, California 92025 Tel: (760) 745-8380 Fax: (760) 860-9800 descalso@pacbell.net Estimated Assets: $1,000,001 to $10 million Estimated Debts: $1,000,001 to $10 million Debtor's list of its 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Construction Contract trade debt 0.00 Management Inc. 701 Island Avenue, Ste. A San Diego, CA 92101 Kirk Riley trade debt 0.00 P.O. Box 3919 La Mesa, CA 91944 J.H. Cohn trade debt 0.00 4180 Ruffin Road Ste. 235 San Diego, CA 92123 Market Pointe trade debt 0.00 Integra Reality trade debt 0.00 ATLANTIC EXPRESS: S&P Junks Corporate Rating on Poor Performance ---------------------------------------------------------------- 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, Funmi Afonja. "The CreditWatch also reflects our expectations of continued and increasing liquidity constraints," said Standard & Poor's credit analyst 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 (albeit in a very fragmented industry) 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, $24.5 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. ATM FINANCIAL: Biz Partner Wants Ch. 11 Trustee for Bankr. Case --------------------------------------------------------------- ATM Equity LP asks the U.S. Bankruptcy Court for the Middle District of Florida to direct the appointment of a Chapter 11 trustee to take over the Chapter 11 bankruptcy case of ATM Financial Services LLC, Bill Rochelle of the Bloomberg News. ATM Equity, which operates automated teller machines across the United States, disclosed that it lost $30 million in ATMs, cash, and ATM surcharge revenue to the Debtor. ATM Financial denies the allegation, stating that the complainant's Court filings "are replete with factual errors," Mr. Rochelle relates. ATM Equity told the Court that the Debtor -- which they employed to buy or lease ATMs, and operate the machines on the complainant's behalf -- cheated ATM Equity with fake ATM leases, missing ATMs and disputed ATM ownership claims, according to The News & Observer. On Feb. 7, 2008, prior to the Debtor's bankruptcy filing, Superior Court Judge A. Leon Stanback Jr. issued a temporary restraining order, as requested by ATM Equity, freezing the bank accounts of ATM Financial. Headquartered Leesburg, Florida, ATM Financial Services LLC -- http://atmdoctor.com/-- provides, install, and services automated teller machines. The company filed for Chapter 11 protection on Feb. 12, 2008 (Bankr. M.D. Fla. Case No. 08-00969). Peter N. Hill, Esq., at Wolff Hill McFarlin & Herron PA, in Orlando, Florida, represents the Debtor. When the Debtor filed for protection from its creditors, it listed assets and debts between $1 million and $10 million. AVITAR INC: Dec. 31 Balance Sheet Upside-Down by $11M ----------------------------------------------------- Avitar Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $1,452,056 in total assets, $9,335,504 in total liabilities, and $3,215,490 in convertible preferred stock and redeemable convertible preferred stock, resulting in an $11,098,938 total stockholders' deficit. At Dec. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $454,756 in total current assets available to pay $5,248,361 in total current liabilities. The company reported a net loss of $1,329,617 for the first quarter ended Dec. 31, 2007, compared with a net loss of $943,388 in the same period ended Dec. 31, 2006. Sales for the three months ended Dec. 31, 2007, decreased $443,428 or approximately 47.0%, to $505,386 from $948,814 for the corresponding period of the prior year. 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?2848 Going Concern Doubt BDO Seidman LLP, in Boston, expressed substantial doubt about Avitar Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2007. The auditing firm reported that the company has suffered recurring losses from operations and has working capital and stockholder deficits as of Sept. 30, 2007. About Avitar Inc. Avitar Inc. (OTC BB: AVRN.OB)-- http://www.avitarinc.com/-- develos, manufactures and markets proprietary products in the oral fluid diagnostic market, disease and clinical testing market, and customized polyurethane applications used in the wound dressing industry. BEAR STEARNS: Fitch Affirms 'BB+' Rating on $18.7MM Class L Certs. ------------------------------------------------------------------ Fitch Ratings upgraded these class of Bear Stearns commercial mortgage pass-through certificate, series 2004-BBA3: -- $9.5 million class K to 'AAA' from 'BBB-'. Additionally, Fitch has affirmed these classes: -- Interest-only class X-1B at 'AAA'; -- $18.7 million class L at 'BB+'. Classes A-1A, A-1B, A-2, B, X-2, X-3, X-4, X-5, X-1A, C, D, E, F, G, H, J, E-ST, F-ST, G-ST, H-ST, J-ST, K-ST, L-ST and M-ST have paid in full. The upgrade is due to 47.9% paydown since the last rating action due to the payoff of Sheffield Office Park and improved performance at the transaction's remaining loan - Riverside Center. The transaction has paid down by 98.1% since issuance. The Riverside Center loan is secured by a 633,503 square foot retail shopping center located in Utica, New York that is anchored by Wal-Mart, Lowe's, and BJ's Wholesale Club. The mall was 80.1% occupied as of Dec. 31, 2007 compared to 91.4% at issuance. The borrower is negotiating a lease for 70,000 sf with a major national retailer. As of Dec. 31, 2007, Fitch's annualized stressed debt service coverage ratio on net cash flow for the senior note was 1.39 times compared to 1.21x at the last rating action and 1.57x at issuance. The loan's initial maturity date was Nov. 12, 2006. The loan is currently within its second and final one-year extension option, which expires Nov. 12, 2008. The debt service coverage ratio is calculated based on a Fitch adjusted net cash flow and a stressed debt service based on the current loan balance and a hypothetical mortgage constant. BILTMORE CDO: Moody's Downgrades Ratings on $500MM Notes -------------------------------------------------------- Moody's Investors Service downgraded ratings of eight classes of notes issued by Biltmore CDO 2007-1, Ltd., and left on review for possible further downgrade ratings of six of these classes of notes. The notes affected by this rating action are: Class Description: $500,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due 2050; -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: $350,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2050; -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $50,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes Due 2050; -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $55,000,000 Class A-4 Fourth Priority Senior Secured Floating Rate Notes Due 2050; -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $20,000,000 Class B Fifth Priority Mezzanine Secured Floating Rate Notes Due 2050; -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $5,000,000 Class C Sixth Priority Mezzanine Secured Floating Rate Notes Due 2050; -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $8,000,000 Class D Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2050; -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: C Class Description: $8,500,000 Class E Eighth Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2050. -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: C The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence on February 7, as reported by the Issuer, of an event of default caused by a failure of the Class A Sequential Pay Ratio to be greater than or equal to 100 per cent, pursuant Section 5.1(i) of the Indenture dated July 26, 2007. Biltmore CDO 2007-1, Ltd. is a collateralized debt obligation backed primarily by a portfolio of Structured Finance securities. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued by certain Noteholders. Because of this uncertainty, the ratings assigned to the Class A-1, Class A-2, Class A-3, Class A-4, Class B and the Class C Notes remain on review for possible further action. BIOVEST INT'L: Dec. 31 Balance Sheet Upside-Down by $36.6 Million ----------------------------------------------------------------- Biovest International Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $9.9 million in total assets, $41.7 million in total liabilities, and $4.8 million in non-controlling interests in variable interest entities, resulting in a $36.6 million total stockholders' deficit. At Dec. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $5.6 million in total current assets available to pay $29.9 million in total current liabilities. Net loss was $3.7 million for the first quarter ended Dec. 31, 2007, versus a net loss of $23.9 million in the comparable period ended Dec. 31, 2006. Total revenues for the three months ended Dec. 31, 2007, were $1.3 million, which is comparable to revenues for the three months ended Dec. 31, 2006. During the three months ended Dec. 31, 2006, the company recorded a $3.8 million impairment charge related to Laurus' consent to the company's purchase of Accentia's interest in Biolender, and a $6.6 million expense in connection with the restructuring of the company's royalty agreement with Accentia. Other expense decreased to $2.6 million in the three months ended Dec. 31, 2007, from other expense of $9.9 million in the comparable period ended Dec. 31, 2006. Other expense for the current fiscal year includes a $1.4 million non-cash loss resulting from the modification of terms to the company's $7.8 million note issued to Laurus. The three months ended Dec. 31, 2006, contain a $6.6 million loss incurred upon termination of an anti-dilution agreement with Accentia and a $1.2 million charge related to obtaining a consent from one of Accentia's lenders to permit additional advances to the company by Accentia. Forbearance Agreement with Laurus On Oct. 31, 2007, the company entered into a forbearance agreement with Laurus confirming that no event of default existed under the March 2006 note, and deferred all payments of principal and interest due for the period of March, 2007 through Dec. 31, 2007, until the earlier of a closing of a financing with defined level of proceeds or March 31, 2008. As consideration for this forbearance, the company is required to pay $1.8 million to Laurus on March 31, 2009. 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?284b Going Concern Doubt Aidman Piser & Company P.A., in Tampa, Florida, expressed substantial doubt about Biovest International 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 since inception of approximately $96.6 million and cash used in operating activities of approximately $30.8 million during the three years ended Sept. 30, 2007, and had a working capital deficiency of approximately $22.7 million at Sept. 30, 2007. About Biovest International Based in Worcester, Massachusetts, Biovest International Inc. (OTC BB: BVTI.OB) -- http://www.biovest.com/-- is a majority-owned subsidiary of Accentia Biopharmaceuticals Inc. with its remaining shares publicly traded. Biovest has a foundation in the manufacture of biologics for research and clinical trials. In addition, Biovest develops, manufactures and markets patented cell culture systems, including the innovative AutovaxID(TM), which is being marketed as an automated vaccine manufacturing instrument and for production of cell-based materials and therapeutics. Biovest is currently conducting a pivotal Phase 3 clinical trial for BiovaxID(TM), which is a patient-specific anti-cancer vaccine focusing on the treatment of follicular non-Hodgkin's lymphoma. BiovaxID(TM) has been granted Fast Track status by the FDA. BUFFALO THUNDER: S&P Changes Outlook to Negative; Holds 'B' Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its rating outlook on Buffalo Thunder Development Authority to negative from stable. Ratings on the company, including the 'B' corporate credit rating, were affirmed. "The outlook revision stems from our concern that the Buffalo Thunder Resort's opening may be weaker than we originally anticipated due to challenges in the overall U.S. economy, and the softness that many gaming markets across the country are currently experiencing," said Standard & Poor's credit analyst Ariel Silverberg. Given the property's Santa Fe, New Mexico location and the tourist-driven nature of the local economy, S&P has particular concern for this market. The likelihood for weak economic conditions at opening make it particularly important that the opening is managed well, given potential challenges to the Authority's liquidity position if demand turns out to be lower than previously expected and if expenses are materially higher. The deal structure provides only modest cushion, as prefunded interest for the senior notes will likely cover only about 50%-75% of the interest payment due on Dec. 15, 2008. The 'B' rating reflects the Authority's expected high debt leverage, operations in a single market with a high degree of nearby competition, and ramp-up-related risks associated with this greenfield development. The Santa Fe region's attractiveness as a tourist destination, as well as benefits associated with the Authority's partnership with the Hilton brand to drive hotel visitation, partially temper these factors. BUILDING MATERIALS: Names Stanley Wilson as President and COO ------------------------------------------------------------- The Board of Directors of Building Materials Holding Corporation named Stanley M. Wilson President and Chief Operating Officer of BMHC, effective immediately. Both of BMHC's operating companies, BMC West and SelectBuild, will report to Mr. Wilson, who will continue to report to Robert E. Mellor, Chairman of the Board and Chief Executive Officer. BMHC also disclosed that the Board of Directors has extended the employment contracts of Mr. Mellor and William M. Smartt, Senior Vice President and Chief Financial Officer, through 2010. Mr. Wilson, 63, was elected President and CEO of BMC West in 2004 and was appointed a Senior Vice President in 2003. He was elected Vice President in 2000 and was General Manager of the Pacific Division of BMC West from 1993 to 2003. Prior to that Wilson served as location manager of the Bellevue, Washington BMC West location and has been with the company since its formation in 1987. From 1968 to 1987 he served in various positions with Boise Cascade Corporation. Mr. Wilson has a Bachelor's degree in Business from Boise State University. The company entered into an employment agreement, effective February 19, 2008, with Mr. Wilson. Under the agreement, he is entitled to receive a $600,000 base salary, discretionary bonus and personal health and services allowance as well as annual and long-term incentive compensation. The employment agreement is through December 2010. "Stan has been with BMHC since the company was founded, and has demonstrated leadership and a steadfast commitment to excellence and efficiency," Mr. Mellor stated. "He combines a wealth of operational experience with a clear understanding of back office operations. He has a proven record of enhancing operational effectiveness and delivering superb service to our customers. Stan is very accomplished at developing managerial talent, and I am confident that he will help us adapt our business to meet the challenges of what continues to be an exceptionally difficult environment for our industry and position us for future success." Headquartered in San Francisco, California, Building Materials Holding Corporation (NYSE:BLG) -- http://www.bmhc.com-- provides residential construction services and building products to professional homebuilders and contractors in western and southern regions of the United States. It operates through two business segments: SelectBuild and BMC West. SelectBuild provides framing and other construction services to high-volume homebuilders in key markets. BMC West markets and sells building materials, manufactures building components and provides construction services to professional builders and contractors through a network of 41 distribution facilities and 60 manufacturing facilities. It provides construction services and building products in 16 single-family residential construction markets. In November 2006, SelectBuild acquired the remaining 49% interest in BBP companies. In March 2007, BMHC's subsidiary, SelectBuild Construction Inc., acquired the remaining 27% of Riggs Plumbing LLC. * * * As reported in the Troubled Company Reporter on Feb. 15, 2008, Moody's Investors Service placed the ratings of Building Materials Holding Corporation, including its B1 corporate family rating, its B2 probability-of-default rating, and its first-lien bank credit facility rating of B1 (LGD3, 38%) under review for possible downgrade. As reported in the Troubled Company Reporter on Feb. 8, 2008, Fitch Ratings downgraded these ratings on Building Materials Holding Corporation: Issuer Default Rating to 'B+' from 'BB'; and Senior secured debt to 'BB-/RR3' from 'BB+'. Fitch has also placed BMHC on Rating Watch Negative. CAPPOLA CAPITAL: Case Summary & 17 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Cappola Capital Corporation 320 Mears Boulevard Oldsmar, Florida 34677 Bankruptcy Case No.: 08-02022 Chapter 11 Petition Date: February 19, 2008 Court: Middle District of Florida (Tampa) Judge: K. Rodney May Debtor's Counsel: Frederick T. Lowe, Esq. Florida Law Group LLC 3907 Henderson Boulevard Suite 200 Tampa, Florida 33629 Tel: 813-288-9525 Fax: 813-282-0384 fredlowe@floridalawgroup.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10 million Debtor's list of its 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Paul Cappola $1,121,000 521 Pinellas Bay Way #104 Tierra Verde, FL 33715 Feminine Jewelry Co. Ltd $315,000 1/1 Attakavee Sukhumvit 26th, Klongton Klongtoey, Bangkok 10110 Thailand Pandora Jewelry L.L.C. $98,000 Attn: J. Todd Timmerman, Esq. Shumaker Lopp & Kendrick 101 E. Kennedy Boulevard, 2800 Tampa, FL 33602 Undomani SRL $87,000 Saint Remo MFY, Ltd. $37,000 Blooming World Products Co. Ltd. $35,000 Time Warner Telecom $18,000 American Express $17,000 Robbins Law Firm $14,000 Champagne Jewelry $9,000 Manufacturing Ltd. Federal Express $7,000 Linx and More $5,000 All That's Charming $4,000 Jade International $3,500 (Far East) Ltd. Office Depot $1,500 T-Mobile $800 Knology $500 CASELLA WASTE: Moody's Alters Outlook to Negative; Holds B1 Rating ------------------------------------------------------------------ Moody's Investors Service affirmed its debt ratings of Casella Waste Systems, Inc. as: corporate family and probability of default, each at B1, senior subordinated at B3. Moody's changed the ratings outlook to negative from stable. The change in the outlook to negative follows the declining trend in the EBIT margin, including the results of equity method investments, which has caused interest coverage and leverage metrics to weaken to levels below those indicative of the B1 rating category. "There is also uncertainty of whether Casella's current strategy of reducing growth capital investment will free up enough cash flow to simultaneously cover working capital needs including payments for capping, closure and post-closure obligations and to de-lever the capital structure," said Jonathan Root, Moody's analyst. "The B1 corporate family rating reflects the expectation that Casella's Northeastern collection and disposal operations and growing recycling business should produce a level of funds from operations that covers debt service obligations with meaningful cushion," continued Jonathan Root, Moody's analyst. Leading positions in many of its markets and the belief that waste volumes are minimally exposed to economic cycles should support revenues and operating cash flows during economic troughs as should the U.S.' increasing emphasis on recycling. However, EBIT to Interest of about 1.0 time and Debt to EBITDA of about 5.0 times are indicative of corporate families rated lower than B1. Additionally, Moody's believes that cash flow from operations could provide only a modest cushion after required maintenance capital expenditures. This could limit flexibility to fund capital investments and meet debt reduction objectives, which could inhibit improvements in credit metrics. Liquidity is adequate, primarily because of approximately $150 million of availability under the revolving credit and sizeable cushions with financial covenants. The negative outlook reflects the potential that Casella's current strategy, which focuses on lower growth capital and increasing returns on invested capital might not be sufficient to reverse the recent decline in EBIT margin, which would restrict improvement in leverage and coverage metrics to levels that support the B1 rating. This strategy diverges from that of fiscal years preceding fiscal 2008, whereby Casella featured debt-funded growth of the asset base, resulting in significant negative free cash flow and significantly higher debt. The ratings could be downgraded if Casella is not able to improve EBIT to Interest to a level approaching 1.5 times or Debt to EBITDA to about 4.7 times. Though not expected at this time, one or more large debt-funded acquisitions could also result in a downgrade of the ratings. The outlook may be changed to stable if Casella achieves and sustains positive free cash flow above 4.0% of total debt, if EBIT to interest is sustained above 1.5 times or if Debt to EBITDA is sustained below 4.5 times. Issuer: Casella Waste Systems, Inc. Outlook Actions: -- Outlook, Changed To Negative From Stable LGD Assessments: -- Senior Subordinated, Changed to 84, LGD5 from 83, LGD5 Casella Waste Systems, Inc. based in Rutland, Vermont, is a vertically-integrated regional solid waste services company that provides collection, transfer, disposal and recycling services to residential, industrial and commercial customers, primarily in the eastern United States. CDC MORTGAGE: Eroding Credit Support Cues S&P to Cut Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on five classes of mortgage pass-through certificates from CDC Mortgage Capital Trust 2003-HE3. Concurrently, S&P removed one of the lowered ratings from CreditWatch with negative implications. In addition, S&P affirmed its 'AA+' rating on class M-1 from this transaction. The lowered ratings reflect the deterioration of available credit support for this transaction in combination with projected credit support percentages - based on the delinquency pipeline - that are insufficient to maintain the ratings at their previous levels. Based on the current collateral performance of this transaction, S&P projects future credit enhancement will be significantly lower than the original credit support for the former ratings. The failure of excess interest to cover monthly losses has resulted in the complete erosion of overcollateralization (O/C) for this transaction. This O/C deficiency caused a principal write-down to class B-3 as of the January 2008 remittance period, which prompted us to downgrade the class to 'D'. Cumulative losses for this transaction were 2.17% of the transaction's original pool balance. Total delinquencies and severe delinquencies (90-plus days, foreclosures, and REOs) were 34.24% and 22.69% of the current pool balance, respectively. S&P removed the rating on class B-2 from CreditWatch negative because it was lowered to 'CCC'. The affirmation of the rating on class M-1 reflects current and projected credit support percentages that are sufficient to maintain the rating at its current level. As of the January 2008 remittance report, credit support for this class was 46.07% of the current pool balance. In comparison, current credit enhancement was 2.25x of the original level. A combination of subordination, excess interest, and O/C provides credit enhancement for this transaction. The collateral supporting this series consists of subprime pools of fixed- and adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered CDC Mortgage Capital Trust 2003-HE3 Mortgage Pass-through Certificates Rating ------ Class To From ----- -- ---- M-2 BB+ A M-3 BB- A- B-1 B BBB+ B-3 D CCC Rating Lowered and Removed From CreditWatch Negative CDC Mortgage Capital Trust 2003-HE3 Mortgage Pass-through Certificates Rating ------ Class To From ----- -- ---- B-2 CCC B/Watch Neg Rating Affirmed CDC Mortgage Capital Trust 2003-HE3 Mortgage Pass-through Certificates Series Class Rating ------ ----- ------ 2003-HE3 M-1 AA+ CHESTNUT HILL: Case Summary & 60 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Chestnut Hill Rehab Hospital, L.L.C.. 1022 Main Street, Suite H Dunedin, FL 34698 Bankruptcy Case No.: 08-02150 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Chestnut Hill Rehab Center, L.L.C. 08-02151 Carrington Place of Chestnut Hill, L.L.C. 08-02152 Chapter 11 Petition Date: February 20, 2008 Court: Middle District of Florida (Tampa) Debtors' Counsel: Buddy D. Ford, Esq. (Buddy@tampaesq.com) 115 North MacDill Avenue Tampa, FL 33609-1521 Tel: (813) 877-4669 Fax: (813) 877-5543 Chestnut Hill Rehab Hospital, LLC's Financial Condition: Total Assets: $1,733,000 Total Debts: $15,991,081 A. Chestnut Hill Rehab Hospital, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sovereign Bank Accounts receivable; $15,000,000 235 North Second Street value of security: Harrisburg, PA 17101 $1,740,000 Pharmerica Pharmacy services $104,276 121 Continental drive, Suite 207 Newark, DE 19713 District 1199C Pension Fund Union fees $71,274 Attention: Cynthia Shirley 1530 Locust Street Philadelphia, PA 19102 Ricoh Americas Corp. Copier $59,508 District 1199C Benefit Fund Union fees $53,987 Medline Industries, Inc. Supplies $15,512 EXCEL Nursing Agency $15,255 Securitas Security Services, Security services $14,325 U.S.A. Schlinder Elevator Corp. Elevator services $11,676 Triage Staffing, Inc. Agency $9,787 Sizewise Uniforms $7,790 General Healthcare Resources Agency $6,624 Firststaff Nursing Services Agency $5,000 Platinum Select Agency $4,930 Siemens Building Technologie Maintenance $4,880 P.H.G. Technologies Software vendor $4,824 Ecolab, Inc. Chemicals $4,294 Sammons Preston Supplies $3,423 G.E. Healthcare Financial Phone system $3,233 Services Cintas Fire Number D47 1177 Fire systems $2,861 B. Chestnut Hill Rehab Center, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sovereign Bank Accounts receivable; $15,000,000 235 North Second Street value of security: Harrisburg, PA 17101 $807,000 Pharmerica Pharmacy $89,723 121 Continental Drive, Suite 207 Newark, DE 19713 Firststaff Nursing Services Agency $80,746 One Belmont Avenue, Suite 310 Bala Cynwyd, PA 19004 District 1199C Benefit Fund Union fees $34,841 Platinum Select Agency $25,192 Medline Industries, Inc. Supplies $21,764 EXCEL Nursing Agency $21,448 EMCOR Services Supplies $14,370 Securitas Security Services, Security services $14,325 U.S.A. Nutrition Advantage Dietician $12,075 Direct Supply Equipment Supplies $7,521 Penn Valley Chemical Chemical $6,683 K.C.I. U.S.A. Beds $5,821 N.E.C. Unified Solutions, Inc. Phones $5,114 Schlinder Elevator Corp. Elevator services $4,777 District 1199C Pension Fund Union fees $4,720 Elliott-Lewis Corp. Maintenance $4,272 Siemens Building Technologie repairs $2,895 Keystone Quality Transport Transport services $2,086 District 1199C Training Fund Union fees $1,795 C. Carrington Place of Chestnut Hill, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sovereign Bank Accounts receivable; $15,000,000 235 North Second Street value of security: Harrisburg, PA 17101 $9,180,000 Sysco Food Services of Food $103,891 Pennsylvania District 1199C Benefit Fund Union fees $94,218 Franklin Flooring Flooring $39,454 Securitas Security Services, Security services $23,691 U.S.A. Direct Supply Equipment Supplies $16,674 Kwalu, L.L.C. Chairs $14,741 District 1199C Pension Fund Union fees $12,800 N.E.C. Unified Solutions, Inc. Phones $10,285 Eastern Bag & Paper Co. Supplies $8,592 Simplex-Grinnell Supplies $6,629 Manpower Agency $5,266 J. Ambrogi Foods Food $4,923 District 1199C Training Fund Union fees $4,862 Ecolab, Inc. Chemicals $4,131 Balford Farms Food $3,369 Medline Industries, Inc. Supplies $3,273 Penn Valley Chemical Chemicals $3,233 McCumber, Daniels, et al. Legal service $3,075 District 1199C Legal Fund Union fees $2,490 CHIQUITA BRANDS: S&P Assigns 'B+' Rating on $400 Mil. Senior Loan ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its bank loan and recovery ratings to LLC's $400 million senior secured credit facility. The facility consists of a proposed $200 million six-year senior secured revolving credit facility and $200 million six-year senior secured term loan, and is rated 'B+' (two notches above the corporate credit rating on parent holding company Chiquita Brands International Inc.), with a recovery rating of '1', indicating the expectation for very high (90%-100%) recovery in the event of a payment default. CHRYSLER LLC: Plastech Considers Other Restructuring Alternatives ----------------------------------------------------------------- Plastech Engineered Products Inc. and its debtor-affiliates are in talks with their lenders and major customers about other possible restructuring alternatives. At the hearing on Chrysler LLC's request to lift the stay to recover tooling currently in the Debtors' possession, it was disclosed that after the Debtors signed their second accommodation agreement where they obtained additional funding from major customers, Plastech considered several restructuring alternatives to address its liquidity difficulties and financial conditions. Plan "A" would involve a strategic business combination, merger or acquisition as a going concern. These discussions were mostly between Plastech and Johnson Controls, Inc. JCI was by far the largest customer of the Debtor. As reported in the Troubled Company Reporter on Feb. 21, 2008, Donald S. MacKenzie, a senior managing director at Conway MacKenzie & Dunleavy, testified before the U.S. Bankruptcy Court for the Eastern District of Michigan that Johnson Controls considered acquiring the privately held company in the weeks before it sought Chapter 11. Mr. MacKenzie also said that JCI may still be interested in acquiring Plastech. JCI and the three major U.S. car makers Ford Motor Company, General Motors Corporation, and Chrysler have agreed to make advance payments to Plastech, a condition for Chrysler to obtain a $38,000,000 financing from a syndicate of lenders led by Bank of America, N.A. Plan "B" was a stand alone restructuring that would involve making significant cost reductions to Plastech's operations and might involve a de-leveraging of the balance sheet, including a debt for equity swap with certain of the Debtor's lenders. Plan "B" might also include additional cash from some combination of existing stakeholders or third party investors. In the event that Plan "A" or Plan "B" did not materialize, the Debtor and its advisors would consider Plan "C" consisting of an orderly liquidation. During the short time that the Second Accommodation Agreement was in effect -- Jan. 22 until Jan. 31, 2008 -- the Debtor continued discussions with the Major Customers regarding the restructuring alternatives. Conway MacKenzie & Dunleavy, Plastech's financial advisor, also had discussions with possible investors. During the meetings among the parties, BBK, Chrysler's financial consultant, and CMD prepared various analyses of the Debtor's financial condition and possible restructurings: -- BBK's draft analysis for these discussions projected approximately $61,000,000 of earnings before income tax, depreciation and amortization (EBITDA) for the Debtor for 2008. CMD was projecting approximately $85,000,000 of EBITDA for the Debtor for 2008. In either case, the projected EBITDA would be insufficient to comply with covenants that the Debtor had with its lenders that required $100,000,000 of EBITDA for the Debtor for 2008. -- BBK also advised Chrysler that the Debtor appeared to be insolvent in January 2008. The Debtor's cash management worksheets for the critical days during the last week of January 2008 showed that the Debtor had net outstanding checks during each of those days in excess of the actual credit line available to it, although on each of those days it appears that the checks scheduled to clear on a given day were less than the cash available for the day. The Debtor maintained that it was not insolvent at that time. The Debtor continued its discussions with the Major Customers during the last week of January in an effort to induce them to provide further financial accommodations. The draft of the Third Accommodation Agreement provided for a request for forbearance from the lenders until April 15, 2008, during which time the Debtor would embark upon a sale process with milestones set along the way for the development of a restructuring transaction. The draft of the Third Accommodation Agreement was never executed. During meetings and discussions with the Major Customers, the Debtor requested that the additional accommodation of funds be received by no later than Feb. 4, 2008, because the Debtor's cash flow showed that it would be out of funds at that time. In connection with the proposed Third Accommodation Agreement, Chrysler determined that it would be less costly if it would implement its own plan "B" by moving its tooling from the Debtor to other suppliers to resource the parts previously made by the Debtor for Chrysler. Chrysler concluded it would have to put in another $60,000,000 and perhaps up to $100,000,000 over the next four years. This was coming on the heels of a $1,600,000,000 loss in 2007 by Chrysler. Chrysler's decision was influenced greatly by the recent experience it had with the bankruptcy case of Collins & Aikman in which Chrysler had put in $400,000,000 in accommodations for the troubled supplier. On Feb. 1, 2008, Larry Walker, director of exterior procurement for Chrysler, delivered a letter to Julie Brown, CEO of Plastech. The letter said that Chrysler is terminating all supply agreements with Plastech, and it is taking possession of all tooling associated with Chrysler's production. Chrysler immediately filed suit against the Debtor in Wayne County Circuit Court and obtained an ex parte temporary restraining order and order of possession that required the Debtor to immediately deliver possession of all of the tooling that it utilized in the production of Chrysler's parts. Plastech filed the Chapter 11 case after Chrysler obtained the restraining order from the Wayne County Court. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. An Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) About Chrysler LLC Based in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. S&P said the outlook is negative. CHRYSLER LLC: Plastech to Continue Supplying Parts Until Feb. 27 ---------------------------------------------------------------- Plastech Engineered Products Inc. and its debtor-affiliates, and Chrysler LLC have agreed to an extension of their interim production agreement, under which Plastech will continue to manufacture and deliver component parts to Chrysler until Feb. 27, 2008. Pursuant to the initial interim agreement between the parties: -- Chrysler was obligated to make certain payments to Plastech in conjunction with the continued production of component parts; and -- The Debtors are to allow BBK, as agents for Chrysler, to have supervised access to Plastech facilities for the purpose of inspecting and conducting an inventory of all tooling used for Chrysler production. The parties reached the interim agreement before the U.S. Bankruptcy Court for the Eastern District of Michigan denied Chrysler LLC's request to pull out the tooling equipment from Plastech's plants. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. An Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) About Chrysler LLC Based in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. S&P said the outlook is negative. CHRYSLER LLC: Plastech Needs Tooling to Keep Afloat, Court Says --------------------------------------------------------------- The Honorable Phillip Shefferly of the U.S. Bankruptcy Court for the Eastern District of Michigan said in a court opinion that Plastech Engineered Products Inc. and its debtor-affiliates needed to keep the tooling equipment to help faciliate their reorganization. As reported in the Troubled Company Reporter on Feb. 20, 2008, Chrysler LLC commented that it was disappointed at the decision. Chrysler claimed that in exchange for financial accommodations to Plastech, the Debtor agreed that all tooling -- machinery and equipment Plastech uses in manufacturing 500 component parts for Chrysler's automobiles -- are property of Chrysler. It contended it is entitled to recover the tooling after it terminated its supplier contracts with Plastech prepetition. Plastech, however, asserted that Chrysler is prohibited by the U.S. Bankruptcy Code from seizing the equipment, most of which are also used in manufacturing component parts for other customers, which include General Motors Corporation, Ford Motor Company and Johnson Controls, Inc. Plastech also warned it would lose 15% of its annual revenues if Chrysler is allowed to take possession of the tooling. Chrysler accounts for about $200,000,000 from Plastech's annual sales of approximately $1,200,000,000 to $1,300,000,000. Feb. 14 and 15 Hearings The Court said it carefully considered the briefs filed by Chrysler, the Debtors and other parties-in-interest, as well as the testimony of the eight witnesses presented by Plastech and Chrysler, and the exhibits introduced into evidence. 1) All Tooling Bound by Automatic Stay Section 362(a) of the Bankruptcy Code operates as a stay with respect to "any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate." The Court affirmed the Debtors' contentions that the automatic stay applies to both the tooling paid by Chrysler and the tooling that Chrysler has not paid for. Chrysler paid over $167,000,000 for tooling, and but owes $13,400,000 with respect to some of the tooling utilized by Plastech to make parts for Chrysler. "Even assuming that the Debtor has only a possessory interest in the tooling paid for by Chrysler, that is a sufficient interest by itself to cause the application of the automatic stay," Judge Shefferly said. 2) Balancing of Interests Favor Plastech Chrysler explained it will suffer economic harm if the stay is not lifted under Section 362(d)(1). But Plastech also showed it will suffer economic harm if the Court rules in favor of Chrysler. Richard Smidt, senior manager of material supply operations at Chrysler, testified that if the said tools are not delivered to Chrysler by the end of their current interim agreement (currently February 27, 2008), it could be as little as five hours before Chrysler would see disruptions in its assembly lines, which would be followed by lay offs and, ultimately, substantial damages to Chrysler. On the other hand, if Chrysler is permitted to take possession of the tooling, many of the Debtors' plants will have to be promptly shut down. Mathew Demars, Plastech's president of interior and exterior business units, testified that of the company's 36 manufacturing facilities, 21 produce parts for Chrysler. Of the 21, two are entirely engaged in making parts for Chrysler and another 9 of them have 25% or more of Chrysler revenue as part of their operating structure. The cost to close these plants is $8,000,000 to $9,000,000 per facility according to Mr. Demars. The Court also noted that many parties will be greatly affected, if not destroyed, by a lift of the automatic stay at this point in the Chapter 11 case, which is in its infancy. Aside from their 7,700 employees and secured creditors asserting claims over the Debtors' assets, General Motors, Ford, and JCI depend on the Debtors' business, for component parts. "Chrysler's rights and interests are valid and important, but so are those of the Debtor and the other constituents in this case," Judge Shefferly said. After considering evidence, including the impact upon different parties, the Court concluded that Chrysler has not met its burden of proof to demonstrate "cause" to lift the automatic stay under Section 362(d)(1). 3) Tooling Necessary for Plastech's Reorganization The Court also took into consideration Section 362(d)(2), which allows the lifting of the stay with respect to property if (A) the debtor does not have an equity in the property; and (B) the property is not necessary to an effective reorganization. Judge Shefferly held that evidence demonstrates that Plastech does not have any equity in the tooling that Chrysler has paid for. He noted that even without the express provisions of the tooling acknowledgment in the First and Second Accommodation Agreements, the Debtor still has no equity in the tooling paid for by Chrysler. The Court, however, was convinced that if Chrysler takes immediate possession of the tooling, the Debtor will not be able to continue to provide parts uninterrupted to its other major customers and therefore any prospect of an effective reorganization will be lost. Donald MacKenzie, the Debtor's financial advisor from Conway MacKenzie & Dunleavy, testified that as of February 1, 2008 (when Chrysler delivered its termination letter to Plastech), the Debtor still had, among other things, a proven capability to produce component parts, with substantial customers, significant contracts, a strong work force and a supportive group of lenders. 4) Chrysler Would Have Recovered Tooling Absent Plastech's Chapter 11 Judge Shefferly said he does not share some of the parties' views that Chrysler's conduct was "over reaching," and "precipitous," and that its damages, if any, are "self inflicted." Judge Shefferly stated Chrysler took actions that it believed were in its best interest and consistent with its contractual provisions when it sent the Feb. 1, 2008 letter and filed suit in the Wayne County Circuit Court. "Had the Debtor not filed Chapter 11, Chrysler's exercise of those rights might now be concluded. But the larger point here is that the Debtor did file a Chapter 11 case and exercised a legitimate right that it has under the law in doing so." About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. An Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) About Chrysler LLC Based in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. S&P said the outlook is negative. CHRYSLER LLC: Magna's Hopes of Acquiring Tooling Fade ----------------------------------------------------- Magna International Inc. apparently did not get its wish of acquiring a huge chunk of tooling equipment from Plastech Engineered Products Inc. and its debtor-affiliates' plants, after the Honorable Phillip Shefferly of the U.S. Bankruptcy Court for the Eastern District of Michigan stopped Chrysler LLC from grabbing the tooling. As reported in the Troubled Company Reporter on Feb. 20, 2008, Judge Shefferly denied Chrysler LLC's request to pull out the tooling equipment from Plastech's plants, saying that Plastech needs the equipment more than ever in its bankruptcy. Before the Court decision, Chrysler LLC intended to transfer the equipment to Magna International, a Canadian counterpart of Plastech, in order to keep the flow of production, Alex Ortolani and Michael Ramsey of Bloomberg News report, citing the automaker's planning documents. An analyst commented that Magna, with the additional equipment, could improve production in its plants, and could charge Chrysler with higher rates for its parts than Plastech, Bloomberg relates. "Magna becomes the obvious choice here because they have had a long-term very good relationship with Chrysler," Bloomberg quotes the analyst as saying. "It would be hard for me to believe that Magna is doing it at the same price that Plastech was doing it." Spokespeople for Chrysler declined to comment to Bloomberg since the information was confidential. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more tha