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 25, 2008, Vol. 12, No. 98 Headlines 4S DEVELOPMENT: First State Wants Chapter 11 Case Converted AAMES MORTGAGE: Adverse Pool Performance Cues S&P's Rating Cuts ABSC CERTIFICATES: Fitch Lowers Ratings on $168.3 MM Certificates ACE SECURITIES: Monthly Losses Cue S&P's Rating Cuts on 38 Classes ACT 2005-RR: Fitch Cuts Rating on $165.6 Mil. Certs. to B From AAA ACTION IN MAILING: Case Summary & 20 Largest Unsecured Creditors AIRTRAN HOLDINGS: Posts $34.8 Million Net Loss in 2008 First Qtr. ALOHA AIRLINES: Court OKs Division Sale to Pacific Air for $2 Mil. AMBAC FINANCIAL: Posts $1.6 Billion Net Loss in First Quarter 2008 AMDL INC: KMJ Corbin Expresses Going Concern Doubt AMERIQUEST MORTGAGE: 21 Tranches Get Moody's Rating Downgrades AMERIQUEST MORTGAGE: S&P Pares Ratings on Two Classes to Low-Bs AMPEX CORP: Dec. 31 Balance Sheet Upside Down by $107.135 Million ANTHRACITE 2005-HY2: Fitch Chips Rating on $58 Mil. Notes to 'B' ASSOCIATED ESTATES: S&P Keeps 'B+' Rating; Changes Outlook to Pos. ATARI INC: Special Committee Hires Duff & Phelps as Fin. Advisor AUTO UNDERWRITERS: Clancy and Co Expresses Going Concern Doubt AXS ONE: Amper Politziner Expresses Going Concern Doubt AZRA COMMERCIAL: Case Summary & 20 Largest Unsecured Creditors BLUE STONE: Voluntary Chapter 11 Case Summary BLUE WATER: Case Conversion Not Beneficial to Creditors, Ford Says BOSTON HILL: Court Dismisses Re-filed Chapter 11 Petition BRIGHT HORIZONS: Moody's Puts 'Ba3' Rating on Proposed Senior Loan BUFFETS INC: Moody's Attaches 'Ba3' Rating on $85 Mil. Super Loan CENTEX HOME: Moody's Cuts Nine Tranches' Ratings on Delinquencies CFM U.S.: Committee Wants Sale Bidding Procedures Amended CHART INDUSTRIES: S&P Gives Positive Outlook; Holds 'B+' Rating CIT GROUP: Prices $1BB Offering of Common Stock & Preferred Shares CIT HOME: S&P's Rating on Class BF Notes Tumble to 'D' From 'CCC' COMFORCE CORP: Repurchases $6.4 Million of 12% Senior Notes CORTS TRUST: S&P Upgrades Rating on $27 Mil. Securities to 'BB+' CRITICAL PATH: Burr Pilger Expresses Going Concern Doubt CROWN MEDIA: December 31 Balance Sheet Upside-Down by $684 Million CSAB MORTGAGE: High Delinquencies Cue Moody's 35 Rating Downgrades CFSB TRUSTS: Moody's Cuts Ratings on 100 Tranches From 14 Deals CSMC TRUSTS: Moody's Downgrades 46 Tranches' Ratings From 10 Deals CST INDUSTRIES: S&P Retains 'B+' Rating on $35 Mil. Loan Add-on CT CDO: Fitch Confirms Low-B Ratings on Five Classes of Notes CUSTOM DESIGNED: Case Summary & 19 Largest Unsecured Creditors COVENANT WORSHIP: Case Summary & 18 Largest Unsecured Creditors DANA CORP: Seeks Dismissal of Asbestos Claimants Appeal re Plan DANA CORP: UAW Supports $2.5MM Success Fee to Potoc and Co. DANKA BUSINESS: Plans to Distribute $6.5 Million to Shareholders DAN RIVER: Gets Initial Approval to Access $30 Million Facility DIASTAR INC: Lender Asks Court for Temporary Restraining Order DIOMED HOLDINGS: Committee Wants Goulston & Storrs as Counsel DIOMED HOLDINGS: Seeks OK to Hire Choate Hall as Local Counsel DIOMED HOLDINGS: Various Patent Suits Cost $11.82MM in Five years EASTMAN KODAK: S&P Changes Outlook to Stable; Holds 'B+' Rating EMI GROUP: Restructuring Continues Despite Contractual Hurdles EPIC CYCLE: Case Summary & 20 Largest Unsecured Creditors EQUIFIRST LOAN: Moody's Downgrades Ratings on Nine Tranches FIRST NLC: Higher Delinquency Rates Cues Moody's 25 Rating Cuts FORD CREDIT: Fitch Gives 'BB' Rating on $31.5 Mil. Class D Notes FORD MOTOR: Contests Conversion of Blue Water's Case to Chapter 7 FORD MOTOR: Earns $100 Million in First Quarter of 2008 FORD MOTOR: Jaguar & Land Rover Buyer Gets Antitrust Approval FORTUNOFF: New Case Caption Reflects Name Change to FFJS FRONTIER AIRLINES: Gets Interim OK to Employ Epiq Bankruptcy FRONTIER AIRLINES: May File Schedules and Statements Until June 24 GENERAL MOTORS: Reports 2.25MM Global Car Sales in 1st Qtr. 2008 G-FORCE 2005-RR2: Fitch Slashes Ratings on Nine Classes to Low-Bs G-FORCE 2005-RR: Fitch Maintains Low-B Ratings on Six Classes GMAC LLC: Lends $468 Million to ResCap to Provide Liquidity GMAC LLC: Risks to Liquidity Cue Moody's Rating Downgrade to 'B2' GOLDMAN SACHS: S&P Confirms 'BB+' Rating on Class B Notes HARBORVIEW MORTGAGE: S&P Downgrades Ratings on 15 Cert. Classes HD PARTNERS: Sets April 30 Distribution Record Date HENRICKS JEWELERS: Gets Court's OK to Use Lender's Cash Collateral HERBST GAMING: Moody's Junks Ratings on No Forebearance Agreement HOOP HOLDINGS: Taps Traxi to Provide Crisis Management Services INDYMAC TRUSTS: 165 Tranches From 46 Deals Get Moody's Rating Cuts INTEREP NATIONAL: Files Chapter 11 Plan And Disclosure Statement INTERSTATE BAKERIES: Knox County Opposes Tax Liability Reduction JEFFERIES GROUP: Fitch Downgrades Subordinated Debt Rating to BB+ JER CRE: Fitch Maintains 'B' Rating on $10 Mil. Class G Notes JOHN REYNEN: Files for Bankruptcy to Prevent Bank Foreclosure JOHN REYNEN: Case Summary & 20 Largest Unsecured Creditors JOY DYEING: Case Summary & 20 Largest Unsecured Creditors KURLEMANN BUILDERS: Creditor Wants Chapter 7 Case Dismissed LEHMAN ABS: Moody's Cuts Ratings on 12 Tranches From RMBS Deal LEVITT AND SONS: Given Until May 12 to File Chapter 11 Plan LNR CDO: Fitch Pares Ratings on $27.4 Mil. Class G Notes to 'BB' MARTINO & CARD: Case Summary & 20 Largest Unsecured Creditors MASTR TRUSTS: S&P Gives 'D' Rating on Four Classes of 2006 Certs. MAYFAIR POMONA: Case Summary & Four Largest Unsecured Creditors MCCLATCHY COMPANY: Posts $993K Net Loss in Quarter ended March 30 MCCLATCHY CO: Revenue Decline Prompts S&P to Chip Rating to 'BB-' MOVIDA COMMUNICATIONS: Operations to Continue Under New Owner NATIONSTAR HOME: High Delinquencies Cue Moody's 29 Rating Cuts NOMURA TRUSTS: S&P Downgrades Ratings on Class M-3 to 'CCC' NON-INVASIVE MONITORING: Posts $528,609 Net Loss in Second Qtr. NOR-SKI & SPORTS: Case Summary & 19 Largest Unsecured Creditors NOVASTAR MORTGAGE: 67 Tranches Get Moody's Rating Downgrades NT HOLDING: March 31 Balance Sheet Upside-Down by $200,780 ONE CARTER: Right, Title and Membership Interest for Auction May 7 PRIMEDIA INC: Appoints Charles Stubbs as President and CEO RANDY JONES: Voluntary Chapter 11 Case Summary RESIDENTIAL CAPITAL: Borrows $465MM from GMAC LLC to Add Liquidity RESIDENTIAL CAPITAL: Directors' Stepdown Cues Moody's Junk Rating RESTORE MEDICAL: Losses Prompt KPMG Expresses Going Concern Doubt REYNEN & BARDIS: Co-Founder Files for Personal Bankruptcy RYLAND GROUP: Posts $29.3 Million Net Loss in 2007 First Quarter SAIL TRUSTS: Moody's Cuts Ratings on 121 Tranches From 15 Deals SASCO TRUSTS: 226 Tranches Get Moody's Rating Cuts on Delinquency SBARRO INC: Moody's Keeps Low-B Ratings; Gives Negative Outlook SEA CONTAINERS: Fails to File Plan by April 15 Deadline SEQUIAM CORP: bioMETRX Starts Integration of Assets and Personnel SIX FLAGS: Fitch Keeps 'CCC' Rating on Senior Unsecured Notes STONEHOUSE SPE: Right, Title & Membership Interest for Sale May 7 TOPAZ POWER: Moody's Puts Ba3 Initial Rating on $740 Mil. Facility TOUSA INC: DIP Termination Date Extended Until May 8 UNITEDHEALTH GROUP: Earns $994 Million in Quarter ended March 31 UNIVERSAL HOSPITAL: Posts $64MM Net Loss in Year ended Dec. 31 VALLEY HEALTH: Fitch Downgrades Ratings on $79.5 Mil. Bonds VICTOR PLASTICS: Completes Sale to River Bend for $17.4 Million XM SATELLITE: Dec. 31 Balance Sheet Upside-Down by $984 Million * S&P Downgrades Ratings on Six Classes From Five RMBS Deals * Focus Management Selects Edmund King as Senior Consultant * Ernst & Young Integrates Worldwide Practices Under EMEIA Area * Southwest Healthcare Transactions Conference Set May 30 * BOOK REVIEW: Financial Planning for High Net Worth Individual ********* 4S DEVELOPMENT: First State Wants Chapter 11 Case Converted ----------------------------------------------------------- First State Bank of Altus, a creditor and party-in-interest, asks the Hon. A. Bruce Campbell of the United States Bankruptcy Court for the District of Colorado to dismiss 4S Development, Ltd., LLP's Chapter 11 case because it was filed in bad faith. First State Bank holds a promissory note of $9 million dated April 26, 2006, wherein $5 million was advanced to the Debtor. First State Bank declared on Aug. 16, 2007, that the note is in default after the Debtor failed to make a quarterly payment of $114,167. The note is secured by a deed of trust, which encumbers roughly 860 acres of unused property in Routt County, Colorado. The property is the Debtor's principal single substantial asset. Representing First State Bank, Virginia M. Dalton, Esq., at Pearlman & Dalton, P.C., in Denver, Colorado, says the Debtor filed its Chapter 11 case without plans to reorganize its financial affairs. The Debtor simply wanted to stop First State Bank's attempt to foreclose on the Debtor's property, Ms. Dalton says. First State Bank alleges that the Debtor is solvent by at least $70 million, with total debts of $5.6 million and total assets of $75.8 million pursuant to the Debtor's schedules and statements filed with the Court. About 4S Development Headquartered in Hayden, Colorado, 4S Development Ltd, LLP acquires and develops real estate. The company filed for Chapter 11 protection on Feb. 26, 2008 (Bankr.D.Co. Case No. 08-12162). Philipp C. Theune, Esq. at Theune Law Offices, P.C. represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors it listed total assets of $75,825,498 and total liabilities of $5,684,487. AAMES MORTGAGE: Adverse Pool Performance Cues S&P's Rating Cuts --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class B, M-1, and M-2 mortgage pass-through certificates from Aames Mortgage Trust 2002-1. Concurrently, S&P affirmed its ratings on the class A-3 and A-4 certificates from this transaction. The downgrades reflect continuous adverse pool performance. As of the March 2008 remittance period, this transaction had experienced cumulative losses of $7.013 million, or 4.01% of the original pool balance. Losses have outpaced excess interest in 10 of the past 12 months. Current overcollateralization is $807,169, 5.2x lower than the $4.20 million of loans that are seriously delinquent (90- plus days, foreclosures, and REOs). The affirmations reflect stable collateral performance as of the March 2008 remittance period. Current and projected credit support percentages are sufficient to support the ratings at their current levels. O/C, excess spread, and subordination provide credit enhancement for the classes in this transaction, except for the most subordinate class, which has no subordination. The collateral for this series consists of 30-year, fixed- or adjustable-rate subprime mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered Aames Mortgage Trust 2002-1 Rating ------ Class To From ----- -- ---- M-1 AA AA+ M-2 BB BBB B CCC B Ratings Affirmed Aames Mortgage Trust 2002-1 Class Rating ----- ------ A-3, A-4 AAA ABSC CERTIFICATES: Fitch Lowers Ratings on $168.3 MM Certificates ----------------------------------------------------------------- Fitch Ratings has taken these rating actions on Asset Backed Securities Corporation asset-backed pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $1.4 billion and downgrades total $168.3 million. Additionally, $8.8 million was placed on Rating Watch Negative. ABSC 2003-HE1 -- $29.8 million class M-2 affirmed at 'A'; -- $21.1 million class M-3 downgraded to 'CC/DR3' from 'B'; -- $0.7 million class M-4 revised to 'C/DR6' from C/DR5'; Deal Summary -- Originators: New Century (100%) -- 60+ day Delinquency: 27.06% -- Realized Losses to date (% of Original Balance): 2.42% ABSC 2003-HE2 Total -- $33.2 million class M-1 affirmed at 'AA'; -- $5.0 million class M-2 affirmed at 'A'; -- $1.5 million class M-3 affirmed at 'A-'; -- $2.4 million class M-4 downgraded to 'B' from 'BBB'; -- $1.4 million class M-5 downgraded to 'CCC/DR2' from 'BB'; Deal Summary -- Originators: New Century (100%) -- 60+ day Delinquency: 18.81% -- Realized Losses to date (% of Original Balance): 1.56% ABSC 2003-HE3 Total -- $34.5 million class M1 affirmed at 'AA'; -- $5.4 million class M2 downgraded to 'BBB' from 'A'; -- $1.8 million class M3 downgraded to 'BB+' from 'A-'; -- $2.6 million class M4 downgraded to 'B' from 'BB+'; -- $1.9 million class M5 downgraded to 'C/DR6' from 'B'; Deal Summary -- Originators: New Century (100%) -- 60+ day Delinquency: 30.45% -- Realized Losses to date (% of Original Balance): 1.51% ABSC 2003-HE4 TOTAL -- $57.8 million class M-1 affirmed at 'AA'; -- $21.0 million class M-2 affirmed at 'A'; -- $4.4 million class M-3 affirmed at 'A-'; -- $4.0 million class M-4 affirmed at 'BBB'; -- $3.9 million class M5-A downgraded to 'CC/DR2' from 'B'; Deal Summary -- Originators: New Century (100%) -- 60+ day Delinquency: 21.02% -- Realized Losses to date (% of Original Balance): 1.39% ABSC 2003-HE5 TOTAL -- $32.6 million class M1 affirmed at 'AA'; -- $10.9 million class M2 affirmed at 'A'; -- $2.1 million class M3 affirmed at 'A-'; -- $2.4 million class M4 downgraded to 'B' from 'BBB'; -- $2.3 million class M5 downgraded to 'CC/DR3' from 'B'; Deal Summary -- Originators: New Century (85%), ABFS (15%) -- 60+ day Delinquency: 18.25% -- Realized Losses to date (% of Original Balance): 1.73% ABSC 2003-HE6 TOTAL -- Notional Amount class A-IO affirmed at 'AAA'; -- $0.1 million class A1 affirmed at 'AAA'; -- $3.9 million class A2 affirmed at 'AAA'; -- $9.0 million class A3-B affirmed at 'AAA'; -- $49.3 million class M1 affirmed at 'AA'; -- $33.0 million class M2 affirmed at 'A'; -- $4.1 million class M3 affirmed at 'A-'; -- $2.9 million class M4 affirmed at 'BBB+'; -- $2.9 million class M5 rated 'BBB', placed on Rating Watch Negative; -- $2.9 million class M6 downgraded to 'CCC/DR2' from 'BBB-'; Deal Summary -- Originators: Option One (100%) -- 60+ day Delinquency: 17.12% -- Realized Losses to date (% of Original Balance): 1.13% ABSC Home Equity Loan Trust 2003-HE7 TOTAL -- $42.5 million class M1 affirmed at 'AA'; -- $37.5 million class M2 affirmed at 'A'; -- $8.2 million class M3 affirmed at 'A-'; -- $3.4 million class M4 affirmed at 'BBB+'; -- $2.7 million class M5 affirmed at 'BBB'; -- $2.7 million class M6 downgraded to 'B' from 'BBB-'; Deal Summary -- Originators: New Century (100%) -- 60+ day Delinquency: 10.86% -- Realized Losses to date (% of Original Balance): 1.19% ABSC Home Equity Loan Trust 2004-HE1 TOTAL -- $43.2 million class M1 affirmed at 'AA'; -- $18.8 million class M2 affirmed at 'A'; -- $2.2 million class M3 affirmed at 'A-'; -- $2.2 million class M4 affirmed at 'BBB+'; -- $2.3 million class M5 affirmed at 'BBB'; -- $2.2 million class M6 affirmed at 'BBB-'; Deal Summary -- Originators: New Century (100%) -- 60+ day Delinquency: 14.34% -- Realized Losses to date (% of Original Balance): 1.19% ABSC Home Equity Loan Trust, Series 2004-HE2 TOTAL -- $56.2 million class M1 affirmed at 'AA'; -- $39.9 million class M2 affirmed at 'A'; -- $3.6 million class M3 affirmed at 'A-'; -- $3.8 million class M4 affirmed at 'BBB+'; -- $2.0 million class M5A affirmed at 'BBB'; -- $1.2 million class M5B affirmed at 'BBB'; -- $3.5 million class M6 downgraded to 'B' from 'BBB-'; Deal Summary -- Originators: New Century (100%) -- 60+ day Delinquency: 18.19% -- Realized Losses to date (% of Original Balance): 1.43% Asset Backed Securities Corp. 2004-HE3 Total Pool -- $50.1 million class M1 affirmed at 'AA'; -- $40.3 million class M2 affirmed at 'A'; -- $4.8 million class M3 affirmed at 'A'; -- $2.8 million class M4 affirmed at 'A-'; -- $3.5 million class M5 affirmed at 'BB+'; -- $2.8 million class M6 affirmed at 'B'; -- $3.2 million class M7 downgraded to 'C/DR5' from 'CC/DR3'; Deal Summary -- Originators: Option One (100%) -- 60+ day Delinquency: 19.06% -- Realized Losses to date (% of Original Balance): 1.24% Asset Backed Securities Corp. Series 2004-HE5 TOTAL POOL -- $3.6 million class A-1 affirmed at 'AAA'; -- $0.4 million class A-1A affirmed at 'AAA'; -- $61.4 million class M-1 affirmed at 'AA'; -- $45.9 million class M-2 affirmed at 'A'; -- $13.5 million class M-3 affirmed at 'A'; -- $10.6 million class M-4 downgraded to 'BBB' from 'A-'; -- $7.9 million class M-5 downgraded to 'BBB-' from 'BBB+'; -- $3.0 million class M-6 downgraded to 'BB' from 'BBB'; -- $4.0 million class M-7 downgraded to 'B' from 'BB+'; Deal Summary -- Originators: New Century (100%) -- 60+ day Delinquency: 18.47% -- Realized Losses to date (% of Original Balance): 1.28% Asset Backed Securities Corporation 2004-HE6 TOTAL POOL -- $18.8 million class A-1 affirmed at 'AAA'; -- $26.3 million class A-2 affirmed at 'AAA'; -- $52.0 million class M-1 affirmed at 'AA'; -- $41.4 million class M-2 affirmed at 'A'; -- $11.5 million class M-3 downgraded to 'BBB' from 'A-'; -- $8.8 million class M-4 downgraded to 'BB+' from 'BBB+'; -- $7.9 million class M-5 downgraded to 'BB' from 'BBB'; -- $7.8 million class M-6 downgraded to 'B' from 'BB+'; -- $4.1 million class M-7 downgraded to 'B' from 'BB-'; Deal Summary -- Originators: New Century (85%), Argent (15%) -- 60+ day Delinquency: 29.87% -- Realized Losses to date (% of Original Balance): 2.33% Asset Backed Securities Corp. 2004-HE7 Total Pool -- $5.6 million class A1 affirmed at 'AAA'; -- $0.1 million class A2 affirmed at 'AAA'; -- $0.1 million class A4 affirmed at 'AAA'; -- $91.7 million class M1 affirmed at 'AA'; -- $52.0 million class M2 affirmed at 'A+'; -- $21.4 million class M3 affirmed at 'A'; -- $19.1 million class M4 affirmed at 'A'; -- $16.1 million class M5 affirmed at 'A-'; -- $15.3 million class M6 affirmed at 'BBB+'; -- $11.5 million class M7 affirmed at 'BBB'; -- $14.5 million class M8 affirmed at 'BBB-'; -- $5.9 million class M9 rated 'B', placed on Rating Watch Negative; Deal Summary -- Originators: New Century (67.69%), WMC (32.31%) -- 60+ day Delinquency: 19.23% -- Realized Losses to date (% of Original Balance): 1.35% Asset Backed Securities Corp. 2004-HE8 TOTAL -- $52.1 million class M-1 affirmed at 'AA+'; -- $55.5 million class M-2 affirmed at 'A'; -- $17.4 million class M-3 downgraded to 'BBB-' from 'A-'; -- $13.8 million class M-4 downgraded to 'BB' from 'BBB'; -- $5.0 million class M-5 downgraded to 'B+' from 'BB'; -- $3.3 million class M-6 downgraded to 'B' from 'BB-'; -- $3.4 million class M-7 downgraded to 'C/DR6' from 'B+'; Deal Summary -- Originators: New Century (100%) -- 60+ day Delinquency: 36.45% -- Realized Losses to date (% of Original Balance): 1.15% ABSC Home Equity Loan Trust, Series 2004-HE10 -- $10.5 million class M-1 affirmed at 'AA+'; -- $11.4 million class M-2 affirmed at 'AA'; -- $12.6 million class M-3 affirmed at 'A'; -- $6.1 million class M-4 affirmed at 'BBB+'; -- $2.3 million class M-5 affirmed at 'BBB'; -- $2.8 million class M-6 affirmed at 'BBB-'; -- $2.3 million class M-7 downgraded to 'B' from 'BB+'; Deal Summary -- 60+ day Delinquency: 19.07% -- Realized Losses to date (% of Original Balance): 1.61% ACE SECURITIES: Monthly Losses Cue S&P's Rating Cuts on 38 Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 38 classes of mortgage pass-through certificates issued by seven Ace Securities Corp. Home Equity Loan Trust and Specialty Underwriting and Residential Finance Trust series. Concurrently, S&P placed its ratings on four classes on CreditWatch with negative implications and affirmed its ratings on all remaining classes from these seven transactions. The lowered ratings reflect adverse collateral performance that has caused monthly losses to exceed monthly excess interest. As of the March 2008 remittance period, cumulative losses, as a percentage of the original pool balances, ranged from 1.29% (Ace Securities Corp. Home Equity Loan Trust Series 2004-HE2) to 5.43% (Ace Securities Corp. Home Equity Loan Trust Series 2004-HE1). Overcollateralization has been reduced to zero in all seven transactions. The delinquency pipeline in these transactions strongly suggests that monthly losses will continue to exceed excess interest, thereby further compromising credit support. Severe delinquencies (90-plus days, foreclosures, and REOs) for the downgraded transactions, as a percentage of the current pool balances, ranged from 19.64% (Specialty Underwriting and Residential Finance Trust Series 2005-AB1) to 42.26% (Ace Securities Corp. Home Equity Loan Trust Series 2005-HE2). These deals are seasoned between 30 months (Ace Securities Corp. Home Equity Trust Series 2005-HE6 and Specialty Underwriting and Residential Finance Trust Series 2005- BC3) and 48 months (Ace Securities Corp. Home Equity Loan Trust Series 2004-HE1). S&P placed its ratings on four classes from ACE Securities Corp. Home Equity Loan Trust Series 2005-HE6 on CreditWatch negative. While each of these certificate classes currently lacks what S&P believes to be a sufficient amount of credit enhancement relative to projected losses, S&P will not take further rating actions until S&P has completed additional analysis on each of the affected classes. S&P expects to compare the date of projected defaults with the date of payment in full and evaluate the relationships between projected credit support and projected losses throughout the remaining life of the certificates. S&P affirmed its ratings on the remaining classes from these seven series based on loss coverage percentages that are sufficient to maintain the current ratings despite the negative trends in the underlying collateral for many of the deals. Subordination and excess spread provide credit support for all of the affected deals. The collateral for these transactions primarily consists of subprime, adjustable- and fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered Ace Securities Corp. Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-HE3 M-3 A AA- 2005-HE3 M-4 BBB A+ 2005-HE3 M-5 BBB- A 2005-HE3 M-6 BB- BBB+ 2005-HE3 M-7 B- BB+ 2005-HE3 M-8 CCC BB 2005-HE3 M-9 CCC BB- 2005-HE3 B-1 CCC B 2005-HE3 B-2 D CCC 2004-HE1 M-2 A AA 2004-HE1 M-3 BBB- A 2004-HE1 M-4 B BBB 2004-HE1 M-5 CCC B 2004-HE1 M-6 D CCC 2004-HE2 M-3 A A+ 2004-HE2 M-4 BBB A 2004-HE2 M-5 BB A 2004-HE2 M-6 B A- 2004-HE2 B-1 CCC B 2004-HE2 B-2 D CCC 2005-HE2 M-6 BBB- A 2005-HE2 M-10 CCC B- 2005-HE2 B-2 D CCC 2005-HE6 M-5 BBB- BBB+ 2005-HE6 M-6 BB BB+ 2005-HE6 M-8 B BB- 2005-HE6 M-9 B- B 2005-HE6 M-10 CCC B- 2005-HE6 B-2 D CCC Specialty Underwriting and Residential Finance Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-AB1 M-4 BBB A- 2005-AB1 B-1 BB BBB+ 2005-AB1 B-2 CCC BB- 2005-AB1 B-3 D CCC 2005-BC3 M-5 BBB A+ 2005-BC3 M-6 BBB- A 2005-BC3 M-7 BB BBB 2005-BC3 B-2 B- B 2005-BC3 B-4 D CCC Ratings Placed on CreditWatch Negative Ace Securities Corp. Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-HE6 M-1 AA+/Watch Neg AA+ 2005-HE6 M-2 AA/Watch Neg AA 2005-HE6 M-3 AA/Watch Neg AA 2005-HE6 M-4 AA-/Watch Neg AA- Ratings Affirmed Ace Securities Corp. Home Equity Loan Trust Series Class Rating ------ ----- ------ 2005-HE3 A-1A AAA 2005-HE3 A-1B AAA 2005-HE3 A-2C AAA 2005-HE3 M-1 AA+ 2005-HE3 M-2 AA 2004-HE1 M-1 AAA 2004-HE2 M-1 AA+ 2004-HE2 M-2 AA 2005-HE2 M-1 AA+ 2005-HE2 M-2 AA 2005-HE2 M-3 AA- 2005-HE2 M-4 A+ 2005-HE2 M-5 A+ 2005-HE2 M-7 BB 2005-HE2 M-8 BB- 2005-HE2 M-9 B 2005-HE2 B-1 CCC 2005-HE6 A-1 AAA 2005-HE6 A-2B AAA 2005-HE6 A-2C AAA 2005-HE6 A-2D AAA 2005-HE6 M-7 BB 2005-HE6 B-1 CCC 2005-HE6 M-11 CCC Specialty Underwriting and Residential Finance Trust Series Class Rating ------ ----- ------ 2005-AB1 A-1B AAA 2005-AB1 A-1C AAA 2005-AB1 M-1 AA+ 2005-AB1 M-2 AA 2005-AB1 M-3 A 2005-BC3 A-1A AAA 2005-BC3 A-2B AAA 2005-BC3 A-2C AAA 2005-BC3 M-1 AAA 2005-BC3 M-2 AA+ 2005-BC3 M-3 AA 2005-BC3 M-4 AA- 2005-BC3 B-1 B 2005-BC3 B-3 CCC ACT 2005-RR: Fitch Cuts Rating on $165.6 Mil. Certs. to B From AAA ------------------------------------------------------------------ Fitch Ratings downgraded three classes of ACT 2005-RR Depositor Corp. series 2005-RR, commercial mortgage-backed securities pass- through certificates: -- $225 million class A-1FL to 'BBB' from 'AAA'; -- $118 million class A-2 to 'BB' from 'AAA'; -- $165.6 million class A-3 to 'B' from 'AAA'. Additionally, Fitch has removed all downgraded classes from Rating Watch Negative, where they were originally placed on Jan. 16, 2008 and Dec. 12, 2007. The $294.7 million Retained Certificates are not rated by Fitch. ACT 2005-RR is backed by commercial mortgage-backed securities B- pieces and closed Nov. 9, 2005. CMBS B-piece resecuritizations (also referred to as first loss CRE CDOs ReREMICs) are CRE CDOs and ReREMIC transactions that include the most junior bonds of CMBS transactions. CWCapital Investment LLC selected the initial collateral and serves as the collateral administrator. The collateral for this ReREMIC consists of high-yielding junior bonds of CMBS transactions. The underlying assets of the CMBS bonds, by their nature, face similar exposures to losses from any downturn in the commercial real estate market as well as refinancing risks at the assets' maturity dates. As a mitigant, however, the underlying CMBS transactions do have significant geographic, property type and tenant diversity. While Fitch continues to believe investment grade CMBS will perform well even in a heightened stress environment, the risks facing first loss and junior rated bonds within the capital structure of CMBS transactions have increased with expectations of a rise in commercial real estate defaults from current low levels. Even a relatively modest increase in CRE losses could be material for these CMBS B-piece resecuritizations. In reviewing CMBS ReREMICs, Fitch has targeted expected losses in different rating stresses based on the quality of the underlying CMBS collateral. The overall expected losses reflect the single sector exposure, the concentrated nature of these portfolios, and the low expected recoveries upon bond default, especially for more junior and thinner classes of CMBS tranches. Additional ratings considerations include seasoning of underlying collateral, obligor diversity, actual bond performance and projected losses. The specific credit characteristics that are factored into Fitch's rating review are discussed below. ACT 2005-RR is collateralized by all or a portion of 135 classes of fixed-rate CMBS in 42 separate underlying transactions. All performance and collateral information is based on the March 24, 2008 trustee report and discussions with the collateral administrator. The pool's obligor diversity is considered above- average for CMBS B-piece resecuritizations, and the vintage distribution of the CMBS collateral ranges from 1998 to 2004 (an average of 5.9 years of seasoning). Approximately 63.1% of the collateral is currently rated below 'B-' or not rated, and, therefore, is more susceptible to losses in the near-term. This concentration is one of the highest of all CMBS B-piece resecuritizations rated by Fitch. Overall, a significant portion of the collateral is below investment grade with only 1.8% investment grade. ACT 2005-RR holds 3.2% in the 'BB' category and 31.8% in the 'B' category. The collateral has realized $250.8 million in losses to date, which represents 23.8% of the original collateral. Based on the original below 'B-' balance of $723.2 million, this loss rate equates to a 34.7% loss rate on the below 'B-' collateral, which is higher than other CMBS B-piece resecuritizations rated by Fitch. Additional losses are projected with $277.1 million of the underlying collateral currently 60 days or more delinquent, according to the current trustee report. ACTION IN MAILING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Action in Mailing, Inc. 2511 Midpark Rd. Montgomery, AL 36109 Tel: (334) 286-4667 Bankruptcy Case No.: 08-30664 Type of Business: The Debtor is a full service direct mail lettershop and presort service bureau. See http://www.actioninmailing.com/ Chapter 11 Petition Date: April 18, 2008 Court: Middle District of Alabama (Montgomery) Judge: Dwight H. Williams Jr. Debtor's Counsel: Max A. Moseley, Esq. Email: mam@jbpp.com Johnston Barton Proctor & Rose, LLP 569 Brookwood Village, Ste. 901 Birmingham, AL 35209 Tel: (205) 458-9400 Fax: (205) 458-9500 http://www.jbpp.com/ Estimated Assets: $500,000 to $1 million Estimated Debts: $1 million to $10 million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Industrial Partners $100,701 P.O. Box 1668 Montgomery, AL 36102 Eastman Kodak Co. $50,472 P.O. Box 640350 Pittsburgh, PA 15264-0350 Kelly Temporary Services $50,053 P.O. Box 530437 Atlanta, GA 30353-0437 American Express $36,689 Bell & Howell $27,667 Travelers $26,761 UPS $26,511 The Quantre Group $23,296 Bell & Howell Co. $11,480 Pat Parvin $11,206 Virtual Systems $10,000 Buskro USA, Ltd. $9,964 Dell Account Credit Plan $9,512 Alabama Power $8,887 Ace Expediters $6,250 Wilson Price Barranco $5,825 Eagle Business Systems $5,435 Ryder Transportation Services $5,119 ABS Business System of $4,971 Montgomery Bellsouth Advertising $4,590 AIRTRAN HOLDINGS: Posts $34.8 Million Net Loss in 2008 First Qtr. ----------------------------------------------------------------- AirTran Holdings Inc., the parent company of AirTran Airways Inc., announced Tuesday its financial results for the first quarter ended March 31, 2008. The company reported a net loss of $34.8 million for the first quarter. During the same quarter in 2007, AirTran reported net income of $2.2 million. This quarter's loss is attributable to the effects of record high fuel costs. First quarter traffic rose by 19.2% on a 10.8% increase in capacity, resulting in a first quarter load factor of 75.3%, a 5.2 point increase over 2007. Revenues for the first quarter grew 18.3% to $596.4 million, and passenger unit revenue increased 6.9% to $0.0982, compared with revenues of $478.6 million, and passenger unit revenue of $0.0919 during the first quarter of 2007. The average price per gallon of fuel increased 49.3% to $3.00 in the first quarter compared to $2.01 in the first quarter of 2007. Total fuel expense was $268 million, up $102 million from the prior year. During the first quarter, AirTran realized $4.1 million of hedging gains which reduced fuel expense. The quarter also includes non-operating expense of $5.2 million pertaining to unrealized net losses on certain fuel related derivative financial instruments. At quarter end, the estimated net asset fair value of AirTran's fuel related derivative financial instruments was $17.3 million, including unrecognized gains of $13 million. Going forward the company has increased its fuel hedge positions to cover approximately 50% of its fuel needs for the remainder of the year. "Despite record revenues, record high fuel costs remain a tremendous challenge for all airlines," said Bob Fornaro, AirTran Airways' president and chief executive officer. "We remain committed to serving our customers, reducing costs and profitably managing our company going forward. We are proud that AirTran Airways Crew Members have maintained our focus on a high operational and service standard while achieving the number one ranking in the 2008 Airline Quality Rating report. By focusing on what we do and doing it better than anyone else, AirTran Airways will continue to be well positioned for the future." "Advanced bookings for the summer look very strong, however, we are nonetheless concerned with the continued rise in fuel prices, particularly towards the end of this year" said Kevin Healy, senior vice president of marketing and planning. "Given the current environment we will execute on a plan that will result in the suspension of our growth plans beginning in September 2008 and continuing at least through 2009. We will remain focused on positioning ourselves to be successful in a high fuel environment by reducing costs and improving efficiencies. "At the same time we will continue our focus on increasing unit revenues, introducing more ancillary revenue programs, such as the optional advance seat assignment fees, and maximizing the revenue production associated with our A+ Rewards frequent flier program." Recent highlights of AirTran Airways' accomplishments in the first quarter and to date include: -- Added four new Boeing 737-700 aircraft, which increased our 737 fleet to 54 aircraft and total fleet to 141 aircraft. -- Initiated service to San Juan, Puerto Rico, on March 5. -- Announced the commencement of service to Burlington, Vt., on May 21, and San Antonio, Texas, on June 11. -- Announced additional nonstop flights between Milwaukee, Wis., and Washington D.C., effective in May. -- Announced expansion of Baltimore/Washington service with the addition of new nonstop flights to Los Angeles, Calif. and additional flights to Seattle, Wash. and Portland, Maine. Liquidity and Capital Resources At March 31, 2008, the company had total cash, cash equivalents, and short-term investments of $349.7 million, which is an increase of $31.7 million compared to Dec. 31, 2007. As of March 31, 2008, the company also had $28.4 million of restricted cash and $8.2 million of long-term investments. Total long-term debt and capital leases, including current maturities were approximately $1.14 billion of which $1.01 billion was aircraft related secured indebtedness. Operating activities during the first quarter of 2008 provided $69.3 million of cash flow compared to $99.0 million during the analogous period in 2007. The net loss for the first quarter of 2008 negatively impacted cash provided by operating activities. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed $2.198 billion in total assets, $1.783 billion in total liabilities, and $415 million in total stockholders' equity. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $521 million in total current assets available to pay $619 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2b11 About AirTran Holdings Headquartered in Orlando Florida, AirTran Holdings Inc. (NYSE: AAI) -- http://www.airtran.com/-- a Fortune 1000 company, is the parent company of AirTran Airways Inc., which offers more than 700 daily flights to 58 U.S. destinations. * * * To date, AirTran Holdings Inc. carries Moody's Investors Service 'B3' long-term corporate family and 'Caa2' senior unsecured debt ratings. Outlook is Stable. ALOHA AIRLINES: Court OKs Division Sale to Pacific Air for $2 Mil. ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Hawaii approved the sale of Aloha Airlines Inc.'s contract services operations to Los Angeles-based Pacific Air Cargo, various reports say. Early this week, Pacific Air won the bid for the division by putting $2 million on the table, topping Saltchuk Resources Inc.'s bid, relates the Star Bulletin. The Aloha unit is in charge of, among others, the Debtor's customer service, baggage handling, and ticketing services, The Honolulu Advertiser says, citing sources familiar with the bidding event. The division has around 1,000 workers employed. According to the Los Angeles Business Journal, Aloha CEO David Banmiller was "gratified" in that the bid potentially preserves the jobs of the division's workers. "We're excited about the prospect of this acquisition as it allows Pacific Air Cargo to expand the range of its air transportation services in Hawaii," the LA Journal quotes Pacific Air CEO Beti Ward as saying. Pacific Air came out as the top bidder in an auction held at the San Francisco law offices of Bingham McCutchen LLP, relates the Star Bulletin. Representatives for Saltchuk Resources walked away from the auction after its bid had been topped. 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. AMBAC FINANCIAL: Posts $1.6 Billion Net Loss in First Quarter 2008 ------------------------------------------------------------------ Ambac Financial Group, Inc. disclosed a first quarter 2008 net loss of $1.6 billion. This compares to first quarter 2007 net income of $213.3 million. The first-quarter result was primarily affected by non-cash, mark-to-market losses on credit derivative exposures amounting to $1.7 billion in the first quarter 2008 driven by the continued disruption in the global credit markets impacting the fair value of Ambac's derivatives exposures during the quarter. The decrease was also caused in part by the current quarter's loss provision on Ambac's financial guarantee direct exposures to mortgage-related securities which amounted to $1.0 billion, as well as by other than temporary impairment charges on certain investment securities within the financial services investment portfolio. Shares Tumble 43% The Wall Street Journal reports that the release of Ambac's first quarter financials, which disclosed its $1.6 billion loss, spurred Ambac's shares to drop 43% to $3.46 on Wednesday. Investors are now concerned on the company's AAA credit rating. Mark-to-Market Loss The $1.7 billion first quarter 2008 mark-to-market loss on credit derivative exposures includes estimated credit impairment of $940.4 million related to certain collateralized debt obligations of asset-backed securities backed primarily by residential mortgage-backed securities. An estimate for credit impairment has been established because it is management's expectation that Ambac will have to make claim payments on these exposures in the future. Operating earnings2 in the first quarter 2008 includes the impact of the estimated $940.4 million credit impairment. "The housing market crisis continues to disrupt the global credit markets and our credit derivatives and direct mortgage portfolios were severely impacted once again," Michael A. Callen, Chairman and interim Chief Executive Officer, said. "While we realize that these are disappointing credit results, we continue to believe that the capital raise and strategic business actions taken during the quarter will enable us to get beyond this credit market. The capital that we raised during the quarter in the midst of a very difficult market plus capital generated from the reduction in net par exposure helped bring our claims-paying resources to approximately $16.0 billion as of March 31, 2008. We currently exceed S&P's AAA target level of capital by a comfortable margin and we expect to meet our goal of exceeding Moody's Aaa target level of capital in the second quarter. Importantly, we generated positive operating cash flow during the quarter." "Our team of professionals is working hard on restoring market faith in the Ambac brand and we have recently started to see some business come our way in the municipal markets," Mr. Callen continued. "We feel strongly that our highly qualified professionals worldwide, our significant size and scale, and our expertise in select market sectors will result in new business opportunities." As previously reported, Ambac has written very little business since late 2007 as fixed income investors awaited the results of rating agency reviews and resultant actions. In the U.S. municipal market issuance was down 22% quarter on quarter. Market penetration declined from approximately 52% a year ago to approximately 27% in the current quarter. Subsequent to Ambac's successful $1.5 billion capital raise in early March, Ambac's ratings remain on "negative outlook" and issuers seeking insurance have thus far opted to insure with competitors with stable triple- A ratings. During the first quarter 2008, Ambac suspended underwriting all structured finance business for six months in order to accumulate capital. Global infrastructure, private finance initiative transactions and privatization transactions which finance essential infrastructure are not considered structured finance and are therefore not subject to the six month suspension of underwriting. Also, in the student loan sector, transactions issued by state and local government agencies and nonprofit issuers are not subject to the six month suspension of underwriting. The structured finance business written during the quarter relates to transactions that closed and transactions to which Ambac had committed prior to the announcement of suspension of underwriting. During the first quarter 2008, Ambac disclosed that it would discontinue writing new Financial Services business as part of its capital preservation strategy. The interest rate swap and investment agreement businesses will be run off. In the process of doing so, we expect to execute hedging transactions to mitigate risks in the respective books of business. Such hedging transactions may include execution of new investment agreement transactions whereby the proceeds of such new transactions would be invested in assets selected to improve duration matching of the investment agreement business assets and liabilities or to improve the cash flow profile of the portfolio. Balance Sheet Total assets as of March 31, 2008 were $24.93 billion, up 6% from total assets of $23.57 billion at December 31, 2007. The increase was primarily driven by cash generated from the capital raise in March and from an increase in the deferred tax asset, partially offset by the increase in net unrealized losses in the investment portfolio. The increased net unrealized losses are primarily due to credit spread widening in highly rated asset-backed securities within the investment agreement investment portfolio. As of March 31, 2008, stockholders' equity was $1.30 billion, a 43% decrease from year-end 2007 stockholders' equity of $2.28 billion. The decrease was primarily the result of the net loss reported for the period and the increase in net unrealized losses within the investment agreement investment portfolio, partially offset by the capital raise in March 2008. Annual Meeting of Stockholders The Board of Directors set the 2008 Annual Meeting of Stockholders for Tuesday, June 3, 2008, at 11:30 a.m. in New York City. The record date for determining stockholders entitled to notice of, and to vote at, the annual meeting was the close of business, April 7, 2008. About Ambac Financial Based in New York City, Ambac Financial Group, Inc. is a holding company that provides financial guarantees and financial services to clients in both the public and private sectors around the world through its principal operating subsidiary, Ambac Assurance Corporation. As an alternative to financial guarantee insurance credit protection is provided by Ambac Credit Products, a subsidiary of Ambac Assurance, in credit derivative format. * * * As reported in the Troubled Company Reporter on March 7, 2008, Moody's Investors Service said in a news statement that Ambac Financial Group Inc., if successful with its equity offering of $1.5 billion, will likely retain its "Aaa" rating. Moody's said that it will evaluate Ambac's ability to raise capital at reasonable terms as an indication of the company's financial flexibility and overall level of support from investors. In Moody's view, Ambac's new equity and equity linked capital through a public offering represents an important component of its overall plan to strengthen the credit profile of its financial guaranty insurance subsidiary, Ambac Assurance Corporation. On Jan. 18, Fitch Ratings downgraded Ambac to double-A after the insurer put off plans to raise equity capital. Moody's, the TCR said Jan. 17, 2008, placed the Aaa insurance financial strength ratings of Ambac Assurance Corporation and Ambac Assurance UK Limited on review for possible downgrade. In the same rating action, Moody's also placed the ratings of the holding company, Ambac Financial Group, Inc. (senior debt at Aa2), and related financing trusts on review for possible downgrade. Moody's stated that this rating action follows Ambac's announcement of record losses, a capital raising plan, and the retirement of its CEO. AMDL INC: KMJ Corbin Expresses Going Concern Doubt -------------------------------------------------- KMJ Corbin & Company LLP raised substantial doubt on the ability of AMDL, 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 pointed to the company's significant operating losses and negative cash flows from operations through Dec. 31, 2007, and accumulated deficit at Dec. 31, 2007. AMDL reported that for the year ended Dec. 31, 2007, cash used in operations was $124,243. The major components were the net loss of $2,351,754 offset by non-cash expenses of $1,507,310 related to the fair value of options granted to employees and directors, $2,179,089 related to common stock, warrants and options issued to consultants for services and $1,265,782 for depreciation and amortization. Cash used in investing activities for the year was $5,672,059. The major components were the purchase of property and equipment of $2,536,163 and the purchase of product licenses of $2,561,773. Net cash provided by financing activities was $10,273,271 for the year ended Dec. 31, 2007, primarily consisting of the net proceeds of $9,989,797 from the issuance of common stock and proceeds of $418,697 from the exercise of warrants and options. On Mar. 5, 2008, the company conducted the second closing of the December 2007 Offering. In the second closing the company received $1,000,000 in aggregate gross proceeds from the sale of a total of 323,813 shares of common stock at $3.09 per share and issued warrants to purchase 161,813 shares at an exercise price of $4.74 per share. In connection with the second closing of the December 2007 offering, the company paid a finder's fee of $100,000. At Mar. 20, 2008, the company had cash on hand of approximately $4,875,000 and cash is being depleted at the rate of approximately $425,000 per month. Assuming that the current level of revenue from the sale of DR-70 kits does not increase in the near future, the company does not require new cancer samples to satisfy the FDA concerns on its pending 510(k) application, the company does not conduct any full scale clinical trials for DR-70 or its combination immunogene therapy technology in the U.S. or China, JPI generates sufficient cash to meet or exceed its cash requirements, and no outstanding warrants are exercised, the amount of cash on hand is expected to be sufficient to meet the company's projected operating expenses only through March 2009. The company posted a net loss of $2,351,754 on total revenues of $15,009,100 for the year ended Dec. 31, 2007, as compared with a net loss of $5,867,428 on total revenues of $2,103,936 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $32,867,178 in total assets, $7,145,665 in total liabilities and $25,721,513 in total stockholders' equity. At Dec. 31,2007, the company has an accumulated deficit of $36,886,897. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?2aa5 About AMDL Inc. Based in Tustin, California, AMDL, Inc., (AMEX: ADL) -- http://www.amdl.com/-- with operations in Shenzhen, Jiangxi, and Jilin, China, is a vertically integrated specialty pharmaceutical company. In combination with its subsidiary Jade Pharmaceutical Inc., AMDL engages in the research, development, manufacture, and marketing of diagnostic products. AMERIQUEST MORTGAGE: 21 Tranches Get Moody's Rating Downgrades -------------------------------------------------------------- Moody's Investors Service downgraded the ratings of 21 tranches from 6 subprime RMBS transactions issued by Ameriquest Mortgage Securities Inc. Six 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: Issuer: Ameriquest Mortgage Securities Inc., Series 2005-R10 -- Cl. M-9, Downgraded to Ba2 from Baa3 -- Cl. M-10, Downgraded to B2 from Ba1; Placed Under Review for further Possible Downgrade Issuer: Ameriquest Mortgage Securities Inc., Series 2005-R11 -- Cl. M-9, Downgraded to Ba3 from Baa3 Issuer: Ameriquest Mortgage Securities Inc., Series 2005-R7 -- Cl. M-6, Downgraded to Baa1 from A3 -- Cl. M-7, Downgraded to Ba1 from Baa1 -- Cl. M-8, Downgraded to B3 from Baa2 -- Cl. M-9, Downgraded to Caa1 from Baa3 Issuer: Ameriquest Mortgage Securities Inc., Series 2005-R8 -- Cl. M-7, Downgraded to Baa2 from Baa1 -- Cl. M-8, Downgraded to B1 from Baa2 -- Cl. M-9, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-10, Downgraded to Caa1 from Ba1 Issuer: Ameriquest Mortgage Securities Inc., Series 2006-R1 -- Cl. M-7, Downgraded to Ba2 from Baa1 -- Cl. M-8, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-10, Downgraded to Caa1 from Ba2 -- Cl. M-11, Downgraded to Caa3 from B3 Issuer: Ameriquest Mortgage Securities Inc., Series 2006-R2 -- Cl. M-7, Downgraded to Ba2 from Baa1 -- Cl. M-8, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-10, Downgraded to Caa1 from Ba1 -- Cl. M-11, Downgraded to Caa3 from B1 AMERIQUEST MORTGAGE: S&P Pares Ratings on Two Classes to Low-Bs --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on two classes of asset-backed pass-through certificates from Ameriquest Mortgage Securities Inc.'s series 2004-R6. At the same time, S&P raised its ratings on four classes of senior mortgage pass-through certificates from Rural Housing Trust 1987-1 and removed them from CreditWatch with negative implications. At the same time, S&P lowered its ratings on two classes from Ameriquest Mortgage Securities Inc.'s series 2004-R6 and affirmed the ratings on the remaining three classes from this transaction. The raised ratings on classes A-1 and A-4 from Ameriquest Mortgage Securities Inc.'s series 2004-R6 reflect the structure of the transaction, which has allowed available credit enhancement to increase for both classes. The projected credit support levels support the classes at the 'AAA' rating level. While this transaction is failing its delinquency trigger, it is currently paying the A-1 and A-4 classes pro rata. S&P upgraded the classes because given this payment sequence, these classes will be paid off first. The cumulative loss trigger for series 2004-R6 is currently 2.5% of the original principal balance, while the deal had incurred 2.02% in realized losses as of the March 2008 remittance period. The ratings on both classes have been delinked from XL Capital Assurance Inc., which is currently rated 'A-' and provides bond insurance to these classes. The ratings on these classes now reflect the sufficient inherent credit support present without the bond insurance. The lowered ratings on the subordinate classes from series 2004-R6 reflect the recent poor pool performance, which has eroded available credit support to the junior classes and does not support the ratings at their previous levels. The dollar amount of loans in the transaction's delinquency pipeline indicates that these levels will not improve; the deal is failing its delinquency trigger by 1.8x. As of the March 2008 remittance period, serious delinquencies (90-plus days, foreclosures, and REOs) were approximately 19.06% of the current pool balance. Overcollateralization (O/C) for this series is below its $13.5 million target by $3.63 million, and the deal experienced average monthly losses of approximately $726,087 over the past 12 months. The raised ratings on Rural Housing Trust 1987-1 and their removal from CreditWatch negative reflect the increased level of O/C credit enhancement to the four classes, which is substantial compared with the outstanding principal balances of the classes. The collateral of residential mortgage loans totals $23 million, while the remaining balances of the certificates total approximately $4.5 million. This deal is composed of four loan group structures, which have paid down to 0.53%, 0.65%, 1.05% and 1.71%, respectively. The affirmations on the remaining three classes from Ameriquest Mortgage Securities Inc.'s series 2004-R6 reflect actual and projected credit support levels that are sufficient to maintain the current ratings. Ratings Raised Ameriquest Mortgage Securities Inc. Asset-backed pass-through certificates series 2004-R6 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 03072SSH9 AAA A+ A-4 03072SSL0 AAA A+ Ratings Raised and Removed From CreditWatch Negative Rural Housing Trust 1987-1 Senior mortgage pass-through certificates Rating ------ Class CUSIP To From ----- ----- -- ---- 1D 781740AD7 AAA A/Watch Neg 2C 781740AG0 AAA A/Watch Neg 3B 781740AJ4 AAA A/Watch Neg 4B 781740AL9 AAA A/Watch Neg Ratings Lowered Ameriquest Mortgage Securities Inc. Asset-backed pass-through certificates series 2004-R6 Rating ------ Class CUSIP To From ----- ----- -- ---- M-4 03072SSQ9 BB BBB- M-5 03072SSR7 B BB+ Ratings Affirmed Ameriquest Mortgage Securities Inc. Asset-backed pass-through certificates series 2004-R6 Class CUSIP Rating ----- ----- ------ M-1 03072SSM8 A- M-2 03072SSN6 BBB+ M-3 03072SSP1 BBB AMPEX CORP: Dec. 31 Balance Sheet Upside Down by $107.135 Million ----------------------------------------------------------------- Ampex Corporation reported a balance sheet data with total assets of $26.467 million, total liabilities of $133.602 million resulting to a total stockholders' deficit of $107.135 million, as of Dec. 31, 2007. The company reported a net income of $0.9 million for the fiscal year ended Dec. 31, 2007 compared to $3.9 million net loss in 2007. Total revenues generated by Ampex reached $41.4 million for fiscal 2007 from $35.9 million in 2006. For the year, Ampex reported income from continuing operations of $1.0 million on revenues of $41.5 million in fiscal 2007 compared to a loss from continuing operations of $3.8 million on revenues of $35.9 million in fiscal 2006. Licensing revenue in 2007 totaled $12.4 million of which $1.9 million related to negotiated settlements covering a prepayment of royalty obligations through 2011. The Licensing segment reported operating income of $9.1 million in fiscal 2007. The Licensing segment reported operating income of $0.2 million in fiscal 2006. In the fourth quarter of 2007, the Licensing segment reported revenues of $2.6 million and operating income of $1.4 million. In the fourth quarter of 2006, the Licensing segment reported revenues of $3.4 million and operating income of $1.1 million. The Recorders segment reported operating income of $5.0 million in fiscal 2007 on revenues from the sale of products and services totaling $29.0 million. The Recorders segment reported operating income of $3.4 million in fiscal 2006 on revenues of $25.1 million. The disk- and solid state memory-based products accounted for 90% of system sales in 2007 up from 72% in fiscal 2006. In the fourth quarter of 2007, the Recorders segment reported revenues from the sale of products and services totaling $8.9 million, operating costs of $6.7 million and an operating profit of $2.2 million. In the fourth quarter of 2006, the Recorders segment reported revenues from the sale of products and services totaling $7.9 million, operating costs of $6.5 million and an operating profit of $1.4 million. Non-recurring, non-operating income totaling $0.1 million was realized in 2007, down from $3.4 million in 2006. Interest expense increased to $4.3 million in 2007 from $3.0 million in 2006 due to higher debt balances. In 2007, the company incurred reorganizationcosts of $0.6 million in connection with the restructuring of its liabilities. The 2007 form 10-K filed with the Securities and Exchange Commission on April 15, 2008 included an audit opinion on the company's financial statements that contained a going concern uncertainty explanatory paragraph due to the company's recent filing of a voluntary petition for relief under chapter 11 of the U.S. Bankruptcy Code. A full text of the company's form 10-K filing with the Securities and Exchange Commission can be accessed free of charge at: http://ResearchArchives.com/t/s?2b0e About Ampex Corporation Headquartered in Redwood City, California, Ampex Corp. -- http://www.ampex.com-- designs and manufactures data storage products used in defense application to gather images and other date from aircrafts, satellites and submarines. The company and six of its affiliates filed for Chapter 11 protection on March 30, 2008 (Bankr. S.D.N.Y. Lead Case No.08- 11094). Matthew Allen Feldman, Esq., and Rachel C. Strickland, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection against their creditors, they listed total assets of $26,467,000 and total debts of $133,602,000. ANTHRACITE 2005-HY2: Fitch Chips Rating on $58 Mil. Notes to 'B' ---------------------------------------------------------------- Fitch Ratings downgraded three classes and affirmed six classes of notes issued by Anthracite 2005-HY2, Ltd.or Corp., (Anthracite 2005-HY2): -- $109.4 million class A affirmed at 'AAA'; -- $52.6 million class B affirmed at 'AA'; -- $25.4 million class C-FL affirmed at 'A'; -- $7.0 million class C-FX affirmed at 'A'; -- $25.3 million class D-FL affirmed at 'BBB'; -- $13.5 million class D-FX affirmed at 'BBB'; -- $9.4 million class E downgraded to 'BB' from 'BBB-'; -- $58.0 million class F downgraded to 'B' from 'BB'; -- $57.5 million class G downgraded to 'B-' from 'B'. Additionally, Fitch has removed classes F and G from Rating Watch Negative, where they were originally placed on Jan. 16, 2008. Fitch does not rate the preferred shares. Anthracite 2005-HY2 is a commercial real estate collateralized debt obligation primarily backed by commercial mortgage-backed securities B-pieces that closed on July 26, 2005. CMBS B-piece resecuritizations (also referred to as first loss CRE CDOs ReREMICs) are CRE CDOs and ReREMIC transactions that include the most junior bonds of CMBS transactions. BlackRock Financial Management, Inc. (rated 'CAM1-' by Fitch as a CDO Asset Manager), selected the initial collateral and serves as the collateral administrator. The collateral for this CDO consists of high-yielding junior bonds of CMBS transactions, and some senior unsecured real estate investment trust securities. The underlying assets of the CMBS bonds, by their nature, face similar exposures to losses from any downturn in the commercial real estate market as well as refinancing risks at the assets' maturity dates. As a mitigant, however, the underlying CMBS transactions do have significant geographic, property type and tenant diversity. While Fitch continues to believe investment grade CMBS will perform well even in a heightened stress environment, the risks facing first loss and junior rated bonds within the capital structure of CMBS transactions have increased with expectations of a rise in commercial real estate defaults from current low levels. Even a relatively modest increase in CRE losses could be material for these portfolios. In reviewing CRE CDOs, Fitch has targeted expected losses in different rating stresses based on the quality of the underlying CMBS collateral. The overall expected losses reflect the single sector exposure, the concentrated nature of these portfolios, and the low expected recoveries upon bond default, especially for more junior and thinner classes of CMBS tranches. Additional ratings considerations include seasoning of underlying collateral, obligor diversity, actual bond performance and projected losses. The specific credit characteristics that are factored into Fitch's rating review are discussed below. Anthracite 2005-HY2 is collateralized by all or a portion of 69 classes of fixed-rate CMBS in 16 separate underlying transactions (CMBS: 90.9%) and eight senior unsecured real estate investment trusts (REITs: 9.1%). All performance and collateral information is based on the March 2008 trustee report and discussions with the collateral administrator. The pool's obligor diversity is considered average for CMBS B-piece resecuritizations, and the vintage distribution of the CMBS collateral ranges from 1998 to 2005 (an average of 3.4 years of seasoning). Approximately 31.3% of the collateral is currently rated below 'B-' or not rated, and therefore, is more susceptible to losses in the near-term. While overall a significant portion of the collateral is below investment grade, approximately 20.9% is investment grade. Anthracite 2005-HY2 holds 28.1% in the 'BB' category and 19.8% in the 'B' category. Furthermore, all underlying CMBS transactions have a named special servicer with a Fitch rating of 'CSS1'. The collateral has realized $7 million in losses to date, which represents 1.5% of the original collateral. Based on the original below 'B-' balance of $137.1 million, this loss rate equates to a 5.1% loss rate on the below 'B-' collateral. Additional losses are projected to the collateral, with $104 million of the underlying collateral currently 60 days or more delinquent, according to the current trustee report. Fitch conducted cash flow modeling to test the transaction's structure under various default and interest rate stress scenarios. The ratings on the class A and B notes address the timely payment of interest and ultimate payment of principal. The ratings on the class C-FL, C-FX, D-FL, D-FX, E, F and G notes address the ultimate payment of interest and ultimate payment of principal. ASSOCIATED ESTATES: S&P Keeps 'B+' Rating; Changes Outlook to Pos. ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Associated Estates Realty Corp. to positive from stable. Concurrently, S&P affirmed its 'B+' corporate credit and 'CCC+' preferred stock ratings, affecting roughly $58 million in rated preferred stock. "The outlook revision reflects improved debt coverage metrics, as well as improved portfolio quality and diversity," said credit analyst Lisa Wright. "Associated Estates' management is improving geographic diversity and shedding its lower-quality assets, particularly by exiting the affordable housing ownership and management business." Ms. Wright also noted that debt coverage metrics are benefiting from operational gains, as well as from favorable refinancings and early debt repayments that were funded by sales of Associated Estates' Midwest properties. S&P would consider raising the ratings one notch if Associated Estates' maintains its improved portfolio performance and debt coverage metrics during the economic downturn or reduces debt leverage. Conversely, S&P could revise the outlook to stable or lower the ratings if competition from for-rent condominiums and single-family homes weighs on the REIT's portfolio performance and debt coverage metrics. ATARI INC: Special Committee Hires Duff & Phelps as Fin. Advisor ---------------------------------------------------------------- The special committee of Atari Inc.'s board of directors has retained Duff & Phelps LLC as its financial advisor to assist it in evaluating the proposal by Infogrames Entertainment S.A. to acquire all of the outstanding common stock of Atari Inc. On March 6, 2008, Atari Inc. received a letter from IESA, its majority shareholder, regarding IESA's non-binding expression of intent to acquire the outstanding common stock of Atari Inc. not owned by IESA and its affiliates for a per share cash amount of $1.68. The special committee also informed IESA that it would not be in a position to respond to the offer by the date of March 11, 2008, as requested by IESA in its letter containing the proposal. The special committee intends, together with its advisors, to thoroughly evaluate IESA's proposal before providing any response. Headquartered in New York, Atari Incorporated, (NASDAQ: ATAR) -- http://www.atari.com/-- publishes and distributes interactive entertainment software in the U.S. The company's 1,000+ published titles distributed by the company include hard-core, genre- defining franchises such as Test Drive(R); and mass-market and children's franchises such Dragon Ball Z(R). Atari Inc. is a majority-owned subsidiary of France- based Infogrames Entertainment SA, an interactive games publisher in Europe. As reported in the Troubled Company Reporter on Feb. 20, 2008, Atari Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $43.5 million in total assets and $60.3 million in total liabilities, resulting in a $16.8 million total stockholders' deficit. Going Concern Doubt New York-based Deloitte & Touche LLP expressed substantial doubt about Atari's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended March 31, 2007. The auditing firm pointed to the company's significant operating losses. As reported in the Troubled Company Reporter on March 28, 2008, Atari Inc. received a Staff Determination Letter from the Nasdaq Listing Qualifications Department stating that Atari Inc. has not gained compliance with the requirements of Nasdaq Marketplace Rule 4450(b)(3), and that its securities are therefore subject to delisting from The Nasdaq Global Market. On Dec. 21, 2007, the Nasdaq Listing Qualifications Department notified Atari Inc. that, pursuant to Nasdaq Marketplace Rule 4450(e)(1), unless the market value of Atari Inc.'s publicly held shares, which is calculated by reference to Atari Inc.'s total shares outstanding, less any shares held by officers, directors or beneficial owners of 10% or more, maintains an aggregate market value of $15 million or more for a minimum of 10 consecutive business days prior to March 20, 2008, Atari Inc.'s securities would be subject to delisting. As disclosed on March 21, 2008, the forbearance period granted by BlueBay High Yield Investments (Luxembourg) S.A.R.L., the lender under Atari's senior secured credit facility, has expired and Atari is currently in discussions with BlueBay with respect to, among other things, an extension of the forbearance period. AUTO UNDERWRITERS: Clancy and Co Expresses Going Concern Doubt -------------------------------------------------------------- On Apr. 8, 2008, Auto Underwriters of America, Inc., filed on Form 10-KSB/A a first amendment to its annual report for the year ended June 30, 2007, which was originally filed with the Securities and Exchange Commission on Oct. 15, 2007. Clancy and Co., P.L.L.C., raised substantial doubt about the ability of Auto Underwriters of America, Inc., to continue as a going concern after it audited the company's financial statements for the year ended June 30, 2007. The auditor pointed to Auto Underwriters' recurring losses from operations and working capital deficit. Auto Underwriters reported recurring losses and has an accumulated deficit of around $17,700,000 as of June 30, 2007. The company has $913,930 available under its line of credit with Oak Rock Financial, LLC, at June 30, 2007. Management believes that it has the ability to borrow additional funds from third parties such as financial institutions or will be successful in a debt or equity financing that will be sufficient to fund its operations for the next twelve months. Therefore, for at least the next twelve months, the company can continue to operate as a going concern. The company posted a net loss of $4,649,672 on total revenues of $11,175,265 for the year ended June 30, 2007, as compared with a net loss of $6,574,353 on total revenues of $13,991,565 in the prior year. At June 30, 2007, the company's balance sheet showed $12,285,675 in total assets and $14,894,694 in total liabilities, resulting in $2,609,019 stockholders' deficit. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?2aa4 About Auto Underwriters Auto Underwriters of America, Inc., (OTC BB:ADWT.OB) -- http://www.autounderwriters.com/-- purchases and servicing non- prime installment sales contracts originated by automobile dealers in the sale of new and used automobiles, and light trucks in the United States. It also provides financing programs to automobile dealers through its Web site, which allows the dealer to input various fields of information into an online financing application and obtain an automatic credit decision. In addition, the company purchases, reconditions, sells, and finances used vehicles from three dealerships in Houston, Texas that operate under the name Affordable Cars & Trucks. Auto Underwriters of America was incorporated in 1981 and is based in San Jose, Calif. AXS ONE: Amper Politziner Expresses Going Concern Doubt ------------------------------------------------------- Amper, Politziner, & Mattia, P.C., raised substantial doubt about the ability of AXS-One, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed to the company's losses from operations and working capital deficiency. The management disclosed that there are a number of factors that have negatively impacted the company's liquidity, and may impact the company's ability to function as a going concern. The company has not yet been able to obtain operating profitability from continuing operations and may not be able to be profitable on a quarterly or annual basis in the future. Additionally, the company had a cash balance of $3,400,000 at Dec. 31, 2007, and has a $2,500,000 bank credit facility for which borrowing availability is limited to eligible accounts receivable. The company was not in compliance with its quarterly license revenue covenant as of Mar.31, 2008. The company and the bank are in discussions with respect to a waiver of the covenant violation or revisions to the financial covenants. The company had a working capital deficiency of $1,800,000 as of Dec. 31, 2007. The company posted a net loss of $14,946,000 on total revenues of $ 11,949,000 for the year ended Dec. 31, 2007, as compared with a net income of $5,501,000 on total revenues of $10,296,000 in the prior year. At Dec. 31, 2007, the company's consolidated balance sheet showed $6,944,000 in total assets and $15,536,000 in total liabilities, resulting in $8,592,000 stockholders' deficit. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $6,408,000 in total current assets available to pay $8,167,000 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?2aa6 About AXS-One Inc. Headquartered in Rutherford, N.J., AXS-One (AMEX: AXO) -- http://www.axsone.com/-- provides high performance Records Compliance Management solutions. The AXS-One Compliance Platform enables organizations to implement secure, scalable and enforceable policies that address records management for corporate governance, legal discovery and industry regulations such as SEC17a-4, NASD 3010, Sarbanes-Oxley, HIPAA, The Patriot Act and Gramm-Leach Bliley. Founded in 1979, AXS-One has offices worldwide including in the United States, Australia, Singapore, United Kingdom, and South Africa. AZRA COMMERCIAL: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Azra Commercial Center, L.L.C. 936 E. Sahara Ave. Las Vegas, NV 89104 Bankruptcy Case No.: 08-13840 Chapter 11 Petition Date: April 21, 2008 Court: District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Bob L. Olson, Esq. Email: ecffilings@beckleylaw.com Lewis & Roca, LLP 3993 Howard Hughes Parkway, Ste. 600 Las Vegas, NV 89169 Tel: (702) 949-8200 Fax: (702) 385-9447 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Udell M. Larsen $500,000 P.O. Box 405 Alamo, CA 94507 Tel: (925) 820-1911 Spotted Eagle Lodge, LLC $450,000 P.O. Box 489 Willow, AK 99688 Tel: (702) 858-8022 Robert Blickenstaff $427,000 335 Jacaranda Drive Danville, CA 94506 Frontier Aero Center, LLC $275,000 P.O. Box 489 Willow, AK 99688 Tel: (702) 858-8022 Kari A. Rader $50,000 Deca, LLC Prepaid rent and $27,281 security deposit The Best Service Co. $23,000 Glenn Dulaine $18,000 Republic Services Utility services $13,339 PC Plumbing