T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, May 20, 2008, Vol. 12, No. 119 Headlines AARDVARK ABS: Moody's Assigns B2 Rating on Class A1 Extended Notes ABCDS 2006-1: Moody's Chips Notes Ratings on Three Classes to Ca ABFC 2002-SB1: S&P Slashes 'AAA' Rating on Class M-1 Loans to 'BB' ABITIBIBOWATER INC: Posts $248 Million Net Loss in 2008 First Qtr. ACA ABS 2003-2: Moody's Slashes A1 Rating on $36MM Notes to C ACACIA CDO: Moody's Chips Rating on $41MM Notes to B1 from A1 ADVANTEX MARKETING: March 31 Balance Sheet Upside-Down by C$1MM AIRLIE CDO: Moody's Puts Ba2 Rating Under Review for Possible Cut ALESCO FINANCIAL: Updates on Impact of IndyMac's Deferral BLUE HERON: Moody's Slashes Rating on $1.113BB Notes to 'Baa1' BLUEGREEN CORP: Moody's Rates $20MM Line of Credit Caa1 CANADIAN TRUSTS: Court Delays Approval of ABCP Restructuring Plan CANARGO ENERGY: Posts $1.2 Million Net Loss in 2008 First Quarter CASH SYSTEMS: March 31 Balance Sheet Upside-Down by $1.9 Million CATHOLIC CHURCH: Fairbanks Wants Claims Bar Date Set Dec. 2 CATHOLIC CHURCH: Fairbanks Wants to Hire Future Claims Rep. CATHOLIC CHURCH: Fairbanks May File Chapter 11 Plan on July 15 CATHOLIC CHURCH: Judge Closes Spokane Diocese's Bankruptcy Case CATHOLIC CHURCH: Spokane's Plan Trust Has $6 Million Cash Left C-BASS CBO: Moody's Junks Ratings on Three Note Classes CELL THERAPEUTICS: March 31 Balance Sheet Upside-Down by $124.1MM CHARLES RIVER: Moody's Slices Note Ratings on Three Classes to C CHARMING SHOPPES: Board Member Strandjord to Forego Re-Election CHARTER COMMS: Gets Nasdaq Compliance Notice on Price Listing CHASE FUNDING: S&P Junks Rating on Class IB Certificates CHRISTAL DISTRIBUTION: Seeks Protection from Creditors Under CCAA DAVENPORT CDO: Moody's Slices Ratings on Three Classes to Caa3 DELPHI CORP: WTC Balks at $750 Million Intercompany Loan Transfer DORADO BECKVILLE: May Use Cash Collateral on Interim Basis DORADO BECKVILLE: Various Parties Oppose Use of Cash Collateral DORADO BECKVILLE: U.S. Trustee Forms Four-Member Creditors' Panel DUTCH HILL: Moody's Cuts Ratings, to Undertake Review EIRLES TWO: Moody's Slashes A3 Rating on Class Notes to Ba3 E*TRADE ABS: Moody's Chips Note Ratings on Two Classes to Ca E*TRADE ABS: Moody's Trims Preference Shares Rating to Ca from Ba1 EXUM RIDGE: Moody's Says Ba2 Rating on Notes May be Cut EXUM RIDGE: Moody's Places Ratings Under Review for Possible Cut EXUM RIDGE: Moody's Puts Ba2 Rating on $12MM Notes Under Review EXUM RIDGE: Moody's Places $13.5MM Ba2 Note Rating Under Review EXUM RIDGE: Poor Credit Quality Cues Moody's Rating Reviews EXUM RIDGE: Moody's Puts $12MM Ba1 Notes Rating Under Review FORD CREDIT AUTO: S&P Assigns 'BB' Initial Rating on Class D Notes FRONTIER AIRLINES: "Golden Parachute Deal" Irks Teamsters FRONTIER AIRLINES: Seeks OK on Director & Officer Severance Plan FX REAL ESTATE: Posts $25 Million Net Loss in 2008 First Quarter GAINEY CORP: High Probability of Default Cues Moody's Rating Cut GALLERIA CBO: Moody's Chips Ratings on Three Note Classes to Ca GALLERIA CBO: Moody's Cuts B3 Rating on Two Note Classes to Caa1 HALCYON SECURITIZED: Moody's Chips $76MM Baa2 Notes Rating to Caa1 HAMILTON GARDENS: Moody's Downgrades Ratings on Six Note Classes HEALTH SYSTEMS: March 31 Balance Sheet Upside Down by $1.1 Million HELIX BIOMEDIX: March 31 Balance Sheet Upside Down by $833,173 HOME EQUITY: S&P Lowers Ratings on 98 Certificate Classes HOME INTERIORS: U.S. Trustee Selects Seven-Member Creditor's Panel HOVNANIAN ENTERPRISES: S&P Rates Proposed $600MM Sr. Notes 'B+' HOVNANIAN ENTERPRISES: Moody's Rates $600MM Sr. Secured Notes Ba3 HSPI DIVERSIFIED: Moody's Junks Ratings on Several Note Classes HUDSON FUNDING: Moody's Junks Ratings on Five Note Classes ICEWEB INC: March 31 Balance Sheet Upside Down by $2.2 Million IDLEAIRE TECHNOLOGIES: Locations Expected to Remain Open INMAN SQUARE: Moody's Junks Ratings on Four Note Classes JACOBS ENTERTAINMENT: S&P Revises Outlook to Negative From Stable JUPITER HIGH-GRADE: Moody's Junks Rating on $1.29BB Senior Notes KITTY HAWK: Plan Confirmation Hearing Scheduled for June 24 KITTY HAWK: Judge Nelms Approves Disclosure Statement KLEROS PREFERRED: Poor Credit Quality Cues Moody's Rating Cuts KRONOS ADVANCED: Posts $2.3MM Loss for 9 Months Ended March 31 LA PALOMA: S&P Puts Ratings Under Neg. Watch After Merger Notice LAM RESEARCH: S&P Lifts Corporate Credit Rating to BB from BB- LENNAR CORP: Weak Profitability Cues S&P to Chip Rating to BB LEXINGTON CAPITAL: Moody's Chips Ba2 Ratings on Two Classes to Ca LIBERTAS PREFERRED: Moody's Trims Ratings on Seven Classes to Ca LIBERTAS PREFERRED: Moody's Pares Ratings on Two Classes to Caa2 LONGPORT FUNDING: Moody's Cuts $13MM Notes Rating to B2 from Baa2 LOUISIANA RIVERBOAT: Files Schedules of Assets and Liabilities MONTROSE HARBOR: Moody's Chips Ratings on Five Note Classes to 'C' MRS. FIELDS: March 29 Balance Sheet Upside-Down by $100 Million MSGI SECURITY: March 31 Balance Upside Down by $2 Million NEPTUNE CDO: Moody's Lowers Ratings, to Undertake Review NEPTUNE CDO: Moody's Cuts Rating on $7.5MM Class A-2L Notes to Ba2 NEPTUNE CDO: Moody's Lowers Ratings on Five Note Classes to Ca NEPTUNE CDO: Moody's Lowers Rating on $270MM Notes to Ba3 from Aa1 NETWOLVES CORP: Posts $60,000 Net Loss in 3rd Quarter Fiscal 2008 NORANDA ALUMINUM: March 31 Balance Sheet Upside Down by $133.1MM ORAGENICS INC: Has Until October 27 to Comply with AMEX Criteria ORCHID STRUCTURED: Moody's Chips A3 Rating on $15MM Notes to Ca ORIGEN FINANCIAL: Posts $25 Million Net Loss in 2008 First Quarter PEBBLE CREEK: Moody's Puts Ba2 Rating on Review for Possible Cut PEBBLE CREEK: Moody's Puts $20.75MM Ba2 Notes Rating Under Review PHOENIX FOOTWEAR: Posts $280,000 Net Loss in 2008 First Quarter PINE MOUNTAIN: Moody's to Review Ratings for Possible Downgrade PINE MOUNTAIN: Moody's Downgrades Ratings on Three Notes to C PLASTECH ENGINEERED: Will Close Elwood Plant on July 13 PQ CORP: Moody's Rates Corp. Family B2, Outlook Stable PREMD INC: March 31 Balance Sheet Upside-Down by C$5 Million PROGRESSIVE GAMING: Posts $8.4 Million Net Loss in 2008 1st Qtr. PROPEX INC: Court Extends Plan-Filing Deadline Until August 21 PSIVIDA LIMITED: Posts $5.5 MM Net Loss in 3rd Qtr. Ended March 31 PYXIS ABS: Moody's Junks Ratings on Four Classes of Notes QUEBECOR WORLD: Wants Schedules Filing Period Extended to July 18 RADIAN GROUP: Amendment to Credit Agreement Now Effective REALOGY CORP: S&P Foresees Positive Results, Likely to Hold Rating SCOTTISH RE: S&P Puts Default Stock Rating on Dividend Non-Payment SENTINEL MANAGEMENT: Founder to Pay $10.7MM to Settle Fraud Case SGS HY: Poor Credit Quality Cues Moody's Rating Reviews SHERWOOD FUNDING: Moody's Lowers Ratings on Three Notes to B1 SIGNALIFE INC: Receives Second Amex Deficiency Letter SIX FLAGS: S&P Puts Ratings Under Neg. Watch on Note Buyout News SKYBOX CDO: Moody's Chips Ratings on Credit Quality Deterioration SOUTH COAST: Moody's Junks Aa3 Swap Rating, to Undertake Review SPACEHAB INC: Posts $834,000 Net Loss in Fiscal 2007 Third Quarter STANDARD PACIFIC: Losses Cue S&P to Junk Subordinated Debt Rating TIRECRAFT GROUP: Gets Court's Nod on Pneus Unimax's Buyout Offer TRAILER BRIDGE: March 31 Balance Sheet Upside Down by $329,034 TRIBUNE LIMITED: Moody's Cuts Rating on $80MM Notes to B1 from Aaa TROPICANA ENTERTAINMENT: Section 341(a) Meeting Set for June 13 TROPICANA ENT: U.S. Trustee Picks Seven-Member Creditors Panel VERTICAL VIRGO: Moody's Junks Ratings on Three Classes of Notes VERTIS INC: Noteholders Agree to Changes in Forbearance Agreement VICTORY MEMORIAL: Files Disclosure Statement and Chapter 11 Plan WELLMAN INC: Receives Additional Extension for Bidding Protocol WHX CORP: March 31 Balance Sheet Upside Down by $74.8 Million WORLD HEART: Appeal on Continued Listing in Nasdaq Denied X-RITE INC: Names Dave Rawden as Interim Chief Financial Officer * S&P Sees Looming Problems on Pension Benefits for Retired Worker * S&P Says Mng't Sectors Remained Among the More Stable Industry * BDO Seidman Identifies Risk Factors at 100 Largest Retailers * Large Companies with Insolvent Balance Sheets ********* AARDVARK ABS: Moody's Assigns B2 Rating on Class A1 Extended Notes ------------------------------------------------------------------ Moody's Investors Service has withdrawn the short term rating on the following notes issued by Aardvark ABS CDO 2007-1: Class Description: $1,312,948,854.50 Class A1 Senior Secured Floating Rate Notes Due October 2008 (the "Class A1 Notes") -- Prior Rating: P-1 -- Current Rating: WR Moody's has also assigned a long term rating on this notes: (1) B2 on watch for possible downgrade to the Class A1 Extended Notes According to Moody's, the Prime-1 ratings were assigned to the Class A1 Notes based on the existence of a put agreement provided by a Prime-1 rated third party. These notes had previously failed to remarket and, consequently, the issuer exercised the put agreement whose proceeds were used to fully redeem these notes and issued the Class A1 Extended Notes. Accordingly, Moody's has withdrawn its short-term ratings on the Class A1 Notes and issued long-term ratings of B2, on review for possible downgrade to the Class A1 Extended Notes. ABCDS 2006-1: Moody's Chips Notes Ratings on Three Classes to Ca ---------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible downgrade the ratings on these notes issued by ABCDS 2006-1, Ltd.: Class Description: $200,000,000 Senior Swap Agreement with Royal Bank of Canada, London Branch (the "Senior Swap") -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $60,000,000 Class A-2 First Priority Senior Secured Floating Rate Notes Due 2050 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Ca Class Description: $51,600,000 Class A-3 Second Priority Senior Secured Floating Rate Notes Due 2050 -- Prior Rating: B2, on review for possible downgrade -- Current Rating: Ca Class Description: $48,600,000 Class B Third Priority Senior Secured Floating Rate Notes Due 2050 -- Prior Rating: Caa1, on review for possible downgrade -- Current Rating: Ca Class Description: $8,400,000 Class C Fourth Priority Mezzanine Secured Floating Rate Deferrable Interest Notes Due 2050 -- Prior Rating: Ca -- Current Rating: C Class Description: $12,000,000 Class D Fifth Priority Mezzanine Secured Floating Rate Deferrable Interest Notes Due 2050 -- Prior Rating: Ca -- Current Rating: C Class Description: $5,000,000 Class E Sixth Priority Mezzanine Secured Floating Rate Deferrable Interest Notes Due 2050 -- Prior Rating: Ca -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. ABFC 2002-SB1: S&P Slashes 'AAA' Rating on Class M-1 Loans to 'BB' ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on three classes of asset-backed certificates from ABFC 2002-SB1 Trust. S&P placed one rating on CreditWatch with negative implications. These classes are secured primarily by U.S. subprime mortgage loan collateral. The downgrades reflect reduced credit enhancement due to monthly realized losses, a high amount of loans that are considered severely delinquent, and high loss severities experienced over the past 12 months. Realized losses have outpaced excess interest by approximately 5.0x over the past 12 months. As of the April 2008 remittance period, cumulative losses, as a percentage of the original pool balance, were 6.67%. Total delinquencies and severe delinquencies make up 31.05% and 17.97% of the current pool balance, respectively. Over the past 12 months, loss severities were approximately 103%. The past three months saw loss severities totaling 117%. The high severities reflect a large number of low-value properties being liquidated in Michigan, Ohio, and Pennsylvania. Some of these properties had to be demolished due to deterioration, which caused the transactions to incur additional losses. There are similar low-value properties remaining in the delinquency pipeline. Overcollateralization has been eroded completely, and the B class is currently taking losses. S&P placed its rating on class AII-1 on CreditWatch negative due to the poor performance of this transaction and the certificate's projected credit support relative to projected losses. S&P will evaluate and compare the date of projected defaults with the projected payoff dates, as well as the relationships between projected credit support and projected losses throughout the remaining life of this certificate, and take further negative rating action if necessary. Subordination and excess spread provide credit support for this transaction. The collateral for this transaction consists primarily of conventional, fixed- and adjustable-rate, fully amortizing, first- and second-lien residential mortgage loans with original terms to maturity of no more than 30 years. Ratings Lowered ABFC 2002-SB1 Trust Asset-backed certificates Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 04542BAS1 BB AAA M-2 04542BAT9 B BB M-3 04542BAU6 CC CCC Rating Placed on Creditwatch Negative ABFC 2002-SB1 Trust Asset-backed certificates Rating ------ Class CUSIP To From ----- ----- -- ---- AII-1 04542BAQ5 AAA/Watch Neg AAA ABITIBIBOWATER INC: Posts $248 Million Net Loss in 2008 First Qtr. ------------------------------------------------------------------ AbitibiBowater Inc. reported a net loss of $248.0 million, on sales of $1.7 billion, for the first quarter ended March 31, 2008. These results compare with a net loss of $35.0 million, on sales of $772.0 million, for the first quarter of 2007, which consisted of only Bowater Incorporated results. The company's 2008 first quarter results reflect the full quarter results for Abitibi-Consolidated Inc. and Bowater Incorporated as a combined company following their combination on Oct. 29, 2007. First quarter 2008 special items, net of tax, consisted of: a $44.0 million gain relating to foreign currency changes, a $16.0 million gain on asset sales, a $17.00 million loss related to asset closures and severance and a $76.0 million charge related to tax adjustments. Excluding these special items, the net loss for the quarter would have been $215.0 million. "Important progress was achieved during the first full quarter of AbitibiBowater," stated president and chief executive officer David J. Paterson. "We set out with a disciplined approach and a commitment to deliver sustainable long-term value. Our EBITDA improvement, this quarter over the fourth quarter of last year, is an important step in positioning the company as the industry's great turnaround story." AbitibiBowater said that during the first quarter it successfully completed a series of financing transactions, totaling $1.4 billion, designed to address near-term debt maturities and general liquidity needs for its Abitibi-Consolidated subsidiary. Strategic Review In November 2007, AbitibiBowater announced the results of a Phase 1 comprehensive strategic review, which resulted in the removal of approximately 1 million metric tons of unprofitable newsprint and commercial printing paper capacity and 500 million board feet of wood products from the marketplace. The Phase 1 announcement also: increased the company's annual synergy target to $375.0 million from the $250.0 million target announced at the time of the company's merger; identified $500.0 million in asset sales through the sale of the Snowflake (Arizona) newsprint mill as well as non-core assets; suspended the dividend; and committed to a further review of all aspects of the business in Eastern Canada in light of inherent competitive disadvantages. AbitibiBowater also that the announced closures were completed early in the first quarter of 2008 and other commitments are on track to be met or exceeded. "When the merger closed, we began a strategic review of all aspects of the new company and committed to take decisive action to be a stronger, more sustainable organization," said John W. Weaver, executive chairman. "We are making good progress and are beginning to benefit from improving business conditions. AbitibiBowater remains focused on continued cost reductions, improvement of our manufacturing platform and better positioning the company in the global marketplace." Phase 2 Update Since November, the company has engaged in discussions with governments, employees, communities and other stakeholders to reduce operating costs, enhance the viability of several operations and improve overall competitiveness. The company said that these actions, in addition to increased market prices for company products, are improving financial results. AbitibiBowater expects improved quarter-over-quarter profitability based on stronger business fundamentals, announced price increases, operating efficiencies and synergies. Significant progress has been made; however, at this time, no paper mill closures or idlings are being announced beyond the continued indefinite idling of the Mackenzie (British Columbia) and Donnacona (Quebec) paper mills. The company said that cooperative efforts with stakeholders have enhanced the competitiveness of various company facilities such as the woodland and sawmill operations in the Lac-Saint-Jean (Quebec) region. Collaborative outreach will continue in all of Eastern Canada in light of market conditions as well as high labor, energy and fiber costs, further exacerbated by the strong Canadian dollar. AbitibiBowater will maintain a flexible approach and may take further restructuring actions, if required. "We will continue our collaborative approach with various stakeholders in an effort to find long-term, sustainable solutions," stated Mr. Paterson. "We are confident AbitibiBowater is taking the right steps to manage our business and set the stage for meaningful improvement in earnings, efficiencies and overall growth." Recognizing the challenges facing the North American newsprint market, AbitibiBowater says it continues to realize success in diversifying its sales to international markets, in the more than 90 countries where its products are already sold. The company said it is committed to expanding sales in growing markets. To further the expansion of the global sales effort, the company will work with North American governments and other stakeholders to ensure needed infrastructure improvements at ports supporting operations. The company said it will raise the bar in continued cost reduction efforts and look to increase profitability on some of its paper machine assets by considering the conversion of newsprint capacity to coated and other value-added papers over the next several years. Such conversions would be expected to generate higher returns. Management said it expects to complete the first stage of this review by the third quarter of 2008 and is considering the possibility of manufacturing a light-weight coated product, containing recycled content. The company is confident in its ability to successfully convert a newsprint machine to a high- margin product, based in part on the Catawba (South Carolina) mill success story. AbitibiBowater also formally announced two new product offerings, EcoLaser(TM) and Ecopaque(TM). These uncoated freesheet substitutes represent innovative solutions for the printing industry, providing environmental benefits while also reducing costs for end-users. "We will continue to support growth and diversification of our product mix while positioning the company as the wise choice for environmentally sensitive customers, offering sustainable solutions to them and their clients," stated Mr. Weaver. In addition to removing 500 million board feet of lumber capacity through Phase I actions, the company said it has further lowered its high-cost lumber capacity through consolidations, idlings and various temporary shutdowns at sawmills. The cumulative effect of these measures has reduced AbitibiBowater's lumber capacity to nearly 50% of pre-merger levels, resulting in an avoided cost of $45 per fbm. Furthermore, production costs at operating sawmills have been reduced by 7% in the first quarter of 2008. The company confirms that it expects to meet the asset sales target of $500.0 million by the end of 2008, having achieved sales of approximately $220.0 million to date. AbitibiBowater is targeting an additional $250.0 million in asset sales by the end of 2009. The company has launched a process for the sale of its Mokpo, South Korea paper mill, and is moving forward with additional sales including forest lands, sawmills, hydroelectric sites and other assets. In addition, AbitibiBowater reiterates its synergy target of $375.0 million by the end of 2009. At the end of the first quarter, the company had achieved an annual run rate of approximately $180.0 million in captured synergies. Liquidity and Capital Resources As of March 31, 2008, the company's total liquidity was comprised of liquidity from its Abitibi and Bowater subsidiaries. As disclosed in the company's audited consolidated financial statements included in its Annual Report on Form 10-K/A for the year ended Dec. 31, 2007, the company's Abitibi subsidiary was experiencing a liquidity shortfall and facing significant near- term liquidity challenges. As a result of these liquidity issues, the company had concluded at Dec. 31, 2007, that there was substantial doubt about Abitibi's ability to continue as a going concern. As of March 31, 2008, Abitibi had a total of $346.0 million of long-term debt maturing in 2008: $196.0 million principal amount of its 6.95% Senior Notes due April 1, 2008, and $150.0 million principal amount of its 5.25% Senior Notes due June 20, 2008. Additionally, Abitibi had revolving bank credit facilities with commitments totalling $692.0 million maturing in the fourth quarter of 2008. These amounts were successfully refinanced on April 1, 2008. The company said that while its April 1 refinancing has alleviated the substantial doubt about Abitibi's ability to continue as a going concern, significant financial uncertainties remain for Abitibi to overcome including, but not limited to, Abitibi's ability to repay or to refinance the $350.0 million 364-day term facility due on March 30, 2009, to service the considerable debt resulting from the April 1 refinancings and to overcome their expected ongoing net losses and negative cash flows. This senior secured term loan is guaranteed by Abitibi and secured by substantially all of Abitibi's assets. In order to address the upcoming March 30, 2009 maturity, Abitibi and AbitibiBowater will be pursuing refinancing alternatives to renew or replace the existing 364-day senior secured term loan or entering into a new bank credit agreement. The company has also announced an asset sales program of approximately $750.0 million for AbitibiBowater, and any sales of Abitibi's assets would be expected to be used for debt reduction. Management said it continues to believe that the liquidity constraints at Abitibi will not affect the financial condition of Bowater or AbitibiBowater. As of April 1, 2008, upon completion of the company's refinancings, Abitibi had liquidity of $185.0 million, represented by cash on hand. As of April 15, 2008, after the sale of the company's Snowflake, Arizona newsprint facility and the repayment of certain debt, the company's Abitibi subsidiary had cash on hand of $277.0 million. At March 31, 2008 and Dec. 31, 2007, AbitibiBowater Inc. and its consolidated subsidiaries had $4.7 billion of fixed rate long-term debt and $1.2 billion and $1.0 billion, respectively, of short and long-term variable rate debt. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed $10.3 billion in total assets, $8.7 billion in total liabilities, and $1.6 billion in total stockholders' equity. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $2.3 billion in total current assets available to pay $2.5 billion 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?2c1b About AbitibiBowater Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/ -- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. AbitibiBowater is also among the world's largest recyclers of newspapers and magazines. AbitibiBowater's shares trade under the stock symbol ABH on both the New York Stock Exchange and the Toronto Stock Exchange. * * * As reported in the Troubled Company Reporter on April 16, 2008, Standard & Poor's Ratings Services assigned recovery ratings to the senior unsecured debt issues of AbitibiBowater Inc., Abitibi- Consolidated Inc., and Bowater Inc. At the same time, S&P lowered the issue-level rating on these debts to 'CCC+' from 'B-'. ACA ABS 2003-2: Moody's Slashes A1 Rating on $36MM Notes to C ------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by ACA ABS 2003-2, Limited. Class Description: $315,000,000 Class A1-SU Floating Rate Notes, due December 10 , 2038 -- Prior Rating: Aaa -- Current Rating: Ba1, on review for possible downgrade Class Description: $146,500,000 Class A1-SD Floating Rate Notes, due December 10, 2038 -- Prior Rating: Aaa -- Current Rating: Ba1, on review for possible downgrade Class Description: $108,000,000 Class A1-J Floating Rate Notes, due December 10 , 2038 -- Prior Rating: Aaa -- Current Rating: B1, on review for possible downgrade Class Description: $51,000,000 Class A2 Floating Rate Notes, due December 10 , 2038 -- Prior Rating: Aa1 -- Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $36,000,000 Class A3 Floating Rate Notes, due December 10, 2038 -- Prior Rating: A1, on review for possible downgrade -- Current Rating: C Class Description: $7,000,000 Class BF Fixed Rate Deferrable Interest Notes, due December 10 , 2038 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: C Class Description: $15,000,000 Class BV Floating Rate Deferrable Interest Notes, due December 10 , 2038 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: C Class Description: $3,000,000 Class C Fixed Rate Notes, due December 10, 2038 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the Structured Finance securities. ACACIA CDO: Moody's Chips Rating on $41MM Notes to B1 from A1 ------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings on these notes issued by Acacia CDO 12, Ltd. Class Description: $100,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Baa1, on review for possible downgrade Class Description: $41,000,000 Class B Third Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: A1, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $14,000,000 Class C Fourth Priority Mezzanine Secured Floating Rate Deferrable Interest Notes Due 2047 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Class Description: $11,500,000 Class D Fifth Priority Mezzanine Secured Floating Rate Deferrable Interest Notes 2047 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the Structured finance securities. ADVANTEX MARKETING: March 31 Balance Sheet Upside-Down by C$1MM --------------------------------------------------------------- Advantex Marketing International Inc.'s balance sheet at March 31, 2008, showed total assets of C$10.1 million and total liabilities of C$11.1 million, resulting in a total shareholders' deficit of C$1.0 million. The company reported results for the fiscal third quarter and nine months ended March 31, 2008. For the three months ended March 31, the company incurred net loss of $390,000 compared with net loss of $359,000. The net Loss for nine months ended March 31, 2008, is $1.0 million compared with $1.7 million for the corresponding period of the previous year. For the three months ended March 31, 2008, the increase in interest expense resulted from the new debt financings and the impact from marginally lower revenues of $182,000, is a reflection of the merchant enrolling and activation process. Based in Ontario, Canada, Advantex Marketing International Inc. (TSX:ADX) -- http://www.advantex.com/-- is a specialist in the marketing services industry, managing white-labeled rewards accelerator programs for major affinity groups through which their members earn bonus frequent flyer miles and/or other rewards on purchases at participating merchants. Under the umbrella of each program, Advantex provides merchants with marketing, customer incentives, and secured future sales through its Advance Purchase Marketing model. The company's partners include more than 700 restaurants, online retailers, golf courses, small inns and resorts, and major organizations, including CIBC, United Airlines, Delta Airlines, Alaska Airlines, and Lufthansa Airlines. AIRLIE CDO: Moody's Puts Ba2 Rating Under Review for Possible Cut ----------------------------------------------------------------- Moody's Investors Service has placed these notes issued by Airlie CDO I, Ltd. on review for possible downgrade: Class Description: $306,000,000 Class A Contingent Funding Rate Notes Due 2014 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $17,000,000 Class B Floating Rate Deferrable Notes Due 2014 -- Prior Rating: A2 -- Current Rating: A2, on review for possible downgrade Class Description: $19,000,000 Class C Floating Rate Deferrable Notes Due 2014 -- Prior Rating: Baa2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $18,000,000 Class D Floating Rate Deferrable Notes Due 2014 -- Prior Rating: Ba2 -- Current Rating: Ba2, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying portfolio and the placement under review for possible downgrade of the Lehman Brothers ABS Enhanced LIBOR Fund's MR1 market risk rating. ALESCO FINANCIAL: Updates on Impact of IndyMac's Deferral --------------------------------------------------------- Alesco Financial Inc., a specialty finance real estate investment trust, updates its previous announcement concerning the expected impact to the company of the deferral by IndyMac Bancorp of the interest payments due on IndyMac's trust preferred securities held in Alesco's portfolio. Alesco Financial has completed a review of its eight collateralized debt obligation, or "CDO," transactions that include trust preferred securities issued by IndyMac. Alesco Financial holds a portion of the equity interests in these eight CDOs. IndyMac's securities represent an aggregate of 2.43% of the total pool of collateral in those eight CDOs and approximately $2.1 million in aggregate interest payments per quarter to the eight CDOs, of which Alesco Financial's proportionate share is approximately $1.5 million, or about $0.02 per diluted AFN common share per quarter. IndyMac's deferral will trigger the failure of over- collateralization tests in five of the eight CDOs for a period of time, of which one is expected to be a partial failure that should cure in the current period. Once the failure of an over- collateralization test is triggered in a CDO, Alesco Financial will no longer receive current distributions of cash with respect to its equity interests in the CDO until sufficient cash flow is paid to senior debt holders in the CDOs to cure the over- collateralization tests. IndyMac did not disclose how long it expects to defer its payments. Alesco Financial expects that, even if IndyMac does not resume making payment, and assuming no additional deferrals, the four affected CDOs that are not expected to cure in the current period will recommence making equity distributions within four to seven quarters. For the year ended December 31, 2007, and the quarter ended March 31, 2008, the five CDOs that Alesco Financial expects will fail over-collateralization tests contributed $32.3 million, or 38%, and $8.8 million, or 44%, respectively, of Alesco Financial's adjusted earnings for such periods. Alesco Financial's adjusted earnings will continue to include this income even though AFN will not receive corresponding cash distributions until the over-collateralization tests have been cured. Currently, Alesco Financial has available unrestricted cash of approximately $125 million, including cash generated by previously-disclosed gains on credit default swaps. James McEntee, President and CEO of Alesco Financial, said, "The ultimate impact of IndyMac's actions on Alesco Financial will be determined over time, based upon whether, and when, [IndyMac] commences payment on its obligations. The actions by [IndyMac] are indicative of the stress that the banking sector is under at the current time. As I have stated on recent investor calls, the stress in this sector is likely to continue to evidence itself in our portfolio for the foreseeable future. [IndyMac's] announcement is a negative development; however, we continue to believe in the health of this sector over the mid- and long term, and we expect this portfolio to perform reasonably well. The key to Alesco Financial participating in any turnaround in the banking sector is patience. We have worked diligently over the past nine months to position Alesco Financial's balance sheet in such a way as to avoid having to take precipitous action; our current liquidity is critical to being able to weather this storm. This will, however, take some time. We have the liquidity to be patient, and we have a management team focused on taking advantage of opportunities as they arise, as is evidenced most recently by the benefits garnered from the credit default swaps AFN put in place." Alesco Financial's available unrestricted cash should be sufficient to allow Alesco Financial to maintain its first quarter 2008 dividend rate for the remainder of 2008, even after giving effect to the failure of the over-collateralization tests. The payment of future dividends is, however, subject to the review and approval of Alesco Financial's board of directors, and there can be no assurance that Alesco Financial's board will determine to maintain the first quarter dividend rate. As discussed on Alesco Financial's earnings call last week, Alesco Financial is reviewing a number of strategies for the company, including whether to continue to maintain its REIT qualification. Any change in strategy could impact the level of future dividend payments. A special committee of Alesco Financial's independent directors has been formed and has hired advisors to consider these alternatives. Management and the Board are fully committed to maximizing the realization of value for shareholders, and are actively engaged in the process of seeking to do so. About Indymac Bancorp Headquartered in Pasadena, California, IndyMac Bancorp Inc. (NYSE:IMB) -- http://www.indymacbank.com/-- is the holding company for IndyMac Bank FSB, a hybrid thrift/mortgage bank that originates mortgages in all 50 states of the United States. Indymac Bank provides financing for the acquisition, development, and improvement of single-family homes. Indymac also provides financing secured by single-family homes and other banking products to facilitate consumers' personal financial goals. The company facilitates the acquisition, development, and improvement of single-family homes through the electronic mortgage information and transaction system platform that automates underwriting, risk- based pricing and rate locking via the internet at the point of sale. Indymac Bank offers mortgage products and services that are tailored to meet the needs of both consumers and mortgage professionals. Indymac operates through two segments: mortgage banking and thrift. The Troubled Company Reporter reported on May 15, 2008, that Fitch Ratings downgraded the long-term Issuer Default Ratings (IDRs) of Indymac Bancorp Inc. (IMB) and its wholly owned bank subsidiary Indymac Bank FSB (bank). In addition, Fitch has placed the affected ratings on Rating Watch Negative. Fitch's action reflects the company's challenges in returning to profitability and decision to defer dividend payments on preferred stock issued by IMB and the bank. Approximately $19.9 billion of debt and deposits are involved in Fitch's rating action. Ratings downgraded and placed on Rating Watch Negative: * Indymac Bancorp Inc. -- Long-term IDR to 'B-' from 'BB'; -- Short-term IDR to 'C' from 'B'; -- Individual to 'D/E' from 'C/D'. About Alesco Financial Headquartered in Philadelphia, Alesco Financial Inc. (NYSE: AFN) -- http://www.alescofinancial.com/-- is a specialty finance real estate investment trust (REIT). The company is externally managed by Cohen & Company Management LLC, a subsidiary of Cohen Brothers LLC (which does business as Cohen & Company), an alternative investment management firm, which, since 2001, has provided financing to small and mid-sized companies in financial services, real estate and other sectors. BLUE HERON: Moody's Slashes Rating on $1.113BB Notes to 'Baa1' -------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Blue Heron Funding VI, Ltd. Class Description: $1,113, 750,000 Class A-1 Blue Heron Funding VI Notes, due May 21, 2047 -- Prior Rating: Aaa -- Current Rating: Baa1, on review for possible downgrade Class Description: $25,000,000 Class A-2 Blue Heron Funding VI Notes, due May 21, 2047 -- Prior Rating: Aaa -- Current Rating: B1, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: Euro $89,936,000 (U.S. $105,000,000) Class B Blue Heron Funding VI Notes, due May 21, 2047 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the structured finance securities. BLUEGREEN CORP: Moody's Rates $20MM Line of Credit Caa1 ------------------------------------------------------- Moody's assigned a Caa1 rating to Bluegreen Corporation's $20 million senior unsecured line of credit. Additionally, the ratings outlook was revised to negative from stable. Concurrently, Moody's affirmed the company's B2 Corporate Family Rating and B2 Probability of Default Rating. The revision of Bluegreen's ratings outlook to negative from stable reflects Moody's expectations of lower operating performance over the intermediate term driven by the general economic slowdown coupled with the sustained elevated fuel prices. With properties that are within driving distances of major metropolitan areas, the increased gas prices could result in lower visitation to the company's properties. Additionally, the credit markets could hamper the company's ability to raise financing in order to continue its resort development activity. The B2 Corporate Family Rating reflects the company's highly leveraged position, significant dependence on third party financing, high default rate of customer loan receivables, exposure to real estate development risk, and significant competition within the timeshare segment. The Corporate Family Rating also considers the drive-to nature of Bluegreen's resort properties, adequate liquidity and stable operating performance. Bluegreen has experienced some deterioration in its receivables portfolio with the average annual default rate for the vacation ownership interval receivables increasing to 7.9% for the twelve months ended March 31, 2008. Additionally, approximately 31% of the company's receivables portfolio had FICO scores below 620. These rating was assigned: -- Caa1 (LGD5/83%) rating on $20 million Senior Unsecured Line of Credit. These ratings were affirmed: -- B2 Corporate Family Rating, and; -- B2 Probability of Default Rating. The ratings outlook was revised to negative from stable. Headquartered in Boca Raton, Florida, Bluegreen Corporation is a leading acquirer, developer and marketer of vacation ownership interests in resorts as well as residential and homesites. For the twelve months ended March 31, 2008, the company generated approximately $684.2 million in revenues. CANADIAN TRUSTS: Court Delays Approval of ABCP Restructuring Plan ----------------------------------------------------------------- The Pan-Canadian Investors Committee for Third-Party Structured ABCP disclosed that the Ontario Superior Court of Justice has adjourned the request for approval of the Committee's plan to restructure $32 billion of third-party asset-backed commercial paper under the Companies Creditors Arrangement Act. In his decision, Justice Colin Campbell found that the Plan represents a laudable business solution. He held that the statement provided in the Plan, insofar as it would bar claims against third parties for negligence relating to ABCP, may well be appropriate under the CCAA. However, to the extent the statement could extend to fraud claims, he adjourned the matter for further submissions as to whether the Plan can be approved and, in particular, whether there could be a process within the CCAA to deal with legitimate, specific and particularized claims of noteholders for fraud, if any, against various parties in connec tion with ABCP. Judge Campbell stated that, if the parties can agree on a dispute resolution process within the ambit of the CCAA to deal with serious claims of fraud, the Plan can go forward immediately. He directed the parties to return to report on the proposals, if any, for resolving potential claims in fraud by no later than May 30, 2008. The judge also asked that a hardship consideration process to deal with the special circumstances, including "some elderly individuals and families holding through corporations their entire family savings," be considered by the Committee and reported on to the Court. "We look forward to working with the Monitor and other stakeholders to see if a process can be developed that meets the concerns raised by the Court so that the Plan may be sanctioned and implemented as soon as possible for the benefit of all noteholders," Purdy Crawford, chair of the Investors Committee, said. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of Sept. 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. CANARGO ENERGY: Posts $1.2 Million Net Loss in 2008 First Quarter ----------------------------------------------------------------- Canargo Energy Corp. reported a net loss of $1.2 million for the first quarter ended March 31, 2008, compared with a net loss of $5.9 million in the same period in 2007. Results for the three months ended March 31, 2007, included a net loss, net of taxes and minority interest, of $1.8 million associated with the discontinued operations of Tethys Petroleum Limited. The company recorded operating revenue from continuing operations of $2.6 million during the three month period ended March 31, 2008, compared with $446,847 for the three month period ended March 31, 2007. This increase is attributable to higher sales volumes and higher average net sales prices achieved from the Ninotsminda Field in the first quarter of 2008. Ninotsminda Oil Company Limited sold 27,078 barrels of oil for the three month period ended March 31, 2008, compared to 7,508 barrels of oil for the three month period ended March 31, 2007. For the three month period ended March 31, 2008, NOC's net share of the 39,143 barrels (430 barrels per day) of gross oil production for sale from the Ninotsminda Field in the period amounted to 25,443 barrels (280 barrels per day). In the period, 1,635 barrels of oil was sold from storage. For the three month period ended March 31, 2007, NOC's net share of the 43,881 barrels (488 barrels per day) of gross oil production was 30,898 barrels (343 barrels per day). The operating loss from continuing operations for the three month period ended March 31, 2008, amounted to $228,001 compared with an operating loss of $1,954,863 for the three month period ended March 31, 2007. The decrease in operating loss is attributable to increased operating revenues and decreased selling, general and administration costs partially offset by increased field operating expenses, direct project costs and increased depreciation, depletion and amortization in the period. Other expense decreased to $957,086 for the three month period ended March 31, 2008, from from $2,136,539 for the three month period ended March 31, 2007. The decrease in other expense is primarily a result of lower loan interest payable and amortised debt discount for the three month period ended March 31, 2008, compared to the three month period ended March 31, 2007. The loss from continuing operations of $1,185,087 for the three month period ended March 31, 2008, compares to a net loss from continuing operations of $4,091,402 for the three month period ended March 31, 2007. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed $59.9 million in total assets, $20.7 million in total liabilities, $2.1 million in temporary equity, and $37.1 million in total stockholders' equity. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $5.9 million in total current asets available to pay $8.4 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?2c1c Going Concern Disclaimer As reported in the Troubled Company Reporter on March 18, 2008, L J Soldinger Associates LLC exressed substantial about CanArgo Energy Corporation's ability to continue as a going concern after it audited the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditor reported that the company has incurred net losses since inception and does not have sufficient funds to execute its business plan or fund operations through the end of 2008. In the three month period ended March 31, 2008, and years ended Dec. 31, 2007, and 2006, the company's revenues from operations did not cover the costs of its operations. The company said that its ability to continue as a going concern is dependent upon raising capital through debt or equity financing on terms acceptable to the company in the immediate short-term. If the company is unable to obtain additional funds when these are required or if the funds cannot be obtained on terms favourable to the company, it may be required to delay, scale back or eliminate its exploration, development and completion program or enter into contractual arran gements with third parties to develop or market products that thecompany would otherwise seek to develop or market itself, or even be required to relinquish its interest in its properties or in the extreme situation, cease operations altogether. About CanArgo Energy CanArgo Energy Corporation (AMEX: CNR) -- http://www.canargo.com/ -- is an independent oil and gas exploration and production company with its oil and gas operations currently located in Georgia. CASH SYSTEMS: March 31 Balance Sheet Upside-Down by $1.9 Million ---------------------------------------------------------------- Cash Systems Inc.'s consolidated balance sheet at March 31, 2008, showed $58.2 million in total assets and $60.1 million in total liabilities, resulting in a $1.9 million total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $41.9 million in total current assets available to pay $48.0 million in total current liabilities. The company posted a net loss of $4.7 million for the first quarter ended March 31, 2008, compared with a net loss of $1.4 million in the same period a year ago. Revenue for the quarter ended March 31, 2008, was $27.1 million compared to $25.2 million for the same period in 2007. The increase in revenue is primarily due to an increase in overall transaction volume. Total operating expenses for the three months ended March 31, 2008, were $27.9 million compared to $25.4 million for 2007. Interest expense increased $38.2 million, or 3.3%, to $1.2 million for the three months ended March 31, 2008, when compared to the same period last year. The company also recorded a loss on extinguishment of debt during the three months ended March 31, 2008, in the amount of $2.6 million representing the difference between the carrying value of the First Amended and Restated Notes and Warrants and the fair market value of the Second Amended and Restated Notes and Warrants. 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?2c23 Going Concern Disclaimer As reported in the Troubled Company Reporter on April 29, 2008, Virchow, Krause & Company LLP, in Minneapolis, expressed substantial doubt about Cash Systems Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring operating losses, negative cash flows from operations, negative working capital and accumulated deficit. In addition, the holders of the company's Second Amended and Restated Notes have the right to require the company to redeem a portion of such notes on Oc. 10, 2008, in an amount not to exceed $12.1 million in the aggregate, and will have the right to accelerate the maturity of the outstanding balance of the Second Amended and Restated Notes upon an event of default, including following a delisting of the company's common stock from The NASDAQ Global Market. The company anticipates that its existing capital resources will enable it to continue operations through approximately October 2008, unless prior to that date payments of certain other accrued expenses are accelerated, the company's common stock is delisted from The NASDAQ Global Market, and the company's note holders elect to accelerate the maturity of the outstanding balance of the Second and Amended and Restated Notes, or unforeseen events or circumstances arise that negatively affect the company's liquidity. Management will need to take immediate steps to reduce operating expenses, which may include seeking concessions from customers and vendors in the meantime. If it fails to raise additional capital prior to the earlier of October 2008 and the occurrence of any of these events, the company may be forced to cease operations. About Cash Systems Based in Las Vegas, Cash Systems Inc. (Nasdaq: CKNN) -- http://www.cashsystemsinc.com/-- is a provider of cash-access and related services to the retail and gaming industries. Cash Systems' products include its proprietary cash advance systems, ATMs and check cashing solutions. CATHOLIC CHURCH: Fairbanks Wants Claims Bar Date Set Dec. 2 ----------------------------------------------------------- The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, asked the U.S. Bankruptcy Court for the District of Alaska to establish Dec. 2, 2008, as the time within which proofs of claim against the bankruptcy estate are to be filed. The Diocese disclosed that it consulted with the Office of the United States Trustee for Region 18, and counsel for the Official Committee of Unsecured Creditors regarding the the appropriate Bar Date under the circumstances of the case. With respect to claims concerning executory contracts and unexpired leases, the Diocese also asked the Court to set a bar date for those claims as the earlier of: (i) 30 days from the date of an order rejecting the executory contract or unexpired lease; or (ii) 30 days from the date of a plan of reorganization is confirmed. Starting 2002, the Diocese began receiving lawsuits alleging that acts of abuse had been committed by clergy and others within the Diocese for which CBNA was liable. The claims were made by adults based upon acts that they alleged occurred as many as 30 years prior to bringing the suit. By the bankruptcy filing, there were 150 claims pending against the Diocese in the Alaska state court. While defending the abuse cases, the defense has consumed both the Diocese's time and money. In addition, the Diocese's primary insurer has not participated in a manner that would have allowed the parties to engage in meaningful settlement negotiations and resolve the cases. Consequently, the Diocese filed a Chapter 11 to case deal with: -- all the cases and claimants; -- any other claims, which have not yet been asserted against the Diocese; and -- all of the victims in a fair, just and equitable manner, considering the Diocese's limited resources. Susan G. Boswell, Esq., at Quarles & Brady Streich Lang, LLP, in Tucson, Arizona, contended that for the Diocese to be able to fairly compensate all victims and other creditors, and to confirm a plan of reorganization, it is necessary to determine the universe of potential claimants against the Diocese, which include: -- secured claims of creditors; -- unsecured claims of trade creditors, vendors and other persons or entities, who provide goods or services to the Diocese; and -- tort claims, which are unsecured claims of persons, who contend they were abused by clergy or other persons employed by the Diocese, and who contend that the Diocese is liable under various theories. The Tort Claims consist of claims filed by Tort Claimants, (i) who have filed suit against the Diocese, (ii) those who have come forward and informed the Diocese of potential claims, but who have not filed any legal actions, and (iii) those who have never come forward and are not presently known to the Diocese. The Diocese desires to move expeditiously toward a resolution in the Reorganization Case for the best interests of all creditors and parties-in-interest, Ms. Boswell asserted. Accordingly, it is necessary that the universe of claims be identified as quickly as possible while at the same time ensuring that broad notice of a bar date is given. To allow maximum recovery for proper claimants, it is important for the Diocese to have an opportunity to review the claims to evaluate whether the Diocese is the proper party against which a claim should be asserted, and the validity of the underlying claim, she said. Proofs of Claim Form The Diocese proposed to modify the Official Bankruptcy Form No. 10 to elicit necessary information for the resolution of the Tort Claims. The Diocese further proposed that the Claim Form for other creditors' claims be modified only slightly to clearly advise claimants that they should only use this claim form if they are asserting claims other than Tort Claims. Ms. Boswell said that special circumstances exist because the information, which will be requested, is critical to a reasonable evaluation and analysis of the liability of the Diocese for the alleged Tort Claims. Each proof of claim form will be designed to ensure claimants provide necessary information in a way as to allow the Diocese to determine the nature, extent and validity of the Tort Claims, while being sensitive to the special issues for the claim holders. To facilitate estimation proceedings, which might occur, and to facilitate negotiations toward a consensual plan, it is important that the Diocese and others, who are given access to the Tort Claim Form, know the basic information related to the Tort Claim as early as possible, Ms. Boswell explains. Bar Date and Publication Notices The Diocese proposed forms of bar date notices for both the Tort Claimants and the Non-Tort Claimants. Once the Bar Date Notices are approved by the Court, the Diocese will send the relevant proof of claim form to all creditors and others entitled to receive notice pursuant to Rule 2002(a)(7) of the Federal Rules of Bankruptcy Procedure. To ensure that the Diocese has captured the universe of potential claimants, the Diocese also proposes to provide notice of the Bar Date through publication of a publication notice. Since the Diocese is one of the poorest in the nation, and many potential creditors may not receive a newspaper, have a computer, or have other means by which to access the Publication Notice, the Diocese has attempted to create some unconventional methods to disseminate Bar Date information, in addition to religious publications, regional and national newspapers and other Alaska- based publications. The Publication Notice will be published three times in each of these publications: * the Fairbanks Daily News Miner; * the Anchorage Daily News; * the Seattle Times; * the Oregonian; * the Artic Sounder; * the Bristol Bay Times; * the Cordova Times; * the Dutch Harbor Fisherman; * the Seward Phoenix Log; * the Tundra Drums; * the Delta Discovery; * the Nome Nugget; and * the Alaska Bush Shopper Publication Notice will also be published twice in USA Today. The Diocese will likewise post the Notices in certain locations that are located in the extremely remote areas, but may be close to one of the parishes, including the post offices, universities, and general stores. "[T]he Debtor is exploring publication on one or more of the Alaska native corporation publications and will supplement the publication proposal prior to the hearing on this Motion," Ms. Boswell said. The Diocese will post the Notices on its Web site, and on parish bulletins. It will also make (i) an announcement on its radio station, KNOM, in both in English, and in Yu'pik, a native Alaskan language, and (ii) public service announcements on the Alaska Public Radio Network. In sum, the Diocese asked the Court to (i) provide that December 2 Bar Date is appropriate under the case's circumstances, (ii) approve the proposed forms of the proofs of claim and notices, (iii) order that any creditor, who fails to timely file a proof of claim pursuant to the Bar Date, will be prohibited from participating in the Reorganization Case with respect to voting on a plan of reorganization, distribution under a plan, or in any other regard, and (iv) rule that any creditor's claim, which is untimely filed, will be discharged. About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's exclusive plan filing period expires on June 29, 2008. (Catholic Church Bankruptcy News, Issue No. 125; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Fairbanks Wants to Hire Future Claims Rep. ----------------------------------------------------------- Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Church in Alaska, asked the U.S. Bankruptcy Court for the District of Alaska to: -- find that future tort claimants are parties-in-interest in the reorganization case; and -- appoint a future claims representative to represent the Future Tort Claimants, who will: * make appearances; * file pleadings; * file a proof of claim on behalf of the Future Tort Claimants; * participate in negotiating a plan of reorganization; * participate in any claims estimation process; and * take other actions, or perform other duties as the Court may authorize upon request of the Diocese or other party- in-interest. Substantially all of the individuals who alleged that they were sexually abused by priests and others associated with the Diocese assert that the incidents occurred in rural villages during the 1950s, 1960s, 1970s or early 1980s, relates Susan G. Boswell, Esq., at Quarles & Brady Streich Lang, LLP, in Tucson, Arizona. She noted that the Catholic Bishop of Northern Alaska is not aware of any allegations of abuse occurring after the early 1980s. There is a dispute between the Diocese of Fairbanks and the Tort Claimants as to the reach and applicability of certain provisions of Alaska law with respect to sex abuse claims, Ms. Boswell said. Among other defenses, the Diocese asserts that the Tort Claims are time-barred by the two-year statute of limitations for tort actions. Section 09.10.065 of the Alaska Statutes eliminated the civil statute of limitations for sexual abuse claims as to perpetrators. However, the Alaska Supreme Court recently made it clear that Section 09.10.065 did not apply retrospectively. Therefore, Ms. Boswell contended, Section 09.10.065 did not have to reach the issue of whether it applies to non-perpetrators. Tort Claimants suing other dioceses and archdioceses throughout the United States attempt to overcome the statute of limitations by asserting various factual theories that involve recent discovery of injuries resulting from childhood sexual abuse. The Diocese disputed the "discovery" allegations, and the legal validity of certain tolling theories. However, to comprehensively deal with all of the Tort Claims, including current and future claims, it is necessary to recognize the possibility of future claims, Ms. Boswell explained. Ms. Boswell argued that the appointment of a Future Claims Representative is (i) appropriate under the circumstances of the bankruptcy case because future tort claimants may hold "claims," as defined by the Bankruptcy Code, and (ii) necessary to enable the Court to render valid and binding judgments against Future Tort Claimants by enabling them, through a duly-appointed fiduciary representative, to participate in the reorganization process. "Although CBNA does not believe that the universe of Future Tort Claimants is significant, they should be represented," Ms. Boswell told the Court. She pointed out that the reorganization case seeks to balance the rights and needs of all prepetition creditors, including Future Tort Claimants, with the Diocese's continued ministry and mission, while taking into account its limited resources. About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's exclusive plan filing period expires on June 29, 2008. (Catholic Church Bankruptcy News, Issue No. 125; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Fairbanks May File Chapter 11 Plan on July 15 -------------------------------------------------------------- In a 12-page status report filed with the U.S. Bankruptcy Court for the District of Alaska, the Catholic Bishop of Northern Alaska disclosed that it is planning to submit a plan of reorganization on or about July 15, 2008. The Diocese said it hopes to work cooperatively with the Official Committee of Unsecured Creditors, and incorporate its constructive input into formulating the Plan. Since the Diocese has until June 29, 2008, to exclusively file the Plan, it may seek an extension of the exclusivity periods to file the Plan, and to obtain the Plan's acceptance, said Susan G. Boswell, Esq., at Quarles & Brady Streich Lang, LLP, in Tucson, Arizona. The Diocese is not opposed to combining the hearing on approval of the Disclosure Statement and confirmation of the Plan, Ms. Boswell said. However, given the possible issues in the case and the varying interests of parties-in-interest, she asserted that doing so at this time would be neither productive, nor would it be cost-effective. The Diocese also believes that a mediation involving the Diocese, the Creditors Committee, and insurance carriers would be productive in bringing about a prompt and fair resolution to the case. Accordingly, the Diocese asked Judge McDonald to command the parties to begin mediation as soon as practicable. According to the report, the Diocese anticipates certain additional proceedings in the case, which may affect the formulation of the Plan. The Diocese said that it may seek approval of a debtor-in-possession financing to help fund administrative expenses. Although DIP financing would affect the content of any plan, the Diocese does not believe that it will delay the Plan's formulation. Ms. Boswell further related that the Creditors Committee may initiate litigation against the Diocese and the parishes seeking a judicial determination that the property, which the Diocese scheduled as held for others, is property of the bankruptcy estate that the Diocese can and should use to pay the tort claims. The Diocese, however, hopes to work constructively with the Creditors Committee to determine how much will be paid to the Tort Claimants and from what sources. She noted that the Diocese will devote resources to funding the Plan to compensate the Tort Claimants. "As with other diocesan reorganization cases, most of the funds necessary to pay claims will come from insurance proceeds. CBNA believes that this is most cost effectively accomplished by focusing on the insurance assets and determining the extent of claims against the estate," Ms. Boswell said. In other diocesan Chapter 11 cases, the issue on what constituted estate property were hotly litigated, and has delayed the plan process, Ms. Boswell pointed out. She told Judge McDonald to consider the cases of the Diocese of Spokane and the Archdiocese of Portland in Oregon, as compared to those of the Diocese of Tucson and the Diocese of Davenport. She reminded the Court that Fairbanks "does not have the assets to sustain these fights and still have funds to pay Tort Claimants." The report also said that the Diocese "will strongly resist any efforts to wrestle away its avoidance powers without its consent," if ever the Creditors Committee would seek to obtain control over the Diocese's avoidance actions. The Diocese informed the Court that the tenant on its Pilgrim Springs property has breached the lease. The Diocese believes that the property is marketable for its geo-thermal potential. Committee Responds "On April 16, 2008, Pope Benedict XVI addressed . . . bishops in the United States, to 'bind up the wounds caused by every breach of trust, to foster healing, to promote reconciliation and to reach out with loving concern to those so seriously wronged' by the gravely immoral behavior of the sexual abuse of minors," relates David H. Bundy, Esq., in Anchorage, Alaska. However, Mr. Bundy notes, the Diocese filed the case status report "more geared to managing its public relations than following the Pope's admonition." If the Diocese's public relations consultants have taught it to use phrases like "fairly, justly, and equitably compensate the victims," then, the Diocese should take the next step, and remove the words "alleged" and "contend" from its pleadings, Mr. Bundy asserts. He argues that the Diocese should stop referring to survivors of childhood sexual abused as "alleged" victims. Mr. Bundy contended that the Diocese is concerned about avoiding uncomfortable issues, and making the funding of the Plan the problem of the Creditors Committee, the Future Claims Representative, and the insurance carriers. "The proposal to mediate insurance claims in June when the bar date will not expire until early December appears to be a not so subtle effort to avoid the full disclosure of the scope of the abuse in the Diocese," Mr. Bundy stressed out. He adds that the Diocese's promise or threat to dump insurance litigation into a post-confirmation trust, and walk away, is "tantamount to a dereliction of duty." Mr. Bundy informed the Court that the Diocese has not provided any response to some of the Creditors Committee's document requests, which include copies of all the Diocese's statutes or laws for the last 10 years, and all documents relating to the real property transaction between the Diocese and the Jesuits. The Creditors Committee does not intend to engage in wasteful litigation, Mr. Bundy told the Court. However, the Diocese appears adamant about filing the Plan before the proposed claims bar date, and ignore the value of the parishes and preserve all of its assets. "Under these circumstances, the Committee will not sit idly by and allow this Diocese to shirk its fiduciary duties to the creditors, maneuver around the property issues, and preserve its assets so that it can 'swiftly' exit [C]hapter 11," Mr. Bundy said. About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's exclusive plan filing period expires on June 29, 2008. (Catholic Church Bankruptcy News, Issue No. 125; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Judge Closes Spokane Diocese's Bankruptcy Case --------------------------------------------------------------- Judge Patricia C. Williams of the U.S. Bankruptcy Court for the Eastern District of Washington issued a final decree on May 12, 2008, closing the bankruptcy case of the Diocese of Spokane. Judge Williams noted that since the bankruptcy estate has been fully administered, and the deposit required by the Diocese's Plan Trust has been distributed, the Plan Trustee, Gloria Z. Nagler, Esq., will be discharged as trustee. Spokane's Second Amended Joint Plan of Reorganization was confirmed on April 24, 2007, and was declared effective on May 31. About The Diocese of Spokane The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. The Diocese of Spokane, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes delivered an Amended Plan of Reorganization, and a Disclosure Statement describing that Plan to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams approved the disclosure statement on March 8, 2007. On April 24, 2007, the Court confirmed Spokane's 2nd Amended Joint Plan. That plan is effective May 31, 2007. (Catholic Church Bankruptcy News, Issue No. 125; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CATHOLIC CHURCH: Spokane's Plan Trust Has $6 Million Cash Left -------------------------------------------------------------- The Diocese of Spokane's Plan Trustee, Gloria Z. Nagler, Esq., at Nagler & Associates in Seattle, Washington, filed with the U.S. Bankruptcy Court for the Eastern District of Washington semi- annual financial reports on the remaining assets of the Plan Trust. The Plan Trustee disclosed that the Diocese's Settlement Fund had total assets of $6,391,677 as of Dec. 31, 2007. Moreover, the Settlement Fund had $6,347,138 in excess of receipts over disbursements for the period covering May 8, 2007, through Dec. 31, 2007. About The Diocese of Spokane The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. The Diocese of Spokane, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes delivered an Amended Plan of Reorganization, and a Disclosure Statement describing that Plan to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams approved the disclosure statement on March 8, 2007. On April 24, 2007, the Court confirmed Spokane's 2nd Amended Joint Plan. That plan is effective May 31, 2007. (Catholic Church Bankruptcy News, Issue No. 125; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) C-BASS CBO: Moody's Junks Ratings on Three Note Classes ------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by C- BASS CBO XV Ltd. Class Description: $565,800,000 Class A First Priority Senior Secured Floating Rate Notes Due 2041-1 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Ba3, on review for possible downgrade Class Description: $39,100,000 Class B Second Priority Senior Secured Floating Rate Notes Due 2041 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Class Description: $44,800,000 Class C Third Priority Secured Floating Rate Deferrable Interest Notes Due 2041 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $19,500,000 Class D Fourth Priority Secured Floating Rate Deferrable Interest Notes Due 2041 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the structured finance securities. CELL THERAPEUTICS: March 31 Balance Sheet Upside-Down by $124.1MM ----------------------------------------------------------------- Cell Therapeutics Inc.'s consolidated balance sheet at March 31, 2008, showed $78.6 million in total assets, $192.8 million in total liabilities, and $9.9 million in no par value preferred stock, resulting in a $124.1 million total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $27.6 million in total current assets available to pay $47.9 million in total current liabilities. Net loss attributable to common shareholders for the quarter ended March 31, 2008, which includes a one-time inducement payment of $16.2 million to convert preferred shares into common shares, totaled $54.6 million compared to $28.7 million for the comparable period in 2007. The increase in net loss attributable to common shareholders was also due, in part, to an increase in interest expense and make- whole interest payments related to the 9% convertible senior notes and the loss recorded on the exchange of the 5.75% convertible senior subordinated and subordinated notes in 2008. This was offset by a gain on the derivative liability related to conversions of the 9% convertible senior notes. The company also had a foreign exchange loss for the quarter ended March 31, 2008, compared to a gain for the same period in 2007. Total revenues for the quarter were $3.4 million compared to $20,000 for the first quarter of 2007. Gross product sales of Zevalin(R) (Ibritumomab Tiuxetan) reached $3.8 million in the first quarter of 2008. Total operating expenses increased to $28.4 million for the quarter ended March 31, 2008, compared to $23.6 million for the same period in 2007 mainly as a result of increased expenses related to the creation of commercial infrastructure to support Zevalin and fees associated with capital structure advisory services. The company had approximately $15.3 million in cash and cash equivalents, securities available-for-sale, and interest receivable as of March 31, 2008. This does not include $6.2 million in restricted cash held in escrow and net proceeds, before fees and expenses, of approximately $22.9 million from the issuance on April 30, 2008, of preferred stock, convertible notes, and warrants. The company also expects to receive an additional $5.0 million in gross proceeds from an additional sale of securities to the purchaser of the Series E preferred stock and 13.5% convertible senior notes prior to July 4, 2008, provided adequate shares are available for issuance of such securities at that time. "In the second quarter we expect to see the positive financial impact of our strategy to focus resources on our late-stage development products and growing Zevalin sales. With our commercial team now in place to support Zevalin, we expect revenues to continue to increase over the next few quarters," said James A. Bianco, M.D., president and chief executive officer of CTI. "In addition, over the last two quarters, we have been successful in cleaning up our balance sheet, retiring or exchanging approximately 74.0% of current debt and preferred securities. With the majority of the investments in OPAXIO and pixantrone behind us we look forward to the review of the Marketing Authorization Application for OPAXIO and to final results of the pixantrone pivotal trial." 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?2c27 Going Concern Disclaimer As reported in the Troubled Company Reporter on Apirl 4, 2008, Stonefield Josephson Inc. in Los Angeles, Calif., expressed substantial doubt about Cell Therapeutics Inc.'s ability to continue as a going concern after auditing company's financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the company has substantial monetary liabilities in excess of monetary assets as of Dec. 31, 2007, including approximately $19.8 million of convertible subordinated notes and senior subordinated notes which mature in June 2008. The company has incurred losses since inception and expects to generate losses from operations for at least the next couple of years primarily due to research and development costs for Zevalin, OPAXIO (paclitaxel poliglumex), pixantrone, and brostallicin. The company said that its $15.3 million in cash and cash equivalents, securities available-for-sales, as of March 31, 2008, even with the $5.0 million additional financing from a second offering of securities to the purchaser of the Series E preferred stock and 13.5% convertible senior notes, will not sufficient to fund the company's planned operations for the next twelve months as well as repay approximately $10.7 million in principal due on its convertible subordinated and senior subordinated notes in June 2008. About Cell Therapeutics Headquartered in Seattle, Cell Therapeutics Inc. -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. CHARLES RIVER: Moody's Slices Note Ratings on Three Classes to C ---------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Charles River CDO I, Ltd. Class Description: $214,000,000 Class A-1A Floating Rate Notes Due December 9, 2037 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $15,000,000 Class A-1B Principal Only Notes Due December 9, 2037 -- Prior Rating: Aaa -- Current Rating: Ba2, on review for possible downgrade Class Description: $20,000,000 Class A-2F Fixed Rate Notes Due December 9, 2037 -- Prior Rating: Aa2 -- Current Rating: B3, on review for possible downgrade Class Description: $15,000,000 Class A-2V Floating Rate Notes Due December 9, 2037 -- Prior Rating: Aa2 -- Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $3,000,000 Class B-F Fixed Rate Notes Due December 9, 2037 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: C Class Description: $18,000,000 Class B-V Floating Rate Notes Due December 9, 2037 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: C Class Description: $4,800,000 Class C Fixed Rate Notes Due December 9, 2037 -- Prior Rating: Ca -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the structured finance securities. CHARMING SHOPPES: Board Member Strandjord to Forego Re-Election --------------------------------------------------------------- Charming Shoppes Inc. Board Director Jeannine Strandjord will not stand for re-election at the company's Annual Meeting. As reported in the Troubled Company Reporter on May 9, 2008, the company and The Charming Shoppes Full Value Committee reached an agreement to resolve the proxy contest related to the company's 2008 Annual Meeting of Shareholders. Charming Shoppes Full Value Committee, the investor group that holds an 8% stake in the Lane Bryant and Fashion Bug owner, has called for the sale of noncore assets, cost cutting and slower store expansion. Under the terms of the agreement, the company will nominate to its board of directors: -- two of management's nominees, Dorrit J. Bern, the company's chairman, president and chief executive officer and Alan Rosskamm; -- two of the Committee's nominees, Arnaud Ajdler and Michael C. Appel; and -- two experienced retail executives, Richard W. Bennet III, former vice chairman of The May Department Stores Company and Michael Goldstein, former chairman and chief executive officer of Toys 'R' Us Inc. As previously disclosed, the company and the Committee have each agreed to vote their shares in favor of these nominees and all of the proposals to be presented to shareholders at the Annual Meeting. With the addition of Messrs. Ajdler, Appel, Bennet and Goldstein, Charming Shoppes' board will be expanded to eleven directors, ten of whom will be independent. According to a Securities and Exchange Commission filing, there were no disagreements between Ms. Strandjord and the company on any matter relating to the companys operations, policies or practices that resulted in Ms. Strandjords decision to withdraw her name for reelection or the timing of her decision. Ms. Strandjord will serve as a director until her term expires at the Annual Meeting and until her successor has been elected and qualified. Headquartered in Bensalem, Pennsylvania, Charming Shoppes Inc. (NASDAQ:CHRS) -- http://www.charmingshoppes.com -- is a retailer focused on women's plus-size specialty apparel. The company operates in two segments: retail stores segment and direct-to- consumer segment. The company's retail stores segment operates retail stores and related e-commerce websites through brands, such as Lane Bryant, Fashion Bug, Catherines Plus Sizes, Lane Bryant Outlet and Petite Sophisticate outlet. The company's direct-to- consumer segment operates a number of apparel, accessories, footwear, and gift catalogs and related e-commerce Websites through its Crosstown Traders business. During the fiscal year ended Feb. 3, 2007, the sale of plus-size apparel represented approximately 74% of the Company#s total net sales. As of Feb. 2, 2008, Charming Shoppes Inc. operated 2,409 stores in 48 states. * * * As reported in the Troubled Company Reporter on March 25, 2008, Standard & Poor's Ratings Services lowered the corporate credit rating on Charming Shoppes Inc. to 'B+' from 'BB-.' The outlook remains negative. CHARTER COMMS: Gets Nasdaq Compliance Notice on Price Listing ------------------------------------------------------------- Charter Communications, Inc. received notice from the Nasdaq Global Select Stock Market that it is compliant with the minimum price continued listing standard of the Nasdaq Global Select Stock Market. The company regained compliance when the companys Class A common stock closed at or above $1.00 for the 10 consecutive business days ending May 12, 2008. On May 12, 2008, Charter reported first quarter earnings for the three months ended March 31, 2008. For the quarter, Charter reported revenue growth of 10.5%, revenue generating unit growth of 7.1%, and average revenue per basic customer growth of 13.4% on a pro forma basis versus the comparable period in 2007. Headquartered in St. Louis, Missouri, Charter Communications Inc. (Nasdaq: CHTR) -- http://www.charter.com/-- is a broadband communications company and the third-largest publicly traded cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. * * * As reported in the Troubled Company Reporter on March 14, 2008, Moody's Investors Service affirmed these ratings for Charter Communications Inc.: (i) corporate family rating: Caa1; (ii) probability-of-default rating: Caa2; and (iii) senior unsecured notes: Ca (LGD5 -- 87%). Possible Bankruptcy As reported in the Troubled Company Reporter on May 14, 2008, the company said that if, at any time, additional capital or borrowing capacity is required beyond amounts internally generated or available under the company's credit facilities, it would consider issuing equity, issuing convertible debt or some other securities, further reducing the company's expenses and capital expenditures, selling assets, or requesting waivers or amendments with respect to the company's credit facilities. If the above strategies were not successful, the company says it could be forced to restructure its obligations or seek protection under the bankruptcy laws. CHASE FUNDING: S&P Junks Rating on Class IB Certificates -------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of mortgage loan asset-backed certificates from Chase Funding Loan Acquisition Trust Series 2001-C2 and Chase Funding Trust Series 2002-1. S&P removed two of the lowered ratings from CreditWatch with negative implications. In addition, S&P affirmed its rating on class IIM-2 from Chase Funding Trust Series 2003-1 and removed it from CreditWatch negative. Concurrently, S&P affirmed its ratings on 18 classes from these series. The downgrades reflect collateral performance that has eroded available credit support during recent months. As of the April 2008 remittance period, cumulative losses were 3.34% for series 2001-C2; for series 2002-1, cumulative losses were 1.19% and 1.90% for loan groups 1 and 2, respectively. Serious delinquencies (90- plus days, foreclosures, and REOs) were $4.83 million for series 2001-C2 and $2.64 million and $3.35 million for loan groups I and II, respectively, from series 2002-1. The current overcollateralization for both deals is below its target. The affirmations reflect stable collateral performance as of the April 2008 remittance period. Current and projected credit support percentages are sufficient to support the ratings at their current levels. Serious delinquencies for loan groups 1 and 2 from series 2003-1 are $2.944 million and $5.303 million, respectively. O/C for both loan groups from series 2003-1 is close to the target levels at $1.604 million and $2.344 million, respectively. Subordination, O/C, and excess spread provide credit support for these series. In addition, the IA-5 class from series 2003-1 is bond-insured by MBIA Insurance Corp. (AAA/Negative/-- financial strength rating). The loan pool consists of conventional, adjustable- and fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered and Removed from Creditwatch Negative Chase Funding Loan Acquisition Trust Series 2001-C2 Mortgage loan asset-backed certificates Rating ------ Class To From ----- -- ---- IB CCC B/Watch Neg Chase Funding Trust Series 2002-1 Mortgage loan asset-backed certificates Rating ------ Class To From ----- -- ---- IB BB BBB-/Watch Neg Rating Lowered Chase Funding Loan Acquisition Trust Series 2001-C2 Mortgage loan asset-backed certificates Rating ------ Class To From ----- -- ---- IM-1 A AA IM-2 BB A Rating Affirmed and Removed from Creditwatch Negative Chase Funding Trust Series 2003-1 Mortgage loan asset-backed certificates Ratings ------- Class To From ----- -- ---- IIM-2 BBB BBB/Watch Neg Ratings Affirmed Chase Funding Loan Acquisition Trust Series 2001-C2 Mortgage loan asset-backed certificates Class Rating ----- ------ IA-4 AAA IA-5 AAA Chase Funding Trust Mortgage loan asset-backed certificates Series Class Rating ------ ----- ------ 2002-1 IA-5,IA-6 AAA 2002-1 IIA-1,IIA-2 AAA 2002-1 IM-1,IIM-1 AA 2002-1 IM-2,IIM-2 A 2002-1 IIB BBB 2003-1 IA-5,IA-6 AAA 2003-1 IIA-2 AAA 2003-1 IM-1,IIM-1 AA 2003-1 IM-2 A 2003-1 IB BBB CHRISTAL DISTRIBUTION: Seeks Protection from Creditors Under CCAA ----------------------------------------------------------------- Christal Films Distribution obtained creditor protection under the Companies' Creditors Arrangement Act (Canada) from the Quebec Superior Court. The issued order seeks to protect Christal Films Distribution from its creditors and allows the restructuring of its activities. The order will be in force for a 30-day period. In the past months, the company said it undertook many efforts to reorganize the business, which was confronted by financial difficulty. Christal Films Distribution decided that a CCAA filing is the best alternative in the interests of the company, its employees, customers, creditors and other stakeholders. By virtue of the order issued by Justice Robert Mongeon of the Superior Court of Quebec, Raymond Chabot Inc. is the court appointed Monitor for the CCAA proceedings and will monitor Christal Films Distribution's ongoing operations, assist with the development and filing of a plan of arrangement with its creditors and other stakeholders, liaise with creditors, customers and other stakeholders and report to the Court. The Difficult Context of Film Distribution "[The] order is the result of the prevailing challenges facing the film distribution industry. Domestic and international markets are affected by the many changes within the film industry. Due to these circumstances, profit margins are becoming more limited," says Bertrand Langlois, Vice-President Finance at Christal Films Distribution. In this context, Christal Films Distribution claimed it has taken all the necessary measure in order to find and propose solutions to all stakeholders. The CCAA protection stays creditors, suppliers and others from enforcing any rights against Christal Films Distribution and Christal Films Distribution will use the opportunity to restructure its affairs. Christal Films Distribution will continue operations in the ordinary course during the CCAA proceedings. Christal Films Production Inc., the Debtor said, is not party to the legal proceedings. About Christal Films Distribution Christal Films Distribution Inc. is a Canadian company focused on the distribution and broadcast of feature films in all media, including theatre, DVD and television. Founded in 2001, Christal Films Distribution is headquartered in Montreal. DAVENPORT CDO: Moody's Slices Ratings on Three Classes to Caa3 -------------------------------------------------------------- Moody's Investors Service has downgraded the rating on the following notes issued by Davenport CDO I, Ltd.: Class Description: CP Notes -- Prior Rating: P-2 -- Current Rating: NP Moody's also announced that it has downgraded and left on review for further possible downgrade the ratings on these notes: Class Description: Up to $400,000,000 Super Senior A-1 Notes Due 2056 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Caa3 Class Description: Up to $500,000,000 Super Senior A-2 Notes Due 2056 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Caa3 Class Description: Up to $500,000,000 Super Senior A-3 Notes Due 2056 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Caa3 The rating downgrades taken today reflect the increased deterioration of the credit quality and the loss of over collateralization of the collateral pool comprised of collateralized debt obligations. The Senior Principal Coverage Test as reported by the Trustee on April 8, 2008, was 66.36% with the covenant for this test being 103.0%. The Coverage Test failure reflects the ongoing deterioration of the underlying portfolio that includes a number of CDOs that are currently in event of default. In addition, the credit deterioration of the underlying portfolio has increased the likelihood of payment default on the CP Notes and it has also increased the likelihood that the Put will not be available if it is required. These factors result in a level of risk to the CP notes that is no longer consistent with a Prime rating. Davenport CDO I, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. DELPHI CORP: WTC Balks at $750 Million Intercompany Loan Transfer ----------------------------------------------------------------- Wilmington Trust Company objects to the request of Delphi Corp. and its debtor-affiliates to authorize Delphi Automotive Systems Holdings, Inc., to grant Delphi Automotive Systems, LLC, additional intercompany loans of up to $750 million and to provide adequate protection to the Pension Benefit Guarantee Corporation in connection the transfers. WTC is the indenture trustee for the senior notes and debentures in the aggregate principal amount of $2 billion issued by the Debtors. WTC notes that, under the proposed transactions, DASHI -- a solve