T R O U B L E D C O M P A N Y R E P O R T E R Friday, April 4, 2008, Vol. 12, No. 80 Headlines ABACUS 2006-12: Poor Credit Quality Cues Moody's to Lower Ratings ACE LIMITED: Fitch Assigns Neg. Outlook for 2 Units' Low Ratings ADAM AIRCRAFT: Court Appoints DoveBid to Manage Sale of Assets ALLIANCE ONE: Completes Asset Sale to Pasal Dev't for $7.6 Mil. ALLIED DEFENSE: BDO Seidman Expresses Going Concern Doubt ALOHA AIRLINES: Puts Up Another Division for Sale ALOHA AIRLINES: AMA Says Revenue from Aloha is Fraction of Total ALPHA NATURAL: $100MM Facility Raise Cues Moody's to Lift Ratings ALPHA MEZZ: Moody's Chips Notes Ratings, Puts it Under Review AMERICAN LAFRANCE: Three Parties Respond to Asset Sale Motion AMERICAN AXLE: Moody's Puts Ba3 Corp. Family Rating Under Review AMERICAN HOME: Credit Support Erosion Cues S&P's Default Ratings AMP AA: Moody's Chips Ratings on $9MM Notes to Ca from Caa3 ARTISTDIRECT INC: Appoints Jon Diamond Chairman of the Board ASSOCIATED ESTATES: Extends Maturity Date of Credit to March 2011 ATA AIRLINES: Files Chapter 22 Petition in Indiana ATA AIRLINES: Case Summary & 20 Largest Unsecured Creditors ATA AIRLINES: Pilots Blast Late-Night Decision to Cease Operations ATHERTON-NEWPORT: Case Summary & 20 Largest Unsecured Creditors BAKER STREET: Fitch Puts 11 Note Ratings on Negative Watch BEAR STEARNS: Collapse May Affect Financial System, Bernanke Says BERNOULLI HIGH: Moody's Junks Rating on $14MM Sr. Income Notes BERTHEL GROWTH: McGladrey & Pullen Expresses Going Concern Doubt BLACK DIAMOND: Section 341(a) Meeting Scheduled April 14 BUILDERS FIRSTSOURCE: S&P Puts 'B+' Rating Under Negative Watch BUILDING MATERIALS: S&P Chips Corp. Credit Rating to B+ from BB- C-BASS MORTGAGE: Moody's Junks Ratings on Seven Cert. Classes CASA DE CAMBIO: Section 341(a) Meeting Scheduled April 16 CASA DE CAMBIO: Can Hire Shaw Gussis Fishman as Bankruptcy Counsel CATHOLIC CHURCH: Fairbanks Trustee Wants Panel Appointment Sealed CEC BUILDING: Case Summary & Largest Unsecured Creditor CELL THERAPEUTICS: Stonefield Josephson Raises Going Concern Doubt CENTERSTAGING: Section 341(a) Meeting Scheduled April 21 CENTERSTAGING CORP: Receives Notice of Default from Grand Pacific CHARTERHOUSE BOISE: Disclosure Statement Hearing to Continue May 7 CHILDREN'S DENTAL: Voluntary Chapter 11 Case Summary CIT GROUP: Halts Student-Lending Biz to Ease Indebtedness CITIGROUP MORTGAGE: S&P Junks Ratings on Three Loan Classes CLASS V FUNDING: Moody's Junks Rating on $15MM Preference Shares CLEAR CHANNEL: Extends Expiration of Tender Offers to April 11 CLIFTON STREET: Fitch Puts Class H BB+ Rating on Negative Watch CLST HOLDINGS: Earns $26.3 Million in Year Ended Nov. 30 COLLEZIONE EUROPA: Gets Nod to Employ Trenk DiPasquale as Counsel COLLEZIONE EUROPA: Taps J.H. Cohn LLP as Accountant COLUMBUS PARK: S&P Assigns Preliminary 'BB' Rating on $13MM Notes CONSOLIDATED COMMS: Paying Dividend of $0.38738 Per Share on May 1 CORNERSTONE TECH: No Assets to Liquidate for Creditor Recovery COUNTRYWIDE FINANCIAL: Lambasted by Obama About Mortgage Crisis CP & L: Case Summary & 19 Largest Unsecured Creditors CRISTAL INORGANIC: Moody's Holds B2 Rating; Change Outlook to Neg. CYGNAL TECH: Advances in Plan of Arrangement and Reorganization DAVID EKSTEDT: Case Summary & 19 Largest Unsecured Creditors DELTA AIR: Flight Attendants' Union Voting Starts April 23 DELTA WOODSIDE: Wants GMAC to Put $1.7MM Cash Collateral in Escrow DELPHI CORP: Ex-Parent GM May Assume More Pension Liabilities DIRECTV GROUP: 48% of Stock Now Owned by Liberty Media DIVERSIFIED PRODUCTS: Case Summary & 20 Largest Unsec. Creditors DORSET STREET: Fitch Puts 'BB+'-Rated Class H Notes on Neg. Watch FEDDERS CORP: Panel Formally Files $150MM Lawsuit Against Lenders FEDDERS CORP: Court Extends Plan-Filing Period to April 14 FISHER COMMS: Taps J. Lovejoy as Acting Chief Financial Officer FORD MOTOR: Balks at CIT Adequate Protection Payment Demands FORT DEARBORN: Moody's Cuts Rating to Ba1 from Baa2 on $25MM Notes FULTON LAND: Section 341(a) Meeting Scheduled for May 6 GEA SEASIDE: Section 341(a) Meeting Scheduled for April 7 GENERAL MOTORS: May Assume More Delphi Corp. Pension Liabilities GIBRALTAR INDUSTRIES: Moody's Cuts Ratings; Retains Stable Outlook GLOWPOINT INC: Amper Politziner Expresses Going Concern Doubt GMAC LLC: Ray G. Young Joins Board of Directors of GMAC Financials GROUP 1: Weakening Leverage Prompts Moody's Rating Review HANOVER STREET: Fitch Puts 'BB+'-Rated Notes on Negative Watch HAVEN HEALTHCARE: Secured Lender Says DIP-Related Report is Untrue HERBST GAMING: Warns of Bankruptcy Filing Over Debt Default HERBST GAMING: Deloitte & Touche Raises Going Concern Doubt HERBST GAMING: Going Concern Financial Cues S&P to Revise Watch HILLEN MANAGEMENT: Voluntary Chapter 11 Case Summary HOMEBANC MORTGAGE: To Sell $10 Million in Unpaid Mortgage Loans INDYMAC MORTGAGE: Fitch Chips Ratings on $478.1MM Certificates INFE HUMAN: Miller Ellin Raises Substantial Going Concern Doubt INTEREP NATIONAL: Gets Initial OK to Use $25 Million DIP Facility ISCHUS SYNTHETIC: Poor Credit Quality Cues Moody's Rating Review JACK WILSON: Case Summary & 17 Largest Unsecured Creditors JD INVESTMENT: Section 341(a) Meeting Scheduled for April 17 JED OIL: Has Until May 15 Satisfy Obligation in $32 Million Credit JUPITER HIGH-GRADE: Moody's Places Ratings Under Review JUPITER HIGH-GRADE: Moody's Junks Rating on $23.75MM Class F Notes KENT FUNDING: Moody's Slashes Rating to Caa1 on $3.1MM Notes KNOLLWOOD CDO: Moody's Cuts Rating to Caa2 on $16.5MM Notes KRATON POLYMERS: Moody's Cuts CFR to B2; Puts Rating Under Review LANDRY'S RESTAURANTS: Hires Cowen and Company as Financial Advisor LANDRY'S RESTAURANTS: Posts $6MM Net Loss in Quarter ended Dec. 31 LEVITZ FURNITURE: 11 Landlords Demand Payment of $522,221 Rent LIBERTY MEDIA: Raises Stake Ownership in DIRECTV to 48% LIBERTY MEDIA: Fitch Says DirecTV Deal Won't Affect 'BB' Ratings LINDA LUNDSTROM: Assets Bought by Eleventh Floor Apparel LK&K LLC: Voluntary Chapter 11 Case Summary LONGSHORE CDO: Moody's Downgrades Ratings on Five Note Classes LONGSHORE CDO: Moody's Junks Ratings on Two Note Classes LOUISIANA RIVERBOAT: Section 341(a) Meeting Scheduled for April 9 LUCHT'S CONCRETE: Section 341(a) Meeting Scheduled for Apr. 10 MAIN AUTO: Case Summary & 20 Largest Unsecured Creditors M. JORJEZIAN: Voluntary Chapter 11 Case Summary MADILL EQUIPMENT: Court Appoints RSM Richter as Interim Receiver MARATHON STRUCTURED: Moody's Puts Ba2 Rating Under Review MASSEY ENERGY: Court Reverses $76MM Judgment in Harman Mining Case MATHIS PARTNERS: Case Summary & Two Largest Unsecured Creditors MAXIM HIGH: Moody's Places Low-B Ratings Under Review MCC PROCEEDS: Court Sets April 24 as Claims Bar Date MECHANICAL TECHNOLOGY: PwC Expresses Going Concern Doubt MERRILL LYNCH: Moody's Chips Ratings on Nine Certificates Classes MID OCEAN: Moody's Slashes Ratings to Caa1 on Two Note Classes MIRAMAR VIEW: Voluntary Chapter 11 Case Summary MKP CBO: Poor Credit Quality Cues Moody's Rating Downgrades MMM HOLDINGS: Moody's Retains Ratings Under Review MONTAUK POINT: Moody's Junks Ratings on $4 Million Class G Notes MOTOR COACH: S&P Cuts CCC Rating to CCC-; Removes Negative Watch MOVIE GALLERY: Consolidates Additional Store Operations NATCHEZ HOSPITAL: Governor Barbour Approves Chapter 9 Filing NETBANK INC: Wants Exclusive Plan Filing Period Moved to April 21 NEWARK GROUP: Poor Earnings Prompt S&P to Place Negative Watch NEW YORK RACING: Gets Extra $9,000,000 from New York State NEW YORK RACING: Court OKs Partial Fees for Weil Gotshal, et al. NOVASTAR FINANCIAL: Deloitte & Touche Raises Going Concern Doubt ORIENT POINT: Poor Credit Quality Cues Moody's Rating Downgrades OXFORD STREET: Fitch Puts 'BB+' Note Rating on Negative Watch OWENS CORNING: Asks Court to Clarify Unclaimed Funds Provisions OWENS CORNING: Reserves $36 Million for Remaining Claims OWENS ILLINOIS: Moody's Lifts Corp. Family Rating to Ba3 from B2 PINETREE CDO: Moody's Chips Rating on $18MM Notes to Ba3 from Baa2 POE COMPANIES: Faces $100 Mil. Civil Case Filed by Florida's DFS POLY-PACIFIC INT'L: Adds Ivor Cura to Advisory Board of Directors POLYMER GROUP: Net Loss Rises to $41MM in Year ended December 29 POWER EFFICIENCY: Sobel & Co Expresses Going Concern Doubt PPT VISION: Posts $414,000 Net Loss in First Quarter Ended Jan. 31 PRB ENERGY: AMEX Says Sustained Losses Cue Securities Delisting QMED INC: Amper Politziner Expresses Going Concern Doubt QUEBECOR WORLD: Court Approves Purchase of $12 Million Aircraft QUEBECOR WORLD: Loses Catalog Deal; May Lose Parent Business QUEBECOR WORLD: 517,184 Preferred Shares for Conversion on June 1 QUEBECOR WORLD: AEP & Piedmont Seek Payment of Deliveries REGENT STREET: Fitch Puts Ratings on Nine Notes on Negative Watch RIVER NORTH: Moody's Puts Ca Rating on $14.25 Million Notes SCO GROUP: Gives Up Chapter 11 Plan; Lender to Buy Assets SCOTT FERGUS: Seeks Protection Under Chapter 7 SIMPLON BALLPARK: Section 341(a) Meeting Scheduled for Apr. 10 SINGA FUNDING: Moody's Lowers Ratings to Ca on Three Cert. Classes SONIC CORP: February 29 Balance Sheet Upside-Down by $109 Million SONICBLUE INC: Ch. 11 Trustee, Panel File Disclosure Statement SOUTH COAST: Moody's Cuts Baa3 Rating to Caa2 on $35MM Cl. C Notes STEDMAN LOAN: Completed Wind-Up Cues Fitch to Withdraw Ratings STOMP PORK: Files for Bankruptcy Protection in Canada STRUCTURED ASSET: S&P Cuts Ratings to D from CCC on Two Classes SUGAR HILL: Section 341(a) Meeting Scheduled for April 10 SUPERCONDUCTOR TECH: Stonefield Expresses Going Concern Doubt SUSQUEHANNA AREA: Fitch Affirms 'BB+' Rating on $55.7MM Bonds SYDNEY STREET: Fitch Puts Note Ratings on Negative CreditWatch SYNAGRO TECHNOLOGIES: Weak Performance Cues S&P to Cut Ratings SYZYGY ENTERTAINMENT: Moore & Assoc. Raises Going Concern Doubt TEEVEE TOONS: U.S. Trustee Appoints Five-Member Creditors Panel TERM CDO: Moody's Junks Ratings on Two Floating Rate Note Classes TEXHOMA ENERGY: GLO CPAs Expresses Going Concern Doubt THEGLOBE.COM INC: Rachlin LLP Expresses Going Concern Doubt TIAA STRUCTURED: Moody's Junks Ratings on $17.25 Million Notes TOURMALINE CDO: Moody's Places Ba1 Rating Under Review TOUSA INC: Allowed to Employ Ernst & Young as Auditor TOUSA INC: Can Hire Lazard as Fin'l Advisor & Investment Banker TRAINER WORTHAM: Moody's Cuts Rating to Ca from B2 on $23MM Notes TRIAD GUARANTY: Fitch Slashes LT Issuer Rating to BB- from A- VENTURES I: Moody's Cuts Rating to B3 from Ba1 on $20MM Notes VERDE CDO: Moody's Lowers Ratings and Retains Under Review VERTIS INC: Deloitte Raises Going Concern; Hires Lazard as Advisor VICORP RESTAURANTS: Files for Chapter 11 Protection in Delaware VICORP RESTAURANTS: Case Summary & 21 Largest Unsecured Creditors VIKING DRILLING: Section 341(a) Meeting Scheduled for April 10 VILLAGE HOTEL: To Sell Las Vegas Asset While in Bankruptcy WHATELY CDO: Moody's Lowers Rating to B2 on Three Note Classes WORLD HEART: Burr Pilger Expresses Going Concern Doubt ZWIRN HOLDINGS: SEC Probes Manager's Move to Form New Hedge Fund * Fitch Performs A Vintage Analysis of 1999 US CMBS * Fitch Expects 700 MHz To Modestly Affect Wireless Operators * Fitch Says Equity REIT Liquidity is Adequate But Weakening * Fitch Says US ABS Securities Delinquencies Dropped in February * Fitch Says Housing-And-Consumer-Led Downturns Will Slow Growth * Fitch Says Natural Gas Shortage Threatens Argentine Pipelines * Fitch Says US Auto Asset-Backed Securities Dropped in March * Moody's Median for Non-Profit Hospitals Shows Sound Liquidity * Moody's Says Some Municipal Debt Issuer May Face Rtng. Pressures * S&P Lowers Ratings on 17 Tranches From Cash Flow and Hybrid CDOs * Housing Groups Urges Congress and Administration to Lift Ban * Beard Group Launches Intellectual Property Prospector * BOOK REVIEW:Building American Cities: The Urban Real Estate Game ********* ABACUS 2006-12: Poor Credit Quality Cues Moody's to Lower Ratings ----------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by ABACUS 2006-12, Ltd.: * Class Description: $95,000,000 * Class A-1 Floating Rate Notes, Due 2038 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade * Class Description: $44,900,000 * Class A-2 Floating Rate Notes, Due 2038 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: A2, on review for possible downgrade * Class Description: $20,100,000 * Class B Floating Rate Notes, Due 2038 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: Baa2, on review for possible downgrade * Class Description: $37,500,000 * Class C Floating Rate Notes, Due 2038 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade * Class Description: $8,750,000 * Class D Floating Rate Notes, Due 2038 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. ACE LIMITED: Fitch Assigns Neg. Outlook for 2 Units' Low Ratings ---------------------------------------------------------------- Fitch Ratings placed two ACE Limited ratings on Negative Outlook: -- Century Indemnity Company IFS at 'B-'. -- Century Reinsurance Company IFS at 'CCC+'. Fitch Ratings also upgraded the ratings of Combined Insurance Company of America and its New York subsidiary Combined Life Insurance Company of New York to 'AA-' from 'A' following their purchase by ACE Limited from Aon Corporation for $2.56 billion. The Rating Outlook is Stable. The rating action reflects Fitch's view that the acquired entities are core operations to ACE's global operations. Fitch anticipates that CICA's and CLICNY's financial and business profile benefits being owned by a very strong owner with a long term, global strategy centered on underwriting insurance risks. The improved strategic position and affiliation with ACE more than offsets the reduction in capitalization at CICA that has occurred with the sale. CICA's reported statutory capital and surplus has declined from $934 million at year-end 2007 to a pro forma $426 million due a special one-time dividend to Aon and the sale of a former subsidiary, Sterling Life Insurance Company, to Munich Re. Fitch anticipates that CICA and CLICNY will be able to complement ACE's international distribution capabilities and further expand its growing international operations. CICA and CLICNY have historically generated strong operating margins, and there will be some opportunity to improve these margins through expense activities over the next several quarters. CICA and CLICNY sell individual life, health and disability products to rural and medium income target markets domestically, as well as in Canada, parts of Europe, Australia and Asia. ACE is one of the world's largest insurers providing a mix of P&C, Life, A&H and reinsurance products. Headquartered in Bermuda, ACE provides a diversified range of products and services to clients in nearly 50 countries around the world. Aon's ratings are not impacted by the sale of CICA and CLICNY. Fitch has upgraded these ratings with a Stable Rating Outlook: Combined Insurance Company of America -- Insurer financial strength to 'AA-' from 'A'. Combined Life Insurance Company of New York -- Insurer financial strength to 'AA-' from 'A'. Fitch has these ratings for ACE Limited with a Stable Outlook: ACE Limited -- Issuer Default Rating at 'A+'; -- $575 million preferred stock at 'A-'. ACE INA Holdings Inc. -- IDR at 'A+'; -- $100 million senior debentures due 2029 at 'A'; -- $500 million senior notes due 2014 at 'A'; -- $500 million senior notes due 2017 at 'A'; -- $300 million senior notes due 2036 at 'A'; -- $300 million senior notes due 2018 at 'A'. ACE Capital Trust II -- $300 Capital Securities due 2030 at 'A-'. ACE American Insurance Company ACE Bermuda Insurance Limited ACE Fire Underwriters Ins. Company ACE Indemnity Insurance Company ACE Insurance Company of the Midwest ACE Property and Casualty Insurance Company ACE Tempest Reinsurance Limited Atlantic Employers Insurance Company Bankers Standard Fire & Marine Company Bankers Standard Insurance Company Illinois Union Insurance Company Indemnity Insurance Company of North America Insurance Company of North America Pacific Employers Insurance Company Westchester Fire Insurance Company Westchester Surplus Lines Insurance Company -- Insurer Financial Strength Ratings (IFS) at 'AA-'. Fitch also withdraws ACE Insurance Company of Illinois due to its merger with another ACE entity as of Dec. 31, 2007. ADAM AIRCRAFT: Court Appoints DoveBid to Manage Sale of Assets -------------------------------------------------------------- The United States Bankruptcy Court in Colorado appointed GoIndustry-DoveBid to manage the piecemeal liquidation of Adam Aircraft Industries, Inc., in the event the Debtor fails to receive acceptable bids for substantially all of its assets. GoIndustry-DoveBid provides capital asset management and valuation services. Founded in 1998, Adam Aircraft designed and manufactured a family of innovative general aviation aircraft, including the centerline thrust, twin-engine A500, and the A700 twin-engine very light jet. The A500 aircraft has been Type Certified by the FAA; and the A700, at the time of bankruptcy filing, was undergoing flight test and development with certification anticipated in late 2008. The company used computer-aided design, rapid prototyping, advanced manufacturing techniques, and carbon composite materials to produce high-performance aircraft at attractive prices. Operations of the Colorado facilities were suspended in February 2008. The company employed approximately 800 skilled workers and engineers. The company was offered as an Enterprise Sale with bids in excess of $10 million due April 3, 2008. If an acceptable bid is not received, assets will be sold in a Webcast/Online auction conducted live in Englewood, Colorado and over the Internet at http://www.dovebid.com/on April 30 and May 1, 2008, beginning at 9:00 a.m., Mountain Time each day. The company has yet to release results of Thursday's bidding deadline. The multi-million dollar absolute auction will feature more than 1,500 lots; and all material will be sold, GoIndustry-DoveBid said. Featured assets include Aircraft, Engines, Avionics, Parts Inventory, Heavy Machinery, Tooling, Ovens, QC and Inspection Equipment, Interiors, Raw Material, GSE, and hundreds of Complete Workstations, Servers and IT Equipment. The Intellectual Property is also available for sale to a party who will want to continue the development of this well designed aircraft. Participants may attend in person or bid online. Detailed preview information, asset catalog, and online bidding instructions are available at http://www.dovebid.com/ "We are pleased to have been chosen by the trustee to conduct the sale of the assets from Adam Aircraft, a premier aircraft manufacturer," David Weiss - director of business development, GoIndustry-DoveBid. GoIndustry-DoveBid is ideally positioned to assist companies in selling surplus assets for maximum market value to an extensive network of global buyers." Airlines, OEM's, and Global 2000 companies recognize the tremendous value in this service and utilize GoIndustry-DoveBid to sell their surplus equipment. Bidders from over 20 countries bid on assets located in the United States, United Kingdom, and Europe every month in the Aviation Equipment Exchange. 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. The Debtor filed for chapter 7 liquidation on Feb. 15, 2008, with the U.S. Bankruptcy Court in Colorado after failing to secure financing. It also laid off 800 workers and listed assets between $1 million and $10 million, and debts between $50 million and $100 million. ALLIANCE ONE: Completes Asset Sale to Pasal Dev't for $7.6 Mil. --------------------------------------------------------------- Alliance One International, Inc. completed the sale of certain real property owned by its wholly owned subsidiary Alliance One ESS to Pasal Development SA, an unaffiliated third party. The cash proceeds from the transaction are approximately $7.6 million, of which $4.5 million will be recorded as a net gain on sale of assets. Additionally, the company disclosed that in March 2008, the company completed the sale of the two remaining real properties owned by its discontinued wool operations. These French properties were the subjects of separate sales agreements that had been pending governmental approval. The net cash proceeds from these sales are approximately $11.6 million. "The sale of the Greek and wool assets are consistent with the company's committed focus on strategically identifying and pursuing cost savings while right-sizing our global footprint," Pete Harrison, the company's Chief Executive Officer, stated. Based in Morrisville, North Carolina, Alliance One International Inc. (NYSE: AOI) -- http://www.aointl.com/-- is a leaf tobacco merchant. The company has worldwide operations in Argentina, Bangladesh, Brazil, Bulgaria, Canada, China, France, Philippines, Malaysia, and Singapore. * * * As reported in the Troubled Company Reporter on March 19, 2008, Standard & Poor's Ratings Services revised its rating outlook on Alliance One International Inc. and its wholly owned subsidiary, Intabex Netherlands B.V., to stable from negative. At the same time, the ratings on the Morrisville, North Carolina-based company, including the 'B+' corporate credit rating, were affirmed. ALLIED DEFENSE: BDO Seidman Expresses Going Concern Doubt --------------------------------------------------------- BDO Seidman LLP raised substantial doubt about the ability of The Allied Defense Group, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditing firm reported that in 2007 and 2006 the company suffered losses from operations. Also, in January and February 2008, the banking group of the company's key subsidiary sent notifications to the company of their intentions to terminate the credit facilities. Subsequently, in March 2008, the members of the banking group notified the company of their intentions to continue with the credit facility contingent upon the resolution of additional requirements. The company related that it faced serious liquidity challenges in 2007 mainly resulting from the reduction of revenues and significant operating losses at its MECAR subsidiary, the financing costs associated with registration delay penalties and interest premiums paid to the holders of its Convertible Notes, legal and restructuring costs associated with alleged events of default with the convertible note holders and with the issuance of new convertible notes in June and July 2007, operational restructuring activities at its MECAR and NSM subsidiaries to reduce the fixed cost base of those operations, and the funding of continuing operating losses at several of the company's smaller US-based subsidiaries. The downturn in the MECAR business resulted from lack of replenishment orders from MECAR's largest customer after the completion of a large multi-year contract in early 2005. In fiscal year 2006 and in the first nine months of 2007, MECAR incurred significant operating losses and used its cash balances and credit facilities to fund these losses. The net loss from continuing operations before income taxes was $43,897,000 for the year ended December 31, 2007 as compared to $30,039,000 for the comparable period in 2006. In general, after adjusting for these non-recurring charges, the company continued to sustain losses at the 2006 level because of reduced revenues. The company posted a net loss of $21,278,000 on total revenues of $55,618,000 for the year ended Dec. 31, 2007, as compared with a net loss of $41,097,000 on total revenues of $87,015,000 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $160,251,000 in total assets, $114,596,000 in total liabilities and $45,655,000 in stockholders' equity. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?29ce About Allied Defense The Allied Defense Group, Inc., (AMEX: ADG) -- http://www.allieddefensegroup.com -- is a diversified, multinational portfolio of defense and security businesses. Through its two primary segments, Ammunition & Weapons Effects and Electronic Security it specializes in delivering sophisticated defense and security solutions for government and commercial requirements worldwide. ALOHA AIRLINES: Puts Up Another Division for Sale ------------------------------------------------- Aloha Airgroup Inc., dba Aloha Airlines Inc., which sold its Cargo Division to Seattle-based Saltchuk Resources Inc. for $13 million, is selling another division -- Contract Services, The Associated Press reports. AP says that the Contract Services Division with about 1,200 workers, mostly from Hawaii, is healthy and remains unaffected by Aloha Airlines' closure. Aloha Airlines' Contract Services Division gives ground support to other airline operators, and offers customer services, like baggage handling and ticketing, to international airlines that fly to Hawaii, AP relates. Among the clients of Contract Services Division are UAL Corporation, ATA Airlines Inc., and airlines from Japan, Korea and China, AP adds. The Debtor is searching for interested buyer in order to pool "a little bit of money," AP quotes Aloha CEO David Banmiller as saying. Sale of Cargo Division As reported in the Troubled Company Reporter on March 31, 2008, Saltchuk, the new owner of the Debtor's Cargo Division, intends to retain as many as 300 employees in the division. Saltchuk, however, did not engage Aloha in talks about taking over the bankrupt airlines' passenger business. "We believe our knowledge of Hawaii, coupled with our extensive air cargo operations experience, positions us well to help take Aloha Air Cargo to the next level," Saltchuk President Tim Engle, said. "Our goal is to ensure a smooth transition for both our employees and our customers," he continued. About Aloha Airlines Based in Honolulu, Hawaii, Aloha Airgroup Inc., dba Aloha Airlines Inc., -- http://www.alohaairlines.com/-- and its affiliates are carriers that fly passengers and freight to Hawaii's five major airports, as well as to half a dozen destinations in the western U.S. They operate a fleet of about 20 aircraft, all Boeing 737s, including three configured as freighters. This is the airline's second bankruptcy filing. Aloha filed for Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063), and emerged from Chapter 11 bankruptcy protection in February 2006. The company and its affiliates filed again for Chapter 11 protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08- 00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven Singerman, Esq., at Berger Singerman P.A., and David C. Farmer, Esq., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $100 million to $500 million. ALOHA AIRLINES: AMA Says Revenue from Aloha is Fraction of Total ---------------------------------------------------------------- AeroMechanical Services Ltd., a large supplier of Aloha Airlines Inc., disclosed that while its actual financial exposure to bankrupt Aloha Airlines Inc. is yet unknown, the revenues it derived from Aloha amounted to a small portion of its total revenues. AMA learned via a press release on March 20, 2008, that Aloha Airlines filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the District of Hawaii. A subsequent press release announced that Aloha was ceasing passenger operations after March 31, 2008 but plans to continue operating its cargo operations as well as special operations while the U.S. Bankruptcy Court seeks bids from potential buyers. AMA disclosed that its financial exposure to this turn of events in the airline industry is difficult to fully determine as the formal plans for the entire Aloha aircraft fleet are unknown at this time, said AMA. However, AMA said, for the fiscal year 2007 gross revenue invoiced to Aloha amounted to 9% of cash based revenue. At present time, the accounts receivable from Aloha to AMA are considered current with only the January and February 2008 balances outstanding -- a total of $47,061 amount outstanding. "It is sad for everyone at AMA that Aloha will not presently be continuing its passenger operations. Aloha has been a great partner during our 4-year relationship," AMA CEO Bill Tempany said. "While Aloha represents a large number of the total aircraft shipped with AMA (26%), the revenues from Aloha amounted to a small portion of AMA's total revenues. Aloha had contracted with AMA at lower rates than what we are currently contacting at as they were AMA's initial launch customer on many fronts and the agreements originally entered into reflect such conditions," Mr. Tempany disclosed. About AeroMechanical Services AeroMechanical Services Ltd. -- http://www.amscanada.com/-- provides proprietary technological solutions and services designed to reduce costs and improve efficiencies in the airline industry. The company has successfully commercialized three products and associated services currently marketed to airlines, manufacturers and maintenance organizations around the world. Its premier technology, afirs(TM) UpTime(TM), allows airlines to monitor and manage aircraft operations anywhere, anytime, in real-time. About Aloha Airlines Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines Inc. -- http://www.alohaairlines.com/-- and its affiliates are carriers that fly passengers and freight to Hawaii's five major airports, as well as to half a dozen destinations in the western U.S. They operate a fleet of about 20 aircraft, all Boeing 737s, including three configured as freighters. This is the airline's second bankruptcy filing. Aloha filed for Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063), and emerged from Chapter 11 bankruptcy protection in February 2006. The company and its affiliates filed again for Chapter 11 protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08- 00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven Singerman, Esq., at Berger Singerman P.A., and David C. Farmer, Esq., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $100 million to $500 million. ALPHA NATURAL: $100MM Facility Raise Cues Moody's to Lift Ratings ----------------------------------------------------------------- Moody's Investors Service raised Alpha Natural Resources, LLC's senior secured ratings to Ba3 from B1 and affirmed Alpha's B1 corporate family rating and B3 senior unsecured rating. Moody's also raised Alpha's speculative grade liquidity rating to SGL-1 from SGL-2. The outlook remains stable. The rating action follows Alpha's announcement that it is increasing its senior secured revolving credit facility by $100 million to $375 million and that its parent, Alpha Natural Resources, Inc., is issuing $250 million of convertible notes (unrated) and $150 million of common equity. Alpha will use a portion of the proceeds from the equity and convertible issue to tender for its existing $175 million of 10% senior unsecured notes. The announced transactions are intended to reduce Alpha's annual interest cost, boost liquidity and strengthen its balance sheet. The upgrade of the senior secured facilities reflects an enhanced loss absorption cushion afforded by a larger amount of unsecured convertible debt supporting the secured bank facilities. The upgrade of the speculative grade liquidity rating reflects the substantive cash balance and revolver availability that Alpha will have when the referenced transactions close. The tender offer for the existing 10% senior unsecured notes expires on May 1, 2008. Alpha plans to call any 10% notes not tendered at the first call date in June 2008 by exercising its make-whole call redemption rights. Moody's rating on these notes will be withdrawn upon completion of the tender offer. Alpha's B1 corporate family rating reflects its production of high-quality thermal and metallurgical coal, its solid earnings and free cash flow, and its relatively low level of workers' compensation, black lung, and OPEB obligations. The rating is also supported by currently very strong thermal and metallurgical coal prices, which will benefit Alpha at least in 2008 and 2009. The rating is negatively impacted by Alpha's relatively small size and high cost structure, concentration of operations in Central Appalachia, and history of making frequent, albeit successful, acquisitions. Ratings upgraded: -- $375 million Gtd. Sr. Secured Revolving Facility due 2010, to Ba3 (LGD3, 39%) from B1 -- $233 million Gtd. Sr. Secured Term Loan B Facility due 2012, to Ba3 (LGD3, 39%) from B1 -- Speculative Grade Liquidity Rating, to SGL-1 from SGL-2 Ratings affirmed: -- Corporate Family Rating, B1 -- $175 million 10% Gtd. Sr. Unsecured Notes due 2012, B3 (LGD5, 89%) Moody's last rating action on Alpha was to upgrade its corporate family rating to B1 from B2 in July 2006. Based in Abingdon, Virginia, Alpha Natural Resources, LLC is engaged in the mining and marketing of thermal and metallurgical coal and had revenues in the year ended Dec. 31, 2007 of $1.9 billion. ALPHA MEZZ: Moody's Chips Notes Ratings, Puts it Under Review ------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible downgrade the ratings on these notes issued by Alpha Mezz CDO 2007-I, Ltd. Class Description: $325,000,000 Supersenior Swap -- Prior Rating: Aaa -- Current Rating: Aa2, Review for Possible Downgrade Class Description: $70,000,000 Class II Senior Floating Rate Notes Due 2047 -- Prior Rating: Aaa, Possible Downgrade -- Current Rating: A3, Review for Possible Downgrade Class Description: $30,000,000 Class III Senior Floating Rate Notes Due 2047 -- Prior Rating: Aa2, Possible Downgrade -- Current Rating: Baa2, Review for Possible Downgrade Class Description: $5,000,000 Class IV Senior Floating Rate Notes Due 2047 -- Prior Rating: Aa3, Possible Downgrade -- Current Rating: Baa3, Review for Possible Downgrade Class Description: $23,000,000 Class V Mezzanine Floating Rate Deferrable Notes Due 2047 -- Prior Rating: Baa2, Possible Downgrade -- Current Rating: Ba2, Review for Possible Downgrade Class Description: $22,500,000 Class VI Mezzanine Floating Rate Deferrable Notes Due 2047 -- Prior Rating: Ba2, Possible Downgrade -- Current Rating: B3, Review for Possible Downgrade Class Description: $7,000,00 Class VII Mezzanine Floating Rate Deferrable Notes Due 2047 -- Prior Rating: B1, Possible Downgrade -- Current Rating: Caa2, Review for Possible Downgrade In addition, Moody's placed on review for possible downgrade the rating on these notes: Class Description: $10,000,000 Principal Protected Notes Due 2047 -- Prior Rating: Aa3 -- Current Rating: Aa3, Review for Possible Downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. AMERICAN LAFRANCE: Three Parties Respond to Asset Sale Motion ------------------------------------------------------------- Airgas Red-D-Arc, Inc.; the Municipality of North Cowichan on Vancouver Island, in British Columbia, Canada; and Bill Heard Chevrolet Co. filed responses to American LaFrance, LLC's request to sell substantially all assets. As reported by the Troubled Company Reporter on Feb. 6, 2008, American LaFrance acknowledged that it has operated at a loss and experienced a severe contraction in trade terms by its vendors. The Debtor believed that the most viable solution to its liquidity crisis that will also preserve the value of its assets and business is an asset sale pursuant to Section 363 of the Bankruptcy Code. The Debtor has asked the U.S. Bankruptcy Court for the District of Delaware for permission to sell substantially all of its assets -- in the event it fails to prosecute and confirm a plan of reorganization -- to Patriarch Partners Agency Services LLC, free and clear of liens, claims, encumbrances and subject to higher and better bids. Patriarch is the current secured DIP Lender and agent for the other DIP Lenders who has committed to extend a $50,000,000 DIP credit facility to the Debtor. From the Petition Date through the close of the proposed sale, Patriarch has agreed to fund the Debtor's day-to-day obligations. This is expected to end on May 1, 2008. As reported by the TCR on April 3, the Court rescheduled the hearing of the Asset Sale Motion of American LaFrance LLC to May 1, 2008 at 10:00 a.m. Any response to the Sale Motion must be filed with the Court no later than April 24. Parties' Responses A. Airgas Under the Welderentals Agreement dated June 2006, Airgas Red-D- Arc, Inc. leased and delivered welding equipment and related supplies to American LaFrance, LLC's premises in Epharata, Pennsylvania. As of the Petition Date, $224,140 worth of equipments remains in the Debtor's possession. Airgas is not against the Debtor's Asset Sale Motion. Airgas, however, objects to the inclusion of its assets in the Asset Sale. Accordingly, Airgas asks the Court to clarify that any order approving the Asset Sale Motion should expressly exclude the sale of Airgas' assets. B. Municipality of North Cowichan On June 2007, the Municipality of North Cowichan on Vancouver Island, in British Columbia, Canada, entered into a contract with the Debtor for a pumper firetruck worth $397,997, to be delivered within 360 days of a pre-construction meeting. The Contract is listed in the Debtor's Assumption Notice. Blair A. Russel, Esq., in North Cowichan, British Columbia, discloses that North Cowichan is submitting a claim for damages for any additional costs it may incur in the event of having to rebid the Firetruck Contract, as well as the cost of the difference between a new award and the bid from American LaFrance of British Columbia, should the firetruck not be delivered as scheduled. C. Bill Heard Chevrolet Bill Heard Chevrolet Co. entered into purchase agreements with the Debtor, whereby Bill Heard conditionally agreed in the future to sell to the Debtor certain designated truck cabs and chassis, once the Debtor had a buyer for the up-fitted vehicles so that the Debtor would be able to pay for them. As of the Petition Date, the Debtor was in possession of three 2007 Chevy models worth roughly $48,000 each and the International model vehicle whose value exceeds $77,461, according to Bill Heard. Bill Heard thus objects to the Asset Sale Motion to the extent that the Debtor intends to sell the vehicles that remain the property of Bill Heard, subject to a blanket security interest in them held by the General Motors Acceptance Corporation. The Sale Agreement The Debtor's counsel, Christopher Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, in Wilmington, Delaware, related that the Debtor seeks to enter into a asset purchase agreement with Patriarch. Under the APA, the Debtor will sell all of its assets to Patriarch for $150,000,000. The assets to be sold includes all of the Debtor's title and interest in and to all of its assets, properties, rights, claims and contracts owned, leased or licensed. The Debtor also intends to assume and assign certain contracts to Patriarch in connection with the proposed sale. Among the assets to be excluded from the proposed sale are all minute books, stock records and corporate seals; all records that the Debtor is required by law to retain in its possession; and the Debtor' equity interests. Pursuant to the APA, Patriarch will assume liabilities to cure costs associated certain contracts to be assigned by the Debtor to Patriarch; for trade payables arising postpetition that directly relates to the operation of the Debtor's business in the ordinary course; and all obligations under the Debtor's customer programs. The APA also provides that the Debtor will release Patriarch, as buyer, of all claims, counterclaim, set-off or causes of action. A full-text copy of the Patriarch Partners APA is available for free at http://researcharchives.com/t/s?27c3 About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. The Debtor filed its plan of reorganization on Feb. 3. (American LaFrance Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AXLE: Moody's Puts Ba3 Corp. Family Rating Under Review ---------------------------------------------------------------- Moody's Investors Service placed American Axle & Manufacturing Holdings, Inc.'s Ba3 Corporate Family Rating under review for downgrade. In a related action, American Axle's Speculative Grade Liquidity Rating was lowered to SGL-2 from SGL-1. The review will consider the potential near term implications of the protracted work stoppage by American Axle's UAW employees on the company's financial metrics and liquidity, balanced against the potential long term benefits of any eventual settlement. While Moody's believes that any eventual settlement with the UAW will incorporate terms that support the company's long term competitive position in the domestic auto parts business, the near term disruption caused by the protracted strike and the potential cash use associated with the strike and any negotiated settlement, represent key credit concerns. The review will also consider the potential effects of increasing economic uncertainty in the U.S. and higher fuel costs resulting in weaker consumer automotive demand. The UAW elected to implement a work stoppage on Feb. 25, 2008 at five of American Axle's facilities in Michigan and New York involving approximately 3,650 UAW employees. The underlying issues involve, among other items, American Axle's goal of reducing its all-in hourly labor cost, estimated to be approximately $73.48 under the expired labor contract, to levels competitive with other domestic automotive suppliers. Currently, the work stoppage is into its second month and published reports indicate that progress is being made on some items. However, there appears to be little movement on major wage and benefit discussions. Moody's will continue to monitor developments of the ongoing negotiations between the company and the UAW and consider rating actions as necessary based on new information. In lowering the Speculative Grade Liquidity Rating to SGL-2 from SGL-1, Moody's expects that the protracted work stoppage will consume some cash and has the potential to weaken the company's liquidity profile if not resolved in the near term. Moody's had anticipated the company to be free cash flow generative in 2008, but the combined effects of the strike, weak automotive demand, and lower productions levels at the company's largest customer (GM at 78% of revenues) may create headwinds. At year-end 2007 the company reported $344 million of cash and had $572 million of availability under its $600 million revolving credit facility. American Axle maintains ample cushion under its principal financial covenants which measure net debt to EBITDA and net worth. This cushion should enable the company to maintain significant availability of the facility over the near term. All of the company's bank obligations and notes are currently unsecured, which establishes some flexibility to generate alternative liquidity, if needed, subject to lien baskets and sale/leaseback limitations in the respective indentures. The company has made progress in reducing its cost structure as a result of recent restructuring initiatives. As of Dec. 31, 2007 debt/EBITDA was 2.4x, EBIT/Interest was 2.4x, and free cash flow to debt approximated 14%. These ratings are under review for downgrade: American Axle & Manufacturing Holdings, Inc. -- Corporate Family, Ba3 -- Probability of Default, Ba3 -- Unsecured guaranteed convertible note, Ba3 (LGD-4, 56%) American Axle & Manufacturing, Inc. -- Unsecured guaranteed notes, Ba3 (LGD-4, 56%) -- Unsecured guaranteed term loan, Ba3 (LGD-4, 56%) Ratings lowered: -- Speculative Grade Liquidity, to SGL-2 from SGL-1 Holdings' obligations are guaranteed by American Axle and vice versa. The last rating action was Nov. 26, 2007 when American Axle's ratings were affirmed and the Outlook changed to Stable. American Axle & Manufacturing, Inc., headquartered in Detroit, Michigan, is a world leader in the manufacture, design, engineering and validation of driveline systems and related components and modules, chassis systems, and metal formed products for light truck, SUV's and passenger cars. The company has manufacturing locations in the USA, Mexico, the United Kingdom, Brazil, China and Poland. The company reported revenues of $3.2 billion in 2007. AMERICAN HOME: Credit Support Erosion Cues S&P's Default Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 12 classes of mortgage-backed pass-through certificates from American Home Mortgage Assets Trust's series 2005-1 and 2005-2. At the same time, S&P affirmed its ratings on the remaining 15 classes from these two transactions. The downgrades of classes 1-B-5 and 2-B-5 from series 2005-2 to 'D' from 'CCC' reflect the complete erosion of credit support for these classes and their subsequent write-downs. Classes 1-B-5 and 2-B-5 realized $308,691 and $538,459 in losses, respectively, during the March 2008 remittance period. The lowered ratings on the remaining classes reflect the steady increase in the dollar amount of loans in the transactions' delinquency pipelines over the past seven months, combined with deterioration in credit support due to realized losses. The high levels of total and severe delinquencies in these transactions indicate that losses will continue to increase and further erode available credit support. Severe delinquencies in loan group 1 from series 2005-1 have risen by 212% over the past seven remittance periods to $8.683 million, while loan group 2 has seen an increase of 59% to $37.473 million. During the same period, severe delinquencies rose by 47% to $34.687 million in loan group 1 from series 2005-2 and by 30% to $18.690 million in loan group 2. Expected losses are the major driver for the negative rating actions at the higher rating categories. Based on the amount of loans that are currently in foreclosure and classified as real estate owned in loan group 2 from series 2005-1, and assuming a 35% loss severity, S&P expect losses that are approximately 1.8x the current 'A' credit support amount. Using the same methodology, S&P expect losses of approximately $11.981 million in loan group 1 from series 2005-2, which is about 53% of the current 'AAA' credit support. S&P expect losses of about $6.380 million for loan group 2, which is about 47% of the current 'AAA' credit support in that structure. Class 2-A-1-A, the super senior class in loan group 2, has approximately $19.791 million in credit support, and is therefore not affected by these rating actions. Monthly net losses for series 2005-1 have increased significantly over the past five remittance periods. While loan group 1 from series 2005-1 incurred only $437 in monthly net losses during the March 2008 remittance period, it incurred an average monthly net loss over the past five distribution periods of $101,198. Loan group 2 from series 2005-1 incurred a loss of $237,923 during the March 2008 remittance period, slightly less than the average monthly net loss of $248,562 over the past five distribution periods. Losses in series 2005-2 have increased significantly over the past four remittance periods. Loan group 1 from series 2005-2 incurred $238,624 in monthly net losses during the March 2008 remittance period, less than the average monthly net loss of $319,393 over the last four distribution periods. Loan group 2 from series 2005-2 incurred $498,866 in monthly net losses during the March 2008 remittance period, up from the average monthly net loss of $347,773 over the last four distribution periods. As of the March 2008 remittance period, cumulative losses were 0.12% of the original principal balance for loan group 1 from series 2005-1 and 0.32% for loan group 2. Series 2005-2 had cumulative losses of 0.42% and 1.07% for loan groups 1 and 2, respectively. Total delinquencies were 10.40% and 28.75% of the current principal balance for loan group 1 and loan group 2 from series 2005-1, respectively, and 39.77% and 28.51% for loan group 1 and loan group 2 from series 2005-2. Severe delinquencies were 8.68% and 25.04% of the current principal balance for loan group 1 and loan group 2 from series 2005-1, respectively, and 36.71% and 24.58% for loan group 1 and loan group 2 from series 2005-2. The lowered ratings are in line with the projected credit enhancement amounts following the liquidation of many of the loans currently in the transactions' delinquency pipelines. S&P's expected losses also factor in the default of loans that are current. The affirmations reflect current and projected credit support percentages that are sufficient to support the certificates at their current rating levels. The initial credit enhancement percentages meet or exceed the amount required for each of the affirmed ratings. Subordination primarily provides credit support for loan group 1 from series 2005-1, and for both loan groups from series 2005-2. A combination of subordination, excess spread, and overcollateralization is the primary source of credit support for loan group 2 from series 2005-1. The underlying collateral for the transactions consists primarily of Alternative-A, fixed-, adjustable-rate, and hybrid adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered American Home Mortgage Assets Trust Mortgage-backed pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2005-1 3-M-2 B+ A 2005-1 3-M-3 CCC BBB 2005-1 3-M-4 CCC B 2005-2 1-A-1 BB+ AAA 2005-2 1-X BB+ AAA 2005-2 2-A-1B BBB AAA 2005-2 1-B-1 B BBB 2005-2 1-B-2 CCC B 2005-2 1-B-5 D CCC 2005-2 2-B-1 B A 2005-2 2-B-2 CCC B 2005-2 2-B-5 D CCC Ratings Affirmed American Home Mortgage Assets Trust Mortgage-backed pass-through certificates Series Class Rating ------ ----- ------ 2005-1 1-A-1 AAA 2005-1 2-A-1 AAA 2005-1 2-A-2-1 AAA 2005-1 2-A-2-2 AAA 2005-1 3-A-1-1 AAA 2005-1 3-A-1-2 AAA 2005-1 3-A-2-1 AAA 2005-1 3-A-2-2 AAA 2005-1 3-M-1 AA 2005-1 C-B-5 CCC 2005-2 2-A-1-A AAA 2005-2 1-B-3 CCC 2005-2 1-B-4 CCC 2005-2 2-B-3 CCC 2005-2 2-B-4 CCC AMP AA: Moody's Chips Ratings on $9MM Notes to Ca from Caa3 ----------------------------------------------------------- Moody's Investors Service has downgraded the ratings on these notes issued by AMP AA CDO 4.5-9.0 Notes: Class Description: $9,000,000 AMP AA CDO 4.5-9.0 Notes -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. ARTISTDIRECT INC: Appoints Jon Diamond Chairman of the Board ------------------------------------------------------------ Effective March 6, 2008, Jon Diamond stepped down as chief executive officer of ARTISTdirect Inc. and was appointed by the company's Board of Directors as chairman. Dimitri Villard was appointed by the Board of Directors as interim chief executive officer. Mr. Villard is currently a director of the company and will remain a director. Mr. Villard has served as president and a director of Pivotal BioSciences Inc., a biotechonology company, since September 1998. In addition, since January 1982 to present, he has served as president and director of Byzantine Productions Inc. Previously, Mr. Villard was a director at the investment banking firm of SG Cowen and affiliated entities, a position he held from January 1997 to July 1999. Mr. Villard currently serves as chairman of the board of Dax Solutions Inc., an entertainment industry digital asset management venture. He is also a member of the Executive Committee of the Los Angeles chapter of the Tech Coast Angels, a private venture capital group. Mr. Villard received a B.A. Degree in Government from Harvard University in 1964 and also received a Master of Science degree from China International Medical University. About ARTISTdirect Inc. Headquartered in Santa Monica, California, ARTISTdirect Inc. (OTC.BB: ARTD) -- http://artistdirect.com/-- is a digital media entertainment company that is home to an online music network and, through its MediaDefender subsidiary, is a provider of anti-piracy solutions in the Internet-piracy-protection industry. At Dec. 31, 2007, the company's consolidated balance sheet showed $50.7 million in total assets, $46.7 million in total liabilities, and $4.0 million in total stockholders' equity. Going Concern Disclaimer Gumbiner Savett Inc. in Santa Monica, Calif., expressed substantial doubt about Artistdirect Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm said that the company is in default under its senior and subordinated debt agreements. Pursuant to a series of Forbearance and Consent Agreements with the investors in the Senior Financing, such investors agreed to forbear from the exercise of their rights and remedies from April 17, 2007, through Feb. 20, 2008, in exchange for aggregate cash payments of $1,000,000 in 2007 and $494,446 in February 2008. On March 17, 2008, the company entered into a Forbearance and Consent Agreement with the investors in the company's Senior Debt Financing, which was effective as of Feb. 20, 2008. The investors agreed to forbear from exercising any of their rights and remedies under the Senior Financing transaction documents through Dec. 31, 2008, in exchange for an adjustment in the interest rate associated with the Senior Notes from 11.25% to 15%, provided the loan is repaid prior to Sept. 30, 2008 or 16%, if the loan remains outstanding subsequent to that date. ASSOCIATED ESTATES: Extends Maturity Date of Credit to March 2011 ----------------------------------------------------------------- Associated Estates Realty Corporation amended its $100 million senior unsecured revolving credit facility to increase the facility to $150 million and extend its maturity to March 20, 2011. National City Bank acted as Lead Arranger and is the Administrative Agent. The other participating banks are Wells Fargo Bank N.A., Raymond James Bank FSB, The Huntington National Bank and US Bank, National Association. "The steps we have taken to improve our fixed charge coverage and grow our unencumbered asset pool have enabled us to expand our line and extend its terms," Lou Fatica, chief financial officer, said. "This increased credit facility provides us with the enhanced flexibility to further our strategic objectives of repositioning the portfolio to faster growing markets and strengthening the Company's balance sheet." Based in Richmond Heights, Ohio, Associated Estates Realty Corporation (NYSE: AEC) -- http://www.aecrealty.com/-- is a real estate investment trust and is a member of the Russell 2000 Index. The company directly or indirectly owns, manages or is a joint venture partner in 98 properties containing a total of 19,909 units located in 10 states. * * * Moody's Investor Service placed Associated Estates Realty Corporation's long-term foreign and local issuer credit ratings at 'B+' on July 2007. The ratings still hold to date with a stable outlook. ATA AIRLINES: Files Chapter 22 Petition in Indiana -------------------------------------------------- ATA Airlines, Inc., filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. The petition was filed on April 2 in the U.S. Bankruptcy Court for the Southern District of Indiana, in the Indianapolis division. Subsequent to the Chapter 11 filing, ATA discontinued all operations on April 3. A primary factor leading to these actions was the unexpected cancellation of a key contract for ATA's military charter business, which made it impossible for ATA to obtain additional capital to sustain its operations or restructure the business. With the shutdown of all operations and cancellation of all ATA flights, ATA is no longer able to honor any reservations or tickets. ATA customers should seek alternative arrangements for current and future travel. To that end, ATA has contacted the airlines that serve ATA destinations and asked them to provide assistance to ATA customers. Customer information has also been posted at all ATA ticket counters and is available at (800) 435-9282. Customers should visit http://www.ata.com/for updates as additional information becomes available. Customers who purchased tickets from ATA using a credit card should contact their credit card provider directly for more information about how to obtain a refund for unused tickets. Customers who purchased tickets from Southwest Airlines for flights operated by ATA through its codeshare agreement should contact Southwest at (800) 308-5037 for more information. ATA's frequent flier program and all accumulated frequent flier points will be canceled. ATA has advised its commercial and military charter customers that they should make alternative arrangements for future travel needs. "We deeply regret the disruption and hardship caused by the sudden shutdown of ATA, an outcome we and our employees had worked very hard and made many sacrifices to avoid," Doug Yakola, chief operating officer of ATA, said. "Unfortunately, the cancellation of a critical agreement for our military charter business undermined ATA's plan to address the current conditions facing all scheduled service airlines, including the tremendous spike in the price of jet fuel in recent months. As a result, it became impossible for ATA to continue operating." Despite its financial challenges, ATA continued to seek solutions for its scheduled service business and create value from its longstanding presence in the Hawaii market and its planned international expansion. But these efforts suffered a major blow recently when ATA received abrupt and unexpected notification from FedEx Corporation that ATA would no longer be a member of the FedEx Teaming Arrangement. This arrangement gave ATA a significant share of the airlift contracts under the International Program of the Department of Defense Air Mobility Command, which facilitates transportation for military personnel and their families to and from overseas destinations. This arrangement accounted for most of ATA's charter business. Even though ATA had been a member of the FedEx team for nearly two decades, FedEx informed ATA that it would be denied membership on the FedEx Team for the government's 2009 fiscal year - a period that begins in October 2008 and runs through September 2009. This termination is a full year earlier than the term specified in a letter of agreement between FedEx and ATA. ATA, the second airline company that filed for bankruptcy in less than a month, has engaged in extensive discussions with numerous parties in an effort to obtain capital, identify other opportunities that would allow it to continue operating, or sell the business as a going concern. However, despite its best efforts, ATA could not continue operations or consummate a sale. Accordingly, an immediate shutdown was necessary. ATA's scheduled service business had been severely impacted by the dramatic and unprecedented increase in the price of jet fuel in recent months. On March 6, in an effort to reduce costs, ATA would discontinue its low-fare domestic scheduled service at Chicago's Midway Airport, effective April 14, 2008. International service from Midway was expected to end on June 7, 2008. All such service has been discontinued immediately, in addition to all of ATA's other scheduled flights, which operated between the West Coast and Hawaii. Steven S. Turoff is Chief Restructuring Officer Steven S. Turoff has been named Chief Restructuring Officer of ATA, with responsibility for overseeing the company's Chapter 11 case. Mr. Turoff is president of The Renaissance Consulting Group, Inc., a turnaround management firm based in Dallas, Texas. ATA's lead bankruptcy counsel in its Chapter 11 proceedings is Haynes and Boone, LLP. Founded in 1973 and based in Indianapolis, ATA Airlines, Inc. is a subsidiary of Global Aero Logistics Inc. Global Aero and its other subsidiaries are not part of ATA's Chapter 11 proceedings and are conducting business as usual. At the time of the shutdown, ATA had approximately 2,230 employees, virtually all of whom are being notified today that their positions have been eliminated. ATA has filed motions with the Bankruptcy Court seeking authorization to provide COBRA medical insurance coverage to these employees. ATA was serving approximately 10,000 passengers per day at the time of its shutdown. The company operated 29 aircraft, many of which are leased. Delta and Northwest Flight Options Delta Air Lines Inc. and Northwest Airlines Corp. are extending assistance to customers affected by the termination of ATA service due to its bankruptcy filing and cessation of operations. Delta is offering ATA passengers with confirmed tickets for certain ATA flights to locations in Hawaii and Mexico through the month of April. In addition, affected passengers may purchase confirmed space tickets at a 20% discount on Delta's lowest walk- up fares, through the month of April. Northwest is offering ATA customers and employees a stand-by or confirmed option for travel to or from Hawaii and to or from Cancun. The offers are valid between April 3 and May 3, 2008. About ATA Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. Daniel H. Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. The Court confirmed the Debtors' plan of reorganization on Jan. 31, 2006. The Debtors' emerged from bankruptcy on Feb. 28, 2006. ATA AIRLINES: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: ATA Airlines, Inc. fka American Trans Air, Inc. 7337 West Washington Street Indianapolis, IN 46231-1328 Bankruptcy Case No.: 08-03675 Type of Business: The Debtor is a carrier offering scheduled flights to about a dozen destinations and chartered passenger services for tour operators and the US military. It operates a fleet of some 30 jets, mainly Boeing 737s. Its scheduled flights are primarily from Chicago Midway to tourist destinations in Hawaii and Mexico and to major business centers such as Dallas and New York. See http://www.ata.com/ The Debtor and its bankrupt affiliates first filed separate Chapter 11 petitions on Oct. 26, 2004 at the U.S. Bankruptcy Court for the Southern District of Indiana. They emerged from bankruptcy on Feb. 28, 2006. Chapter 11 Petition Date: April 2, 2008 Court: Southern District of Indiana (Indianapolis) Judge: Basil H. Lorch III Debtor's Counsel: Terry E. Hall, Esq. (terry.hall@bakerd.com) Baker & Daniels, LLP 300 Noth Meridian Street, Suite 2700 Indianapolis, IN 46204 Tel: (317) 237-0300 http://www.bakerd.com/ Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ City of Chicago, Department loan agreement $7,097,500 of Aviation O'hare International Airport Terminal 2 Mezzanine P.O. Box 66142 Chicago, IL 60666 DFAS-CO/FPS/F fuel $2,496,659 P.O. Box 182317 Columbus, OH 43218-2317 Eurocontrol navigational fees $634,612 Den Danske Bank Holmes Kanal 2-12 Copenhagem, Denmark DK-1092 Tel: 42-33-44-00-00 Lufthansa Technik maintenance $543,784 P.O. Box 470690 Tulsa, OK 74146 Tel: (918) 459-8000 State of Hawaii airport rents & $477,948 400 Rodgers Boulevard, landings Suite 700 Honolulu, HI 96819-1880 Tel: (808) 838-8600 Rockwell Collins, Inc. audiovisual, license $418,948 400 Collins Road Northeast & maintenance Cedar Rapids, IA 52498 Tel: (972) 929-5030 Federal Express Corp. freight $412,316 2600 Nonconnah Boulevard, Suite 132 Memphis, TN 38132 Tel: (305) 718-2163 Worldwide Flight Services handling $373,505 Attn: WFS PTS, LLC P.O. Box 910421 Dallas, TX 75391-0421 Tel: (808) 839-0202 Precision Response Corp. reservations $352,550 8151 Peters Road, Suite 3000 Plantation, FL 33324 Tel: (954) 693-3700 Servisair USA handling in various $327,618 2024 Payshere Circle, scheduled service Suite 700 Chicago, IL 60674 Tel: (305) 262-4059 Boeing Commercial Airplane maintenance $315,566 GRP Chase Manhattan Bank New York, NY Tel: (425) 237-4755 Air Dispatch, Ltd. representation & $309,768 5 Hobart Place handling in Middle London, SWIW OHU East Tel: 01293-572872 Gate Gourmet catering foreign & $281,169 3853 Collections Center Drive domestic Chicago, IL 60693 Tel: (703) 964-3006 Port of Oakland airport rents & $267,123 File No. 73752 landings P.O. Box 60000 San Francisco, CA 94160-3752 Tel: (510) 627-1100 Certified Aviation Services, line maintenance $263,522 Inc. 1150 South Vineyard Ontario, CA 91761 Tel: (909) 605-0380 Goodrich Lighting Systems maintenance $243,634 23438 Network Place Chicago, IL 60673-1234 Tel: (813) 891-7100 Timco Aviation maintenance $209,738 401 South Tryon Street charlotte, NC 28288-1008 Tel: (386) 758-3000 EFG Inflight Catering Foreign $185,323 Knockbeg Point, Shannon Airport Shannon Claire, Irelend 353-0-61-475625 Dallas/Fort Worth airport rents & $183,705 International Airport landings P.O. Box 974551 Dallas, TX 75397-4551 Tel: (972) 574-8405 World Fuel Services fuel $175,249 700 South Royal Ponciana Boulevard, Suite 800 Miami, FL 33166 Tel: (305) 428-8000 ATA AIRLINES: Pilots Blast Late-Night Decision to Cease Operations ------------------------------------------------------------------ Air Line Pilots Association, International, which is representing the pilots of ATA Airlines, is condemning the airline's management for its callous disregard of its employees and passengers in canceling all operations without warning early on Thursday morning. "By shutting down in the middle of the night, this management group has let down its loyal customers and the flight crews, cabin crews, mechanics, and other employees who have made deep sacrifices over the past few years to keep ATA afloat," Capt. Steve Staples, chairman of the ATA unit of ALPA said. "It shows an utter lack of respect and illustrates the ruthlessness of Wall Street hedge fund managers who have no knowledge or interest in the companies they own." ALPA was notified at approximately 4:00 a.m. Central time that the airline was filing for bankruptcy and shutting down all operations immediately. The airline's last flight was ATA Flight 4586, a morning red-eye from Honolulu to Phoenix that was scheduled to land at 8:34 a.m. Pacific time. "ATA's customers and employees had absolutely no warning that the airline was going out of business," Capt. Staples said. "This abrupt withdrawal is the airline equivalent of getting on the last helicopter out of Saigon." The April 3 announcement that ATA is ceasing operations is two days shy of the first anniversary of ATA's announcement that its holding company was buying World Airways and North American Airlines. On April 5, 2007, ATA Holdings changed its name to Global Aero Logistics and, in August 2007 completed the transaction that gave it three airlines: ATA, World, and North American. GAL is privately held by the hedge fund MatlinPatterson Global Opportunities Partners II. "We find it unusually coincidental that ALPA, which was in contract negotiations with ATA and had the best opportunity to change our collective bargaining agreement to reflect the new realities of the industry, was suddenly forced to shut down while World and North American will continue operating under the Global Aero Logistics banner," Capt. Staples said. "Since when does the acquiring airline go out of business while the acquired airlines keep flying?" Staples said that all ATA employees are the ultimate victims of a series of incompetent managers who chose to blame economic conditions for the airline's problems instead of admitting their own mistakes. "We were telling management two years ago that they needed to institute a fuel management program, and even found a fuel consultant who offered to work with the company -- but our overtures to help ATA reduce its fuel costs were repeatedly ignored," he said. "Management decided to outsource virtually all of our maintenance, then acquired elderly, unreliable DC-10s that needed extensive repairs. The ripple effect of years of poor management decisions -- not the current economy -- was what doomed ATA." Capt. Staples said the union's top priority is making sure that all 585 ATA pilots and flight engineers find new jobs, especially since part of ATA's fleet has been transferred to World Airways and more airplanes could go to World and North American later. "Our position is that we are pilots of Global Aero Logistics, which is still operating, and we deserve to be in the cockpits of Global's airliners," Capt. Staples adds. "Our contract says that the pilots go with the airplanes, and we will use every legal means available to us to ensure that our members' rights are protected." Founded in 1931, Air Line Pilots Association, International -- http://www.alpa.org/-- is a pilots' union, representing 61,000 pilots at 43 airlines in the U.S. and Canada. About ATA Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. Daniel H. Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. The Court confirmed the Debtors' plan of reorganization on Jan. 31, 2006. The Debtors' emerged from bankruptcy on Feb. 28, 2006. ATHERTON-NEWPORT: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Atherton-Newport Redondo LLC 23792 Rockfield Boulevard Suite 200 Lake Forest, CA 92630 Bankruptcy Case No.: 08-11471 Type of Business: Single Asset Real Estate Chapter 11 Petition Date: March 28, 2008 Court: Central District Of California (Santa Ana) Judge: Erithe A. Smith Debtor's Counsel: Stephen R. Wade, Esq. The Law Offices of Stephen R. Wade 400 North Mountain Avenue, Suite 214B Upland, CA 91786 Tel: 909-985-6500 Fax: 909-985-2865 dp@srwadelaw.com Estimated Assets: $1,000,001 to $10 million Estimated Debts: $1,000,001 to $10 million Debtor's list of its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Perkins Cole $17,025 1201 Third Avenue, 40th Floor Seattle, WA 98111 Buy-Rite Carpet Wholesaler $7,085 1402 Auburn Way N., #455 Auburn, WA 98270 Apcon $6,176 4105 114th Avenue E. Puyallup, WA 98372 Absolute Maintainance $2,175 ABC Landscape Services Inc. $2,216 Cascade Roof & Gutter $1,414 Consumer Source Inc. $1,277 Cortez Cleaning Services $1,535 Cover-All Inc. $1,028 E-Rein Construction Services LLC $2,869 Glacier Management Inc. $2,475 Green River Landscaping $4,284 Guardian Asphalt Inc. $3,209 HD Supply Facilities Maintainance Ltd. $4,539 New Life Carpet Cleaning Inc. $2,893 Qwest $1,191 Rent.com Inc. $1,047 Rental Recovery $2,435 Waste Management Federal Waste Disposal $3,675 White, Nelson & Co. LLP $3,129 BAKER STREET: Fitch Puts 11 Note Ratings on Negative Watch ---------------------------------------------------------- Fitch Ratings placed eleven classes of notes issued by Baker Street Finance Limited and nine classes of notes issued by Baker Street Finance USD Limited on Rating Watch Negative. Affected notes total EUR748 million and US$45.5 million, respectively. These classes are placed on Rating Watch Negative, effective immediately: -- EUR137,500,000 class A-1a notes 'AAA'; -- EUR110,000,000 class A-1b notes 'AAA'; -- EUR92,400,000 class A-1c notes 'AAA'; -- EUR90,200,000 class A2 notes 'AAA'; -- EUR89,100,000 class B notes 'AA+'; -- EUR68,750,000 class C notes 'AA'; -- EUR55,000,000 class D notes 'AA-'; -- EUR39,600,000 class E notes 'A'; -- EUR24,200,000 class F notes 'A-'; -- EUR22,000,000 class G notes 'BBB; -- EUR19,250,000 class H notes 'BB+'. -- US$8,400,000 class A-1 notes 'AAA'; -- US$8,200,000 class A-2 notes 'AAA'; -- US$8,100,000 class B notes 'AA+'; -- US$6,250,000 class C notes 'AA'; -- US$5,000,000 class D notes 'AA-'; -- US$3,600,000 class E notes 'A'; -- US$2,200,000 class F notes 'A-'; -- US$2,000,000 class G notes 'BBB'; -- US$1,750,000 class H notes 'BB+'. Baker Street is a synthetic collateralized debt obligation that references a EUR2.75 billion or US$250 million portfolio of primarily investment grade corporate bonds referenced via direct investments (50% of the total referenced amount), and indirectly through ten inner tranche credit default swaps (30% of the total referenced amount), as well as various asset backed securities (ABS) (20% of total referenced amount). The transaction is designed to provide credit protection for realized losses on the reference portfolio through a master credit default swap between the issuer and the swap counterparty, KBC Investments Cayman Islands V, Ltd. KBC also has the right, subject to trading guidelines set at the closing of the transaction, to adjust the portfolio via additions, removals, and replacements of reference entities and reference obligations. The ratings of the notes address the likelihood that investors will receive full and timely payments of interest and ultimate receipt of principal by the scheduled maturity date. Fitch's rating actions primarily reflect the negative credit rating migration within the ABS portion of the underlying collateral, which currently comprises 20% of the total portfolio. The ABS exposure consists primarily of structured finance CDOs and residential mortgage-backed securities backed by Alternative-A and subprime mortgages from the 2005, 2006, and 2007 vintages, whose performance has deteriorated in recent periods. Approximately 23.5% of the ABS portion of the portfolio (4.7% of the entire portfolio) carries a current rating of 'CCC+' or lower. Absent any remedial actions on the part of KBC and any further credit deterioration occur in the portfolio, Fitch expects to take negative rating actions. Such actions may be more pronounced on the mezzanine and lower rated classes of notes. BEAR STEARNS: Collapse May Affect Financial System, Bernanke Says ----------------------------------------------------------------- The Federal Reserve System's $29 billion term financing that facilitated JPMorgan Chase & Co.'s acquisition of The Bear Stearns Companies Inc. was made to bolster the global economy and financial system, Fed Board Chairman Ben S. Bernanke said at a hearing before the U.S. Congress Joint Committee on April 2, 2008. Mr. Bernanke stated that the impact of Bear Stearns downfall would have fazed investor confidence and would have bring into question the stance of the thousands of Bear Stearns' counterparties as well as other financial services firms. He added that the effects would have not been limited to the financial system but would have spread to the American and world economic system, had it not been for the aid from Federal Reserve and the Treasury Department. As reported in the Troubled Company Reporter on March 31, 2008, Senate Finance Committee Chairman Max Baucus (D-Mont.) and ranking Republican Charles E. Grassley (Iowa) demanded information regarding the sale of Bear Stearn Cos. Inc. to JPMorgan Chase & Co. from Bear Stearns CEO Alan Schwartz, JPMorgan CEO James Dimon, Treasury Secretary Henry M. Paulson Jr., Federal Reserve Chairman Ben S. Bernanke and New York Federal Reserve President Timothy F. Geithner. In addition, Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) called the same executives and government officials, including Securities and Exchange Commission Chairman Christopher Cox, to be present at the hearing on the sale transaction April 1, 2008. As previously reported in the TCR, at the closing of the merger, the Federal Reserve Bank of New York agreed to provide term financing to facilitate JPMorgan's acquisition of Bear Stearns. This action is being taken by the Federal Reserve, with the support of the Treasury Department, to bolster market liquidity and promote orderly market functioning. The New York Fed will take, through a limited liability company formed for this purpose, control of a portfolio of assets valued at $30 billion as of March 14, 2008. The assets will be pledged as security for $29 billion in term financing from the New York Fed at its primary credit rate. JPMorgan Chase will bear the first $1 billion of any losses associated with the portfolio and any realized gains will accrue to the New York Fed. BlackRock Financial Management, Inc. will manage the portfolio under guidelines established by the New York Fed designed to minimize disruption to financial markets and maximize recovery value. The senators are requesting a directive describing the pacing of the sale deal and defining the assets secured by the Federal Reserve. They also want copies of all documents the parties intend to file with regulatory agencies, the names of all negotiators who represented each party and the names of counsels, and other professionals involved in the transaction. The Finance Committee is trying to assess if there was a misuse of public funds, while the Banking Committee is studying the sale deal to evaluate if public funds had been put at risk. A full-text copy of the Chairman's Testimony before the U.S. Congress is available for free at the Federal Reserve System's Web site at http://ResearchArchives.com/t/s?29f3 About JPMorgan JPMorgan Chase & Co. (NYSE: JPM) -- http://www.jpmorganchase.com/ -- is a global financial services firm with operations in more than 60 countries. The firm does investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management, and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients under its JPMorgan and Chase brands. About Bear Stearn Companies New York City-based The Bear Stearns Companies Inc. (NYSE: BSC) -- http://www.bearstearns.com/-- is a leading financial services firm serving governments, corporations, institutions and individuals worldwide. The company's core business lines include institutional equities, fixed income, investment banking, global clearing services, asset management, and private client services. The company has approximately 14,000 employees worldwide. * * * As reported in the Troubled Company Reporter on Dec. 28, 2007, Fitch Ratings' affirmed its Negative Outlook for The Bear Stearns Companies Inc. following the announcement of the company's fiscal year earnings for 2007. On Nov. 14, 2007, Fitch affirmed Bear Stearns' long-term credit ratings, along with its subsidiaries. Fitch also downgraded the short-term rating to 'F1' from 'F1+', and Individual rating to 'B/C' from 'B'. BERNOULLI HIGH: Moody's Junks Rating on $14MM Sr. Income Notes -------------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Bernoulli High Grade CDO I, Ltd.: Class Description: $60,000,000 Class B Third Priority Senior Secured Floating Rate Notes due July 5, 2042 -- Prior Rating: Aa2 -- Current Rating: Aa2, on review for possible downgrade Moody's also downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $15,000,000 Class C Fourth Priority Senior Deferrable Secured Floating Rate Notes due July 5, 2042 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Baa2, on review for possible downgrade Class Description: $15,000,000 Class D Fifth Priority Mezzanine Deferrable Secured Floating Rate Notes due July 5, 2042 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ba3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $14,000,000 Senior Income Notes due July 5, 2042 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. BERTHEL GROWTH: McGladrey & Pullen Expresses Going Concern Doubt ---------------------------------------------------------------- McGladrey & Pullen, LLP, raised substantial doubt about the ability of Berthel Growth & Income Trust I to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor stated that the trust continues to have a deficiency in net assets, as well as net losses. In addition, Berthel SBIC, LLC, a wholly owned subsidiary of the trust, has agreed to liquidate its portfolio assets in order to pay its indebtedness to the United States Small Business Administration. The company posted a net income of $442,389 on total revenue of $101,437 for the year ended Dec. 31, 2007, as compared with a net loss of $459,634 on total revenue of $130,806 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $5,438,059 in total assets and $11,355,840 in total liabilities, resulting in $5,917,781 stockholders' deficit. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?29cf About Berthel Growth Berthel Growth & Income Trust I (the Trust), a Delaware business trust that has elected to be treated as a business development company under the Investment Company Act of 1940, was organized on February 10, 1995. The Trust's Registration Statement was declared effective June 21, 1995, at which time the Trust began offering Shares of Beneficial Interest (shares). The underwriting period was completed on June 21, 1997, with a total of $10,541,000 raised. The Trust's principal office is located at 701 Tama Street, Marion, Iowa 52302. The Trust is a closed-end management investment company intended as a long-term investment and not as a trading vehicle. BLACK DIAMOND: Section 341(a) Meeting Scheduled April 14 -------------------------------------------------------- The United States Trustee for Region 8 will convene a meeting of creditors of Black Diamond Mining Co., LLC and its debtor- affiliates on April 14, 2008 at 2 p.m. at Room 529, 100 East Vine Street, 5th Floor in Lexington, Kentucky. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Pikeville, Kentucky-based Black Diamond Mining Co., LLC and its debtor-affiliates specialize in coal mining. The Debtors filed for Chapter 11 Petition on March 4, 2008 (Bankr. E.D. Ky. Case No. 08-70109). David M. Canto, Esq. at Seiller Waterman, LLC represents the Debtors in their restructuring efforts. When it filed for protection from their creditors, Black Diamond Mining Co., LLC listed $100 Million to $500 Million both as its estimated assets and debts. BUILDERS FIRSTSOURCE: S&P Puts 'B+' Rating Under Negative Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Dallas, Texas-based Builders FirstSource Inc., including the 'B+' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch placement reflects the ongoing weakness in the U.S. housing industry, which we expect will continue for at least the next several quarters and which will materially hurt BLDR's operating performance during this period," said Standard & Poor's credit analyst Andy Sookram. "We expect BLDR's earnings to remain depressed over this time, resulting in a further weakening in credit metrics and a likely diminishing of overall liquidity." In resolving S&P's CreditWatch listing, it will discuss with management its business and financial outlook, including projections and potential actions to manage through the continued downturn in the housing market. S&P will also discuss expected liquidity over the next several quarters. Mr. Sookram said, "If our analysis results in a downgrade, it might not be limited to one notch." BUILDING MATERIALS: S&P Chips Corp. Credit Rating to B+ from BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Building Materials Corp. of America, including lowering its corporate credit rating to 'B+' from 'BB-'. All ratings remain on CreditWatch with negative implications, where they were originally placed on Jan. 10, 2008, because of weakness in the housing environment. "The downgrade and continued CreditWatch listing reflects the material weakening of the company's overall financial profile due to the challenging operating conditions in the company's primary markets, mainly in the residential repair and remodeling sector," said Standard & Poor's credit analyst Thomas Nadramia. "As a result, the company's credit metrics have deteriorated to a level no longer consistent with the prior rating. In addition, given the difficult operating environment, we would expect credit metrics to remain challenged during 2008, likely constricting the cushion relative to covenant levels under its bank facility." In resolving the CreditWatch listing, Standard & Poor's will discuss with management its near-term operating expectations and liquidity position given this operating environment. Mr. Nadramia said, "If a further downgrade were to occur, it might not be limited to one notch." C-BASS MORTGAGE: Moody's Junks Ratings on Seven Cert. Classes ------------------------------------------------------------- Moody's Investors Service downgraded 11 certificates and maintained on review for possible further downgrade three of those classes of certificates from a transaction issued by C-Bass Mortgage Loan Asset-Backed Certificates. The transaction is backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-SL1 -- Cl. A-1, Downgraded to A3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to A3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-3, Downgraded to A3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to B1 from Aa1 -- Cl. M-2, Downgraded to Caa1 from Baa3 -- Cl. M-3, Downgraded to Caa2 from Ba1 -- Cl. M-4, Downgraded to Caa3 from B1 -- Cl. M-5, Downgraded to Ca from B3 -- Cl. M-6, Downgraded to C from Caa1 -- Cl. B-1, Downgraded to C from Caa3 -- Cl. B-2, Downgraded to C from Ca CASA DE CAMBIO: Section 341(a) Meeting Scheduled April 16 --------------------------------------------------------- The U.S. Trustee for Region 10 will convene a meeting of Casa de Cambio Majapara S.A. de C.V.'s creditors on April 16, 2008 at 1:30 p.m., at Room 804, 219 South Dearborn in Chicago, Illinois. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Mexico City, Casa de Cambio Majapara S.A. de C.V. aka Majapara Casa de Cambio is engaged in financial transactions processing, reserve, and clearing house activities. The company filed for Chapter 11 protection on March 5, 2008 (Bankr. N.D. Illinois). Andrew L. Wool, Esq., at Katten Muchin Rosenman, LLP, in Chicago, Illinois, represent the Debtor. When the Debtor filed for protection from its creditors, it listed assets and debts between $10 million to $50 million. CASA DE CAMBIO: Can