T R O U B L E D C O M P A N Y R E P O R T E R Thursday, April 10, 2008, Vol. 12, No. 85 Headlines ABITIBIBOWATER INC: S&P Removes Unit's 'B-' Rating From Neg. Watch ACE SECURITIES: Fitch Acts on Ratings on Five Pass-through Certs. ACE SECURITIES: Higher Delinquencies Cues Moody's 315 Rating Cuts ADELPHIA COMMS: Court Okays Pact Resolving NBC Rejection Claims ADVANCED CELL: Says It Erred in Stating Auditor Agreed on Findings ADVANCED MICRO: Weak Quarter Results Spurs Moody's Rating Reviews ADVANCED MICRO: Low Revenues Cues S&P's Negative Watch on B Rating ALIVE TECH: Case Summary & 19 Largest Unsecured Creditors ALPHATRADE.COM: Chisholm Bierwolf Raises Substantial Doubt AMERICAN HOME: Servicing Business Buyer Moves to Close Sale AMERICAN HOME: Moody's Downgrades Ratings on 29 Certificates AMERICAN TONERSERV: Perry-Smith Raises Substantial Doubt AMERIGROUP CORP: S&P Lifts Rating on Senior Bank Facility to 'BB+' AMERIQUEST MORTGAGE: S&P Junks Rating on Class M-5 Certs. From 'B' AMR CORP: Cancels More than 1,000 Flights; Resumes Aircraft Check ANF DEER CREEK: Court Converts Bankr. Case to Ch. 7 Liquidation ARCA FUNDING: Moody's Junks Rating on $99.5 Mil. Notes From 'Ba1' ARLO VII: Three Classes of Notes Acquire Moody's Rating Reviews ARLO VI: Moody's Junks Ratings on Two Notes; Reviews Eight Ratings ASARCO LLC: Wants Environmental Claims from PRPs Disallowed ASARCO LLC: Wants Court to Approve St. Paul Insurance Settlement ASPEN FUNDING: Moody's Reviews Three Note Ratings For Likely Cuts AZALEA 2007-1C: Moody's Cuts Rating to 'Ca' on Poor Credit Quality BANC OF AMERICA: Moody's Lowers 66 Tranches' Ratings From 16 Deals BEAR STEARNS: Fund Liquidators Commences $1 Billion Lawsuit BEAR STEARNS: Fitch Holds Low-B Ratings on Three Classes of Certs. BEAR STEARNS: Half of Employees To Be Laid Off, Report Says BEAR STEARNS: Moody's Keeps Low-B Ratings on Six Classes of Certs. BERRY PETROLEUM: Moody's Reviews 'B1' Ratings For Possible Upgrade BORDERS GROUP: Obtains $42.5M Loan to Address Liquidity Issues BROADRIDGE FINANCIAL: Risk Appetite Cues S&P's Rating Cut to 'BB' BUCHANAN 2006: Moody's Reviews Ratings on Four Classes of Notes BUILDING MATERIALS: Moody's Junks Probability of Default Rating BURNHAM HARBOR: Moody's Cuts Ratings on $29 Mil. Notes to 'Ba1' CALPINE CONSTRUCTION: S&P Lifts Corporate Rating to 'B' From CCC- CALPINE CORP: Court Approves Consolidation of Debt Obligations CANAAN MISSIONARY: Case Summary & 18 Largest Unsecured Creditors CAPITAL ONE: Cuts 40% Workforce in UK Division, Plans to Outsource CBA COMMERCIAL: Moody's Retains 'Ba1' Rating on Class M-6 Certs. CBO HOLDINGS: S&P Withdraws Ratings on Four Classes on Redemption CCS INC: Moody's Puts 'Caa1' Ratings on Proposed $312 Mil. Notes CCS INC: S&P Puts S&P Puts 'B-' Rating on Proposed $312 Mil. Notes CFM US: Case Summary & 30 Largest Unsecured Creditors CHARMING SHOPPES: Panel Urges Shareholders to Elect 3 Nominees CHESAPEAKE CORP: Moody's Downgrades Ratings to 'B2' From 'B1' CITIGROUP COMMERCIAL: S&P Puts Low-B Initial Ratings on Six Certs. CLARIENT INC: KPMG Raises Substantial Doubt COOKSON 2007: Poor Credit Quality Cues Moody's Rating Downgrades CREDIT DEFAULT CN100988: Moody's Junks Rating on $20 Mil. Notes CREDIT DEFAULT CN10098: Moody's Cuts Rating to 'Ca' on $10MM Notes DANKA BUSINESS: Selling DOIC Unit to Konica for $240 Million DELTA AIR: Revives NWA Merger Talks, Sweetens Offer to Pilots DENNY'S CORP: Henry Nasella to Resign from Board Effective May 21 DIABLO GRANDE: U.S. Trustee Appoints Three-Member Creditors Panel DIAMOND GLASS: Taps The Garden City Group as Claims Agent DIVERSIFIED ASSET: Moody's Junks Rating on Class A-3L From 'B1' EDUCATION RESOURCES: Wants Schedules Filing Extended to June 23 ENCYSIVE PHARMA: Pfizer Commences Tender Offer of Company Shares ENCYSIVE PHARMA: 7 Board Members Resign Amid Pfizer Merger Talks ENRON CORP: $11MM to Be Restored in Former Workers' Savings Plan ENTRAVISION COMMS: S&P Changes Outlook to Stable; Holds B+ Rating FIRST FRANKLIN: Worse Performance Cues Moody's Rating Downgrades FIRST UNION: Moody's Junks Rating on Class M From 'B2' on Losses FORBES MEDI-TECH: Losses & Deficit Prompt Going Concern Doubt GREEKTOWN HOLDINGS: Moody's Junks Ratings on Covenant Violations GSAMP MORTGAGE: Fitch Cuts Ratings on Certs. Totaling $284.9 Mil. GTM HOLDINGS: Tight Covenant Cues S&P's Negative Watch on B Rating GUNDLE/SLT ENVIRONMENTAL: Moody's Maintains 'B2' Debt Ratings HANOVER CAPITAL: Grant Thornton Raises Substantial Doubt HAWAIIAN TELCOM: System Problems Cues Moody's Rating Cut to 'B3' HEXION SPECIALTY: Extends Merger Pact Termination Date to July 4 HOME EQUITY: S&P Chips Rating on FGIC Insured Class A-II to 'BB' HUDSON MEZZANINE 2006-1: Moody's Downgrades Ratings on Six Classes HUDSON MEZZANINE 2006-2: Moody's Junks Ratings on Two Note Classes HUMAN TOUCH: Weak Operating Performance Prompts S&P's Rating Cuts INDEPENDENCE CDO: Weak Credit Quality Cues Moody's Rating Reviews INDEPENDENCE I: Moody's Junks Rating on $50 Mil. Notes From 'B3' INGLES INC: Moody's Raises Ratings to 'Ba3' on Improved Metrics JEFFERSON COUNTY: Moody's Cuts Ratings on Revenue Bonds to 'Ba2' JMAR TECHNOLOGIES: Singer Lewak Raises Substantial Doubt JOANNE'S BED: Case Summary & 20 Largest Unsecured Creditors JOURNAL REGISTER: Fin'l Advisor Hiring Cues S&P's Negative Watch JP MORGAN: Fitch Takes Various Rating Actions on Certificates KC TRANSPORT: Case Summary & 35 Largest Unsecured Creditors KINETIC CONCEPTS: Moody's Keeps Ba2 Rating on $1.7BB LifeCell Deal KINETIC CONCEPTS: S&P Holds 'BB' Rating on $1.7 Bil. LifeCell Deal LANDRY'S RESTAURANTS: S&P Holds Negative Watch on Lower Offering LEINER HEALTH: Files Schedules of Assets and Liabilities LEINER HEALTH: S&P Withdraws 'D' Ratings and '3' Recovery Rating LONG BEACH: Fitch Takes Various Rating Actions on Mortgage Certs. LONG BEACH: Moody's Slashes Rating on 238 Tranches From 22 Deals LUCHT'S CONRETE: Gets Initial Court Nod to Obtain DIP Financing MARKWEST ENERGY: Moody's Attaches 'B2' Rating on $250 Mil. Notes MARKWEST ENERGY: Weak Risk Profile Spurs S&P to Keep 'B+' Rating MEDIA GENERAL: Management Failing Shareholders, Harbinger Asserts MEDIA GENERAL: CEO Reacts to Harbinger's Move to Replace Board MEDIA GENERAL: Plans to Cut Debts Through Proceeds of Asset Sale MEDICOR LTD: Wants Court to Stretch Loan Maturity Until May 31 MERRILL LYNCH: Moody's Cuts Ratings on 218 Tranches on Delinquency META HEALTH: Sells Theramed In Exchange for Mutual Releases METRO ONE: Posts Letter on Exit from Directory Assistance Business MID OCEAN: Eroding Credit Quality Cues Moody's Two Junk Ratings MOBILE MINI: HSR Waiting Period Expires, Continuing Merger Plans MORGAN STANLEY: Fitch Downgrades Rating on Certs. Totaling $1.5BB MORGAN STANLEY: Moody's Lifts Rating on $22.146 Mil. Certs. to B3 MOVIE GALLERY: 90% of Creditor Ballots Favor Chapter 11 Plan MOVIE GALLERY: To Close Approximately 160 Stores MOVIE GALLERY: Files Supplements to Second Amended Chapter 11 Plan MOVIE GALLERY: Court Confirms 2nd Amended Chapter 11 Plan NATIONSLINK FUNDING: Moody's Lifts Rating on $30.5MM Certs. to B1 NORTHWEST AIRLINES: Revives Merger Talks With Delta Air Lines NORTHWEST AIRLINES: Inks Pact to Settle Pilots' $921MM Claim NUANCE COMMUNICATIONS: Inks Pact Buying eScription for $363 Mil. OPTION ONE: Fitch Lowers Ratings on Certs. Amounting to $725 Mil. PATHEON INC: Weak Business Profile Cues S&P to Retain 'B+' Rating PEACE ARCH: Posts CN$1.1 Million Net Loss in Qtr. Ended Nov. 30 PEOPLE'S CHOICE: Fitch Takes Rating Actions on Three Certificates PHELPS DODGE: S&P Lifts Rating From BB+ on Adequate Debt Reduction PLASTECH ENGINEERED: Faurecia Wants Stay Lifted to Remove Tooling PLASTECH ENGINEERED: Reko Cries Foul on GM Forfeiting Tooling PLASTECH ENGINEERED: Reko Cries Foul on GM Forfeiting Tooling POLYONE CORP: Intends to Offer its $50 Mil. Senior Notes Due 2012 POLYONE CORP: Moody's Attaches 'B1' Rating on Proposed $50MM Notes PONTIAC BUILDING: Moody's Cuts Rating to Ba3; Gives Stable Outlook PRC LLC: Wants Lease Decision Period Extended to August 20 PRC LLC: Wants Action Removal Period Extended to July 21 PRC LLC: Wants Site Consolidation Incentive Plan Approved PROSPECT MEDICAL: S&P Retains Negative CreditWatch on 'B-' Rating QUALITY HOME: Soft Performance Cues Moody's Rating Cuts to 'B3' QUALITY HOME: Soft Performance Cues S&P's Neg. Watch on 'B' Rating QUEBECOR MEDIA: S&P Puts BB- Rating on Arm's Proposed $350MM Notes QUICKSILVER RESOURCES: S&P Gives Positive Outlook; Retains Rating QWEST COMMS: CFO John Richardson Resigns, Successor Search Begins RAMP TRUSTS: Moody's Lowers Ratings on 156 Tranches From 20 Deals RASC TRUSTS: Moody's Cuts Ratings of Tranches From 33 RMBS Deals RENAISSANCE MORTGAGE: Fitch Downgrades $36.8MM Certificates RICHFX INC: Obtains Court Approval on Asset Sale Procedures RIVERSIDE PARK: S&P Attaches 'BB' Initial Rating on Class D Notes SAINT VINCENT: Court Expunges Cargill and Fair Harbor Claims SANCON RESOURCES: Kabani & Company Raises Substantial Doubt SASCO 2003-BC2: $168,460 Losses Cues S&P's 'D' Rating on Class B1 SCOTTISH RE: Inks LOI to Recapture Business Ceded to Ballantyne Re SCOTTISH RE: Explores Sale of North America Life Reinsurance Biz SCRANTON-LACKAWANNA HEALTH: S&P Gives Negative Outlook on Bonds SEA CONTAINER: Gets Court's Nod to Enter Charter Termination Pacts SEA CONTAINERS: Contrarian, et al. Wants March 5 Subpoenas Quashed SECURITY CAPITAL: Fitch Take Rating Actions on XLCA Insured Bonds SIRVA INC: Files Supplements to Chapter 11 Plan SOLSTICE ABS: Two Classes of 2038 Notes Get Moody's Junk Ratings SOMERSET INT'L: WithumSmith+Brown Raises Substantial Doubt SPECIALTY UNDERWRITING: S&P Downgrades Ratings on 26 Cert. Classes SS&C TECHNOLOGIES: S&P Upgrades Rating to 'B+' on Improved Metrics SUNCOM WIRELESS: Moody's Raises Rating to 'B2' on T-Mobile Merger TABS 2005-4: Three Classes of 2045 Notes Get Moody's Junk Ratings TAPESTRY PHARMA: Form 10K Filing Delay Cues Nasdaq Delisting TEEVEE TOONS: Creditors Panel Taps Sonnenschein Nath as Counsel TOURO COLLEGE: Moody's Withdraws 'Ba1' Ratings on 1999A Bonds TROPICANA ENT: Moody's Slashes Probability of Default Rating to Ca VERTIS INC: Will Forgo Interest Payment on Second Lien Notes VERTIS INC: S&P Rating on 9.75% Senior Notes Tumbles to 'D' From C VICORP RESTAURANTS: Sec. 341(a) Creditors Meeting Set for May 2 VICORP RESTAURANTS: Obtains Limited Access to Cash Collateral VIDEOTRON LTEE: Moody's Puts 'Ba2' Rating on $350 Mil. Sr. Notes WASHINGTON MUTUAL: Moody's Gives Stable Outlook on $1.5BB Equity WELLMAN INC: Court Approves Edwards Angell as Conflicts Counsel WELLMAN INC: Wants Conway Del Genio as Restructuring Advisor WINDSWEPT ENVIRONMENTAL: Monthly Payments on Laurus Note Deferred WJ LANG: Court Dismisses Case Over "Accidental" Filing by Counsel WORNICK COMPANY: Section 341(a) Meeting Scheduled on April 17 WORNICK CO: Can Hire Kroll Zolfo as Special Financial Advisors WR GRACE: Will Keep Medical Program to Support Asbestos Victims W.R. GRACE: Wants Court's Approval to Appoint Welsh as Mediator * Fitch Says Commodity Prices Are Not Immune To Global Slowdown * Moody's Conducts Review on Subprime RMBS Transactions * Global Default Rate Continues To Rise, Moody's Reports * Moody's Issues Methodology For Rating Public Power Bonds * S&P Downgrades 33 Classes' Ratings To 'D' From Four CDO Deals * S&P Downgrades 21 Tranches' Ratings From Six Cash Flows and CDOs * S&P Downgrades Ratings on 161 Classes From 38 RMBS Transactions * Christopher Graham Joins McKenna Long in New York Office * Houlihan Smith Forms Scheme on Valuing Auction Rate Securities * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* ABITIBIBOWATER INC: S&P Removes Unit's 'B-' Rating From Neg. Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services removed Abitibi-Consolidated Inc., a subsidiary of AbitibiBowater Inc. (B-/Negative/--), from CreditWatch with negative implications, where it was placed March 10. The ratings, including the 'B-' long-term corporate credit ratings, on Abitibi-Consolidated, parent AbitibiBowater, and sister company Bowater Inc. (B-/Negative/--), are unchanged. The outlook on all three companies is negative. "We removed the ratings from CreditWatch because Abitibi- Consolidated was successful in refinancing upcoming debt maturities, alleviating significant near-term liquidity pressure," said Standard & Poor's credit analyst Jatinder Mall. The refinancing means that Abitibi-Consolidated has only a small ($12 million) debt maturity in 2008. "Initially the ratings on Abitibi-Consolidated and Bowater were independent, however, the ratings are becoming more linked as the parent begins to take on debt to provide funds for, and guarantee, subsidiary obligations," Mr. Mall added. The ratings on Montreal-based parent AbitibiBowater reflect the company's participation in the declining newsprint market, its highly leveraged capital structure, and weak cash flow generation. These risks are partially offset by its leading market position in the newsprint market and expectations that synergies and high-cost mill closures could lead to improved profitability. AbitibiBowater is the largest newsprint producer in North America, with annual capacity of about 5.3 million metric tons. The company also produces coated and uncoated paper, pulp, and wood products. It has 27 pulp and paper, and 35 wood product facilities in Canada, the U.S., South Korea, and the U.K. AbitibiBowater's vulnerable business risk profile stems from the continuing decline in the North American newsprint market, which accounts for about half of its total revenues. On a stand-alone basis, Abitibi-Consolidated is more exposed to the newsprint and wood product business. Bowater, on the other hand, is better diversified because it benefits from a robust pulp and coated paper business and has very small exposure to the lumber segment, although it is still largely exposed to declining newsprint. The negative outlook on AbitibiBowater, Abitibi-Consolidated, and Bowater reflects weak market conditions for the newsprint and lumber business segments, and the significant challenges the companies face in rationalizing production capacity to meet deteriorating demand. S&P could lower the ratings on all three if newsprint and lumber prices and demand decline severely and the merged company cannot realize synergies and reduce debt as stated. An upgrade, although unlikely in the near term, would require meaningful deleveraging of the company's balance sheet. ACE SECURITIES: Fitch Acts on Ratings on Five Pass-through Certs. ----------------------------------------------------------------- Fitch Ratings has taken these rating actions on five ACE Securities Corp Home Equity Loan Trust mortgage pass-through certificates. Affirmations total $774.7 million and downgrades total $413.0 million. Additionally, $21.3 million was placed on Rating Watch Negative and $37.5 million was removed from Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions: Ace 2005-RM2 TOTAL -- $8.3 million class A-1A affirmed at 'AAA', (BL: 99.19, LCR: 4.94); -- $2.1 million class A-1B affirmed at 'AAA', (BL: 99.00, LCR: 4.93); -- $21.0 million class M1 affirmed at 'AA+', (BL: 90.15, LCR: 4.49); -- $18.7 million class M2 affirmed at 'AA+', (BL: 76.99, LCR: 3.83); -- $11.0 million class M3 affirmed at 'AA', (BL: 68.68, LCR: 3.42); -- $10.2 million class M4 affirmed at 'AA-', (BL: 60.78, LCR: 3.03); -- $9.6 million class M5 affirmed at 'A+', (BL: 53.32, LCR: 2.65); -- $9.3 million class M6 affirmed at 'A', (BL: 40.18, LCR: 2); -- $7.6 million class M7 affirmed at 'A-', (BL: 37.91, LCR: 1.89); -- $5.9 million class M8 downgraded to 'BBB' from 'A-' (BL: 33.96, LCR: 1.69); -- $5.4 million class M9 downgraded to 'BB' from 'BBB+' (BL: 29.71, LCR: 1.48); -- $5.1 million class M10 downgraded to 'BB' from 'BBB' (BL: 25.12, LCR: 1.25); -- $5.7 million class M11 downgraded to 'B' from 'BBB-', removed from Rating Watch Negative (BL: 20.38, LCR: 1.01); -- $8.8 million class B1 downgraded to 'CC/DR6' from 'BB', removed from Rating Watch Negative (BL: 13.31, LCR: 0.66). Deal Summary -- Originators: ResMae (100%); -- 60+ day Delinquency: 38.87% (AOD Feb. 25, 2008); -- Realized Losses to date (% of Original Balance): 2.03% (AOD Feb. 25, 2008); -- Expected Remaining Losses (% of Current balance): 20.08%; -- Cumulative Expected Losses (% of Original Balance): 6.85%; Ace 2005-SN1 -- $22.7 million class A-1 affirmed at 'AAA', (BL: 63.68, LCR: 13); -- $58.7 million class A-2 affirmed at 'AAA', (BL: 16.80, LCR: 3.43); -- $4.5 million class M-1 affirmed at 'AA', (BL: 11.67, LCR: 2.38); -- $2.5 million class M-2 affirmed at 'A', (BL: 8.83, LCR: 1.8); -- $1.2 million class M-3 downgraded to 'BBB' from 'BBB+' (BL: 7.41, LCR: 1.51); -- $1.2 million class M-4 downgraded to 'BB' from 'BBB' (BL: 6.22, LCR: 1.27). Deal Summary -- Originators: Washington Mutual (56%), National City, (33%), GE Mortgage (11%); -- 60+ day Delinquency: 7.32% (AOD Feb. 25, 2008); -- Realized Losses to date (% of Original Balance): 1.07% (AOD Feb. 25, 2008); -- Expected Remaining Losses (% of Current balance): 4.90%; -- Cumulative Expected Losses (% of Original Balance): 3.78%; Ace 2005-HE2 TOTAL -- $59.8 million class M-1 affirmed at 'AA+', (BL: 90.99, LCR: 2.78); -- $39.0 million class M-2 affirmed at 'AA', (BL: 76.45, LCR: 2.34); -- $23.8 million class M-3 affirmed at 'AA-', (BL: 66.97, LCR: 2.05); -- $21.3 million class M-4 rated 'A+', placed on Rating Watch Negative (BL: 55.90, LCR: 1.71); -- $20.7 million class M-5 downgraded to 'BBB' from 'A+' (BL: 49.51, LCR: 1.51); -- $18.3 million class M-6 downgraded to 'BB' from 'A' (BL: 42.29, LCR: 1.29); -- $15.2 million class M-7 downgraded to 'B' from 'A-' (BL: 35.88, LCR: 1.1); -- $15.2 million class M-8 downgraded to 'CCC' from 'BBB+' (BL: 29.41, LCR: 0.9); -- $12.2 million class M-9 downgraded to 'CC/DR5' from 'BBB', removed from Rating Watch Negative (BL: 23.89, LCR: 0.73); -- $12.2 million class M-10 downgraded to 'CC/DR5' from 'BBB-', removed from Rating Watch Negative (BL: 18.18, LCR: 0.56); -- $16.5 million class B-1 revised to 'C/DR6' from 'C/DR3' (BL: 11.14, LCR: 0.34); -- $7.3 million class B-2 revised to 'C/DR6' from 'C/DR5' (BL: 8.83, LCR: 0.27). Deal Summary -- Originators: Fremont (83%); -- 60+ day Delinquency: 49.74% (AOD Feb. 25, 2008); -- Realized Losses to date (% of Original Balance): 1.49% (AOD Feb. 25, 2008); -- Expected Remaining Losses (% of Current balance): 32.71%; -- Cumulative Expected Losses (% of Original Balance): 8.55%; Ace 2005-HE3 TOTAL -- $43.7 million class A-1A affirmed at 'AAA', (BL: 88.11, LCR: 2.69); -- $10.9 million class A-1B affirmed at 'AAA', (BL: 85.02, LCR: 2.6); -- $34.8 million class A-2C affirmed at 'AAA', (BL: 87.28, LCR: 2.67); -- $58.4 million class M-1 affirmed at 'AA+', (BL: 67.18, LCR: 2.05); -- $35.5 million class M-2 downgraded to 'BBB' from 'AA' (BL: 55.68, LCR: 1.7); -- $22.4 million class M-3 downgraded to 'BB' from 'AA-' (BL: 47.34, LCR: 1.45); -- $19.6 million class M-4 downgraded to 'BB' from 'A+' (BL: 41.45, LCR: 1.27); -- $18.5 million class M-5 downgraded to 'B' from 'A' (BL: 35.50, LCR: 1.08); -- $18.0 million class M-6 downgraded to 'CCC' from 'A-' (BL: 29.47, LCR: 0.9); -- $14.2 million class M-7 downgraded to 'CCC' from 'BBB' (BL: 24.50, LCR: 0.75); -- $13.1 million class M-8 downgraded to 'CC/DR6' from 'BBB-', removed from Rating Watch Negative (BL: 19.96, LCR: 0.61); -- $10.9 million class M-9 downgraded to 'C/DR6' from 'BB-' (BL: 15.94, LCR: 0.49); -- $6.5 million class B-1 downgraded to 'C/DR6' from 'B' (BL: 13.33, LCR: 0.41); -- $10.9 million class B-2 revised to 'C/DR6' from 'C/DR5' (BL: 10.50, LCR: 0.32). Deal Summary -- Originators: Finance America (44%), OwnIt (21%), New Century (17%); -- 60+ day Delinquency: 46.47% (AOD Feb. 25, 2008); -- Realized Losses to date (% of Original Balance): 2.20% (AOD Feb. 25, 2008); -- Expected Remaining Losses (% of Current balance): 32.75%; -- Cumulative Expected Losses (% of Original Balance): 11.79%; Ace 2005-HE4 TOTAL -- $48.0 million class A-1A affirmed at 'AAA', (BL: 90.08, LCR: 3.37); -- $22.1 million class A-1B affirmed at 'AAA', (BL: 82.04, LCR: 3.07); -- $57.9 million class A-2C affirmed at 'AAA', (BL: 80.97, LCR: 3.03); -- $52.6 million class M-1 affirmed at 'AA+', (BL: 69.24, LCR: 2.59); -- $45.3 million class M-2 affirmed at 'AA+', (BL: 58.77, LCR: 2.2); -- $26.3 million class M-3 affirmed at 'AA', (BL: 51.64, LCR: 1.93); -- $24.8 million class M-4 downgraded to 'BBB' from 'AA-' (BL: 46.33, LCR: 1.74); -- $22.6 million class M-5 downgraded to 'BBB' from 'A+' (BL: 41.22, LCR: 1.54); -- $20.4 million class M-6 downgraded to 'BB' from 'BBB+' (BL: 36.30, LCR: 1.36); -- $19.0 million class M-7 downgraded to 'B' from 'BBB' (BL: 31.56, LCR: 1.18); -- $17.5 million class M-8 downgraded to 'B' from 'BB+' (BL: 27.16, LCR: 1.02); -- $12.4 million class M-9 downgraded to 'CCC' from 'BB-' (BL: 23.87, LCR: 0.89); -- $10.2 million class M-10 downgraded to 'CCC' from 'B+' (BL: 21.12, LCR: 0.79); -- $13.9 million class B-1 revised to 'CC/DR5' from 'CC/DR3' (BL: 17.60, LCR: 0.66); -- $17.5 million class B-2 revised to 'CC/DR5' from 'CC/DR3' (BL: 13.35, LCR: 0.5). Deal Summary -- Originators: New Century (64%); -- 60+ day Delinquency: 35.14% (AOD Feb. 25, 2008); -- Realized Losses to date (% of Original Balance): 1.32% (AOD Feb. 25, 2008); -- Expected Remaining Losses (% of Current balance): 26.70%; -- Cumulative Expected Losses (% of Original Balance): 9.28%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. ACE SECURITIES: Higher Delinquencies Cues Moody's 315 Rating Cuts ----------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 315 tranches from 31 subprime RMBS transactions issued by ACE Securities Corp. Home Equity Loan Trust. 67 downgraded tranches remain on review for possible further downgrade. The collateral backing these transactions consists primarily of first-lien, fixed and adjustable-rate, subprime residential mortgage loans. The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. The actions described below are a result of Moody's on-going surveillance process. Complete rating actions are: ACE Securities Corp. HEL Tr 2007-HE4 -- Cl. A-1, Downgraded to Aa3 from Aaa -- Cl. A-2A, Downgraded to Aa2 from Aaa -- Cl. A-2B, Downgraded to Aa3 from Aaa -- Cl. A-2C, Downgraded to Aa3 from Aaa -- Cl. A-2D, Downgraded to A1 from Aaa -- Cl. M-1, Downgraded to Ba1 from Aa1 -- Cl. M-2, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Caa2 from Baa2 -- Cl. M-5, Downgraded to Caa3 from Ba2 -- Cl. M-6, Downgraded to Ca from B3 ACE Securities Corp. Home Equity Loan Trust, Series 2005-AG1 -- Cl. M-3, Downgraded to A1 from Aa3 -- Cl. M-4, Downgraded to Baa1 from A1 -- Cl. M-5, Downgraded to Ba2 from A2 -- Cl. M-6, Downgraded to B2 from A3; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to B3 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. B-2, Downgraded to Caa2 from Baa2 -- Cl. B-3, Downgraded to Caa3 from Baa3 -- Cl. B-4, Downgraded to Ca from Ba1 -- Cl. B-5, Downgraded to C from Ba2 ACE Securities Corp. Home Equity Loan Trust, Series 2005-HE5 -- Cl. M-5, Downgraded to Baa1 from A2 -- Cl. M-6, Downgraded to Ba2 from A3 -- Cl. M-7, Downgraded to Caa1 from Baa1 -- Cl. M-8, Downgraded to Caa2 from Baa2 -- Cl. M-9, Downgraded to Caa3 from Ba2 -- Cl. M-10, Downgraded to Ca from B1 -- Cl. B-1, Downgraded to Ca from B3 ACE Securities Corp. Home Equity Loan Trust, Series 2005-HE6 -- Cl. M-3, Downgraded to A2 from Aa3 -- Cl. M-4, Downgraded to Baa1 from A1 -- Cl. M-5, Downgraded to Ba2 from A2 -- Cl. M-6, Downgraded to B3 from A3 -- Cl. M-7, Downgraded to Caa1 from Baa1 -- Cl. M-8, Downgraded to Caa2 from Baa2 -- Cl. M-9, Downgraded to Caa3 from Ba2 -- Cl. M-10, Downgraded to Ca from B1 -- Cl. M-11, Downgraded to Ca from B3 ACE Securities Corp. Home Equity Loan Trust, Series 2005-HE7 -- Cl. M-2, Downgraded to A1 from Aa2 -- Cl. M-3, Downgraded to Baa2 from Aa3 -- Cl. M-4, Downgraded to Ba2 from A1 -- Cl. M-5, Downgraded to B3 from A2 -- Cl. M-6, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to Caa2 from Baa1 -- Cl. M-8, Downgraded to Caa3 from Baa2 -- Cl. M-9, Downgraded to Caa3 from Ba1 -- Cl. M-10, Downgraded to Ca from Ba3 -- Cl. M-11, Downgraded to Ca from B2 ACE Securities Corp. Home Equity Loan Trust, Series 2006-ASAP1 -- Cl. M-5, Downgraded to Baa2 from A2 -- Cl. M-6, Downgraded to B1 from A3 ACE Securities Corp. Home Equity Loan Trust, Series 2006-ASAP2 -- Cl. M-4, Downgraded to Baa1 from A1 -- Cl. M-5, Downgraded to Ba2 from A3 -- Cl. M-6, Downgraded to B2 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to B3 from Ba1; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Caa1 from B1 -- Cl. M-9, Downgraded to Caa2 from B3 ACE Securities Corp. Home Equity Loan Trust, Series 2006-ASAP3 -- Cl. M-2, Downgraded to Baa1 from Aa2 -- Cl. M-3, Downgraded to Ba2 from Aa3 -- Cl. M-4, Downgraded to B2 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B3 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to Caa1 from Baa3 -- Cl. M-7, Downgraded to Caa2 from Ba3 -- Cl. M-8, Downgraded to Caa3 from B2 -- Cl. M-9, Downgraded to Ca from B3 ACE Securities Corp. Home Equity Loan Trust, Series 2006-ASAP4 -- Cl. M-1, Downgraded to Baa1 from Aa1 -- Cl. M-2, Downgraded to B2 from Aa2 -- Cl. M-3, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Caa1 from Ba1 -- Cl. M-6, Downgraded to Caa2 from B2 -- Cl. M-7, Downgraded to Caa3 from B3 -- Cl. M-8, Downgraded to Ca from B3 -- Cl. M-9, Downgraded to Ca from Caa2 -- Cl. M-10, Downgraded to C from Ca ACE Securities Corp. Home Equity Loan Trust, Series 2006-ASAP5 -- Cl. A-1A, Downgraded to A2 from Aaa -- Cl. A-1B, Downgraded to A2 from Aaa -- Cl. A-2B, Downgraded to A2 from Aaa -- Cl. A-2C, Downgraded to A3 from Aaa -- Cl. A-2D, Downgraded to Baa1 from Aaa -- Cl. M-1, Downgraded to B1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Caa1 from Baa1 -- Cl. M-6, Downgraded to Caa2 from Baa3 -- Cl. M-7, Downgraded to Caa3 from Ba3 -- Cl. M-8, Downgraded to Ca from B2 -- Cl. M-9, Downgraded to C from B3 ACE Securities Corp. Home Equity Loan Trust, Series 2006-ASAP6 -- Cl. A-1A, Downgraded to A1 from Aaa -- Cl. A-1B, Downgraded to A1 from Aaa -- Cl. A-2B, Downgraded to A1 from Aaa -- Cl. A-2C, Downgraded to A3 from Aaa -- Cl. A-2D, Downgraded to A3 from Aaa -- Cl. M-1, Downgraded to B1 from Aa1 -- Cl. M-2, Downgraded to B1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Caa1 from Ba2 -- Cl. M-6, Downgraded to Caa2 from B1 -- Cl. M-7, Downgraded to Caa3 from B3 -- Cl. M-8, Downgraded to Ca from Caa2 ACE Securities Corp. Home Equity Loan Trust, Series 2006-CW1 -- Cl. M-1, Downgraded to A2 from Aa1 -- Cl. M-2, Downgraded to Ba2 from Aa2 -- Cl. M-3, Downgraded to B1 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B1 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B2 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B3 from Ba1; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to Caa1 from Ba3 -- Cl. M-8, Downgraded to Caa2 from B3 -- Cl. M-9, Downgraded to Caa3 from B3 -- Cl. M-10, Downgraded to Ca from B3 ACE Securities Corp. Home Equity Loan Trust, Series 2006-FM1 -- Cl. A-1, Downgraded to Aa2 from Aaa -- Cl. A-2B, Downgraded to Aa2 from Aaa -- Cl. A-2C, Downgraded to Aa3 from Aaa -- Cl. A-2D, Downgraded to A1 from Aaa -- Cl. M-1, Downgraded to Ba3 from Aa1 -- Cl. M-2, Downgraded to B1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Caa2 from B1 -- Cl. M-6, Downgraded to Caa3 from B3 -- Cl. M-7, Downgraded to Ca from Caa1 -- Cl. M-8, Downgraded to Ca from Caa2 -- Cl. M-9, Downgraded to C from Ca ACE Securities Corp. Home Equity Loan Trust, Series 2006-FM2 -- Cl. A-1, Downgraded to Ba1 from Aaa -- Cl. A-2A, Downgraded to A2 from Aaa -- Cl. A-2B, Downgraded to Ba1 from Aaa -- Cl. A-2C, Downgraded to B1 from Aaa -- Cl. A-2D, Downgraded to B1 from Aaa -- Cl. M-1, Downgraded to B2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Caa1 from Aa2 -- Cl. M-3, Downgraded to Caa2 from Aa3 -- Cl. M-4, Downgraded to Caa3 from B3 -- Cl. M-5, Downgraded to Caa3 from B3 -- Cl. M-6, Downgraded to Ca from Caa2 -- Cl. M-7, Downgraded to C from Ca -- Cl. M-8, Downgraded to C from Ca ACE Securities Corp. Home Equity Loan Trust, Series 2006-HE1 -- Cl. M-3, Downgraded to Baa1 from Aa3 -- Cl. M-4, Downgraded to Ba3 from A1 -- Cl. M-5, Downgraded to B2 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to Caa2 from Ba2 -- Cl. M-8, Downgraded to Caa3 from B3 -- Cl. M-9, Downgraded to C from Ca ACE Securities Corp. Home Equity Loan Trust, Series 2006-HE2 -- Cl. M-2, Downgraded to A2 from Aa2 -- Cl. M-3, Downgraded to Ba1 from Aa3 -- Cl. M-4, Downgraded to B2 from A2 -- Cl. M-5, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to Caa1 from Baa3 -- Cl. M-7, Downgraded to Caa2 from Ba3 -- Cl. M-8, Downgraded to Caa3 from B3 ACE Securities Corp. Home Equity Loan Trust, Series 2006-HE3 -- Cl. M-1, Downgraded to Aa2 from Aa1 -- Cl. M-2, Downgraded to Baa3 from Aa2 -- Cl. M-3, Downgraded to B3 from Aa3 -- Cl. M-4, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Caa1 from Baa3 -- Cl. M-6, Downgraded to Caa2 from Ba1 -- Cl. M-7, Downgraded to Caa3 from B1 -- Cl. M-8, Downgraded to Ca from B3 -- Cl. M-9, Downgraded to C from Ca ACE Securities Corp. Home Equity Loan Trust, Series 2006-HE4 -- Cl. A-1, Downgraded to A2 from Aaa -- Cl. A-2B, Downgraded to A3 from Aaa -- Cl. A-2C, Downgraded to Baa1 from Aaa -- Cl. A-2D, Downgraded to Baa1 from Aaa -- Cl. M-1, Downgraded to B1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Caa1 from Baa2 -- Cl. M-5, Downgraded to Caa2 from Ba2 -- Cl. M-6, Downgraded to Caa3 from B2 -- Cl. M-7, Downgraded to Ca from B3 -- Cl. M-8, Downgraded to Ca from Caa3 -- Cl. M-9, Downgraded to C from Ca ACE Securities Corp. Home Equity Loan Trust, Series 2006-NC1 -- Cl. M-4, Downgraded to A3 from A1 -- Cl. M-5, Downgraded to Ba1 from A2 -- Cl. M-6, Downgraded to B2 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Caa1 from Ba1 -- Cl. M-9, Downgraded to Caa2 from Ba2 -- Cl. M-10, Downgraded to Caa3 from B2 ACE Securities Corp. Home Equity Loan Trust, Series 2006-NC2 -- Cl. A-1, Downgraded to Aa3 from Aaa -- Cl. A-2B, Downgraded to Aa3 from Aaa -- Cl. A-2C, Downgraded to A1 from Aaa -- Cl. A-2D, Downgraded to A1 from Aaa -- Cl. M-1, Downgraded to Baa3 from Aa1 -- Cl. M-2, Downgraded to B1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to Caa1 from Ba2 -- Cl. M-7, Downgraded to Caa2 from B2 -- Cl. M-8, Downgraded to Caa3 from B3 -- Cl. M-9, Downgraded to Ca from Caa3 ACE Securities Corp. Home Equity Loan Trust, Series 2006-NC3 -- Cl. A-1A, Downgraded to Baa3 from Aaa -- Cl. A-1B, Downgraded to Baa3 from Aaa -- Cl. A-2A, Downgraded to Baa3 from Aaa -- Cl. A-2B, Downgraded to Ba2 from Aaa -- Cl. A-2C, Downgraded to Ba2 from Aaa -- Cl. A-2D, Downgraded to Ba2 from Aaa -- Cl. M-1, Downgraded to B1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Caa1 from Ba3 -- Cl. M-6, Downgraded to Caa2 from B3 -- Cl. M-7, Downgraded to Caa3 from Caa2 -- Cl. M-8, Downgraded to C from Ca -- Cl. M-9, Downgraded to C from Ca ACE Securities Corp. Home Equity Loan Trust, Series 2006-OP1 -- Cl. M-3, Downgraded to A3 from Aa3 -- Cl. M-4, Downgraded to Ba1 from A1 -- Cl. M-5, Downgraded to B2 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B3 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to Caa1 from Ba1 -- Cl. M-8, Downgraded to Caa2 from Ba3 -- Cl. M-9, Downgraded to Caa3 from B3 -- Cl. M-10, Downgraded to Ca from Caa3 ACE Securities Corp. Home Equity Loan Trust, Series 2006-OP2 -- Cl. M-2, Downgraded to Ba1 from Aa2 -- Cl. M-3, Downgraded to B1 from Aa3 -- Cl. M-4, Downgraded to B1 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to Caa1 from Ba2 -- Cl. M-8, Downgraded to Caa2 from B1 -- Cl. M-9, Downgraded to Caa3 from B3 ACE Securities Corp. Home Equity Loan Trust, Series 2007-ASAP1 -- Cl. A-1, Downgraded to Baa1 from Aaa -- Cl. A-2A, Downgraded to Aa1 from Aaa -- Cl. A-2B, Downgraded to Baa1 from Aaa -- Cl. A-2C, Downgraded to Baa3 from Aaa -- Cl. A-2D, Downgraded to Baa3 from Aaa -- Cl. M-1, Downgraded to B1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Caa1 from Baa1 -- Cl. M-5, Downgraded to Caa2 from Ba1 -- Cl. M-6, Downgraded to Caa3 from B1 -- Cl. M-7, Downgraded to Ca from Caa3 ACE Securities Corp. Home Equity Loan Trust, Series 2007-ASAP2 -- Cl. A-1, Downgraded to Aa1 from Aaa -- Cl. A-2A, Downgraded to Aa1 from Aaa -- Cl. A-2B, Downgraded to Aa2 from Aaa -- Cl. A-2C, Downgraded to Aa2 from Aaa -- Cl. A-2D, Downgraded to Aa2 from Aaa -- Cl. M-1, Downgraded to A3 from Aa1 -- Cl. M-2, Downgraded to B1 from Aa2 -- Cl. M-3, Downgraded to B1 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B2 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to Caa1 from Baa3 -- Cl. M-7, Downgraded to Caa2 from Ba3 -- Cl. M-8, Downgraded to Caa3 from B1 -- Cl. M-9, Downgraded to Ca from B3 ACE Securities Corp. Home Equity Loan Trust, Series 2007-HE1 -- Cl. A-1, Downgraded to Baa1 from Aaa -- Cl. A-2A, Downgraded to A3 from Aaa -- Cl. A-2B, Downgraded to Baa2 from Aaa -- Cl. A-2C, Downgraded to Baa2 from Aaa -- Cl. A-2D, Downgraded to Baa2 from Aaa -- Cl. M-1, Downgraded to B1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Caa1 from Baa3 -- Cl. M-5, Downgraded to Caa2 from Ba3 -- Cl. M-6, Downgraded to Caa3 from B3 -- Cl. M-7, Downgraded to C from Ca ACE Securities Corp. Home Equity Loan Trust, Series 2007-HE2 -- Cl. A-1, Downgraded to A1 from Aaa -- Cl. A-2A, Downgraded to Aa2 from Aaa -- Cl. A-2B, Downgraded to A3 from Aaa -- Cl. A-2C, Downgraded to A3 from Aaa -- Cl. A-2D, Downgraded to A3 from Aaa -- Cl. M-1, Downgraded to Ba3 from Aa1 -- Cl. M-2, Downgraded to B1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Caa1 from Baa2 -- Cl. M-6, Downgraded to Caa2 from Ba2 -- Cl. M-7, Downgraded to Caa3 from B2 -- Cl. M-8, Downgraded to Ca from Caa2 -- Cl. M-9, Downgraded to C from Ca ACE Securities Corp. Home Equity Loan Trust, Series 2007-HE3 -- Cl. A-1, Downgraded to Ba2 from Aaa -- Cl. A-2A, Downgraded to Ba1 from Aaa -- Cl. A-2B, Downgraded to B1 from Aaa -- Cl. A-2C, Downgraded to B1 from Aaa -- Cl. A-2D, Downgraded to B1 from Aaa -- Cl. M-1, Downgraded to Caa3 from Aa1 -- Cl. M-2, Downgraded to Ca from Aa2 -- Cl. M-3, Downgraded to Ca from Aa3 -- Cl. M-4, Downgraded to C from Ba3 -- Cl. M-5, Downgraded to C from Caa2 -- Cl. M-6, Downgraded to C from Ca ACE Securities Corp. Home Equity Loan Trust, Series 2007-HE5 -- Cl. M-1, Downgraded to A2 from Aa1 -- Cl. M-2, Downgraded to Ba3 from Aa2 -- Cl. M-3, Downgraded to B1 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B1 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to Caa1 from Ba3 -- Cl. M-7, Downgraded to Caa2 from B3 -- Cl. M-8, Downgraded to Ca from Caa2 -- Cl. M-9, Downgraded to C from Ca ACE Securities Corp. Home Equity Loan Trust, Series 2007-WM1 -- Cl. A-1, Downgraded to Ba1 from Aaa -- Cl. A-2A, Downgraded to Baa3 from Aaa -- Cl. A-2B, Downgraded to Ba3 from Aaa -- Cl. A-2C, Downgraded to Ba3 from Aaa -- Cl. A-2D, Downgraded to Ba3 from Aaa -- Cl. M-1, Downgraded to B2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to Caa1 from Aa3 -- Cl. M-4, Downgraded to Caa2 from Ba2 -- Cl. M-5, Downgraded to Caa3 from B3 ACE Securities Corp. Home Equity Loan Trust, Series 2007-WM2 -- Cl. A-1, Downgraded to Ba2 from Aaa -- Cl. A-2A, Downgraded to Ba1 from Aaa -- Cl. A-2B, Downgraded to Ba3 from Aaa -- Cl. A-2C, Downgraded to B1 from Aaa -- Cl. A-2D, Downgraded to B1 from Aaa -- Cl. M-1, Downgraded to B2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to Caa1 from Aa3 -- Cl. M-4, Downgraded to Caa2 from B2 -- Cl. M-5, Downgraded to Caa3 from B3 -- Cl. M-6, Downgraded to Ca from Caa3 ADELPHIA COMMS: Court Okays Pact Resolving NBC Rejection Claims --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved a settlement agreement between the reorganized Adelphia Communications Corp. and its debtor-affiliates, and certain NBC entities that resolves NBC Rejection Claims. As reported in the Troubled Company Reporter on March 14, 2008, National Broadcasting Company, Bravo Company, CNBC, Inc., MSNBC Cable, L.L.C., and Universal Television Networks filed Claim Nos. 19606, 19607, 19608, 19609, 19610,19611, 19612, and 19613 in August 2006, against the ACOM Debtors, asserting about $11,969,064 plus unliquidated amounts in contract rejection damages. Subsequently, the ACOM Debtors disputed the NBC Rejection Claims. The Reorganized ACOM Debtors and the NBC Affiliates decided to settle their claims dispute. In a stipulation with the NBC Affiliates, the Reorganized ACOM Debtors agreed to: (a) withdraw their objection to the NBC Rejection Claims; and (b) grant CNBC a $7,150,000 Allowed ACC Other Unsecured Claim, as that term is defined in the ACOM Debtors' First Modified Fifth Amended Joint Plan of Reorganization, against ACOM. In return, the NBC Affiliates agreed to withdraw the NBC Rejection Claims. Both parties further agreed to waive and release any and all claims against each other related to the NBC Rejection Claims and the Claims Objection. About the Adelphia Recovery Trust The Adelphia Recovery Trust is a Delaware Statutory Trust that was formed pursuant to the ACOM Debtors' First Modified Fifth Amended Joint Plan of Reorganization, which became effective Feb. 13, 2007. The ART holds certain litigation claims transferred pursuant to the Plan against various third parties and exists to prosecute the causes of action transferred to it for the benefit of holders of ART interests. About Adelphia Comms Based in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television company. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, Internet access and other advanced services over its broadband networks. The company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the Debtors in their restructuring efforts. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates' chapter 11 cases. The Bankruptcy Court confirmed the Debtors' Modified Fifth Amended Joint Chapter 11 Plan of Reorganization on Jan. 5, 2007. That plan became effective on Feb. 13, 2007. (Adelphia Bankruptcy News, Issue No. 186; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADVANCED CELL: Says It Erred in Stating Auditor Agreed on Findings ------------------------------------------------------------------ Subsequent to the filing of the company's Form 8-K dated March 27, 2008, the company filed on April 7, 2008, an amendment on Form 8-K/A to correct an incorrect statement regarding the concurrence of the company's auditor with its decision to amend and restate its previously issued audited consolidated financial statements and other financial information for the years ended Dec. 31, 2007, and the unaudited consolidated financial statements for the quarters ended Sept. 30, 2006, March 31, 2007, June 30, 2007, and Sept. 30, 2007. As reported in the Troubled Company Reporter on April 3, 2008, the Company disclosed that its consolidated financial statements and information contained in the company's Form 10-QSB filed with the Securities and Exchange Commission on Nov. 20, 2006, for the quarter and nine months ended Sept. 30, 2006, did not properly account for the debentures and warrants issued in September, 2006. The company's current auditor, Singer Lewak Greenbaum & Goldstein LLP, has not yet reviewed the foregoing matters, and has indicated that it will do so following review by the auditor of the company who was engaged at the time the error occurred. Following the correction of the errors, the company will restate its consolidated financial statements for the affected period and amend all periodic reports filed for the relevant periods. About Advanced Cell Technology Inc. Headquartered in Alameda, California, Advanced Cell Technology Inc. (OTCBB:ACTC) -- http://www.advancedcell.com/-- is a biotechnology company focused on developing and commercializing human stem cell technology in the emerging field of regenerative medicine. It has developed and maintained a portfolio of patents and patent applications that form the proprietary base for its embryonic stem cell research and development. The company operates facilities in Alameda, California and Worcester, Massachusetts. At Sept. 30, 2007, the company's unaudited consolidated balance sheet showed $15.6 million in total assets and $42.1 million in total liabilities, resulting in a $26.5 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 26, 2007, Stonefield Josephson Inc. in Los Angeles, California, expressed substantial doubt about Advanced Cell Technology Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's minimal sources of revenue, substantial losses, substantial monetary liabilities in excess of monetary assets and accumulated deficits as of Dec. 31, 2006. The company expects that it will not be able to continue as a going concern and fund cash requirements for operations through June 30, 2008, with current cash reserves. ADVANCED MICRO: Weak Quarter Results Spurs Moody's Rating Reviews ----------------------------------------------------------------- Moody's Investors Service placed Advanced Micro Devices' B1 corporate family and probability of default ratings, along with its B2 senior unsecured rating, under review for possible downgrade following the company's announcement that first quarter 2008 results will be weaker than anticipated. AMD announced that first quarter revenue will be down 15% sequentially to approximately $1.5 billion as compared to earlier guidance of a seasonal decline of 7%. The company also announced that it expects to take a charge in the second quarter related to plans to reduce its work force by 10% but that it is unable to quantify the amount of the charge at this time. Given the high fixed cost nature of the microprocessor business in addition to its currently weaker offerings in the high end server market, Moody's expects that a significant portion of the revenue shortfall will fall to the bottom line, resulting in a larger net loss than earlier anticipated. The rating action reflects the ongoing challenges AMD faces in terms of generating sustained profits and cash flow in the face of continued strong competition from Intel throughout its microprocessor offerings, delayed product introductions, and the softer macro environment. In previous reports, Moody's noted that, "AMD's ratings could come under downward pressure to the extent that product launches are delayed, if it experiences operating losses in the second half of 2007, or if cash levels fall below $1.2 billion. Alternatively, a stabilization of its ratings outlook could emerge if AMD is able to make steady progress towards sustainable free cash flow from operations, which would enhance financial flexibility that is critical in the capital intensive and volatile microprocessor segment." AMD ended fiscal 2007 with about $1.9 billion of cash and equivalents. Available cash is above the minimum $1.2 billion level that Moody's has previously outlined would be a trigger to downwards rating pressure, owing largely to the $608 million equity contribution from the Mubadala Development Company in the fourth quarter of 2007. However, the company's announcement raises the likelihood that a return to profitability will be delayed and that the company will continue to consume cash on an operational basis. The review will focus on: (1) the prospects for a sustained recovery to material levels of profitability and cash flow generation sufficient to internally fund product development and necessary technology transitions and capacity expansion, (2) management's plans to buttress its liquidity position, and (3) the prospects that the company's pending "asset smart" strategy could yield a material change in its operational, debt, and liquidity profile. Rating placed under review include: -- Corporate family rating B1; -- Probability-of-default rating B1; -- $390 million senior unsecured notes due August 2012 at B2 (LGD5, 73%). Advanced Micro Devices, Inc., headquartered in Sunnyvale, California, designs and manufactures microprocessors and other semiconductor products. ADVANCED MICRO: Low Revenues Cues S&P's Negative Watch on B Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B' corporate credit and senior unsecured ratings on Sunnyvale, California-based Advanced Micro Devices Inc. on CreditWatch with negative implications. The action follows AMD's announcement that first-quarter revenues will be lower than previously expected as a result of weakening business conditions and continued technical challenges. The company now expects a decline in March quarter revenues that exceeds normal seasonality for the quarter, to $1.5 billion, raising concerns about negative free cash flows and prospects for improvement. Cash balances of $1.9 billion as of Dec. 31, 2007, are adequate for the near term, although the company appears to have only limited additional sources of liquidity as it addresses overall operational problems. Following competitor Intel Corp.'s (A+/Stable/A-1+) product line refresh in mid-2006, AMD's earlier technology lead and profitability dwindled, while the largely debt-funded acquisition of ATI Technologies Inc. reduced AMD's financial flexibility to deal with marketplace challenges. After generating good operating profitability in late 2005 and early 2006, EBITDA weakened sharply and recovered only moderately in the December quarter. Free cash flow remained at negative $200 million, despite less capital spending, in the September and December 2007 quarters. The company has been implementing a strategy to reduce its negative free cash flows through a combination of operating cost reductions and continued lower capital expenditures, but progress has been slow and anticipated improvement may be delayed. "We will meet with management to discuss its revised restructuring plan to reduce costs, its progress on new product introduction, and the impact on liquidity and cash flow to resolve the CreditWatch," said Standard & Poor's credit analyst Bruce Hyman. ALIVE TECH: Case Summary & 19 Largest Unsecured Creditors --------------------------------------------------------- Debtor: ALIVE Tech Inc. 600 Peachtree Parkway Suite 112 Cumming, GA 30041 Bankruptcy Case No.: 08-20908 Chapter 11 Petition Date: April 2, 2008 Court: Northern District of Georgia (Gainesville) Judge: Robert Brizendine Debtor's Counsel: Paul Reece Marr, Esq. Paul Reece Marr P.C. 300 Galleria Parkway, N.W. Suite 960 Atlanta, GA 30339 Tel: 770-984-2255 pmarr@mindspring.com Estimated Assets: $1,000,001 to $10 million Estimated Debts: $1,000,001 to $10 million Debtor's list of its 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 3VR Seciroty Inc. account payable $1,792,000 475 Brannan Street, Suite 430 San Francisco, CA 94107 Johnson Controls Security business dispute $1,000,000 Systems LLC 910 Clopper Road Gaithsburg, MD 20877 Cirrus Investments LP account payable $425,103 Attn: Boccardo Management Group 985 University Avenue, Suite 12 Los Gatos, CA 95032-7639 Ventures & Solutions LLC consulting $200,000 Attn: Dale W. Church services Nine Franklin Street Slexandria, VA 22314 White Lee LLP account payable $134,412 600 Peachtree Parkway LLC arrearage under $98,036 premies lease Holland & Knight account payable $70,859 Kevin Knaus shareholder loan $50,000 Fish & Richardson PC account payable $39,922 Britain Consulting LLC consulting $29,183 services American Express credit card $28,900 account Outlook Solutions Inc. account payable $21,571 Lydia Kossman wages $14,690 Steven Lopez wages $12,506 VCT Vision account payable $10,771 R&R Diversified LLC account payable $9,800 Capital One credit card $8,810 Kossman Consulting Inc. wages $7,352 Worldwide Travel Marketing account payable $5,000 ALPHATRADE.COM: Chisholm Bierwolf Raises Substantial Doubt ---------------------------------------------------------- Chisholm, Bierwolf & Nilson, LLC, in Bountiful, Utah, raised substantial doubt about AlphaTrade.com's ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's significant losses from operations and dependence on financing to continue operations. For the year ended Dec. 31, 2007, the company posted a $3,688,403 net loss on $5,978,825 of total revenues as compared with a $4,736,539 net loss on $4,395,996 of total revenues in 2006. At Dec. 31, 2007, the company's balance sheet showed $1,192,280 in total assets and $4,839,814 in total liabilities, resulting in a $3,647,534 stockholders' deficit. The company had a $961,521 stockholders' deficit at Dec. 31, 2006. The company's balance sheet at Dec. 31, 2007, also showed strained liquidity with $846,647 in total current assets available to pay $4,839,814 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at s http://ResearchArchives.com/t/s?29fc Based in North Vancouver, British Columbia, AlphaTrade.com (OTCBB: APTD) -- http://www.alphatrade.com/-- provides both real-time and delayed stock market quotes to subscribers via the Internet. AMERICAN HOME: Servicing Business Buyer Moves to Close Sale ----------------------------------------------------------- AH Mortgage Acquisition Co., Inc., the entity created by Wilbur L. Ross to purchase the mortgage servicing business of American Home Mortgage Investment Corp. for about $500,000,000, asks the U.S. Bankruptcy Court for the District of Delaware to direct sellers American Home Mortgage Investment Corp., American Home Mortgage Corp., and American Home Mortgage Servicing, Inc., to effectuate the final closing under their Asset Purchase Agreement dated as of September 25, 2007. Judge Christopher Sontchi approved in October 2007 the sale of the Debtors' loan servicing business to AHM Acquisition under a two- stage closing process. The Debtors agreed, effective on the initial closing, to temporarily service the loans, until final closing when AHM Acquisition obtains licenses to take over the servicing business. On March 16, 2008, AHM Acquisition notified AHM that 40 of the 44 needed licenses to proceed to closing had been obtained. It then held daily conference calls wit the Debtors in anticipation of the final closing of the sale, and worked toward finalizing various agreements, including the Transition Services Agreement and the post-Final Closing servicing agreements. The parties, then, set March 31, 2008, as the Final Closing date. Although AHM Acquisition had satisfied the Regulatory Approval Condition, the Debtors failed to effectuate the Final Closing on March 31 because of a regulatory issue associated with two mortgage servicing agreements that are not included in the Purchased Assets. AHM relates that the APA contemplates that it enter into a sub- servicing arrangement with the Debtors to service mortgage loans under servicing agreements that are not included in the sale. It notes, however, that a problem arose relating to the need for both the Debtors and AHM Acquisition to be licensed to service those loans. Additionally, the Debtors indicated that one of the servicing agreements, a repurchase agreement with Calyon New York Branch, required Calyon's consent for AHM Acquisition to act as subservicer. On April 3, 2008, the parties resolved the regulatory issues associated with the sub-servicing arrangements. Victoria W. Counihan, Esq., at Greenberg Traurig, LLP, in Wilmington, Delaware, relates that on April 4, AHM Acquisition sent a demand letter to the Debtors (i) formally notifying them that AHM Acquisition has satisfied the Regulatory Approval Condition and that, to the extent there is doubt on the condition's satisfaction, AHM Acquisition waives the condition, and (ii) demanding that they comply with the APA and effectuate the Final Closing no later than April 7. "Although the Debtors initially agreed to close on April 7, the Debtors informed [AHM Acquisition] on April 7 that they were not willing to close because they had not yet obtained Calyon's consent," Ms. Counihan tells Judge Sontchi. Ms. Counihan asserts that although the Debtors have no legal basis to delay the Final Closing because of the long-standing dispute between them and Calyon, they are holding AHM Acquisition hostage because of the purported need for a consent and the Debtors' apparent insistence, perhaps at the behest of their prepetition lenders, in reaching a global settlement with Calyon before effectuating the Final Closing. She insists that obtaining Calyon's consent is not a condition to the Debtors' obligation to effectuate the Final Closing. The Debtors' refusal to effectuate the Final Closing is exposing the bankruptcy estates to the continuing accrual of AHM Acquisition' administrative claims, Ms. Counihan tells the Court. She says that for each day the Final Closing is delayed causes AHM Acquisition to suffer damages under the APA. She notes that the APA allocates, among other provisions, certain overhead costs of the Servicing Business, totaling $350,000 per month, to AHM Acquisition during the period between the Initial Closing Date and the Final Closing Date. Thus, she says, the longer the Final Closing is delayed, the more overhead costs AHM Acquisition will incur, and the more fees AHM Acquisition will forego. AHM Acquisition cannot wait for an extended period while the Debtors seek to obtain Calyon's consent because AHM Acquisition has entered into other significant transactions that are dependent upon the Final Closing under the APA, Ms. Counihan declares. She discloses that AHM Acquisition has agreed to acquire the mortgage servicing rights of Option One Mortgage Corporation. She informs the Court that one of the condition for the closing of the Option One sale, which is targeted to close on April 30, is that the Final Closing has occurred on AHM Acquisition's acquisition of the Servicing Business. To the extent that the Debtors' failure to effectuate the Final Closing causes AHM Acquisition to miss the targeted April 30 closing date for the Option One Sale, AHM Acquisition intends to hold the estates and the Debtors' prepetition lenders, if they caused the delay, liable for all damages incurred, Ms. Counihan asserts. She adds that it is imperative that AHM Acquisition maintains the confidence of the Servicing Business employees, the counterparties to servicing agreements, and state regulators. AHM Acquisition also asks Judge Sontchi to consider its request on an expedited basis, and suggests that the request be heard at the next omnibus hearing currently set for April 14, 2008, at 10:00 a.m. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The U.S. Bankruptcy Court for the District of Delaware extends the exclusive periods for American Home Mortgage Investors Corp. and its debtor-affiliates to file a plan of reorganization through June 2, 2008; and solicit and obtain acceptances for that plan through July 31, 2008. (American Home Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Moody's Downgrades Ratings on 29 Certificates ------------------------------------------------------------ Moody's Investors Service has downgraded 29 certificates and placed on review for possible downgrade three classes of certificates from five transactions issued by American Home Mortgage Investment Trust. Most of the affected pools in these transactions are backed by second lien loans. Group one of the American Home Mortgage Investment Trust 2005-SD1 is backed by scratch and dent collateral. 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. AHMIT 2005-SD1 Group I bonds are backed primarily by first lien adjustable-rate and fixed-rate scratch and dent mortgage loans. The transaction has experienced an increasing proportion of severely delinquent loans. Timing of losses will cause the protection available to the subordinated bonds to be diminished. Complete rating actions are: Issuer: American Home Mortgage Investment Trust 2005-SD1 -- Cl. I-A1, Downgraded to Aa2 from Aaa -- Cl. I-M1, Downgraded to A2 from Aa2 -- Cl. I-M2, Downgraded to Baa2 from A2 -- Cl. I-M3, Downgraded to Ba2 from Baa2 -- Cl. II-A1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-M1, Downgraded to A2 from Aa2 -- Cl. II-M2, Downgraded to Ba2 from A2 -- Cl. II-M3, Downgraded to Ca from Baa2 Issuer: American Home Mortgage Investment Trust 2006-2 -- Cl. IV-A, Downgraded to Ba1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. IV-M-1, Downgraded to Caa2 from Baa3 -- Cl. IV-M-2, Downgraded to Caa3 from B1 -- Cl. IV-M-3, Downgraded to Ca from B3 -- Cl. IV-M-4, Downgraded to C from Caa2 -- Cl. IV-M-5, Downgraded to C from Ca Issuer: American Home Mortgage Investment Tr 2006-3 -- Cl. IV-A, Downgraded to Baa3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. IV-M-1, Downgraded to Ba2 from Aa3 -- Cl. IV-M-2, Downgraded to Caa1 from A3 -- Cl. IV-M-3, Downgraded to Caa2 from Baa1 -- Cl. IV-M-4, Downgraded to Caa3 from Baa2 -- Cl. IV-M-5, Downgraded to Ca from Baa3 -- Cl. IV-M-6, Downgraded to C from Ba1 -- Cl. IV-M-7, Downgraded to C from B2 -- Cl. IV-M-8, Downgraded to C from Ca Issuer: American Home Mortgage Investment Trust 2007-A -- Cl. II-A, Downgraded to B3 from Aaa -- Cl. II-M-1, Downgraded to C from Ba1 -- Cl. II-M-2, Downgraded to C from Caa3 Issuer: American Home Mortgage Investment Trust 2007-2 -- Cl. II-A, Downgraded to B3 from Baa1 -- Cl. II-M-1, Downgraded to Caa3 from Ba1 -- Cl. II-M-2, Downgraded to C from Caa2 -- Cl. II-M-3, Downgraded to C from Ca AMERICAN TONERSERV: Perry-Smith Raises Substantial Doubt -------------------------------------------------------- Perry-Smith LLP in Sacramento, Calif., raised substantial doubt about American TonerServ Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring losses from operations, accumulated deficit and working capital deficit. For the year ended Dec. 31, 2007, the company's net loss increased to $4,832,325 from $1,933,869 in 2006. The company's total revenues also increased to $3,630,531 for the year ended Dec. 31, 2007, from $456,433 in 2006. At Dec. 31, 2007, the company's balance sheet showed $8,836,301 in total assets, $7,054,564 in total liabilities, and $1,781,737 in total stockholders' equity. The company's balance sheet at Dec. 31, 2007, showed strained liquidity with $2,606,840 in total current assets available to pay $4,728,464 in total current liabilities. The company had $17,578,840 of accumulated deficit at Dec. 31, 2007. The auditing firm said the company has suffered recurring losses from operations resulting in an accumulated deficit of $17,578,840. Current liabilities exceed its total current assets at Dec. 31, 2007, by $2,121,624 Subsequent Events On Jan. 8, 2008, the board of directors elected Chuck Mache to serve as chairman of the board. On Jan. 22, 2008, the company entered into consulting agreements with Chuck Mache, chairman, and Thomas H. Hakel, director for $5,000 per month. These agreements are cancelable with 30 days notice. On Jan. 24, 2008, the company converted $300,000 of a $960,000 line of credit available for Stand By letter of Credits into cash for working capital purposes. The line of credit has an interest rate of 7.5% and is due and payable on June 30, 2008. On Jan. 25, 2008, the company granted 75,000 options to an employee. These options have an exercise price of $0.25 per share with a four-year vesting schedule. On March 3, 2008 the company established NC TonerServ LLC and opened a new office in Morrisville, North Carolina, with seven employees to begin selling printer supplies and services to businesses. The company granted 75,000, 45,000, 5,000 and 5,000 options to four key employees. These options have an exercise price of $0.25 per share with a four-year vesting schedule. On March 5, 2008, the company received a loan from Rob Gutierrez for $100,000 with 10% interest and due in 30 days. On March 5, 2008, the company issued Rob Gutierrez 150,000 options in exchange for consulting services. These options have an exercise price of $0.25 per share and vest equally over 24 months. On March 6, 2008, the company amended its original termination agreement dated Oct. 22, 2007, with Dinosaur Securities. The company issued 750,000 warrants to Dinosaur Securities in lieu of the 600,000 shares originally agreed upon as settlement. On March 6, 2008, the company terminated its relationship with After Market Support LLC and Keating Investments. As part of the termination, AMS will return 3,000,000 common shares that it purchased for $3,000 as part of the deal. During the period from January 2008 to March 2008, the company raised $1,250,000 from 12 accredited investors related to the company's Common Stock and Warrants offering. On March 25, 2008, the company entered into an agreement with Merriman Curhan Ford & Co. to represent American TonerServ to act as its exclusive financial advisor to assist in capital raising efforts and general investment banking services. As compensation for MFC's services, MFC will receive shares of the company's common stock valued at $500,000. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?29f9 About American TonerServ Based in Santa Rosa, Calif., American TonerServ Corp., formerly known as Q Matrix Inc. (OTCBB: ASVP.OB) -- http://www.americantonerserv.com/-- is a consolidator in the highly fragmented printer supplies and services industry. ATS acquires, integrates and manages independent businesses that deliver printer supplies, services and equipment to small/mid- sized businesses. AMERIGROUP CORP: S&P Lifts Rating on Senior Bank Facility to 'BB+' ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its rating on Amerigroup Corp.'s senior secured bank facility to 'BB+' from 'BB'. Standard & Poor's also said that it assigned it '2' recovery rating to this debt, indicating its expectation for a substantial (70%-90%) recovery in the event of a payment default scenario. At the same time, Standard & Poor's lowered its rating on AGP's senior unsecured convertible notes to 'B+' from 'BB'. In addition, Standard & Poor's assigned a '6' recovery rating to this debt, indicating the expectation for a negligible (0%-10%) recovery in the event of a payment default scenario. The senior secured bank facilities consist of a $50 million revolving credit facility and a $130 million synthetic letter of credit facility due March 2012. The principal amount of the convertible senior unsecured notes is $260 million, maturing May 2012. AGP used the proceeds mainly to post a bond to stay the enforcement of a judgment in Qui Tam litigation pending the resolution of an appeal by the company and its Illinois subsidiary. As of March 2008, the company had drawn $102.5 million from the senior secured facility and nothing from the revolver. "In assigning recovery ratings, we simulate a payment default scenario that incorporates a borrower's fundamental business risks and the financial risk inherent in its existing capital structure," noted Standard & Poor's credit analyst Hema Singh. "Our methodology assumes that all committed debt is fully funded but generally does not make any assumptions for the addition of any other debt prior to default." AMERIQUEST MORTGAGE: S&P Junks Rating on Class M-5 Certs. From 'B' ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on three classes of asset-backed pass-through certificates from Ameriquest Mortgage Securities Inc.'s series 2003-8 and removed one of the lowered ratings from CreditWatch with negative implications. In addition, S&P affirmed its ratings on seven other classes from the same series. The downgrades reflect continuous adverse pool performance. Monthly losses have outpaced excess interest for 11 of the 12 most recent months, and these losses have continuously reduced the credit support available to the classes. As of the March 2008 remittance period, cumulative realized losses were $50.704 million, and the pool had paid down to 13.63% of its original principal balance. Serious delinquencies (90-plus days, foreclosures, and REOs) were $32.55 million, 13x the current overcollateralization amount, which is currently below target by about $10 million. Subordination, excess interest, and overcollateralization provide credit support for this transaction. At issuance, the collateral backing this deal consisted of subprime, fixed- and adjustable- rate, fully amortizing first-lien mortgage loans secured by one- to four-family residential properties. Rating Lowered and Removed From CreditWatch Negative Ameriquest Mortgage Securities Inc. Asset-backed pass-through certificates series 2003-8 Rating ------ Class To From ----- -- ---- M-3 BBB- BBB/Watch Neg Ratings Lowered Ameriquest Mortgage Securities Inc. Asset-backed pass-through certificates series 2003-8 Rating ------ Class To From ----- -- ---- M-4 B BB M-5 CCC B Ratings Affirmed Ameriquest Mortgage Securities Inc. Asset-backed pass-through certificates series 2003-8 Class Rating ----- ------ AV1, AV2, AF5 AAA M-1 AA M-2 A MV-6 CCC MF-6 CCC AMR CORP: Cancels More than 1,000 Flights; Resumes Aircraft Check ----------------------------------------------------------------- American Airlines canceled more than 900 flights on Thursday as it works to complete the inspections of its MD-80 fleet. The airline is also working to re-accommodate customers affected by the cancellations. As of Wednesday afternoon, * 179 MD-80 aircraft were completely inspected; * 60 of the 179 MD-80s were returned to service; * 119 of the 179 MD-80s were still undergoing work; * 121 MD-80s remain to be inspected. On Wednesday, American officially canceled 1,094 flights, in addition to the 460 canceled on Tuesday. "We apologize for the inconvenience this has caused our customers," Gerard Arpey, Chairman and CEO of American Airlines, said. "American will do whatever it takes to assist those affected by these flight changes and our employees are working hard to ensure that we remain their choice for air travel. This includes compensating those inconvenienced customers who stayed overnight in a location away from their final destination." "We continue to inspect every airplane to ensure we are in total agreement with the specifications of the directive," Mr. Arpey said. "We will get back to a full schedule as quickly as possible." These inspections were conducted to ensure compliance with a Federal Aviation Administration directive related to the bundling of wires in the aircraft's wheel well of the MD-80 aircraft. These inspections -- based on FAA audits -- are related to detailed, technical compliance issues and not safety-of-flight issues. American also plans to contract with an independent third party to review American’s processes for compliance with all future FAA airworthiness directives. This work will ensure that all procedures strictly adhere to the technical elements of every directive so American can avoid this type of schedule disruption in the future. Customers who were scheduled on a flight that was canceled may request a full refund or apply the value of their ticket toward future travel on American Airlines. Additionally, customers scheduled to travel on any MD-80 flight April 8 to 11, even if their flight has not been canceled, may rebook without a change fee to any AA flight with availability in the same cabin as long as their travel begins by April 17. Customers who were inconvenienced with overnight stays should go to http://www.AA.com/where a link has been established to request information about compensation. Customers also are encouraged to continue to check http://www.AA.com/or to contact their travel agents for flight status information. Headquartered in Forth Worth, Texas, AMR Corporation (NYSE: AMR) operates with its principal subsidiary, American Airlines Inc. -- http://www.aa.com/-- a worldwide scheduled passenger airline. At the end of 2006, American provided scheduled jet service to about 150 destinations throughout North America, the Caribbean, Latin America, Europe and Asia. American is also a scheduled airfreight carrier, providing freight and mail services to shippers throughout its system. Its wholly owned subsidiary, AMR Eagle Holding Corp., owns two regional airlines, American Eagle Airlines Inc. and Executive Airlines Inc., and does business as "American Eagle." American Beacon Advisors Inc., a wholly owned subsidiary of AMR, is responsible for the investment and oversight of assets of AMR's U.S. employee benefit plans, as well as AMR's short-term investments. * * * As reported in the Troubled Company Reporter on Nov. 30, 2007, following the announcement by AMR Corp. that it intends to divest its American Eagle Holding Corp. subsidiary in 2008, Fitch expects no near-term impact on the debt ratings of AMR and its principal operating subsidiary, American Airlines Inc. Fitch affirmed both entities' Issuer Default Ratings at 'B-' on Nov. 13, 2007, while revising the Rating Outlook for AMR to Positive. ANF DEER CREEK: Court Converts Bankr. Case to Ch. 7 Liquidation --------------------------------------------------------------- The Honorable Theodor C. Albert of the U.S. Bankruptcy Court for the Central District of California denied ANF Deer Creek LLC's request to obtain cash collateral, and concurrently converted the Debtor's bankruptcy case to a Chapter 7 liquidation proceeding. The Debtor previously asked the Court for permission to use the cash collateral of its secured creditor Mesa West Real Estate Income Fund, L.P. The Debtor related that it signed a Deed of Trust with Mesa, encumbering substantially all of the Debtor's real property assets. Mesa asserted that any and all money in the Debtor's debtor-in- possession bank accounts constitutes its cash collateral. The principal amount due to Mesa was $19 million, including interest and other charges. The Debtor told the Court that it faced an immediate need to use the cash collateral for the continuation of its business. The Debtor related that it was unable to reach a consensual resolution of the cash collateral issue before the need for use of Mesa' cahs collateral became dire. However, Mesa argued that it has a perfected security interest in all the Debtor's cash collateral. It asserted that the Debtor has failed to provide -- and cannot provide -- adequate protection of Mesa's interest in the cash collateral. Mesa declared that the Debtor's property is deteriorating in value, and opposed the further diminution of Mesa's interest in the Debtor's property. It complained of a lack in adequate protection to be given by the Debtor. The Court decided to convert the case to a liquidation proceeding in a March 31 hearing. Based in Lake Forest, California, ANF Deer Creek, LLC owns and develops real estate. The developer filed for Chapter 11 protection on Mar. 5, 2008 (Bankr. C.D. Calif. Case No. 08-11068). Leonard M. Shulman, Esq. at Shulman, Hodges & Bastian, LLP represents the Debtor in its restructuring efforts. The Debtor's schedules reflected total assets of $21,159,060 and total liabilities of $21,159,080. ARCA FUNDING: Moody's Junks Rating on $99.5 Mil. Notes From 'Ba1' ----------------------------------------------------------------- Moody's Investors Service downgraded ratings of seven classes of notes issued by Arca Funding 2006-I, Ltd. The notes affected by this rating action are: Class Description: $99,500,000 Class II Funded Senior Notes Due 2046 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Ca Class Description: $59,500,000 Class III Funded Senior Notes Due 2046 -- Prior Rating: Caa1, on review for possible downgrade -- Current Rating: Ca Class Description: $17,000,000 Class IV Funded Senior Notes Due 2046 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: Ca Class Description: $17,000,000 Class V Funded Mezzanine Notes Due 2046 -- Prior Rating: Ca -- Current Rating: C Class Description: $17,000,000 Class VI Funded Mezzanine Notes Due 2046 -- Prior Rating: Ca -- Current Rating: C Class Description: $7,000,000 Class VII Funded Mezzanine Notes Due 2046 -- Prior Rating: Ca -- Current Rating: C Class Description: $7,000,000 Class VIII Funded Mezzanine Notes Due 2046 -- Prior Rating: Ca -- Current Rating: C The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence as reported by the Trustee on March 27, 2008, of an event of default caused by a failure of the Class I Par Coverage Ratio to be greater than or equal to 100 per cent, pursuant Section 5.1(j) of the Indenture dated Oct. 11, 2006. As provided in Article 5 of the Indenture during the occurrence and continuance of an Event of Default, certain parties to the transaction may be entitled to direct the Trustee to take particular actions with respect to the Collateral and the Notes. The rating actions taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. Arca Funding 2006-I, Ltd. is a collateralized debt obligation backed by a portfolio of structured finance securities. ARLO VII: Three Classes of Notes Acquire Moody's Rating Reviews --------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible further downgrade the ratings on these notes issued by ARLO VII Limited Series 2006. Issuer: ARLO VII Limited Series 2006-13 (SABS) Class Description: $15,625,000 Variable Secured Limited Recourse Credit-Linked Notes due 2047 -- Prior Rating: A1, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade Issuer: ARLO VII Limited Series 2006-14 (SABS) Class Description: $25,000,000 Variable Secured Limited Recourse Credit-Linked Notes due 2046, -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade Issuer: ARLO VII Limited Series 2006-15 (SABS) Class Description: $30,000,000 Variable Secured Limited Recourse Credit-Linked Notes due 2047 -- Prior Rating: Baa1, 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. ARLO VI: Moody's Junks Ratings on Two Notes; Reviews Eight Ratings ------------------------------------------------------------------ Moody's Investors Service downgraded and placed on review for possible further downgrade the ratings on these notes issued by ARLO VI Limited Series 2006. Class Description: $10,000,000 Initial Tranche Notional Amount Credit Default Swap with Barclays Bank plc, Series 2006-3 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: $15,000,000 Variable Secured Limited Recourse Credit-Linked Notes due 2040, Series 2006-4 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade Class Description: $15,000,000 Variable Secured Limited Recourse Credit-Linked Notes due 2040, Series 2006-5 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: B2, on review for possible downgrade Class Description: $10,000,000 Variable Secured Limited Recourse Credit-Linked Notes due 2040, Series 2006-6 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: $10,000,000 Class A Variable Secured Limited Recourse Credit-Linked Notes due 2046, Series 2006-9 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $12,500,000 Class B Variable Secured Limited Recourse Credit-Linked Notes due 2046, Series 2006-9 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: $10,000,000 Class A Variable Secured Limited Recourse Credit-Linked Notes due 2046, Series 2006-10 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $12,500,000 Class B Variable Secured Limited Recourse Credit-Linked Notes due 2046, Series 2006-10 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: B2, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $10,000,000 Class A Variable Secured Limited Recourse Credit-Linked Notes due 2046, Series 2006-8 -- Prior Rating: B2, on review for possible downgrade -- Current Rating: Ca Class Description: $12,500,000 Class B Variable Secured Limited Recourse Credit-Linked Notes due 2046, Series 2006-8 -- Prior Rating: B3, 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. ASARCO LLC: Wants Environmental Claims from PRPs Disallowed ----------------------------------------------------------- ASARCO LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Texas to disallow certain environmental claims filed by potentially responsible parties. The Court previously entered a case management order for the estimation of environmental claims filed by state and federal government agencies and third parties against the Debtors. Estimation proceedings have been held and the Debtors have reached settlements regarding the majority of the environmental claims covered by the CMO. Tony M. Davis, Esq., at Baker Botts L.L.P., in Houston, Texas, relates that the Debtors have reached an agreement-in-principle with their creditor constituencies holding the majority of claims on the structure of a plan of reorganization. In anticipation of confirmation of a reorganization plan, the Debtors need to resolve environmental claims filed by potentially responsible parties. The Debtors believe that the PRP Claims fall into: i) claims for future costs; ii) claims barred by the contribution protection provided by the environmental claims settlement agreements; and iii) claims for past costs that are not barred by contribution protection. The Debtors assert that the PRP Future Claims are contingent claims by co-liable parties for reimbursement or contribution. Mr. Davis notes that Section 502(e)(1)(B) of the U.S. Bankruptcy Code mandates disallowance of claims when: * the claimant is co-liable with the debtor on the claim; * the claim is for reimbursement or contribution; and * the claim is contingent as of the time of allowance or disallowance of the claim. In addition, the Debtors assert that many of the PRP Claims are barred by the contribution protection that the U.S. Government and several state governments have provided or will provide ASARCO under settlement agreements resolving environmental claims. Mr. Davis says that the U.S. Supreme Court is encouraging district courts to apply equitable apportionment principles under CERCLA to ensure that settling PRPs that have paid their fair share of liability may not be subject to additional contribution in a PRP action. For the reasons stated, the Debtors ask the Court to disallow the PRP Claims. A schedule of the Disallowed PRP Claims is available for free at http://researcharchives.com/t/s?2a5e The Debtors also ask the Court to enter a case management order that establishes proceedings, which require: (1) each PRP to file an initial disclosure by April 10, 2008, that provides these information: * all documents relating to the PRP's proof of claim; * the factual and legal basis for the PRP's claim; * the amount of costs to which the PRP alleges it is entitled, and the claimant's basis for asserting that that claim is not duplicative of the claims of federal and/or state governments; and * whether the PRP intends to assert secured, administrative or other priority for the PRP's claim and, if so, identification of the site and the basis for the secured or priority claim; and (2) mediation between each PRP and ASARCO prior to estimation or disallowance of the PRP claims. About ASARCO Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). The Debtors are currently asking the Court to extend their exclusive plan-filing period to June 10, 2008. (ASARCO Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: Wants Court to Approve St. Paul Insurance Settlement ---------------------------------------------------------------- ASARCO LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Texas to approve its insurance settlement with St. Paul Fire & Marine Insurance Company St. Paul and Seaboard Surety Company issued several surety bonds on behalf of ASARCO LLC, as principal, including: Bonds Purpose Amount ----- ------- ----------- Mission Bonds To bond certain of $11,654,896 ASARCO's obligations relating to its Mission Mine operations Flow Through Bonds To bond ASARCO's 12,357,861 obligations to various other entities Bond No. 386149 To bond ASARCO's 850,000 reclamation obligations at the Deming Mill Mine, Luna County, New Mexico Bond No. 408788 in To bond ASARCO's 501,163 favor of the Texas obligations to comply with Commission on permit requirements to Environmental Quality three injection wells Bond No. 400KA1234 in To bond ASARCO's 6,000,000 favor of Old Republic obligations under certain Insurance Company workers' compensation and employers' liability &nbs