/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080715.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, July 15, 2008, Vol. 12, No. 167 Headlines 203 SOUTH: Voluntary Chapter 11 Case Summary ACAS CRE: S&P Chips Ratings on 17 Note Classes, Removes Neg. Watch ACTIVISION INC: S&P Withdraws Ratings After Vivendi Acquisition ADELPHIA COMMS: Wants to Exclude Documents from Lucent Trial ADVANCED MICRO: Will Write Down $880MM, Mostly Due to ATI Purchase AGILYSYS INC: To Appeal Nasdaq's Decision to Delist Securities AMERICAN HOME: Asks Authority to Sell Up to $3MM Mortgage Loans AMERICAN HOME: Court Extends Removal Period Until Sept. 2 AMR CORP: Moody's to Review Corporate Family Rating for Likely Cut ARIAD PHARMACEUTICALS: Peter Nelson to Leave Board on August 29 ASARCO LLC: Has Court Nod to Expand Keegan's Insurance Services ASARCO LLC: AlixPartners OK'd to Replace Trumbull as Claims Agent ASARCO LLC: Court Okays Reduction of Wachovia Claim to $2,091,000 ASHLAND INC: $3.3 Bil. Hercules Deal Cues S&P's Negative Watch BABSON CLO: Moody's Assigns Ba2 Rating to Class E Notes Due 2018 BEATRIX READY: Case Summary & 20 Largest Unsecured Creditors BHM TECHNOLOGIES: Court Approves $45,000,000 DIP Financing BHM TECHNOLOGIES: Asks Court to Approve Solicitation Protocol BHM TECHNOLOGIES: Asks Court to Approve Disclosure Statement BIOJECT MEDICAL: Awards Shares in Lieu of $75K Cash to CEO Makar CAMBIUM LEARNING: Delayed Fin'l Statements Cue S&P to Junk Rating CASALE MARBLE: Case Summary & 20 Largest Unsecured Creditors CEDAR FUNDING: Case Summary & 20 Largest Unsecured Creditors CENTAUR: Gaming Board Refuses to Grant Gaming License CENTAUR LLC: Failure to Renew Gaming License Cues S&P's Neg. Watch CLEARPOINT BUSINESS: ComVest Group Discloses 15.7% Equity Stake CMT AMERICA: Case Summary & 19 Largest Unsecured Creditors CREDIT SUISSE: S&P Lowers Ratings on Seven Classes of Certificates CRIIMI MAE: S&P Cuts Rating on 1996-CI Trusts to CCC- from B DELPHI CORP: GM Wants to Participate in Appaloosa Adversary Suit DELPHI CORP: Retains W.Y. Campbell to Coordinate Brake Biz Sale DELPHI CORP: Wants to Modify 19.1% Stake in Ener1 Venture E*TRADE FINANCIAL: Sells Canadian Unit to Scotiabank for $442MM EVERGREEN INT'L: S&P Cuts Rating to B- on Weak Operating Outlook EXPRESS ENERGY: S&P's 'B' Rating Unmoved by $22.5MM New Facility FAREPORT CAPITAL: Provides Update on Financial Statement Reporting FONAR CORP: Subject to Nasdaq Delisting on Failure to Hold AGM GE COMMERCIAL: S&P Junks Ratings on Three Certificate Classes GENERAL MOTORS: CEO to Detail Further Cost Cutting Measures Today GENERAL MOTORS: Wants to Participate in Delphi-Appaloosa Lawsuit GREATWIDE LOGISTICS: Moody's Downgrades B3 Rating to D GS MORTGAGE: S&P Junks Rating on Class L Certificates GWLS HOLDINGS: S&P Cuts Corporate Credit Ratings to D HERCULES INC: S&P Puts $350MM Interest Debenture Under Neg. Watch HOLOGIC INC: S&P Assigns 'BB+' Rating on $800MM Amended Facility IMMUNICON CORP: Taps Stifel Nicolaus as Investment Banker INDEPENDENCE COUNTY: S&P's Outlook on $28MM Bonds Now Developing INDEPENDENCE VI: Fitch Downgrades Ratings on Six Note Classes INDEVUS PHARMA: Releases Operating Plan to Respond to NEBIDO Delay INDYMAC BANCORP: Says FDIC Eyes Selling Bank or Assets INFOSONICS CORP: Has Until January 6 to Comply with Bid Price Rule ISLE OF CAPRI: Moody's Changes Stable Outlook to Negative IXIS ABS: Moody's Cuts Ratings of Five Classes of Notes to C JEVIC TRANSPORTATION: Gets Court OK to Sell Property at Auction JIM PALMER: Files Voluntary Chapter 11 Case Summary LABELCORP HOLDINGS: Moody's Assigns Corporate Family Rating of B2 LEAP WIRELESS: Closes Sale of $250,000,000 Unsecured 4.5% Notes LEAP WIRELESS: Unit Closes Sale of $300 Mil. Unsecured 10% Notes LIBERTY MEDIA: S&P Revises Outlook to Stable on DIRECTV Agreement LINENS N THINGS: Court Okays Amended $100MM Trade Vendor Program LINENS N THINGS: To Auction Off Leases to Closing Stores LITHIUM TECH: Appoints Teho Kremers as Chief Executive Officer MAAX CORP: Files for Chapter 15, Sells Assets to Brookfield MAAX CORP: Chapter 15 Petition Summary MAGNA ENTERTAINMENT: Senior Vice President Brant Latta Resigns MANASQUAN CDO: Moody's Cuts Ratings of Two Classes of Notes to C MCCLATCHY CO: Revenue Decline Prompts S&P to Downgrade Ratings MIDWEST AIR: To Cut 40% of Staff as Part of Fleet Reduction MONTERRA ENTERPRISES: Taps Anna W. Drake P.C. as General Counsel MORGAN STANLEY: Moody's Cuts Ratings on Eight Classes of Notes MORTGAGES LTD: Wants to Access Southwest Value's $125 Million Loan MORTGAGES LTD: Taps Jennings, Strouss as General Counsel MSC 2007-SRR3: Fitch Puts Six Low-B Ratings Under Negative Watch MW JOHNSON: Section 341(a) Meeting Set for July 31 MW JOHNSON: Obtains Court's Interim Nod to Use Cash Collateral MW JOHNSON: Panel May Retain Hinshaw & Culbertson LLP as Attorneys MW JOHNSON: U.S. Trustee Names 3-Member Creditors Panel MW JOHNSON: Can Employ Lighthouse as Financial Consultant NATIONAL CITY: Quells Rumors of Unusual Depositor Activity NEMASKET REALTY: Case Summary & Seven Largest Unsecured Creditors NEPTUNE CDO: Collateral Decline Cues Fitch to Cut Five Note Rtngs OMNI FINANCIAL: Has Until October 8 to Comply with Nasdaq Criteria PINE TREE III: Moody's Cuts Rating of Notes Eight Notches to B2 PIXELPLUS CO: KPMG Samjong Expresses Going Concern Doubt PLASTECH ENGINEERED: JCI Says Unit Acquisition to Hurt Earnings PLASTECH ENGINEERED: Court Approves Intercreditor Funding Deal PLASTECH ENGINEERED: Says $365MM in Term Loans Have Secured Status PROGRESSIVE MOLDED: U.S. Trustee Appoints 5-Member Creditors Panel PROGRESSIVE MOLDED: Withdraws Bid to Employ Miller Buckfire PROGRESSIVE MOLDED: Has Until July 31 to Use Cash Collateral PROGRESSIVE MOLDED: CCCA Court Allows Chrysler to Take Tooling RAFFLES PLACE: Moody's Withdraws Ratings, Junks 2 Classes of Notes RED SHIELD: Section 341(a) Meeting Scheduled for August 5 SACRED HEART: Moody's Cuts Debt Rating to B3, Outlook Negative SALTON INC: Terminates Sale Agreement with Spectrum Brands SEALY CORP: June 1 Balance Sheet Upside-Down by $105.3 Million SOLAR COSMETIC: Bid Procedures Approved; To Pay Employees $300,000 SPECTRUM BRANDS: Terminates Sale Agreement with Salton Inc. STEVEN DALBY: Case Summary & Four Largest Unsecured Creditors STRIKER OIL: Restates 2007 Net Loss and Accumulated Deficit Data STRUCTURED ASSET: S&P Slashes Cl. B-2 Certs. Rating to CCC from A STEVE & BARRY'S: Asks Permission to Use Cash Collateral TCW GLOBAL: Fitch Cuts $27MM Class D Notes Rating to B+ from BB THOMAS JEFFERSON SCHOOL: S&P Trims 2005AB Bonds Rating to BB+ TOWER PARK: Case Summary & 18 Largest Unsecured Creditors UNI-MARTS LLC: Judge Walrath Approves Sale Bidding Procedures US DATAWORKS: Posts $11.67 Mil. Net Loss for FY Ended March 31 WASHINGTON MUTUAL: Says Well Capitalized After Shares Decline WATER TOWER: Voluntary Chapter 11 Case Summary WEIGHT WATCHERS: Full 17.5% VAT Imposed on UK Unit's Meeting Fees WESTERN NONWOVENS: Files for Bankruptcy; To Sell Assets to SBC * Fitch Says US Housing Downturn Will Likely Persist This Year * Fitch Reviews Ratings on 89 CDOs, Puts $7.9BB CDO on Neg. Watch * S&P Chips Ratings on 118 Classes from 13 RMBS Transactions * Three Chapter 11 Filers in Fortune Top 500 Companies * Consumer Bankruptcy Filings Up 30% in First Half of 2008 * Fulbright Forms Subprime and Credit Crisis Practice Group * Justice Dept. Names D. McDermott as U.S. Trustee for Region 9 * U.S. SEC to Probe Industry Controls Against False Information * Large Companies with Insolvent Balance Sheets ********* 203 SOUTH: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: 203 South Van Dien Realty, LLC 203 South Van Dien Ave. Ridgewood, NJ 07652 Bankruptcy Case No.: 08-23023 Type of Business: The Debtor is in the real estate business. Chapter 11 Petition Date: July 11, 2008 Court: District of New Jersey (Newark) Judge: Novalyn L. Winfield Debtor's Counsel: Catherine E. Youngman, Esq. Email: cyoungman@fyky.com Feitlin, Youngman, Karas & Youngman 9-10 Saddle River Rd. Fair Lawn, NJ 07410 Tel: (201) 791-4400 http://www.fykylaw.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor does not have any creditors who are not insiders. ACAS CRE: S&P Chips Ratings on 17 Note Classes, Removes Neg. Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 17 classes from ACAS CRE CDO 2007-1 Ltd. and removed them from CreditWatch with negative implications, where they were placed on May 28, 2008. The rating actions follow S&P's full analysis of the transaction, including an examination of the current credit characteristics of the transaction's assets and liabilities. Its review incorporated Standard & Poor's revised recovery rate assumptions for commercial mortgage-backed securities transactions, as detailed in "Recovery Rates For CMBS Collateral In Resecuritization Transactions," published May 28, 2008, on RatingsDirect. According to the June 30, 2008, trustee report, the transaction's current assets included 117 classes ($1.162 billion, 99%) of pass-through certificates from 21 distinct CMBS transactions issued between 2005 and 2007. The following CMBS transactions represent an asset concentration of 10% or more of total assets: --- CD 2007-CD4 Mortgage Trust ($144.9 million, 12%); --- JPMorgan Chase Commercial Mortgage Securities Corp.'s series 2005-LDP5 ($136.2 million, 12%); and --- Wachovia Bank Commercial Mortgage Trust's series 2006-C23 ($130 million, 11%). The current assets also included four classes ($11.8 million, 1%) from JPMorgan-CIBC Commercial Mortgage-Backed Securities Trust's series 2006-RR1, which is a CMBS resecuritization. The aggregate principal balance of the assets totaled $1.174 billion, down slightly from $1.175 billion at issuance, while the aggregate liabilities totaled $757.6 million, which is unchanged since issuance. The $483,776 reduction in the total assets since issuance was due to principal losses realized on first-loss CMBS assets, which currently represent $494.3 million (42%) of the asset pool. S&P's analysis indicates that the current asset pool exhibits weighted average credit characteristics consistent with 'CCC+' rated obligations. Excluding first-loss CMBS assets, the current asset pool exhibits credit characteristics consistent with 'B+' rated obligations. Standard & Poor's rates $481.5 million (41%) of the assets. S&P reanalyzed its outstanding credit estimates for the remaining assets. Standard & Poor's analysis of the transaction supports the lowered ratings. Ratings Lowered and Removed from Creditwatch Negative ACAS CRE CDO 2007-1 Ltd. Floating-rate notes Rating ------ Class To From ----- -- ---- A AA+ AAA/Watch Neg B A+ AA+/Watch Neg C-FL A AA/Watch Neg C-FX A AA/Watch Neg D A- AA-/Watch Neg E-FL BBB+ A+/Watch Neg E-FX BBB+ A+/Watch Neg F-FL BBB- A/Watch Neg F-FX BBB- A/Watch Neg G-FL BB+ A-/Watch Neg G-FX BB+ A-/Watch Neg H B+ BBB+/Watch Neg J B- BBB/Watch Neg K CCC BBB-/Watch Neg L CCC- BB+/Watch Neg M CCC- BB/Watch Neg N CCC- BB-/Watch Neg ACTIVISION INC: S&P Withdraws Ratings After Vivendi Acquisition --------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on Activision Inc., including the 'BB-' corporate credit rating, following Vivendi SA's acquisition of a 52% interest in the company. As part of the transaction, Vivendi contributed its Vivendi Games unit, which includes Blizzard Entertainment. Activision Blizzard, the newly formed entity from the transaction, has a significant presence in both massive multiplayer online games and video console games. This unsolicited ratings was initiated by Standard & Poor's. It may be based solely on publicly available information and may or may not involve the participation of the issuer's management. Standard & Poor's has used information from sources believed to be reliable, but does not guarantee the accuracy, adequacy, or completeness of any information used. to with General Dynamics Government Systems Corp. and Amroc Investments, LLC, the subsequent purchaser of General Dynamics' Claim No. 89100. Devon Mobile Communications, L.P., entered into a Master Services Agreement with General Dynamics. Adelphia Communications Corporation, owning 49.9% of limited partnership of Devon, guaranteed the payment of Devon's obligations under the Agreement. However, due to the cessation of the Reorganized Debtors' funding, Devon failed to pay General Dynamics who then filed Claim No. 89100 against the Reorganized Debtors for $34,908,731. After engaging in extensive negotiations, the parties stipulate that: a) Claim No. 89100 will be allowed as an other unsecured claim against ACOM for $30,568,000; b) Within 25 days after the Court's approval of the Settlement Agreement, the Reorganized Debtors will cause all distributions due to Amroc on account of Claim No. 89100 to be made other than the distributions of CVV Interests. The distribution of CVV Interests will be made in August 2008; c) Amroc and the Reorganized Debtors will exchange mutual releases. By entering into the Settlement, the Reorganized Debtors note that they will avoid all possible costs that would be incurred if the disputes were to be fully litigated in court. About Adelphia Comms Based in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television company. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, Internet access and other advanced services over its broadband networks. The company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the Debtors in their restructuring efforts. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates' chapter 11 cases. The Bankruptcy Court confirmed the Debtors' Modified Fifth Amended Joint Chapter 11 Plan of Reorganization on Jan. 5, 2007. That plan became effective on Feb. 13, 2007. (Adelphia Bankruptcy News, Issue No. 188; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADELPHIA COMMS: Wants to Exclude Documents from Lucent Trial ------------------------------------------------------------ Reorganized Adelphia Communications Corporation and its affiliates suffered a setback in its bid to seek a declaration from the U.S. Bankruptcy Court for the Southern District of New York on a claim by Lucent Technologies Inc. under Section 17-303 of Delaware's Revised Uniform Limited Partnership Act. In its Claim, Lucent tries to hold ACC liable for the debts allegedly incurred by Devon Mobile Communications, L.P., pursuant to a General Agreement for Personal Communications Service Systems between Lucent and Devon. ACOM owns 49.9% of the limited partnership of Devon. The Reorganized ACOM Debtors had wanted the Court to preclude Lucent from introducing into evidence: (a) The Challenged Exhibits, which refer to holdings and filings made in the ACC bankruptcy cases as well as other proceedings, including the Adelphia Business Solutions, Inc. bankruptcy case, the ACC/Rigas Action, the Devon/ACC Adversary Proceeding, the BOA Action, the SEC Actions and the FCC/Baker Creek Action that have nothing to do with the contested proof of claim proceeding; (b) The Challenged Control Facts, which purport the proposition that ACOM participated in the control of Devon; and (c) The Challenged ABIZ Facts, which purport the idea that Adelphia Business Solutions, Inc., assisted and provided support to Devon and that ABIZ received no payment from Devon for certain services performed. For reasons stated on the record, the Court denied the Reorganized ACOM Debtors' Motions in Limine with the exception of the affidavit of Edward Babcock included in the Challenged Exhibits. The Court reserved its decision with respect to the Babcock Affidavit until the trial. A trial was scheduled on June 23, 2008, solely on the Lucent Section 17-303 Claim. During that trial, Lucent was to prove that: -- ACC participated in the control of Devon, within the meaning of Section 17-303(a) and prove conduct that is not within the acts and powers given a "safe harbor" under Section 17-303(b); -- if Lucent satisfactorily proves the Control Prong, Lucent must also demonstrate conduct by ACC that would support a reasonable belief by Lucent that ACC was a general partner of Devon. "The Challenged Exhibits are not subject to judicial notice, are inadmissible hearsay and are not admissible to establish any element of Lucent's Section 17-303 Claim," Joanne B. Wills, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, in Philadelphia, Pennsylvania, argues. She adds that the Challenged Control Facts are within the acts and powers given a "safe harbor" under Section 303(b) and 303(d) of the Delaware RULPA, which provides an extensive list of protected activities that a limited partner is free to engage in without being considered in "control of the business" of the limited partnership. Furthermore, the Challenged ABIZ Facts are irrelevant to both the control and reliance prongs of Lucent's because the acts of ABIZ cannot be imputed to ACOM; and even if they could be imputed, the ABIZ acts fall within the safe harbors of Section 303(b), Ms. Wills maintains. On behalf of Lucent, Joseph Lubertazzi, Jr., Esq., at McCarter & English LLP, in New York, asserted that the Court should deny ACC's Motions in Limine for these reasons: (1) The application of the legal standards governing in limine motions, especially where there is to be a bench trial, results in the requests being denied; (2) ACC failed to recognize that the challenged evidence is admissible under Rules of Evidence and that the challenged evidence also applies to other issues in the proceeding; and (3) ACC attempts to isolate, minimize and mis-apply the challenged evidence from the entirety of the proceeding. Mr. Lubertazzi clarified that the evidence Lucent wishes to use establishes that ACC disregarded corporate forms in its conduct with regard to many of its related entities, including Devon. He maintained that Lucent is entitled to present the entire picture of the manner in which ACC operated, including demonstrating how the challenged evidence interacts with the rest of the case's factual record. "Evidence should be excluded on a motion in limine only when the evidence is clearly inadmissible on all potential grounds," Mr. Lubertazzi elaborated. "A review of many of the arguments raised by ACC reflects that they are, in reality, an argument as to the weight of the evidence," Mr. Lubertazzi said. "Viewed in that light, it is clear that the present motions are misguided." About Adelphia Comms Based in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television company. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, Internet access and other advanced services over its broadband networks. The company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the Debtors in their restructuring efforts. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates' chapter 11 cases. The Bankruptcy Court confirmed the Debtors' Modified Fifth Amended Joint Chapter 11 Plan of Reorganization on Jan. 5, 2007. That plan became effective on Feb. 13, 2007. (Adelphia Bankruptcy News, Issue No. 188; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADVANCED MICRO: Will Write Down $880MM, Mostly Due to ATI Purchase ------------------------------------------------------------------ Advanced Micro Devices Inc. said it will take goodwill and intangible asset impairment charges of approximately $880 million, mostly due to its 2006 acquisition of ATI Technologies. The charges were associated with the Handheld and DTV reporting units which have not performed in accordance with the company's expectations. As a result of these impairment charges, the company will not be required to make any current or future cash expenditures. Restructuring Plan During the fiscal quarter ended June 28, 2008, the company implemented a restructuring plan to reduce its breakeven point. The plan involves the termination of employees which commenced during the second quarter of fiscal 2008 and is expected to complete by the end of fiscal 2008. The company expects to record a restructuring charge of approximately $32 million in the second quarter of 2008. A part of this $32 million charge is related to employee severance, and a majority of this severance was paid by the company during the second quarter of 2008. The company believes that subsequent charges related to this restructuring plan will consist of employee severance payments. However, the company does not expect these charges to be material. In addition, in the fiscal quarter ended June 28, 2008, the company expects to incur other-than-temporary investment impairment charges of approximately $36 million related to the company's short-term investments. These charges consist of a $24 million charge for the company's investment in Spansion Inc., a former joint venture of AMD and Fujitsu Ltd., and a $12 million charge related to the company's holdings in Auction Rate Securities. Also, during the fiscal quarter ended June 28, 2008, the company expects to recognize a gain in connection with sales of certain 200mm wafer fabrication tools which the company expects will have a materially favorable impact on its gross margin for the second quarter of 2008. The company's estimate is that the gross margin impact will be approximately $190 million. The Wall Street Journal related that the charges are the latest in a series of negative financial news from AMD, whose shares have shed two-thirds of their value in the past 12 months. AMD's shares declined after the statement to $4.84, down 12 cents, WSJ added. About Advanced Micro Devices Headquartered in Sunnyvale, California, Advanced Micro Devices Inc. (NYSE: AMD) -- http://www.amd.com/-- provides innovative processing solutions in the computing, graphics and consumer electronics markets. At Dec. 29, 2007, the company's consolidated balance sheet showed $11.550 billion in total assets, $8.295 billion in total liabilities, $265.0 million in minority interest in consolidated subsidiaries, and $2.990 billion in total stockholders' equity. * * * As reported in the Troubled Company Reporter on Jan. 28, 2008, Fitch downgraded these ratings on Advanced Micro Devices Inc., including its Issuer Default Rating to 'B-' from 'B'; and its Senior unsecured debt to 'CCC'/RR6 from 'CCC+/RR6'. The Rating Outlook remains Negative. AGILYSYS INC: To Appeal Nasdaq's Decision to Delist Securities -------------------------------------------------------------- Agilysys Inc. will submit a request for a hearing before the NASDAQ Listing Qualifications Panel to appeal NASDAQ's determination to delist the company's shares. On July 3, 2008, the company received a NASDAQ staff determination letter stating the company's shares are subject to potential delisting. The potential delisting is related to Agilysys' delay in filing its Form 10-K for the fiscal year ended March 31, 2008, with the Securities and Exchange Commission, as required by Marketplace Rule 4310(c)(14). The delay in filing the Form 10-K is due to Agilysys waiting on audited financial statements for its investment in a foreign entity. On June 2, 2008, in the company's fourth quarter earnings release, Agilysys recorded material other income of $8.9 million during fiscal year 2008 resulting from its 20% ownership interest in Magirus AG, a privately held enterprise computer systems distributor headquartered in Germany. Due to the materiality of Magirus to Agilysys' financial statements in fiscal 2008, Agilysys requires audited confirmation of Magirus income and SEC rules require audited financial statements related to Magirus to be filed with the company's Form 10-K. Agilysys expects to file its Form 10-K within 60 days. The request for a hearing will automatically stay the delisting of the company's common shares until the Panel makes its decision. As reported in the Troubled Company Reporter on June 19, 2008, Agilysys said its management and financial advisors will explore strategic and financial alternatives to enhance shareholder value. These alternatives include continued implementation of Agilysys strategic growth plan, a sale of certain assets or the entire company, formation of joint ventures, and a change to the company's capital structure. The company has retained JPMorgan as financial advisor in the evaluation process. The company has also deferred its Aug. 1, 2008, annual meeting of shareholders pending completion of the strategic evaluation. Fourth Amendment to Credit Agreement As reported in the Troubled Company Reporter on March 3, 2008, on Feb. 21, 2008, Agilysys entered into a fourth amendment agreement to its credit agreement, dated Oct. 18, 2005. The credit agreement provides for loans and letters of credit aggregating to $200 million, including a $20 million sub-facility for letters of credit issued by LaSalle Bank NA or one of its affiliates and a $20 million sub-facility for swingline loans, which are short-term loans generally used for working capital requirements. About Agilysys Inc. Agilysys Inc. (NASDAQ: AGYS) -- http://www.agilysys.com/-- provides IT solutions to corporate and public-sector customers, including retail and hospitality. The company uses technology -- including hardware, software and services -- to help customers resolve their most complicated IT needs. The company possesses expertise in enterprise architecture and high availability, infrastructure optimization, storage and resource management, identity management and business continuity; and provides industry-specific software, services and expertise to the retail and hospitality markets. Headquartered in Boca Raton, Fla., Agilysys operates extensively throughout North America, with additional sales offices in the United Kingdom and China. AMERICAN HOME: Asks Authority to Sell Up to $3MM Mortgage Loans --------------------------------------------------------------- Prior to the Petition Date, American Home Mortgage Investment Corp. and its debtor-affiliates held mortgage loans they originated, and other loans, for sale and investment purposes. In the ordinary course, the Debtors conducted auctions, by which they sold the mortgage loans on a servicing released or servicing retained basis in the open market. As of the Petition Date, the Debtors held approximately $4,600,000,000 in mortgage loans for sale and investment purposes. Since then, the amount has been reduced to $900,000,000. Based on current market conditions, and the exigency with which the Debtors hope to prosecute a Chapter 11 plan of reorganization and begin paying allowed claims, the Debtors note that compromising and selling certain loans -- without further notice or hearing -- may be the best vehicles for maximizing the value of the mortgage loans. Pursuant to Sections 363(b)(l), 363(c) and 105(a) of the Bankruptcy Code, and Rule 9019(b) of the Federal Rules of Bankruptcy Procedure, the Debtors seek authority of the U.S. Bankruptcy Court for the District of Delaware to: (i) compromise certain of the mortgage loans to aid borrowers in their ability to refinance their loans; or (ii) sell the Mortgage Loans, either individually or in smaller pools, up to approximately $3,000,000 in aggregate unpaid principal balance, pursuant to proposed procedures. The Mortgage Loans, which are loans that the Debtors own subject to the security interests of other parties, are categorized as: (1) unencumbered loans, which are first lien and second lien performing loans owned by the Debtors, but subject to the liens of AH Mortgage Acquisition Co., Inc. -- in its capacity as lender and administrative agent -- and other lenders; and (2) JPMorgan loans, which are first lien performing mortgage loans owned by the Debtors, pursuant to a Senior Secured Credit Agreement with JPMorgan Chase Bank, N.A. As of May 31, 2008, there were 251 first lien performing Unencumbered Loans with an aggregate UPB of $37,923,576, and 293 performing second lien Unencumbered Loans with an aggregate unpaid principal balances of $13,143,949. Additionally, there were 109 performing first lien JPMorgan Loans with an aggregate UPB of $22,796,655. The Debtors believe that the relief they seek is reasonable and necessary to maximize value for creditors based on their evaluation of: -- the current market conditions; -- the proceeds obtained through prior mortgage loan sales; -- the success they achieved through offering compromises to holders of certain loans that were apart of their construction loan business; -- the types of assets that are the subject of the request; and -- their fiduciary duties to the bankruptcy estates. James L. Patton, Jr., Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that certain of the Mortgage Loans may ultimately be marketed and sold via a more traditional sale process. However, the Debtors believe that the current market conditions require them to act quickly, Mr. Patton adds. As a result, the relief requested may provide the bankruptcy estates with a greater return as to certain of the Mortgage Loans, than that which could be obtained through the typical marketing and sale process that has been used in the Debtors' bankruptcy cases. Mortgage Loan Compromise Procedures The Debtors have primarily attempted to liquidate their assets through Court-approved sales. However, Mr. Patton says, based on, among other things, significant costs associated with a traditional sale process, offering incentives to borrowers is a favorable and profitable alternative for maximizing the value of certain of the Mortgage Loans, subject to compliance with these procedures: -- Advise counsel for the Official Committee of Unsecured Creditors, and counsel for (i) the DIP Lender with respect to the Unencumbered Loans, or (ii) JPMorgan with respect to the JPMorgan Loans of the terms of the proposed compromise. The Compromise Notice Parties will have three days to object to the proposed compromise; -- The Compromise Notice Parties may informally object to a proposed compromise having to file a pleading with the Court; -- In the absence of a timely objection, the Debtors will be authorized to proceed with, and consummate the, proposed compromise without further notice or hearing; -- The Debtors will not proceed with the proposed compromise unless objections, if any, are resolved. The Debtors, however, reserve the right to seek Court approval of the proposed compromise under Rule 9019 of the Federal Rules of Bankruptcy Procedure. Mortgage Loan Sale Procedures Although the Debtors have liquidated a number of mortgage loans through Court-approved sales, the value obtained for those loans has not been overwhelming, Mr. Patton asserts. Consequently, to take advantage of potentially advantageous sales, the Debtors believe, in certain instances, greater value may be derived from selling a Mortgage Loan or smaller Mortgage Loan pools, without further hearing, pursuant to these procedures: (1) The Debtors will give written notice of a proposed sale to: * the Office of the U.S. Trustee; * counsel to the Creditors Committee; and * counsel to the DIP Lender with respect to the sale of an Unencumbered Loan, or JPMorgan with respect to the sale of a JPMorgan Loan. The Sale Notice Parties will have three days to object to the proposed sale; (2) The Sale Notice will consist of, among other things: * an identification of the Mortgage Loans being sold; * a general description of the relationship between the potential purchaser and the Debtors; and * the estimated purchase price, provided that the Sale Notice will be deemed fully confidential, and will not be shared with any party other than the Sale Notice Parties. (3) Objections to a proposed sale will be filed with the Court, and served on counsel for the Debtors and the Sale Notice Parties; (4) If no timely objections are filed, the Debtors will be authorized to take all actions, and to execute all resolutions and other documents necessary to effectuate the sale, without any further Court order; and (5) If a timely objection is filed, and cannot be resolved, a hearing on the matter will be scheduled, so as to seek the Court's determination of whether to approve the proposed sale. Reporting of Compromises and Sales Upon completion of the compromise or sale of all the Mortgage Loans, or determination by the Debtors that no other Mortgage Loans will be compromised or sold, the Debtors will file a report, which will identify: -- each Mortgage Loan by loan number that has been compromised or sold; -- the amount of the UPB as of the date of compromise or sale of each compromised or sold Mortgage Loan; and -- the amount received by the bankruptcy estates for each compromised or sold Mortgage Loan. The rights of the Debtors and any other party-in-interest to seek to file the Report under seal are fully reserved, as are the rights of any party-in-interest, including the U.S. Trustee, to object to that request. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Court Extends Removal Period Until Sept. 2 --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended through September 2, 2008, the deadline for American Home Mortgage Investment Corp. and its debtor-affiliates to file notices of removal of all civil actions pending as of the Petition Date. The Court, however, noted that the Order is without prejudice to (i) any position the Debtors may take regarding whether Section 362 of the Bankruptcy Code applies to stay any litigation pending against them, or (ii) the Debtors' right to seek further extensions. Since the Petition Date, the Debtors have focused primarily on maximizing the value of their bankruptcy estates through the orderly liquidation of their assets, James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, related. To that end, the Debtors negotiated and sought Court approval of various assets' sales, including their mortgage loan servicing business. As a result, the Debtors have not had an opportunity to fully investigate all of the State Court Actions to determine whether removal is appropriate. The Debtors believe that granting additional opportunity to consider removal of the State Court Actions will assure that their decisions are fully informed and consistent with the best interests of their bankruptcy estates, Mr. Patton told the Court. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMR CORP: Moody's to Review Corporate Family Rating for Likely Cut ------------------------------------------------------------------ Moody's Investors Service placed the debt ratings of AMR Corp. and its subsidiaries under review for possible downgrade. The company has an outstanding B2 corporate family rating. The review includes the ratings for certain equipment trust certificates and enhanced equipment Trust Certificates of American Airlines, Inc. During the review, Moody's will assess AMR's liquidity profile, and the adequacy of its funding sources in relation to its rate of operating cash burn and other calls on cash. Moody's will also consider AMR's business prospects in the face of persistently elevated fuel prices that are likely to result in sizeable negative cash flow at the airline for the foreseeable future. The review will consider the actions which AMR is taking to adapt to the challenging business environment, including capacity reductions, overhead cost cuts, and passenger fare increases, and the degree to which these actions could realistically be expected to moderate the company's rate of cash losses. Also Moody's will consider the collateral values and transaction structure of the ETC's and EETC's in light of any potential revision to the probability of default rating. Moody's notes that AMR's current liquidity profile offers important near term flexibility, yet its liquidity could be pressured over the next year. Cash and cash equivalents of approximately $4.5 billion at March 31, 2008 is robust when compared to the absolute level of cash held by the other network carriers. The company also has potential to raise additional funds through the pending sale of AMR Beacon, and a material amount of unencumbered assets and a modest revolver credit. Nonetheless the company's ability to sustain its current liquidity profile will likely be pressured in light of a meaningful step-up in debt scheduled to mature during 2009 of about $1.2 billion, along with ongoing pension obligations and scheduled aircraft deliveries. Moreover, in the absence of a near term turnaround in its financial performance, AMR could face a material, and increasing, amount of cash holdback under the terms of its credit card processing agreements, which could further erode liquidity. Downgrades: Issuer: AMR Corporation -- Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 On Review for Possible Downgrade: Issuer: AMR Corporation -- Probability of Default Rating, Placed on Review for Possible Downgrade, currently B2 -- Corporate Family Rating, Placed on Review for Possible Downgrade, currently B2 -- Senior Unsecured Conv./Exch. Bond/Debenture, Placed on Review for Possible Downgrade, currently 83 - LGD5 -- Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently 83 - LGD5 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently 83 - LGD5 -- Senior Unsecured Shelf, Placed on Review for Possible Downgrade, currently 83 - LGD5 Issuer: Alliance Airport Authority, Inc. -- Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 Issuer: American Airlines 1988-A Grantor Trust -- Senior Secured Equipment Trust, Placed on Review for Possible Downgrade, currently B2 Issuer: American Airlines, Inc. -- Senior Secured Bank Credit Facility, Placed on Review for Possible Downgrade, currently 30 - LGD3 -- Series 1999-1 Pass Through Certificates, placed on Review for Possible Downgrade -- Class A1, currently Baa2 -- Class A2, currently Baa2 -- Class B, currently Ba3 -- Series 2001-1 Pass Through Certificates, placed on Review for Possible Downgrade -- Class A1, currently Ba1 -- Class A2, currently Ba1 -- Class B, curently B1 -- Class C, currently B3 -- Series 2001-2 Pass Through Certificates, placed on Review for Possible Downgrade -- Class A1, currently Baa2 -- Class B, currently Baa3 Secured Global Notes -- Class A, currently rated Ba1 Secured Notes -- Class B, currently rated B1 -- Series 2005-1 Pass Through Certificates, placed on Review for Possible Downgrade -- Class G, currently Baa1 -- Class B, currently Ba2 -- Senior Secured Equipment Trust, Placed on Review for Possible Downgrade, currently rated B1 to Caa1 -- Senior Secured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently B1 -- Senior Secured Shelf, Placed on Review for Possible Downgrade, currently (P)Ba3 Issuer: Chicago O'Hare International Airport, IL -- Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 -- Senior Unsecured Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 Issuer: Dallas-Fort Worth Intl. Airp. Fac. Imp. Corp. -- Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 -- Senior Secured Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 -- Senior Unsecured Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 Issuer: Dallas-Fort Worth TX, Regional Airport -- Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 Issuer: New Jersey Economic Development Authority -- Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 Issuer: New York City Industrial Development Agcy, NY -- Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 -- Senior Unsecured Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 Issuer: Puerto Rico Ind Med&Env Poll Ctl Fac Fin Auth -- Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 Issuer: Puerto Rico Ports Authority -- Senior Unsecured Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 Issuer: Raleigh-Durham Airport Authority, NC -- Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 Issuer: Regional Airports Improvement Corporation, CA -- Senior Unsecured Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 Issuer: Tulsa OK, Municipal Airport Trust (Ttees of) -- Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 -- Senior Secured Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 -- Senior Unsecured Revenue Bonds, Placed on Review for Possible Downgrade, currently 83 - LGD5 Outlook Actions: Issuer: AMR Corporation -- Outlook, Changed To Rating Under Review From Stable Issuer: American Airlines 1988-A Grantor Trust -- Outlook, Changed To Rating Under Review From Stable Issuer: American Airlines, Inc. -- Outlook, Changed To Rating Under Review From Stable AMR Corp. and its principal subsidiary American Airlines, Inc. are based in Fort Worth, Texas. ARIAD PHARMACEUTICALS: Peter Nelson to Leave Board on August 29 --------------------------------------------------------------- Peter J. Nelson notified ARIAD Pharmaceuticals, Inc. that he will resign from the company's Board of Directors, effective Aug. 29, 2008, due to other work commitments. Mr. Nelson has served as a director since November 2004 and currently serves as the chair of the Audit Committee. Mr. Nelson is Managing Partner of Morecambe Partners, an advisory firm for real estate companies and early stage enterprises. Previously, from 2004 to 2005, he was Co-Chief Executive Officer of National Beverage Properties, Inc., a private real estate investment firm and, from 1997 to 2004, he was Senior Vice President-Operations, Chief Financial Officer, and Treasurer of Alexandria Real Estate Equities, Inc., a NYSE real estate investment trust principally providing scientific research space to life science entities and biotechnology companies. He continues to serve as Corporate Secretary of Alexandria Real Estate Equities, Inc. Previously, from 1995 to 1997, Mr. Nelson was Chief Financial Officer of Lennar Partners, Inc. (nka LNR Property Corporation). >From 1986 to 1995, he also held senior management positions at Public Storage, Inc. and Westrec Properties, Inc. From 1980 to 1986, Mr. Nelson was an audit manager at Ernst & Young, LLP. Mr. Nelson received his B.S. degree from California State University, Northridge and is a certified public accountant. The company intends to appoint another member of the Board to serve on the Audit Committee prior to the effective date of Mr. Nelson's resignation. Headquartered in Cambridge, Mass., ARIAD Pharmaceuticals Inc. (Nasdaq: ARIA) -- http://www.ariad.com/-- is engaged in the discovery and development of breakthrough medicines to treat cancer by regulating cell signaling with small molecules. ARIAD has a global partnership with Merck & Co. Inc. to develop and commercialize deforolimus, ARIAD's lead cancer product candidate, which is in Phase 3 clinical development. At March 31, 2008, the company's consolidated balance sheet showed $97.6 million in total assets and $121.1 million in total liabilities, resulting in a $23.5 million total stockholders' deficit. ASARCO LLC: Has Court Nod to Expand Keegan's Insurance Services --------------------------------------------------------------- ASARCO LLC and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of Texas to further expand the scope of employment of Keegan, Linscott & Kenon, P.C., to include professional consulting services in connection with pending insurance coverage actions. Luckey R. McDowell, Esq., at Baker Botts L.L.P., in Dallas, Texas, told the Court that ASARCO believes Keegan is well- positioned to provide professional consulting services in connection with pending insurance coverage action in light of: -- the substantial accounting services Keegan performed for ASARCO before and during its bankruptcy case; -- Keegan's familiarity with the Debtors' financial situation; -- Keegan's services to the Debtors in claims reconciliation analysis; and -- Keegan's knowledge of the Debtors' businesses and creditors and the Material Inventory Management System that ASARCO uses. For services related to the insurance coverage litigation, ASARCO will pay Keegan $75 to $250 per hour depending on the individual who performs the service. ASARCO will also reimburse Keegan for actual costs and expenses incurred in connection with its pending insurance coverage services. Keegan's director, Christopher Linscott, assures the Court that his firm does not have any interest adverse to the Debtors or their bankruptcy estates. Mr. Linscott declares further that Keegan is a "disinterested person" as the term is defined in Section 101(14) of the U.S. Bankruptcy Code, as modified by Section 1107(b). About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). ASARCO and its debtor-affiliates have until Aug. 1, 2008 to file a plan of reorganization. (ASARCO Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: AlixPartners OK'd to Replace Trumbull as Claims Agent ----------------------------------------------------------------- ASARCO LLC and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of Texas to employ AlixPartners LLP as its claims, noticing and balloting agent effective as of April 21, 2008. James R. Prince, Esq., at Baker Botts, L.L.P, in Dallas, Texas, informed the Court that ASARCO's need to employ AlixPartners stems from Wells Fargo Bank's withdrawal from the bankruptcy market administration on April 8, 2008. Wells Fargo is the parent of Trumbull Group, LLC, ASARCO's official claims, noticing and balloting agent. Trumbull's withdrawal prompted ASARCO to solicit bids from claims, noticing and balloting agents to replace Trumbull from which AlixPartners was selected by the Debtors. In late 2007, the Debtors and AlixPartners entered into an agreement for AlixPartners to provide certain financial advisory and consulting services for the Debtors, including evaluating proofs of claim, analyzing claims and preparing a report evaluating overall liability and claims exposure. ASARCO chose AlixPartners to replace Trumbull as claims, noticing and balloting agent because AlixPartners has: -- already performed substantial services for ASARCO and is familiar with the Debtors, their business, the key parties in their Chapter 11 cases and the types of claims being asserted against the Debtors; -- experience working with Trumbull claims database; -- provided a competitive proposal for claims, noticing and balloting agent services and has agreed to waive certain charges in connection with the transfer of the services from Trumbull to AlixPartners; and -- AlixPartners is well-positioned to provide the services, has extensive experience in this area and has handled a number of other large bankruptcy cases. As claims, noticing and balloting agent, AlixPartners is expected to: (a) serve as notice agent to mail notices to certain of the estates' creditors and other parties-in-interest; (b) provide computerized claims, objection and balloting database services; and (c) provide expertise, consultation and assistance in connection with claim and ballot processing and the dissemination of other administrative information related to the Debtors and their Chapter 11 cases. For its services, ASARCO will pay AlixPartners based on its hourly rates: Professional Hourly Rates ------------ ------------ Administrative Support $55 Data Specialist $65 to $80 Assistant Case Manager $85 Case Manager $100 to $125 Automation Consultant $140 Senior Automation Consultant $155 to $175 Operations Manager $100 to $165 Consultant $210 Meade Monger, managing director at AlixPartners, LLP, assured the Court that his firm does not have any interest adverse to ASARCO or its estates, and is a "disinterested person" as the term is defined in Section 101(14) of the U.S. Bankruptcy Code, modified by Section 1107(b). Trumbull Group, LLC, will transfer its rights and interests in the Web site http://www.asarcoreorg.com/to AlixPartners. Trumbull will apply the $25,000 retainer paid to it by ASARCO against any due but unpaid bills, and the balance, if any, will be returned to ASARCO on or before Dec. 31, 2008. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). ASARCO and its debtor-affiliates have until Aug. 1, 2008 to file a plan of reorganization. (ASARCO Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: Court Okays Reduction of Wachovia Claim to $2,091,000 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas approved a stipulation between ASARCO LLC and its debtor- affiliates and Wachovia Financial Services Inc. that resolves and reduces Wachovia's claim against the Debtors. Wachovia Financial filed Claim No. 10333 against ASARCO LLC, asserting amounts relating to certain executory contracts and a term note related to an equipment purchase. The part of Claim No. 10333, which relates to certain executory contracts was resolved by a prior agreement and Court order, but the term note portion was not addressed. Wachovia subsequently filed Claim No. 18205 reasserting the balance of Claim No. 10333. ASARCO and Wachovia entered into a stipulation, which provides that Wachovia has agreed to reduce its remaining claim from $2,340,169 to $2,091,156. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). ASARCO and its debtor-affiliates have until Aug. 1, 2008 to file a plan of reorganization. (ASARCO Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASHLAND INC: $3.3 Bil. Hercules Deal Cues S&P's Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Ashland Inc., including the 'BB+' corporate credit rating, on CreditWatch with negative implications following the announcement that Ashland will acquire Hercules Inc. in a transaction valued at $3.3 billion excluding transaction-related costs. At the same time, S&P placed its 'BB+' corporate credit rating on Hercules and its 'BB-' rating on its $350 million 6.5% junior subordinated deferrable interest debenture due June 20, 2029 (remaining balance $215 million) on CreditWatch with negative implications. S&P affirmed its ratings on Hercules' bank credit facility and $250 million 6.75% senior subordinated notes due Oct. 15, 2029. Because these instruments contain change of control provisions, S&P believe they would be repaid upon closing of the acquisition. "If the transaction closes as currently structured, we expect to lower Ashland's corporate credit rating to 'BB' and assign a negative outlook," said Standard & Poor's credit analyst Cynthia Werneth. >From a business risk perspective, the Hercules transaction would be a strong positive. It would add substantial specialty chemical assets with investment-grade business characteristics, creating a company with more than $10 billion in annual revenues. The acquisition should result in more favorable growth prospects and a more stable and profitable chemicals company, with reduced reliance on the lower-margin distribution and Valvoline products. Although the transaction as currently contemplated will be primarily debt-financed, it will include about $500 million of stock at Ashland's pre-announcement share price. In addition, Ashland currently has very little book debt, and the company plans to use its substantial cash balance to finance the Hercules acquisition. As a result, S&P expect Ashland's total adjusted debt pro forma for the transaction to be about $3 billion. S&P would adjust debt to include about $360 million of after-tax pension and other postretirement obligations, $210 million of estimated, tax-effected asbestos liabilities, and $210 million of capitalized operating leases at the combined company. Pro forma funds from operations to adjusted total debt will be in the upper teens percentage area. Following this acquisition, S&P would expect Ashland to use the majority of discretionary cash flow to reduce debt, so that the FFO to debt ratio strengthens to the 20%-25% range it deem appropriate at the 'BB' rating. S&P will update this CreditWatch for any changes to the transaction structure or if details regarding the prospective capital structure are disclosed. S&P anticipate resolving the CreditWatch upon closing of the transaction, which is expected to occur by the end of calendar 2008, subject to Hercules shareholder and regulatory approval. Ashland has financing commitments for the transaction. BABSON CLO: Moody's Assigns Ba2 Rating to Class E Notes Due 2018 ---------------------------------------------------------------- Moody's Investors Service assigned these ratings to notes issued by Babson CLO Ltd. 2008-I. -- Aaa to the $340,000,000 Class A Senior Floating Rate Notes Due 2018; -- Aa2 to the $18,000,000 Class B Senior Floating Rate Notes Due 2018; -- A2 to the $16,000,000 Class C-1 Deferrable Mezzanine Floating Rate Notes Due 2018; -- A2 to the $5,000,000 Class C-2 Deferrable Mezzanine Fixed Rate Notes Due 2018; -- Baa2 to the $13,000,000 Class D Deferrable Mezzanine Floating Rate Notes Due 2018; -- Ba2 to the $16,500,000 Class E Deferrable Mezzanine Floating Rate Notes Due 2018. The Moody's ratings of the notes address the ultimate cash receipt of all required interest and principal payments, as provided by the notes' governing documents, and are based on the expected loss posed to noteholders, relative to the promise of receiving the present value of such payments. The ratings reflect the risks due to the diminishment of cash flow from the underlying portfolio consisting of senior secured loans due to defaults, the transaction's legal structure and the characteristics of the underlying assets. Babson Capital Management LLC will manage the selection, acquisition and disposition of collateral on behalf of the issuer. BEATRIX READY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Beatriz Ready Mix, Inc. PMB 24 P.O. Box 6400 Cayey, PR 00737 Bankruptcy Case No.: 08-04457 Type of Business: The Debtor sells pre-mixed concrete. Chapter 11 Petition Date: July 10, 2008 Court: District of Puerto Rico (Old San Juan) Debtors' Counsel: Carmen D. Conde Torres, Esq. (condelaw.com) 254 San Jose Street, 5th Floor San Juan, PR 00901-1523 Tel: (787) 729-2900 Fax: (787) 729-2203 Total Assets: $3,182,872 Total Debts: $4,355,605 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/prb08-04457.pdf BHM TECHNOLOGIES: Court Approves $45,000,000 DIP Financing ---------------------------------------------------------- The United States Bankruptcy Court for the Western District of Michigan granted final approval to the request of BHM Technologies Holdings, Inc., and its debtor-subsidiaries to obtain $45,000,000 of DIP financing from a syndicate of lenders led by Lehman Commercial Paper, Inc., administrative agent under the DIP Facility. The Court authorized the Debtors to grant superpriority claims, liens on certain unencumbered property and other liens to the DIP Lenders. Paragraph 7(a) of the Final DIP Order provides that the Unencumbered Property "will not include the Avoidance Actions, any proceeds or property recovered in respect of any Avoidance Actions or any other assets upon which security may not be lawfully granted, but Unencumbered Property shall include the proceeds of such other assets upon which security may be lawfully granted." A full-text copy of the Final DIP Order is available for free at: http://bankrupt.com/misc/BHM_Final_DIP_Order.pdf First Lien Agent Wants Clarification On behalf of Lehman Commercial Paper Inc., John T. Gregg, Esq., at Barnes & Thornburg LLP, in Grand Rapids Michigan, asserts the Court should amend Paragraph 7(a) or at least clarify the intent of the Court's revision, pursuant Rule 9024 of the Federal Rules of Bankruptcy Procedure. Mr. Gregg says that in the proposed Final DIP Financing Order submitted to the Court, Paragraph 7(a) was intended to grant the DIP Lenders a lien only on the proceeds of the assets upon which security may not lawfully be granted. T The intention of the First Lien Agent, the Debtors and the other parties who agreed to the form of the proposed Final DIP Financing Order was to ensure that the Court was not, in effect, entering an order that was in conflict with applicable law. It was the intent of the parties that the liens granted to the DIP Lenders would not extend to the Unencumbered Property upon which security cannot be granted. The liens would extend only to the proceeds of the Unencumbered Property upon which security cannot be granted. Upon review of the Final DIP Financing Order, it appears that the Court was attempting to protect against a violation of applicable law by declining to grant a lien over assets to which a lien may not attach, Mr. Gregg asserts. The First Lien Agent believes that, upon close inspection of Paragraph 7(a) as submitted, the Court would only be granting a lien on the proceeds of Unencumbered Property to which security cannot attach under applicable law. According to the Final DIP Financing Order as entered by the Court, the DIP Lenders would not be entitled to a lien on proceeds from Unencumbered Property upon which security cannot attach. The DIP Lenders agreed to extend the $45,000,000 DIP Loan in exchange for certain protections, including a lien on the proceeds of Unencumbered Property, which category includes the proceeds of Unencumbered Property upon which security cannot attach. The First Lien Agent requests that the Court correct the clerical error it made when it revised Paragraph 7(a) of the Final DIP Financing Order so that the DIP Lenders receive the protections for which they bargained. In the alternative, the First Lien Agent asks the Court to reconsider the Final DIP Financing Order pursuant to Bankruptcy Rule 9023 and Federal Rule 59(e). The intention of the parties was that security would extend only to the proceeds of Unencumbered Property, which such Unencumbered Property could not be subject to security. Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc.-- http://www.browncorp.com/--manufactures and sells automobile parts including air bags and electrical systems. It has manufacturing facilites in Mexico and operates under Brown Corp. BHM Technologies Holdings, Inc. and 14 affiliates filed separate voluntary petitions under Chapter 11 on May 19, 2008 (Bankr. W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum, Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, it listed estimated assets and debts to be both between US$100 million and US$500 million. The Debtors have until Sept. 16, 2008, to exclusively file their bankruptcy plan. (BHM Technologies Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BHM TECHNOLOGIES: Asks Court to Approve Solicitation Protocol ------------------------------------------------------------- BHM Technologies Holdings, Inc., and its debtor-subsidiaries intend to mail solicitation packages to solicit votes on their Joint Chapter 11 Plan of Reorganization, and submit it to the United States Bankruptcy Court for the Western District of Michigan for confirmation, following the approval of their disclosure statement explaining the terms of the plan. The Debtors have proposed these time-line and key dates: Date ---- Record Date for Voting Purposes Date DS is Approved Delivery of Solicitation Packages Not later than Aug. 12, 2008 Deadline to submit ballots to Kurtzman Carson Consultants Sept. 5, 2008 Confirmation Hearing on Plan Week of Sept. 15, 2008 Deadline to File Confirmation Objections Sept. 5, 2008 Deadline to Submit Replies to Confirmation Objections Sept. 11, 2008 Pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure, solely for purposes of voting to accept or reject the Plan and not for the purpose of the allowance of, or distribution on account of, a claim, and without prejudice to the rights of the Debtors in any other context, the Debtors propose that each claim within a class of claims entitled to vote to accept or reject the Plan be temporarily allowed in an amount equal to the amount of the claim as set forth in a timely filed proof of claim, or, if no proof of claim was filed, the amount of such claim as set forth in the Debtors' Schedules of Assets and Liabilities. If a proof of claim is listed as unliquidated, the claims will be allowed, for voting purposes only, at $1.00. The Court will convene a hearing to consider approval of the Solicitation Protocol on August 7, 2008. Objections are due July 31, 2008. Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc.-- http://www.browncorp.com/--manufactures and sells automobile parts including air bags and electrical systems. It has manufacturing facilites in Mexico and operates under Brown Corp. BHM Technologies Holdings, Inc. and 14 affiliates filed separate voluntary petitions under Chapter 11 on May 19, 2008 (Bankr. W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum, Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, it listed estimated assets and debts to be both between US$100 million and US$500 million. The Debtors have until Sept. 16, 2008, to exclusively file their bankruptcy plan. (BHM Technologies Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BHM TECHNOLOGIES: Asks Court to Approve Disclosure Statement ------------------------------------------------------------ BHM Technologies Holdings, Inc., and its debtor-subsidiaries ask the United States Bankruptcy Court for the Western District of Michigan to set a hearing to consider approval of the Disclosure Statement on August 7, 2008 at 1:30 pm (ET). The Debtors have set a July 31, 2008 deadline to file objections to the adequacy of the Disclosure Statement. On July 2, 2008, the Debtors filed a disclosure statement explaining the terms of their Joint Chapter 11 Plan of Reorganization. A full-text copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/BHM_DiscStatement.pdf Leon R. Barson, Esq., at Pepper Hamilton LLP, in Philadelphia, Pennsylvania, asserts the Disclosure Statement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. Accordingly, by this motion, the Debtors ask the Court approve the Disclosure Statement pursuant to Section 1125(b) of the Bankruptcy Code. The Disclosure Statement notes that the Plan, while proposed jointly by all of the Debtors, constitutes a separate Plan for each debtors. The estates of the Debtors, according to Don Dees, president of BHM Technologies Holdings, Inc., have not been consolidated, substantively or otherwise. The Disclosure Statement provides that the purpose of the Plan is to de-lever the Debtors' balance sheet by converting a substantial amount of secured debt into equity. The Plan provides that each Debtor will pay 100% of all Unsecured Ongoing Operations Claims that are held by ongoing trade vendors, without interest, over a six month period. The reason why the Debtors can successfully accomplish this goal is primarily due to concessions by the Prepetition First Lien Lenders and Prepetition Second Lien Lenders. In addition, under one of two alternatives, Atlantic Equity Partners IV, L.P., will infuse an additional $12,500,000 into the Debtors, further improving the Debtors' balance sheet and cash flow. Mr. Dees relates that in order to ensure a smooth, efficient and quick exit from Chapter 11, the Debtors are proposing two alternative plans simultaneously. The New Money Alternative is the preferred alternative, and the Debtors will first seek confirmation of this alternative. However, in the event the New Money Alternative is not confirmed, the Debtors will seek to confirm the No New Money Alternative. The Debtors note that a ballot that indicates an acceptance of the Plan will be deemed to be an acceptance of both alternatives. These classes are entitled to vote to accept or reject the Plan: Class S-1 (Secured Tax Claims), Class S-2 (Other Secured Claims), Class P-1 (Other Priority Claims), Class U-1 (Convenience Claims), Class U-3 (Intercompany Claims) and Class E-2 (Subsidiary Debtor Equity Interests). The key terms of each Alternative with respect to the capitalization of the Reorganized Debtors are: NEW MONEY ALTERNATIVE --------------------- Prepetition Prepetition AEP Invests Management Independent First Lien Second Lien $12.5 Mill. Equity Plan Director Lenders Lenders and Receives: Equity Plan Receive: Receive: Receives: $92.5MM $3.75MM of 26.75% of 9% of New 1% of New Exit Term Parent New Common Common Common Stock Loan Pref. Stock Stock on a Stock on a on a fully (gifted by non-diluted fully diluted $75MM of First Lien basis diluted basis Parent Lenders) (postgifting basis Pref. Stock .25% to 2nd (based on 8% of New Lien Lenders) implied Common total ent. Stock on a Warrants value of non-diluted exercisable $325MM (inc. 4% into 15% of from New Common 65% of New gifting of Stock at Common Prepetition implied TEV Stock on a First Lien of $325MM w/ non-diluted Deficiency a 7-year basis Claim and tenor .25% from gifting by AEP. NO NEW MONEY ALTERNATIVE ------------------------ Prepetition Prepetition AEP Management Independent First Lien Second Lien Receives: Equity Plan Director Lenders Lenders Equity Plan Receive: Receive: Receives: $92.5MM Approx. Nothing 9% of New 1% of New Exit Term 5% of New Common Common Stock Loan Common Stock on a on a fully Stock on a fully diluted Approx. non-diluted diluted basis 94% of New basis basis Common Stock on a Penny non-diluted warrants basis, inc. convertible distrib. on into 2.5% Class S-3 of New & Class U-4 Common Claims Stock (gifted by First Lien Lenders) Claim and .25% from gifting by AEP. Also, under the Debtors' Joint Chapter 11 Plan of Reorganization, Class U-1 (Convenience Claims) consist of any unsecured claim that is allowed in an amount of $1,500 or less or is allowed in an amount greater than $1,500, but which is reduced to $1,500 by irrevocable written election of the holder thereof pursuant to the holder's ballot. Pursuant to the Plan, the holder of an allowed Convenience Claim will receive payment in full, without postpetition interest. Leon R. Barson, Esq., at Pepper Hamilton LLP, in Philadelphia, Pennsylvania, note that the Sixth Circuit has explaineed that a claim is impaired under Section 1124(1) of the Bankruptcy Code if the plan deprives the creditor of interest "to which the creditor is entitled." However, she cites Thompson v. Kentucky Lumber Co. (In re Kentucky Lumber Co.), 860 F.2d 674, 676 (6th Cir. 1988), which said that unsecured creditors are not entitled to postpetition interest upon their allowable claims, unless the debtor is solvent. According to Mr. Barson, the Debtors are admittedly not solvent from a balance sheet perspective. In view of the circumstances, and the fact that holders of claims in Class U-1 are expected to receive 100% of their allowed claims very shortly after the Plan's effective date, the Debtors seek the Court's determination that Class U-1 is unimpaired. Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc.-- http://www.browncorp.com/--manufactures and sells automobile parts including air bags and electrical systems. It has manufacturing facilites in Mexico and operates under Brown Corp. BHM Technologies Holdings, Inc. and 14 affiliates filed separate voluntary petitions under Chapter 11 on May 19, 2008 (Bankr. W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum, Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, it listed estimated assets and debts to be both between US$100 million and US$500 million. The Debtors have until Sept. 16, 2008, to exclusively file their bankruptcy plan. (BHM Technologies Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000) BIOJECT MEDICAL: Awards Shares in Lieu of $75K Cash to CEO Makar ---------------------------------------------------------------- Bioject Medical Technologies Inc. awarded 197,368 shares of its common stock with a value of $0.38 per share, for a total value of $75,000, to Mr. Ralph Makar, its President and Chief Executive Officer on June 25, 2008. The grant of stock was in lieu of a $75,000 cash award that was earned by Mr. Makar pursuant to his employment agreement related to 2007 performance. Based in Portland, Oregon, Bioject Medical Technologies Inc. (Nasdaq: BJCT) -- http://www.bioject.com/-- is a developer and manufacturer of needle-free injection therapy systems (NFITS). NFITS provide an empowering technology and work by forcing medication at high speed through a tiny orifice held against the skin. This creates a fine stream of high-pressure fluid penetrating the skin and depositing medication in the tissue beneath. The company is focused on developing mutually beneficial agreements with leading pharmaceutical, biotechnology, and veterinary companies. Going Concern Doubt As reported in the Troubled Company Reporter on April 18, 2008, Moss Adams LLP expressed substantial doubt about Bioject Medical Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditor reported that the company has suffered recurring losses, has had significant recurring negative cash flows from operations, and has an accumulated deficit. CAMBIUM LEARNING: Delayed Fin'l Statements Cue S&P to Junk Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Natick, Massachusetts-based Cambium Learning Inc. The corporate credit rating was lowered to 'CCC+' from 'B-'. Ratings remain on CreditWatch with negative implications, where they were placed Dec. 6, 2007. Cambium had total debt of $191 million at March 31, 2008. "The downgrade reflects the company's insufficient progress to date in either delivering its 2007 financing statements or obtaining another waiver and amendment, if it is needed," said Standard & Poor's credit analyst Hal Diamond. The company has received a limited waiver and amendment for the extension of covenant requirements for financial statement reporting from its banks until July 15, 2008. Cambium has scheduled a meeting with its bank group on July 14. A continued delay in filing could lead to an event of default unless the company receives subsequent extensions. Interest expense is rising because of a 200-basis-point required increase in the margins applicable to outstanding bank borrowings up to July 15, 2008. In addition, the company is not permitted to borrow under its revolving credit facility during the restatement process, prompting its equity sponsor, Veronis Suhler Stevenson, to make loans in the second quarter to fund seasonal working capital requirements. Cambium has a modest cushion of compliance with the credit agreement's 8.0x debt to EBITDA covenant, having posted debt to EBITDA of 7.46x as of March 31, 2008. The company faces a step- down of the required level to 7.75x at June 30, 2008, and a further step-down to 7.5x at Sept. 30, 2008. Unaudited results indicate that the EBITDA loss in the seasonally weak first quarter ended March 31, 2008 increased to $1.5 million from $1.1 million a year earlier, due to higher planned selling, sampling, and marketing costs. Cambium is now in the critical season for sales of supplemental and remedial learning materials. S&P remain concerned about the company's ability to remain in covenant compliance in light of the negative effect that strained state and local government budgets could have on supplemental education funding that is crucial to its future profitability. S&P will resolve the CreditWatch listing pending a review of the company's operations, cash flow, and liquidity following the delivery of its audited financials and its review of the filings. S&P may lower the rating again in the near term if additional delays in the filing of financial statements further impair liquidity. S&P will also evaluate whether Cambium's discussions with its bank group produce any increase in covenant headroom, and the financial cost of covenant relief. CASALE MARBLE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Casale Marble Imports, Inc. 750 S.W. 17th Ave. Delray Beach, FL 33444 Tel: (561) 404-4213 Bankruptcy Case No.: 08-19689 Type of Business: The Debtor is a stone supplier. See http://www.casalemarble.net Chapter 11 Petition Date: July 14, 2008 Court: Southern District of Florida (West Palm Beach) Judge: Paul G. Hyman, Jr. Debtor's Counsel: Paul L. Orshan, Esq. Email: plorshan@orshanpa.com 2655 LeJeune Rd., Ste. 410 Coral Gables, FL 33134 Tel: (305) 779-4882 Fax: (305) 402-0777 Estimated Assets: $10,000,000 to $50,000,000 Estimated Debts: $10,000,000 to $50,000,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ MLP-VC Stone Trade debt $257,313 37010 S. Amrogio Valpolicella Verona, Italy Chariot International Pvt. Trade debt $241,996 Ltd. #107, Agrahara Town White Field Rd. Bangalore, India 560 066 Savino Del Bene (Florida) Trade debt $204,419 8815 N.W. 33rd St., Ste. 110 Miami, FL 33172 Euler Hermes UMA Collection Agency $139,032 Exact Software North America Computer software $130,727 Andrade S/A Marmores e Granito Trade debt $127,625 Tab India Granites Pvt. Ltd Trade debt $125,905 Stone World Direct Exports Trade debt $102,637 Pvt. Marmocil Ltd. Trade debt $85,088 Jacigua Marmores e Granitos Trade debt $59,005 Tracomal Mineracao S.A. Trade debt $54,110 Stocchero Attilio & Co. Srl. Trade debt $53,027 Parana Granitos Trade debt $52,640 Andrade Industria E Mineracao Trade debt $47,471 Luis Sanchez Diez, S.A. Trade debt $45,090 Pemagran-Pedras Trade debt $44,164 Marca Ltda Trade debt $43,739 VC Stone Imports, Inc. Trade debt $42,288 Oceans/Vereda Marmores Trade debt $38,882 DMI Imports Trade debt $35,481 CEDAR FUNDING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Cedar Funding Mortgage Fund, LLC 465 Tyler St. Monterey, CA 93940 Bankruptcy Case No.: 08-53670 Type of Business: The Debtor is a private money lending company whose clients consist of borrowers and investors. See http://www.cedarfundinginc.com/ Chapter 11 Petition Date: July 11, 2008 Court: Northern District of California (San Jose) Judge: Arthur S. Weissbrodt Debtor's Counsel: Cecily A. Dumas, Esq. Email: cdumas@friedumspring.com Friedman, Dumas and Springwater 150 Spear St., Ste. 1600 San Francisco, CA 94104 Tel: (415) 834-3802 http://www.friedumspring.com/ Estimated Assets: Less than $50,000 Estimated Debts: $100 million to $500 million A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/canb08-53670.pdf CENTAUR: Gaming Board Refuses to Grant Gaming License ----------------------------------------------------- The Pennsylvania Gaming Control Board denied a request by the developers of the Valley View Downs racetrack in Lawrence County to grant a Conditional Category 1 slots gaming license prior to the completion of its background investigation and suitability hearing. The unanimous decision by the Board does not deny the application by Valley View Downs, a subsidiary of Centaur, LLC, a slots gaming license in the future. Rather, the decision of the Board acknowledges its view that the background investigation of those persons who control the slot machine license must be completed prior to licensing the casino facility. In this case, the background investigation by the Board on their application continues and a suitability hearing can be scheduled in the future to gather additional information and evidence necessary to consider the award of a slots license. "Valley View Downs' application review and investigation is not to the point where the Board felt it had all the necessary background information required within Pennsylvania's strict regulatory environment to issue a conditional license at this time," Mary DiGiacomo Colins, Chairman, said. "At the same time, it is important to note that [the] decision does not impact any future decision by this Board on Valley View's application for a slot operator's license." The Board expects to release an adjudication on this decision in the near future. About Centaur, Inc. Headquarter in Indianapolis, Indiana, Centaur, Inc. -- http://www.centaurgaming.net/-- is a privately held business focused on bringing the entertainment and economic development benefits of gaming and horse racing to key communities across North America. Centaur's experienced, well-respected management team has managed gaming operations in several states, and continues to explore additional racing and gaming opportunities across North America. Centaur currently owns and manages Hoosier Park in Anderson, Indiana, and Fortune Valley Hotel & Casino in Central City, Colorado, and is seeking final approval to develop Valley View Downs in western Pennsylvania. In addition to its current properties, Centaur is a former owner of the Argosy Riverboat Hotel & Casino in Lawrenceburg, Indiana, and the Augustine Casino in Palm Springs, Californian. CENTAUR LLC: Failure to Renew Gaming License Cues S&P's Neg. Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its corporate credit and issue-level ratings for Centaur LLC, including the 'B' corporate credit rating, on CreditWatch with negative implications. The CreditWatch listing follows the announcement by the Pennsylvania Gaming Control Board that it denied Centaur's request for a gaming license at this time, and that the background investigation of the persons controlling the slot machine license must be completed prior to licensing the casino facility. An inability to obtain the Pennsylvania gaming license by July 15, 2008 constitutes an event of default under Centaur's credit agreement. In resolving the CreditWatch listing, S&P will evaluate the implications of potential actions by the lending group. CLEARPOINT BUSINESS: ComVest Group Discloses 15.7% Equity Stake --------------------------------------------------------------- ComVest Capital LLC, ComVest Capital Management LLC, ComVest Group Holdings, LLC, and founder Michael S. Falk disclose that they own 2,210,825 shares in Clearpoint Business Resources Inc., representing 15.7% of Clearpoint's outstanding shares. Based in Chalfont, Pennsylvania, ClearPoint Business Resources Inc., through its proprietary, technology-based iLabor network platform, provides its clients a comprehensive web-based portal to streamline the process involved in procurement and management of temporary labor through a network of ClearPoint-approved staffing vendors. Clearpoint Business Resources Inc.'s consolidated balance sheet at March 31, 2008, showed $10,264,003 in total assets and $26,251,109 in total liabilities, resulting in a $15,987,106 total stockholders' deficit. M&T Credit Pact Default As disclosed in the Troubled Company Reporter on June 12, 2008, ClearPoint Business is in default under a credit agreement, dated Feb. 23, 2007, with Manufacturers and Traders Trust Company and several lenders. As a consequence of the default, M&T declared all ClearPoint's outstanding obligations under the Credit Agreement to be immediately due and payable and terminated the lenders' obligation to make any additional loans or issue additional letters of credit to ClearPoint. ClearPoint is in the process of negotiating a financing arrangement with a potential lender. However, there is no assurance that ClearPoint's capital raising efforts will be able to attract the additional capital or other funds it needs to sustain its operations. Due to ClearPoint's financial position and results of operations, on May 30, 2008, ClearPoint scaled back various aspects of its operations. If ClearPoint is unable to obtain additional funding, or such funding is not available on acceptable terms, this will materially adversely impact ClearPoint's ability to continue operations. CMT AMERICA: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: CMT America Corp. aka Fairvane Corp. aka Urban Behavior aka Weathervane 21 Hyde Rd. Farmington, CT 06032 Bankruptcy Case No.: 08-11434 Chapter 11 Petition Date: July 13, 2008 Court: District of Delaware (Delaware) Judge: Christopher S. Sontchi Debtor's Counsel: Robert S. Brady, Esq. Email: bankfilings@ycst.com Young, Conaway, Stargatt & Taylor The Brandywine Bldg. 1000 W. St., 17th Fl. P.O. Box 391 Wilmington, DE 19899-0391 Tel: (302) 571-6600 Fax: (302) 571-1253 http://www.ycst.com/ Estimated Assets: $10,000,000 to $50,000,000 Estimated Debts: $10,000,000 to $50,000,000 Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ CHIQLE trade $313,876 1100 S. San Pedro St., Ste. A-3 Los Angeles, CA 90015-2343 Tel: (213) 745-8110 Fax: (213) 745-9110 Wellton Express International trade $190,371 (Ontario), Inc. 2600 Skymark Ave., Bldg. 3 Mississauga, ON L4W B52 Tel: (905) 602-8828 Fax: (905) 602-8688 Gaze USA, Inc. trade $158,170 2135 E. 52nd St. Vernon, CA 90058 Tel: (323) 277-1085, 148 (ext.) Fax: (323) 586-8048 Bozzolo-Shine Imports trade $139,241 CRB Commercial Interiors, Inc. trade $112,604 Have Fashion-Merch trade $97,876 Lechase Construction Services trade $96,948 KPMG, LLP trade $93,208 4838-Braintree Property trade $84,792 Association Taubman Auburn Hills trade $69,243 TAVU trade $65,343 Southlake Indiana, LLC trade $64,525 4835 Rockaway Center trade $61,741 Association Allied Printing Services trade $60,792 ESTAM trade $59,938 Woodfield Mall, LLC trade $54,119 Expand Inc., Judy Jr. trade $53,866 4822-Bellwether Properties trade $50,342 Carousel Center Co., LP trade $48,076 CREDIT SUISSE: S&P Lowers Ratings on Seven Classes of Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on seven classes of commercial mortgage pass-through certificates from Credit Suisse First Boston Mortgage Securities Corp.'s series 2005-C3. Concurrently, S&P affirmed its ratings on the remaining classes from this transaction. The downgrades reflect the credit deterioration of the pool. Fifteen loans have reported debt service coverage below 1.0x, and three loans are with the special servicer. The trust has realized $3.6 million in realized losses to date. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the June 17, 2008, remittance report, the collateral pool consisted of 197 loans with an aggregate balance of $1.59 billion, down from 198 loans with a balance of $1.64 billion at issuance. The master servicer, Midland Loan Services Inc., reported financial information for 99% of the pool. Fifty-nine percent of the servicer-provided information was full-year 2007 data and 14% was interim-2007 data. Fifteen loans in the pool, totaling $102.7 million (7%), have reported DSCs lower than 1.0x. These loans are secured primarily by a variety of office, retail, and multifamily properties and have an average balance of $6.8 million and an average decline in DSC of 54% since issuance. Excluding defeased loans totaling $105.0 million (6.6%), Standard & Poor's calculated a weighted average DSC of 1.61x for the pool, down from 2.01x at issuance. Loans secured by cooperative apartment properties secure 10.3% of the pool. All but two of the loans in the pool are current; one loan totaling $3.9 million is 60-plus-days delinquent and another loan totaling $920,371 is 90-plus-days delinquent. There are three loans totaling $27.8 million (1.7%) with the special servicer, LNR Partners Inc. To date, the trust has experienced one loss totaling $3.6 million. The top 10 loan exposures secured by real estate have an aggregate outstanding balance of $616.8 million (38.7%) and a weighted average DSC of 1.33x (excluding the ninth-largest loan, a co-op loan), up from 1.23x at issuance. The fourth-largest loan is on the servicer's watchlist and is discussed below. Standard & Poor's reviewed property inspections provided by Midland for nine of the assets underlying the top 10 exposures. Two assets were characterized as "excellent" and the remaining properties were characterized as "good." Details of the three loans with the special servicer are: -- The Center of Winter Park loan ($22.9 million, 1.4%) is secured by a 258,885-sq.-ft. anchored retail center in Winter Park, Florida, built in 1965 and renovated in 1991. The loan was transferred to the special servicer due to imminent default, which included insufficient insurance and failure to remit excess cash flow. All of the defaults have been cured and negotiations concerning an accrued interest default have been resolved, and LNR plans to return the loan to the master servicer. As of Dec. 31, 2007, the property reported a DSC of 1.31x. -- The Lenox Square loan ($3.9 million; 0.2%) is secured by a 93,224-sq.-ft. unanchored retail property built in 1978 in Richmond, Michigan. This property is also encumbered by a $680,000 B note. The loan was transferred to special servicing due to payment default. In addition, the B note, which matured Sept. 11, 2007, was not repaid. The property is currently in foreclosure, and based on the most recent appraisal, Standard & Poor's expects a minimal loss upon the resolution of this asset. -- The Amory Street Apartments Loan ($920,080) is secured by a 32-unit multifamily property built in 1920 in Nashua, N.H. The loan was transferred to special servicing on June 11, 2008, due to a payment default. The special servicer is currently evaluating different strategies. Midland Loan Services Inc. reported a watchlist of 20 loans with an aggregate outstanding balance of $109.7 million (6.9%). The largest loan on the watchlist and the fourth-largest loan in the pool is the Everest MBC Portfolio Tower loan. The loan is secured by six cross-collateralized and cross-defaulted loans collateralized by industrial warehouse, flex, and office properties in Billerica, Boston, and Chicopee, Massachusetts. The master servicer placed this loan on the watchlist because one of the properties reported a low DSC of 0.23x as of Sept. 30, 2007, and the sole tenant at another property vacated when its lease expired in August 2007. As of June 17, 2008, the combined DSC was 1.10x. Standard & Poor's stressed the loans on the watchlist, along with other loans with credit issues, as part of its pool analysis. The resultant credit enhancement levels support the lowered and affirmed ratings. Ratings Lowered Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2005-C3 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ H BB BBB- 3.24% J BB- BB+ 2.86% K B- BB 2.34% L CCC+ BB- 1.96% M CCC B+ 1.70% N CCC- B 1.44% O CCC- B- 1.06% Ratings Affirmed Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2005-C3 Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 30.63% A-2 AAA 30.63% A-3 AAA 30.63% A-AB AAA 30.63% A-4 AAA 30.63% A-1-A AAA 30.63% A-M AAA 20.34% A-J AAA 11.86% B AA 9.67% C A+ 8.64% D A 7.74% E A- 6.72% F BBB+ 5.43% G BBB 4.40% A-X AAA N/A A-SP AAA N/A A-Y AAA N/A N/A -- Not applicable. CRIIMI MAE: S&P Cuts Rating on 1996-CI Trusts to CCC- from B ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on class E from CRIIMI Mae Trust I's series 1996-C1 to 'CCC-' from 'B' and removed it from CreditWatch with negative implications, where it was placed on May 28, 2008. The rating action follows S&P's full analysis of the transaction, including an examination of the current credit characteristics of the transaction's assets and liabilities. S&P's review incorporated Standard & Poor's revised recovery rate assumptions for commercial mortgage-backed securities, as detailed in "Recovery Rates For CMBS Collateral In Resecuritization Transactions," published May 28, 2008, on RatingsDirect. According to the June 30, 2008, trustee report, the transaction's current assets included six classes ($59.8 million, 100%) of CMBS pass-through certificates from four distinct transactions issued in 1995 and 1996. The current assets are from the following transactions: -- Asset Securitization Corp.'s series 1995-D1 ($20.3 million, 34%); -- LB Commercial Conduit Mortgage Trust's series 1995-C2 ($19.4 million, 32%); -- Asset Securitization Corp.'s series 1996-D2 ($13.6 million, 23%); and -- Fannie Mae Aces' series 1996-M1 ($6.5 million, 11%). The aggregate principal balance of the assets and liabilities totaled $59.8 million, down from $349 million at issuance. Of the $289.2 million reduction in the total liabilities since issuance, approximately $3.4 million was due to principal losses realized on first-loss CMBS assets, which currently represent $30.2 million (51%) of the asset pool. S&P's analysis indicates that the current asset pool exhibits weighted average credit characteristics consistent with 'CCC+' rated obligations. Excluding first-loss CMBS assets, the current asset pool exhibits credit characteristics consistent with 'BB' rated obligations. Standard & Poor's rates $53.3 million (89%) of the assets. S&P reanalyzed its outstanding credit estimates for the remaining assets. Standard & Poor's analysis of the transaction supports the lowered rating. DELPHI CORP: GM Wants to Participate in Appaloosa Adversary Suit ---------------------------------------------------------------- General Motors Corp. seeks authority from the U.S. Bankruptcy Court for the Southern District of New York to participate in the adversary proceedings filed by Delphi Corp. against Appaloosa, Management, L.P., et al. GM wants to participate in the proceedings as a "party-in-interest." Delphi's ties with Appaloosa, et al., soured after Delphi sought funding of the $2,825,000,000 of its $6,100,000,000 exit debt financing facility from General Motors, its primary customer. The lenders, including GM, were ready to close April 4, but the financing agreements have been terminated after Appaloosa, et al., pulled out from their commitment to provide $2,550,000,000 of equity financing to Delphi. Michael P. Kessler, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the Court that GM wants to: (i) appear before the Court on any matter arising in the adversary proceedings, including hearings and chambers conferences; (ii) participate in settlement discussions, mediation sessions and arbitrations regarding the Adversary Proceeding; and (iii) participate in the discovery process, including through the review of documents produced and attendance at depositions. Mr. Kessler asserts GM only seeks limited participation rights sufficient to fully monitor the progress and status of the adversary proceedings and to permit involvement in activities likely to affect or overlap with the negotiation of a modified new plan. GM clarifies it does not intend to intervene at this time as a plaintiff in the adversary proceedings, and it does not intend to file pleadings, argue before the court, or examine witnesses at depositions, hearings, or trial. Delphi and the statutory committees appointed in the Chapter 11 cases -- the Official Committee of Unsecured Creditors and the Official Committee of Equity Security Holders have reached an agreement with regarding the terms of their intervention in the adversary proceedings, and they will have significantly more information into the potential value of the litigation if GM is not permitted to monitor the Adversary Proceeding, Mr. Kessler points out. GM cannot meaningfully negotiate over the value and disposition of any proceeds of this litigation if it is not afforded the opportunity to participate, including by attending depositions and reviewing documents produced by the Plan Investors. Such an advantage to the other major constituents would be unfair to GM given its role as one of the major constituents in the case, Mr. Kessler adds. Mr. Kessler notes that the participation rights now sought by GM are the same as those GM has enjoyed in other major contested matters in the Chapter 11 cases. The relief now sought, then, is not only justified by GM's unique role in Delphi's reorganization, but is consistent with past practice in these cases, Mr. Kessler contends. GM Involved in New Plan Talks with Delphi and Creditors Committee GM says that it is a major constituent of a new plan under negotiation together with Delphi and the Official Committee of Unsecured Creditors. GM has been asked to provide major support through financial contributions, subsidies and loans, Mr. Kessler discloses. GM adds its interest in participating in the adversary proceedings is in the litigation's representation of a significant asset of the Debtors' estates. The terms and conditions of a modified or new plan will depend, in part, on the value ascribed to the litigation and the disposition of any recoveries from the litigation, Mr. Kessler avers. Delphi Opposes Dismissal In light of the Plan Investors' request for dismissal of the adversary proceedings, Delphi is defiant, saying that the defendants engaged in serious misconducts that have caused devastating harm to the company and its many stakeholders, and pleaded two theories of fraud against Appaloosa Management, L.P., for: (i) fraudulently inducing Delphi to enter in the December 2007, Equity Purchase & Commitment Agreement by having its president, David Tepper, represent that AMLP had committed a minimum of $1,100,000,000 of its own capital when in fact, AMLP intended to invest nothing if it did not like the economics of the deal at closing, even if Delphi complied with the conditions precedent to the defendants' commitments, and (ii) fraudulently concealing its plans efforts, before and after confirmation of the Joint Plan of Reorganization of Delphi, to avoid a closing and avoid consummation of the Plan. The Official Committees join in Delphi in its opposition to the Motions for Dismissal, asserting they too have been injured by the Plan Investors' acts. Representing Delphi, Edward A. Friedman, Esq., at Friedman Kaplan Seiler & Adelman LLP, tells the Court that the Plan Investorshave conspired to avoid their commitments to Delphi and ultimately renounced any intention to perform, despite their contractual commitments to provide the equity financing necessary for the consummation of the Reorganization Plan, and despite their repeated assurances to Delphi and to the Court that they would honor their commitments. Mr. Friedman says, the Plan Investors' misconduct resulted in Delphi's remaining in bankruptcy, despite obtaining confirmation of the Plan in January, and obtaining commitments for its $6,100,000,000 debt financing in April. "Now defendants argue that, even if they behaved exactly as Delphi alleges, the Court is powerless to enforce the parties' agreements," Mr. Friedman asserts. The Defendants, he says, are arguing that there is no remedy for their breach of contract if they did not do it at will, but even if they did so willfully, only limited monetary damages will be imposed on them, contrary to what the parties agreed and contrary to what the law provides. The remedies available to redress Delphi's injury, Mr. Friedman asserts, turn on disputed facts, which cannot be determined on the face of the pleadings. The defendants' arguments are based on four major premises, which he discusses one by one: (i) The specific performance of a contract to provide money is always precluded as a matter of law. This rule does not exist, Mr. Friedman says. As in most cases, the injured party can obtain substitute performance elsewhere, then sue to recover any increased costs. In the case of Delphi, substitute performance is not available. The plaintiff cannot obtain the money elsewhere on similar terms and the complex nature of the transaction makes damages difficult to measure, and this must be resolved on a full record, not on the pleadings. Delphi's inability to find another $2.55 billion equity package makes substitute performance impossible. It also makes the calculation of Delphi's damages very difficult, Mr. Friedman relates. The Court would have to weigh the accuracy and credibility of competing fact and expert witnesses trying to estimate the difference in value between the equity package promised by the defendants and what a hypothetical alternative investor might theoretically charge for a similar package. The Court would also need to weigh the injury caused by all the other changes to the Plan a hypothetical substitute investment might require, Mr. Friedman adds. (ii) Even if the Court could order specific performance, it may not do so because the parties' agreements forbid it. This contention raises a question of fact because even if the agreements could be read, under New York Law, any contractual limitation on the remedies available for breach is unenforceable, as a matter of public policy, if the breaching party is guilty of willful misconduct or has acted with reckless indifference to the damage it is inflicting, Mr. Friedman notes. He asserts the Defendants' commitments were an integral part of the plan to consummate one of the largest public company reorganizations in history. The reorganized Delphi represents a a unique asset of incalculable value to its employees, its community, and its many other stakeholders. The proposed transaction involves a unique and irreplaceable asset, Mr. Friedman avers. (iii) Section 12(d) of the EPCA permitted termination of the contract without cause as of April 5, 2008, if the transaction had not closed by April 4. It did not close by that date, so the defendants argue that they had an unequivocal right to walk away, making specific performance impossible whatever the merits if Delphi's claims, Mr. Friedman adds. It is settled law, however, that a party cannot take advantage of its own wrongdoing in that fashion. If, as Delphi alleges, the sole reason the transaction did not close on April 4 is that the Defendants improperly terminated the contract on that date, they cannot claim the benefit of a provision that would have had no application but for their own misconduct, Mr. Friedman contends. Even if the EPCA and the Commitment Letter Agreements could be read to preclude specific performance, that preclusion would be unenforceable as a matter of public policy. It is well-established under New York law that, where a defendant has breached a contract in bad faith or through willful misconduct, a limitation--liability provision will not be enforced and will not preclude any legal or equitable remedy otherwise appropriate. Public policy precludes enforcement of a contractual limitation on liability or remedy where the defendant has acted in bad faith, Mr. Friedman explains. (iv) The Defendants argue that the Court need not reach the question of remedy because they did not breach their agreements at all. They contended that Delphi failed go satisfy various conditions precedent, excusing their performance. Mr. Friedman laments the Defendants are free to try to make the case, which is without merit in any event, but not on the pleadings. It is beyond question that Delphi pleaded "generally that all conditions precedent had occurred or been performed,' and nothing more is required, Mr. Friedman tells the Court. A defendant that fails to plead non-compliance with a particular condition waives its right to invoke that condition in its defense. At this point, the Defendants have not yet pleaded, so any alleged failure of a condition is not yet an issue. The Defendants' suggestion that the complaint should be dismissed because Delphi did not anticipate which conditions the defendants might argue were unsatisfied, and address those defenses preemptively, is without merit, Mr. Friedman maintains . In deciding a motion to dismiss, a court will accept the complaint as true and draw all reasonable inference in the plaintiff's favor. A defendant cannot obtain dismissal of an adequately pleaded complaint with the argument "that the plaintiff will not fail to find evidentiary support for his allegations, because the issue is not whether the plaintiff ultimately will prevail but whether the plaintiff is entitled to offer evidence to support its claims, Mr. Friedman states. Delphi asks the court to deny the Motions to Dismiss, asserting that hearing the case will lead to the discovery and trial for of Delphi's claims and the determination of the appropriate remedy. Parties Stipulate on Confidential Information Delphi, the Committees, and the Plan Investors anticipate that the documents provided in the adversary proceedings may involve information that are sensitive and confidential in nature. Accordingly, they agree to these terms: * Discovery Material that contains information that is (i) not generally available to the public and (ii) sensitive commercial, financial, or business information, sensitive personal information, trade secrets, or other confidential research, development, or commercial information the public disclosure of which may adversely affect the producing party may be designated as "Confidential." * Discovery Material that poses a reasonable risk of competitive or other harm to the Producing Party or non- party, maybe classified as "Highly Confidential." * Confidential Discovery Material will only be available to the Court, the Court employees directly involved in the proceeding, counsel to the Parties in the Chapter 11 cases, and third-party contractors working on the data in connection with the action, and any joining party required to provide assistance in the conduct of these cases. * "Highly Confidential" Discovery Materials will be available only to the Court, the Court employees directly involved in the proceedings, counsel to the parties in these cases and their staff, and third party contractors engaged in working on the data in connection with the action. Consultants, advisors, investigators, or experts employed by counsel in connection with the Chapter 11 cases may be authorized access to "Highly Confidential' Discovery Materials when necessary, provided they sign a confidentiality agreement. * A party who desires to provide "Highly Confidential' materials to persons not authorized in the Stipulation will have to make an appropriate application to the Court. * The unintentional disclosure by a producing party of unmarked Confidential Discovery Materials will not be deemed as a waiver of the party's claim of confidentiality, and the unintentional production of any privileged material by the producing Party or a third party will not be deemed to be a waiver or impairment of any claim of privilege. * To the extent that Confidential Discovery Material is proposed to be filed or is filed with the Court, that Confidential Discovery Material, any portion of a pleading, motion or memorandum that discloses the Confidential Discovery Material will be filed under seal, together with a motion to seal the documents. About GM Based in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. At March 31, 2008, GM's balance sheet showed total assets of $145,741,000,000 and total debts of $186,784,000,000, resulting in a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000, respectively. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide $2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 136; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Retains W.Y. Campbell to Coordinate Brake Biz Sale --------------------------------------------------------------- Delphi Corp. disclosed the retention of W.Y. Campbell & Company to explore sale opportunities for Delphi's Brake business. Delphi's Brake business has estimated 2008 revenue of $295 million and provides fully integrated brake system solutions to customers as well as engineered components tailored to customer requirements. Delphi's Brake business has more than 1,000 employees globally throughout three manufacturing and assembly facilities located in Juarez, Mexico and Shanghai, China. The business also has technical centers in Shanghai, China; Brighton, Michigan; and Dayton, Ohio. Parties interested in Delphi's Brake business may contact: Cliff Roesler Managing Director W.Y. Campbell & Company Tel: (313) 496-9000 E-mail: croesler@wycampbell.com Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide $2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 136; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Wants to Modify 19.1% Stake in Ener1 Venture --------------------------------------------------------- Delphi Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to allow Debtor Delphi Automotive Systems LLC to enter into a Restructuring and Exchange Agreement with Ener1, Inc., for the restructuring and exchange of DAS LLC's ownership interests in EnerDel, Inc., pursuant to Section 363 of the Bankruptcy Code and Rules 2004 and 6004(a) of the Federal Rules of Bankruptcy Procedure. In 2004, DAS LLC and Ener1 Inc. formed a joint venture, EnerDel, to design and manufacture lithium-ion battery technologies and products. The goal of the joint venture was to create an alternative energy source and sell and distribute its products globally. EnerDel primarily focuses its lithium-ion batteries business in the automotive, power tool, military, consumer appliance, and personal mobility markets. Ener1 contributed capital and intellectual property to the joint venture, and in exchange was granted 80.5% of EnerDel's common stock. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, tells the Court that DAS LLC contributed proportionally a smaller amount of capital and intellectual property to the joint venture and in exchange was granted 19.5% of EnerDel's common stock. DAS LLC was also granted one of six seats on the EnerDel board of directors, 8,000 shares of EnerDel preferred stock and warrants to acquire 750,000 shares of Ener1 common stock with a strike price of $7 per share, to expire on Oct. 20, 2011. The low-cost, high-performance lithium-ion batteries that EnerDel develops are designed for plug-in hybrid and extended-range electric vehicles. This niche is becoming increasingly competitive, Mr. Butler avers. Nevertheless, EnerDel believes it has a feasible business plan for the development of the lithium- ion batteries, and the global market for alternate fuel sources is in the billions of dollars. Mr. Butler tells the Hon. Robert Drain that the Restructuring and Exchange Agreement which is aimed at restructuring the ownership interests of DAS LLC in EnerDel to a more liquid asset, provides, among others, that: (a) DAS LLC would transfer 19.5% Common Stock interest and its preferred Stock in EnerDel to its joint partner, Ener1, in exchange for (i) 2,086,000 shares of the Ener1 common stock valued at approximately $19,500,000, (ii) $8,000,000 cash, and (iii) revised warrants to acquire Ener1 common stock at an exercise price of $5.25 per share; (b) the non-compete provision in the Formation Agreement, which limits the options of DAS LLC and Ener1 to engage in operations to compete with EnerDel will remain in effect until October 20, 2010; (c) EnerDel would continue to license intellectual property to DAS LLC for the use of, manufacture, and sale of products other than lithium batteries; (d) the Restructuring and Exchange Agreement could be terminated prior to the closing upon (1) mutual agreement by the parties, (2) termination by either party, provided that the terminating party is not in material breach of its obligations under the Restructuring and Exchange Agreement, if the closing does not occur on or five business days following the date an order approving the motion is no longer subject to a stay or injunction, (3) termination by either party if the other party materially breached its representations and warranties and the breach is not cured within 10 business days of written notice of the breaches, and (4) termination by either party, if the Court has not entered an order approving the motion on or before Sept. 2, 2008. The Agreement is a product of both parties' good-faith and arm's- length bargaining positions, Mr. Butler tells the Court. The transactions and instruments contemplated by the Agreement, he says, satisfies the requirements of Section 363 of the Bankruptcy Code. The Court will convene a hearing on July 31, 2008, at 10:00 a.m., to consider approval of the Debtors' request. Objections are due July 24, 2008 at 4:00 p.m. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide $2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 136; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) E*TRADE FINANCIAL: Sells Canadian Unit to Scotiabank for $442MM --------------------------------------------------------------- E*Trade Financial Corp. agreed to sell its Canadian operations to Bank of Nova Scotia for $442 million and said the sale and return of related capital would generate about $511 million for the online brokerage, The Wall Street Journal related. In a press statement, Scotiabank or Bank of Nova Scotia said it will purchase E*TRADE Canada from U.S.-based parent E*TRADE Financial. The definitive agreement is subject to regulatory approvals. The Journal indicated that E*Trade's shares fell 26 cents, or 9.6%, to $2.46 as of 4 p.m. in Nasdaq Stock Market composite trading, the stock was up in after-hours trading to $2.54. Scotiabank said in a statement that the completion of the transaction will double Scotiabank's footprint in the Canadian online investing market. "Scotiabank's agreement to purchase E*TRADE Canada demonstrates our commitment to pursuing opportunities to grow our wealth management business and drive revenue growth," Rick Waugh, president and CEO, Scotiabank, said. "This is an excellent growth opportunity that will build on Scotiabank's strong position as a leading online investing solution." "This statement is consistent with our overall strategic focus on growing our wealth management business in Canada and around the world," he added. E*TRADE Canada is an online brokerage with approximately $4.7 billion in assets under administration and 190 employees. E*TRADE Canada offers a variety of products and services to retail and institutional investors buying and selling securities via electronic trading platforms. "Through this acquisition, Scotiabank has demonstrated its commitment to growing its online investing business," Duncan Hannay, president, E*TRADE Canada, said. "The E*TRADE Canada team will help Scotiabank achieve its goals by continuing to deliver exceptional value to the self-directed investor," Mr. Hannay said. "This acquisition marks a new chapter for our business and the industry, and represents an exciting growth opportunity for all. We anticipate a smooth transition for our customers." The statement builds on Scotiabank's 2007 completion of the acquisition of TradeFreedom Securities Inc., a Canadian online brokerage boutique. "Online brokerage is playing an increasingly significant role in wealth management as more Canadians are using online investment solutions, and many are becoming more active traders," Chris Hodgson, executive vice-president, head of domestic personal banking, Scotiabank, said. "The addition of E*TRADE Canada's products and services to those offered by Scotiabank will provide greater online investing solutions for all customers, a comprehensive range of highly competitive direct investing choices for Canadians and continued excellent customer service. "In addition to retail services, E*TRADE Canada's institutional business is included in the transaction," Mr. Hodgson said. "E*TRADE Canada will continue to provide full support for all of their institutional technology product offerings." "For the immediate term as we seek regulatory approvals, it will continue to be business as usual," Barbara Mason, Executive vice- president, wealth management, Scotiabank, added. "E*TRADE Canada clients can be assured that they will continue to receive the benefits that they currently enjoy, and employees will continue to have a great place to work," Ms. Mason added. "We are committed to bringing together the best of E*Trade Canada and Scotiabank to provide a seamless transition to a highly competitive online investing solution for all Canadians." For this acquisition, Scotia Capital is acting as exclusive financial advisor to Scotiabank. About Scotiabank Scotiabank (Toronto: BNS) and NYSE: BNS) -- http://www.scotiabank.com/-- is a financial institutions and an international bank. With more than 60,000 employees, Scotiabank Group and its affiliates serve approximately 12.5 million customers in some 50 countries around the world. Scotiabank offers a diverse range of products and services including personal, commercial, corporate and investment banking. Scotiabank has $453 billion in assets, as at April 30, 2008 About E*TRADE Financial Based in New York City, E*Trade Financial Corporation (NasdaqGS: ETFC) -- http://us.etrade.com/-- provides financial services including trading, investing, banking and lending for retail and institutional customers. Securities products and services are offered by E*Trade Securities LLC. Bank and lending products and services are offered by E*Trade Bank, a Federal savings bank, or its subsidiaries. * * * Moody's Investors Service placed E*Trade Financial Corporation's subordinated debt rating at 'B1' in November 2007. The outlook for the long-term rating is negative. EVERGREEN INT'L: S&P Cuts Rating to B- on Weak Operating Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Evergreen International Aviation Inc. to 'B-' from 'B'. At the same time, S&P lowered the rating on the company's first- lien credit facility to 'B+' from 'BB-' and lowered the rating on the second-lien credit facility to 'CCC+' from 'B-'. All ratings were removed from CreditWatch, where they were placed with negative implications on March 31, 2008. The outlook is stable. The downgrades reflect the company's weaker-than-expected near- term operating outlook and S&P's expectation that its liquidity will remain constrained despite the recent amendment of its credit facility. "Although our concerns over covenant compliance have been reduced somewhat, we believe the company's near-term operating outlook and liquidity position no longer support our previous rating," said Standard & Poor's credit analyst Lisa Jenkins. "Although we expect operating performance to improve over the next few years from the depressed level of fiscal 2008 [year ended Feb. 28], a material improvement in liquidity is unlikely over the near term and we expect the room under the financial covenants to remain limited." Privately held Evergreen does not disclose financial results to the public. Ratings on McMinnville, Oregon-based Evergreen reflect the company's participation in a cyclical, competitive, and capital- intensive industry and its highly leveraged capital structure. Offsetting these risks somewhat is the company's established position in certain narrow market segments and its long-standing relationship with many key customers. Evergreen derives the majority of its revenues and operating profits from Evergreen International Airlines, its heavy airfreight transportation subsidiary. The company also provides ground logistics services, aircraft maintenance and repair services, helicopter and small aircraft services, and aviation sales and leasing. Over the past year, the company has been experiencing significant profit pressures in its airfreight business. In large part, this reflects the impact of delays with Boeing's new 787 aircraft. (Evergreen has an agreement with Boeing to provide transportation- related services for the new aircraft.) Boeing-related delays are likely to continue to depress operating results in the near term, although S&P expect revenues and earnings to increase over time as delivery schedules build. Military demand, which is a significant contributor to Evergreen's revenues and earnings, also declined in fiscal 2008, because of operational issues at Evergreen that have since been addressed and the temporary displacement of destination airport capacity by other cargo. Military demand should recover over the near to intermediate term, although it remains subject to temporary disruptions like those experienced in fiscal 2008. With the recent easing of covenant requirements and the likelihood of improved operating performance over the near to intermediate term, S&P expect Evergreen to have adequate, albeit limited, liquidity. S&P would likely revise the outlook to negative if the expected improvement in operating performance fails to occur, raising liquidity and covenant compliance concerns again. Given the company's constrained liquidity position and the operating challenges it faces, an outlook revision to positive is unlikely over the next year. EXPRESS ENERGY: S&P's 'B' Rating Unmoved by $22.5MM New Facility ---------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on oilfield service provider Express Energy Services Operating LP (B/Stable/--) would not be affected by the announcement that its new senior revolving credit facility will close at $22.5 million from a previously contemplated $35 million. Issue and recovery ratings for Express Energy's senior secured credit facilities remain unchanged at 'B+' and '2', respectively. These ratings indicate S&P's expectation for substantial (70% to 90%) recovery in the event of a payment default. The company can increase the facility up to $50 million. FAREPORT CAPITAL: Provides Update on Financial Statement Reporting ------------------------------------------------------------------ Fareport Capital Inc., in compliance with the National Instrument 51-102 Continuous Disclosure Obligations, confirms that: -- The company remains unable to file its April 30, 2007, interim financial statements; July 31, 2007 annual financial statements; Oct. 31, 2007, interim financial statements; and Jan. 31, 2008, interim financial statements. Further, the company was not able to file its April 30, 2008, interim financial statements on time due to continued problems with its internal accounting and records management. -- The company intends to satisfy the alternative information guidelines recommended by Ontario Securities Commission Policy 57-603, including the filing of Default Status Reports on a bi-weekly basis, disclosing the details required by Appendix B of Staff Notice 57-301 for so long as the company remains in default of its NI 51-102 financial reporting obligations. The company understands that it has been subject to the MCTO for a period longer than two months after the filing deadline of its April 30, 2007, interim financial statements and that the OSC may impose an issuer cease trade order on the company at any time. -- The new management of the company, since taking control of the company pursuant to the corporate reorganization transaction disclosed on Aug. 24, 2007, has undertaken an ongoing examination and restructuring of the company's infrastructure and operations. The completion of the reorganization transaction was disclosed on Oct. 1, 2007. Certain common shares issued by the company in connection with the transaction remain in escrow pending the termination of the MCTO. The management reports these preliminary conclusions from its ongoing examination since that time based on information in its possession: -- Management has determined that the company's internal accounting and reporting systems prior to September 2007 were deficient in their structure, organization, controls and accuracy. As a result, management has taken steps to implement an accurate and timely accounting and financial reporting system. -- Due to a lack of accounting information available, including the company's records and accounts, management has been unable to either confirm or deny the accuracy of the company's 2006 closing financial statement balances or the corresponding 2007 opening financial statement balances, and will continue to provide updates regarding its review, analysis and any final determinations regarding the financial information as part of its ongoing examinations. -- The inability of the company to confirm to date its 2007 opening financial statement balances has, as of the date hereof, restricted the ability of its auditors to provide an unqualified opinion for the 2007 annual financial statements. The company is therefore unable to provide an expected date for the filing of its July 31, 2007, annual financial statements; its April 30, 2007, interim financial statements; its Oct. 31, 2007, interim financial statements; its Jan. 31, 2008, interim financial statements, and its April 30, 2008, interim financial statements. Management will continue to work with its auditors to issue its annual and interim financial statements. In addition to the preliminary conclusions of management's ongoing examination, management also reports that prior management was delinquent with its GST reporting and payments on behalf of the company for the 2005, 2006, and 2007, fiscal years ended July 31, which periods were prior to the completion of the corporate reorganization transaction. On Feb. 5, 2008, the company received a notice of reassessment regarding the GST amounts payable by the company in its 2004 and 2005 fiscal years. The Canada Revenue Agency claimed the company owed an additional $456,000 of unpaid taxes. On May 5, 2008, the company filed an objection to these assessments. Pending resolution of its objection the company has worked out a payment schedule with the CRA. As well, the company was required to file and pay GST returns for the calendar years 2006 and 2007 which GST returns had previously not been paid. The company's GST returns are now up to date and current. In March 2008, the CRA commenced a review of the company's employee tax remittances for the 2006 and 2007 fiscal years. Upon the completion of that review, the company was reassessed for the improper reporting of payroll taxes in 2006. The company negotiated a payment plan with the CRA regarding this matter. The payment of the company's pay roll taxes is now current and up to date. Also in March 2008, management learned that prior management failed to file the company's annual corporate income tax returns for the fiscal years from 2004 to 2006. The company is working with the CRA in an attempt to rectify the company's income tax reporting requirements and will continue to provide updates of the progress of such efforts as they occur. The management will continue to work to improve the company's operations and its business in an effort to bring financial stability to its operations and accountability to its financial reporting systems. The company is also continuing to seek the appointment of an additional independent and qualified director to the company's board of directors in order to satisfy the requirement in section 2.1 of Policy 3.1 of the TSX Venture Exchange Corporate Finance Manual. About Fareport Capital Inc Headquartered in Ontario, Canada, Fareport Capital Inc. (TSX VENTURE:FPC) -- http://www.fareport.com/-- is engaged in the operation of taxicab brokerages, leasing taxicab licenses and taxicabs, and also provides other forms of personal charter transportation services within the Ontario region. The company operates the Crown Taxi and Olympic Taxi brokerages and Crown Transportation and Trax Shuttle Service. Fareport also provides or facilitates lender financing to taxicab operators for the purchase of taxi vehicles and insurance services. FONAR CORP: Subject to Nasdaq Delisting on Failure to Hold AGM -------------------------------------------------------------- FONAR Corporation received a letter from The NASDAQ Stock Market LLC indicating that the company is not in compliance with Marketplace Rules 4350(e) and 4350(g) due to the fact that it has not yet solicited proxies and held its annual meeting for the fiscal year ended June 30, 2007. As a result, the notice indicated that the company's securities would be subject to delisting from The NASDAQ Capital Market unless the company requested a hearing before a NASDAQ Listing Qualifications Panel. The company intends to request a hearing at which it will request continued listing based upon its plan to solicit proxies and hold the annual meeting. However, there can be no assurance the Panel will grant the company's request for continued listing. About Fonar Corporation Based in Melville, New York, Fonar Corporation (NASDAQ:FONR) -- http://www.fonar.com/-- is engaged in the business of designing, manufacturing, selling and servicing magnetic resonance imaging (MRI), scanners which utilize MRI technology for the detection and diagnosis of human disease. Fonar is the originator of the iron- core, non-superconductive and permanent magnet technology. GE COMMERCIAL: S&P Junks Ratings on Three Certificate Classes ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on seven classes of commercial mortgage pass-through certificates from GE Commercial Mortgage Corp.'s series 2005-C2. Concurrently, S&P affirmed its ratings on the remaining classes from this transaction. The downgrades reflect the credit deterioration of the pool. Seven loans reported debt service coverage below 1.0x, and three loans are with the special servicer. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the June 12, 2008, remittance report, the collateral pool consisted of 140 loans with an aggregate balance of $1.786 billion, down from 142 loans with a balance of $1.877 billion at issuance. The master servicer, GEMSA Loan Services L.P., reported financial information for 95% of the pool. Eighty-one percent of the servicer-provided information was full-year 2007 data, and 8% was interim-2007 data. Excluding the loans with the special servicer, there are seven loans in the pool, totaling $70.1 million (3.9%), that have reported DSCs lower than 1.0x. The loans are secured primarily by a variety of retail and multifamily properties, with an average balance of $7.7 million and an average decline in DSC of 69.0% since issuance. Excluding defeased loans totaling $299.5 million (16.8%), Standard & Poor's calculated a weighted average debt service coverage of 1.58x for the pool, down from 1.61x at issuance. All of the loans in the pool are current with the exception of two loans totaling $17.4 million (0.98%) that are 90-plus-days and 30-plus-days delinquent. There are currently three loans totaling $48.8 million (2.7%) with the special servicer, LNR Partners Inc., including the aforementioned delinquent loans. The trust has experienced no losses to date. Details of the three loans with the special servicer are: -- Jefferson Commons ($31.4 million; 1.75%) is the largest loan in the pool and is currently within its grace period. The loan is secured by a 288-unit, 792-bed, gated student housing property that opened in the fall of 2004 in Sacramento, California. The property is located less than a mile from CSU-Sacramento. The loan was transferred to LNR in June 2008 due to imminent default. Occupancy was down to 71.1% as of March 2008 from 91.1% at issuance. The most recent inspection report characterized the property as "good." Year-end DSC 2007 was 0.68x. -- The Melrose loan ($14.1 million; 0.79%) is 90-plus-days delinquent. It is secured by a 271-unit student housing property built in 1997 in Urbana, Illinois, 140 miles south of Chicago. The loan was transferred to the special servicer for imminent default. LNR has filed foreclosure proceedings. The DSC as of year-end 2007 was 0.80x. Based on the draft appraisal, Standard & Poor's expects a minimal loss upon the resolution of the asset. -- The Augusta Ranch Storage loan ($3.2 million; 0.18%) is 30 days delinquent. The loan is secured by a self-storage facility in Phoenix, Arizona. All overdue principal and interest has been paid, and the loan was reinstated as of Feb. 21, 2008, and will be returned to the master servicer. The top 10 loan exposures secured by real estate have an aggregate outstanding balance of $508.6 million (28.4%), and the weighted average DSC was 1.75x for year-end 2007, up from 1.70x at issuance. Despite the overall rise in DSC, DSC has declined 20% or more for three of the top 10 loans. These include the largest and the 10th-largest loans, which are on the watchlist, and the eighth-largest loan, which is in special servicing, all of which were discussed above. Standard & Poor's reviewed property inspections provided by GEMSA for all of the assets underlying the top 10 exposures, and all were characterized as "good" except for two that were characterized as "excellent." GEMSA reported a watchlist of 21 loans with an aggregate outstanding balance of $310.4 million (17.3%). The largest loan on the watchlist (and the largest loan in the pool) is the Fountain Place Office loan ($105.9 million; 5.9%). The loan is secured by a 1,198,431-sq.-ft., 58-story, class A office building in the central business district of Dallas, Texas. The master servicer placed this loan on the watchlist due to declining occupancy and DSC. The decline in occupancy to 64.4% at year-end 2007 from 94.3% at issuance resulted directly from the November 2007 departure of what was then the largest tenant, Hunt Consolidated, which occupied 328,000 sq. ft. (27.3%) of the net rentable area. As of Dec. 31, 2007, the DSC was 1.48x. The most recent property inspection characterized the property as "good." The 10th-largest loan in the pool, The Lodge at Kingwood ($24.0 million, 1.34%), appears on the watchlist due to a low DSC at year-end 2007 due to increased vacancies, rent concessions, and increased operating expenses. As of March 30, 2008, the DSC and occupancy had improved to 1.06x and 91.7%, respectively, from 0.98x and 90.0% at year-end 2007. The most recent property inspection characterized the property as "good." At issuance, four loans had credit characteristics consistent with those of investment-grade obligations. These included the largest loan, the GM Building (9.2%), which was defeased. Two of the remaining loans retain credit characteristics of an investment- grade obligation, while the third, Sterling University Trails, no longer does. Details of these loans are: -- The Campus Club Apartments loan has a trust balance of $18.8 million (1.05%). The interest-only loan is secured by a 276- unit, 984-bed student housing complex in Statesboro, Georgia, built in 2002. The complex houses students from nearby Georgia Southern University. DSC was 2.58x for the year ended Dec. 31, 2007, and Standard & Poor's adjusted value for this loan is comparable to its level at issuance. -- The Hilton Realty Multifamily Portfolio has a trust balance of $15.6 million (0.87%). The 10-year fixed-rate loan amortizes on a 30-year schedule and is secured by three multifamily properties totaling 504 units, all located in central New Jersey. DSC was 0.84x for the year ended Dec. 31, 2007, and Standard & Poor's adjusted value for this loan is comparable to its level at issuance. -- Sterling University Trail Apartments has a trust balance of $15.7 million (0.88%). The interest-only loan is secured by a 24-unit student housing complex in Lubbock, Texas, built in 2002. The property houses students from nearby Texas Tech University. For the year ended Dec. 31, 2007, the reported DSC was 2.21x, down from 3.08x at issuance. Operating expenses have increased 40.0% since issuance, and Standard & Poor's adjusted net cash flow for this loan is down 31.3% compared to its level at issuance. Standard & Poor's stressed the loans on the watchlist, along with other loans with credit issues, as part of its pool analysis. The resultant credit enhancement levels support the lowered and affirmed ratings. Ratings Lowered GE Commercial Mortgage Corp. Commercial mortgage pass-through certificates series 2005-C2 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ J BB+ BBB- 3.52% K BB- BB+ 3.00% L B+ BB 2.61% M B- BB- 2.09% N CCC+ B+ 1.96% O CCC B 1.57% P CCC- B- 1.30% Ratings Affirmed GE Commercial Mortgage Corp. Commercial mortgage pass-through certificates series 2005-C2 Class Rating Credit enhancement ----- ------ ------------------ A-2 AAA 20.87% A-3 AAA 20.87% A-AB AAA 20.87% A-4 AAA 20.87% A-1A AAA 20.87% A-J AAA 12.52% B AA+ 11.74% C AA 10.05% D AA- 9.13% E A 7.70% F A- 6.78% G BBB+ 5.61% H BBB 4.70% X-P AAA N/A X-C AAA N/A N/A -- Not applicable. GENERAL MOTORS: CEO to Detail Further Cost Cutting Measures Today ----------------------------------------------------------------- General Motors Corp. is likely to announce further production and workforce streamlining today, with a potential inclusion of white- collar jobs due to a decline in sales, The Wall Street Journal's John D. Stoll report, citing unnamed sources. According to WSJ, GM said that Chairman and Chief Executive Rick Wagoner is set to detail to employees and reporters in a Web broadcast the cost-cutting measures, which are in regards to the company's plan to cut its dependence on trucks and sport-utility vehicles. WSJ's source suggested that there will be further plant closures. As disclosed in the Troubled Company Reporter on July 2, 2008, GM June sales results are highlighted by an 8% rise in retail car sales and continued strong performance in crossovers. Despite the significant decline of industry market volume and the limited availability of some of GM's most popular models, GM dealers in the United States delivered 265,937 vehicles in June, down 8% (18.5% unadjusted). Truck sales declined 6%. The TCR related, on June 26, 2008, that GM has been planning to cut production of its trucks as a result of the slump in pickup trucks and SUVs sales, decreasing production of pickup trucks and SUVs by 170,000 units but increase output of cars, crossovers and vans by 47,000 units during the second half of the year. In May, GM's U.S. sales of trucks and SUVs were 37% below those of May 2007, the biggest decline in the segment among the major auto makers. Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. At March 31, 2008, GM's balance sheet showed total assets of $145,741,000,000 and total debts of $186,784,000,000, resulting in a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000, respectively. * * * As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corporation and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. economy. Standard & Poor's Ratings Services is placing its corporate credit ratings on the three U.S. automakers, General Motors Corp., Ford Motor Co., and Chrysler LLC, on CreditWatch with negative implications, citing the need to evaluate the financial damage being inflicted by deteriorating U.S. industry conditions--largely as a result of high gasoline prices. Included in the CreditWatch placement are the finance units Ford Motor Credit Co. and DaimlerChrysler Financial Services Americas LLC, as well as GM's 49%-owned finance affiliate GMAC LLC. As related in the Troubled Company Reporter on June 5, 2008, Standard & Poor's Ratings Services said that its ratings on General Motors Corp. (B/Negative/B-3) are not immediately affected by the company's announcement that it will cease production at four North American truck plants over the next two years. These closures are in response to the re-energized shift in consumer demand away from light trucks. GM previously said only one shift was being eliminated at each of the four truck plants. Production is being increased at plants producing small and midsize cars, but the cash contribution margin from these smaller vehicles is far less than that of light trucks. GENERAL MOTORS: Wants to Participate in Delphi-Appaloosa Lawsuit ---------------------------------------------------------------- General Motors Corp. seeks authority from the U.S. Bankruptcy Court for the Southern District of New York to participate in the adversary proceedings filed by Delphi Corp. against Appaloosa, Management, L.P., et al. GM wants to participate in the proceedings as a "party-in-interest." As previously reported, Delphi's ties with Appaloosa, et al., soured after Delphi sought funding of the $2,825,000,000 of its $6,100,000,000 exit debt financing facility from General Motors, its primary customer. The lenders, including GM, were ready to close April 4, but the financing agreements have been terminated after Appaloosa, et al., pulled out from their commitment to provide $2,550,000,000 of equity financing to Delphi. Michael P. Kessler, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the Court that GM wants to: (i) appear before the Court on any matter arising in the adversary proceedings, including hearings and chambers conferences; (ii) participate in settlement discussions, mediation sessions and arbitrations regarding the Adversary Proceeding; and (iii) participate in the discovery process, including through the review of documents produced and attendance at depositions. Mr. Kessler asserts GM only seeks limited participation rights sufficient to fully monitor the progress and status of the adversary proceedings and to permit involvement in activities likely to affect or overlap with the negotiation of a modified new plan. GM clarifies it does not intend to intervene at this time as a plaintiff in the adversary proceedings, and it does not intend to file pleadings, argue before the court, or examine witnesses at depositions, hearings, or trial. Delphi and the statutory committees appointed in the Chapter 11 cases -- the Official Committee of Unsecured Creditors and the Official Committee of Equity Security Holders have reached an agreement with regarding the terms of their intervention in the adversary proceedings, and they will have significantly more information into the potential value of the litigation if GM is not permitted to monitor the Adversary Proceeding, Mr. Kessler points out. GM cannot meaningfully negotiate over the value and disposition of any proceeds of this litigation if it is not afforded the opportunity to participate, including by attending depositions and reviewing documents produced by the Plan Investors. Such an advantage to the other major constituents would be unfair to GM given its role as one of the major constituents in the case, Mr. Kessler adds. Mr. Kessler notes that the participation rights now sought by GM are the same as those GM has enjoyed in other major contested matters in the Chapter 11 cases. The relief now sought, then, is not only justified by GM's unique role in Delphi's reorganization, but is consistent with past practice in these cases, Mr. Kessler contends. GM Involved in New Plan Talks with Delphi and Creditors Committee GM says that it is a major constituent of a new plan under negotiation together with Delphi and the Official Committee of Unsecured Creditors. GM has been asked to provide major support through financial contributions, subsidies and loans, Mr. Kessler discloses. GM adds its interest in participating in the adversary proceedings is in the litigation's representation of a significant asset of the Debtors' estates. The terms and conditions of a modified or new plan will depend, in part, on the value ascribed to the litigation and the disposition of any recoveries from the litigation, Mr. Kessler avers. Delphi Opposes Dismissal In light of the Plan Investors' request for dismissal of the adversary proceedings, Delphi is defiant, saying that the defendants engaged in serious misconducts that have caused devastating harm to the company and its many stakeholders, and pleaded two theories of fraud against Appaloosa Management, L.P., for: (i) fraudulently inducing Delphi to enter in the December 2007, Equity Purchase & Commitment Agreement by having its president, David Tepper, represent that AMLP had committed a minimum of $1,100,000,000 of its own capital when in fact, AMLP intended to invest nothing if it did not like the economics of the deal at closing, even if Delphi complied with the conditions precedent to the defendants' commitments, and (ii) fraudulently concealing its plans efforts, before and after confirmation of the Joint Plan of Reorganization of Delphi, to avoid a closing and avoid consummation of the Plan. The Official Committees join in Delphi in its opposition to the Motions for Dismissal, asserting they too have been injured by the Plan Investors' acts. Representing Delphi, Edward A. Friedman, Esq., at Friedman Kaplan Seiler & Adelman LLP, tells the Court that the Plan Investorshave conspired to avoid their commitments to Delphi and ultimately renounced any intention to perform, despite their contractual commitments to provide the equity financing necessary for the consummation of the Reorganization Plan, and despite their repeated assurances to Delphi and to the Court that they would honor their commitments. Mr. Friedman says, the Plan Investors' misconduct resulted in Delphi's remaining in bankruptcy, despite obtaining confirmation of the Plan in January, and obtaining commitments for its $6,100,000,000 debt financing in April. "Now defendants argue that, even if they behaved exactly as Delphi alleges, the Court is powerless to enforce the parties' agreements," Mr. Friedman asserts. The Defendants, he says, are arguing that there is no remedy for their breach of contract if they did not do it at will, but even if they did so willfully, only limited monetary damages will be imposed on them, contrary to what the parties agreed and contrary to what the law provides. The remedies available to redress Delphi's injury, Mr. Friedman asserts, turn on disputed facts, which cannot be determined on the face of the pleadings. The defendants' arguments are based on four major premises, which he discusses one by one: (i) The specific performance of a contract to provide money is always precluded as a matter of law. This rule does not exist, Mr. Friedman says. As in most cases, the injured party can obtain substitute performance elsewhere, then sue to recover any increased costs. In the case of Delphi, substitute performance is not available. The plaintiff cannot obtain the money elsewhere on similar terms and the complex nature of the transaction makes damages difficult to measure, and this must be resolved on a full record, not on the pleadings. Delphi's inability to find another $2.55 billion equity package makes substitute performance impossible. It also makes the calculation of Delphi's damages very difficult, Mr. Friedman relates. The Court would have to weigh the accuracy and credibility of competing fact and expert witnesses trying to estimate the difference in value between the equity package promised by the defendants and what a hypothetical alternative investor might theoretically charge for a similar package. The Court would also need to weigh the injury caused by all the other changes to the Plan a hypothetical substitute investment might require, Mr. Friedman adds. (ii) Even if the Court could order specific performance, it may not do so because the parties' agreements forbid it. This contention raises a question of fact because even if the agreements could be read, under New York Law, any contractual limitation on the remedies available for breach is unenforceable, as a matter of public policy, if the breaching party is guilty of willful misconduct or has acted with reckless indifference to the damage it is inflicting, Mr. Friedman notes. He asserts the Defendants' commitments were an integral part of the plan to consummate one of the largest public company reorganizations in history. The reorganized Delphi represents a a unique asset of incalculable value to its employees, its community, and its many other stakeholders. The proposed transaction involves a unique and irreplaceable asset, Mr. Friedman avers. (iii) Section 12(d) of the EPCA permitted termination of the contract without cause as of April 5, 2008, if the transaction had not closed by April 4. It did not close by that date, so the defendants argue that they had an unequivocal right to walk away, making specific performance impossible whatever the merits if Delphi's claims, Mr. Friedman adds. It is settled law, however, that a party cannot take advantage of its own wrongdoing in that fashion. If, as Delphi alleges, the sole reason the transaction did not close on April 4 is that the Defendants improperly terminated the contract on that date, they cannot claim the benefit of a provision that would have had no application but for their own misconduct, Mr. Friedman contends. Even if the EPCA and the Commitment Letter Agreements could be read to preclude specific performance, that preclusion would be unenforceable as a matter of public policy. It is well-established under New York law that, where a defendant has breached a contract in bad faith or through willful misconduct, a limitation--liability provision will not be enforced and will not preclude any legal or equitable remedy otherwise appropriate. Public policy precludes enforcement of a contractual limitation on liability or remedy where the defendant has acted in bad faith, Mr. Friedman explains. (iv) The Defendants argue that the Court need not reach the question of remedy because they did not breach their agreements at all. They contended that Delphi failed go satisfy various conditions precedent, excusing their performance. Mr. Friedman laments the Defendants are free to try to make the case, which is without merit in any event, but not on the pleadings. It is beyond question that Delphi pleaded "generally that all conditions precedent had occurred or been performed,' and nothing more is required, Mr. Friedman tells the Court. A defendant that fails to plead non-compliance with a particular condition waives its right to invoke that condition in its defense. At this point, the Defendants have not yet pleaded, so any alleged failure of a condition is not yet an issue. The Defendants' suggestion that the complaint should be dismissed because Delphi did not anticipate which conditions the defendants might argue were unsatisfied, and address those defenses preemptively, is without merit, Mr. Friedman maintains . In deciding a motion to dismiss, a court will accept the complaint as true and draw all reasonable inference in the plaintiff's favor. A defendant cannot obtain dismissal of an adequately pleaded complaint with the argument "that the plaintiff will not fail to find evidentiary support for his allegations, because the issue is not whether the plaintiff ultimately will prevail but whether the plaintiff is entitled to offer evidence to support its claims, Mr. Friedman states. Delphi asks the court to deny the Motions to Dismiss, asserting that hearing the case will lead to the discovery and trial for of Delphi's claims and the determination of the appropriate remedy. Parties Stipulate on Confidential Information Delphi, the Committees, and the Plan Investors anticipate that the documents provided in the adversary proceedings may involve information that are sensitive and confidential in nature. Accordingly, they agree to these terms: * Discovery Material that contains information that is (i) not generally available to the public and (ii) sensitive commercial, financial, or business information, sensitive personal information, trade secrets, or other confidential research, development, or commercial information the public disclosure of which may adversely affect the producing party may be designated as "Confidential." * Discovery Material that poses a reasonable risk of competitive or other harm to the Producing Party or non- party, maybe classified as "Highly Confidential." * Confidential Discovery Material will only be available to the Court, the Court employees directly involved in the proceeding, counsel to the Parties in the Chapter 11 cases, and third-party contractors working on the data in connection with the action, and any joining party required to provide assistance in the conduct of these cases. * "Highly Confidential" Discovery Materials will be available only to the Court, the Court employees directly involved in the proceedings, counsel to the parties in these cases and their staff, and third party contractors engaged in working on the data in connection with the action. Consultants, advisors, investigators, or experts employed by counsel in connection with the Chapter 11 cases may be authorized access to "Highly Confidential' Discovery Materials when necessary, provided they sign a confidentiality agreement. * A party who desires to provide "Highly Confidential' materials to persons not authorized in the Stipulation will have to make an appropriate application to the Court. * The unintentional disclosure by a producing party of unmarked Confidential Discovery Materials will not be deemed as a waiver of the party's claim of confidentiality, and the unintentional production of any privileged material by the producing Party or a third party will not be deemed to be a waiver or impairment of any claim of privilege. * To the extent that Confidential Discovery Material is proposed to be filed or is filed with the Court, that Confidential Discovery Material, any portion of a pleading, motion or memorandum that discloses the Confidential Discovery Material will be filed under seal, together with a motion to seal the documents. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide $2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 136; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) About General Motors Based in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. At March 31, 2008, GM's balance sheet showed total assets of $145,741,000,000 and total debts of $186,784,000,000, resulting in a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000, respectively. * * * As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corporation and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. economy. Standard & Poor's Ratings Services is placing its corporate credit ratings on the three U.S. automakers, General Motors Corp., Ford Motor Co., and Chrysler LLC, on CreditWatch with negative implications, citing the need to evaluate the financial damage being inflicted by deteriorating U.S. industry conditions--largely as a result of high gasoline prices. Included in the CreditWatch placement are the finance units Ford Motor Credit Co. and DaimlerChrysler Financial Services Americas LLC, as well as GM's 49%-owned finance affiliate GMAC LLC. As related in the Troubled Company Reporter on June 5, 2008, Standard & Poor's Ratings Services said that its ratings on General Motors Corp. (B/Negative/B-3) are not immediately affected by the company's announcement that it will cease production at four North American truck plants over the next two years. These closures are in response to the re-energized shift in consumer demand away from light trucks. GM previously said only one shift was being eliminated at each of the four truck plants. Production is being increased at plants producing small and midsize cars, but the cash contribution margin from these smaller vehicles is far less than that of light trucks. GREATWIDE LOGISTICS: Moody's Downgrades B3 Rating to D ------------------------------------------------------ Moody's Investors Service lowered the Probability of Default Rating of Greatwide Logistics Services, Inc. to D from B3, and its Corporate Family Rating to Ca from Caa1. The ratings were lowered due to Greatwide's failure to meet the scheduled principal and interest payments due on its first and second lien credit facilities. The grace period for these payments has expired. Greatwide has entered into a forbearance agreement with its lenders while discussions about amending the credit facilities proceed. Demand for services in the company's Dedicated Transport sector, which contributes more than half of the company's revenue, will likely continue to be stressed due to on-going weakness in the retail sector that comprises an important part of the company's customer base. Meanwhile, Moody's expects that Greatwide's Freight Brokerage business will continue to experience pressure in pricing, while Truckload Management remains subject to increasing uses of working capital if fuel prices continue to escalate. As a result, Moody's believes that the company will face continued difficulty in improving its financial profile regardless of the outcome of its amendments discussions. Downgrades: Issuer: Greatwide Logistics Services, Inc. -- Probability of Default Rating, Downgraded to D from B3 -- Corporate Family Rating, Downgraded to Ca from Caa1 -- Senior Secured First Lien Bank Credit Facility, Downgraded to Ca (LGD3, 49%) from B3 -- Senior Secured Second Lien Term Loan Facility, Downgraded to C (LGD5, 87%) from Caa2 The ratings outlook is stable. Headquartered in Irving, Texas, Greatwide Logistics Services, Inc., is a leading non-asset based North American provider of dedicated "closed loop" transportation services to the grocery and consumer products sectors. The company also provides non-asset-based truckload management, truck brokerage and warehouse and distribution logistics services. Greatwide is a wholly-owned subsidiary of GWLS Holdings, Inc. GS MORTGAGE: S&P Junks Rating on Class L Certificates ----------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on six classes from GS Mortgage Securities Trust 2007-GKK1 and removed them from CreditWatch with negative implications, where they were placed on either May 28, 2008, or July 7, 2008. Concurrently, S&P affirmed its ratings on six classes and removed five of the affirmed ratings from CreditWatch with negative implications. The rating actions follow S&P's full analysis of the transaction, including an examination of the current credit characteristics of the transaction's assets and liabilities. Its review incorporated Standard & Poor's revised recovery rate assumptions for commercial mortgage-backed securities, as detailed in "Recovery Rates For CMBS Collateral In Resecuritization Transactions," published May 28, 2008, on RatingsDirect. According to the June 20, 2008, trustee report, the transaction's current assets included 73 classes ($633.7 million, 100%) of CMBS pass-through certificates from 46 distinct transactions issued between 1998 and 2007. Certificates from CMBS transactions issued between 2005 and 2007 represented $579.7 million (91%) of the total assets. None of the CMBS transactions represent an asset concentration of 10% or more of total assets. The aggregate principal balance of the assets and liabilities totaled $633.7 million, which has not changed since issuance. The transaction has realized no principal losses to date, and none of the current assets are first-loss CMBS assets. S&P's analysis indicates that the current asset pool exhibits weighted average credit characteristics consistent with 'BBB' rated obligations. Standard & Poor's rates $432.1 million (68%) of the assets. S&P reanalyzed its outstanding credit estimates for the remaining assets. Standard & Poor's analysis of the transaction supports the lowered and affirmed ratings. Ratings Lowered and Removed from Creditwatch Negative GS Mortgage Securities Trust 2007-GKK1 CMBS pass-through certificates Rating ------ Class To From ----- -- ---- A-2 AA+ AAA/Watch Neg B A+ AA/Watch Neg C A A+/Watch Neg D A- A/Watch Neg E BBB+ A-/Watch Neg L CCC B-/Watch Neg Ratings Affirmed and Removed from Creditwatch Negative GS Mortgage Securities Trust 2007-GKK1 CMBS pass-through certificates Rating ------ Class To From ----- -- ---- F BBB+ BBB+/Watch Neg G BBB BBB/Watch Neg H BBB- BBB-/Watch Neg J BB BB/Watch Neg K B B/Watch Neg Rating Affirmed GS Mortgage Securities Trust 2007-GKK1 CMBS securities pass-through certificates Class Rating ----- ------ A-1 AAA GWLS HOLDINGS: S&P Cuts Corporate Credit Ratings to D ----------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on GWLS Holdings Inc. to 'D' from 'B-'. Concurrently, S&P lowered the rating on the company's primary operating subsidiary Greatwide Logistics Services Inc.'s $70 senior secured revolving credit facility, $300 million secured first-lien term loan, and $127 million secured second-lien term loan to 'D', the same level as the corporate credit rating. "The downgrade follows the company's June 30, 2008, failure to meet scheduled interest and principal payments on its debt," said Standard & Poor's credit analyst Anita Ogbara. The lending group has approved a forbearance agreement which the company believes will allow sufficient time to negotiate new terms under its credit agreement. HERCULES INC: S&P Puts $350MM Interest Debenture Under Neg. Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Ashland Inc., including the 'BB+' corporate credit rating, on CreditWatch with negative implications following the announcement that Ashland will acquire Hercules Inc. in a transaction valued at $3.3 billion excluding transaction-related costs. At the same time, S&P placed its 'BB+' corporate credit rating on Hercules and its 'BB-' rating on its $350 million 6.5% junior subordinated deferrable interest debenture due June 20, 2029 (remaining balance $215 million) on CreditWatch with negative implications. S&P affirmed its ratings on Hercules' bank credit facility and $250 million 6.75% senior subordinated notes due Oct. 15, 2029. Because these instruments contain change of control provisions, S&P believe they would be repaid upon closing of the acquisition. "If the transaction closes as currently structured, we expect to lower Ashland's corporate credit rating to 'BB' and assign a negative outlook," said Standard & Poor's credit analyst Cynthia Werneth. >From a business risk perspective, the Hercules transaction would be a strong positive. It would add substantial specialty chemical assets with investment-grade business characteristics, creating a company with more than $10 billion in annual revenues. The acquisition should result in more favorable growth prospects and a more stable and profitable chemicals company, with reduced reliance on the lower-margin distribution and Valvoline products. Although the transaction as currently contemplated will be primarily debt-financed, it will include about $500 million of stock at Ashland's pre-announcement share price. In addition, Ashland currently has very little book debt, and the company plans to use its substantial cash balance to finance the Hercules acquisition. As a result, S&P expect Ashland's total adjusted debt pro forma for the transaction to be about $3 billion. S&P would adjust debt to include about $360 million of after-tax pension and other postretirement obligations, $210 million of estimated, tax-effected asbestos liabilities, and $210 million of capitalized operating leases at the combined company. Pro forma funds from operations to adjusted total debt will be in the upper teens percentage area. Following this acquisition, S&P would expect Ashland to use the majority of discretionary cash flow to reduce debt, so that the FFO to debt ratio strengthens to the 20%-25% range it deem appropriate at the 'BB' rating. S&P will update this CreditWatch for any changes to the transaction structure or if details regarding the prospective capital structure are disclosed. S&P anticipate resolving the CreditWatch upon closing of the transaction, which is expected to occur by the end of calendar 2008, subject to Hercules shareholder and regulatory approval. Ashland has financing commitments for the transaction. HOLOGIC INC: S&P Assigns 'BB+' Rating on $800MM Amended Facility ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its issue-level and recovery ratings to Bedford, Massachusetts-based Hologic Inc.'s $800 million amended and restated credit facility. The issue- level rating on the facility is 'BB+' with recovery rating of '1', indicating the expectation of a very high (90% to 100%) recovery in the event of a payment default. At the same time, S&P affirmed the 'BB-' corporate credit rating and the 'B+' issue-level rating on Hologic's $1.725 billion senior convertible notes. The recovery rating of '5', which indicates the expectation of a modest (10% to 30%) recovery in the event of a payment default, remains unchanged. The outlook is positive. The ratings on Hologic's original facility will be withdrawn at the close of the pending acquisition of Third Wave Technologies Inc. (unrated). "Hologic intends to purchase Third Wave for about $580 million with proceeds from the amended and restated credit facility," said Standard & Poor's credit analyst David Lugg. "The financial impact of this transaction is neutral." Given that Hologic has largely repaid its outstanding term loan (used to finance the late-2007 acquisition of unrated Cytyc Corp.), the new borrowings largely return credit measures to a level consistent with the current rating. Third Wave produces molecular diagnostic test reagents sold as experimental tools and for clinical diagnosis. The mid-speculative grade rating on Hologic Inc. reflects its high debt leverage, short track record of success, and the challenge to integrate the acquisition of Cytyc Corp. The company's strong positions in attractive specialty medical markets partially offset these risks. In October 2007, Hologic purchased Cytyc Corp. in a $6 billion transaction, about one-third of which was funded with a secured credit facility. This transforming transaction almost doubled the size of Hologic, adding product and geographic breadth. The combined company's specialty surgical and diagnostic products focus on the medical needs of women--a market characterized by limited competition from a few, but very large, companies, and some exposure to reimbursement challenges. Technological innovation that produces products with greater accuracy and ease of use is a key to success in this market. IMMUNICON CORP: Taps Stifel Nicolaus as Investment Banker --------------------------------------------------------- Immunicon Corp. and its debtor-affiliats ask the U.S. Bankruptcy Court for the District of Delaware for authority to employ Stifel, Nicolaus & Company, Incorporated as their investment banker, effective as of June 11, 2008. Stifel Nicolaus will advise the Debtors on all financial matters, as well as act as the Debtors' sole and exclusive agent relating to the sale of the Debtors' businesses as a going concern pursuant to Sec. 363 of the Bankruptcy Code. Scott R. Cousino, a managing director at Stifel Nicolaus, assures the Court that the firm does not hold or represent any interest adverse to the Debtors and their estates, and that the firm is a "disinterested person" within the meaning of Sec. 101(14) of the Bankruptcy Code. Subject to the Court's approval, Stifel Nicolaus will receive: a. An advisory fee of $45,000 per month. Each installment of the advisory fee shall be deemed earned when paid and shall be3 non-refundable. b. If any sale of the Debtors occurs, or the parties to a sale reach a preliminary understanding or definitive agreement in respect of any such sale, either: i. during the term of Stifel Nicolaus' engagement, regardless of whether the party or parties to any sale were identified by Stifel Nicolaus or whether Stifel Nicolaus rendered advice concerning a sale, or ii. at any time during a period of 18 months following the effective date of termination of Stifel Nicolaus' engagement, and any sale involves a party (or an affiliate of a party) included (or which should have been included pursuant to Section4 of the engagement letter) on the List then, upon consummation of any sale, the Debtors shall pay to Stifel Nicolaus the greater of $400,000 and 3.0% of the consideration involved in any sale. $400,000 is the minimum fee for the aggregate value whether one or more transactions are executed. c. In the event a sale is not consummated and the Debtors receive a termination or break-up fee, then the Debtors shall pay Stifel Nicolaus a fee equal to twenty-five percent (25%) of any such termination or break-up fee. d. Compensation due under paragraph b. above shall be paid at the closing of a sale, provided that compensation attributable to that part of the consideration which is contingent upon future earnings performance or the occurences of some other event or circumstance shall be paid by the Debtors at the earlier of (i) the receipt of such contingent consideration, or (ii) the time that the amount of such contingent consideration can be determined. Headquartered in Huntington Valley, Pennsylvania, Immunicon Corporation and its debtor-affiliates -- http://www.immunicon.com/ -- offers products and services for cell analysis and molecular research. The Debtors filed for Chapter 11 protection on June 11, 2008 (Bankr. D. Del. Lead Case No. 08-11178). Sheldon K. Rennie, Esq., at Fox Rothschild LLP, represents the Debtors in their restructuring efforts. Schulte Rote & Zabel LLP is the Official Committee of Unsecured Creditors' proposed bankrupcy counsel. When Immunicon Corp. filed for protection against its creditors, it listed estimated assets of $9,231,264 and estimated debts of $24,309,838. INDEPENDENCE COUNTY: S&P's Outlook on $28MM Bonds Now Developing ---------------------------------------------------------------- Standard & Poor's Ratings Services revised the CreditWatch implications on its underlying rating of 'B' on Independence County, Arkansas' $28.45 million power revenue bonds due 2033 to developing from negative. This change factors in a potential amendment to the position of operations and maintenance payments in the indenture that could benefit the rating on the senior secured bonds. Independence County issued the bonds, and used proceeds to fund an 11.1 megawatt hydroelectric project, Independence County Hydroelectric, which is the obligor for bond repayment. The bonds are not general obligations but are special obligations secured by the Trust Estate that includes the county's interests in the physical assets, contracts including the power purchase agreement, and gross receipts. ACA Financial Guaranty Corp. (ACA; CCC/Watch Dev/--) insures the bonds. The rating reflects these risks: S&P expect debt service coverage ratios to be low through the debt's maturity. Liquidity should be tight in the near term and the project has had to draw on the senior debt service reserve for the last three senior debt payments. ACA had to pay the principal and interest payment that was due May 1, 2008 on the $14.95 million junior lien bonds. The project has experienced significant challenges in terms of cost and schedule overruns. Although operations have begun, heavy rains severely hampered operational performance and further delayed the final construction completion of Dam 3 until at least November 2008. At that time, a determination will be made of the insurability of Dam 3. Plant performance is lower than expected. Project O&M expenses are paid after junior debt service, so there is a risk to O&M payments given low coverages and constrained liquidity. These strengths offset those risks at the 'B' rating level: A PPA with the City of Clarksville, Arkansas that runs beyond the debt maturity through to January 2036. The price of power to Clarksville is currently competitive and creates an incentive for them to support the project, especially given the potential rebate built into the PPA. Clarksville has recently agreed to voluntary increase the rate they pay from $60.97 to $82 per megawatt-hour from May 1, 2008 through April 30, 2010. When operating as expected, project should generate stable cash flows. The CreditWatch reflects Standard & Poor's view that the project faces a number of key challenges in the near term, in particular the completion of the cap and insurance of Dam 3, along with depleted liquidity. If these are not satisfactory resolved within the next six months then we will likely lower the rating. However, should these challenges be resolved and the project develop an improved operations track record that shows a generation output moving toward an annual generation run rate of 60,000 MWh, then, if the proposed amendment in the indenture is executed, S&P might raise the rating on the senior debt. INDEPENDENCE VI: Fitch Downgrades Ratings on Six Note Classes ------------------------------------------------------------- Fitch Ratings has downgraded six classes of notes issued by Independence VI CDO, Ltd. and Independence VI CDO, Inc. Fitch has also removed all six classes of notes from Rating Watch Negative. These rating actions are effective immediately: -- $503,099,409 class A-1 notes to 'B' from 'BBB-'; -- $85,688,581 class A-2 notes to 'CC' from 'BB+'; -- $83,421,687 class B notes to 'CC' from 'BB'; -- $14,627,113 class C notes to 'C' from 'B+'; -- $19,545,981 class D notes to 'C' from 'B-'; -- $17,502,536 class E notes to 'C' from 'CCC'. Fitch originally placed all classes on Rating Watch Negative on Feb. 27, 2008. Independence VI is a cash flow structured finance collateralized debt obligation that closed on June 30, 2005 and is managed by Declaration Management & Research LLC. The portfolio is comprised primarily of U.S. subprime residential mortgage-backed securities (75.1%), Alternative-A RMBS (6.8%) and SF CDOs (5.6%). Subprime RMBS bonds of the 2005, 2006 and 2007 vintages account for approximately 48.8% of the portfolio. Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically subprime RMBS, Alt-A RMBS and SF CDOs with underlying exposure to subprime RMBS. Since November 2007, approximately 63.5% of the portfolio has been downgraded, with 7% of the portfolio currently on Rating Watch Negative. This credit deterioration includes 53.8% of the portfolio that now carries a rating below the rating Fitch assumed in the November 2007 review. Assets rated below investment grade currently represent 59.5% of the portfolio, and 29.5% of the portfolio is now rated 'CCC+' or below. The collateral deterioration has caused each of the overcollateralization tests to fall below 100% and fail their respective triggers. As of the trustee report dated June 8, 2008, the class A/B OC ratio was 90.8%, the class C OC ratio was 88.9%, the class D OC ratio was 86.4% and the class E OC ratio was 84.3%. Due to these OC test failures, cash flows have been diverted to pay down the class A-1 notes, and payment of interest to the class C, class D and class E notes has been made in kind by writing up the principal balance of each class by the amount of interest owed. As of April 29, 2008, the net outstanding portfolio collateral balance was less than the aggregate outstanding amount of the class A and class B notes, causing an Event of Default to occur. As a remedy to the EOD, the majority of holders of the class A notes may declare the notes immediately due and payable. In the event of a liquidation of the collateral, Fitch expects that the resulting proceeds will not be enough to return full principal on the class A-1, A-2 and B notes, and the remaining class C, D and E notes are expected to receive zero principal returns. The ratings on the class A-1, A-2 and B notes address the timely receipt of scheduled interest payments and the ultimate receipt of principal as per the transaction's governing documents. The ratings on classes C, D and E address the ultimate receipt of interest payments and ultimate receipt of principal as per the transaction's governing documents. The ratings are based upon the capital structure of the transaction, the quality of the collateral, and the protections incorporated within the structure. INDEVUS PHARMA: Releases Operating Plan to Respond to NEBIDO Delay ------------------------------------------------------------------ In view of the NEBIDO regulatory delay, the Board of Directors of Indevus Pharmaceuticals Inc. approved a revised operating plan that more appropriately aligns cost structure to the company's revenue projections and development opportunities. On June 27, 2008, the company received an approvable letter from the U.S. Food and Drug Administration for NEBIDO(R) related to a New Drug Application submitted to the FDA in August 2007. The letter indicated that the application may be approved if the company is able to adequately respond to certain clinical deficiencies related to the product. The letter generally confirmed the company's indications from the FDA based on telephone discussions. The FDA has expressed a concern about a relatively small number of patients in European post-marketing use who have experienced respiratory symptoms immediately following the intramuscular injection of NEBIDO 1000 mg., 4 cc. injection volume, (versus the 750 mg., 3 cc. injection volume used in the United States). The company believes and the FDA concurs that the reaction is likely the result of a small amount of the oily solution immediately entering the vascular system from the injection site, a known, rare complication of oil-based depot injections. The phenomenon is characterized by short-term reactions involving an urge to cough, coughing episodes or a shortness of breath. In rare cases the reaction has been classified as serious or the patient experiences other symptoms such as dizziness, flushing or fainting. In the company's U.S. clinical trials of NEBIDO 750 mg. (3 cc. injection volume), the proposed dose in the U.S., there was a single, mild, non-serious case of oil-based cough observed. In addition, the FDA believes that four cases in the European post- marketing experience may have an allergic, anaphylactoid component, although the company believes these cases were improperly classified and represent the same oil-based phenomenon. The FDA has requested the company address these clinical deficiencies by providing detailed safety information from clinical studies to determine the precise incidence of serious post-injection oil-based reactions and allergic reactions. Specifically, the FDA has requested follow-up data from the on- going U.S. and European studies in which patients are being treated with NEBIDO on an extended basis. A majority of these trials are scheduled to be completed within twelve months. The FDA stated that depending on the findings, the number of subjects and the number of injections of testosterone undecanoate from the studies, the safety database may need to include data from additional clinical studies. They have requested that the company propose the size of the safety database (i.e., total number of subjects exposed to testosterone undecanoate intramuscular injection and total number of injections) and the rationale for the size of the proposed safety database. FDA has also requested the company provide a plan to minimize the risks associated with the clinical use of testosterone undecanoate intramuscular injection, namely, to reduce the incidence and/or severity of the serious oil-based reactions and has requested certain in vitro and skin-testing data to exclude an allergic component to the drug or some of its excipients. "We believe that NEBIDO is a safe and effective drug for its intended use and continue to be disappointed that the FDA was not willing to approve the drug at this time with adequate labeling of the oil-based reactions and how to minimize them with proper injection technique," Glenn L. Cooper, M.D., chairman and chief executive officer of Indevus, stated. "However, we are encouraged that this approvable letter provides a road map for the product's eventual approval. We will work with the FDA and our partner, Bayer Schering Pharma AG, to respond to the approvable letter and devise a plan to address the deficiencies. While the FDA has not specifically requested additional clinical studies, we believe that an additional study will likely be required to demonstrate that NEBIDO 750 mg (3 cc volume) administered with careful and proper intramuscular injection technique, has an acceptably low incidence of oil-based reactions to gain approval. "In addition, we are pleased that FDA has provided guidance on how we can demonstrate that the product does not cause allergic reactions. We hope to be able to articulate a development plan to address FDA concerns within the next few months, and for now are maintaining our previous guidance that it may take the company approximately 18 months to re-submit the revised NDA. We will communicate specific guidance on clinical plans and timelines when they are available." Revised Operating Plan The new operating plan provides for: 1) aggressive support and top-line growth of marketed products, VANTAS(R) and SUPPRELIN(R) LA, 2) aggressive support for the launch of VALSTAR(TM) for bladder cancer later this year, 3) continued co-promotion with Allergan of SANCTURA(R) and SANCTURA XR(TM) with the urology sales force through March 2009, 4) initiation of Phase III trials for the six-month octreotide implant for acromegaly, and 5) significant reduction in operating expenses through a combination of headcount reductions of approximately 12% of employees, primarily at the corporate and administrative levels at the Lexington, Massachusetts headquarters, and reduction of other operating expenses. "We have made the difficult but necessary decision to reduce the operating expenses and cash burn of the company and intend to be vigilant in managing expenses through this difficult period," Dr. Cooper said. "Under our revised plan, in fiscal 2009, we expect that our operating cash burn will fall to $10 million per quarter on total revenues for the year of $88 to $95 million. This is a significant improvement compared to our recent average operating cash burn of approximately $18 to $20 million per quarter and our expected revenues for fiscal 2008 of approximately $70 million. Our current revised plan does not give effect to additional NEBIDO studies as their size, duration and expense are not yet final. In conjunction with implementation of this revised operating plan, the company anticipates recording an aggregate restructuring charge of approximately $3 to $4 million in the third fiscal quarter. "While the NEBIDO delay is unfortunate, the company remains strong and is committed to the patients and physicians who use and prescribe our products for urological and endocrine disorders. We are highly focused on driving revenue growth for our marketed products SANCTURA XR, VANTAS and SUPPRELIN LA and our organization is also preparing to launch VALSTAR, another important urology product, subject to FDA approval. In addition to NEBIDO, we are focused on our octreotide implant, a high-value Phase 3 product which we believe can reach the market, assuming approval, by the end of 2010. Also, we are actively exploring the acquisition of late-stage or marketed products which can further leverage our experienced urology and endocrinology field sales force. "The company is also moving forward to strengthen its balance sheet," continued Dr. Cooper. "In addition to potential out- licensing transactions for the company's partnerable products, we are also exploring opportunities for the monetization of the royalties we receive from sales of SANCTURA and SANCTURA XR. Our financial goals are to secure adequate non-dilutive capital to fund the company's operations for the foreseeable future and to retire the company's outstanding convertible debt which matures in July 2009." About Indevus Pharmaceuticals Based in Lexington, Massachusetts, Indevus Pharmaceuticals Inc. (Nasdaq: IDEV) -- http://www.indevus.com/-- is a specialty pharmaceutical company engaged in the acquisition, development and commercialization of products to treat conditions in urology and endocrinology. At March 31, 2008, the company's consolidated balance sheet showed $180.1 million in total assets and $281.4 million in total liabilities, resulting in a $101.3 million total stockholders' deficit. INDYMAC BANCORP: Says FDIC Eyes Selling Bank or Assets ------------------------------------------------------ Federal Deposit Insurance Corporation is taking a look into IndyMac Bancorp Inc.'s financial records as part of its strategy to sell the bank or its assets, The Wall Street Journal reports. According to WSJ, IndyMac was the largest mortgage lender to collapse since the housing crisis erupted last year, and the FDIC would like to find a buyer for it quickly. FDIC spokesman said they will try to sell as much of the bank as possible with the deposit franchise, however, the final terms of the sale have not been set, WSJ indicates. WSJ, citing FDIC chairman Sheila Bair, says that FDIC officials also were looking at the troubled loans in the broader portfolio to see if there was a way to help borrowers avoid losing their homes. The Journal states that Ms. Bair's move could offer only brief respite for troubled borrowers, as the agency is trying to sell the bank and its assets within 90 days. Still, that could be enough time for many borrowers to rework their loan terms, WSJ adds. 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. IndyMac specialized in making and selling so-called Alt-A mortgage loans, a category of loans to consumers more credit worthy than subprime borrowers but typically without the complete documentation of income or assets necessary to receive a prime- rate loan. 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 company was ranked the ninth-largest U.S. mortgage lender in 2007 in terms of loan volume, The Wall Street Journal says, citing trade publication Inside Mortgage Finance. * * * As reported by the Troubled Company Reporter on July 11, 2008, Standard & Poor's Ratings Services lowered its rating on Indymac Bancorp and its subsidiaries, including lowering the counterparty credit rating on Indymac, to 'CCC/C' from 'B/C'. "We took this action because we believe that Indymac's weakened financial profile and exposure to deteriorating housing markets leaves its creditworthiness severely impaired," said Standard & Poor's credit analyst Robert B. Hoban, Jr. On July 9, the TCR said Fitch Ratings downgraded the long-term Issuer Default Ratings of Indymac Bancorp to 'CC' from 'B-'; and the long-term Issuer Default Ratings of Indymac Bank FSB to 'CCC' from 'B'. The downgrade follows IMB's disclosure that, according to its regulators, the bank is no longer 'well capitalized'. Concurrent with this rating action, Fitch has removed all ratings from Rating Watch Negative. The Rating Outlook is Negative for IMB. INFOSONICS CORP: Has Until January 6 to Comply with Bid Price Rule ------------------------------------------------------------------ InfoSonics Corporation received a Nasdaq Staff Determination letter dated July 10, 2008, indicating that InfoSonics failed to comply with the minimum bid price requirement for continued listing set forth in Marketplace Rule 4450(a)(5). Therefore, in accordance with Marketplace Rule 4450(e)(2), InfoSonics has been provided 180 calendar days, or until Jan. 6, 2009, to regain compliance. If, at anytime before Jan. 6, 2009, the bid price of InfoSonics' common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, InfoSonics will have regained compliance with the Rule. The Notice also stated that if InfoSonics does not regain compliance with the Rule by Jan. 6, 2009, Nasdaq Staff will provide InfoSonics written notification that its securities will be delisted. In the event of the a notification, InfoSonics may appeal the Staff's determination to delist its securities, or alternatively InfoSonics may apply for a transfer of its securities to the Nasdaq Capital Market. There can be no assurance the Staff will grant the company's request for continued listing nor the application for transfer to the Nasdaq Capital Market. As of July 11, InfoSonics meets the Nasdaq Capital Market initial inclusion criteria. The Notice arises as a result of the fact that for the last 30 consecutive business days, the bid price of InfoSonics common stock has closed below the minimum $1.00 per share requirement for continued inclusion under the Rule. About InfoSonics Corporation Headquartered in San Diego, California, InfoSonics Corporation (NASDAQ:IFON) -- http://www.infosonics.com/-- is a distributor and provider of wireless handsets and accessories in Latin America and the United States. The company distributes products of several original equipment manufacturers, including Samsung, LG, Novatel and others. InfoSonics is also involved in the designing, sourcing and distributing of a line of products under its own verykool brand, which includes entry level, mid-tier and high-end products. From its facility in Miami, Florida, where the company has its Latin America sales and executive offices, InfoSonics operates a warehouse and distribution center. This distribution center services customers in Latin America and the United States. The company has wholly owned subsidiaries in Latin America, which conduct some of its business activities in their respective regions of Latin America. ISLE OF CAPRI: Moody's Changes Stable Outlook to Negative --------------------------------------------------------- Moody's Investors Service revised Isle of Capri Casinos, Inc.'s rating outlook to negative from stable. The outlook revision to negative considers the continuing uncertainty regarding Isle's ability to reduce debt/EBITDA to at or below 6 times, particularly given the unfavorable economic environment and negative gaming revenue trends throughout most of the markets in which the company operates. Isle's leverage, already considered high for its B1 corporate family rating, continues to be affected by the company's past debt-financed development activities, slower than expected ramp-up of its Waterloo and Pompano Park casinos, a smoking ban in Colorado, and increased competition in Lake Charles, LA and Biloxi, MS. Debt/EBITDA for the fiscal year ended April 27, 2008 was about 8 times. Isle's ratings could be lowered if revenues continue to decline and it appears that a meaningful reduction in leverage will not occur in the next 12 to 18-month period. The outlook could be revised back to stable if there is evidence that Isle's new management team's operating and financial strategy will lead to substantially lower leverage. The new management team has had some initial success regarding cost cutting initiatives, and its plan to more efficiently manage and invest the company's capital resources could provide longer- term benefits. Isle of Capri Casinos, Inc. owns and operates 18 casino properties. Net revenue for the fiscal year ended April 27, 2008 was about $1.1 billion. In January 2008, Isle acquired the 43% interest in Isle of Capri Black Hawk, L.L.C. that it did not previously own. The Black Hawk, Colorado operations, consisting of the Isle of Capri-Black Hawk and Colorado Central Station, are now wholly owned by Isle. In connection with the transaction, Isle repaid Isle Black Hawk's rated debt in full. As a result, Isle Black Hawk's B1 corporate family rating, B2 probability of default rating, B1 senior secured bank loan rating, and stable outlook ratings have been withdrawn. IXIS ABS: Moody's Cuts Ratings of Five Classes of Notes to C ------------------------------------------------------------ Moody's Investors Service downgraded ratings of five classes of notes issued by IXIS ABS CDO 2 Ltd. The notes affected by the rating action are: Class Description: $123,500,000 Class A-1 Senior Secured Funded Notes Due 2046; -- Prior Rating: B3, on review for possible downgrade -- Current Rating: C Class Description: $201,500,000 Class A-1 Senior Secured Unfunded Notes Due 2046; -- Prior Rating: B3, on review for possible downgrade -- Current Rating: C Class Description: $6,500,000 Class A-X Notes Due 2046; -- Prior Rating: Ca -- Current Rating: C Class Description: $85,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2046; -- Prior Rating: Ca -- Current Rating: C Class Description: $30,000,000 Class B Secured Floating Rate Notes Due 2046; -- Prior Rating: Ca -- Current Rating: C IXIS ABS CDO 2, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. An Event of Default occurred on Jan. 31, 2008. As provided in Article V of the indenture during the occurrence and continuance of an event of default, certain parties to the transaction may be entitled to direct the trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. In this regard, the trustee notified Moody's that the Controlling Class and the CDS Counterparty directed the trustee to dispose of and liquidate the collateral in accordance with the indenture. The trustee also notified Moody's that the liquidation of the collateral is now completed and the trustee made a final distribution and applied the proceeds of the liquidation in accordance with applicable provisions of the indenture on June 2, 2008. In that distribution, according to the trustee, the only noteholders to receive a principal payment from the distribution of liquidation proceeds were holders of Class A-1 and A-X Notes. Available funds were not sufficient to pay the Class A-1 and A-X Notes in full. The rating actions taken today reflect the changes in severity of loss associated with certain tranches and reflect the final liquidation distribution. JEVIC TRANSPORTATION: Gets Court OK to Sell Property at Auction --------------------------------------------------------------- The Hon. Brendan L. Shannon of the United States Bankruptcy Court for the District of Delaware approved proposed bidding procedures for the sale of substantially all of Jevic Transportation Inc. and its debtor-affiliates assets, free and clear of all liens and interests, subject to higher and better offers. Judge Shannon authorized the Debtors to employ Taylor & Martin Inc. of Nebraska as their auctioneer. The firm is expected to conduct public auctions to four locations, including: a) Atlanta, Georgia, on Aug. 5, 2008, b) Charlotte, North Carolina, on Aug. 7, 2008, c) Markham, Illinois, on Aug. 12, 2008, and d) Delanco, New Jersey, on Aug. 19, 2008. As reported in the Troubled Company Reporter on July 2, 2008, for this engagement, the firm will receive: i) a 6% premium from each purchaser in connection with the sale of each item of equipment; and ii) a 1% commission of the proceeds received from the sale of all equipment. The Debtors have determined that these equipment -- consisting of trucks, tractors, trailers, motor vehicle equipment, miscellaneous personal property -- have no further use. The Debtors contended that the sale will maximize the value of their property and maximize the return to unsecured creditors. A full-text copy of the firm's sale auction agreement is available free at http://ResearchArchives.com/t/s?2ee8 About Jevic Transportation Based in Delanco, New Jersey, Jevic Transportation Inc. -- http://www.jevic.com/-- provides trucking services. The company has two units: Jevic Holding Corp. and Creek Road Properties. Neither of the units have assets nor operations. The company and its affiliates filed for chapter 11 protection on May 20, 2008 (Bankr. D. Del. Case No. 08-11008). Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg & Ellers, in Wilmington, Delaware, represents Jevic Transportation. The U.S. Trustee for Region 3 has appointed five creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Pachulski Stang Ziehl & Jones LLP as its counsel. When the Debtors' filed for protection against their creditors, they listed assets and debts between $50 million and $100 million. JIM PALMER: Files Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Jim Palmer Equipment, Inc. 9730 Derby Drive Missoula, MT 59808 Bankruptcy Case No.: 08-60892 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Jim Palmer Equipment II, LLC 08-60893 Type of Business: The Debtors provide transportation services. See: http://www.jimpalmertrucking.com/ Chapter 11 Petition Date: July 10, 2008 Court: U.S. Bankruptcy Court, District of Montana (Butte) Judge: Ralph B. Kirscher Debtors' Counsel: James A. Patten, Esq. (japatten@ppbglaw.com) The Fratt Building, Suite 300 2817 2nd Avenue N. Billings, MT 59101 Tel: (406) 252-8500 Fax: (406) 294-9500 Estimated Assets: unknown Estimated Debts: Leas than $50,000 Consolidated Debtors' List of xx Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Debtors did not file a list of their largest unsecured creditors. LABELCORP HOLDINGS: Moody's Assigns Corporate Family Rating of B2 ----------------------------------------------------------------- Moody's Investors Service assigned a first time Corporate Family Rating of B2 to LabelCorp Holdings, Inc. Additional instrument ratings are detailed. Moody's assigned these ratings for LabelCorp Holdings, Inc.: -- Assigned $23 million senior secured revolver maturing 2013, B1 (LGD 3, 32%) -- Assigned $150 million senior secured term loan due 2014, B1 (LGD 3, 32%) -- Assigned corporate family rating, B2 -- Assigned probability of default rating, B2 Moody's also assigned these ratings for York Label Canada Ltd.: -- Assigned CDN $2 million senior secured revolver maturing 2013, B1 (LGD 3, 32%) -- Assigned CDN $15 million senior secured term loan due 2014, B1 (LGD 3, 32%) -- Assigned USD $15 million senior secured term loan due 2014, B1 (LGD 3, 32%) The ratings outlook is stable. York's B2 Corporate Family Rating reflects the concentration of sales, acquisition risk and short operating history in its current form. The rating also reflects the high leverage. The company has only been operating under current ownership since March 2006 and significantly changed it product mix and structure since then. The company's aggressive acquisition strategy and propensity for debt financed acquisitions entails significant operating, integration and financial risk. Strengths in York's credit profile include long standing customer relationships, stability of its core end market segments and potential growth opportunities. The company's four core end market segments generate approximately 85% of pro forma revenue and offer some stability. Synergies from the recent acquisitions and an improvement in product mix should help improve credit metrics. Free cash flow to debt is expected to allow for modest debt reduction despite significant projected capital spending for growth initiatives. The rating is predicated upon the application of all free cash flow to debt reduction over the intermediate term. On June 12th, 2008, York Label entered into a definitive agreement to be acquired by Diamond Castle Holdings, LLC. Headquartered in Omaha, Nebraska, LabelCorp Holdings, Inc. is a provider of premium, labels for the consumer products, wine and spirits, food and beverage, and pharmaceutical markets. The company produces primarily pressure sensitive labels and has 14 facilities in the U.S., Canada, and Chile. Pro forma revenue for the 12 months ended March 31, 2008 was approximately $240.0 million. LEAP WIRELESS: Closes Sale of $250,000,000 Unsecured 4.5% Notes --------------------------------------------------------------- Leap Wireless International, Inc., completed the closing of the sale of $250,000,000 aggregate principal amount of unsecured 4.50% Convertible Senior Notes due 2014. The Notes and the shares of the company's common stock, par value $0.0001 per share, issuable upon conversion of the Notes have not been registered under the Securities Act of 1933, as amended. The notes were issued by the company in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act, pursuant to an Indenture, dated as of June 25, 2008, between the company and Wells Fargo Bank, N.A., as trustee, which governs the terms of the notes. The company intends to use the net proceeds of this offering, which are estimated to be approximately $241.8 million after deducting estimated discounts, commissions and offering expenses, for working capital and other general corporate purposes, including the build-out of new markets, expansion of our footprint in our existing markets and the development of our broadband initiative. Pending application of the net proceeds, the company will invest the net proceeds in short-term, investment-grade, interest-bearing securities. A copy of the Indenture, which includes the form of Note, is available for free at http://ResearchArchives.com/t/s?2f72 Based in San Diego, Leap Wireless International Inc. (Nasdaq: LEAP) -- http://www.leapwireless.com/-- is a leading provider of innovative and value-driven wireless communications services. With the value of unlimited wireless services as the foundation of its business, Leap pioneered its Cricket(R) service. The company and its joint ventures now operate in 23 states and hold licenses in 35 of the top 50 U.S. markets. Through its affordable, flat- rate service plans, Cricket offers customers a choice of unlimited voice, text, data and mobile Web services. * * * As reported in the Troubled Company Reporter on June 24, 2008, Moody's Investors Service assigned a Caa1 rating to Leap Wireless International Inc.'s $200 million convertible notes, due 2014. Moody's also assigned a B2 corporate family rating to Leap Wireless International Inc. Rating outlook is Stable. As disclosed in the Troubled Company Reporter on June 23, 2008, Standard & Poor's Rating Services assigned its 'CCC' rating to Leap Wireless International Inc.'s proposed $200 million of convertible senior notes due 2014, with a '6' recovery rating, indicating the expectation for negligible (0%-10%) recovery in the event of a payment default. At the same time, S&P assigned a 'B-' rating to funding unit Cricket Communications Inc.'s proposed $200 million of senior notes due 2015 with a '4' recovery rating, indicating the expectation for average (30%-50%) in the event of a payment default. These are being issued under Rule 144A with registration rights. S&P also affirmed San Diego-based Leap's existing ratings, including its 'B-' corporate credit rating. The outlook is stable. LEAP WIRELESS: Unit Closes Sale of $300 Mil. Unsecured 10% Notes ---------------------------------------------------------------- Cricket Communications, Inc., a wholly owned subsidiary of Leap Wireless International, Inc., completed the closing of the sale of $300,000,000 aggregate principal amount of unsecured 10% Senior Notes due 2015. The Notes are guaranteed on a senior unsecured basis by Leap and certain subsidiary guarantors of Cricket and Leap. The notes have not been registered under the Securities Act of 1933, as amended. The notes were issued by Cricket in a private placement to qualified institutional buyers pursuant to Rule 144A and Regulation S under the Securities Act, pursuant to an Indenture, dated as of June 25, 2008, by and among Cricket, the Guarantors and Wells Fargo Bank, N.A., as trustee, which governs the terms of the notes. Cricket intend to use the net proceeds of this offering, which are estimated to be approximately $292.6 million after deducting estimated discounts, commissions and offering expenses, for working capital and other general corporate purposes, including the build-out of new markets, expansion of its footprint in its existing markets and the development of our broadband initiative. Pending application of the net proceeds, the company will invest the net proceeds in short-term, investment-grade, interest-bearing securities. A copy of the Indenture, which includes the form of Note, is available for free at http://ResearchArchives.com/t/s?2f73 Based in San Diego, Leap Wireless International Inc. (Nasdaq: LEAP) -- http://www.leapwireless.com/-- is a leading provider of innovative and value-driven wireless communications services. With the value of unlimited wireless services as the foundation of its business, Leap pioneered its Cricket(R) service. The company and its joint ventures now operate in 23 states and hold licenses in 35 of the top 50 U.S. markets. Through its affordable, flat- rate service plans, Cricket offers customers a choice of unlimited voice, text, data and mobile Web services. * * * As reported in the Troubled Company Reporter on June 24, 2008, Moody's Investors Service assigned a Caa1 rating to Leap Wireless International Inc.'s $200 million convertible notes, due 2014. Moody's also assigned a B2 corporate family rating to Leap Wireless International Inc. Rating outlook is Stable. As disclosed in the Troubled Company Reporter on June 23, 2008, Standard & Poor's Rating Services assigned its 'CCC' rating to Leap Wireless International Inc.'s proposed $200 million of convertible senior notes due 2014, with a '6' recovery rating, indicating the expectation for negligible (0%-10%) recovery in the event of a payment default. At the same time, S&P assigned a 'B-' rating to funding unit Cricket Communications Inc.'s proposed $200 million of senior notes due 2015 with a '4' recovery rating, indicating the expectation for average (30%-50%) in the event of a payment default. These are being issued under Rule 144A with registration rights. S&P also affirmed San Diego-based Leap's existing ratings, including its 'B-' corporate credit rating. The outlook is stable. LIBERTY MEDIA: S&P Revises Outlook to Stable on DIRECTV Agreement ----------------------------------------------------------------- Standard & Poor's Rating Services revised its rating outlook on Englewood, Colorado-based Liberty Media Corp. to stable from negative. All ratings on the company, including the 'BB+' corporate credit rating, were affirmed. Total debt outstanding as of March 31, 2008 was $13.1 billion (outstanding principal). "The outlook revision is based on our view that Liberty's equity purchase standstill agreement with DIRECTV Group Inc. lessens the probability of the company pursuing an outright purchase of the remaining stakes in DIRECTV," said Standard & Poor's credit analyst Andy Liu. "The outlook change also incorporates our expectation for steady performance of key operating subsidiaries QVC Inc. and Starz Entertainment." The 'BB+' rating reflects our view that management's financial strategy could become more aggressive and shareholder-favoring. Liberty Media's large equity portfolio and the growth prospects of its majority-owned and wholly owned operations mitigate these concerns. Liberty completed its equity swap with News Corp. (BBB+/Stable/--) in February 2008 for a 41% stake in satellite direct-to-home TV provider The DIRECTV Group Inc. (BB/Stable/--), as well as other News Corp. assets and cash. Liberty subsequently purchased additional shares in DIRECTV, pushing its equity stake to about 48% on April 3, 2008. More recently, in May 2008, DIRECTV announced a major debt-financed share repurchase program that could raise Liberty's economic interest in the company to more than 50%. Liberty's voting stake will remain at 48% through a proxy agreement with DIRECTV. The proxy agreement lessens the probability that Liberty will leverage up to own 100% of DIRECTV during the short term. For the long term, the financial implications of Liberty's DIRECTV investment are unclear. S&P believe that Liberty will continue to explore opportunities to swap passive equity stakes for operating assets, but that the pace and size of the transactions will likely decrease. Liberty's lease-adjusted total debt to EBITDA was 7.7x as of March 31, 2008--higher than the 6.3x at the end of 2006. The company has been fairly active in repurchasing its own shares, often using debt as the funding source, which has been the key reason for escalating leverage. S&P currently don't expect leverage to decrease. Liberty will likely use free cash flow to make acquisitions or purchase shares. LINENS N THINGS: Court Okays Amended $100MM Trade Vendor Program ---------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware approved the request of Linens 'n Things and its debtor-affiliates to amend a Collateral Trust Agreement, and a Trade Credit Program Terms and Conditions and Statement of Qualifications relating to the Debtors' Trade Vendor Payment Program, pursuant to Sections 105 and 363 of the Bankruptcy Code. The Honorable Christopher S. Sontchi had earlier authorized the Debtors to execute the Collateral Trust Agreement, and to pay trade vendors that agree to participate in the Trade Vendor Payment Program. The Court also required any trade vendors that have accepted the Debtors' payment prepetition, but failed to supply the paid goods and services, or supplied the goods before being able to apply to become Approved Trade Creditors under the Trade Vendor Payment Program. Pursuant to the Trade Vendor Payment Program, the Debtors agreed to obtain a letter of credit in an initial amount of $25,000,000 that had to be increased in $25,000,000 increments to a total amount of $100,000,000 for the benefit of their postpetition suppliers. Pursuant to Section 2.2 of the Collateral Trust Agreement, the initial amount of the Letter of Credit would be $25,000,000, which would be increased to: * $50,000,000 not later than July 11, 2008; * $75,000,000 not later than July 21; and * $100,000,000 not later than July 31. To gain access to the protections of the Letter of Credit, the Debtors' suppliers had to agree to be bound by the Terms and Conditions, and to agree to extend to the Debtors trade terms that required payment in no fewer than 45 days after the receipt of the goods by the Debtors. The amount of trade credit extended by the participating suppliers would not exceed to twice the amount of the Letter of Credit. In implementing the Trade Vendor Payment Program, the Debtors had experienced some unexpected mechanical issues in initiating the Letter of Credit with their bank. Specifically, the Debtors' issuing bank was requiring that the full amount of the Letter of Credit -- $100,000,000 -- be immediately reserved against the Debtors' availability under the DIP Agreement at the time that it is established, notwithstanding the fact that the Letter of Credit was not contemplated to reach this level until July 31. The Debtors asserted that the bank's request would unnecessarily constrain their otherwise existing availability under the DIP Agreement. Accordingly, the Debtors had sought authority to amend Section 2.2 to provide that the Initial Amount would be automatically increased to $50,000,000 on July 11, and further increased to $75,000,000 on July 21. After July 21, the Letter of Credit would be further increased, but not decreased, on a weekly basis, to an amount equal to: -- the aggregate approved trade creditors accounts balance at that time; plus -- the Debtors' reasonable best estimate of the amount of Approved Trade Creditor Accounts, which were likely to be created over the next seven days as a result of purchase orders then outstanding, provided that the Letter of Credit would in no event exceed $100,000,000. If the Letter of Credit outstanding on December 15, 2008, was greater than $75,000,000, it would automatically decrease to $75,000,000 on that date. The Collateral Trustee, KDW Liquidating Services LLC, agreed to fully cooperate with the Debtors, and execute any documents necessary or appropriate to accomplish the increases or decrease of the Letter of Credit as contemplated in Section 2.2. The Debtors also sought to amend the Terms and Conditions to address the implementation of the proposed amendments to the Collateral Trust Agreement. Specifically, the Terms and Conditions would be amended to (i) clarify that the weekly reports delivered to the Trust Board would include, among other things, the estimated amount of Approved Trade Creditor Accounts, and (ii) add a "Program Default," which would occur in the event that the Letter of Credit is not increased, after a 15-day cure period, above $75,000,000 in accordance with Section 2.2. The Debtors submitted that the proposed amendments were in the best interests of their bankruptcy estates because the sought increase was necessary to match the amount of actual and anticipated trade payables subject to the Trade Vendor Payment Program. Thus, the Agreement's amendment would prevent the Debtors from having to unnecessarily reserve $100,000,000 in availability that could otherwise be used for the operation of their business. The Debtors further submitted that modifying the Collateral Trust Agreement as requested would allow them to maximize their liquidity under the DIP Agreement by only reserving amounts that were needed for the Trade Vendor Payment Program. They asserted that trade vendors would not be prejudiced by the proposed modification because the required minimum ratio of available amounts under the Letter of Credit to outstanding trade credit would remain unchanged, and the Letter of Credit would increase up to $100,000,000 provided there was sufficient trade credit to justify the increase. Prior to the ruling, the Court also permitted the Debtors and the Collateral Trustee to immediately arrange for the issuance of the Letter of Credit in accordance with the sought modification of the Trade Vendor Program. Linens 'N Things and 11 affiliates filed separate voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on May 2, 2008 (Lead Case No. 08-10832). The Canadian operations are not included in the filings. Linens 'N Things has secured a $700 million debtor-in-possession financing from General Electric Capital Corp. The company plans to be out of chapter 11 by the end of the year, on this timetable: 09/14/2008 DIP Facility Deadline for Filing a Chapter 11 Plan 10/14/2008 DIP Facility Deadline for Disclosure Statement Approval 11/18/2008 DIP Facility Deadline for Soliciting Votes on Plan 11/28/2008 DIP Facility Deadline for Entry of a Confirmation Order Linens 'N Things is represented by Richards, Layton & Finger, P.A., and Morgan, Lewis & Bockius LLP. Conway, Del Genio, Gries & Co., LLC serves as the retailer's restructuring advisor until substantial consummation of a chapter 11 plan. Conway Del Genio's Michael F. Gries acts as the Debtors' chief restructuring officer and interim CEO. Kurtzman Carson Consultants LLC acts as the Debtors' claims agent. A Noteholder Committee has been formed and is represented by Kasowitz, Benson, Torres & Friedman LLP, and Pachulski Stang Ziehl & Jones. (Linens 'n Things Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: To Auction Off Leases to Closing Stores -------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware: (a) scheduled: * an auction to sell the interests of Linens 'n Things and its debtor-affiliates in each of the Leases for July 24, 2008, at 10:00 a.m., Eastern Daylight Time; * a deadline of July 28, at 12:00 p.m. for parties to file and serve objections to proposed assignment of the Leases to various assignees as a result of the Auction; and * a sale hearing for July 30, at 10:00 a.m., Eastern Daylight Time, to consider the lease assignments or lease termination agreements agreed to as a result of the Auction; (b) approved the Debtors' proposed bidding procedures, and terms and conditions of the Auction; (c) establish cure amounts for the Leases; (d) authorize the Debtors to enter into lease termination agreements with landlords, when appropriate; (e) authorize the Debtors to abandon personal property in connection with the assignment or termination of the Leases; (f) approve and authorize the sale of the Leases; and (g) waive the automatic 10-day stay provided for under Rules 6004(g) and 6006(d) of the Federal Rules of Bankruptcy Procedure. The Debtors have sought and obtained the Court's permission to close, and currently in the process of closing their underperforming stores to aid in their reorganization efforts, and to ease certain of their liquidity restraints. Pursuant to the Court-approved Agency Agreement, the sales at the Closing Stores are scheduled to last no later than August 31, 2008. The Debtors anticipate, however, that the Store Closing Sales will end prior to July 31, 2008, with respect to certain of the Closing Stores, and that the rest will end sometime in August. Contemporaneously, the Debtors have engaged DJM Asset Management, LLC, as special real estate consultants to assist them in marketing their interests in certain unexpired nonresidential leaseholds associated with the Closing Stores. Mark D. Collins, Esq., at Richards, Layton & Finger P.A., in Wilmington, Delaware, relates that the sale of the Leases by auction will enable the Debtors to obtain the highest and best offers for the Leases, thus, maximizing the value of their bankruptcy estates, and is in the best interests of the Debtors, their creditors and other parties-in-interest. He notes that the marketing program established by DJM is sufficient to provide adequate notice to interested and potential purchasers of the Sale. Proposed Bidding Procedures If the Debtors receive more than one offer for a Lease, an auction will be conducted. In order to bid, a bidder must submit a written bid for any number of Leases no later than July 21, 2008, to certain notice parties, which include the U.S. Trustee Office and the Debtors' and the Official Committee of Unsecured Creditors' counsel. To maximize the value of their real estate assets, the Debtors reserve the right, prior to the Auction, to enter into (i) an agreement of assumption and assignment of Lease with a prospective assignee, or (ii) a lease termination agreement in the case of a landlord bidding on a Lease, to which the landlord is a party. The Debtors also propose to pay to the prospective "stalking horse" assignee a break-up fee of 3% of its aggregate bid. If the Debtors desire to enter into an Assumption and Assignment Agreement with a stalking horse assignee for multiple leasehold interests, the Debtors may entitle that assignee to price reduction, in the event a successful bid from another bidder at the Auction equal to an amount not less than the Break-up Fee and not greater than 103% of the assignee's allocated price per Leasehold Interest, which was successfully bid upon by the other bidder. For a regular bid, the deposit will be equal to the greater of (i) 10% of the bid amount, or (ii) $5,000 for each Lease. For a landlord bidding on its leased premises, the landlord will deposit an amount equal to 10% of the cash portion of any bid over and above cure amounts and any claims waiver. For a Private Sale Agreement or Stalking Horse Agreement, the deposit is equal to the greater of (i) 15% of the bid amount, or (ii) $7,500 for each Lease. In the event of a failure to consummate a sale of a Lease because of a breach or failure on the part of a successful bidder with respect to the Lease, the Debtors will retain the successful bidder's deposit as liquidated damages, and the next highest or best qualified bidder will be deemed the successful bidder, and will consummate the sale of the Lease without further order of the Court. Cure Amounts and Adequate Assurance The Debtors believe that they are current on all obligations under the Leases, except for certain cure amounts owed to certain landlords. Among the largest proposed cure amounts are: Proposed Landlord/Counterparty Cure Amount --------------------- ----------- CLPF-600 NMA, LP $730,718 Columbia Retail Deer Grove Center 527,114 Marc Realty, LLC 380,153 Ramco Auburn Crossroads SPE LLC 355,831 Inland Commercial Property Mgmt. 339,650 DDR Flatiron LLC 332,777 Sunshine Land Associates L.P. 289,269 A complete list of the proposed cure amounts is available for free at: http://bankrupt.com/misc/LNT_List_of_Cure_Amounts.pdf The Debtors also request that any cure amounts deemed by the Court, or agreed by the Debtors to be due and owing be deemed to include any other losses under the Leases. Consequently, payment of any cure amounts will compensate the appropriate party for any other loss under the Lease. Abandonment of Personal Property The Debtors request that any personal property remaining at a closing store location be deemed abandoned without any liability to any party, to the landlord if the Lease is rejected, or to the assignee, if the Lease is assumed or assigned. The Debtors have determined that any the personal property is of an inconsequential value of their estates. The Debtors also seek authority to sell each of the Leases free and clear of any and all liens, claims and encumbrances, which may be asserted. Mr. Collins contends that there are compelling reasons and sound business justifications for the Court to authorize the sale of the Leases as proposed. He asserts that approval of the sale at this point in the Debtors' Chapter 11 cases is necessary to maximize the value to the estates, and will minimize the amount of administrative rent incurred on the Closing Stores following the completion of the Store Closing Sales. The Debtors risk the deterioration in value of the Leases, and the incurrence of administrative expenses if the Auction is not conducted and sales are not authorized promptly, Mr. Collins further argues. He adds that if the Debtors are forced to maintain and market the Leases for an extended period of time, there is a high likelihood of the Leases losing value to potential purchasers, and increased administrative costs to the estates. Hence, the Debtors ask the Court to immediately consider their request. Linens 'N Things and 11 affiliates filed separate voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on May 2, 2008 (Lead Case No. 08-10832). The Canadian operations are not included in the filings. Linens 'N Things has secured a $700 million debtor-in-possession financing from General Electric Capital Corp. The company plans to be out of chapter 11 by the end of the year, on this timetable: 09/14/2008 DIP Facility Deadline for Filing a Chapter 11 Plan 10/14/2008 DIP Facility Deadline for Disclosure Statement Approval 11/18/2008 DIP Facility Deadline for Soliciting Votes on Plan 11/28/2008 DIP Facility Deadline for Entry of a Confirmation Order Linens 'N Things is represented by Richards, Layton & Finger, P.A., and Morgan, Lewis & Bockius LLP. Conway, Del Genio, Gries & Co., LLC serves as the retailer's restructuring advisor until substantial consummation of a chapter 11 plan. Conway Del Genio's Michael F. Gries acts as the Debtors' chief restructuring officer and interim CEO. Kurtzman Carson Consultants LLC acts as the Debtors' claims agent. A Noteholder Committee has been formed and is represented by Kasowitz, Benson, Torres & Friedman LLP, and Pachulski Stang Ziehl & Jones. (Linens 'n Things Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LITHIUM TECH: Appoints Teho Kremers as Chief Executive Officer -------------------------------------------------------------- The Board of Directors of Lithium Technology Corporation appointed Theo M.M. Kremers as Chief Executive Officer. Mr. Theo Kremers has over the part 25 years served as CEO and President for several European and U.S. based IT and High Tech companies and also serves as Board Member for several other companies. Mr. Kremers has a Masters Degree in Electrical Engineering from the Technical University Eindhoven, the Netherlands. "The company's strategy going forward will be to focus on market recognition and operational excellence" Mr. Kremers said. "The company's focus in the past years has been to develop high power and high energy, large format cylindrical Li-Ion cells and batteries as well as a cost effective, environmentally friendly manufacturing technology." Dr. Klaus Brandt, who has been instrumental in advancing the company during this developmental stage, will assume the role of CTO and President of the company and will also continue to serve as Managing Director of LTC's German subsidiary, GAIA Akkumulatorenwerke GmbH. As part of this transition, Mr. Amir Elbaz, CFO of the company, will transition his Marketing and Sales responsibilities to the newly appointed CEO. Going forward the company will discontinue its flat cell production at the company's headquarters in Plymouth Meeting, Pennsylvania. This step is necessary to allow the company to focus all its efforts on cylindrical cells that are its core competency. Now that its customers are moving away from prototype solutions and proof of concepts to the first phase of market entry, there is a need to supply larger volumes of both Li-Ion cells and batteries. The company will expand its present manufacturing capability in Germany and will seek opportunities including the formation of joint ventures to enable the supply of larger volumes of standardized cells and batteries. About Lithium Technology Based in Plymouth Meeting, Pennsylvania, Lithium Technology Corporation (OTC: LTHU) -- http://www.lithiumtech.com/-- produces unique large-format rechargeable batteries under the GAIA brand name and trademark. The company supplies a variety of military, transportation and back-up power customers in the U.S. and Europe from its two operating locations in Plymouth Meeting and Nordhausen, Germany. Going Concern Doubt In a letter dated May 13, 2008, Amper, Politziner & Mattia, P.C., raised substantial doubt on the ability of Lithium Technology Corporation to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed to the company's recurring losses from operations since inception and working capital deficiency. The company's operating plan seeks to minimize its capital requirements, but the expansion of its production capacity to meet increasing sales and refinement of its manufacturing process and equipment will require additional capital. The company expects that operating and production expenses will increase significantly. The company has recently entered into a number of financing transactions and is continuing to seek other financing initiatives. The company needs to raise additional capital to meet its working capital needs, for the repayment of debt and for capital expenditures. Such capital is expected to come from the sale of securities. The company believes that if it raises approximately $14,000,000 to $20,000,000 in debt and equity financings it would have sufficient funds to meet its needs for working capital, repayment of debt and for capital expenditures over the next 12 months to meet expansion plans. Bankruptcy Warning Management warned that if the company is unsuccessful in completing these financings, it will not be able to meet its working capital, debt repayment or capital equipment needs or execute its business plan. In such case, the company will assess all available alternatives including a sale of its assets or merger, the suspension of operations and possibly liquidation, auction, bankruptcy, or other measures. MAAX CORP: Files for Chapter 15, Sells Assets to Brookfield ----------------------------------------------------------- Canada-based MAAX Corporation, along with its 10 affiliates, filed chapter 15 petitions on July 14, 2008, with the U.S. Bankruptcy Court for the District of Delaware. Foreign entities undergoing reorganization or winding-down in their home country file chapter 15 of the U.S. Bankruptcy Code to obtain protection from their U.S. creditors. In a court filing, Quebec Court-appointed monitor, Alvarez & Marsal Canada ULC said that the MAAX Group is insolvent and unable to meet its obligations to Brookfield Bridge Lending Fund Inc. The monitor pointed to large reductions in EBITDA arising from significant declines in the U.S. housing market and sales, high oil prices and corresponding increases in freight costs and raw material prices. Adjusted EBITDA declined from C$60.2 million in fiscal 2005 to C$26.5 million in fiscal 2008. Brookfield is the administrative and collateral agent and senior secured lender under a credit and guaranty agreement dated Jan. 9, 2007 involving holders of 9.75% senior subordinated notes due 2012 in the aggregate amount of $150 million. MAAX Corporation issued the senior subordinated notes pursuant to an indenture dated June 4, 2004. The monitor said that MAAX Group has pursued a number of alternatives to improve its capital structure or refinance, but it was not able to consummate a transaction. On Jan. 7, 2008, certain MAAX entities entered into a forbearance agreement with Brookfield to enable MAAX Group to continue to explore and pursue strategic alternatives. The forbearance agreement was amended and extended on March 19, 2008, and again on April 1, 2008. In April 2008, Alvarez & Marsal Securities LLC commenced a comprehensive marketing and sale of MAAX Group products and businesses while MAAX Group continued its recapitalization efforts. Sale of Substantially All Assets to Brookfield On June 12, 2008, MAAX issued a release saying it has entered into an asset purchase agreement with Brookfield concerning a transaction. Under that agreement, Brookfield will acquire substantially all of the assets and property of MAAX and its affiliates. The sale transaction preserves the MAAX business and ensures its continuance as a successful competitor in the marketplace. The sale transaction's key elements include: * Brookfield will assume substantially all of the company's trade obligations and the continued employment of substantially all of the company's employees as set out in the asset purchase agreement; * Brookfield will continue to fulfill the company's obligations to its customers and suppliers as set out in the asset purchase agreement; * the purchase price is the amount owing under the company's senior secured credit facility, plus the assumption by Brookfield of the assumed liabilities; and * the sale transaction is expected to close within 60 days. "This transaction will place the MAAX business on a much stronger financial footing that will enable it to focus on building upon its competitive position and positive reputation," said Paul Golden, the company's President and CEO. "It preserves the MAAX business and ensures its continuance as a successful competitor in the marketplace." Pursuant to an agreement dated July 2, 2008, 25 holders representing about 86% in value of the senior subordinated notes, and indenture trustee, U.S. Bank Trust National Association, have consented to the sale to Brookfield. Brookfield has agreed to a $5 million payment to the indenture trustee prior to the closing out of MAAX's line of credit. The sale transaction will be implemented through a Court- supervised process. Protection Under CCAA (Canada) MAAX has applied for and obtained on June 12, 2008, an order of the Superior Court of the Province of Quebec (Commercial Division) to initiate proceedings under the Companies' Creditors Arrangement Act. These proceedings are limited to the company's operations in Canada and do not apply to those in the United States or Europe. The sale transaction hearing before the Superior Court of the Province of Quebec (Commercial Division) was set June 26, 2008. The CCAA process will not affect the company's day-to-day operations, MAAX said. MAAX has access to the funding necessary to maintain operations and the business will continue without disruption during the CCAA period. As part of the Initial CCAA order, the Quebec Court has approved an amendment to the company's existing credit facilities with Brookfield that provide MAAX with an additional C$30 million of available financing. As part of the sale transaction, MAAX will continue pay its suppliers for all goods and services in the ordinary course. Brookfield is assuming the co-op, rebate, warranty claim and other provisions of its current customer agreements, and the company anticipates that these will continue to be honored without interruption. "Our sales in Canada remain strong," Mr. Golden added. "We have plans to continue growing our leadership position and market share in the United States, and we expect that the completion of the Sale Transaction will enable MAAX to emerge as a stronger company for the long term in North America and Europe." By order dated July 10, 2008, the Quebec Court entered an extended initial order adding the U.S. entities as debtors in the Canadian proceedings. Sale of Spa Division Halted MAAX Group's Spa business, which accounts for about 9% of consolidated sales and was experiencing negative EBITDA, was designated as a non-core business. The Spa business was subject to a letter of intent at the time of the sale process and was not included in the marketing efforts of Alvarez & Marsal Securities. On June 5, 2008, MAAX disclosed that it would not proceed with the sale of MAAX Spas (Arizona) Inc. MAAX said that MAAX Spas will continue to be managed under its current operating structure and the management team remains committed to delivering high quality products and services to all its stakeholders. MAAX Group's Debts The senior secured facility is MAAX Group's most significant debt, Alvarez & Marsal said in a court filing. The senior secured facility consists of two term loans, one of C$42.4 million and another of C$151.7 million. The senior secured facility also has about C$110 million of aggregate commitments under a revolving credit facility, which includes a C$4 million swingline facility provided by HSBC Bank Canada. As of July 4, 2008, about C$277 million remained outstanding under the senior secured facility. MAAX Corporation also issued senior subordinated notes, guaranteed on a subordinated basis by the MAAX Group. MAAX Canada also issued an unsecured hybrid note of about C$300 million payable to MAAX Corporation. About MAAX Quebec, Canada-based MAAX Corporation -- http://www.maax.com/-- is a North American manufacturer of award-winning bathroom products and spas for the residential housing market. The company offers products through plumbing wholesalers, bath and spa specialty boutiques and home improvement centers. The company currently employs more than 2,000 people in 16 plants and independent distribution centers throughout North America and Europe. MAAX Corporation is a subsidiary of Beauceland Corporation, itself a wholly owned subsidiary of MAAX Holdings, Inc. MAAX Canada is the principal operating entity in the MAAX Group. About 94% of aggregate EBITDA for the Northern American business was generated in Canada in fiscal 2008. About 45% of the total corporate overhead costs incurred in Canada are allocated to the U.S. entities, with the remaining 55% allocated to the Canadian entities. Majority of MAAX Group's bank accounts are with HSBC Bank Canada. On June 12, 2008, MAAX Corporation and its 10 affiliates sought and obtained order from the Superior Court of the Province of Quebec (Commercial Division) granting the companies protection under the Companies Creditors Arragement Act (Canada). Alvarez & Marsal Canada ULC was appointed by the Quebec Court as the Debtors' monitor. Buchanan Ingersoll & Rooney and Allen & Overy LLP is counsel to the monitor. The Debtors filed their chapter 15 petition on July 14, 2008 (Bankr. D. Del. Case Nos. 08-11443 through 08-11453). John Henry Knight, Esq., at Richards, Layton & Finger, P.A. and Mary Caloway, Esq., at Buchanan Ingersoll & Rooney PC, represent the Debtors in their chapter 15 cases. Judge Christopher S. Sontchi presides over the chapter 15 cases. The Debtors listed US$100 million to US$500 million in assets and US$100 million to US$500 million in debts. MAAX CORP: Chapter 15 Petition Summary -------------------------------------- Chapter 15 Petitioner: Alvarez & Marsal Canada ULC Chapter 15 Lead Debtor: MAAX Corp. dba 3087229 Nova Scotia Co. 160 St. Joseph Blvd. Lachine Quebec Canada Chapter 15 Case No.: 08-11443 Debtor-affiliates filing separate Chapter 15 petitions: Entity Case No. ------ -------- MAAX Canada, Inc. 08-11444 MAAX-Hydro Swirl Manufacturing Corp. 08-11445 4200217 Canada, Inc. 08-11446 MAAX Spas (Ontario), Inc. 08-11447 MAAX Cabinets, Inc. 08-11448 MAAX KSD, LLC 08-11449 MAAX Midwest, Inc. 08-11450 MAAX Spas (Arizona), Inc. 08-11451 Aker Plastics Co., Inc. 08-11452 Pearl Baths, LLC 08-11453 Type of Business: The Debtors design, manufacture and sell a range of bathroom and spa fixture products, including acrylic, gel coat and thermoplastic bathtubs, showers, whirlpools and bathtub & shower surrounds, as well as shower doors and medicine cabinets. See http://www.maax.com/ Chapter 15 Petition Date: July 14, 2008 Court: District of Delaware (Delaware) Judge: Christopher S. Sontchi Chapter 15 Petitioner's Counsel: John Henry Knight, Esq. Email: knight@rlf.com Richards, Layton & Finger, P.A. One Rodney Square P.O. BOX 551 Wilmington, DE 19899 Tel: (302) 651-7700 Fax: (302) 651-7701 http://www.rlf.com/ -- and -- Mary Caloway, Esq. Email: mcaloway@klettrooney.com Buchanan Ingersoll & Rooney, PC 1000 W. St., Ste. 1410 Wilmington, DE 19801 Tel: (302) 552-4209 Fax: (302) 552-4295 http://www.klettrooney.com/ MAAX Corp's Financial Condition: Estimated Assets: $100,000,000 to $500,000,000 Estimated Debts: $100,000,000 to $500,000,000 MAGNA ENTERTAINMENT: Senior Vice President Brant Latta Resigns -------------------------------------------------------------- Brant Latta ceased to serve as Senior Vice-President, Operations and as an employee of Magna Entertainment Corp. on June 30, 2008. Mr. Latta had been the Senior Vice President of Operations of the company since Oct. 6, 2006. Prior to that, Mr. Latta served as the Vice President of Operations of MEC from March 2006 to October 2006 and also served as its Senior Manager of Continuous Improvement Team from August 2003 to March 2006. Prior to that, he served in various senior level capacities within MEC since its inception. Headquartered in Aurora, Ontario, Magna Entertainment Corp. (Nasdaq: MECA)(TSX: MEC.A) -- http://www.magnaentertainment.com/ -- acquires, develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. The company also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. * * * As reported in the Troubled Company Reporter on March 20, 2008, Ernst & Young LLP in Toronto, Canada, expressed substantial doubt about Magna Entertainment Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring operating losses and working capital deficiency. MANASQUAN CDO: Moody's Cuts Ratings of Two Classes of Notes to C ---------------------------------------------------------------- Moody's Investors Service downgraded ratings of four classes of notes issued by Manasquan CDO 2005-1, Ltd., and left on review for possible further downgrade the rating of one of these classes of notes. The notes affected by the rating action are: Class Description: $23,000,000 Class A-1LB Floating Rate Notes Due 2045 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Baa1, on review for possible downgrade Class Description: $42,000,000 Class A-2L Floating Rate Notes Due 2045 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: Ca Class Description: $15,000,000 Class B-1 L Floating Rate Notes Due 2045 -- Prior Rating: Ca -- Current Rating: C Class Description: $5,000,000 Class B-2L Floating Rate Notes Due 2045 -- Prior Rating: Ca -- Current Rating: C The rating actions reflect deterioration in the credit quality of the underlying portfolio as well as the occurrence, as reported by the trustee on June 27, 2008, of an event of default caused by the Senior Class A Overcollaterization Ratio falling below 100%, as described in Section 5.1(f) of the indenture dated Dec. 22, 2005. Manasquan CDO 2005-1, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. As provided in Article V of the indenture, during the occurrence and continuation of an event of default, certain parties to the transaction may be entitled to direct the trustee to take particular actions with respect to the collateral and the notes. The rating downgrades taken today reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued following the default event. Because of this uncertainty, the rating assigned to the Class A-1LB Notes remains on review for possible further action. MCCLATCHY CO: Revenue Decline Prompts S&P to Downgrade Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on The McClatchy Co. to 'B+' from 'BB-'. The rating outlook is negative. The issue-level rating on the senior unsecured debt assumed from Knight Ridder Inc. also was lowered, to 'B-' from 'B'. The recovery rating on the Knight Ridder debt remains at '6', indicating the expectation for negligible (0% to 10%) recovery in the event of a payment default. At the same time, Standard & Poor's revised the recovery rating on McClatchy's unsecured credit facility to '2', indicating the expectation for substantial (70% to 90%) recovery in the event of a payment default, from '3'. The 'BB-' issue-level rating on this debt was affirmed. "The downgrade reflects meaningful declines in revenue and EBITDA in McClatchy's newspaper publishing business and the likelihood for further declines over the intermediate term," explained Standard & Poor's credit analyst Emile Courtney. S&P expect that total revenue could decline in the mid-teens percentage area and EBITDA could decline in the mid-20% area in 2008. S&P believe that this would result in the need for McClatchy to amend its 5x leverage and 2.75x interest coverage covenants in its senior unsecured guaranteed credit facility in the second half of 2008. The company's lenders will likely agree to temporary covenant relief, largely because McClatchy's leverage profile, while strained relative to historical levels and expected to deteriorate further over the intermediate term, compares favorably with newspaper company peers' and other highly leveraged borrowers'. In addition, S&P expect McClatchy to generate declining, but sufficient, levels of discretionary cash flow over the intermediate term. Interest costs will likely rise as the consequence of any amendment. MIDWEST AIR: To Cut 40% of Staff as Part of Fleet Reduction ----------------------------------------------------------- Midwest Airlines said it plans to reduce the workforce of Midwest Airlines and its Skyway subsidiary by about 1,200 employees, or 40 percent of current staffing levels. The majority of the jobs affected are related to the airline's previously announced decision to remove its 12-plane MD-80 fleet from service this fall, as well as other schedule adjustments to be announced. "In order to successfully restructure, there is no way to avoid deep and painful reductions to our current workforce," said Timothy E. Hoeksema, chairman and chief executive officer. "We will go about this task with compassion and dignity. Midwest has always been a place where employees take care of one another -- in times that are good and in times that are hard. Perhaps more than any other time in our history, we must hold true to this value." The company said it would begin notifying affected employees today. The reductions will take the form of furloughs or position eliminations, depending on job function. The reductions are spread throughout the airline's flight operations, inflight, operations, maintenance and general administrative functions. The effective date of the reductions will vary by job function, but most will take place no later than mid-September. In addition, the company said it is continuing talks this week with the Airline Pilots Association and the Association of Flight Attendants, the labor organizations that represent its pilots and flight attendants, to reach agreements on concessions necessary to reduce the airline's cost structure. Midwest Airlines hired Seabury Group, an aviation consultant, to assist with a restructuring plan. 30-Day Restructuring As reported by the Troubled Company Reporter on June 27, 2008, Jay Schnedorf, chairman of the Air Line Pilots Association's Midwest chapter, said that Midwest Air Group Inc. plans to reduce its fleet and workforce under a 30-day restructuring in order to prevent a bankruptcy filing. Reports say that the airline is scrambling to raise funds as profits dwindle due to rising fuel prices. Pilots Predict Bankruptcy As reported by the TCR on July 14, 2008, after failing to strike collective bargaining agreement with the management of Midwest Airlines, the carrier's pilots are saying the company is planning to file for bankruptcy, reports say. The pilots say Midwest was not bargaining in good faith, and that the carrier is eyeing a better deal through a bankruptcy filing. About Midwest Air Oak Creek, Wisconsin-based Midwest Air Group Inc. -- http://www.midwestairlines.com/-- is a holding company of Midwest Airlines, Inc. Midwest Airlines operates a passenger jet airline that serves destinations throughout the United States from Milwaukee, Wisconsin and Kansas City, Missouri. Skyway Airlines, Inc., dba Midwest Connect, is a wholly owned subsidiary of Midwest Airlines and serves as the regional airline for the company. Midwest Airlines and Midwest Connect constitute the company's segments. It has three principal product offerings: Midwest Airlines Signature Service, Midwest Airlines Saver Service and Midwest Connect regional service. As of Dec. 31, 2006, Midwest Airlines Signature Service operated in 20 cities in the United States, and Midwest Airlines Saver Service operated in 10 cities. Midwest Connect builds feeder traffic and provides regional scheduled passenger service to cities primarily in the Midwest. Its subsidiaries provide aircraft charter services, transport air freight and mail. The company has a total of more than 3,000 workers. As of Sept. 30, 2007, Midwest Air Group listed total assets of $395,615,000, total liabilities of $331,810,000, and total stockholders' equity of $63,805,000. MONTERRA ENTERPRISES: Taps Anna W. Drake P.C. as General Counsel ---------------------------- ----------------------------------- The U.S. Bankruptcy Court for the District of Utah granted Monterra Enterprises, LLC, authority to employ Anna W. Drake, P.C. as its general counsel. The Debtor has agreed to compensate Anna W. Drake, P.C. at its regular hourly rates. At present, Anna W. Drake, P.C. charges $275 per hour for legal services. Anna W. Drake, Esq., the sole shareholder of Anna W. Drake, P.C. assures the Court that her firm has no interest adverse to the Debtor or its estate. Based in St. George, Utah, Monterra Enterprises, LLC filed for Chapter 11 bankruptcy protection on June 6, 2008 (D. Utah Case No. 08-23641). When the Debtor filed its schedules, it disclosed total assets of $31,855,727 and total liabilities of $36,367,256. MORGAN STANLEY: Moody's Cuts Ratings on Eight Classes of Notes -------------------------------------------------------------- Moody's Investors Service downgraded the ratings on these notes issued by Morgan Stanley ACES SPC: Morgan Stanley ACES SPC, Series 2006-37: Class Description: $19,000,000 Class IA Secured Floating Rate Notes due 2016 -- Prior Rating: A2, on watch for possible downgrade -- Current Rating: Baa3 Class Description: JPY1,000,000,000 Class IB Secured Floating Rate Notes due 2016 -- Prior Rating: A2, on watch for possible downgrade -- Current Rating: Baa3 Class Description: $5,000,000 Class II Secured Floating Rate Notes due 2016 -- Prior Rating: A2, on watch for possible downgrade -- Current Rating: Baa3 Class Description: $5,700,000 Class IIIA Secured Floating Rate Notes due 2016 -- Prior Rating: Baa2, on watch for possible downgrade -- Current Rating: Ba3 Class Description: $1,500,000 Class IV Secured Floating Rate Notes due 2016 -- Prior Rating: Ba2, on watch for possible downgrade -- Current Rating: Caa1 Morgan Stanley ACES SPC, Series 2005-8: Class Description: $ 6,000,000 Secured Fixed Rate Notes due 2015-2 -- Prior Rating: Baa2, on watch for possible downgrade -- Current Rating: Ba1 Morgan Stanley ACES SPC, Series 2007-7: Class Description: Rated Notes -- Prior Rating: Baa3, on watch for possible downgrade -- Current Rating: Ba2 Morgan Stanley ACES SPC, Series 2005-21: Class Description: Class IA Notes due September 20, 2010 -- Prior Rating: A3, on watch for possible downgrade -- Current Rating: Ba1 According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of corporate securities. MORTGAGES LTD: Wants to Access Southwest Value's $125 Million Loan ------------------------------------------------------------------ Mortgages Ltd. asks the United States Bankruptcy Court for the District of Arizona for authority to obtain up to $125,000,000 in postpetition financing from Southwest Value Partners. The committed $125,000,000 financing is comprised of: i) a $5,000,000 revolving line of credit, which will be used to: -- fund working capital needs, -- pay off a $500,000 prepetition loan made by the lender to the Debtor, and -- pay down by $2,250,000 a debt owed by the Debtor to Artemis Realty Capital, LLC from the release of a lien held by Artemis on real property of the Debtor at Central and Highland avenues in Phoenix; and ii) a $120,000 construction line of credit to finance the completion of certain projects that are the subject of prepetition loans by the Debtor at present. Under the credit agreement, the $5,000,000 revolving line of credit bears interest rate at 11%, while the $120,000,000 construction line of credit incurs 12% interest rate, plus preferred return of up to 20% of funded amount based upon level of recovery by the Debtor's investors in the projects. Several parties have filed objections to the Debtor's DIP request, including Central & Monroe, LLC, and Osborn III Partners, LLC, who have significant claims against the estate, assert that the Debtor's proposed lender may have a pre-existing relationship with the Debtor that needs to be disclosed in detail. Central and Osborn filed an involuntary petition under Chapter 7 against the Debtor on June 20, 2008. The Debtor argues that the involuntary petition was improper and was filed in bad faith by Central and Osborn. The Debtor points out that Central and Osborn are not eligible creditors within the meaning of Section 303(b)(1). The Debtor tells the Court that it has an urgent need to use up to $500,000 from the $5,000,000 revolving line of credit to fund operations, on the interim basis. The DIP lien is subject to carve-outs for payment to professional advisors to the Debtors and the committee, and fees required to be paid to the clerk of the bankruptcy court. There is a $750,000 carve-out for payment of fees and expenses incurred by professional advisors retained by the Debtor and the committee. To secure its DIP obligation, the lender will be granted a superpriority administrative expense claim status over all administrative expense claims and unsecured claims against the Debtor under Section 364(c)(1) of the Bankruptcy Code. Furthermore, the Debtor together with MCA Financial Group Ltd., as financial advisor, prepared a 12-week cash flow projection which shows that the Debtor has insufficient available sources of working capital and financing to operate its business without the DIP credit facility. A full-text copy of the credit agreement is available for free at http://ResearchArchives.com/t/s?2f74 A full-text copy of the 12 week cash flow is available for free at http://ResearchArchives.com/t/s?2f75 About Mortgages Ltd. Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/-- originates, invests in, sells and services its own short-term real-estate secured loans on properties within the state of Arizona in the US. It underwrites loans for commercial, industrial and residential properties for acquisition, entitlement, development, construction and investment. Mortgages Ltd. was the subject of an involuntary chapter 7 petition dated June 20, 2008, filed by KGM Builders Inc. -- a contractor for Grace Communities, a borrower of the company -- before the U.S. Bankruptcy Court for the District of Arizona. Central & Monroe LLC and Osborn III Partners LLC, divisions of Grace Communities, sought the appointment of an interim trustee for Mortgages Ltd. in the chapter 7 proceeding. Mortgages Ltd. is also facing lawsuits filed by Grace Communities and Rightpath Limited Development Group for its alleged failure to fully fund loans. Mortgages Ltd. denied the charges. It has filed a motion to dismiss the Rightpath suit. The Debtor's case was converted to a chapter 11 proceeding on June 24, 2008 (Bankr. Ariz. Case No. 08-07465). Judge Sarah Sharer Curley presides over the case. As of Dec. 31, 2007, the Debtor had total assets of $358,416,681 and total debts of $350,169,423. MORTGAGES LTD: Taps Jennings, Strouss as General Counsel -------------------------------------------------------- Mortgages Ltd. asks the United States Bankruptcy Court for the District of Arizona for permission to employ Jennings, Strouss & Salmon P.L.C. as its general counsel. As reported in the Troubled Company Reporter on July 11, 2008, Todd A. Burgess, Esq., at Greenberg Traurig LLP, was dismissed by the Court as counsel to the Debtor. Jennings Strouss will: a) assist, advice and represent the Debtor in connection with the administration of the Debtor's case; b) advise the Debtor with respect to its powers and duties as debtor-in-possession in the continued management and operation of its business and properties; c) attend meetings and negotiate with representative of creditors and other parties-in-interest; d) take all necessary action to protect and preserve the Debtor's estate, including the prosecution of action on it behalf, the defense of any actions, commenced against the estate, negotiations concerning litigation in which the Debtor may be involved and objections to claims filed against the estate; e) prepare on behalf of the Debtor all motions, applications, answers, orders, reports and papers necessary to the administration of the estate; f) negotiate, solicit and obtain court approval on the Debtor's behalf plan(s) of reorganization, disclosure statements, and all related agreements and documents, and take any necessary action on behalf of the Debtor to obtain confirmation of the plan(s); g) appear before the Court, any appellate courts, and the United States Trustee, and protect the interests of the Debtor's estate before the courts and the United States Trustee; and h) perform all other necessary legal services and provide all other necessary legal advice to the Debtor in connection with the Chapter 11 case. The firm's principal attorneys and their compensation rates are: Professionals Hourly Rates ------------- ------------ Carolyn J. Johnsen, Esq. $425 Bradley J. Stevens, Esq. $390 Brian Spector, Esq. $385 Todd Adkins, Esq. $175 To the best of the Debtor's knowledge, the firm does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Mortgages Ltd. Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/-- originates, invests in, sells and services its own short-term real-estate secured loans on properties within the state of Arizona in the US. It underwrites loans for commercial, industrial and residential properties for acquisition, entitlement, development, construction and investment. Mortgages Ltd. was the subject of an involuntary chapter 7 petition dated June 20, 2008, filed by KGM Builders Inc. -- a contractor for Grace Communities, a borrower of the company -- before the U.S. Bankruptcy Court for the District of Arizona. Central & Monroe LLC and Osborn III Partners LLC, divisions of Grace Communities, sought the appointment of an interim trustee for Mortgages Ltd. in the chapter 7 proceeding. Mortgages Ltd. is also facing lawsuits filed by Grace Communities and Rightpath Limited Development Group for its alleged failure to fully fund loans. Mortgages Ltd. denied the charges. It has filed a motion to dismiss the Rightpath suit. The Debtor's case was converted to a chapter 11 proceeding on June 24, 2008 (Bankr. Ariz. Case No. 08-07465). Judge Sarah Sharer Curley presides over the case. As of Dec. 31, 2007, the Debtor had total assets of $358,416,681 and total debts of $350,169,423. MSC 2007-SRR3: Fitch Puts Six Low-B Ratings Under Negative Watch ---------------------------------------------------------------- Fitch Ratings has placed these classes of variable floating-rate notes from MSC 2007-SRR3, Ltd./LLC on Rating Watch Negative: -- $10,541,250 class K 'BBB-'; -- $15,854,040 class L 'BBB-'; -- $9,491,810 class M 'BB+'; -- $4,000,990 class N 'BB'; -- $3,007,770 class O 'BB-'; -- $3,495,010 class P 'B+'; -- $2,501,790 class Q 'B'; -- $1,499,200 class R 'B-'. The placement of the classes on RWN reflects the decline in the portfolio credit quality resulting from Fitch's downgrades of five tranches within five CMBS B-Piece resecuritizations (10.7% of the portfolio). MSC 2007-SRR3 represents a synthetic collateralized debt obligation transaction that references a static portfolio consisting of 89.3% of commercial mortgage backed securities and 10.7% of CMBS B-Piece resecuritizations. The transaction is designed to provide credit protection for realized losses on a reference portfolio through a credit default swap between the issuer and the swap counterparty, Morgan Stanley Capital Services Inc. The initial ratings were based on the quality of the portfolio assets which had a Fitch weighted average rating of 'BBB/BBB-', the credit enhancement provided by the subordination for each tranche and the protection incorporated within the structure. After accounting for the downgrades to approximately 10.7% of the collateral, which are CMBS B-Piece resecuritizations, the average rating is nearing 'BBB-' and no longer supports the ratings for the classes placed on Rating Watch Negative. Proceeds from the securities are invested in a pool of eligible investments, which are protected through the total return swap agreement between the issuer and MSCS, the TRS counterparty. The payment obligations of the TRS counterparty are guaranteed by Morgan Stanley, the swap counterparty guarantor. Under the TRS agreement, MSCS will make periodic interest payments to the issuer and pay any depreciation in market value with respect to eligible collateral upon its disposition to the issuer, and the issuer will pay MSCS all the interest and similar amounts payable with respect to the eligible collateral. In addition, the issuer will pay to MSCS any appreciation in market value of the eligible collateral upon its disposition. Fitch is reviewing its structured finance CDO approach and will comment separately on any changes and potential rating impact at a later date. The resolution of this Rating Watch Negative action will reflect the current portfolio as well as the structural features of the transactions and will follow the release of Fitch's revised SF CDO rating criteria. MW JOHNSON: Section 341(a) Meeting Set for July 31 -------------------------------------------------- The United States Trustee for Region 12 will convene a meeting of M.W. Johnson Construction Inc.'s creditors at 9:30 a.m., on July 31, 2008, at the U.S. Courthouse, Room 1017, 300 South Fourth Street, Minneapolis, Minnesota. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about his financial affairs and operations that would be of interest to the general body of creditors. About M.W. Johnson Lakeville, Minnesota-based M.W. Johnson Construction Inc. -- http://www.mwjohnson.com/-- and M.W. Johnson Construction of Florida Inc. are custom homebuilders. They filed their chapter 11 petition on June 13, 2008 (Bankr. D. Minn. Case Nos. 08-32874 and 08-32876). Judge Robert J. Kressel presides over the case. Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath Nauman, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed estimated assets of between $50 million and $100 million and estimated debts of between $50 million and $100 million. MW JOHNSON: Obtains Court's Interim Nod to Use Cash Collateral -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Minnesota granted M.W. Johnson Construction Inc. and M.W. Johnson Construction of Florida Inc. interim authority to use cash, including cash collateral of the pre-petition lenders consistent with a budget. As adequate protection for the use of the pre-petition lenders' cash collateral, the pre-petition lenders are granted replacement liens in the security interest of Lenders Builders Mortgage Company LLC and RBC Real Estate Finance Inc., as successor and assignee to RBC Bank, in: a) the Borrowers Collateral, as set forth in Section 3.1 of the post-petition loan, cash collateral and security agreement with BMC and RBC; b) the Johnsons Tax Claims; c) the Pre-Petition Collateral, which shall extend to the Proceeds of such Pre-Petition Collateral collected or created by the Debtors post-petition; pursuant to Sec. 552 of the Bankruptcy Code, having the same priority, dignity, scope and effect as the pre-petition lien of the pre-Petition Lenders. BMC is a secured creditor of Debtors pursuant to the Credit Agreement and Original Notes. The amount of the BMC Pre-Petition Indebtedness is approximately $24,900,762 plus any accrued interest, fees, and costs not included as of the bankruptcy filing date, secured by the BMC Pre-Petition Security Interest. RBC is a secured creditor of Debtors pursuant to the RBC Loan Agreements and RBC Loan Agreement Obligations. The amount of the RBC Loan Agreement Obligations is approximately $34,552,376 plus any accrued interest, fees, and costs not included as of the filing date. As previously reported M.W. Johnson Construction Inc. obtained interim approval from the Cout on June 19, 2008, to access $1 million in debtor-in-possession fund from Builders Mortgage Co. LLC and RBC Real Estate Finance Inc., John Blakeley of The Deal said. About M.W. Johnson Lakeville, Minnesota-based M.W. Johnson Construction Inc. -- http://www.mwjohnson.com/-- and M.W. Johnson Construction of Florida Inc. are custom homebuilders. They filed their chapter 11 petition on June 13, 2008 (Bankr. D. Minn. Case Nos. 08-32874 and 08-32876). Judge Robert J. Kressel presides over the case. Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath Nauman, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed estimated assets of between $50 million and $100 million and estimated debts of between $50 million and $100 million. MW JOHNSON: Panel May Retain Hinshaw & Culbertson LLP as Attorneys ------------------------------------------------------------------ The United States Bankruptcy Court for the District of Minnesota granted the Official Committee of Unsecured Creditors appointed in M.W. Johnson Construction Inc.'s Chapter 11 case, authority to retain Hinshaw & Culbertson LLP as its attorneys. In an unsworn statement dated June 27, 2008, Jamie R. Pierce, Esq., an associate at Hinshaw & Culbertson LLP, told the Court that the firm does not represent or hold any interest adverse to the Debtor or its estate. Mr. Pierce further told the Court that he and Joel D. Nesset, Esq., will bill $225 per hour for services to be rendered on behalf of the Committee. Lakeville, Minnesota-based M.W. Johnson Construction Inc. -- http://www.mwjohnson.com/-- and M.W. Johnson Construction of Florida Inc. are custom homebuilders. They filed their chapter 11 petition on June 13, 2008 (Bankr. D. Minn. Case Nos. 08-32874 and 08-32876). Judge Robert J. Kressel presides over the case. Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath Nauman, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed estimated assets of between $50 million and $100 million and estimated debts of between $50 million and $100 million. MW JOHNSON: U.S. Trustee Names 3-Member Creditors Panel --------------------------------------------------------- Pursuant to Section 1102(a)(1) of the Bankruptcy Code, Habbo G. Fokkena, United States Trustee for Region 12, appointed three creditors to the Official Committee of Unsecured Creditors in M.W. Johnson Construction Inc.'s Chapter 11 case. The Creditors Committee consists of: (1) Stewart Plumbing Inc. Attn: Scott R. Stewart 13025 George Weber Drive Rogers, MN 55374 Tel: (763) 428-1833 (2) Abbey Carpet & Floor Attn: Kirk Johnson 6808 151st Street W Suite 104 Apple Valley, MN 55124 Tel: (952) 891-5100 (3) Bob Kilian Electric Company Attn: Steve Long 12075 43rd Street NE Suite 100 St. Michael, MN 55376 Lakeville, Minnesota-based M.W. Johnson Construction Inc. -- http://www.mwjohnson.com/-- and M.W. Johnson Construction of Florida Inc. are custom homebuilders. They filed their chapter 11 petition on June 13, 2008 (Bankr. D. Minn. Case Nos. 08-32874 and 08-32876). Judge Robert J. Kressel presides over the case. Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath Nauman, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed estimated assets of between $50 million and $100 million and estimated debts of between $50 million and $100 million. MW JOHNSON: Can Employ Lighthouse as Financial Consultant --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Minnesota granted M.W. Johnson Construction Inc. and its debtor affiliate, M.W. Johnson Construction of Florida Inc., authority to employ Lighthouse Management Group Inc. as their financial consultant. James A. Bartholomew, the president of Lighthouse Management Group Inc., assured the Court that the firm does not hold or represent any interest adverse to the Debtors or their estate. To the best of the Debtors' knowledge, the firm is disinterested. As compensation for their services, James Bartholomew and Tim Becker will charge $275 per hour, while Mark Allen, Patrick Finn and Susan Mack will charge $225 per hour. Lakeville, Minnesota-based M.W. Johnson Construction Inc. -- http://www.mwjohnson.com/-- and M.W. Johnson Construction of Florida Inc. are custom homebuilders. They filed their chapter 11 petition on June 13, 2008 (Bankr. D. Minn. Case Nos. 08-32874 and 08-32876). Judge Robert J. Kressel presides over the case. Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath Nauman, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed estimated assets of between $50 million and $100 million and estimated debts of between $50 million and $100 million. NATIONAL CITY: Quells Rumors of Unusual Depositor Activity ---------------------------------------------------------- National City Corporation, in response to market rumors, issued a statement on Monday saying it is experiencing no unusual depositor or creditor activity. "As of the close of Friday's business, the bank maintained more than $12 billion of excess short-term liquidity. Further, as a result of our recent $7 billion capital raise, National City maintains one of the highest Tier I regulatory capital ratios among large banks," it said in an exhibit filed with the Securities and Exchange Commission. Bloomberg News says National City, together with Washington Mutual Inc., "led led the steepest-ever decline in the two-decade history of an index of bank stocks after IndyMac Bancorp Inc.'s collapse spurred concern more lenders are vulnerable to bad home loans." WaMu slid $1.72, or 35 percent, to $3.23 at 4:01 p.m., and National City dropped 65 cents, or 14 percent, to $3.77 in New York Stock Exchange composite trading, Bloomberg noted. As reported by the Troubled Company Reporter on April 22, 2008, National City approved the raising of $7 billion of additional equity capital. The capital raise includes $985 million of private equity capital from Corsair Capital, a private equity firm. The balance, or $6 billion, of equity capital is being purchased by other investors, including several of National City's largest current institutional stockholders. Separately, that time, National City also released its first quarter 2008 results, reporting a net loss of $171 million, compared to a net loss of $333 million in the fourth quarter of 2007. Balance Sheet At March 31, 2008, total assets were $155.0 billion and stockholders' equity was $13.2 billion or 8.5% of total assets. At March 31, 2008, total deposits were $98.5 billion, including core deposits of $89.1 billion. Tangible equity to assets was 5.00% at March 31, 2008, compared to 5.29% at Dec. 31, 2007. The company's Tier 1 capital was 6.65% at March 31, 2008, which is above the "well-capitalized" threshold of 6.00%. The Corporation had no share repurchases in the first quarter of 2008 and none are planned. As reported by the TCR on June 9, 2008, National City Corp.'s banking unit has entered into a confidential agreement with the Office of the Comptroller of the Currency that effectively put the bank on probation. The TCR, citing The Wall Street Journal, reported that the terms of the agreement with National City aren't disclosed, however, regulators usually urge banks to maintain adequate capital and improve lending standards. According to WSJ, National City has been severely contracting its mortgage and home-equity lending, laying off hundreds of employees in the process. About National City Corporation Headqurtered in Cleveland, Ohio, National City Corporation -- http://www.nationalcity.com/-- is financial holding company that operates through an extensive distribution network in Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania, and Wisconsin, and also conducts selected lending and other financial services businesses on a nationwide basis. The primary source of National City's revenue is net interest income from loans and deposits, revenue from loan sales and servicing, and fees from financial services provided to customers. Its operations are primarily conducted through more than 1,400 branch banking offices located within National City's nine-state footprint. In addition, National City operates over 410 retail mortgage offices throughout the United States. NEMASKET REALTY: Case Summary & Seven Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Nemasket Realty LLC 92 Main Street Kingston, MA 02364 Bankruptcy Case No.: 08-15083 Chapter 11 Petition Date: July 10, 2008 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: Earl D. Munroe, Esq. (emunroe@munroelaw.com) Munroe & Chew 5 Broadway Saugus, MA 01906 Tel: (617) 848-1218 Fax: (617) 507-8377 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 Debtor's list of its seven largest unsecured creditors: Entity Claim Amount ------ ------------ William Jenkins $195,000 35 Eagle Drive Canton, MA 02021 Henry Buletti $97,500 33 Lovejoy Lane Meredith, NH 03253 Elliott M. Sherman, Esq. $65,000 45 Fairfield Street Boston, MA 02116 Town of Middleborough $11,605 One Becon Insurance Co. $3,668 Standish Oil Co. $352 Middleboro Electric Company $197 NEPTUNE CDO: Collateral Decline Cues Fitch to Cut Five Note Rtngs ----------------------------------------------------------------- Fitch Ratings has downgraded five classes of notes issued by Neptune CDO II, Ltd. and Neptune CDO II (Delaware), LLC. Fitch has also removed all five classes of notes from Rating Watch Negative. These rating actions are effective immediately: -- $168,720,346 class A-1 to 'B' from 'A'; -- $52,000,000 class A-2 to 'CC' from 'BBB'; -- $18,000,000 class B to 'CC' from 'BB'; -- $6,167,895 class C to 'C' from 'B'; -- $11,315,480 class D to 'C' from 'CCC'. Fitch originally placed all classes on Rating Watch Negative on Feb. 27, 2008. Neptune II is a cash flow structured finance collateralized debt obligation that closed on July 26, 2005 and is managed by Chotin Fund Management Corporation, formerly known as Fund America Management Corporation. The portfolio is comprised primarily of U.S. subprime residential mortgage-backed securities (72.7%), Alternative-A RMBS (7.8%), Prime RMBS (10.5%) and SF CDOs (4.2%). Subprime RMBS bonds of the 2005, 2006 and 2007 vintages account for approximately 65.2% of the portfolio. Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically subprime RMBS, Alt-A RMBS and SF CDOs with underlying exposure to subprime RMBS. Since November 2007, approximately 62.8% of the portfolio has been downgraded, with 8.9% of the portfolio currently on Rating Watch Negative. This credit deterioration includes 61.5% of the portfolio that now carries a rating below the rating Fitch assumed in the November 2007 review. Assets rated below investment grade currently represent 61.8% of the portfolio, and 29.7% of the portfolio is now rated 'CCC+' or below. The collateral deterioration has caused each of the overcollateralization tests to fall below 100% and fail their respective triggers. As of the trustee report dated May 30, 2008, the class A/B OC ratio was 89.5%, the class C OC ratio was 87.2% and the class D OC ratio was 83.4%. Due to these OC test failures, cash flows have been diverted to pay down the class A-1 notes, and payment of interest to the class C and class D notes has been made in kind by writing up the principal balance of each class by the amount of interest owed. The ratings on the class A-1, A-2 and B notes address the timely receipt of scheduled interest payments and the ultimate receipt of principal as per the transaction's governing documents. The ratings on classes C and D address the ultimate receipt of interest payments and ultimate receipt of principal as per the transaction's governing documents. The ratings are based upon the capital structure of the transaction, the quality of the collateral, and the protections incorporated within the structure. OMNI FINANCIAL: Has Until October 8 to Comply with Nasdaq Criteria ------------------------------------------------------------------ Omni Financial Services Inc. received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market notifying the company that it fails to comply with Nasdaq's minimum market value of publicly held shares requirement for continued listing set forth in Nasdaq Marketplace Rule 4450(a)(2), which requires companies to maintain a MVPHS of $5,000,000. In accordance with Marketplace Rule 4450(e)(1), the company will be provided 90 calendar days, or until Oct. 8, 2008, to regain compliance. If, at anytime before Oct. 8, 2008, the MVPHS of the company's common stock is $5,000,000 or greater for a minimum of 10 consecutive trading days, the Staff will provide written notification to the company that it has achieved compliance with the Rule. If the company does not regain compliance with the Rule by Oct. 8, 2008, the company's common stock is subject to delisting. At that time, the company may appeal the Staff's determination to delist its securities to a Listing Qualifications Panel. About Omni Financial Services Inc. Headquartered in Atlanta, Georgia, Omni Financial Services Inc. (NASDAQ:OFSY) -- http://www.onb.com.-- is a bank holding company that provides a full range of banking and related services through its wholly owned subsidiary, Omni National Bank, a national bank headquartered in Atlanta, Georgia. Omni has one full service banking location in Atlanta, one in Dalton, Georgia, four in North Carolina, one in Chicago, Illinois, one in Dallas, Texas, one in Houston, Texas and one in Tampa, Florida. In addition, Omni has loan production offices in Charlotte, North Carolina, Birmingham, Alabama, and Philadelphia, Pennsylvania. Omni provides traditional lending and deposit gathering capabilities, well as an array of financial products and services, including specialized services such as community redevelopment lending, small business lending and equipment leasing, warehouse lending, and asset-based lending. Defer Interest Payment On June 13, 2008, Omni Financial elected to defer interest payments due on its trust preferred junior subordinated debt for an initial period of up to four quarters and has provided notice to the respective trustees, U.S. Bank Trust for Omni Statutory Trust II and Wilmington Trust Company for Omni Statutory Trusts III and IV. The company has the ability under the trust indentures to defer interest payments for up to 20 quarters, or through June 2013, with a continuation of on-going, appropriate notice to the respective trustees. * * * As reported in the Troubled Company Reporter on May 16, 2008, Omni Financial Services delayed the filing of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, because its completion of the audit and financial statements for the year ended Dec. 31, 2007 is subject to resolution of issues relating to certain valuation assertions in such financial statements. The ultimate resolution of these issues will also impact the financial results for the quarter ended March 31, 2008. The primary issue relates to documentation supporting valuation assertions of other real estate owned held by the company. The OREO was acquired through foreclosure of properties that collateralized loans in the Community Development Lending Division. The company is working with its independent registered public accounting firm to resolve these issues but the timing of the resolution is currently unknown. These valuation assertions materially affect OREO and the provision for and the allowance for loan and lease losses, which in turn impacts both earnings and capital. Therefore, the company cannot reliably quantify the results of operations for 2007. PINE TREE III: Moody's Cuts Rating of Notes Eight Notches to B2 --------------------------------------------------------------- Moody's Investors Service has downgraded these notes: Class Description: Pine Tree III: $4,000,000 Secured Floating Rate Credit Linked Notes Due 2012, Series 2005-4 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: B2 According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of corporate securities. PIXELPLUS CO: KPMG Samjong Expresses Going Concern Doubt -------------------------------------------------------- KPMG Samjong Accounting Corp. in Seoul, Korea, raised substantial doubt about Pixelplus Co., Ltd.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations making a significant decrease in net capital. The company posted net loss of KRW7,856,000,000 ($8,395,000) on total revenues of KRW17,590,000,000 ($18,797,000) for the year ended Dec. 31, 2007, as compared with a net loss of KRW17,369,000,000 on total revenues of KRW31,996,000,000 in the prior year. Cash used in operating activities was KRW4,200,000,000 in 2007, which principally reflects the company's net loss of KRW7,900,000,000 and positive cash flow adjustments such as a KRW2,000,000,000 decrease in inventories and a KRW1,8000,000,000 decrease in accounts receivables. The company's working capital balance as of Dec. 31, 2007, was KRW5,000,000,000 compared with KRW12,200,000,000 as of Dec. 31, 2006. The decrease of KRW7,200,000,000 in the company's working capital balance was primarily due to a KRW11,600,000,000 decrease in cash and cash equivalent and a decrease in inventories and accounts receivables, caused by a delay in the launch schedule for its new products. For investing activities, the company used cash of about KRW5,730,000,000 in 2007 compared with KRW3,139,000,000 in 2006. Cash outflow in 2007 was mainly due to a cash outflow of KRW5,055,000,000 used for increase of restricted deposit and KRW2,850,000,000 used for purchase of property and equipment. Also, the company received proceeds of KRW1,400,000,000 from disposal of memberships in 2007. For financing activities, the company used KRW1,638,000,000 in 2007, compared with KRW2,918,000,000 in 2006. Cash used in financing activities for both years were mainly due to the net repayment of borrowings, which amounted to KRW1,829,000,000 in 2007 and KRW3,118,000,000 in 2006. The company's highly customized new third generation PO4010 CIF image sensors based on PlusPixel2(TM) technology is expected to be featured in the mobile camera phones of Samsung Electro-Mechanics Co., Ltd., and Pantech Co, Ltd. In December 2007, the company started shipment of its PO4010 CIF image sensors to Samsung Techwin Co, Ltd., which will assemble and supply completed modules incorporating these image sensors for use in upcoming mobile camera phones of SEMC. Separately, the company started shipment of its third generation image sensors to KTF Technologies, Inc., through MCNEX Co., Ltd., as well as to certain other module companies. Although there are no firm purchase commitments, sales of the company's PO4010 CIF image sensors are projected to steadily increase in 2008; monthly sales during the four-month period ending April 2008 doubled each month with total sales for the period of nearly US$1,100 thousand. Accordingly, management expects to record around US$19 million in sales for fiscal year 2008. Outside of Korea, the company started to introduce its new third generation image sensors to the overseas markets. Specifically, in an effort to improve business operations in China, the company closed its office in Shanghai and established a new entity in Shenyang, Pixelplus Electronics Shenyang Co., Ltd, to reduce administration costs. The company also launched its other new third generation PO6030 VGA image sensors and PS7030 VGA Bayer image sensors and continues to engage in activities with large companies having significant market share in China and Taiwan in an effort to penetrate these markets. In addition, a prominent game manufacturing company located in China tested and conducted trials of the company's PO5030 VGA image sensor, which the company co-developed with Sharp Corporation of Japan. Based on its tests and trials, this Chinese game manufacturing company selected the company’s co-developed PO5030 to be used in their products. Currently, the company is also developing new products in the security and surveillance market, which includes CCTV, toy cameras, door phone cameras, and other related security and surveillance video cameras. The United States National Television Systems Committee/Phase Alternation by Line image sensor is well suited for these cameras. The company has supplied its NTSC/PAL image sensors to the domestic and Chinese markets since 2004. The company's NTSC/PAL is highly integrated, delivers an advanced level of image quality, and operates well under low light conditions. This product also offers a single chip solution that will enable manufacturing of this product to be simple, efficient, and cost-effective. With NTSC/PAL and new line of third generation products, the Company expects to achieve an increase in revenues starting in the second half of fiscal 2008. Due to a steady increase in demand worldwide, including Korea, China, Europe, and Central and South America, the company continues to focus on penetrating these markets with its new third generation image sensors. Compared to 2006, the company's productivity in terms of the number of chips per wafer increased in 2007. Moreover, the company has considered and implemented various methods to reduce costs by working closely with fabrication foundries. Also, since the beginning of 2007, the company has restructured its subsidiaries and downsized its employees to control expenses and cut costs. Separately, the company is contemplating certain alternatives to improve its cash position including sale of tangible assets, borrowing additional funds from banks and issuance of convertible bonds or bonds with warrants amounting to KRW3,000,000,000 in the third quarter of 2008. Balance Sheet At Dec. 31, 2007, the company's balance sheet showed KRW19,203,000,000 ($20,521,000) in total assets, KRW8,563,000,000 ($9,150,000) in total liabilities, and KRW10,640,000,000 ($11,371,000) in total stockholders' equity. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?2f71 About Pixelplus Co. Pixelplus Co., Ltd., (NasdaqGM: PXPL) -- http://www.pixelplus.com/ -- offers complementary metal oxide semiconductor image sensor devices that are used to capture and convert images into digital signals for display or transmission in mobile camera phones, personal computer cameras, and security and surveillance systems. It also provides engineering, technology, and other services, including CMOS image sensor design, product customization services, manufacturing process consulting, product probe testing, customer support, and technical services. The company, through its subsidiaries, manufactures modules purchased from the company into CMOS image sensors, as well as distributes the company's products in the form of wafers, chips, or modules. It sells its products to designers and manufacturers of mobile phones, camera modules, and other electronic imaging products through direct sales force, as well as through a network of authorized international sales agents and distributors. Pixelplus operates in the Republic of Korea, the People's Republic of China, other Asian countries, and the United States. The company was founded in 2000 and is based in Suwon-si, South Korea. PLASTECH ENGINEERED: JCI Says Unit Acquisition to Hurt Earnings --------------------------------------------------------------- Johnson Controls, Inc. remarked that its acquisition of Plastech Engineered Products, Inc. and its debtor-affiliates' interior and underhood business for $199,500,000 will make a dent to its financial condition, for the interim. JCI unit JCIM LLC was only required to pay $39,500,000 in cash to Plastech as the remaining consideration was in the form of the $160,000,000 of secured debt owed to the first lien term lenders, led by Goldman Sachs Credit Partners, LP. JCI has said that in its joint venture with the term lenders, it will own 70% of the unit, while the term lenders will control the 30%. JCI said that its purchase of Plastech will reduce fiscal fourth- quarter earnings by about 3 cents a share. While it is foreseen to incur losses in the near term, the venture is expected to break even in 2009 and add to earnings by fiscal 2010. JCI said that the 29 plants bought by the venture are projected to sell $1,200,000,000 in component parts, half of those revenues going to JCI. Assets sold to JCIM include the Debtors' 51% equity interest in TrimQuest, LLC. In its fiscal third second quarter ended March 31, 2008, JCI recorded net income of $289,000,000 on $7,593,000,000 of sales, compared to $228,000,000 of net income on $6,841,000,000 of revenues in the past year. Diluted earnings per share was $0.48 in three months ended March 31, 2008, compared to $0.38 last year. In its latest 10-Q filed with the Securities and Exchange Commission, JCI noted that future adverse developments in the automotive industry, which account a significant portion of JCI's sales, could impact is liquidity position and its financial solvency. "Through this new joint venture we are better able to leverage our scale and operational excellence to improve quality and profitability. It also creates a strong and reliable supplier for our customers who have been very supportive of our plans," Jeff Williams, Group Vice President and General Manager, North America for the Automotive Experience business of Johnson Controls, said in a press release. "Johnson Controls has consistently expressed its commitment to growth in the automotive interiors business and we believe today's transaction will help us achieve that goal." Employees Wait for JCI Plan Employees at the Kendallville facility, one of the sites Plastech sold to JCI, are awaiting a decision by JCI whether it will continue or halt operations at the facility, Kendallville Mayor Suzanne Handshoe said in a report by Journalgazette.net. "It is a stressful time for Kendallville employees," she said. None of the 200 plant employees, however, has been laid off since Plastech filed for bankruptcy in February, the mayor told the news source, but said JCI is currently reviewing its options with respect to each of the plants acquired from Plastech. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. Joel D. Applebaum, Esq., at Clark Hill PLC, represents the Official Committee of Unsecured Creditors. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PLASTECH ENGINEERED: Court Approves Intercreditor Funding Deal -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan approved the settlement agreements between Plastech Engineered Products Inc. and its debtor-affiliates, and: -- the Steering Committee of First Lien Term Loan Lenders and the Official Committee of Unsecured Creditors; and -- certain First Lien Term Lenders and certain Second Lien Term Lenders. The Debtors believe that the compromises are fair and equitable and in the best interests of the Debtors, their estates, creditors and other parties. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, related the Committee Term Agreement states that: (a) the First Lien Term Lenders will promptly make a lump sum contribution of $14,000,000 in cash from proceeds of the sale of the Debtors' Interiors Business to a liquidation agent, trust or similar entity authorized to hold the funds for the sole benefit of the general, non- priority unsecured creditors of the estates; (b) the First Lien Term Lenders will make available to the Debtors' estates (i) up to $17,000,000 to cover 50% of the expenses associated with a plan of liquidation and the wind down of the Debtors' estates after the closing of the sales and (ii) up to $8,500,000 to cover 50% of the allowed claims under Section 503(b) of the Bankruptcy Code; and (c) the Term Lenders will waive any right to receive (i) any part of the First Lien Term Lender Contribution and (ii) any proceeds of avoidance actions, in each case, whether on account of any secured, super-priority, administrative priority or other priority, and/or unsecured deficiency claim. A copy of the Term Lenders' Term Sheet is available for free at: http://researcharchives.com/t/s?2ef1 In addition, certain Term Lenders representing a majority of First Lien Term Lenders and certain Term Lenders representing a majority of Second Lien Term Lenders entered into the Intercreditor Settlement in furtherance of the sales of the Debtors' main businesses. According to Mr. Galardi, the Intercreditor Settlement represents a compromise of potential disputes under the Intercreditor Agreement, to which the Debtors are a party. The Term Lenders that are parties to the Intercreditor Settlement also covenant to support the Sales, the Committee Settlement and the settlement with the Brown Family. The Intercreditor Settlement provides for an allocation of proceeds from sales or other disposition of other Fixed Collateral. The Debtors have been informed that a copy of the Intercreditor Settlement has been posted on the Intralinks site maintained by the agent for the First Lien Term Lenders. A full-text copy of the Intercreditor Settlement Term Sheet is available for free at: http://researcharchives.com/t/s?2ef2 Mr. Galardi said the approval of the Settlements will result in substantial contributions to the Debtors' estates for the benefit of all the major constituencies in the case. Specifically: 1. the Committee Settlement provides a direct benefit to the Debtors' estates and their creditors by establishing a source of funds for the Debtors' general, non-priority unsecured creditors, in addition to establishing a source of funds through which to pay allowed claims under Bankruptcy Code section 503(b)(9); and 2. the Intercreditor Settlement, in turn, provides substantial benefits to the Debtors' estates through the agreement to subordinate claims and to support the carve outs from the term lenders' collateral. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. Joel D. Applebaum, Esq., at Clark Hill PLC, represents the Official Committee of Unsecured Creditors. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PLASTECH ENGINEERED: Says $365MM in Term Loans Have Secured Status ------------------------------------------------------------------ Plastech Engineered Products Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to approve their settlement agreement with certain DIP lenders that resolves $365 million in secured claims. On Feb. 12, 2007, the Debtors entered into loan facilities with lenders and Goldman Sachs Credit Partners, L.P.: -- $200,000,000 asset-based revolving credit facility with Goldman as administrative agent, predecessor to Bank of America, N.A.; -- a $265,000,000 first lien term loan facility, with Goldman as admin. agent and collateral agent, which loan was fully drawn as of the bankruptcy filing; and -- a $100,000,000 second lien term loan, with the Bank of New York, as admin. agent and collateral agent, which loan was fully drawn as of the date of bankruptcy. Upon filing for bankruptcy, the $87,000,000 of DIP financing funded by the Debtors' major customers, including Chrysler LLC, provided for an acquisition of the Debtors' debt to lenders under the prepetition revolving loan facility. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Debtors sought and obtained emergency approval of a settlement agreement entered into with the First Lien Term Lenders and the Second Lien Term Lenders. Pursuant to the Settlement Agreement, the Debtors agreed to (i) grant secured status to the Term Lenders' claims and allow the claims in full, and (ii) release the Term Lenders from any claims and causes of action. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, relates the Debtors and their advisors, Jones Day Limited Partnership, conducted an analysis of the liens of the Term Lenders and have determined that those liens are valid and properly perfected. Mr. Galardi adds the Debtors intend to cooperate fully with the Official Committee of Unsecured Creditors' investigation of the Liens. Mr. Galardi avers that the release of claims against the Term Lenders causes no harm to the Debtors or their estate. The Debtors assert the value of the consideration provided by the Term Lenders under the Committee Settlement and the WindDown Settlement outweighs any value that could be realized from any claims or causes of action against them. Mr. Galardi adds that absent the court approval of the Settlement Agreement, the Debtors may be unable to consummate the the $199,500,000 sale of their interiors and underhood business, and the $25,000,000 sale of their exteriors business, as the proposed considerations by the winning bidders included credit bids by Goldman Sachs. The Settlement Agreement specifically provides for these terms: (a) The Debtors confirm that the Term Lenders' secured claims for (x) $265,000,000 in principal amount under the First Lien Term Loan Credit Agreement, and (y) $100,000,000 in principal amount under the Second Lien Term Loan Credit Agreement, are allowed and are fully secured claims against the Debtors to the extent of any "credit bids" by either or both Collateral Agents on behalf of their respective Term Lenders and Agents for the Debtors' Interiors Business and Exteriors Business; (b) In exchange for the consideration provided by the Term Lenders pursuant to the Wind-Down Settlement and the Committee Settlement, the Debtors agree the Prepetition Debt may not be subject to offset, counterclaim, recoupment, avoidance, recharacterization or equitable subordination by or on behalf of the Debtors and their respective estates; (c) The Debtors waive and release all claims against all of the Term Lenders Parties in connection with the Term Loan Facilities, in exchange for the Term Lender Consideration, other than claims, counterclaims, defenses, set-offs or causes of action against the Agents as a result of any claims the Agent may assert against the Debtors, their estates or their directors and officers, other than the Brown Group; (d) The respective liens and security interests of the Term Lender Parties in the Debtors' and their estates' assets are legal, valid, binding, enforceable, perfected and non- avoidable Liens; (e) The Debtors waive all claims of rights to surcharge under Section 506(c) of the Bankruptcy Code or otherwise against the First Lien Second Lien Lenders; and (f) The Term Lenders waive and release all claims, other than the Prepetition Debt, against all of the Debtors and their directors, officers and employees in their capacities as directors, officers and employees of the Debtors, in each case including all claims under contract or tort or pursuant to any section of the Bankruptcy Code; in each case in order to facilitate, among other things, the sales of the Interiors Business and Exteriors Business and the credit bid(s) of the Collateral Agents under Section 363(k) of the Bankruptcy Code. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. Joel D. Applebaum, Esq., at Clark Hill PLC, represents the Official Committee of Unsecured Creditors. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PROGRESSIVE MOLDED: U.S. Trustee Appoints 5-Member Creditors Panel ------------------------------------------------------------------ Roberta A. DeAngelis, the Acting U.S. Trustee for Region 3, appointed five members to the Official Committee of Unsecured Creditors in the Progressive Molded Products Inc. and its debtor- affiliates Chapter 11 case. The Creditors Committee consists of: (1) Wells Fargo Bank, N.A. Attn: James R. Lewis 45 Broadway, 14th Floor New York, New York 10006 Tel: (212) 515-5258 Fax: (866) 524-4681; (2) Wilmington Trust Company, N.A. Attn: James J. McGinley, Managing Director 520 Madison Avenue, 33rd Floor New York, New York 10022 Tel: (212) 415-0522 Fax: (212) 415-0513; (3) I-Tooling Co., Ltd. Attn: Liangmin Zhang, 14# Yongfa Industrial Park Jinxiu Road, Heyi Village Shajing, Baoan, Shenzhen Guangdong 518104 Tel: 86-755-26951878 Fax: 86-755-26544726; (4) Dura Automotive Systems, Inc. Attn: Martha Moyer 2791 Research Drive Rochester Hills, Michigan 48309 Tel: (248) 299-7226 Fax: (248) 299-7518; and (5) Sabic Innovative Plastics Attn: Val Venable 9930 Kincey, Huntersville North Carolina 28078 Tel: (704) 992-5075 Fax: (886) 585-2386 About Progressive Molded Ontario, Canada-based Progressive Molded Products Inc. -- designs and manufactures component parts for General Motors Corp., Ford Motor Company and Chrysler, LLC. Its interior automotive subsystems are used for the "Big Three" automakers' top-selling platforms, including lightweight trucks, SUVs, mini-vans, cross- over vehicles, and passenger cars. The company and three of its affiliates filed for creditor protection under Chapter 11 of the U.S. Bankruptcy Code before the United States Bankruptcy Court for the District of Delaware on June 20, 2008 (Lead Case No. 08-11253). Kelley A. Cornish, Esq. and Brian S. Hermann, Esq. at Paul, Weiss, Rifkind Wharton & Garrison LLP and Pauline K. Morgan, Esq., Joseph M. Barry, Esq., and Donald J. Bowman, Jr., Esq. at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Progressive Molded Products entities also commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on June 20. Sheryl E. Seigel, Esq. and Alex A. Ilchenko, Esq. at Lang Michener LLP are their solicitors. Alex F. Morrison at Ernst & Young, Inc., has been appointed CCAA monitor and Kevin J. Zych, Esq. at Bennett Jones LLP serves as his solicitor. PROGRESSIVE MOLDED: Withdraws Bid to Employ Miller Buckfire ----------------------------------------------------------- Progressive Molded Products Inc. and its debtor affiliates have withdrawn their application to employ Miller Buckfire & Co., LLC, as investment banker without prejudice. As previously reported in the Troubled Company Reporter, July 7, the Debtors sought the U.S. Bankruptcy Court for the District of Delaware's permission to retain Miller Buckfire as their financial advisor and investment banker in connection with their ongoing restructuring efforts. As financial advisor and investment banker, Miller Buckfire was supposed to: (1) provide advise and assistance to the Debtors in developing and seeking approval of a financial restructuring; (2) provide advice and assistance to the Debtors in structuring any new securities that may be issued under a plan; (3) assist the Debtors or participate in negotiations with entities or groups affected by a plan; (4) provide advice and assistance to the Debtors in connection with any potential sale, identifying and contacting potential acquirors; (5) assist the Debtors or participate in negotiations with potential acquirors; and (6) participate in hearings before the Bankruptcy Court with respect to the matters upon which Miller Buckfire has provides advice. The Debtors had proposed to pay Miller Buckfire: (a) a $150,000 monthly advisory fee, (b) a $4,500,000 restructuring transaction fee, contingent upon the consummation of a restructuring by the Debtors, (c) a sale transaction fee equal to 1% of the aggregate consideration received by the Debtors pursuant to a sale, and (d) a financing fee equal to: -- 1% of the gross proceeds of any indebtedness issued that is secured by a first lien; -- 3% of the gross proceeds of any indebtedness issued that (x) is secured by a second or more junior lien, (y) is unsecured or (z) is subordinated; and -- 5% of the gross proceeds of any equity or equity-linked securities or obligations issued. About Progressive Molded Ontario, Canada-based Progressive Molded Products Inc. -- designs and manufactures component parts for General Motors Corp., Ford Motor Company and Chrysler, LLC. Its interior automotive subsystems are used for the "Big Three" automakers' top-selling platforms, including lightweight trucks, SUVs, mini-vans, cross- over vehicles, and passenger cars. The company and three of its affiliates filed for creditor protection under Chapter 11 of the U.S. Bankruptcy Code before the United States Bankruptcy Court for the District of Delaware on June 20, 2008 (Lead Case No. 08-11253). Kelley A. Cornish, Esq. and Brian S. Hermann, Esq. at Paul, Weiss, Rifkind Wharton & Garrison LLP and Pauline K. Morgan, Esq., Joseph M. Barry, Esq., and Donald J. Bowman, Jr., Esq. at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Progressive Molded Products entities also commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on June 20. Sheryl E. Seigel, Esq. and Alex A. Ilchenko, Esq. at Lang Michener LLP are their solicitors. Alex F. Morrison at Ernst & Young, Inc., has been appointed CCAA monitor and Kevin J. Zych, Esq. at Bennett Jones LLP serves as his solicitor. PROGRESSIVE MOLDED: Has Until July 31 to Use Cash Collateral ------------------------------------------------------------ Progressive Molded and its debtor-affiliates have reached an agreement with their prepetition lenders regarding (a) the continued consensual use of cash collateral until July 31, 2008, and (b) limited financing from General Motors Corp. and Ford Motor Company to fund the orderly winding-down of their business. The parties have agreed to a revise budget. The cash collateral budget is available for download at no charge at: http://bankrupt.com/misc/CashCollateral_Budget.pdf Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates the continued use of cash collateral, in addition to the customer funding, will enable the Debtors to maximize the value of their estates by effectuating an orderly winding-down of their operations and transitioning of production to other suppliers. The Debtors believe that these arrangements will provide sufficient liquidity to pay their employees and meet other payroll obligations, and will also suffice to pay the necessary costs of administering their estates during the customers' wind-down period. The U.S. Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice (Commercial List) have granted approval to the cash collateral use extension. U.S. Bankruptcy Court Judge Kevin J. Carey, in an interim order, has authorized the Debtors to use cash collateral until June 30, solely up to the amounts and for the purposes identified in the budget submitted to the Court. Judge Carey was slated to hold a final hearing on the cash collateral motion July 14, 2008. About Progressive Molded Ontario, Canada-based Progressive Molded Products Inc. -- designs and manufactures component parts for General Motors Corp., Ford Motor Company and Chrysler, LLC. Its interior automotive subsystems are used for the "Big Three" automakers' top-selling platforms, including lightweight trucks, SUVs, mini-vans, cross- over vehicles, and passenger cars. The company and three of its affiliates filed for creditor protection under Chapter 11 of the U.S. Bankruptcy Code before the United States Bankruptcy Court for the District of Delaware on June 20, 2008 (Lead Case No. 08-11253). Kelley A. Cornish, Esq. and Brian S. Hermann, Esq. at Paul, Weiss, Rifkind Wharton & Garrison LLP and Pauline K. Morgan, Esq., Joseph M. Barry, Esq., and Donald J. Bowman, Jr., Esq. at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Progressive Molded Products entities also commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on June 20. Sheryl E. Seigel, Esq. and Alex A. Ilchenko, Esq. at Lang Michener LLP are their solicitors. Alex F. Morrison at Ernst & Young, Inc., has been appointed CCAA monitor and Kevin J. Zych, Esq. at Bennett Jones LLP serves as his solicitor. PROGRESSIVE MOLDED: CCCA Court Allows Chrysler to Take Tooling -------------------------------------------------------------- Chrysler LLC obtained approval from the Honourable Mr. Justice Campbell of the Ontario Superior Court of Justice (Commercial List) for the modification of the stay to allow it to seize possession of its tooling from Progressive Moulded Products, Ltd. and its debtor-affiliates. Judge Campbell directed the Applicants to promptly release and deliver all tools, equipment, material, drawings, and manufacturing aids to Chrysler. Chrysler will pay the Applicants $2,000,000 for the costs incurred in the removal of the tooling. Judge Campbell directed Chrysler to fund into escrow with the Ernst & Young, Inc., by wire transfer, CDN$10,482,941 in respect to the claims of the Applicants for the amounts outstanding and and US$659,913 in respect to certain amounts payable with respect to certain ED&D claims. About Progressive Molded Ontario, Canada-based Progressive Molded Products Inc. -- designs and manufactures component parts for General Motors Corp., Ford Motor Company and Chrysler, LLC. Its interior automotive subsystems are used for the "Big Three" automakers' top-selling platforms, including lightweight trucks, SUVs, mini-vans, cross- over vehicles, and passenger cars. The company and three of its affiliates filed for creditor protection under Chapter 11 of the U.S. Bankruptcy Code before the United States Bankruptcy Court for the District of Delaware on June 20, 2008 (Lead Case No. 08-11253). Kelley A. Cornish, Esq. and Brian S. Hermann, Esq. at Paul, Weiss, Rifkind Wharton & Garrison LLP and Pauline K. Morgan, Esq., Joseph M. Barry, Esq., and Donald J. Bowman, Jr., Esq. at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Progressive Molded Products entities also commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on June 20. Sheryl E. Seigel, Esq. and Alex A. Ilchenko, Esq. at Lang Michener LLP are their solicitors. Alex F. Morrison at Ernst & Young, Inc., has been appointed CCAA monitor and Kevin J. Zych, Esq. at Bennett Jones LLP serves as his solicitor. RAFFLES PLACE: Moody's Withdraws Ratings, Junks 2 Classes of Notes ------------------------------------------------------------------ Moody's Investors Service withdrew and replaced the ratings on these notes issued by Raffles Place Funding, Ltd.: Class Description: The Maximum CP Principal Component Amount of CP Notes -- Prior short-term Rating: P-1 -- Current short-term Rating: WR -- Prior long-term Rating: NR -- Current long-term Rating: Aa1, on review for possible downgrade According to Moody's, the Prime-1 ratings assigned to the CP Notes were based on the existence of a put agreement provided by a Prime-1 rated third party. The notes have been re-issued with the put provider as both the investor and the put counterparty. Where the put provider is also the holder of the notes, it is Moody's view that the put agreement ceases to be relevant. Accordingly, Moody's has withdrawn its short-term ratings on these notes. In place of the short-term ratings issued on these notes, Moody's has issued long-term ratings of Aa1, on review for possible downgrade. In addition, Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by Raffles Place Funding, Ltd. Class Description: $35,000,000 Class A-1a Floating Rate Notes Due 2040 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade Class Description: $25,000,000 Class A-1b Floating Rate Notes Due 2040 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $38,000,000 Class A-2 Floating Rate Notes Due 2040 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: Ca Class Description: $5,000,000 Class B Deferrable Floating Rate Notes Due 2040 -- Prior Rating: Ca -- Current Rating: C Class Description: $15,000,000 Class C Deferrable Floating Rate Subordinate Notes Due 2040 -- Prior Rating: Ca -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio.f RED SHIELD: Section 341(a) Meeting Scheduled for August 5 --------------------------------------------------------- The U.S. Trustee for Region 1 will convene a meeting of creditors of Red Shield Environmental, LLC and RSE Pulp & Chemical, LLC, on Aug. 5, 2008, at 11:00 a.m., at the U.S. Courthouse in room 334, at 202 Harlow Street in Bangor, Maine. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Old Town, Maine, Red Shield Environmental, LLC -- http://www.redshieldenv.com/-- provides renewable energy for on- site consumption. The company and its affiliates, RSE Pulp & Chemical, LLC, filed for Chapter 11 protection on June 27, 2008 (Bankr. D. Maine Lead Case No.08-10634 and 08-10634). Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represents the Debtors in their restructuring efforts. When the Debtors filed for protection against their creditors, they listed assets between $50 million and $100 million, and debts between $1 million and $10 million. SACRED HEART: Moody's Cuts Debt Rating to B3, Outlook Negative -------------------------------------------------------------- Moody's Investors Service downgraded Sacred Heart Health System's debt rating to B3 from B1 and removed the rating from Watchlist for downgrade, where it was placed on May 23, 2008. The outlook is negative. The rating applies to $41.8 million of rated debt outstanding, including approximately $10.3 million of variable rate debt backed by an LOC provided by Wachovia Bank (Aa2). The LOC backed debt is rated under a "two party pay" analysis that incorporates both SHHS' and Wachovia's rating. The LOC-backed bonds are rated Aa2/VMIG1. The rating downgrade is primarily attributable to continued decline in volumes, increased physician turnover, and weakened financial performance culminating in the expectation that SHHS will violate the debt service coverage rate covenant in FY 2008, raising concerns regarding the renewal risk associated with the letter of credit. LEGAL SECURITY: The Series 1998 and 2005 bonds are secured by a gross revenue pledge of the Obligated Group, which is comprised of Sacred Heart Health System and Sacred Heart Hospital of Allentown, the flagship facility and a member of SHHS. Additionally, the Hospital's obligations will be secured by a mortgage of Sacred Heart Hospital's main building in Allentown. The bonds are secured by a fully funded debt service reserve fund equal to maximum annual debt services of the Series 2005 bonds. INTEREST RATE DERIVATIVES: None STRENGTHS -- SHHS has distinguished itself as a provider of non acute care services, including nursery, transitional care, adult behavioral medicine, and adult psychiatry volumes -- No significant debt plans for several years -- Recent clinical affiliation with Lehigh Valley Health and Hospital Network in cardiac services provides for greater stability in the physician base CHALLENGES -- Sacred Heart Hospital, which comprises 88% of system revenues and has historically been the engine of the system, has recorded a $5.1 mm operating loss through 10 months of FY 2008, a material decline from a $1.2 mm operating income through the first ten months of FY 2007. It is highly likely that SHHS will violate the 1.2 times debt service coverage rate covenant in FY 2008. -- Covenant violations anticipated in FY 2008 increases renewal risk associated with securing an extension of the LOC on the Series 1998 B bonds ($10.3 million outstanding), provided by Wachovia. SHHS will have to secure a renewal when the letter expires on Feb. 28, 2009 -- Total admissions have declined six out of the last seven years. SHHS has experienced a 7% decline in acute care admissions through the first ten months of FY 2008, raising concerns about the long term viability of the facility following the recent closure of open heart services in January, 2008 and an increase in physician turnover. RECENT DEVELOPMENTS/RESULTS The rating downgrade to B3 from B1 reflects continued decline in admissions and increased physician turnover that has translated into a material decline in operating performance that Moody's believes will result in a covenant violation for the second time in the last three years. Located in Allentown, Pennsylvania, SHHS has historically drawn 50% of its inpatient admissions from the City of Allentown, which Moody's views as demographically unfavorable. SHHS has experienced market share erosion in recent years, with inpatient admissions declining six out of the last seven years and falling 11% over the last five years. SHHS holds a 7% market share in the competitive Lehigh Valley market, down in recent years from 9%, and has lost share to Baa1- rated St. Luke's Hospital and Health Network (SLHHN, 350 beds, 32% market share) and A1-rated Lehigh Valley Health Network (LVHN, 617 beds, 44% market share). Notably, SLHHN opened a newly renovated, 100 bed facility in Allentown in 2003, and plans to add 26 beds by 2009 and double bed capacity by 2011. Moreover, SHHS has begun to observe an increase in physician turnover amongst a historically loyal physician staff, with an increase in the number of physicians departing for a physician owned 24-bed hospital located seven miles away. While the weak financial performance in FY 2006 was due primarily to a temporary closure of the cardiac catheterization lab stemming from technological difficulty with cardiac equipment, Moody's believes that the continued and accelerating decline in admissions and physician retention challenges marks a fundamental shift. Moody's notes that the CEO has recently resigned and a current search for an interim CEO is underway. After recording a $9.7 million operating loss in FY 2006, system performance rebounded to a $6.3 million operating loss in FY 2007. However, FY 2008 financial performance has weakened materially, with revenues at the hospital, which comprises 88% of system revenues, declining 4.8% through the first ten months of FY 2008 due to declining admissions and the closure of open heart services in January, 2008. As a result, the hospital has recorded a $5.1 mm operating loss (-5.4% margin) through the first 10 months of FY 2008, down from a $1.3 million operating income (1.3% margin) through 10 months of FY 2007. Operating cash flow at the hospital has declined to $1.8 million (1.9% margin), down from $8.1 million (8.2% margin). While Moody's believes the recent clinical affiliations with LVHN will help to stabilize the physician base, Moody's believes that the long term viability of the facility remains uncertain. Management has engaged a nationally recognized consulting firm and will be issuing its report and turnaround plan in the coming months. Due to the challenging operating environment and recent investment losses, unrestricted cash and investments have declined to $17.6 million through ten months of FY 2008, down from $21.5 million at FYE 2007. Although Moody's believes that SHHS has enough cash to make several debt service payments and is not in immediate danger of missing a payment, the acceleration of financial losses, the decline in liquidity, the anticipated violation of the 1.2 times debt service coverage covenant, and the current debt structure heightens credit concerns. With the LOC expiring in Feb. 28, 2009, Moody's believes that renewal risk remains; failure to secure an extension of the LOC could result in a dramatic decline in liquidity to dangerously low levels. Outlook The negative outlook is attributable to continued and accelerating declines in operating performance and liquidity indicators. Moody's will continue to monitor system performance, turnaround initiatives and the system's ability to extend the letter of credit What could change the rating--UP Given the current challenges SHHS faces with financial performance, liquidity, and its debt structure, a rating upgrade is unlikely in the short-term; over the longer-term, a rating upgrade would be considered if the system can achieve and sustain substantial operating improvement and demonstrate long-term viability. What could change the rating--DOWN These are the inability of the company to renew the letter of credit, continued volume losses, further decline in financial performance or weakening of liquidity measures. KEY INDICATORS Assumptions & Adjustments: Based on financial statements for Sacred Heart Healthcare System -- First number reflects audit year ended June 30, 2006 -- Second number reflects audit year ended June 30, 2007 -- Investment returns normalized at 6% unless otherwise noted -- Inpatient admissions: 8,547; 8,413 -- Total operating revenues: $127,487; $133,592 -- Moody's-adjusted net revenue available for debt service: $1,701; $4,518 -- Total debt outstanding: $47,892; $45,881 -- Maximum annual debt service (MADS): $5,360; $5,360 -- MADS Coverage with reported investment income: 0.25 times; 1.42 -- Moody's-adjusted MADS Coverage with normalized investment income: 0.32 times; 0.84 times -- Debt-to-cash flow: -35.28; 27.1 -- Days cash on hand: 63 days; 58 days -- Cash-to-debt: 47.3%; 46.9% -- Operating margin: -7.6%; -4.7% -- Operating cash flow margin: -0.3%; 1.9% RATED DEBT (debt outstanding as of June 30, 2007) Sacred Heart HealthCare System -- Series 1998 A, $7.5 million outstanding; fixed rate; rated B3 -- Series 1998 B, $10.3 million outstanding; variable rate; rated Aa2/VMIG1, B3 underlying -- Series 2005, $23.9 million outstanding; fixed rate; rated B3 SALTON INC: Terminates Sale Agreement with Spectrum Brands ---------------------------------------------------------- Spectrum Brands, Inc. and Salton Inc. and Salton's wholly owned subsidiary, Applica Pet Products LLC, have mutually agreed to terminate the definitive agreement for the sale of the company's global pet supply business. As disclosed in the Troubled Company Reporter on May 22, 2008, Spectrum Brands signed a definitive agreement with Salton Inc. and its subsidiary, Applica Pet Products LLC, for the sale of its Global Pet Business for $692.5 million in cash and an aggregate principal amount of the company's subordinated debt securities equal to $222.5 million less an amount equal to accrued and unpaid interest on such subordinated debt securities since the dates of the last interest payments, which, depending on when the closing occurs, could be an amount of up to $6.5 million. On July 1, 2008, the TCR related that Spectrum Brands had not been successful in its attempt to secure the consent of its senior lenders necessary to complete the sale of its pet supply business. "Despite our desire and diligent efforts to complete this transaction upon the negotiated terms, we have been unable to obtain the consent of our senior lenders necessary to close on a basis that would be in the best interests of our shareholders and the Company," Kent Hussey, CEO of Spectrum Brands, said. "We will therefore continue to operate the global pet supply business and work to capture the strong market potential we see there. Additionally, our Board and management team remain committed to finding and executing appropriate alternatives for reducing the indebtedness of the company." "With $72.7 million of cash on our Balance Sheet at quarter-end, June 29, 2008, and both sales and adjusted EBITDA growth expected for the full year fiscal 2008 versus full year fiscal 2007 results, we continue to believe that we have sufficient liquidity to run our businesses, Mr. Hussey continued. "In addition, based on current forecasts, the company projects its fiscal 2009 free cash flow from operations, which would be available to reduce outstanding indebtedness, to range between $40 to $50 million. This projection includes an estimate of Cash Flows from Operating Activities for fiscal 2009 of $75 to $85 million less capital expenditures of $35 million. Termination of the definitive agreement is conditioned upon the company paying to Salton Inc. $3 million as a reimbursement of expenses within 2 business days. Additionally, the standstill provisions of the confidentiality and standstill agreement entered into on Feb. 26, 2008 with Harbinger Capital Partners Master Fund I, Ltd. were terminated. About Spectrum Brands Headquartered in Atlanta, Georgia, Spectrum Brands Inc. (NYSE: SPC) -- http://www.spectrumbrands.com/-- is a supplier of consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products and portable lighting. About Salton Headquartered in Lake Forest, Illinois, Salton Inc. (NYSE:SFP) -- http://www.saltoninc.com/-- designs, markets and distributes branded, high-quality small appliances, home decor and personal care products. Its product mix includes a range of small kitchen and home appliances, electronics for the home, time products, lighting products, picture frames and personal care and wellness products. * * * As disclosed in the Troubled Company Reporter on July 7, 2008, Standard & Poor's Ratings Service assigned its 'B+' corporate credit rating to Mirmar, Florida-based small appliance manufacturer Salton Inc. This rating incorporates Salton's proposed acquisition of the United Pet Group, the global pet business of Spectrum Brands Inc. (CCC+/Watch Pos/--), along with UPG's subsidiary Applica Pet Products LLC, which will become wholly owned by Salton. Pro forma for the transaction, S&P estimate total debt at Salton to be about $573 million. The outlook on Salton is stable. As reported in the Troubled Company Reporter on June 26, 2008, Moody's Investors Service assigned a B1 first time corporate family rating and B2 probability of default rating to Applica Pet Products LLC. Applica Pet is the wholly owned subsidiary of Salton, Inc. At the same time, Moody's assigned a B1 rating to the company's $325 million senior secured bank credit facilities. The ratings outlook is stable. SEALY CORP: June 1 Balance Sheet Upside-Down by $105.3 Million -------------------------------------------------------------- Sealy Corporation reported last week results for its second fiscal quarter ended June 1, 2008. At June 1, 2008, the company's consolidated balance sheet showed $1.0 billion in total assets, $1.1 billion in total liabilities, and $8.1 million in common stock and options subject to redemption, resulting in a $105.3 million total stockholders' deficit. Net income for the second quarter was $12.0 million versus $16.1 million for the comparable period last year. Included in net income for the quarter ended June 1, 2008, were the effects of a change in the company's estimates for warrantable and other product return reserves, which provided an $8.2 million benefit to income from operations. Net sales for the fiscal quarter ended June 1, 2008, decreased 6.6% to $375.4 million compared to $401.8 million in the comparable period in the prior year. Total domestic net sales were $258.7 million compared to $303.2 million in the second quarter of 2007. Wholesale domestic net sales, which exclude third party sales from Sealy's component plants, were $252.9 million, as a 0.6% increase in Average Unit Selling Price (AUSP) was offset by a 16.1% decline in unit volume. Wholesale domestic unit volumes were impacted by softer demand, as well as lost distribution from a few of the company's accounts, such as Levitz and Wickes, who were forced to shut down operations beginning in the fourth quarter of 2007 owing to the difficult economic environment. Sales of the company's new Posturepedic product line and specialty products outperformed other products in the U.S. portfolio. International net sales grew 18.3% from the second quarter of 2007, or 6.1% excluding the effects of currency fluctuation, to $116.7 million. The increase in international net sales represents 7.6% growth in unit volume, partially offset by a decrease in AUSP, primarily due to increased sales of lower-priced OEM products in Europe. Second quarter gross profit was $148.4 million, or 39.5% of net sales, versus $172.5 million, or 42.9% of net sales for the comparable period a year earlier. This decrease in gross margin was primarily due to an increase in U.S. material costs, including an unprecedented increase in inflation on core inputs such as steel and foam as well as an incremental $3.0 million in costs required for the company's products to be in compliance with the July 2007 federal flame retardant regulations. In addition, domestic gross profit margins were impacted by costs associated with the new Posturepedic line rollout, including deleveraging of overhead expense on lower volumes, as well as an increase in sales discounts on floor samples. During the quarter, gross profit benefited from a change in accounting estimates related to the company's warrantable and other product return reserves which resulted in an increase to sales of approximately $3.7 million and a reduction of cost of sales of approximately $4.5 million. Additionally, gross margin was positively impacted by price increases implemented in December 2007 and continuing improvements in the company's manufacturing efficiencies, particularly factory labor and scrap management. During the second quarter of 2007, the company recorded a one-time rebate of $2.5 million on lumber tariffs received from Canadian suppliers and incurred $800,000 more in expenses related to the start-up of the Mountaintop, Pennsylvania latex production plant. Internationally, gross margins declined primarily due to a shift in product mix in the company's European business. Selling, general, and administrative (SG&A) expenses were $116.4 million, a decrease of $19.2 million versus the comparable period a year earlier. As a percentage of net sales, SG&A expenses declined to 31.0% in the second quarter of 2008 from 33.7% in the second quarter of 2007. This improvement in SG&A expenses in both absolute dollars and as a percent of sales is due to the company's implementation of cost reduction initiatives, which generated a $14.9 million reduction in fixed expenses, in addition to a $7.8 million decline in volume-driven variable expenses. Actions taken to reduce costs in the second quarter of 2008 included a decrease in promotional expenses related to a more efficient launch of the new Sealy Posturepedic innerspring line, a decline in salary and fringe benefit-related costs, and reduced spending on professional services and other discretionary items. These were partially offset by $2.7 million of severance costs as well as an increase in delivery costs due primarily to fuel cost inflation, higher foreign currency valuations relative to the U.S. dollar and increased international unit volume. During the second quarter of 2007, the company recorded a $2.6 million gain on the sale of its Orlando facility and incurred $1.7 million of costs associated with an organizational realignment. Larry Rogers, Sealy's interim chief executive officer and president of North America, stated, "The U.S. mattress retail environment deteriorated during the second quarter of 2008, impacting our ability to drive domestic sales volumes. Even though our sales performance was pressured and inflation has impacted our profitability, we were pleased to see the initiatives we implemented to accelerate our cost reductions begin to take hold, leading to the second consecutive quarter of SG&A leverage for the company. "We also completed the majority of the rollout of our new Posturepedic innerspring line by the end of June. Initial results are encouraging as retail customers that have rolled out the new Posturepedic line have started to see an improvement in their Posturepedic innerspring sales compared to the old line. Our specialty business was impacted by the industry-wide softening in retail demand for higher price point mattresses, although we believe we continued to gain share in the specialty market segment in the second quarter." "Looking ahead, we expect our second-half performance to be challenging as industry trends weakened further in June and retail traffic remains soft. We also expect to incur significantly higher material costs due to rapidly growing inflation on core materials, along with additional promotional expenses associated with new product launches. "While we cannot control these external forces, we will continue to focus on managing those areas of our business that we can control, including executing on our strategic initiatives, completing the rollout of our Posturepedic innerspring line, implementing price increases to protect our profitability, aggressively managing our costs and working capital, and expanding distribution of our latex products including the new Posturepedic PurEmbrace line to retain our leadership position in the worldwide bedding industry. We are confident that when the market turns, the steps we are taking will lead to improved long-term growth prospects for Sealy and our shareholders," Mr. Rogers concluded. Net sales for the six months ended June 1, 2008, decreased 5.8% to $767.3 million from $814.4 million for the comparable period a year earlier. Gross profit was $301.6 million, or 39.3% of net sales, versus $349.8 million, or 43.0% of net sales, for the comparable period a year earlier. Net income was $28.2 million versus net income of $40.8 million for the comparable period a year earlier. As of June 1, 2008, the company's debt net of cash was $743.1 million, compared to net debt of $802.7 million as of May 27, 2007. At June 1, 2008, the company had approximately $64.3 million available under its $125 million revolving credit facility after taking into account letters of credit issued totaling $15.9 million. The company's net weighted average borrowing cost was 7.6% and 7.5% for the six months ended June 1, 2008, and May 27, 2007, respectively. Full-text copies of the company's consolidated financial statements for the quarter ended June 1, 2008, are available for free at http://researcharchives.com/t/s?2f79 About Sealy Corp. Headquartered in Trinity, N.C., Sealy Corp. (NYSE: ZZ) -- http://www.sealy.com/-- manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), Stearns & Foster(R), and Bassett(R) brands. Sealy operates 26 plants in North America, and has the largest market share and highest consumer awareness of any bedding brand on the continent. In the United States, Sealy sells its products to 2,900 customers with more than 7,000 retail outlets. Sealy is also a leading supplier to the hospitality industry. SOLAR COSMETIC: Bid Procedures Approved; To Pay Employees $300,000 ------------------------------------------------------------------ The Hon. Laurel Isicoff of the U.S. Bankruptcy Court for the Southern District of Florida approved proposed bidding procedures for the sale of substantially all of the assets of Solar Cosmetic Labs Inc. and its debtor-affiliate, subject to competitive bidding and auction. A sale hearing is set for July 25, 2008, at 9:30 a.m., at 51 S.W. First Avenue in Room 1409 in Miami. Objections, if any, are due July 22, 2008. All bids along with a non-refundable $200,000 initial deposit must be delivered by July 21, 2008, at 4:00 p.m. An auction is set for July 24, 2008, at 10:00 a.m. at the Offices of Shutts & Bowen LLP at 200 East Broward Boulevard, Suite 2100 in Ft. Lauderdale, Florida. In a separate filing, the Debtors ask the Court for permission to pay employees up to $300,000 in bonuses in the aggregate in connection with the sale. As reported in the Troubled Company Reporter on July 7, 2008, the Debtor and The Village Suncare LLC entered into an asset purchase agreement in connection with the sale of substantially all of the Debtors' intangible assets and certain inventory. The agreement provides for these material terms: a. The purchaser will pay the seller $4,000,000 in cash; b. The buyer will pay the seller (i) for all first quality finished goods inventory in the Solar 2009 business plan existing as of Aug. 22, 2008, and customer returns at 85% of the seller's costs for each item at the sole cost and expense of the buyer and (ii) for all items of inventory as the buyer determines in its sole discretion; The buyer will pay the seller for the inventory no later than the later of (i) Oct. 31, 2008, for all items identified as raw materials an no later than Dec. 15, 2008, for all items identified as packaging and finished goods and customer returns, or (ii) 60 days following receipt by the buyer of the items; c. The purchaser will also pay up to $2,000,000 based upon 8% of total worldwide net sales by the buyer or any affiliate relating to assets and business in excess of $16,800,000 for each of the calendar years ended 2009 through 2012. d. The assets to be purchased include customer list, inventory, open sales orders, intellectual property rights and data and records; e. The assets will be conveyed to the purchaser free and clear of all liens; and f. A closing on or before July 16, 2008, unless extended at the request of the parties. The agreement provides for a $120,000 break-up fee payable to the purchaser in the event the Debtors consummate the sale to another party. A full-text copy of the Asset Purchase Agreement is available for free at http://ResearchArchives.com/t/s?2f1f About Solar Cosmetic Miami Gardens, Florida-based Solar Cosmetic Labs Inc. -- http://www.solarcosmetics.com/-- and -- http://www.bodyandearth.com/-- manufacture, markets and sells perfumes, cosmetics, and other toilet preparations. Solar Packaging Corp. is the holder of certain operating licenses and is a guarantor of certain of Solar Cosmetic's obligations. The company and Solar Packaging Corp. filed chapter 11 petition on May 6, 2008 (Bankr. S.D. Fla. Case Nos. 08-15793 and 08-15796). Judge Laurel Isicoff presides the case. Peter E. Shapiro, Esq., at Shutts & Bowen, LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Jeffrey P. Bast, Esq. The Debtors' schedule showed total assets of $13,925,425 and total liabilities of $50,928,780. SPECTRUM BRANDS: Terminates Sale Agreement with Salton Inc. ----------------------------------------------------------- Spectrum Brands, Inc. and Salton Inc. and Salton's wholly owned subsidiary, Applica Pet Products LLC, have mutually agreed to terminate the definitive agreement for the sale of the company's global pet supply business. As disclosed in the Troubled Company Reporter on May 22, 2008, Spectrum Brands signed a definitive agreement with Salton Inc. and its subsidiary, Applica Pet Products LLC, for the sale of its Global Pet Business for $692.5 million in cash and an aggregate principal amount of the company's subordinated debt securities equal to $222.5 million less an amount equal to accrued and unpaid interest on such subordinated debt securities since the dates of the last interest payments, which, depending on when the closing occurs, could be an amount of up to $6.5 million. On July 1, 2008, the TCR related that Spectrum Brands had not been successful in its attempt to secure the consent of its senior lenders necessary to complete the sale of its pet supply business. "Despite our desire and diligent efforts to complete this transaction upon the negotiated terms, we have been unable to obtain the consent of our senior lenders necessary to close on a basis that would be in the best interests of our shareholders and the Company," Kent Hussey, CEO of Spectrum Brands, said. "We will therefore continue to operate the global pet supply business and work to capture the strong market potential we see there. Additionally, our Board and management team remain committed to finding and executing appropriate alternatives for reducing the indebtedness of the company." "With $72.7 million of cash on our Balance Sheet at quarter-end, June 29, 2008, and both sales and adjusted EBITDA growth expected for the full year fiscal 2008 versus full year fiscal 2007 results, we continue to believe that we have sufficient liquidity to run our businesses, Mr. Hussey continued. "In addition, based on current forecasts, the company projects its fiscal 2009 free cash flow from operations, which would be available to reduce outstanding indebtedness, to range between $40 to $50 million. This projection includes an estimate of Cash Flows from Operating Activities for fiscal 2009 of $75 to $85 million less capital expenditures of $35 million. Termination of the definitive agreement is conditioned upon the company paying to Salton Inc. $3 million as a reimbursement of expenses within 2 business days. Additionally, the standstill provisions of the confidentiality and standstill agreement entered into on Feb. 26, 2008 with Harbinger Capital Partners Master Fund I, Ltd. were terminated. About Salton Headquartered in Lake Forest, Illinois, Salton Inc. (NYSE:SFP) -- http://www.saltoninc.com/-- designs, markets and distributes branded, high-quality small appliances, home decor and personal care products. Its product mix includes a range of small kitchen and home appliances, electronics for the home, time products, lighting products, picture frames and personal care and wellness products. About Spectrum Brands Headquartered in Atlanta, Georgia, Spectrum Brands Inc. (NYSE: SPC) -- http://www.spectrumbrands.com/-- is a supplier of consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products and portable lighting. * * * As reported in the Troubled company Reporter on April 16, 2008, Standard & Poor's Ratings Services revised its outlook on Atlanta, Georgia-based Spectrum Brands Inc. to developing from negative. At the same time, Standard & Poor's affirmed all of its ratings on Spectrum Brands, including the company's 'CCC+' corporate credit rating. STEVEN DALBY: Case Summary & Four Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Steve Allen Dalby 105 Tahoe Drive Zephyr Cove, NV 89448 Bankruptcy Case No.: 08-51152 Chapter 11 Petition Date: July 11, 2008 Court: District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Stephen R. Harris, Esq. (steve@renolaw.biz) Belding Harris & Petroni Ltd. 417 West Plumb Lane Reno, NV 89509 Tel: (775) 786-7600 Fax: (775) 786-7764 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 Debtor's list of its four largest unsecured creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Goods & Services $6,842 P.O. Box 98751 Las Vegas, NV 89193 Washington Mutual Credit Line $4,751 P.O. Box 78148 Phoenix, AZ 85062-8148 Wells Fargo Splash Goods & Services $3,624 P.O. Box 94498 Las Vegas, NV 89193-4498 Capital One Goods & Services $2,276 P.O. Box 7086 Charlotte, NC 28272-9903 STRIKER OIL: Restates 2007 Net Loss and Accumulated Deficit Data ---------------------------------------------------------------- Striker Oil and Gas, Inc., formerly known as Unicorp, Inc., filed an amended annual report for the year ended Dec. 31, 2007, with the U.S. Securities and Exchange Commission on June 11, 2008. With this filing, the company's consolidated financial statements have been restated to: -- update the presentation of stock-based compensation to comply with the provisions of Staff Accounting Bulletin Topic 14:F; -- change the affected financial statements to: a. show the change in derivative liability originally accounted for as a gain on the settlement of debt as part of the change in the fair value of derivatives; and b. remove the gain on settlement of embedded derivatives from additional paid in capital with a corresponding reduction in the change in the fair value of derivatives on the income statement; -- reflect the expense of the fair value of non-employee stock options; -- provide additional disclosure relating to the company's calculations of compensation expense related to stock options; and -- include the conclusions of management regarding the effectiveness of its disclosure controls and procedures. The restatements for the year ended Dec. 31, 2007, increased the net loss by $523,405 to $1,946,768 from $1,423,363 and increased the accumulated deficit by $375,426 to $15,100,209 from $14,576,804. The company posted a restated net loss of $1,946,768 on total oil and gas revenues of $3,075,924 for the year ended Dec. 31, 2007, as compared with a net loss of $3,310,279 on total oil and gas revenues of $924,498 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $12,426,760 in total assets, $6,070,118 in total liabilities, and $6,356,642 in total stockholders' equity. The company's consolidated balance sheet at Dec. 31, 2007, showed strained liquidity with $2,575,336 in total current assets available to pay $5,099,366 in total current liabilities. A full-text copy of the company's restated 2007 annual report is available for free at http://ResearchArchives.com/t/s?2f70 Going Concern Doubt Malone & Bailey PC in Houston raised substantial doubt about Striker Oil and Gas, Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations and net working capital deficit. About Striker Oil & Gas Based in Houston, Striker Oil & Gas, Inc. (OTC BB: SOIS.OB) -- http://www.unicorpinc.net/-- explores, acquires, develops, produces, and sells natural gas, crude oil, and natural gas liquids primarily from conventional reservoirs in the United States. It operates onshore along the Gulf Coast of Texas and Louisiana, as well as east Texas and Mississippi. STRUCTURED ASSET: S&P Slashes Cl. B-2 Certs. Rating to CCC from A ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of mortgage pass-through certificates issued by Structured Asset Securities Corp. Trust 2005-SC1. Concurrently, S&P placed its 'AAA' ratings on three additional classes on CreditWatch with negative implications. The downgrades reflect a reduction in credit enhancement as a result of monthly realized losses, as well as the high amount of severe delinquencies in the pool. Since the July 2007 remittance date, the transaction has experienced an average of approximately $491,866 in losses each month. As of the June 25, 2008, remittance date, there was approximately $19,469,999 in severe delinquencies, 11% of the current pool balance. The transaction has experienced a loss severity of approximately 49% over the past year. S&P will resolve the three CreditWatch negative placements upon further analysis of the projected defaults compared with the projected payoff dates of the affected classes. Subordination provides credit support for this transaction. An unrated class provides $1,726,441 in subordination, which has been deteriorating monthly. The collateral for this transaction consists primarily of a pool of seasoned, conventional, adjustable-and fixed-rate, fully amortizing, first- and second-lien seasoned residential and multifamily subprime loans. Ratings Lowered Structured Asset Securities Corp. Trust 2005-SC1 Mortgage pass-through certificates Rating ------ Class To From ----- -- ---- B-1 B- AA B-2 CCC A B-3 CC BBB B-4 CC BB Ratings Placed on Creditwatch Negative Structured Asset Securities Corp. Trust 2005-SC1 Mortgage pass-through certificates Rating ------ Class To From ----- -- ---- 1-A1, 1-A1X, 1-A2 AAA/Watch Neg AAA STEVE & BARRY'S: Asks Permission to Use Cash Collateral ------------------------------------------------------- Steve & Barry's, LLC, and its debtor-affiliates seek permission from the United States Bankruptcy Court for the Southern District of New York to use their cash collateral in accordance with a budget from July 9, 2008, through the week ending August 1, 2008. A full-text copy of the budget is available for free at http://bankrupt.com/misc/s&b_budget.pdf Prior to seeking protection under Chapter 11, the Debtors have sought, but were unable to obtain, postpetition financing on acceptable terms, says Lori R. Fife, Esq., at Weil, Gotshal & Manges LLP, in New York, proposed counsel for the Debtors. The Debtors are entering Chapter 11 with no available cash and no debtor-in-possession financing. Without any cash, the Debtors cannot replenish their inventory and, therefore, the value of their business is declining on a daily basis, says Ms. Fife. Currently, Ms. Fife says, the Debtors lack sufficient unencumbered funds with which to operate their businesses on an ongoing basis. The Debtors' postpetition access to cash is dependent on their agreement with their prepetition secured lenders, General Electric Capital Corporation, with respect to the use of cash collateral. As a condition for the Debtors' use of cash collateral, the Debtors are required to effect a sale of their assets by no later than July 31, 2008, Ms. Fife explains. In this vein, Ms. Fife continues, the Debtors will seek the Court's approval of bidding procedures pursuant to which the Debtors will conduct an auction for all or substantially all of their assets. The Debtors hope to effectuate a sale of their business as a going concern, as they believe that their business has significant value. According to Ms. Fife, the Cash Collateral is encumbered by (i) a first priority lien granted to GECC, as agent, for a consortium of lenders who extended up to $197,000,000 of revolving loans to the Debtors, and (ii) a second priority lien granted to PrensB, LLC, as agent, for a group of lenders who extended up to $30,000,000 of term loans to the Debtors. As of July 9, 2008, the outstanding amounts under the prepetition credit agreements total approximately $165,000,000. The Debtors believe that the value of the assets encumbered by the Prepetition Lenders' liens exceeds the aggregate amount of the obligations owed under the Prepetition Credit Agreements, says Ms. Fife. Mr. Fife relates that the Prepetition Lenders have consented to the use of the Cash Collateral provided that the Debtors do not incur events of defaults, which include (i) maintaining cash receipts in an amount of at least 90% of the amount provided for in the Budget; (ii) maintaining Inventory levels at the amount provided for in the Budget, subject to a $10,000,000 variance; or (iii) performing these Sale Trigger Events: July 15, 2008 -- Acceptance of a stalking horse bid that is reasonably acceptable to Prepetition Agents July 16, 2008 -- Court approval of a sales procedures order with respect to the Sale Transaction July 29, 2008 -- Completion of an auction July 31, 2008 -- Court approval of the Sale Transaction -- Execution of all agency documents or purchase agreements Sale Transaction -- Consummation of a Sale or commencement of a Full Chain Liquidation The Debtors will have continued use of the Cash Collateral until the earliest of (i) the day the Prepetition Lenders declare an event of default, (ii) August 1, 2008, or (ii) the Closing Date of a Sale or a Full Chain Liquidation. As adequate protection, the Prepetition Revolver Agent will: (a) receive payments of (i) interest and fees due under the Revolver Documents, (ii) fees and expenses of it incurred, and (iii) all of the Debtors' cash on hand as of close of business on Friday of each week in excess of $2,500,000, on Monday of each week; (b) be granted additional and replacement continuing valid and perfected security interests and liens on any and all Collateral, which will be junior to the Prepetition Revolver Liens; (c) be granted an allowed superpriority administrative claim in each Debtor's Chapter 11 case; and (d) have access to an account into which the Debtors will deposit $250,000 as security for any reimbursement or indemnification. The Prepetition Term Loan Agent, as adequate protection, will: (a) receive payments of fees and expenses of legal and other professionals it retained; (b) be granted additional and replacement continuing valid and perfected security interests and liens on any and all Collateral, which will be junior to the Prepetition Revolver Liens and the Revolver Adequate Protection Liens; (c) an allowed superpriority administrative claim in each of Debtor's Chapter 11 case, which will be junior to the Revolver Adequate Protection Superpriority Claim; and (d) have access to an indemnity account containing a $250,000 from the Debtors. The Cash Collateral is subject to Carve-Out, which refers to (i) statutory fees payable to the U.S. Trustee, (ii) the allowed wind-down expenses and expenses of a Chapter 7 trustee appointed in any of the Chapter 11 cases in an aggregate amount not to exceed $50,000, and (iii) $2,500,000 less the allowed and paid professional fees and disbursements incurred by the Debtors and any Court-appointed statutory committee. The Adequate Protection Liens and Superpriority Claims are junior to the Carve Out. Headquartered in Port Washington, New York, Steve and Barry LLC -- http://www.steveandbarrys.com/-- is a national casual apparel retailer that offers high quality merchandise at low prices for men, women and children. Founded in 1985, the company operates 276 anchor and junior anchor shopping center and mall-based locations throughout the U.S. At STEVE & BARRY'S (R) stores, shoppers will find brands they can't find anywhere else, including the BITTEN(TM) collection, the first-ever apparel line created by actress and global fashion icon Sarah Jessica Parker, and the STARBURY(TM) collection of athletic and lifestyle apparel and sneakers created with NBA (R) star Stephon Marbury. Steve & Barry's, LLC, and 63 affiliates filed separate voluntary petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, it listed $693,492,000 in total assets and $638,086,000 in total debts. TCW GLOBAL: Fitch Cuts $27MM Class D Notes Rating to B+ from BB --------------------------------------------------------------- Fitch Ratings has downgraded four and affirmed four tranches of TCW Global Project Fund II as: -- $330 million revolving senior notes affirmed at 'AAA'; -- $70 million class A-1 floating-rate notes affirmed at 'AAA'; -- $64 million class A-2-A floating-rate notes affirmed at 'AA'; -- $6 million class A-2-B fixed-rate notes affirmed at 'AA'; -- $61 million class B-1 floating-rate notes downgraded to 'BBB' from 'A'; -- $14 million class B-2 fixed-rate notes downgraded to 'BBB' from 'A'; -- $33 million class C floating-rate notes downgraded to 'BB' from 'BBB'; -- $27 million class D floating-rate notes downgraded to 'B+' from 'BB'. These actions reflect Fitch's view on the credit risk of the rated notes following changes in Fitch's CDO rating methodologies. In particular, Fitch's view on the fund's exposure to relatively high obligor concentration levels has changed. GPF II is a securitization of project finance loans, the majority of which are senior secured obligations. At present time, there are 13 assets in the portfolio. Approximately 42% of the fund's assets are domiciled in the United States and 58% stem from emerging market countries. TCW Asset Management Company is the portfolio manager. The majority of investments are in the energy, oil and gas, and infrastructure project finance sectors. THOMAS JEFFERSON SCHOOL: S&P Trims 2005AB Bonds Rating to BB+ ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Thomas Jefferson School of Law, Calif.'s series 2005AB bonds to 'BB+' from 'BBB-'. The outlook is stable. In addition, Standard & Poor's assigned its 'BB+' rating to the California Statewide Communities Development Authority's tax-exempt revenue bonds, series 2008A and taxable revenue bonds series 2008B, issued for the school. The outlook is stable. "The rating reflects the quadrupling of debt with this issuance, as well as the school's slim liquidity of cash and investments of only 12% of post-issuance debt," said Standard & Poor's credit analyst Carlotta Mills. There will be a significant change in the school's overall institutional risk profile over the next several years as an extensive capital project begins, expected enrollment increases occur, and the school's financial operations grow into a significantly higher debt service and depreciation obligation. Proceeds will be used to repay the school's outstanding series 2007 taxable notes, pay capitalized interest, fund a debt service reserve, and provide new money to construct a new academic facility. Located in San Diego, Thomas Jefferson School of Law is a standalone school that has been in existence since 1969. TOWER PARK: Case Summary & 18 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Tower Park Properties, LLC 1652 Tower Grove Dr. Los Angeles, CA 90210 Bankruptcy Case No.: 08-20298 Chapter 11 Petition Date: July 11, 2008 Court: Central District Of California (Los Angeles) Judge: Barry Russell Debtor's Counsel: Craig M. Rankin, Esq. Email: cmr@lnbrb.com Levene, Neale, Bender, Rankin & Brill, L.L.P. 10250 Constellation Blvd. Ste. 1700 Los Angeles, CA 90067 http://www.lnbrb.com/ Estimated Assets: $100,000,000 to $500,000,000 Estimated Debts: $50,000,000 to $100,000,000 Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cathcart, Collins & Kneafsey, legal services $498,270 LLP Attn: Joseph Collins 444 S. Flower St., 42nd Fl. Los Angeles, CA 90071 Silver & Freedman, APLC legal services $250,000 Attn: Barry Weisz 2029 Century Park E., 19th Fl. Los Angeles, CA 90067-3005 Camarillo Engineering, Inc. engineering $243,838 P.O. Box 758 Somis, CA 93066 Pacific Crest Consultants development $215,150 consultant Oakridge Landscape, Inc. landscape services $64,238 William Rose & Associates consultant $47,940 Athans Enterprises, Inc. $27,725 GeoSoils Consultants, Inc. consultant $23,849 The Sullivan Partnership consultant $21,090 Levy & Rowe, LLP accounting services $15,000 Mark Hughes Family Trust loans & advances $12,062 KNA Engineering, Inc. engineering $11,228 Major Appraisals appraisal services $6,000 ACS Security Industries, Inc. security $3,157 William Scotsman $1,683 Sierra Land Technologies consultant $432 LA DWP utilities $151 BJ Palmer & Associates, Inc. consultant $147 UNI-MARTS LLC: Judge Walrath Approves Sale Bidding Procedures ------------------------------------------------------------- The Hon. Mary J. Walrath of the United States Bankruptcy Court for the District of Delaware approved proposed bidding procedures for the sale of substantially all of the assets of Uni-Marts, LLC, and its debtor-affiliates, subject to higher and better offers. A hearing is set for Aug. 18, 2008, at 10:30 a.m., prevailing Eastern time, to consider final approval of the Debtor's sale request. As reported in the Troubled Company Reporter on June 17, 2008, the Debtors entered into an asset purchase agreement with Atlantis Petroleum LLC, the designated "stalking-horse" bidder. Atlantis Petroleum will pay $17.7 million in the aggregate for the Debtors' convenience stores located in Pennsylvania, New York, and Ohio, pursuant to the agreement, which entitles Atlantis Petroleum to a credit equal to $400,000 for the purpose of reimbursing it for risks related to any potential violation of environmental laws and remediation costs at the Debtors' assets. As part of the transaction, Atlantis petroleum will: i) issue a promissory note to the Debtors in an amount equal to 50% of the purchase price for non-fuel inventory, which will be payable in three equal installments; and ii) have the right to remove one or more leases for non- residential real property that currently are scheduled to be assigned to Atlantis Petroleum. Initial overbid along with a refundable deposit of at least $500,000 are required to be delivered to the counsel of the Debtors or Atlantis Petroleum by Aug. 11, 2008. An auction will take place on Aug. 14, 2008, at 10:00 a.m. During the auction, subsequent overbid will be in $100,000 increments. In the event the Debtors consummate the sale to another party, Atlantis Petroleum will be paid $750,000 break-up in cash. Investment firm Matrix Capital Markets Group LLC represents the Debtors in marketing their assets. The closing of the sale is expected to occur by Sept. 15, 2008. A full-text copy of the Asset Purchase Agreement is available for free at http://ResearchArchives.com/t/s?2e01 About Uni-Marts Headquartered in State College, Pennsylvania, Uni-Marts LLC sells consumer goods. The company and six of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. D. Del. Lead Case No.08-11037). Michael Gregory Wilson, Esq., at Hunton & Williams LLP represents the Debtors in their restructuring efforts. The Debtor selected Epiq Bankruptcy Solutions LLC as their claims, noticing and balloting agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection, they listed assets and debts between $50 million and $100 million. US DATAWORKS: Posts $11.67 Mil. Net Loss for FY Ended March 31 -------------------------------------------------------------- US Dataworks, Inc., reported a net loss of $11,674,891 on net sales of $5,717,593 for the year ended March 31, 2008, compared with a net loss of $3,306,009 on net sales of $7,069,575 for the same period ended March 31, 2007. Revenues decreased by 19.1% in fiscal 2008, as compared with fiscal 2007. Transactional revenues and maintenance revenues increased 23.6% and 104.3%, respectively, in fiscal 2008, as compared with fiscal 2007. The increase in transactional revenues was primarily attributable to new customers added during the year and a steady growth of transactions processed by existing customers. Maintenance revenues increased in large part due to the annual maintenance fees generated under the company's license agreement with American Express Company. The company began to collect revenue related to this maintenance fee in May 2007 and received around $400,000 in fiscal 2008 under this agreement. These increases were offset by a decrease in licensing revenues by 59.1% in fiscal 2008, as compared with fiscal 2007 and by a decrease in professional services revenues of 18.1% in fiscal 2008 as compared with 2007. This decrease in license revenues was primarily due to a reduction in first time sales of licenses for third-party party software add-ons as compared with fiscal 2007. While these contracts were renewed in fiscal 2008, the renewal fees were only a percent of the original license fee. The decrease in professional service revenues was the result of a reduction in required services as the company completed projects for two customers in the prior year as well as a decrease in professional services as the company completed certain portions of work associated with its consulting agreement with American Express, which the company signed in June 2005, and related purchase orders. Total operating expenses increased by $9,263,331, or 129.1%, from $7,175,338 in fiscal 2007 to $16,438,669 in fiscal 2008. The increase in operating expenses was principally attributable to the goodwill impairment expense of $10,112,931 that the company booked in fiscal year 2008 due to the drop in the trading price of its common stock, which was partially offset by a decrease in legal expenses of $324,000, decrease in the use outside consultants and services of $350,000 and in a decrease of $249,000 in bad debt expense related to the Hyundai transaction that was taken in the prior year. With the company's recent reduction in force, which took place after March 31, 2008, the company anticipates that its operating expenses will continue to decrease going forward while the company continues to maintain and expand its customer base. The company has incurred significant losses and negative cash flows from operations for the last two fiscal years. The company has obtained its required cash resources through the sale of debt and equity securities. The company may not operate profitably in the future and may be required to continue the sale of debt and equity securities to finance its operations. Cash and cash equivalents increased by $763,117 from $140,276 at March 31, 2007 to $903,393 at March 31, 2008. Cash used for operating activities was $886,264 in fiscal 2007 compared with $2,741,323 in fiscal 2008. Cash used for investing activities for fiscal 2007 and 2008 consisted of the purchase of property and equipment and repayments to affiliates totaling $149,098 and $117,850, respectively. Financing activities provided cash of $3,622,290 in fiscal 2008, and included $4,000,000 in proceeds from the issuance of senior secured convertible notes, $305,000 in proceeds from stock sales, partially offset by $256,066 repayment of convertible promissory notes, $56,640 in repayment of notes payable and $370,004 in deferred financing cost associated with the senior secured convertible notes. Financing activities used cash of $114,800 in fiscal 2007, and included $500,000 in proceeds from a related party loan, offset by $614,800 repayment of convertible promissory notes. As a result of the company's recent capital raising transactions, its increased level of transactional revenues achieved in fiscal 2008, and the expected increase in revenues to be received from recently received and contemplated contracts, management believes the company currently has adequate capital resources to fund its anticipated cash needs through March 31, 2009, and beyond. However, an adverse business or legal development could require the company to raise additional financing sooner than anticipated. Management recognizes that the company may be required to raise such additional capital, at times and in amounts, which are uncertain, especially under the current capital market conditions. If the company is unable to acquire additional capital or is required to raise it on terms that are less satisfactory than the company desires, it may have a material adverse effect on the company's financial condition. In the event the company raises additional equity, these financings may result in dilution to existing shareholders. At March 31, 2008, the company's balance sheet showed $6,762,078 in total assets, $4,071,078 in total liabilities, and $2,691,000 in total stockholders' equity. A full-text copy of the company's 2008 annual report is available for free at http://ResearchArchives.com/t/s?2f6f About US Dataworks US Dataworks, Inc. (AMEX: UDW) -- http://www.usdataworks.com/-- develops, markets, and supports payment processing software for the financial services industry. Its customer base includes many of the largest financial institutions as well as credit card companies, government institutions, and high-volume merchants in the United States. It has strategic partnerships with Computer Sciences Corporation, Chase Paymentech Services, eGistics, and Accuity. The company was founded in 1994 and is based in Sugar Land, Texas. WASHINGTON MUTUAL: Says Well Capitalized After Shares Decline ------------------------------------------------------------- In response to the uncertainty in the marketplace, Washington Mutual Inc. said it significantly exceeds all regulatory well- capitalized minimums for depository institutions and has excess liquidity of more than $40 billion, The Wall Street Journal reports. According to WSJ, the disclosure came after National City Corp. issued a similar statement after being forced to assert it is still credit-worthy. The Journal indicates that banks are unwilling to publicly assert their creditworthiness, because it only shows the pressures facing struggling banks, especially in the midst of IndyMac Bancorp Inc., which was seized on July 11 by federal regulators. Earlier Monday, an analyst warned that WaMu won't turn a profit until the second half of 2009, helping send shares down 35% to $3.23, WSJ adds. In after-hours trading, shares of the bank holding company rebounded 8.4% to $3.50, WSJ states. The shares, according to WSJ, hit a 17-year low of $3.03 during the regular session. WSJ relates that since IndyMac's collapse and the Bush administration's decision to step in and save government-chartered mortgage backers Freddie Mac and Fannie Mae from a similar fate, markets got a heightened case of the jitters about banks. According to WSJ, Lehman Brothers in a research note said that while WaMu's losses could total $26 billion, the bank must have enough money to avoid having to raise more capital. The firm took in $7 billion in April, WSJ states. WSJ points out that analysts' mean estimate, as surveyed by Thomson Reuters, is for a second-quarter loss of 93 cents. About Washington Mutual Inc. Washington Mutual Inc. (NYSE: WM) -- http://www.wamu.com/-- is a consumer and small business banking company with operations in United States markets. The Company is a savings and loan holding company. It owns two banking subsidiaries, Washington Mutual Bank and Washington Mutual Bank fsb, as well as numerous non-bank subsidiaries. The company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. * * * As reported in the Troubled Company Reporter on March 17, 2008, Moody's Investors Service downgraded the senior unsecured rating of Washington Mutual, Inc. to Baa3 from Baa2. Washington Mutual Bank's long term deposit rating was downgraded to Baa2 from Baa1. Washington Mutual Bank's bank financial strength rating at C- and short term rating at Prime-2 were affirmed. Moody's placed a negative outlook on all Washington Mutual entities. WATER TOWER: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: The Water Tower, Inc. 95 West Summit Road Tuxedo, NY 10989 Bankruptcy Case No.: 08-36493 Chapter 11 Petition Date: July 11, 2008 Court: Southern District of New York (Poughkeepsie) Judge: Cecelia G. Morris Debtor's Counsel: Jonathan S. Pasternak, Esq. (jsp@rattetlaw.com) Julie A. Cvek, Esq. (jcvek@rattetlaw.com) Rattet, Pasternak & Gordon Oliver, LLP 550 Mamaroneck Avenue, Suite 510 Harrison, NY 10528 Tel: (914) 381-7400 Fax: (914) 381-7406 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 The Debtor did not submit a list of its 20 largest unsecured creditors. WEIGHT WATCHERS: Full 17.5% VAT Imposed on UK Unit's Meeting Fees ----------------------------------------------------------------- Weight Watchers International, Inc. received an adverse ruling from the U.K. Court of Appeal with respect to the imposition of value added tax, or VAT, on Weight Watchers' meetings fees collected since April 1, 2005, by the company's subsidiary, Weight Watchers (UK) Limited. The company previously disclosed that this adverse ruling, if received, would result in a total estimated amount owed of approximately $50 million at Dec. 29, 2007, covering the period April 1, 2005, through the end of fiscal 2007. At the time of that disclosure, the company recorded a charge of approximately $23 million in accordance with SFAS 5, Accounting for Contingencies. Therefore, as a result of this ruling, in the second quarter of fiscal 2008, the company will record a charge in the amount not previously reserved for U.K. VAT for this prior period, currently estimated to be approximately $28 million inclusive of interest accruing on this amount through the second quarter of fiscal 2008. This incremental charge equates to a one- time reduction to 2008 earnings per fully diluted share of approximately $0.22. On a going forward basis, the company will record VAT charges associated with U.K. meeting fees as earned, consistent with this ruling. The additional 2008 annualized charges for U.K. VAT resulting from this ruling are estimated to be approximately $9 million. These additional charges are expected to have the impact of reducing fiscal 2008 earnings per fully diluted share by approximately $0.07, of which approximately $5 million, or $0.04 per fully diluted share, is expected to be charged in the second quarter of 2008 reflecting the additional VAT for both the first and second quarters of fiscal 2008. In summary, as a result of this ruling, the company expects to incur a charge in the second quarter of 2008 for the period April 1, 2005, through the end of the second quarter of 2008 of approximately $33 million, or $0.26 per fully diluted share. Both the prior period and the 2008 additional reduction to 2008 earnings per fully diluted share were not included in the company's full year 2008 earnings guidance range. For over a decade prior to April 1, 2005, Her Majesty's Revenue and Customs, or HMRC, had determined that Weight Watchers meetings fees in the U.K. were only partially subject to 17.5% standard rated VAT. In March 2005, HMRC reversed its prior determinations and ruled that meetings fees in the U.K. should be fully subject to 17.5% VAT. It was the company's view that HMRC's prior determinations should remain in effect and the company successfully appealed HMRC's new determination to the U.K. VAT and Duties Tribunal, which ruled on March 8, 2007, that meetings fees should only be partially subject to 17.5% VAT. HMRC appealed this ruling to the U.K. High Court of Justice, which on Jan. 21, 2008 upheld the VAT Tribunal's decision in part and reversed its decision in part. Both the company and HMRC appealed the High Court's decision to the U.K. Court of Appeal. On June 25, 2008, the U.K. Court of Appeal issued its ruling that Weight Watchers meetings fees in the U.K. were fully subject to 17.5% VAT, reversing the U.K. VAT Tribunal's 2007 decision in favor of the company. The company is reviewing its options, including whether to seek permission to appeal the Court of Appeal's ruling to the U.K. House of Lords. Based in New York, Weight Watchers International Inc. (NYSE: WTW) -- http://www.weightwatchersinternational.com/-- is the world's leading provider of weight management services, operating globally through a network of company-owned and franchise operations. WeightWatchers.com provides innovative, subscription weight management products over the Internet and is the leading Internet- based weight management provider in the world. In addition, Weight Watchers offers a wide range of products, publications and programs for those interested in weight loss and weight control. Weight Watchers International Inc.'s consolidated balance sheet at March 29, 2008, showed $1.1 billion in total assets and $2.0 billion in total liabilities, resulting in an approximately $893.9 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 25, 2008, Standard & Poor's Ratings Services revised its outlook on Weight Watchers International Inc. to stable from negative. At the same time, Standard & Poor's affirmed its ratings on the company, including its 'BB' corporate credit rating. WESTERN NONWOVENS: Files for Bankruptcy; To Sell Assets to SBC -------------------------------------------------------------- Western Nonwovens Inc. and seven of its affiliates filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code before the U.S. Bankruptcy Court for the District of Delaware, various sources report. Western Nonwovens was hurt by rising commodity costs and declining sales associated with deterioration of the housing market, Bloomberg quoted Jonathan Nash, chief executive officer of WNI, as saying. Furthermore, Western Nonwovens agreed to sell a substantial portion of its assets to SBC Manufacturing Co. LLC. The sale includes the Western Nonwovens' plants in Orlando, Florida; Sauget, Illinois; and an option to purchase a plant in Carson, California. The purchase agreement is subject to the approval of the Bankruptcy Court. Definitive documents will be filed with the court, along with bidding procedures noting that qualified bidders will be provided an opportunity to make higher and better offers for the purchase. Bid procedures for sale of assets not included in the sale to SBC Manufacturing will also be filed with the court. Western Nonwovens expects the sale to complete within 45 days. At the same time, the Western Nonwovens reached an agreement with its lender to provide debtor-in-possession financing, subject to Bankruptcy Court approval, to fund its business operations while it completes the sale process. The financing will provide the company the necessary funds to continue operations in the normal course of business; keeping all of the company's currently operating plants open on normal schedules, and fulfilling customer orders. "We are pleased to have entered into an agreement for the sale of several of WNI's plants," said Mr. Nash. "We have carefully reviewed our options and believe that a sale will provide the best long-term prospects for the company's customers, suppliers and employees." The transition of control should be concluded by the end of August 2008. According to Bloomberg, the company listed assets of $28.4 million and debts of $106.9 million. The company owes at least $70.6 million in secured debt, the report says. About Western Nonwovens Headquartered in Carson, California, Western Nonwovens, Inc. -- http://www.westernnonwovens.com-- manufactures nonwoven materials and provides services to industries, including mattress, automotive, retail apparel, filtration and furniture manufacturers. * Fitch Says US Housing Downturn Will Likely Persist This Year -------------------------------------------------------------- The U.S. housing downturn will likely persist for the remainder of this year, though the rate of decline should moderate from current lofty levels, according to Fitch Ratings in the latest edition of 'The Chalk Line'. Most of the statistical data reported so far in 2008 are discouraging and the spring selling season was a bust, with year- over-year housing start and new home sales comparisons likely to be negative throughout 2008. 'Fitch projects further slippage in housing metrics for 2009, with poor buyer psychology, easing pricing and excessive inventories likely to mitigate other moderately positive developments', said Managing Director and lead Homebuilding Analyst Robert Curran. First quarter-2008 homebuilders' operating and financial performances (before non-recurring charges) were typically quite weak, a pattern likely to be replicated in 2Q'08 results. Deterioration in credit metrics continued in 1Q'08, particularly for profit-related metrics. Tangible net worth covenants have been and will be a covenant issue for some companies. Builders continue to seek amendments from their bank groups. * Fitch Reviews Ratings on 89 CDOs, Puts $7.9BB CDO on Neg. Watch ----------------------------------------------------------------- With U.S. RMBS bonds continuing to experience credit deterioration that has led to widespread downgrades across the sector, Fitch Ratings recently undertook a review of 89 U.S. structured finance CDO transactions that were not previously placed on Rating Watch due to exposure to what had been better performing vintages of subprime RMBS bonds. Upon completion of the review, Fitch has placed $7.9 billion U.S. SF CDO tranches on Rating Watch Negative. While much emphasis has been placed on the negative credit migration of 2005-2007 subprime residential mortgage backed securitizations, significant negative credit migration has also affected alternative-A RMBS bonds along with 2003-2004 subprime RMBS. The Rating Watch Negative actions affect 159 rated tranches from 49 of the 89 SF CDO transactions examined in the review. Of the 159 tranches placed on Rating Watch Negative, 52 were previously downgraded and 108 tranches maintained their original ratings until being placed on Rating Watch Negative in this action. Fitch's rating action affects 36 tranches currently rated 'AAA' and 101 additional classes that are rated investment grade. The remaining 22 tranches placed on Rating Watch Negative at this time are currently rated below investment grade. In determining which tranches to place on Rating Watch Negative, Fitch looked at the composition of the underlying portfolio to assess potential impairment based on asset type, vintage and original and current rating level. Subprime and Alt-A RMBS assets issued prior to 2005 and all other assets that have been downgraded to the 'B' rating category and lower were assumed to eventually default and generate a total loss to the portfolio. For 2005-2007 subprime and Alt-A RMBS and SF CDOs, expected losses were assigned based on their original rating and vintage. For each portfolio, losses were aggregated and subsequently compared to the capital structure. Tranches that had losses greater than their credit enhancement and tranches with low remaining credit enhancement after projected losses were applied were placed on Rating Watch Negative. Fitch notes that credit deterioration of the underlying RMBS securities may be amplified at the SF CDO-level due to the use of leverage as well as structural features, such as overcollateralization haircuts and OC-based events of default, which may adversely impact certain rated notes and SF CDOs containing these notes. This review marks the third full portfolio review of SF CDOs resulting from deterioration in the RMBS markets. This review included SF CDOs not placed on Rating Watch Negative during the February 2008 portfolio review. The transactions in this review can generally be grouped into three categories. -- The first category consists of 56 SF CDOs backed primarily by RMBS-related assets issued between 2002 and 2006; -- The second category includes 10 transactions issued during the same 2002-2006 period where the portfolios consist primarily of non-RMBS assets, such as commercial mortgage- backed securities and other asset-backed securities; -- The third category is comprised of 24 transactions issued between 1999 and 2001 with significant exposure to manufactured housing and aircraft securitizations remaining in their current portfolios. At issuance, these transactions were highly diversified across multiple structured finance sectors including RMBS, ABS, and CMBS but the higher quality assets have been paying off, leaving the remaining portfolios with a much higher concentration of distressed and defaulted assets often from the MH and aircraft sectors. Many of the transactions in this third category had experienced downgrades previously when aircraft securitizations and MH had initially come under distress. Of the 49 transactions placed on Rating Watch Negative, 39 transactions come from the 56 SF CDOs described in the first category whereby 129 rated tranches totaling $6 billion are directly attributable to the negative credit migration of the aforementioned RMBS bonds. There are 13 classes totaling approximately $.5 billion that are from two transactions in the second category. Approximately $1.4 billion consisting of 18 rated classes from eight early vintage SF CDOs described in the third category have been placed on Rating Watch Negative due to credit deterioration attributable to non-RMBS credit migration as well as the negative selection that occurs when performing assets pay down and distressed and defaulted assets comprise a larger portion of the portfolio. Of the 40 transactions that were reviewed and had no classes placed on Rating Watch Negative, 17 are from the first category, seven are from the second category, and 16 a part of the third category of deals. These transactions were not placed on Rating Watch Negative as Fitch's current portfolio loss projections are offset by sufficient credit enhancement or are have small outstanding principal balances and are expected to pay of in the next two years. Additionally, Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. The resolution of this Rating Watch Negative action will reflect the rating actions taken on the underlying RMBS assets and will incorporate Fitch's most current view on SF CDOs. The characteristics of the exposure of each portfolio as well as the structural features of the specific SF CDO will ultimately determine the magnitude of rating downgrades. * S&P Chips Ratings on 118 Classes from 13 RMBS Transactions ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 118 classes from 13 residential mortgage-backed securities transactions backed by U.S. prime jumbo mortgage loan collateral issued in 2005 and 2006. S&P removed 106 of the lowered ratings from CreditWatch with negative implications, where they were placed on May 1, 2008 (ratings on 2006-vintage classes) and May 9, 2008 (ratings on 2005-vintage classes). In addition, S&P affirmed its ratings on 12 classes and removed them from CreditWatch negative. The downgrades reflect S&P's opinion that projected credit support for the affected classes is insufficient to maintain the previous ratings, given S&P's current projected losses. S&P used the 1999 prime jumbo vintage as its benchmark default curve to forecast the performance of the 2005 and 2006 vintages. The 1999 vintage experienced the most stress of any issuance year over the past 10 years (excluding recent years since 2005) in terms of foreclosures. S&P expect the losses in 2005 and 2006 to significantly exceed those experienced in 1999; however, in its opinion, the timing of the losses, and therefore the shape of the loss curve, is more likely to be similar to that of 1999 than to any subsequent year. S&P calculated individual transaction projections by multiplying the current foreclosure amount by the rate of change that the foreclosure curve forecasted for the upcoming periods. Due to current market conditions, S&P are assuming that it will take approximately 18 months to liquidate loans in foreclosure and approximately eight months to liquidate loans categorized as real estate owned. S&P are assuming a loss severity of 23% for U.S. prime jumbo RMBS transactions. Additionally, S&P assumed that the loans that are currently REO will be liquidated over the next eight months, and then its added the projected loss amounts from the REO liquidations to the projected losses from foreclosures. S&P estimated the lifetime projected losses by adding these projected losses to the actual losses that the transactions have experienced to date. As part of our analysis, S&P considered the characteristics of the underlying mortgage collateral as well as macroeconomic influences. For example, the risk profile of the underlying mortgage pools influences S&P's default projections, while the outlook for housing price appreciation and the health of the housing market influence its loss severity assumptions. The lowered ratings reflect our assessment of credit support under three constant prepayment rate scenarios. The first scenario utilizes the lower of the lifetime or the 12-month CPR. The second utilizes a CPR of 6.00%, which is very slow by historical standards. The third scenario uses a CPR that is double the CPR used in the first scenario. This allows S&P to see how the transactions would be affected in different CPR environments. S&P assumed a constant default rate for each pool. Because the analysis focused on each individual class with varying maturities, prepayment scenarios may cause an individual class or the transaction itself to prepay in full before it incurs the entire loss projection. Slower prepayment assumptions lengthen the average life of the mortgage pool, which increases the likelihood that total projected losses will be realized. To assess the creditworthiness of each class, S&P reviewed the individual delinquency and loss trends of each transaction for changes, if any, in risk characteristics, servicing, and the ability to withstand additional credit deterioration. In order to maintain a rating higher than 'B', a class had to absorb losses in excess of the base case assumption S&P used in its analysis. For example, one prime jumbo class may have to withstand 150% of S&P's projected loss assumption in order to maintain a 'BB' rating, while a different class may have to withstand losses of approximately 200% of its base case loss assumption to maintain a 'BBB' rating. Each class that has an affirmed 'AAA' rating can generally withstand approximately 350% of its projected loss assumptions under its analysis. Subordination provides credit support for the affected transactions. The underlying collateral for these deals consists of fixed- and adjustable-rate U.S. prime jumbo mortgage loans that are secured by primarily by first liens on one- to four-family residential properties. To date, including the classes listed below and actions on both publicly and confidentially rated classes, S&P have resolved all of the prime jumbo collateral CreditWatch placements of the ratings on 118 classes from 14 U.S. RMBS prime jumbo transactions from the 2005 and 2006 vintages. Currently, S&P's ratings on 171 classes from 22 U.S. RMBS prime jumbo transactions from the 2007 vintage are on CreditWatch negative. Ratings Lowered CHL Mortgage Pass-Through Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-HYB5 B-4 170256AU5 D CC CSMC Mortgage-Backed Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-8 A-P 22942MBH8 BB AAA 2006-8 PP 22942MBS4 BB AAA 2006-8 C-B-4 22942MBP0 CC CCC Lehman Mortgage Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-3 B6 52520CBD6 D CC 2006-4 AP1 52520RAK8 BBB+ AAA 2006-4 AX1 52520RAM4 BBB+ AAA Prime Mortgage Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-2 PO 74161YAC9 BBB AAA 2006-2 X 74161YAA3 BBB AAA TBW Mortgage-Backed Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-1 C-B-1 225470V26 B BB 2006-1 C-B-2 225470V34 CCC B 2006-1 C-B-4 225470V67 CC CCC Ratings Lowered and Removed from Creditwatch Negative Chase Mortgage Finance Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-S3 1-A1 16162XAA5 AA- AAA/Watch Neg 2006-S3 1-A2 16162XAB3 AA- AAA/Watch Neg 2006-S3 1-A3 16162XAC1 AA- AAA/Watch Neg 2006-S3 1-A5 16162XAE7 AA AAA/Watch Neg 2006-S3 1-A6 16162XAF4 AA- AAA/Watch Neg 2006-S3 1-A7 16162XAG2 AA- AAA/Watch Neg 2006-S3 2-A1 16162XAH0 AA- AAA/Watch Neg 2006-S3 2-A3 16162XAK3 AA- AAA/Watch Neg 2006-S3 A-M 16162XAP2 BBB AA/Watch Neg CHL Mortgage Pass-Through Trust Rating ------ Transaction Class CUSIP To From ----------- ------ ----- -- ---- 2006-HYB5 1-A-2 170256AB7 AA AAA/Watch Neg 2006-HYB5 2-A-2 170256AH4 AA AAA/Watch Neg 2006-HYB5 3-A-2 170256AL5 AA AAA/Watch Neg 2006-HYB5 4-A-2 170256AP6 AA AAA/Watch Neg 2006-HYB5 M 170256AQ4 BB+ AA/Watch Neg Citigroup Mortgage Loan Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-AR5 1-B2 17309FAP3 BBB A/Watch Neg CSMC Mortgage-Backed Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-8 1-A-1 22942MAA4 BB AAA/Watch Neg 2006-8 2-A-1 22942MAB2 BB AAA/Watch Neg 2006-8 3-A-1 22942MAC0 BB AAA/Watch Neg 2006-8 3-A-2 22942MAD8 BB AAA/Watch Neg 2006-8 3-A-3 22942MAE6 BB AAA/Watch Neg 2006-8 3-A-4 22942MAF3 BB AAA/Watch Neg 2006-8 3-A-5 22942MAG1 BB AAA/Watch Neg 2006-8 3-A-6 22942MAH9 BB AAA/Watch Neg 2006-8 3-A-7 22942MAJ5 BB AAA/Watch Neg 2006-8 3-A-8 22942MAK2 BB AAA/Watch Neg 2006-8 3-A-9 22942MAL0 BB AAA/Watch Neg 2006-8 3-A-10 22942MAM8 BB AAA/Watch Neg 2006-8 3-A-11 22942MAN6 BB AAA/Watch Neg 2006-8 3-A-12 22942MAP1 BB AAA/Watch Neg 2006-8 3-A-13 22942MAQ9 BB AAA/Watch Neg 2006-8 3-A-14 22942MAR7 BB AAA/Watch Neg 2006-8 3-A-15 22942MAS5 BB AAA/Watch Neg 2006-8 3-A-16 22942MAT3 BB AAA/Watch Neg 2006-8 3-A-17 22942MAU0 BB AAA/Watch Neg 2006-8 3-A-18 22942MAV8 BB AAA/Watch Neg 2006-8 3-A-19 22942MAW6 BB AAA/Watch Neg 2006-8 3-A-20 22942MAX4 BB AAA/Watch Neg 2006-8 3-A-21 22942MAY2 BB AAA/Watch Neg 2006-8 3-A-22 22942MAZ9 BB AAA/Watch Neg 2006-8 3-A-23 22942MBA3 BB AAA/Watch Neg 2006-8 3-A-24 22942MBB1 BB AAA/Watch Neg 2006-8 3-A-25 22942MBC9 BB AAA/Watch Neg 2006-8 3-A-26 22942MBD7 BB AAA/Watch Neg 2006-8 4-A-1 22942MBE5 BB AAA/Watch Neg 2006-8 5-A-1 22942MBF2 BB AAA/Watch Neg GSR Mortgage Loan Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-AR2 1B2 36297TAN2 BBB A/Watch Neg Lehman Mortgage Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-3 1-A2 52520CAE5 A AAA/Watch Neg 2006-3 1-A3 52520CAF2 A AAA/Watch Neg 2006-3 1-A4 52520CAG0 A AAA/Watch Neg 2006-3 1-A5 52520CAH8 A AAA/Watch Neg 2006-3 1-A6 52520CAJ4 A AAA/Watch Neg 2006-3 1-A7 52520CAK1 A AAA/Watch Neg 2006-3 1-A8 52520CAL9 A AAA/Watch Neg 2006-3 1-A9 52520CAM7 A AAA/Watch Neg 2006-3 1-A11 52520CAP0 A AAA/Watch Neg 2006-3 1-A13 52520CAR6 A AAA/Watch Neg 2006-3 2-A1 52520CAS4 A AAA/Watch Neg 2006-3 2-A2 52520CAT2 A AAA/Watch Neg 2006-3 3-A2 52520CAB1 A AAA/Watch Neg 2006-3 3-A3 52520CAC9 A AAA/Watch Neg 2006-3 M 52520CAW5 BB AA+/Watch Neg 2006-4 1-A1 52520RAA0 BBB+ AAA/Watch Neg 2006-4 1-A2 52520RAB8 BBB+ AAA/Watch Neg 2006-4 1-A3 52520RAC6 BBB+ AAA/Watch Neg 2006-4 1-A4 52520RAD4 BBB+ AAA/Watch Neg 2006-4 2-A1 52520RAE2 BBB+ AAA/Watch Neg 2006-4 2-A2 52520RAF9 BBB+ AAA/Watch Neg Merrill Lynch Mortgage Investors Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-AF1 AF-1 59023RAA7 BBB AAA/Watch Neg 2006-AF1 AF-2A 59023RAB5 BBB AAA/Watch Neg 2006-AF1 AF-2B 59023RAC3 BBB AAA/Watch Neg 2006-AF1 AF-2C 59023RAD1 BBB AAA/Watch Neg 2006-AF1 AF-3A 59023RAE9 BBB AAA/Watch Neg 2006-AF1 AF-3B 59023RAF6 BBB AAA/Watch Neg 2006-AF1 MF-1 59023RAN9 BB- AA/Watch Neg 2006-AF1 MV-1 59023RAR0 A+ AA/Watch Neg 2006-AF1 MF-2 59023RAP4 B- A/Watch Neg 2006-AF1 MV-2 59023RAS8 BB+ A/Watch Neg Prime Mortgage Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-2 I-A1-1 74161YAL9 BBB AAA/Watch Neg 2006-2 I-A1-2 74161YAM7 BBB AAA/Watch Neg 2006-2 I-A1-3 74161YAN5 BBB AAA/Watch Neg 2006-2 I-A1-4 74161YAP0 BBB AAA/Watch Neg 2006-2 I-A1-5 74161YAQ8 BBB AAA/Watch Neg 2006-2 I-A2-1 74161YAR6 BBB AAA/Watch Neg 2006-2 I-A2-2 74161YAS4 BBB AAA/Watch Neg 2006-2 II-A1-1 74161YAT2 BBB AAA/Watch Neg 2006-2 II-A2-1 74161YAU9 BBB AAA/Watch Neg RFMSI Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-SA4 I-A-2 74958CAD2 BBB+ AAA/Watch Neg 2006-SA4 II-A-2 74958CAC4 BBB+ AAA/Watch Neg 2006-SA4 III-A-3 74958CAN0 BBB+ AAA/Watch Neg Structured Adjustable Rate Mortgage Loan Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2005-23 1-A4 863579K72 A AAA/Watch Neg 2005-23 2-A2 863579L30 A AAA/Watch Neg 2006-7 1-A2 86361BAB3 BBB- AAA/Watch Neg 2006-7 2-A2 86361BAD9 BBB- AAA/Watch Neg 2006-7 3-A2 86361BAG2 BBB- AAA/Watch Neg 2006-7 3-AS 86361BAH0 BBB- AAA/Watch Neg 2006-7 4-A2 86361BAK3 BBB- AAA/Watch Neg TBW Mortgage-Backed Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-1 1-A-1 225470S87 A AAA/Watch Neg 2006-1 1-A-2 225470S95 A AAA/Watch Neg 2006-1 1-A-5 225470T45 A AAA/Watch Neg 2006-1 1-A-6 225470T52 A AAA/Watch Neg 2006-1 2-A-1 225470T60 A AAA/Watch Neg 2006-1 3-A-2 225470T86 A AAA/Watch Neg 2006-1 4-A-1 225470T94 A AAA/Watch Neg 2006-1 5-A-2 225470U35 A AAA/Watch Neg 2006-1 6-A-1 225470U43 A AAA/Watch Neg 2006-1 7-A-1 225470U50 A AAA/Watch Neg Ratings Affirmed and Removed from Creditwatch Negative Chase Mortgage Finance Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-S4 A-M 16162YBC8 AA AA/Watch Neg Citigroup Mortgage Loan Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-AR5 1-B1 17309FAN8 AA AA/Watch Neg GSR Mortgage Loan Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-AR2 1B1 36297TAM4 AA AA/Watch Neg Lehman Mortgage Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-4 3-A1 52520RAG7 AAA AAA/Watch Neg 2006-4 4-A1 52520RAH5 AAA AAA/Watch Neg 2006-4 5-A1 52520RAJ1 AAA AAA/Watch Neg Structured Adjustable Rate Mortgage Loan Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-7 1-A1 86361BAA5 AAA AAA/Watch Neg 2006-7 2-A1 86361BAC1 AAA AAA/Watch Neg 2006-7 3-A1 86361BAE7 AAA AAA/Watch Neg 2006-7 3-AF 86361BAF4 AAA AAA/Watch Neg 2006-7 4-A1 86361BAJ6 AAA AAA/Watch Neg 2006-7 4-AX 86361BAL1 AAA AAA/Watch Neg * Three Chapter 11 Filers in Fortune Top 500 Companies ------------------------------------------------------ Three companies who previously filed for Chapter 11 protection from creditors in the United States, made it to Fortune Magazine's 2008 Fortune Global 500 list of largest companies by revenues: | --- Revenues --- | --- Profits ---- | Global | % change | % change Company | 500 Rank | $ mill. in 2006 | $ mill. in 2006 ------- | -------- | ------- ------- | ------- ------- Delphi 305 26,160 -1 -3,065 0 UAL 422 20,143 4 403 -98.5 Delta Air 441 19,154 12 1,612 0 UAL Corp. and Delta Air Lines, Inc., were 4th and 6th largest among seven airlines in the Fortune 500, which had Air France-KLM Group on top at 222nd place overall with $34,130,000,000 in revenues, and $1,059,000,000 in profits. Delta, which emerged from bankruptcy protection April 30, 2007, announced a merger with Northwest Airlines on April 14, 2008, to form one of the world's biggest airline with $35,000,000,000 in combined annual revenues, and $17,700,000,000 in enterprise value. UAL, parent of United Airlines, emerged from from bankruptcy in February 2006. Soleil Securities Corp. analyst James M. Higgins, informed clients in May 2009 that AMR, which American Airlines parent AMR Corp., which came in 3rd among airlines and 366 overall in the Fortune 500, may have trouble avoiding bankruptcy by sometime in 2009. He added that UAL may also be close to that possibility. Delphi Corp. obtained confirmation of its Chapter 11 plan in January 2008 but has languished in bankruptcy after lenders led by Appaloosa Management, L.P., backed out from their commitment to provide $2,550,000,000 in exit equity financing. Bankruptcy Creditors' Service, Inc. -- http://www.bankrupt.com/ -- launched newsletters covering the restructuring proceedings of Delta, UAL and Delphi. U.S. automaker General Motors Corp., Delphi's primary customer, came in 9th. A Merrill Lynch & Co. analyst said July 2 that GM may need to raise $15,000,000,000 and that bankruptcy for United States' largest automaker is not "impossible", which statement caused GM shares to tumble to a 54-year low. GM CEO Rick Wagoner, however, said that the company has "no thoughts whatsoever" of filing for Chapter 11. Japan-based Toyota Motor was the highest ranked automaker in the list, at 5th, with more than $230,200,800,000 in revenues and $15,043,000,000 in profits for 2007, compared to GM's $182,347,000 in sales and $38,732,000,000 in losses. Ford Motor Company, which, like the other members of Detroit's Big Three (including GM and Chrysler), is struggling to stem losses and restore sales, came in 4th among auto-makers, and 13th overall with 172,468,000,000 in revenues and losses of $2,723,000,000 for 2007, following Daimler who was 11th with 177,167,100,000 in revenues. Chrysler LLC did not make it to the Fortune 500. General Motor came in as the top money loser among companies listed on the Fortune 500: | Global | Loss Company | 500 Rank | (in $ mill.) ------- | -------- | ---------- General Motors 9 38,732 Sprint Nextel 176 29,580 KFW Bankengruppe 199 8,443 Merrill Lynch 100 7,777 U.S. Postal Svc. 83 5,142 Alcatel-Lucent 325 4,815 UBS 31 3,654 Freddie Mac 162 3,094 Delphi 305 3,065 Ford Motor 13 2,723 GMAC 244 2,332 Fannie Mae 161 2,050 Wal-Mart Stores ranked No. 1 in the Fortune 500 with $378,799,000,000 in revenues and $12,731,000,000 in profits for 2007. * Consumer Bankruptcy Filings Up 30% in First Half of 2008 ---------------------------------------------------------- U.S. consumer bankruptcy filings increased 30% nationwide during the first six months of 2008 -- Jan. 1 - June 30 -- from the same period a year ago, according to the American Bankruptcy Institute, relying on data from the National Bankruptcy Research Center. The overall June consumer filing total of 82,770 was 20.7% more than the 68,559 consumer filings recorded in June 2007. While the June total represented an increase over the previous year, it was a 9.3% decrease from the May 2008 total of 91,214 consumer filings. Chapter 13 filings constituted 32.6 percent of all consumer cases in June, a slight increase from May. "The overall trend of rising bankruptcies reflects the growing financial strain of felt by U.S. households, burdened by high debt, rising mortgage costs and falling home values," said ABI Executive Director Samuel J. Gerdano in a news statement. ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 11,700 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. On the Net: http://www.abiworld.org/ * Fulbright Forms Subprime and Credit Crisis Practice Group ----------------------------------------------------------- Lawyers working within Fulbright & Jaworski LLC's securities and complex commercial litigation, bankruptcy, and white collar defense and government investigations groups have long handled matters that involve the issues emerging as the global subprime crisis continues to unfold. In a time when some have suggested the turmoil in the credit markets could result in losses reaching as high as $1 trillion, Fulbright's lawyers are addressing the needs of financial institutions, brokerage firms, title companies, corporate directors and officers, and public accounting firms through the international firm's recently formalized Global Subprime and Credit Crisis Practice Group. A team of lawyers from disciplines across the firm will work proactively to guide clients through the vast array of issues the subprime crisis presents, including complex litigation, internal and governmental investigations and bankruptcy, and will examine clients' internal policies and practices. "Issues similar to those we now face with the subprime fall out date back to the late 1980s when many of our lawyers were handling litigation involving the failed savings and loan industry," said Stephen C. Dillard, the head of Fulbright's Global Litigation Department. "This is an area where we can offer our clients the advice and experience they need to successfully deal with the subprime collapse." In 2003, lawyers now working in Fulbright's subprime practice group successfully defended a nine-week class-action jury trial in California. The suit was brought on behalf of borrowers of a bankrupt subprime mortgage lender who alleged fraud by an investment banking firm in the sale of subprime mortgages. Others in the group are actively assisting U.S. and European banks and fund managers in connection with sophisticated subprime matters involving restructurings and potential litigation. Fulbright has also assisted entities purchasing and selling subprime mortgages, including a mortgage subsidiary of a top Wall Street investment banking firm. "The challenges are complex and typically span multiple jurisdictions," said Chris Warren-Smith, a partner in Fulbright's London location and co-head of the subprime group. "We have assembled what we believe to be a unique team of skilled lawyers to offer a single law firm solution to the domestic and international challenges that arise." Five co-heads from various disciplines and offices within the firm have been designated to steer the practice group: -- Rodney Acker, a financial institutions litigator in Dallas; -- David Barrack, a bankruptcy litigator in New York; -- Anne Rodgers, a securities and complex commercial litigator in Houston; -- Richard Smith, a white collar defense and government investigations litigator in Washington, D.C.; and -- Chris Warren-Smith, a financial disputes and investigations lawyer in London. "Given our experience and international platform, we are uniquely positioned to work with clients in tackling the complex, international issues related to subprime matters," said New York partner Paul Jacobs, the co-head of Fulbright's Corporate Practice. "This is an issue that is impacting markets across the globe." The ongoing investigations that are continuing into the collapse of the credit and subprime lending markets have also expanded into the auction rate securities market, which are long-term debt instruments where the interest rates are determined through weekly or monthly auctions. Due to the current credit crisis and its effect on bond insurers, auction-rate securities, which were once treated as cash equivalents, suddenly became difficult to trade given there were not enough purchasers for all the shares being sold, which created failed auctions. "Our knowledge of markets worldwide combined with our experience with complex litigation, government and corporate investigations, public finance, and bankruptcy puts us in a position to assist our clients through the evolving issues some face as the subprime collapse continues to unfold," said Barrack. "We're doing what we have always done to serve our clients as this new surge of litigation takes root. We expect subprime litigation will be something we will help those who face it to work through for a number of years to come." About Fulbright & Jaworski Headquartered in Houston, Texas, Fulbright & Jaworski LLP -- http://www.fulbright.com/-- is a full-service international law firm, with nearly 1,000 lawyers in 16 locations in Austin, Beijing, Dallas, Denver, Dubai, Hong Kong, Houston, London, Los Angeles, Minneapolis, Munich, New York, Riyadh, San Antonio, St. Louis and Washington, D.C. Founded in 1919, Fulbright provides a full range of legal services to clients worldwide. The 2007 BTI survey of FORTUNE 1000 general counsel chose Fulbright as "The BTI Client Service 30" A-Team and Corporate Board Member magazine named Fulbright among the top 20 corporate law firms in the U.S. in their survey of board members of public companies. * Justice Dept. Names D. McDermott as U.S. Trustee for Region 9 --------------------------------------------------------------- Daniel M. McDermott has been appointed by the Attorney General as the United States Trustee for Ohio and Michigan (Region 9), Clifford J. White III, Director of the Executive Office for United States Trustees, said. Mr. McDermott's appointment took effect July 11, 2008. "It gives me great pleasure to announce the appointment of Dan McDermott as United States Trustee for Ohio and Michigan." Mr. White stated. "During his years with the U.S. Trustee Program, Mr. McDermott has proven himself to be an exemplary public servant, a skillful manager, and a fine lawyer. I look forward to working with him as he leads this important region." Mr. McDermott was appointed as the Assistant U.S. Trustee in the Program's Cleveland office in 1991, after serving three years as a Trial Attorney in that office. In 1999, he was recognized with the Director's Award for Management Excellence. Prior to joining the Program, Mr. McDermott held positions as a Bankruptcy Administrator for the U.S. Bankruptcy Court for the Northern District of Ohio and as a bank officer and assistant counsel. Mr. McDermott received his law degree from Cleveland-Marshall College of Law in Cleveland, Ohio, and his undergraduate degree from Villanova University in Villanova, Pennsylvania. The U.S. Trustee Program is the component of the Department of Justice that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The Program has 21 regions and 95 field offices. Region 9 is headquartered in Cleveland with additional offices in Cincinnati and Columbus, Ohio, and Detroit and Grand Rapids, Michigan. * U.S. SEC to Probe Industry Controls Against False Information --------------------------------------------------------------- The U.S. Securities and Exchange Commission said that, together with other securities regulators, it will immediately conduct examinations aimed at the prevention of the intentional spread of false information intended to manipulate securities prices. The examinations will be conducted by the SEC's Office of Compliance Inspections and Examinations, as well as the Financial Industry Regulatory Authority and New York Stock Exchange Regulation, Inc. The securities laws require that broker-dealers and investment advisers have supervisory and compliance controls to prevent violations of the securities laws, including market manipulation. Examiners will focus on these controls and whether they are reasonably designed to prevent the intentional creation or spreading of false information intended to affect securities prices, or other potentially manipulative conduct. These examinations are in addition to the Commission's enforcement investigations into alleged intentional manipulation of securities prices through rumor-mongering and abusive short selling that are already underway. "The examinations we are undertaking with FINRA and NYSE Regulation are aimed at ensuring that investors continue to get reliable, accurate information about public companies in the marketplace," said SEC Chairman Christopher Cox. "They will also provide an opportunity to double-check that broker-dealers and investment advisers have appropriate training for their employees and sturdy controls in place to prevent intentionally false information from harming investors." FINRA, NYSE Regulation and the Options Regulatory Surveillance Authority recently reminded industry firms that intentionally spreading false rumors or engaging in collusive activity to affect the financial condition of an issuer are violative activities, and further reminded market participants to review their internal controls and procedures to prevent this type of conduct. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------ ------- ABSOLUTE SOFTWRE ABT 89 (2) 30 AFC ENTERPRISES AFCE 146 (51) (28) APP PHARMACEUTIC APPX 1,087 (73) 227 AVANT IMMUNOTHER AVAN 41 28 11 BARE ESCENTUALS BARE 236 (76) 99 BLOUNT INTL BLT 407 (44) 138 CABLEVISION SYS CVC 9,180 (5,114) (476) CENTENNIAL COMM CYCL 1,346 (1,058) 26 CHENIERE ENERGY CQP 1,923 (253) 108 CHENIERE ENERGY LNG 2,955 (65) 258 CHOICE HOTELS CHH 338 (142) (26) CINCINNATI BELL CBB 2,034 (660) 32 COMPASS MINERALS CMP 800 29 209 COREL CORP CRE 256 (18) (30) CROWN MEDIA HL-A CRWN 668 (661) (1) CV THERAPEUTICS CVTX 228 (208) 156 CYBERONICS CYBX 136 (15) 110 DELTEK INC PROJ 179 (79) 32 DOMINO'S PIZZA DPZ 453 (1,451) 58 DUN & BRADSTREET DNB 1,632 (479) (177) EINSTEIN NOAH RE BAGL 154 (29) 5 ENDEVCO INC EDVC 19 (5) (8) EXTENDICARE REAL EXE-U 1,498 (43) (28) GENCORP INC GY 994 (24) 67 GENERAL MOTORS GM 145,741 (39,674) (10,929) HEALTHSOUTH CORP HLS 2,012 (1,065) (214) HUMAN GENOME SCI HGSI 914 (49) 26 ICO GLOBAL C-NEW ICOG 608 (160) (49) IMAX CORP IMAX 204 (95) (8) IMAX CORP IMX 204 (95) (8) INCYTE CORP INCY 237 (197) 193 INTERMUNE INC ITMN 236 (56) 166 IPCS INC IPCS 548 (47) 69 KNOLOGY INC KNOL 654 (52) (6) KOPPERS HOLDINGS KOP 700 2 217 LIFE SCIENCES RE LSR 199 (22) 6 LINEAR TECH CORP LLTC 1,504 (488) 1,004 MEDIACOM COMM-A MCCC 3,612 (296) (297) MOODY'S CORP MCO 1,587 (903) (466) NATIONAL CINEMED NCMI 490 (547) 51 NAVISTAR INTL NAV 11,614 (562) 1,415 NEW FLYER INDUST NFI-U 890 10 47 NPS PHARM INC NPSP 187 (199) 97 PRIMEDIA INC PRM 251 (137) (6) PROTECTION ONE PONE 655 (45) 0 RADNET INC RDNT 498 (78) 25 REDWOOD TRUST RWT 8,546 585 N.A. REGAL ENTERTAI-A RGC 2,634 (186) 153 RESVERLOGIX CORP RVX 26 8 22 ROK ENTERTAINMEN ROKE 17 (25) (7) RSC HOLDINGS INC RRR 3,412 (42) (65) RURAL CELLULAR-A RCCC 1,350 (580) 137 SALLY BEAUTY HOL SBH 1,432 (729) 401 SEALY CORP ZZ 1,049 (115) 48 SOLUTIA INC SOA 4,794 1,030 870 SONIC CORP SONC 776 (110) (31) THERAVANCE THRX 300 (91) 219 UST INC UST 1,436 (391) 405 VALENCE TECH VLNC 27 (59) 11 VISA INC-CLASS A V 33,869 22,315 4,245 VOYAGER LEARNING VLCY 917 (53) (637) WARNER MUSIC GRO WMG 4,532 (103) (813) WEIGHT WATCHERS WTW 1,095 (894) (252) WESTMORELAND COA WLB 783 (178) (85) WR GRACE & CO GRA 3,927 (285) 1,091 XERIUM TECHNOLOG XRM 925 (499) 0 SATELLITE -A XMSR 1,662 (1,038) (293) ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Raphael M. Palomino, Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Joseph Medel C. Martirez, Ma. Cristina I. Canson, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2008. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***