/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080808.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, August 8, 2008, Vol. 12, No. 188 Headlines AMERICREDIT CORP: Fitch Cuts IDR to B+ from BB; Removes Neg. Watch ASCENDIA BRANDS: Taps Epiq Bankruptcy as Claims Agent BANC OF AMERICA: Fitch Affirms Low-B Ratings on Six Cert. Classes BEACON HILL: Case Summary & 6 Largest Unsecured Creditors BEAZER HOMES: CDS Spread Among Industry's Top Three BEST BRANDS: Covenant Default Prompts Moody's to Cut CFR to Caa3 BIRUTE GUDENAVICHENE: Case Summary & Five Largest Unsec. Creditors BOSCOV'S LLC: Won't Close More Than 10 Stores, Analyst Says CABLEVISION SYSTEMS: Strategic Review Wont' Affect DBRS' Ratings CEDAR TRUCKING: Case Summary & 17 Largest Unsecured Creditors COMMODORE CDO: Fitch Chips Ratings on Four Classes of Notes DERRICK MCCOY: Case Summary & 18 Largest Unsecured Creditors E*TRADE ABS: Collateral Slide Cues Fitch Rtngs Cut; Removes Watch E*TRADE FINANCIAL: DBRS Cuts Issuer & Sr. Debt Rating to B(high) FOUR TWELVE: Voluntary Chapter 11 Case Summary GMAC LLC: DBRS' 'B' Long-Term Debt Rating Unmoved by 2Q '08 Loss G-STAR: Fitch Junks Ratings on Two Classes of Notes G-STAR: Fitch Lowers Seven Notes Ratings and Removes Neg. Watch G-STAR: Fitch Slashes 'AA-' Rating to 'BB' on $5MM Class B-2 Notes GREEKTOWN CASINO: Wants to Employ Ernst & Young as Auditors GREEKTOWN CASINO: Panel Wants to Hire Xroads as Financial Advisor HOVNANIAN ENTERPRISE: CDS Spread Highest Among Peers JAMES HARRINGTON: Voluntary Chapter 11 Case Summary J & P ANDERSON: Case Summary & 6 Largest Unsecured Creditors KIK CUSTOM: Moody's Junks Corporate Family Rating to Caa1 from B2 LAKEVIEW DEVELOPMENT: Voluntary Chapter 11 Case Summary LENNAR CORP: CDS Spread Among Industry's Top Three LEVEL 3 FINANCING: DBRS Assigns 'B(low)' Issuer Rating MASONITE CORP: Moody's Cuts Debt Ratings to Caa1, Concludes Review NEW CENTURY: Fitch Keeps Junk Ratings on 11 Classes ONEBEACON US: A.M. Best Assigns 'bb+' Rating on Preferred Stock PDK INVESTMENT: Case Summary & 10 Largest Unsecured Creditors POLAR MOLECULAR: Voluntary Chapter 11 Case Summary RESIDENTIAL CAPITAL: DBRS Keeps 'CCC' Rating with Negative Trend SPH ASSOCIATES: Case Summary & Largest Unsecured Creditor SPRINT NEXTEL: Incurs $344 Million Net Loss in 2008 2nd Quarter RESIDENTIAL CAPITAL: DBRS Keeps 'CCC' Rating with Negative Trend SPRINT NEXTEL: DBRS Rates Proposed $3BB Preferred Shares 'BB' SYNCORA GUARANTEE: Moody's Reviews B2 IFSR for Possible Upgrade SYNTAX-BRILLIAN: Court Approves Greg Rayburn as Interim COO TAYLOR CAPITAL: Fitch Cuts Rating to 'BB' on Weakened Liquidity THROWER & THROWER: Voluntary Chapter 11 Case Summary TRIBUNE COMPANY: Closes Formation Agreement with Cablevision Unit VERTICAL ABS: Fitch Cuts Six Notes Ratings and Removes Neg. Watch WCI COMMUNITIES: Shares Debut in Pink Sheets Amid NYSE Suspension WCI COMMUNITIES: S&P Cuts Rating to 'D' After Bankruptcy Filing WICHITA RENTALS: Voluntary Chapter 11 Case Summary XL CAPITAL: Best Puts 'bb+' Rating on $500MM Preference Shares ZIFF DAVIS: CNET Wants 800 Jorie's Claim in Lease Dispute Denied * Best Takes Rating Actions on Various Mezzanine Notes * Fitch: Weak Economy to Worsen Dealer Floorplan ABS Performance * SitkaPacific Advisor Lists Homebuilders with Highest CDS Spread ********* AMERICREDIT CORP: Fitch Cuts IDR to B+ from BB; Removes Neg. Watch ------------------------------------------------------------------ Fitch Ratings has downgraded the long-term Issuer Default Rating of AmeriCredit Corp. to 'B+' and placed all ratings on Rating Watch Negative. Approximately $950 million of debt is affected by this action. Fitch has taken these rating actions: AmeriCredit Corp. -- Long-term Issuer Default Rating downgraded to 'B+' from 'BB'; -- Senior debt downgraded to 'B+/RR4' from 'BB'. The downgrade reflects the announcement that Financial Security Assurance would no longer be providing insurance for structured products. ACF issued $750 million in AMCAR notes in May 2008 with an FSA wrap. Without the availability of structured bond insurance, ACF would need to rely on senior/subordinate structures for long-term portfolio funding, which, given current market conditions, would be very expensive and may lack sufficient investor interest. While ACF has a commitment from Deutsche Bank AG, whereby the bank will purchase $2 billion in 'AAA'-rated asset-backed securities in registered public offerings, ACF would need to attract investors for the lower-rated tranches or retain them themselves, which would require a significant capital commitment. Should investor appetite fall short of expectations, Fitch believes ACF would need to reduce origination volumes further, which would negatively impact future profitability. The Rating Watch Negative reflects uncertainty relating to ACF's near-term funding plan. The resolution of the Rating Watch will be dependent upon the company's ability to secure viable longer- term funding options while maintaining adequate levels of liquidity and risk-adjusted capitalization. ASCENDIA BRANDS: Taps Epiq Bankruptcy as Claims Agent ----------------------------------------------------- Ascendia Brands Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for permission to employ Epiq Bankruptcy Solutions LLC as their notice, claims, and balloting agent. As the Debtors' claims agent, the firm will: a) prepare and serve required notice in these Chapter 11 cases, including: -- a notice of the commencement of these Chapter 11 cases and the initial meeting of creditors under Section 341(a0 of the Bankruptcy Code; -- a notice of the claims bar date; -- notices of objections to claims; -- notices of hearings on a disclosure statement and confirmation of a Chapter 11 plan; and -- other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these Chapter 11 cases; b) assist with the publication of required notices, as necessary; c) prepare for filing with the clerk's office an affidavit of service that includes (i) a copy of the notice serve, (ii) an alphabetical list of persons on whom the notice was served along with their addresses and (iii) the date and manner of service; d) maintain copies of all proofs of claims and proofs of interest filed in these cases; e) maintain official claims registers in these cases by docketing all proofs of claim and proofs of interest in a claims database that includes these information for each claim or interest asserted: -- name and address of the claimant or interest holder and any agent thereof; if the proofs of interest was filed by an agent; -- date the proofs of claim or proof of interest was received by the firm and the Court; -- claim number assigned to the proof of claim or proof of interest; and -- asserted amount and classification of the claim; f) implement necessary security measures to ensure the completeness and integrity of the claims registers; g) transmit to the clerk's office a copy of the claims registers on a weekly basis, unless requested by the clerk's office on a more or less frequent basis; h) maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest and make such list available to the clerk's office or any party in interest upon request; i) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in these cases without charge during regular business hours; j) create and maintain a public access website setting forth pertinent case information and allowing access to certain documents filed in the Debtors' Chapter 11 cases; k) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of such transfers to the extent required by Bankruptcy Rule 3001(e); l) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, order, and other requirements; m) provide temporary employees, who are not past or present employees of the Debtors, to process claims, as necessary; n) comply with other further conditions and requirements as the clerk's office or the Court may at any time prescribe; o) provide other claims processing, noticing, balloting and related administrative services as may be requested from time to time by the Debtors; and p) transport all original documents in proper format as the close of these cases, as provided by the clerk's office, to the federal archives. The firm's professionals and their compensation rates are: Designation Hourly Rates ----------- ------------ Senior Consultant $295 Senior Case Manager $225-$275 Case Manager (Level 2) $185-$220 IT Programming Consultant $140-$190 Case Manager (Level 1) $125-$175 Clerk $40-$60 Daniel C. McElhinney, a senior vice president and director at firm, assures the Court that the firm does not hold any interest adverse to the Debtors' estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. McElhinney can be reached at: Daniel C. McElhinney 757 Third Avenue, 3rd Floor New York, NY 10017 Tel: (646) 282-2500 Fax: (646) 282-2501 http://www.epiqbankruptcysolutions.com About Ascendia Brands Headquartered in Hamilton, New Jersey, Ascendia Brands, Inc. -- http://www.ascendiabrands.com/-- makes and sells branded consumer products primarily in North America and over 80 countries as well. The company's customers include Walmart, Walgreens, Kmart, Meijer Stores, Target, and CVS. The company and six of its affiliates filed for Chapter 11 protection on Aug. 5, 2008 (Bankr. D. Del. Lead Case No.08-11787). M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor, represents the Debtors in their restructuring efforts. When the Debtors filed for protection against their creditors, they listed total assets of $194,800,000 and total total debts of $279,000,000. BANC OF AMERICA: Fitch Affirms Low-B Ratings on Six Cert. Classes ----------------------------------------------------------------- Fitch Ratings has affirmed Banc of America Commercial Mortgage Securities, Inc.'s mortgage pass-through certificates, series 2007-3, as: -- $47.8 million class A-1 at 'AAA'; -- $334 million class A-2 at 'AAA'; -- $150 million class A-2FL at 'AAA'; -- $133 million class A-3 at 'AAA'; -- $78.9 million class A-AB at 'AAA'; -- $1.0 billion class A-4 at 'AAA'; -- $50 million class A-5 at 'AAA'; -- $647.6 million class A-1A at 'AAA'; -- Interest-only class XW at 'AAA'; -- $116.6 million class A-M at 'AAA'; -- $100 million class A-MF at 'AAA'; -- $135 million class A-MFL at 'AAA'; -- $241.7 million class A-J at 'AAA'; -- $35.2 million class B at 'AA+'; -- $48.3 million class C at 'AA'; -- $26.4 million class D at 'AA-'; -- $26.4 million class E at 'A+'; -- $35.2 million class F at 'A'; -- $30.8 million class G at 'A-'; -- $48.3 million class H at 'BBB+'; -- $35.2 million class J at 'BBB'; -- $43.9 million class K at 'BBB-'; -- $26.4 million class L at 'BB+'; -- $4.4 million class M at 'BB'; -- $17.6 million class N at 'BB-'; -- $4.4 million class O at 'B+'; -- $8.8 million class P at 'B'; -- $13.2 million class Q at 'B-'; Fitch does not rate the $57.1 million class S. The affirmations are the result of stable performance since issuance in July 2007. As of the July 2008 distribution date, the pool's certificate balance has decreased 0.1% to $3.51 billion from $3.52 billion at issuance. There have been no delinquencies since issuance. 115 loans (94.7%) are interest-only or partial interest-only. 1001-1007 Third Avenue, located in New York (0.4%), maintains its investment-grade shadow rating. The loan is secured by a two- story single tenant building of 13,149 square feet and is currently occupied by a three screen movie theater. The largest loan (9.3%) is collateralized by four interconnected, 50-story apartment towers located in downtown Chicago, Illinois. Occupancy as of March 2008 was 90.0% compared to 92.5% at issuance. The second largest loan (5.7%) is secured by a 657 key full- service hotel located in Washington, D.C. Servicer reported trailing twelve month occupancy was 71.7% as of February 2008, compared to 73.9% at issuance. BEACON HILL: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------ Debtor: Beacon Hill at Mountain's Edge, LLC dba Eagle Homes 7872 W Sahara Ave Las Vegas, NV 89117 Bankruptcy Case No.: 08-20746 Type of Business: Homebuilding Chapter 11 Petition Date: July 30, 2008 Court: Southern District of Florida (Fort Lauderdale) Judge: John K. Olson Debtor's Counsel: Paul Steven Singerman, Esq. 200 South Biscayne Blvd. #1000 Miami, FL 33131 Tel: (305) 755-9500 Email: singerman@bergersingerman.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A copy of Beacon Hill's list of 6 largest unsecured creditorsis available for free at: http://bankrupt.com/misc/flsb08-20746.pdf BEAZER HOMES: CDS Spread Among Industry's Top Three --------------------------------------------------- An article at Seeking Alpha by Michael Shedlock, a registered investment advisor representative for SitkaPacific Capital Management, responds to questions about which homebuilder will most likely file for bankruptcy after the fall of WCI Communities Inc. this month. Basing on credit market players' perception, Mr. Shedlock said that Hovnanian Enterprises Inc., Beazer Homes USA Inc., and Lennar Corp. are now the top three candidates for bankruptcy. Five-year data from Bloomberg shows the cost of insuring the credit risk of these companies are the highest in the industry. Company Spread Company Spread Company Spread ------- ------ ------- ------ ------- ------ (bps) (bps) (bps) Hovnanian 1,427.2 Meritage Homes 676.7 Ryland 442.6 Beazer Homes 1,158.1 Standard-Pacific 663.3 Pulte 325.0 Lennar 793.8 DH Horton 527.8 Toll 282.8 Centex 470.8 MDC Holdings 160.8 KB homes 447.5 Mr. Shedlock notes that in December 2007, Standard Pacific was the least likely to go bankrupt. Gretchen Morgenson in a July 2008 International Herald Tribune article states that the CDS market is one of the hottest investment arenas nowadays. She said in a February 2008 article that the market for these securities has grown from $900 billion since 2000 to more than $45.5 trillion this year. While CDS is considered a large market, lack of disclosure rules, however, makes it an obscure market. This may change shortly, though. According to Ms. Morgenson, the Financial Accounting Standards Board has suggested a list of disclosures to help investors understand the financial implications for companies that have sold credit default swaps. The disclosure requirements will be effective in financial statements for fiscal years that end after Nov. 15, 2008. The deadline may "ensnare some of the biggest U.S. brokerage firms with fiscal years ending in November -- Lehman Brothers, Morgan Stanley and Goldman Sachs," according to Ms. Morgenson. About Hovnanian Enterprises Hovnanian Enterprises Inc. (NYSE: HOV) -- http://www.khov.com/-- founded in 1959 by Kevork S. Hovnanian, chairman, is headquartered in Red Bank, New Jersey. The company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. Hovnanian Enterprises, Inc. is a member of the Public Home Builders Council of America (PHBCA) -- http://www.phbca.org/-- a nonprofit group devoted to improving understanding of the business practices of America's largest publicly-traded home building companies, the competitive advantages they bring to the home building market, and their commitment to creating value for their home buyers and stockholders. The PHBCA's 14 member companies build one out of every five homes in the United States. About Lennar Corp. Based in Miami, Fla., Lennar Corporation (NYSE: LEN and LEN.B) -- http://www.lennar.com/-- builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides primarily mortgage financing, title insurance and closing services for both buyers of the company's homes and others. About Beazer Homes Headquartered in Atlanta, Beazer Homes USA Inc., (NYSE: BZH) -- http://www.beazer.com/-- is a single-family homebuilder with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia. The company also provides mortgage origination and title services to its homebuyers. * * * As disclosed in the Troubled Company Reporter on June 12, 2008 Fitch Ratings downgraded Beazer Homes USA, Inc.'s Issuer Default Rating and other outstanding debt ratings as: IDR to 'B' from 'B+'; Secured revolving credit facility to 'BB-/RR1' from 'BB/RR1'; Senior notes to 'B-/RR5' from 'B/RR5'; Convertible senior notes to 'B-/RR5' from 'B/RR5'; and Junior subordinated debt to 'CCC/RR6' from 'CCC+/RR6'. The TCR said on Feb. 19, 2008, that Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured note ratings on Beazer Homes USA Inc. to 'B' from 'B+'. The ratings remain on CreditWatch, where they were placed with negative implications on Aug. 14, 2007. The TCR reported on May 8, 2008, that Beazer Homes USA Inc. stated in a filing with the Securities and Exchange Commission that it received a default notice from The Bank of New York Trust Company National Association, the trustee under the indenture governing the company's outstanding $103.1 million unsecured junior subordinated notes due July 2036. The notice alleges that the company is in default under the indenture because the company has not provided certain required information, including its annual audited and quarterly unaudited financial statements. BEST BRANDS: Covenant Default Prompts Moody's to Cut CFR to Caa3 ---------------------------------------------------------------- Moody's Investors Service lowered Best Brands Corporation's ratings, including its probability of default rating to Caa3 from Caa1, and placed all of the company's ratings on review for possible downgrade. LGD percentages are subject to adjustments. This action succeeds the disclosure of Best Brands' default under the leverage covenant in its first lien credit agreements for the quarter ended on June 28, 2008. Rating lowered and placed under review for possible downgrade: -- Probability of default rating to Caa3 from Caa1 -- Corporate family rating to Caa3 from Caa2 -- First lien revolving credit agreement and term loan to Caa2 from Caa1 -- Second lien term loan to Ca from Caa3 The review and downgrade reflect the increase in probability of default following the challenges to operating profitability in an environment of high commodity costs. Moody's review will focus on negotiations with lenders regarding the covenant default and on near term cash flow and alternate sources of liquidity. Moody's expects that recovery in a default scenario will be average, based on current views on asset values. Moody's notes that Best Brands reduced funded bank debt in the first fiscal quarter, after completion of a sale/leaseback. Headquartered in Minnetonka, Minnesota, Best Brands Corporation is a manufacturer and distributor of specialty bakery products in the U.S., specializing in frozen laminated dough, frozen baked cakes, frozen muffins and bakery mixes, as well as other value-added services sold to in-store bakeries and institutional baking clients. Revenues for the twelve months ending June 28, 2008 were approximately $530 million. Its parent company is Value Creation Partners, Inc. BIRUTE GUDENAVICHENE: Case Summary & Five Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Birute Gudenavichene 9 Grand Corniche Henderson, NV 89011 Bankruptcy Case No.: 08-18795 Chapter 11 Petition Date: August 6, 2008 Court: District of Nevada (Las Vegas) Debtor's Counsel: Roger P. Croteau, Esq. (croteaulaw@croteaulaw.com) Roger P. Croteau & Associates Ltd. 720 South 4th Street, Suite 202 Las Vegas, NV 89101 Tel: (702) 254-7775 Fax: (702) 228-7719 Estimated Assets: Less than $50,000 Estimated Debts: $1,000,000 to $10,000,000 A copy of Birute Gudenavichene's petition is available for free at http://bankrupt.com/misc/nvb08-18795.pdf BOSCOV'S LLC: Won't Close More Than 10 Stores, Analyst Says ----------------------------------------------------------- According to Gary Haber at The News Journal in Delaware, Burt P. Flickinger III, managing director at Strategic Resource Group, a New York-based consumer industry consulting firm, said he does not expect Boscov's Inc. to shutter any more stores than the 10 the company announced when it filed for bankruptcy. Boscov's has 49 outlets. Mr. Flickinger, the report relates, said Boscov's is a "solidly run" retailer that has suffered from a concentration of stores in economically struggling communities. "The key variable is the suppliers and the suppliers should be supportive," News Journal quotes Mr. Flickinger as saying. Boscov's posted sales of $1.25 billion in its most recently completed fiscal year, which ended Feb. 2, the report notes. According to News Journal, Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm, Boscov's as a privately owned retailer is at a disadvantage because it can't issue stock or bonds to raise capital, as its publicly traded rivals can. Mr. Davidowitz said Boscov's has to rely on banks and other lenders for money to expand or for cash to finance inventories, but that lenders are very hesitant to lend now. The report also notes that Barton Weitz, executive director of the Miller Center for Retailing Education and Research at the University of Florida, said Boscov's relatively small number of stores, all of which are in the Mid-Atlantic region, makes it tougher to develop deals with big-name designers that national chains use to bring shoppers into its stores. About Boscov's Inc. Headquartered in Reading, Pennsylvania, Boscov's Inc. -- http://www.boscovs.com-- is America's largest family-owned independent department store, with 49 stores in Pennsylvania, New York, New Jersey, Maryland, Delaware and Virginia. Boscov's Inc. and its debtor-affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637) Daniel J. DeFranceschi, Esq. at Richards Layton & Finger and L. Katherine Good, Esq. at Richards, Layton & Finger, P.A. represent the Debtors in their restructuring efforts. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers Inc. Boscov's listed assets of $538 million and liabilities of $479 million in its bankruptcy filing. CABLEVISION SYSTEMS: Strategic Review Wont' Affect DBRS' Ratings ---------------------------------------------------------------- DBRS notes that Cablevision Systems Corporations recent announcement that its board of directors has authorized management to explore several strategies for bringing the market value of the company's common stock more closely in line with the underlying operating performance of the company does not immediately impact DBRS' current ratings. CSC Holdings, Inc. has a BB(low) Issuer Rating and BBB(low)/BB(high) instrument ratings, while Cablevision's instrument rating is B. In addition, Rainbow National Services LLC has a BB(low) Issuer Rating and BBB(low)/BB(high)/B instrument ratings. DBRS also rates Newsday LLC's Senior Secured Term Loan BB(high). Cablevision indicated that its strategic review will focus on two key initiatives. Firstly, the company's board has authorized management to evaluate and establish a policy with respect to quarterly dividends or share repurchases to be initiated in the near term. DBRS noted in its July 23, 2008, rating report that the expectation of good levels of free cash flow in 2008, should give Cablevision the ability to apply this free cash flow to debt reduction, additional acquisitions or further shareholder-friendly initiatives. While at this stage it remains difficult to quantify the magnitude of the company's efforts in terms of dividends or share repurchases, a reasonable recurring dividend or share repurchase program should be manageable. However, if either of these efforts ultimately goes beyond DBRS' expectations (as was the case with the company's $3.0 billion leveraged special dividend in 2006), this could affect the company's issuer and instrument ratings. Secondly, the board has authorized management to explore the spin- off of one or more businesses or other potential strategies. This would likely occur over the near to medium term. DBRS notes that if a spin-off of Cablevision's Rainbow Media business or RNS, for example, were to take place, this would not likely affect the ratings of CSC Holdings, Newsday LLC or Cablevision, as DBRS treats RNS as a separate credit within Cablevision and has only factored the company's cable operations as the main cash flow from operations generator for CSC Holdings. However, DBRS notes that at this point it remains difficult to forecast the company's strategy as well as assess the impact on its credit ratings in terms of spin-offs or other strategies. DBRS will continue to monitor the impact of Cablevision's strategic review and expects to take further rating action, if necessary, as events unfold. While ultimately the impact of this review may not affect Cablevision's ratings, DBRS notes that certain actions taken by the company over the past couple of years have had an impact on the ratings. This includes the aforementioned special dividend in 2006 and the unsuccessful attempt to privatize the company via a leveraged buyout in 2007. CEDAR TRUCKING: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Cedar Trucking, Inc. P.O. Box 283 Glasgow, WV 25086 Bankruptcy Case No.: 08-20746 Chapter 11 Petition Date: August 1, 2008 Court: Southern District of West Virginia (Charleston) Debtor's Counsel: Marshall C. Spradling, Esq. (marshallspradling@wvdsl.net) 100 Capitol Street Suite 1110 Charleston, WV 25301 Tel: (304) 343-2544 Fax: (304) 343-2546 Total Assets: $6,768,362 Total Debts: $6,065,292 Debtor's list of its 17 largest unsecured creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Little General Trade Debt $336,531 P.O. Box 968 Beckley, WV Center Capital Bank Loan $119,902 P.O. Box 1188 Secured: Farmington, CT 06034 $105,000 Unsecured: 119,902 Sunbridge Bank Loan $132,754 P.O. Box 877492 Secured: Kansas City, MO 64187-7492 $45,000 Unsecured: $87,754 Fleetpride Trade Debt $77,225 National City Bank Loan $251,642 Secured: $210,000 Unsecured: $41,642 Sun Trust Bank Bank Loan $40,000 Altec Bank Loan $169,754 Secured: $130,000 Unsecured: $39,754 Alter Moneta Bank Loan (1) $120,763 Secured: $105,000 Unsecured: $15,763 Bank Loan (2) $120,724 Secured: $105,000 Unsecured: $15,724 Quality Bank Loan $120,453 Secured: $105,000 Unsecured: $15,453 Financial Federal $360,000 Secured: $345,000 Unsecured: $15,000 Center Capital Bank Loan $119,902 Secured: $105,000 Unsecured: $14,902 GMAC Bank Loan $50,438 Secured: $40,000 Unsecured: $10,438 Poca Valley Bank Bank Loan $139,058 Secured: $130,000 Unsecured: $9,058 G.E. Bank Loan $49,015 Secured: $40,000 Unsecured: $9,015 Midstate Industrial Lubricants $8,686 Financial Federal $105,748 Secured: $97,500 Unsecured: $8,248 Quality Bank Loan (1) $137,605 Secured: $130,000 Unsecured: $7,605 Bank Loan (2) $137,319 Secured: $130,000 Unsecured: $7,319 COMMODORE CDO: Fitch Chips Ratings on Four Classes of Notes ----------------------------------------------------------- Fitch downgraded 4 and affirmed 3 classes of notes issued by Commodore CDO III, Ltd. and Commodore CDO III, Inc. These rating actions are effective immediately: -- $102,431,253 class A-1A affirmed at 'A'; -- $25,159,296 class A-1B affirmed at 'A'; -- $16,649,399 class A-1C affirmed at 'A'; -- $63,750,000 class A-2 downgraded to 'BB' from 'BBB', removed from Rating Watch Negative; -- $50,000,000 class B downgraded to 'CCC' from 'BB+', removed from Rating Watch Negative; -- $18,857,787 class C-1 downgraded to 'C' from 'B-', removed from Rating Watch Negative; -- $2,291,344 class C-2 downgraded to 'C' from 'B-', removed from Rating Watch Negative. Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically subprime RMBS and SF CDOs with underlying exposure to subprime RMBS. Commodore III is a cash flow structured finance collateralized debt obligation that closed on March 1, 2005 and is managed by Fisher Francis Trees & Watts, Inc. Currently 70% of the portfolio is comprised of U.S. subprime residential mortgage-backed securities, of which 18.7% is of the 2005, 2006 and 2007 vintages, and 7.7% consists of 2005, 2006 and 2007 vintage U.S. SF CDOs. Since November 2007, approximately 52.9% of the portfolio has been downgraded with 7.2% of the portfolio currently on Rating Watch Negative. Fitch notes that, overall, 37% of the assets in the portfolio now carry a rating below the rating it assumed in November 2007. Of the portfolio, 47.6% is now rated below investment grade, of which 20.1% of the portfolio is rated 'CCC+' and below with limited or no recovery expected. The negative credit migration experienced since the last review in November 2007 has resulted in the Weighted Average Rating Factor deteriorating to 15.39 from 5.68, breaching its covenant of 4.95, as of the June 30, 2008 trustee report. 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 30, 2008, the class A/B OC ratio was 95.6% and the class C OC ratio was 88.4%. As a result of the class A/B OC test failure, payment of interest to the classes C-1 and C-2 notes has been made in kind by writing up the principal balance of each class by the amount of interest owed. Fitch expects that the classes C-1 and C-2 notes will receive no further interest or principal payments going forward. The ratings on the classes A-1A, A-1B, A-1C, 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 the classes C-1 and C-2 notes address the ultimate receipt of interest payments and ultimate receipt of principal as per the transaction's governing documents. DERRICK MCCOY: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Derrick A. Mccoy renee A. Mccoy 35 West Cecilia's Lane Cottonwood, AZ 86326 Bankruptcy Case No.: 08-09759 Chapter 11 Petition Date: July 31, 2008 Court: District of Arizona (Phoenix) Judge: Redfield T. Baum PCT Sr. Debtor's Counsel: KIRK A. GUINN GUKEISEN LAW GROUP P.C. 430 W. 1st Street, Suite 102 Tempe, AZ 85281 Tel: 602-265-3822 Fax: 480-699-1070 Email: arizonabankruptcyhelpers@yahoo.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's largest unsecured creditors is available for free at http://bankrupt.com/misc/azdb08-09759.pdf E*TRADE ABS: Collateral Slide Cues Fitch Rtngs Cut; Removes Watch ----------------------------------------------------------------- Fitch Ratings downgraded and removed from Rating Watch Negative seven classes of notes issued by E*Trade ABS CDO IV, Ltd. These rating actions are effective immediately: -- $6,355,290 class A-1A to 'CCC' from 'BBB+'; -- $137,275,766 class A-1B-1 to 'CCC' from 'BBB+'; -- $35,936,397 class A-1B-2 to 'CC' from 'BBB-'; -- $19,755,611 class A-2 to 'CC' from 'BB+'; -- $48,918,656 class B to 'CC' from 'B'; -- $16,935,745 class C to 'C' from 'CCC'; -- $4,576,666 class D to 'C' from 'CC'. 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. E*Trade IV is a cash flow structured finance collateralized debt obligation that closed on Dec. 1, 2005 and is managed by Vertical Capital, LLC. As of the June 30, 2008 trustee report, 61% of the portfolio is comprised of 2005, 2006, and 2007 vintage U.S. subprime residential mortgage-backed securities, 4.7% consists of U.S. SF CDOs, and 12.5% is comprised of 2005, 2006 and 2007 vintage U.S. Alternative-A RMBS. Since November 2007, approximately 70.5% of the portfolio has been downgraded, with 13.4% of the portfolio currently on Rating Watch Negative. 67.7% of the portfolio is now rated below investment grade, of which 46.7% of the portfolio is rated 'CCC+' and below. Fitch notes that, overall, 65.2% of the assets in the portfolio now carry a rating below the rating it assumed in November 2007. The negative credit migration experienced since the last review on Nov. 21, 2007 has resulted in the Weighted Average Rating Factor deteriorating to 23.55 from 12.48, continuing to breach its covenant of 6.16. As of the June 30, 2008 trustee report, the interest coverage tests were passing their respective triggers, but all of the overcollateralization tests were failing. The class A/B IC test was 139.9%, passing its 113.3% trigger. The class C IC test was 124.0% compared to the 103.0% trigger. The class A/B OC test was 64.9% compared to the 106.7% trigger, the class C OC test was 60.7% compared to the 102.3% trigger, and the class D OC test was 54.5% compared to the 101.4% trigger. The weighted average coupon was passing its test at 5.6% compared to 5.5% trigger. However, the weighted average spread was failing at 1.71% compared to the 1.74% trigger. As a result of the failure of the Net Outstanding Portfolio Collateral Balance to be at least equal to the Aggregate Outstanding Amount of the Class A Notes, E*trade IV is in an Event of Default. To date the trustee has not received notification from the noteholders or the hedge counterparty, AIG Financial Products Corp., as to what action to take regarding the Event of Default. Holders of at least 66 2/3% of the aggregate outstanding amount of each class and hedge counterparty are entitled to direct the trustee to take certain actions with respect to the collateral debt securities and the notes. Fitch expects the classes A-1A and A-1 B-1 notes to benefit from the Event of Default as their pro rata seniority in the capital structure enables the classes to receive most of their principal due. In the event of a sale and liquidation of the collateral, Fitch expects that the proceeds from the liquidation of the collateral will not be enough to pay the senior classes, A-1A and A-1 B-1, in full. Classes A-1 B-2, A-2, and B are expected to receive some interest and zero principal. Payment of interest to the class C and D notes have been paid in kind since November 2007 by writing up the principal balance of each class by the amount of interest owed, and thus these classes will receive zero interest and principal going forward. The classes are removed from Rating Watch as Fitch believes further negative migration in the portfolio will have a lesser impact on these classes. Additionally, Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. The ratings of the classes A-1A, A-1 B-1, A-1 B-2, A-2, and B notes address the likelihood that investors will receive full and timely payments of interest, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class C and D notes address the likelihood that investors will receive ultimate payments of interest, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. E*TRADE FINANCIAL: DBRS Cuts Issuer & Sr. Debt Rating to B(high) ---------------------------------------------------------------- DBRS has downgraded the long-term ratings for E*TRADE Financial Corporation, including its Issuer & Senior Debt rating to B(high) from BB. Concurrently, DBRS has confirmed the company's Short- Term Instruments rating at R-4. DBRS also downgraded the Deposits & Senior Debt rating of E*TRADE Bank, the company's principal banking subsidiary, to BB from BB(high) and its Short-Term Instruments rating to R-4 from R-3. The trend on the Banks Short- Term Instruments rating is Stable, while the trend on all other ratings is Negative. The ratings have been removed from Under Review with Negative Implications, where they were placed on Dec. 6, 2007. These actions follow the release of the company's second quarter 2008 earnings. The rating actions reflect DBRSs view that, while E*TRADE has made considerable progress in stabilizing its retail financial services franchise, the company's financial flexibility has been reduced through a significantly higher debt burden somewhat mitigated by improved liquidity through its assets sales. E*TRADE remains exposed to further increases in loan loss provisioning for its mortgage portfolio, particularly its home equity loans, from the still weakening housing markets and U.S. economy. Although E*TRADE has made substantial provisions for its mortgage portfolios in prior quarters, provisions remain elevated and trending higher. In the absence of some stability in the company's provisioning and with most signs pointing to continued deterioration in housing and the U.S. economy, the trend on all long-term ratings is Negative. The two-notch downgrade of the parent holding company's long-term rating reflects the Parents high leverage, its reliance on assets sales to manage its debt servicing obligations and the potential calls on its liquid resources that might be required to support the Bank should credit conditions continue to deteriorate. At the Corporate level, interest payments of $90 million in Q2 2008 are $52 million higher than a year ago, as a result of the increased debt at the Parent following the Citadel transaction late last year. Bolstered by successful asset sales, including the sale of its Canadian operations that is expected to generate net cash proceeds of approximately $511 million, the Parent has considerable liquid resources to meet its obligations in the near term and the ability, if needed, to defer some interest payments. Gains from the asset sales in the third quarter will more than offset expected losses on E*TRADEs holdings of Fannie Mae and Freddie Mac preferred equity. In order to reduce its heavy debt burden at the Parent, the company is utilizing debt for equity swaps and could use some of the asset sales proceeds to further decrease leverage. In the intermediate term, although E*TRADE is having success with its Turnaround Plan and its cash raising actions, its legacy portfolios are absorbing a higher-than-anticipated proportion of the proceeds of the plan through increased provisioning and other write-downs, leaving fewer resources to improve the Parents financial position. The one-notch downgrade of the Deposits & Senior Debt rating of the Bank reflects the continued pressure on its earnings from increasing provisions and other write-downs that are outpacing the Banks ability to absorb the credit costs of its legacy portfolios. Given the current resources at the Parent and the company's commitment to maintain the well-capitalized status of the Bank, DBRS is maintaining the equalization of the Senior Debt and the Deposit rating for the Bank. Any weakening in capitalization of the Bank could result in a downgrade of the Senior Debt rating below the Deposit rating to reflect the increased risk that senior debts face with such a deterioration. The Bank remains well capitalized with regard to regulatory requirements, with a Leverage ratio of 6.68% versus the 5% minimum to be well-capitalized and a Total Capital ratio of 12.17% versus the minimum to be well capitalized of 10%, which gives it a $622 million cushion. This ratio is up from 11.1% in Q4 2007. The Bank retains a solid liquidity position, with substantial borrowing capacity at the FHLB, as well as significant liquid assets and access to the Federal Reserve discount window. The company has made progress in strengthening its balance sheet. Since the end of the year, E*TRADE has reduced its assets by about $5.0 billion to $51.8 billion. Specifically, the Bank has cut its holdings of mortgage-backed securities and other investment securities held for sale by about $2.7 billion and reduced its loan portfolio by about $3.2 billion, while increasing its cash and cash equivalents by $1.0 billion to $2.8 billion. While retaining the generally higher credit quality lines, E*TRADE has also reduced its exposure to unused home equity lines of credit to $3.7 billion, down by almost 50% since last year. On the liability side, it has increased its deposits by about $1.2 billion to $27 billion, while reducing repos by $2.0 billion and other borrowings by about $2.6 billion. With two quarters of losses, shareholders equity is down $192 million to $2.6 billion, but reduced assets have supported its risk weighted capital ratios. The company has had success in stabilizing its franchise in 2008 under new senior management and has returned to growth in several key indicators like retail customers, target segment accounts and margin debt and deposits. Despite weak equity markets, E*TRADE has seen only moderate declines in trading activity. Even with improvements in its franchise, E*TRADE reported a net loss of $94.6 million for Q2 2008 that followed a net loss of $91.2 million for the prior quarter. Provisions increased to $319 million, up by $85 million from Q1 2008, as projected credit costs continued to increase. Higher net interest income was largely offset by reduced non-interest income, leaving revenues largely flat. A reduction in expenses of about $36 million reflected the company's focus on controlling expenses and helped offset increased provisioning. The Banks earnings before credit losses and taxes rose to $204 million in Q2 2008, up $21 million from $183 million in the prior quarter and down only slightly from a year ago largely flat to Q2 2007. While DBRS views this increase a sign of improvement in the Banks fundamentals, it was still well below the increase in the provision. At the same time, non-bank income before tax and discontinued operations was down to $52 million in Q2 2008 from $90 million in Q1 2008, reducing the flow of resources to the Parent. Given E*TRADEs actions to stabilize its franchise and strengthen its balance sheet in the face of a difficult environment, a return to a Stable trend is more likely if the company can achieve a combination of lower provisioning levels and increased income before provisions and taxes that would enable it to better cope with the credit costs of its legacy portfolios. Conversely, continued elevated credit costs that inhibit E*TRADEs ability to reduce debt at the Parent could put further pressure on E*TRADEs ratings. FOUR TWELVE: Voluntary Chapter 11 Case Summary -------------------------------------- Debtor: Four Twelve Sixty-Nine Properties LLC 17321 SE Green Valley Rd. Auburn, WA Bankruptcy Case No.: 08-14964 Chapter 11 Petition Date: Aug. 4, 2008 Court: Western District of Washington (Seattle) Judge: Karen A. Overstreet Debtor's Counsel: Marc S. Stern, Esq. 1825 NW 65th St Seattle, WA 98117 Tel: (206) 448-7996 Email: marc@hutzbah.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. GMAC LLC: DBRS' 'B' Long-Term Debt Rating Unmoved by 2Q '08 Loss ---------------------------------------------------------------- DBRS commented that the ratings of GMAC, LLC, including the Issuer and Long-Term Debt of B with Negative trend, are not affected by the loss reported by the company for the second quarter of 2008. This comment follows GMACs second quarter 2008 earnings release, which indicates a considerable consolidated loss of $2.5 billion for the quarter. The results were impacted by a sizable loss at Residential Capital, LLC, totaling $1.9 billion. Furthermore, GMAC recorded a $716 million impairment to its operating lease portfolio, owing to the significantly weaker used vehicle values. These losses were partially offset by positive results in GMACs Insurance and International Auto Finance segments and a $616 million gain on the retirement of debt resulting from the recently completed ResCap debt restructuring. Importantly, and particularly concerning, is that GMACs core Global Automotive Finance operations recorded a noteworthy loss of $717 million. While DBRS factored in a level of weakness in the automotive finance business in the current rating and trend, the material loss recorded this quarter is beyond DBRS' expectations, as such, the current rating level has little tolerance for further material losses, especially those stemming from leases. Although automotive delinquency rates have trended slightly downwards in the recent quarter, DBRS expects credit performance in GMACs auto portfolio to remain strained in the near term, given the weakening U.S. economy and increasing fuel and food costs, which have pressured many household budgets. Furthermore, in DBRSs opinion, continued elevated loss severities will be the large driver in any increase in credit costs. DBRS acknowledges the significant debt refinancing that GMAC achieved during the second quarter, which improved GMACs near-term liquidity position; however, the current market conditions continue to add liquidity pressure. Moreover, a notable consequence of the refinancing transactions is a more encumbered balance sheet, thereby reducing future funding flexibility and decreasing the credit protection of the unsecured creditor. The Negative trend reflects DBRSs expectations that GMACs core automotive financing business will continue to face escalating pressures by the weakened U.S. economy, increased credit and lease-related costs, elevated funding costs and the reduced industry-wide liquidity. As discussed above, additional material losses will add noteworthy negative ratings pressure. Furthermore, DBRS expects that GMACs automotive financing business profitability will also be negatively impacted by the declines in GM automotive sales, which will likely lead to a reduction in new auto loan origination volume and may also add stress to the wholesale portfolio. The continued losses at ResCap will remain a significant impediment to GMAC returning to profitability. G-STAR: Fitch Junks Ratings on Two Classes of Notes --------------------------------------------------- Fitch downgraded and removed from Rating Watch Negative six classes of notes issued by G-Star 2005-5 Ltd. These rating actions are effective immediately: -- $423,000,000 class A-1 notes downgraded to 'BBB' from 'AA-' and removed from Rating Watch Negative; -- $60,000,000 class A-2 notes downgraded to 'BB' from 'BBB+' and removed from Rating Watch Negative; -- $37,000,000 class A-3 notes downgraded to 'BB-' from 'BBB' and removed from Rating Watch Negative; -- $21,000,000 class B notes downgraded to 'B' from 'BBB-' and removed from Rating Watch Negative; -- $24,000,000 class C notes downgraded to 'CCC' from 'BB-' and removed from Rating Watch Negative; -- $35,000,000 Income Notes downgraded to 'CC' from 'B-' and removed from Rating Watch Negative. Fitch's rating actions reflect the credit deterioration within the portfolio and underlying exposure to subprime residential mortgage-backed securities. G-Star 2005-5 is a cash flow collateralized debt obligation that closed on March 16, 2005 and is managed by Capmark Investments LP. The reinvestment period will end in March 2009. Presently 56.59% of the portfolio consists of U.S. subprime RMBS, 1.79% Alt-A RMBS, 3.42% prime RMBS, 1.10% U.S. SF CDOs, 4.38% U.S. Non-SF CDOS, 3.6 % other asset backed securities and 29.12% commercial mortgage backed securities. Since November 21, 2007, approximately 37.5% of the portfolio has been downgraded with 5.65% of the portfolio currently on Rating Watch Negative. 44.93% of the portfolio is now rated below investment grade, of which 10.66% of the portfolio is rated 'CCC' and below. Overall, 38.4% of the assets in the portfolio now carry a rating below the rating assumed in Fitch's November 2007 review. Currently, the class A, B and C overcollateralization tests ratios are passing the minimum levels of 109.0%, 107.25% and 104.4%, respectively. All classes of notes and income notes are receiving interest distributions at this time and principal proceeds from collateral amortization can be reinvested in additional collateral. The downgrades to the rated notes are a result of the credit deterioration experienced to date and reflect Fitch's updated view of the default risk associated with each of the notes. Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. Fitch will continue to monitor and review this transaction for future rating adjustments. The ratings of the Class A-1, A-2 and A-3 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the Class B and Class C notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating on the Income Notes addresses the ultimate payment of aggregate outstanding amount of the Income Notes as of the closing date. G-STAR: Fitch Lowers Seven Notes Ratings and Removes Neg. Watch --------------------------------------------------------------- Fitch downgraded and removed from Rating Watch Negative seven classes of notes issued by G-Star 2004-4 Ltd. These rating actions are effective immediately: -- $394,574,205 class A-1 notes downgraded to 'BB' from 'A+' and removed from Rating Watch Negative; -- $20,000,000 class A-2A notes downgraded to 'B' from 'BBB' and removed from Rating Watch Negative; -- $10,000,000 class A-2B notes downgraded to 'B' from 'BBB' and removed from Rating Watch Negative; -- $12,000,000 class B notes downgraded to 'CCC' from 'BB+' and removed from Rating Watch Negative; -- $8,000,000 class C-1A notes downgraded to 'CC' from 'BB-' and removed from Rating Watch Negative; -- $6,000,000 class C-1B notes downgraded to 'CC' from 'BB-' and removed from Rating Watch Negative; -- $24,000,000 Preferred Shares downgraded to 'C' from 'B+' and removed from Rating Watch Negative. Fitch's rating actions reflect the credit deterioration within the portfolio and underlying exposure to subprime residential mortgage-backed securities. G-Star 2004-4 is a cash flow collateralized debt obligation that closed on Aug. 12, 2004 and is managed by Capmark Investments LP. The reinvestment period ends in August 2008. Presently 57.14% of the portfolio consists of U.S. subprime residential mortgage- backed securities, 2.12% Alt-A RMBS, 2.58% U.S. SF CDOs, 3.5% U.S. Non-SF CDOS, 10.27 % asset backed securities and 24.39% commercial mortgage backed securities. Since Nov. 21, 2007, approximately 32.84% of the portfolio has been downgraded with 9.52% of the portfolio currently on Rating Watch Negative. 35.34% of the portfolio is now rated below investment grade, of which 14.40% of the portfolio is rated 'CCC' and below. Overall, 29.71% of the assets in the portfolio now carry a rating below the rating assumed in Fitch's November 2007 review. The collateral deterioration has caused the class C overcollateralization test ratio to fall below the minimum level of 102.5%. As a result, interest proceeds are being used to pay down the class A-1 notes and will continue until the OC test is cured. The class A and B OC test ratios are currently passing the minimum levels of 104% and 103%, respectively. All classes of notes are currently receiving interest distributions; however, the preferred shares are no longer receiving cash flows. The downgrades to the rated notes reflect Fitch's updated view of the default risk associated with each of the notes. Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. Fitch will continue to monitor and review this transaction for future rating adjustments. The ratings of the Class A-1, A-2A and A-2B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the Class B, Class C-1A and C-1B notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating on the Preferred Shares addresses the ultimate payment of aggregate outstanding amount of the Preferred Shares as of the closing date. G-STAR: Fitch Slashes 'AA-' Rating to 'BB' on $5MM Class B-2 Notes ------------------------------------------------------------------ Fitch downgraded and removed from Rating Watch Negative six classes of notes issued by G-Star 2003-3 Ltd./Corp. These rating actions are effective immediately: -- $207,406,781 class A-1 notes downgraded to 'AA' from 'AAA' and removed from Rating Watch Negative; -- $48,000,000 class A-2 notes downgraded to 'A' from 'AAA' and removed from Rating Watch Negative; -- $18,000,000 class A-3 notes downgraded to 'BBB' from 'AA+' and removed from Rating Watch Negative; -- $5,000,000 class B-1 notes downgraded to 'BB' from 'AA-' and removed from Rating Watch Negative; -- $15,000,000 class B-2 notes downgraded to 'CCC' from 'BBB+' and removed from Rating Watch Negative; -- $6,127,108 preference shares downgraded to 'CCC' from 'BB' and removed from Rating Watch Negative. Fitch's rating actions reflect the collateral deterioration within the portfolio and underlying exposure to subprime residential mortgage-backed securities. G-Star 2003-3 is a cash flow structured finance collateralized debt obligation that closed on March 13, 2003 and is managed by Capmark Investments L.P. Presently 33.3% of the portfolio consists of U.S. subprime RMBS, 5.7% of which are from 2005 and 2006 vintages, 10.1% of the portfolio is Alternative-A RMBS from 2005 and 2006 vintages, and 33.7% is U.S. commercial mortgage- backed securities. Since the last review in June 2007, approximately 28.2% of the portfolio has been downgraded with 10.4% of the portfolio currently on Rating Watch Negative. Currently, 18.6% of the portfolio is rated below investment grade, of which 10.3% of the portfolio is rated 'CCC+' and below. Exposure to assets rated 'CCC+' and below exceeds the credit enhancement levels on the class B-2 notes. Currently, the class A, B-1 and B-2 overcollateralization test ratios are passing their respective minimum levels of 104%, 103% and 101%. All classes of notes and income notes are receiving interest distributions at this time and principal proceeds are being used to amortize the class A-1 notes. The downgrades to the rated notes are a result of the credit deterioration experienced to date and reflect Fitch's updated view of the default risk associated with each of the notes. Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. Fitch will continue to monitor and review this transaction for future rating adjustments. The ratings on the class A-1, A-2, and A-3 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 the class B-1 and B-2 notes address the ultimate receipt of interest payments and ultimate receipt of principal as per the transaction's governing documents. The rating of the preference shares addresses the ultimate receipt of the remaining rated principal balance. GREEKTOWN CASINO: Wants to Employ Ernst & Young as Auditors ----------------------------------------------------------- Greektown Casino LLC and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Michigan to employ Ernst & Young LLP as their auditor and accountant, nunc pro tunc to June 30, 2008. The Debtors believe that Ernst & Young is well qualified because of the firm's extensive knowledge and experience in auditing and accounting services. The Debtors believe the firm can perform the contemplated services in a cost-effective, efficient and timely manner. Ernst & Young note that it has provided prepetition services to the Debtors, including certain accounting, auditing and other services. In effect, the firm is already familiar with the Debtors' operations, Brendan G. Best, Esq., at Schafer and Weiner, PLLC, in Bloomfield Hills, Michigan, relates. As the Debtors' auditor and accountant, Ernst & Young will: (a) perform the annual audit of consolidated financial statements of Greektown Holdings, LLC, for the year ended Dec. 31, 2008; (b) perform the quarterly audits of consolidated financial statements of Greektown Casino, LLC, for the quarters ended June 30, 2008, Sept. 30, 2008, and Dec. 31, 2008; (c) research and consult with the Debtors' management regarding financial accounting and reporting matters; and (d) prepare management letter and internal control communications. For the Accounting and Auditing Services to be rendered by the firm, Ernst & Young professionals will be paid according to these hourly rates: Professional Hourly Rate ------------ ----------- National Partner $430 - $495 Partners $430 - $485 Executive Directors $420 - $455 Senior Manager $350 - $415 Manager $275 - $315 Senior $210 - $250 Staff $120 - $170 Senior Client Serving Associate $85 - $100 For Special Audit Services to be rendered by the firm, Ernst & Young professionals will be paid according to these hourly rates: Professional Hourly Rate ------------ ----------- National Partner $860 - $990 Partners $860 - $970 Executive Directors $840 - $910 Senior Manager $700 - $830 Manager $550 - $630 Senior $420 - $500 Staff $240 - $340 Senior Client Serving Associate $170 - $200 Charles L. Norman, a partner at Ernst & Young, disclosed that the firm's fees for the quarterly audit of Greektown Casino LLC will range from $95,000 to $100,000 per quarter, and the firm's fees for the quarterly audit of Greektown Holdings, LLC, for the year ended Dec. 31, 2008, will range from $30,000 to $40,000. Ernst & Young agrees not to undertake any Special Audit Services in excess of $10,000 without first notifying the Debtors regarding those services. The firm will first provide the Debtors of an estimate of the fees for those services and will obtain the Debtors' written consent and the Court's approval. Mr. Norman assures the Court that Ernst & Young is a "disinterested person" as that term defined in Section 101(14) of the U.S. Bankruptcy Code, as modified by Section 1107(b). The firm does not hold or represent an interest adverse to the Debtors or their estates, he maintains. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC and its affiliates -- http://www.greektowncasino.com/-- operate world- class casino gaming facilities located in Detroit's historic Greektown district featuring over 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC serves as the Debtors' claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. (Greektown Casino Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). GREEKTOWN CASINO: Panel Wants to Hire Xroads as Financial Advisor ----------------------------------------------------------------- The Official Committee of Unsecured Creditors in Greektown Casino LLC and its debtor-affiliates' Chapter 11 cases seeks permission from the U.S. Bankruptcy Court for the Eastern District of Michigan to retain XRoads Solutions Group LLC, as its financial advisor and investment banker, nun pro tunc to June 23, 2008. The Committee believes that XRoads' professionals have considerable experience in providing the type of restructuring, reorganization and corporate finance assistance that the Committee anticipates it will need in the Debtors' Chapter 11 cases. The Committee also notes that XRoads has advised official creditors committees in numerous bankruptcy cases and the firm's professionals have served as financial advisors to debtors, official creditors committees, secured lenders, ad hoc bondholder committees and acquirers in connection with assignments involving gaming companies operating in several jurisdictions in the United States. As the Committee's financial advisor, XRoads will: (a) review and analyze the Debtors' business, operations, liquidity situation, assets and liabilities, financial condition and prospects; (b) monitor and track the uses of cash and the use of the budgets prepared by the Debtors; (c) analyze the Debtors' business plans, operating budgets and financial projections and assess the reasonableness of those plans, budgets and projections; (d) evaluate the Debtors' debt capacity prior and subsequent to the completion and commencement of operations of the Debtors' expanded hotel and casino resort complex; (e) analyze the Debtors' long-term financing needs and the various strategic alternatives to those long-term financing needs; (f) review and provide an analysis of any valuation of the Debtors or their assets; (g) review and provide an analysis of any proposed capital structure for the Debtors; (h) evaluate and assess the adequacy of any procedures proposed by the Debtors or their advisors with respect to the implementation of any proposed asset sales or divestitures and monitoring the execution of any of those procedures; (i) review and analyze the Debtors' existing capital structure and advise the Committee with respect to refinancing and restructuring alternatives to the existing indebtedness; (j) evaluate and analyze any proposed new financing for which the Debtors seek approval and advise the Committee with respect to the formulation of its positions with respect to any financing; (k) evaluate, analyze and valuate purchase offers received by the Debtors and advise the Committee with respect to the formulation of its positions with respect to any purchase offer; (l) advise the Committee and its counsel regarding financial, strategic and business issues concerning the Debtors and their Chapter 11 cases; (m) participate in negotiations with the Debtors and other parties-in-interest and advise the Committee and its counsel with respect to those negotiations; (n) monitor the status of construction of the Debtors' expanded hotel and casino resort complex and track the costs of the construction relative to budgets prepared by the Debtors or their advisors; and (o) provide other ancillary financial advisor services as the Committee or its counsel may from time to time reasonably request and that are customarily provided by financial advisors in similar situations. Jeffrey R. Truitt, an officer of XRoads, discloses that his firm will be paid a $10,000 monthly fee for the services XRoads will render to the Committee. The Monthly Advisory Fee for June 2008 will be prorated to June 23, 2008. XRoads will also be reimbursed on the first business day of each month for any actual and necessary out-of-pocket expenses it incurs. In addition, the Committee will seek to obtain approval of payment of up to $3,500 in expenses for XRoads on a monthly basis. Mr. Truitt assures the Court that XRoads is a "disinterested person," as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC and its affiliates -- http://www.greektowncasino.com/-- operate world- class casino gaming facilities located in Detroit's historic Greektown district featuring over 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC serves as the Debtors' claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. (Greektown Casino Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). HOVNANIAN ENTERPRISE: CDS Spread Highest Among Peers ---------------------------------------------------- An article at Seeking Alpha by Michael Shedlock, a registered investment advisor representative for SitkaPacific Capital Management, responds to questions about which homebuilder will most likely file for bankruptcy after the fall of WCI Communities Inc. this month. Basing on credit market players' perception, Mr. Shedlock said that Hovnanian Enterprises Inc., Beazer Homes USA Inc., and Lennar Corp. are now the top three candidates for bankruptcy. Five-year data from Bloomberg shows the cost of insuring the credit risk of these companies are the highest in the industry. Company Spread Company Spread Company Spread ------- ------ ------- ------ ------- ------ (bps) (bps) (bps) Hovnanian 1,427.2 Meritage Homes 676.7 Ryland 442.6 Beazer Homes 1,158.1 Standard-Pacific 663.3 Pulte 325.0 Lennar 793.8 DH Horton 527.8 Toll 282.8 Centex 470.8 MDC Holdings 160.8 KB homes 447.5 Mr. Shedlock notes that in December 2007, Standard Pacific was the least likely to go bankrupt. Gretchen Morgenson in a July 2008 International Herald Tribune article states that the CDS market is one of the hottest investment arenas nowadays. She said in a February 2008 article that the market for these securities has grown from $900 billion since 2000 to more than $45.5 trillion this year. While CDS is considered a large market, lack of disclosure rules, however, makes it an obscure market. This may change shortly, though. According to Ms. Morgenson, the Financial Accounting Standards Board has suggested a list of disclosures to help investors understand the financial implications for companies that have sold credit default swaps. The disclosure requirements will be effective in financial statements for fiscal years that end after Nov. 15, 2008. The deadline may "ensnare some of the biggest U.S. brokerage firms with fiscal years ending in November -- Lehman Brothers, Morgan Stanley and Goldman Sachs," according to Ms. Morgenson. About Beazer Homes Headquartered in Atlanta, Beazer Homes USA Inc., (NYSE: BZH) -- http://www.beazer.com/-- is a single-family homebuilder with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia. The company also provides mortgage origination and title services to its homebuyers. About Lennar Corp. Based in Miami, Fla., Lennar Corporation (NYSE: LEN and LEN.B) -- http://www.lennar.com/-- builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides primarily mortgage financing, title insurance and closing services for both buyers of the company's homes and others. About Hovnanian Enterprises Hovnanian Enterprises Inc. (NYSE: HOV) -- http://www.khov.com/-- founded in 1959 by Kevork S. Hovnanian, chairman, is headquartered in Red Bank, New Jersey. The company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. Hovnanian Enterprises, Inc. is a member of the Public Home Builders Council of America (PHBCA) -- http://www.phbca.org/-- a nonprofit group devoted to improving understanding of the business practices of America's largest publicly-traded home building companies, the competitive advantages they bring to the home building market, and their commitment to creating value for their home buyers and stockholders. The PHBCA's 14 member companies build one out of every five homes in the United States. At April 30, 2008, the company's consolidated balance sheet showed $3.96 billion in total assets, $3.07 billion in total liabilities, $38.6 million in minority interest from inventory not owned, $1.4 million in minority interest from consolidated joint ventures, and $850.2 million in total stockholders' equity. * * * As reported in the Troubled Company Reporter on June 12, 2008, Fitch Ratings affirmed Hovnanian Enterprises Inc.'s 'B-' Issuer Default, 'CCC/RR6' Senior subordinated notes, and 'CCC-/RR6' Series A perpetual preferred stock ratings. HOV's Rating Outlook remains Negative. JAMES HARRINGTON: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: James Samuel Harrington Eileen Claire Harrington (Joint Debtor) c/o Sacha Ross, Esq. Grimes Goebel et al., P.L. 1023 Manatee Ave. West Bradenton, FL 34205 Tel: (941) 748-0151 Bankruptcy Case No.: 08-11809 Chapter 11 Petition Date: Aug. 5, 2008 Court: Middle District of Florida (Tampa) Debtor's Counsel: Sacha Ross, Esq. Grimes Goebel Grimes Hawkins, etal 1023 Manatee Avenue West Bradenton, FL 34205 941-748-0151 Fax : 941-748-0158 http:sross@grimesgoebel.com Estimated Assets: $500,000 to $1 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. J & P ANDERSON: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: J & P Anderson Enterprises Inc. dba Kwik Dry Clean Super Center on 3040 4213 O'Hare Dr. Mesquite, TX 75150 Bankruptcy Case No.: 08-42076 Chapter 11 Petition Date: Aug. 4, 2008 Court: Eastern District of Texas (Sherman) Debtor's Counsel: Daniel C. Durand, III, Esq. Durand & Associates, P.C. 522 Edmonds, Suite 101 Lewisville, TX 75067 Tel: (972) 221-5655 Email: bankruptcy@durandlaw.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A list of the Debtor's largest unsecured creditors is available for free at http://bankrupt.com/misc/txeb08-42076.pdf KIK CUSTOM: Moody's Junks Corporate Family Rating to Caa1 from B2 ----------------------------------------------------------------- Moody's Investors Service lowered the ratings of KIK Custom Products Inc.'s including the Corporate Family Rating and Probability of Default rating to Caa1 from B2. In addition, Moody's lowered KIK's 1st lien debt, including its $55 million revolving credit facility and $410 million term loan to B3 from B1 and its $235 million 2nd lien term loan to Caa2 from Caa1. The rating outlook is stable. These rating actions conclude KIK's review for possible downgrade initiated on March 24, 2008. The downgrade reflects the significant financial underperformance of the company due to the challenges of a potential new entrant in the bleach market as well as escalating raw material costs. Somewhat mitigating substantial concerns regarding the deterioration in fundamental value are several actions taken by the company to enhance liquidity and reduce the competitive threat. A $10 million equity contribution from its existing equity investors, a sale leaseback of a production facility raising $27 million in proceeds and an asset exchange and non- compete agreement with the potential bleach entrant alleviate immediate concerns regarding KIK's liquidity. In Moody's view, while the equity contribution is modest, this may provide the company enough opportunity to improve performance, (mostly through price increases and cost savings) such that EBITDA is sufficient to meet capital and debt service requirements albeit still perceptibly behind original expectations. Notably, the company has limited margin for error, given the significant cash requirements for interest expense and ongoing restructuring efforts. While cash flow will be very constrained over the near term, over time, the company could begin to generate free cash flow as a result of price increases, the more modest competition going forward, the ongoing trend among KIK's consumer product customers to outsource manufacturing as well as the increase in demand from its large retailer customers for private label products. Rating actions are: -- $55 million senior secured revolving credit facility due 2013, downgraded to B3 (LGD3, 34%); -- $410 million first lien senior secured term loan due 2014, downgraded to B3 (LGD3, 34%); -- $235 million second lien senior secured term loan due 2014, downgraded to Caa2 (LGD5, 81%); -- Corporate family rating downgraded to Caa1; -- Probability-of-default rating downgraded to Caa1; Headquartered in Ontario, Canada, KIK Custom Products Inc. manufactures a variety of household cleaning, personal care, over- the-counter ("OTC") and prescription drug product lines. The private label bleach business ("Classic Segment") manufactures retail-branded bleach and other household liquid cleaners for a wide variety of supermarket companies and other mass merchandisers, while the contract manufacturing business ("Custom Segment") primarily produces aerosol and liquid products for leading branded consumer product companies. LAKEVIEW DEVELOPMENT: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Lakeview Development Partners L.P. Suite 201, 123 W. Main Street Grand Prairie, TX 75050 Bankruptcy Case No.: 08-43569 Chapter 11 Petition Date: August 4, 2008 Court: Northern District of Texas (Ft. Worth) Judge: Russell F. Nelms Debtor's Counsel: Lynda L. Lankford Forshey & Prostok LLP 777 Main Street, Ste. 1290 Fort Worth, TX 76102 Tel: (817) 878-2022 Fax: (817) 877-4151 Email: llankford@forsheyprostok.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors. LENNAR CORP: CDS Spread Among Industry's Top Three -------------------------------------------------- An article at Seeking Alpha by Michael Shedlock, a registered investment advisor representative for SitkaPacific Capital Management, responds to questions about which homebuilder will most likely file for bankruptcy after the fall of WCI Communities Inc. this month. Basing on credit market players' perception, Mr. Shedlock said that Hovnanian Enterprises Inc., Beazer Homes USA Inc., and Lennar Corp. are now the top three candidates for bankruptcy. Five-year data from Bloomberg shows the cost of insuring the credit risk of these companies are the highest in the industry. Company Spread Company Spread Company Spread ------- ------ ------- ------ ------- ------ (bps) (bps) (bps) Hovnanian 1,427.2 Meritage Homes 676.7 Ryland 442.6 Beazer Homes 1,158.1 Standard-Pacific 663.3 Pulte 325.0 Lennar 793.8 DH Horton 527.8 Toll 282.8 Centex 470.8 MDC Holdings 160.8 KB homes 447.5 Mr. Shedlock notes that in December 2007, Standard Pacific was the least likely to go bankrupt. Gretchen Morgenson in a July 2008 International Herald Tribune article states that the CDS market is one of the hottest investment arenas nowadays. She said in a February 2008 article that the market for these securities has grown from $900 billion since 2000 to more than $45.5 trillion this year. While CDS is considered a large market, lack of disclosure rules, however, makes it an obscure market. This may change shortly, though. According to Ms. Morgenson, the Financial Accounting Standards Board has suggested a list of disclosures to help investors understand the financial implications for companies that have sold credit default swaps. The disclosure requirements will be effective in financial statements for fiscal years that end after Nov. 15, 2008. The deadline may "ensnare some of the biggest U.S. brokerage firms with fiscal years ending in November -- Lehman Brothers, Morgan Stanley and Goldman Sachs," according to Ms. Morgenson. About Beazer Homes Headquartered in Atlanta, Beazer Homes USA Inc., (NYSE: BZH) -- http://www.beazer.com/-- is a single-family homebuilder with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia. The company also provides mortgage origination and title services to its homebuyers. About Hovnanian Enterprises Hovnanian Enterprises Inc. (NYSE: HOV) -- http://www.khov.com/-- founded in 1959 by Kevork S. Hovnanian, chairman, is headquartered in Red Bank, New Jersey. The company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. Hovnanian Enterprises, Inc. is a member of the Public Home Builders Council of America (PHBCA) -- http://www.phbca.org/-- a nonprofit group devoted to improving understanding of the business practices of America's largest publicly-traded home building companies, the competitive advantages they bring to the home building market, and their commitment to creating value for their home buyers and stockholders. The PHBCA's 14 member companies build one out of every five homes in the United States. About Lennar Corp. Based in Miami, Fla., Lennar Corporation (NYSE: LEN and LEN.B) -- http://www.lennar.com/-- builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides primarily mortgage financing, title insurance and closing services for both buyers of the company's homes and others. * * * As reported in the Troubled Company Reporter on June 11, 2008, Moody's Investors Service lowered all of the ratings of Lennar Corporation, including its corporate family rating to Ba3 from Ba1 and the ratings on its various issues of senior unsecured notes to Ba3 from Ba1. At the same time, a speculative grade liquidity rating of SGL-2 was assigned. The ratings outlook remains negative. LEVEL 3 FINANCING: DBRS Assigns 'B(low)' Issuer Rating ------------------------------------------------------ DBRS assigned an Issuer Rating of B(low) to Level 3 Financing Inc., a wholly-owned finance subsidiary of Level 3 Communications Inc. Additionally, DBRS has assigned recovery and instrument ratings to both Level 3 Financing and Level 3s specific debt instruments. The changes in the instrument ratings result from the application of DBRSs new Leveraged Finance rating methodology. The Positive trend reflects DBRSs expectation that further realization of the company's integration efforts following a number of acquisitions over the past couple of years and the expectation of positive free cash flow should lead to a stronger credit profile for Level 3 over the next 12 to 18 months. Specifically, this expectation is based on more predictable gross margins of 57% currently and potentially improving toward 60%, improved EBITDA margins of 21.6% currently heading toward the mid- 20% range over time and, after many years of free cash flow deficits, the generation of free cash flow. The company's Issuer Rating of B(low), which is consistent with DBRSs previous view of the company's implied Issuer Rating, is based on three factors. Firstly, the company has achieved additional scale as a result of its acquisitions. This has served to: (a) expand the company's presence further in metropolitan area markets which align well with its significant long haul network and capabilities; (b) expand its focus to enterprise customers; and (c) diversify its revenue base across product line as well as geography with its enhanced European presence. As a result, the company's EBITDA has grown significantly (over $1 billion expected for 2008) and should further strengthen as it unlocks its operational leverage. Secondly, DBRS continues to expect that Level 3 is well-positioned to generate positive free cash flow for the first time on an annual basis in 2009. Thirdly, this free cash flow along with the company's current liquidity of $666 million at June 30, 2008, should more than cover its 2009 maturities and better position the company to handle its steady amount of debt that matures over the 2009 to 2014 timeframe. Despite these factors, DBRS continues to acknowledge that Level 3 will continue to face challenges over the medium term. These continue to include: (a) further integration risks, although the company appears to be well on its way to rectifying previously stated integration issues in conjunction with good progress on its plan to complete the consolidation of its operating and billings systems (Project Unity); (b) a highly competitive operating environment as its acquisitions have positioned the company into areas that are more competitive with incumbent telcos and service aggregators; and (c) a sizable revenue mix of voice services (roughly one-third of its core communications revenue). DBRS notes that of its voice services, the wholesale portion is managed for its incremental gross margin contribution (30%) despite this service largely being commoditized. The other portion is local and enterprise voice service which is sold along with other enterprise services that collectively contribute strong incremental gross margins of 80%. DBRS has simulated a default scenario for Level 3 in order to analyze potential recovery for various debt classes in the event of default. DBRS has stressed Level 3 under such a scenario whereby, under certain assumptions, it could potentially default on its debt obligations over the 2009 to 2011 timeframe. This default scenario results in a decline in EBITDA to a point that is 42% lower at the end of 2011 than the EBITDA for the twelve months period ending June 30, 2008. Additionally, the implied EBITDA multiple has been discounted by over 2.0 times to 5.0 times for the base case. The resulting valuation assumes a total enterprise value of $3.4 billion under the base case, which is nearly 50% below the current implied enterprise value of $6.7 billion. At a distressed valuation level, DBRS believes the Senior Secured Credit Facility has outstanding prospects for full recovery of 100%. As such, DBRS has assigned this debt a recovery rating of RR1 and an instrument rating of BB(low), three notches above Level 3 Financings B(low) Issuer Rating. DBRS notes that even in the worst case valuation scenario where the enterprise value plummets by 54% versus the current enterprise value, the senior secured lenders should experience full recovery. Level 3 Financings Senior Unsecured Notes have a meaningful recovery after the secured creditors have been paid. As such, the recovery rating on these unsecured notes is RR3 and assumes a Good recovery that ranges between 50% to 70%. As such, this debt is rated B or one notch above Level 3 Financings B(low) Issuer Rating. Level 3s Senior Unsecured Notes and Convertible Senior Notes have been assigned a recovery rating of RR6 given their Poor recovery prospects of 0%. This debt is rated CCC, two notches below Level 3 Financings B(low) Issuer Rating. DBRS notes that this debt is inherently superior relative to Level 3s Subordinated Notes. Level 3s Subordinated Notes have been assigned a recovery rating of RR6 given their Poor recovery prospects of 0%. This debt is also rated CCC, two notches below Level 3 Financings B(low) Issuer Rating. DBRS believes that Level 3 has the ability to improve its B(low) Issuer Rating given improvements in both its business and financial risk profile with gross debt-to-EBITDA possibly improving to below 5.5 times in 2009 from 7.27 times currently. However, should any of its current operational issues persist or become protracted or demand not materialize as expected, this could lead to a removal of its Positive trend and/or possibly even pressure its current ratings. MASONITE CORP: Moody's Cuts Debt Ratings to Caa1, Concludes Review ------------------------------------------------------------------ Moody's Investors Service has downgraded various Masonite Corporation's debt ratings, including its CFR from B3 to Caa1. The outlook is negative. This concludes the review for possible downgrade initiated on July 9, 2008. The downgrade results from the expectation that business conditions are likely to remain weak over the intermediate horizon, leading to financial pressure, and the deterioration of credit metrics. Additionally, the company's negotiations with its bank group to address breached debt covenants remain unresolved at this time. Weakening business conditions, limit the company's negotiating options. The company's position would likely benefit if KKR, its equity sponsor, were to provide meaningful equity support. These debt ratings have been downgraded: -- Corporate family rating, downgraded to Caa1 from B3; -- Probability of default rating, downgraded to Caa2 from B3; These ratings have been affirmed and assessments changed: -- $1,172 million Gtd. Sr. Sec. Term Loan due 2013, affirmed at B2. LGD assessment changed to LGD2, 22% from LGD3, 33%; -- $350 million Gtd. Sr. Sec. Revolver due 2011, affirmed at B2. LGD assessment changed to LGD2, 22% from LGD3, 33%; -- Speculative grade liquidity rating, is affirmed at SGL-4. The senior secured credit facility was affirmed and as a result is now rated two notches higher than the company's CFR to reflect its senior status in the event of bankruptcy and its anticipated recovery in a default scenario. The downgrade in the company's probability of default rating reflects the view that the ongoing weakness in the homebuilding and remodeling slowdown has raised the probability that the company will default during this downturn. The CFR and the notching are primarily a result of the company's capital structure and are tiered to reflect anticipated recovery by debt class in the event of default per Moody's LGD rating methodology. The LGD rate has been changed to 40% from 50%. Anticipated recovery estimates consider both the company's capital structure and the value of the company's business/assets. The negative outlook results from the company's ongoing weak cash generation, and unresolved covenant violations. Masonite is headquartered in Ontario, Canada. The company is a leading global manufacturer of doors and door components with customers in over 70 countries and manufacturing facilities in 18 countries in North America, Europe, Latin America, Asia and Africa. Revenues for the trailing twelve month period ended March 31, 2008 were approximately $2.1 billion. NEW CENTURY: Fitch Keeps Junk Ratings on 11 Classes --------------------------------------------------- Fitch Ratings has taken these rating actions on one New Century second lien transaction. Downgrades total $107 million. New Century 2006-S1 -- $48 million class A1 downgraded to 'CCC/DR2' from 'B'; -- $25.7 million class A-2A downgraded to 'CCC/DR2' from 'B'; -- $33.1 million class A-2B downgraded to 'CCC/DR2' from 'B'; -- $0.0 class M-1 remains at 'C/DR6'; -- $0.0 class M-2 remains at 'C/DR6'; -- $0.0 class M-3 remains at 'C/DR6'; -- $0.0 class M-4 remains at 'C/DR6'; -- $0.0 class M-5 remains at 'C/DR6'; -- $0.0 class M-6 remains at 'C/DR6'. -- $0.0 class M-7 remains at 'C/DR6'; -- $0.0 class M-8 remains at 'C/DR6'; Deal Summary -- Originators: 100% New Century; -- 60+ day Delinquency: 33.4%; -- Realized Losses to date (% of Original Balance): 37.8%; -- Expected Remaining Losses (% of Current Balance): 22%; -- Cumulative Expected Losses (% of Original Balance): 45.7%. The rating actions are based on deterioration in the relationship between credit enhancement and expected losses and reflect continued poor loan performance and home price weakness. Minimum LCR's specifically for subprime second lien transactions are as follows: AAA: 2.00; AA: 1.75; A: 1.50; BBB: 1.30; BB 1.10; B: 1.00. ONEBEACON US: A.M. Best Assigns 'bb+' Rating on Preferred Stock --------------------------------------------------------------- A.M. Best Co. has assigned indicative ratings of "bbb" on senior debt, "bbb-" on subordinated debt and "bb+" on preferred stock and trust preferred securities to OneBeacon Insurance Group, Ltd. (Bermuda) and OneBeacon U.S. Holdings, Inc.'s (Wilmington, DE) (formerly Fund American Companies, Inc.), recently filed $1 billion universal shelf registration. OneBeacon, Ltd. is the ultimate holding company for OneBeacon U.S. Holdings. White Mountain Insurance Group, Ltd. (Bermuda) owns 75.1% (as of June 30, 2008) of OneBeacon, Ltd. The outlook assigned to the above ratings is stable. The indicative ratings reflect the manageable financial leverage of OneBeacon, Ltd, with debt-to-total capital of 32% through second quarter 2008 and coverage ratios over a three-year period that support the assigned debt ratings. Furthermore, the ratings reflect the group's improved operating performance over a five- year period and favorable capitalization. The operating companies of OneBeacon, Ltd. are consolidated under the OneBeacon Insurance Group (Canton, MA). OneBeacon Group's financial strength rating of A(Excellent) and issuer credit ratings of "a" are unchanged, and the outlook is stable. These indicative shelf ratings have been assigned: OneBeacon U.S. Holdings, Inc. and OneBeacon Insurance Group, Ltd.: -- "bbb" on senior unsecured debt -- "bbb-" on subordinated debt -- "bb+" on preferred stock OneBeacon U.S. Holdings Trust I, II and III: -- "bb+" on preferred securities PDK INVESTMENT: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: PDK Investment Group, LLC PO Box 81228 Atlanta, GA 30366 Bankruptcy Case No.: 08-75143 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- F&S Lofts, LLLP 08-75139 Type of Business: Single Asset Real Estate as defined in 11 U.S.C. Sec. 101 (51B) Chapter 11 Petition Date: Aug. 5, 2008 Court: Northern District of Georgia (Atlanta) Debtor's Counsel: M. Denise Dotson, Esq. Jones & Walden, LLC 21 Eighth Street, NE Atlanta, GA 30309 Tel: (404) 564-9300 Fax: (404) 564-9301 Email: ddotson@joneswalden.com Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million PDK Investment Group, LLC's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Charles K. Schmandt Architect $325,000 5522 New Peachtree Rd, Suite 122 Chamblee, GA 30341 CKS Management Co. $175,000 5522 New Peachtree Roa, Suite 122 Chamblee, GA 30341 Craig Design Group $65,110 Attn: Patrick Craig 12101 Ashford Gables Drive Atlanta, GA 30338 DeKalb Co. Tax 2008 Real Estate $58,801 Commissioner Taxes 120 West Trinity Place Decatur, GA 30030 Hanover Insurance Group $2,725 Williams, Turner & Mathis, Inc. P.O. Box 450289 Atlanta, GA 31145 JM Wilkerson Construction $2,108,978 Attn: Jim Wilkerson 1734 Sands Place Marietta, GA 30067 Kilpatrick Stockton $16,253 Attn: T. Hairston Whitner 1100 Peachtree Street, Suite 2800 Atlanta, GA 30309 Mactec $522,276 Attn: David Gorschel 1105 Lakewood Pkwy, Suite 300 Alpharetta, GA 30004 Robert and Co. $15,685 Attn: B. Klutz 229 Peachtree St, NE International Towers, Suite 2000 Atlanta, GA 30303 Terracon Consultants, Inc. $9,538 Attn: Scott Philips 2855 Premier Pkwy, Suite C Duluth, GA 30097 A copy of F&S Lofts, LLLP's petition is available for free at: http://bankrupt.com/misc/ganb08-75139.pdf POLAR MOLECULAR: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Polar Molecular Corp. 4610 South Ulster, Suite 150 Denver 80237 Bankruptcy Case No.: 08-21608 Type of Business: Fuel Additive Company Chapter 11 Petition Date: Aug. 4, 2008 Court: District of Colorado (Denver) Debtor's Counsel: Garry R. Appel, Esq. 1917 Market St. Suite A Denver, CO 80202 (303) 297-9800 Email: appelg@appellucas.com Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. RESIDENTIAL CAPITAL: DBRS Keeps 'CCC' Rating with Negative Trend ---------------------------------------------------------------- DBRS commented on the second quarter 2008 results of Residential Capital, LLC. DBRSs CCC Issuer Rating for ResCap and Negative trend remain unaffected. This comment follows ResCaps earnings release, which indicates a loss of $1.9 billion for the second quarter of 2008, representing an approximate $1.0 billion increase from the previous quarter. Driving this quarters loss were increased loan provisioning, realized losses on asset sales and an increase in reserves for loan repurchases. The ongoing weakness in the U.S. housing market and the difficult operating environment continues to negatively impact ResCaps performance. Credit performance of the portfolio assets continued to weaken, while house price declines increased loss severity, driving higher loan loss provisions and other impairments. During the quarter, ResCap recorded $467 million in loan loss provisions for its held for investment portfolio and $397 million of impairment related to the value of its held for sale mortgage portfolio. The company was successful in selling non-conforming assets, which generated substantial cash, however, resulted in ResCap incurring approximately $1.0 billion of losses associated with these sales. DBRS recognizes that these transactions represent progress in managements efforts to reduce the size of the company's balance sheet. Partially offsetting these aforementioned losses was a gain of $647.0 million associated with the early retirement of debt. DBRS views this quarters loss as outsized, given the company's reduced equity base and, in DBRSs opinion, the company has limited ability to manage additional sizable losses. While DBRS recognizes that the debt restructuring and the other liquidity initiatives implemented during the quarter combined with support gained from GMAC and its shareholders have improved ResCaps near-term liquidity profile, in DBRSs opinion the company still faces very significant liquidity pressures. Given the current environment, DBRS views ResCaps ongoing business fundamentals as weak, as ResCap continues to face pressures from its legacy portfolios, the slowed U.S. housing market and the difficult capital markets environment. SPH ASSOCIATES: Case Summary & Largest Unsecured Creditor --------------------------------------------------------- Debtor: SPH Associates 131 Davis Drive North Wales, PA 19454 Bankruptcy Case No.: 08-15018 Chapter 11 Petition Date: Aug. 5, 2008 Court: Eastern District of Pennsylvania (Philadelphia) Debtor's Counsel: Stephen M. Hladik, Esq. Kerns Pearlstine Onorato & Fath LLP 425 West Main Street P.O. Box 29 Lansdale, PA 19446-0029 Tel: (215) 855-9521 Email: shladik@kernslaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $1 million to $10 million Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ William R. Bingham and 446-450 North 6th $1,414,000 Beverly Bingham Street 410 Bayside Road Bellingham, WA 98225 SPRINT NEXTEL: Incurs $344 Million Net Loss in 2008 2nd Quarter --------------------------------------------------------------- Sprint Nextel Corp. reported Wednesday financial results for its second quarter ended June 30, 2008. The company recorded a net loss of $344.0 million in the second quarter 2008, compared to net income of $19.0 million in the second quarter 2007. For the year-to-date period 2008 the company reported a net loss of $849.0 million compared to a net loss of $192.0 million in the year-to-date period 2007. The second quarter 2008 and the year-to-date period 2008 net losses were primarily due to decreases in Wireless segment revenue, while the year-to-date period 2007 loss was principally due to increases in Wireless segment operating expenses, including an increase in severance costs related to workforce reductions. Net operating revenues decreased 11% to $9.06 billion in the second quarter 2008 as compared to $10.16 billion in the second quarter 2007 and decreased 9% to $18.39 billion in the year-to- date period 2008 from $20.26 billion in the year-to-date period 2007, reflecting the continuing decline in revenues from the company's Wireless segment, due to declines in the average revenue per subscriber and a decrease in the number of wireless subscribers. Wireless Service revenue totaled $7.01 billion for the second quarter 2008 and $14.13 billion for the year-to-date period 2008 and $7.90 billion for the second quarter 2007 and $15.71 billion for the year-to-date period 2007. Adjusted Net Income Before Amortization Adjusted net income before amortization, which removes the effects of special items and non-cash amortization expense, was $163.0 million in the second quarter 2008 compared to $719.0 million in the second quarter 2007. In the second quarter 2008 and 2007, the company recorded severance, exit costs and asset impairment charges of $64.0 million, net of tax, and $52.0 million, net of tax, respectively. In the second quarter 2008 and 2007, the company recorded merger and integration costs of $27.0 million, net of tax and $100.0 million, net of tax, respectively. All merger costs are related to the Sprint-Nextel merger and/or the PCS Affiliates and Nextel Partners� acquisitions. Free Cash Flow/Capital Expenditures For the quarter, free cash flow was $11.0 million compared to $183.0 million in the second quarter of 2007. Free Cash Flow in the quarter was impacted by sequential deceleration in spending levels as well as the timing of cash outlays and receipts. Capital expenditures decreased $821.0 million to $2.57 billion in the first six months 2008 compared to $3.39 billion in the first six months of 2007 primarily due to reduced spending in the company's Wireless segment. This was partially offset by an increase in expenditures relating to FCC licenses of $210.0 million. Net Debt/Total Liquidity Net Debt at the end of the period was $19.48 billion, consisting of total debt of $22.98 billion, offset by cash and marketable securities of $3.50 billion. The company used $1.25 billion in cash in the second quarter to retire all of the 6.125% Senior Notes due in November 2008. As of June 30, 2008, the company had $3.50 billion of cash and maintained approximately $1.20 billion of borrowing capacity under its revolving credit facility. Total liquidity was approximately $4.70 billion. Balance Sheet At June 30, 2008, the company's consolidated balance sheet showed $62.81 billion in total assets, $41.40 billion in total liabilities, and $21.41 billion in total shareholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?307f About Sprint Nextel Sprint Nextel Corp. -- http://www.sprint.com/-- offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel is widely recognized for developing, engineering and deploying innovative technologies, including two robust wireless networks serving about 52 million customers at the end of the second quarter 2007; industry-leading mobile data services; instant national and international walkie- talkie capabilities; and a global Tier 1 Internet backbone. * * * As reported in the Troubled Company Reporter on May 26, 2008, Fitch affirmed the Sprint Nextel Corporation's ratings, including the company's 'BB+' Issuer default rating. RESIDENTIAL CAPITAL: DBRS Keeps 'CCC' Rating with Negative Trend ---------------------------------------------------------------- DBRS commented on the second quarter 2008 results of Residential Capital, LLC. DBRSs CCC Issuer Rating for ResCap and Negative trend remain unaffected. This comment follows ResCaps earnings release, which indicates a loss of $1.9 billion for the second quarter of 2008, representing an approximate $1.0 billion increase from the previous quarter. Driving this quarters loss were increased loan provisioning, realized losses on asset sales and an increase in reserves for loan repurchases. The ongoing weakness in the U.S. housing market and the difficult operating environment continues to negatively impact ResCaps performance. Credit performance of the portfolio assets continued to weaken, while house price declines increased loss severity, driving higher loan loss provisions and other impairments. During the quarter, ResCap recorded $467 million in loan loss provisions for its held for investment portfolio and $397 million of impairment related to the value of its held for sale mortgage portfolio. The company was successful in selling non-conforming assets, which generated substantial cash, however, resulted in ResCap incurring approximately $1.0 billion of losses associated with these sales. DBRS recognizes that these transactions represent progress in managements efforts to reduce the size of the company's balance sheet. Partially offsetting these aforementioned losses was a gain of $647.0 million associated with the early retirement of debt. DBRS views this quarters loss as outsized, given the company's reduced equity base and, in DBRSs opinion, the company has limited ability to manage additional sizable losses. While DBRS recognizes that the debt restructuring and the other liquidity initiatives implemented during the quarter combined with support gained from GMAC and its shareholders have improved ResCaps near-term liquidity profile, in DBRSs opinion the company still faces very significant liquidity pressures. Given the current environment, DBRS views ResCaps ongoing business fundamentals as weak, as ResCap continues to face pressures from its legacy portfolios, the slowed U.S. housing market and the difficult capital markets environment. SPRINT NEXTEL: DBRS Rates Proposed $3BB Preferred Shares 'BB' ------------------------------------------------------------- DBRS has assigned the Sprint Nextel Corporation proposed issuance of $3.0 billion of Cumulative Perpetual Convertible Preferred Shares a rating of BB. The trend is Negative. This offering is being done by way of Rule 144a under the Securities Act of 1933. The shares will have an aggregate liquidation preference of $1,000 per share for a total of $3.0 billion and will be convertible into shares of Sprint Nextel common stock. The company also expects to grant the initial purchasers a 30-day option to purchase up to 450,000 shares of additional preferred shares. DBRS expects the proceeds from this offering to be used for general corporate purposes, which may include debt reduction. SYNCORA GUARANTEE: Moody's Reviews B2 IFSR for Possible Upgrade --------------------------------------------------------------- Moody's Investors Service placed the B2 insurance financial strength ratings of Syncora Guarantee Inc. (formerly XL Capital Assurance Inc.), Syncora Guarantee (U.K.) Ltd. and Syncora Guarantee Re Ltd. (formerly XL Financial Assurance Ltd) on review for possible upgrade. In the same rating action, Moody's confirmed the ratings of Syncora Holdings Ltd. (formerly Security Capital Assurance Ltd.; preference shares at Ca) with a negative outlook. Moody's also placed the ratings of Twin Reefs Pass- Through Trust on review with direction uncertain. The rating action was prompted by SCA's announcement that it has closed on the agreement with XL Capital Ltd providing for the termination, elimination or commutation of certain reinsurance, guarantees and other agreements with XL and its affiliates in return for a payment by XL of $1.775 billion in cash and 8 million shares of XL Class A ordinary shares. SCA also announced it has closed on the previously announced agreement with Merrill Lynch & Co., Inc. for the termination of eight credit default swaps on ABS CDOs written by SG in return for a $500 million cash payment to Merrill Lynch. Prior to this rating action, the ratings of SG and SG Re were under review with direction uncertain and the debt ratings of SCA and Twin Reefs were under review for possible downgrade. Moody's ratings on securities that are guaranteed or "wrapped" by a financial guarantor are generally maintained at a level equal to the higher of a) the rating of the guarantor (if rated at the investment grade level), or b) the published underlying rating. In accordance with current rating agency policy, after Moody's June 20, 2008, rating action on XL Capital Assurance (now Syncora Gurantee) and XL Financial Assurance (now Syncora Guarantee Re) which lowered their ratings to below the investment grade level, Moody's withdrew ratings on SG and SG Re-wrapped securities for which there was no published underlying rating. If the guarantors' ratings subsequently move back into the investment grade range or should the agency subsequently publish the associated underlying rating, Moody's would reinstate previously withdrawn ratings on those wrapped instruments. For further information please see Moody's published special comment entitled: Assignment of Wrapped Ratings When Financial Guarantor Falls Below Investment Grade (May 6, 2008). According to Moody's, the review for possible upgrade on the insurance financial strength ratings of SG and SG Re reflects the significant improvement to SCA's capital adequacy position and upward pressure on the ratings following the successful completion of the aforementioned transactions with XL and Merrill Lynch. However, Moody's stated that the insurance financial strength ratings are likely to remain non-investment grade at the conclusion of our rating review given the continued uncertainty with respect to SCA's remaining mortgage-related exposures and currently impaired franchise. The confirmation of SCA's shelf and preference share ratings (with a negative outlook) reflects the positive overall capital adequacy implications associated with the Master Agreement and Merrill Agreement and resulting upward pressure on the insurance financial strength ratings. However, in Moody's opinion, the credit profile of the holding company has not benefited to the same degree. The change in the direction of the rating review on Twin Reefs, to review with direction uncertain, from review for possible downgrade, reflects the potential for upward rating pressure based on the improvement in the credit profile of the trust's underlying securities (SG Re Series B preference shares), well as the possibility that dividends on these underlying securities could be omitted at some future date, which could result in a downgrade from the current Caa2 rating. The rating agency stated that SCA has announced that it expects to record significant reserve charges on its mortgage-related exposures during 2Q2008, including both second-lien RMBS and ABS CDOs. This reserving activity will result in both SG and SG Re reporting negative statutory capital at quarter-end. However, the transactions contemplated by the Master Agreement and the Merrill Agreement will result in the companies having positive statutory capital and result in a significant improvement in their capital adequacy positions, in Moody's opinion. In addition, SCA has announced it has commuted its outbound reinsurance with RAM Reinsurance Company Ltd and a portion of inbound reinsurance with Financial Security Assurance Inc. (the remainder of which will be moved from SG Re to SG). SCA has also earmarked $820 million for the purpose of commuting, terminating, amending or restructuring existing agreements with certain CDS bank counterparties who have signed the Master Agreement. Moody's stated that the ratings review will focus on: 1) the risk- adjusted capital adequacy positions of SG and SG Re; 2) further clarity with respect to future preferred share dividend policy and capacity; and 3) an assessment of SCA's franchise value and future business prospects. With respect to SCA's commutation agreement with Merrill, Moody's stated that the negotiated settlement has some elements that are typically associated with a distressed exchange, though such a determination is ultimately a matter of judgment, and depends on the specific circumstances of the guarantor as well as the amount of the settlement compared to the economic value of the hedge. Based on Moody's evaluation of these exposures, the settlement amount represents a significant discount to the capital charges applied in our model. These ratings have been placed on review for possible upgrade: Syncora Guarantee Inc. -- insurance financial strength at B2; Syncora Guarantee (U.K.) Ltd. -- insurance financial strength at B2; and Syncora Guarantee Re Ltd -- insurance financial strength at B2. These ratings have been confirmed with a negative outlook: Syncora Holdings Ltd. -- provisional rating on senior debt at (P)Caa3, provisional rating on subordinated debt at (P)Ca and preference shares at Ca. These rating has been placed on review with direction uncertain: Twin Reefs Pass-Through Trust -- contingent capital securities at Caa2. Syncora Holdings Ltd. (formerly Security Capital Assurance Ltd) is a Bermuda-domiciled holding company whose primary operating subsidiaries, Syncora Gurantee Inc. (formerly XL Capital Assurance Inc.) and Syncora Guarantee Re Ltd. (formerly XL Financial Assurance Ltd), provide credit enhancement and protection products to the public finance and structured finance markets throughout the United States and internationally. SYNTAX-BRILLIAN: Court Approves Greg Rayburn as Interim COO ----------------------------------------------------------- Syntax-Brillian Corporation and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ FTI Consulting and certain of its employees, including Greg Rayburn as interim chief operating officer. FTI Consulting is expected to provide services of: a) Mr. Rayburn, as chief executive officer of the Debtors; and b) certain other FTI Consulting employees namely: Kyle Boyle, Michael Tucker, Mary Ann Kaptain, Peter Keogh, Lance Peterson, Dan Brosious, Cecilia Yang and Brenden Brewer to act as temporary employees to the Debtor. Mr. Rayburn and the temporary employees is expected to assist the Debtors in operating on a day-to-day basis well as in evaluating and implementing strategic and tactical options related to the Debtors' businesses and in facilitating the proposed sale of substantially all of the Debtors' assets. Mr. Rayburn told the Court that FTI Consulting will be paid its standard rates of: Professional Hourly Rates ------------ ------------ Senior Managing Directors $525 - $715 Directors/Managing Directors $425 - $620 Associates/Consultants $235 - $440 Administrative/Paraprofessionals $100 - $180 Mr. Rayburn said that he and the temporary employees are not entitled to direct compensation or bonuses from the Debtors, but will continue to draw their salaries and receive benefits from FTI Consulting. Mr. Rayburn assured the Court that FTI Consulting is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. About Syntax-Brillian Corporation Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq:BRLC) -- http://www.syntaxbrillian.com-- manufactures and markets LCD HDTVs, digital cameras, and consumer electronics products include Olevia(TM) brand high-definition widescreen LCD televisions and Vivitar brand digital still and video cameras. Syntax-Brillian is the sole shareholder of California-based Vivitar Corporation. The company and two of its affiliates -- Syntax-Brillian SPE, Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection on July 8, 2008 (Bankr. D. Delaware Lead Case No.08-11409 through 08-11409. Dennis A. Meloro, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig LLP, represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 3 has appointed five creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection against their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. TAYLOR CAPITAL: Fitch Cuts Rating to 'BB' on Weakened Liquidity --------------------------------------------------------------- Fitch Ratings has downgraded the ratings of Taylor Capital Group, Inc. to 'BB' from 'BB+'. At the same time, all ratings of TAYC and its subsidiaries have been placed on Rating Watch Negative. Ratings downgraded, placed on Rating Watch Negative: Taylor Capital Group, Inc. -- Long-term Issuer Default Rating to 'BB' from 'BB+' -- Individual to 'C/D' from 'C'; TAYC Capital Trust I -- Preferred stock to 'B+' from 'BB'. Fitch has downgraded the long-term IDR of parent company TAYC to 'BB+' to reflect the weakened liquidity position and the parent's increasing dependence on cash flows from the bank to make debt service payments. TAYC recently announced a $25 million loss in the second quarter of 2008. The loss was largely caused by a $49 million loan loss provision which was driven by further deterioration in the company's residential construction loan portfolio. Given primary subsidiary Cole Taylor Bank's weakened profitability and lower capital ratios, Fitch also notes the bank's dividend capacity, without seeking regulatory approval, to upstream dividends to TAYC to service holding company debt is constrained. In addition to the downgrade of the parent company and trust preferred securities, Fitch has placed all ratings for TAYC and its primary subsidiaries on Rating Watch Negative, signaling the potential for further deterioration in asset quality, particularly in exposures dependent upon residential real estate conditions. Fitch notes that TAYC has materially strengthened its credit risk management staff, including loan review and special assets administration. The expanded, experienced team lends key support to Cole Taylor Bank's ratings at this time. Credit quality is expected to remain pressured given a weakening economy. However, should asset quality deterioration escalate or require further significant provisions, this would likely result in a downgrade in ratings. Contributing to Fitch's rating action is the net losses in the first half of 2008 have significantly reduced the capital position. TAYC has announced plans to help bolster capital and parent liquidity. It has signed a non-binding letter of intent to negotiate the sale of $50 million in noncumulative convertible preferred stock of the parent company to an outside investor group. The lead outside investor would obtain seats on TAYC's Board of Directors and membership on the Executive Committee of the Board. Execution of the agreement depends on the investor's satisfactory completion of a due diligence review, as well as regulatory and Board approval. TAYC has also announced that Cole Taylor Bank intends to issue up to $50 million of subordinated debt in a private placement. Management expects the preferred stock and subordinated debt to be issued by the end of the third quarter of 2008. Neither the preferred stock nor the subordinated debt issuances are assured. Nonetheless, Fitch considers these developments positively particularly given current, weakened capital levels. The capital will help to provide TAYC with additional resources and financial flexibility to resolve existing levels of problem assets. However, the inability to complete these transactions would likely place further downward rating pressure. TAYC management is making efforts to de-emphasize residential construction lending in its business model in favor of commercial and industrial lending. To this end, management has hired a team of experienced lenders from the former LaSalle Bank N.A. and is booking a large volume of commercial loans. Although this initiative will help to diversify TAYC's loan portfolio over the long-term, Fitch will monitor this loan growth in terms of the additional pressure it may place on reserves, capital, and funding. Ratings placed on Rating Watch Negative: Taylor Capital Group, Inc. -- Short-term IDR 'B'; -- Support Rating '5'; -- Support Floor 'NF'; Cole Taylor Bank -- Long-term IDR 'BB+'; -- Long-term deposits 'BBB-'; -- Short-term deposits 'F3'; -- Individual 'C'; -- Short-term IDR 'B'; -- Support Rating '5'; -- Support Floor 'NF'. THROWER & THROWER: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Thrower & Thrower Inc. 5409 North Shepherd Drive Houston, TX 77091-5739 Bankruptcy Case No.: 08-35013 Chapter 11 Petition Date: Aug. 4, 2008 Court: Southern District of Texas (Houston) Judge: Marvin Isgur Debtor's Counsel: Margaret Maxwell McClure, Esq. 909 Fannin, Suite 3810 Houston, TX 77010 Tel: (713) 659-1333 Fax: (713) 658-0334 Email: mccluremar@aol.com Estimated Assets: Unknown Estimated Debts: Unknown The Debtor did not file a list of its largest unsecured creditors. TRIBUNE COMPANY: Closes Formation Agreement with Cablevision Unit ----------------------------------------------------------------- On July 29, 2008, Tribune Company and Newsday Inc., a wholly-owned subsidiary of the company, consummated the closing of the Formation Agreement with CSC Holdings Inc., a Delaware corporation, and NMG Holdings Inc., a wholly-owned subsidiary of Cablevision Systems Corp., to form a new limited liability company. As reported in the Troubled Company Reporter on May 14, 2008, Cablevision Systems Corporation and Tribune Company disclosed a definitive agreement to form a new partnership through which Cablevision will acquire approximately 97% of Newsday Media Group. Under the terms of the Formation Agreement, Tribune, through Newsday and other wholly-owned subsidiaries, contributed certain assets and related liabilities of the Newsday business, and NMG Holdings contributed newly issued Senior Notes of Cablevision with a fair market value of $650.0 million on the closing date. Also on the closing date, Newsday LLC borrowed $650.0 million under a new secured credit facility, and Tribune received $630.0 million in cash from the proceeds of that financing (which includes the $18 million of prepaid rent). NMG Holdings also made capital contributions of $35.0 million in cash to Newsday LLC to pay certain transaction costs. As a result of these transactions, CSC Holdings, through NMG Holdings, owns approximately 97% and Tribune, through Newsday, owns approximately 3% of the equity in Newsday LLC. CSC Holdings has operational control of Newsday LLC. The Newsday Media Group Assets were valued at $632.0 million in the transaction, and Tribune also received $18.0 million at closing as prepaid rent under certain leases of property used in the business, bringing the total transaction value to $650.0 million. The debt securities contributed by NMG Holdings have terms which mirror Cablevision's 8% Senior Notes due 2012. Under the financing agreements for Newsday LLC, borrowings are guaranteed by CSC Holdings, Newsday Holdings LLC and NMG Holdings and secured by a lien on the assets of Newsday LLC, including the Cablevision Senior Notes contributed by NMG Holdings. Newsday LLC is generally prohibited from using the proceeds received from any repayment of the Cablevision Senior Notes contributed by NMG Holdings to acquire non-publicly traded notes or debt instruments of Cablevision or CSC Holdings, and Newsday LLC is required under the financing agreements to maintain cash or cash equivalents or publicly traded notes or debt instruments of Cablevision or CSC Holdings with an aggregate principal amount that exceeds the then- outstanding borrowings by Newsday LLC. At any time after the tenth anniversary of the closing of the transaction and prior to the thirteenth anniversary of the closing, NMG Holdings has the right to purchase Newsday�s entire interest in Newsday LLC. At any time after the thirteenth anniversary of the closing and on or prior to the date that is six months after such anniversary, Tribune has the right to require NMG Holdings to purchase Newsday's entire interest in Newsday LLC. In either case, the purchase price will be the fair market value of the interest. Tax Matters Agreement/Indemnification Agreement On the closing date of the Formation Agreement, Tribune and CSC Holdings entered into the Tax Matters Agreement pursuant to which, among other things, CSC Holdings, NMG Holdings and Newsday LLC agreed that they will indemnify Tribune for certain taxes incurred by Tribune if, prior to Jan. 1, 2018, Newsday LLC sells or otherwise disposes of the Newsday Media Group Assets contributed by Tribune or fails to maintain outstanding indebtedness of $650.0 million for the first three years after the closing date, reducing to $530 million after the third year, and by $35 million each year thereafter until Jan. 1, 2018 at which point such amount is reduced to $0. On the closing date of the Formation Agreement,Tribune, CSC Holdings and NMG Holdings also entered into the Indemnity Agreement pursuant to which, among other things, Tribune agreed to indemnify CSC Holdings and NMG Holdings with respect to any payments that CSC Holdings or NMG Holdings make under their guarantee of the Newsday LLC financing. To the extent that Tribune makes any indemnification payments to CSC Holdings or NMG Holdings under the Indemnity Agreement, Tribune will be subrogated to all rights of CSC Holdings or NMG Holdings, as applicable, against Newsday LLC in respect of such indemnification payments. >From the closing date through the third anniversary of the closing date, the maximum amount of potential indemnification payments is $650.0 million. After the third year, the Maximum Indemnification Amount is reduced by $120.0 million, and each year thereafter by $35.0 million until Jan. 1, 2018, at which point the Maximum Indemnification Amount is reduced to $0. A full-text copy of the company's Formation Agreement, dated as of May 11, 2008, is available for free at: http://researcharchives.com/t/s?307c A full-text copy of the Tax Matters Agreement, dated as of July 29, 2008, is available for free at: http://researcharchives.com/t/s?307a A full-text copy of the Indemnity Agreement, dated as of July 29, 2008, is available for free at: http://researcharchives.com/t/s?307b About Tribune Co. Headquartered in Chicago, Illinois, Tribune Company (NYSE: TRB) -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting. It reaches more than 80% of U.S. households and is the only media organization with newspapers, television stations and websites in the nation's top three markets. In publishing, Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, Newsday (Long Island, New York), The Sun (Baltimore), South Florida Sun-Sentinel, Orlando Sentinel and Hartford Courant. The company's broadcasting group operates 23 television stations, Superstation WGN on national cable, Chicago's WGN-AM and the Chicago Cubs baseball team. Tribune Company's consolidated balance sheet at March 30, 2008, showed total assets of $12.97 billion, total liabilities of $14.63 billion, and common shares held by ESOP, net of unearned compensation, of $10.7 million, resulting in a shareholders' deficit of roughly $1.67 billion. * * * As reported in the Troubled Company Reporter on July 24, 2008, Moody's Investors Service downgraded Tribune Company's Corporate Family rating to Caa2 from B3, the Probability of Default rating to Caa2 from B3, concluding the review for downgrade initiated on April 21, 2008. Moody's also assigned an SGL-4 speculative-grade liquidity rating. The LGD point estimates were updated to reflect the current mix of debt. VERTICAL ABS: Fitch Cuts Six Notes Ratings and Removes Neg. Watch ----------------------------------------------------------------- Fitch downgraded and removed from Rating Watch Negative six classes of notes issued by Vertical ABS CDO 2006-2, Ltd./Corp. These rating actions are effective immediately: -- $301,341,970 class A-S1VF notes to 'CCC' from 'BBB+'; -- $52,000,000 class A1 notes to 'CC' from 'BBB-'; -- $41,000,000 class A2 notes to 'CC' from 'BB'; -- $26,724,567 class A3 notes to 'C' from 'B'; -- $21,769,566 class B notes to 'C' from 'CCC'; -- $5,304,125 class C notes to 'C' from 'CC'. The downgrades are a result of significant credit deterioration within the portfolio, specifically in subprime residential- mortgage backed securities. Vertical 2006-2 is a hybrid cash flow and synthetic structured finance collateralized debt obligation that closed on June 20, 2006 and is managed by Vertical Capital, LLC. Presently 84.6% of the portfolio is comprised of 2005 through 2007 vintage U.S. subprime RMBS, and 2.2% consists of 2005 through 2007 vintage U.S. SF CDOs. Since Fitch's last review of Vertical 2006-2 on Nov. 21, 2007, approximately 92.2% of the portfolio has been downgraded and 9.8% of the portfolio is currently on Rating Watch Negative. 91.5% of the portfolio is now rated below investment grade, with 57% being rated 'CCC+' and below. Overall, 90.5% of the assets in the portfolio now carry a rating below the rating assumed in Fitch's November 2007 review. The negative credit migration experienced since the last review on Nov. 21, 2007 has resulted in the weighted average rating factor declining to 'B-/CCC' from 'BBB/BBB-', as of the June 3, 2008 trustee report. The significant collateral deterioration has caused the class A2 overcollateralization ratio to decline to 73.5%, relative to its trigger of 108%. This failure results in a diversion of interest proceeds to the reserve account which reduces the remaining unfunded facility commitment amount after paying class A2 interest. The class B and C notes have been paying in kind, whereby the principal balance of each class of notes has been written up by the amount of interest owed, since November 2007 when the A3 OC test started failing its covenant. The class A3 notes have been PIKing since February 2008 when the A2 OC test began failing its covenant. Fitch does not currently expect the class A3, B and C notes to receive any interest or principal payments going forward. Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. Fitch will continue to monitor and review this transaction for future rating adjustments. The ratings on the class A-S1VF, A1 and A2 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 the class A3, B and C notes address the ultimate receipt of interest payments and ultimate receipt of principal as per the transaction's governing documents. WCI COMMUNITIES: Shares Debut in Pink Sheets Amid NYSE Suspension ----------------------------------------------------------------- WCI Communities, Inc.'s common stock began trading under the symbol WCIMQ on the Pink Sheets August 5, 2008. Pink Sheets is a daily listing of bid and ask prices for over-the-counter stocks not included in the daily OTC bulletin board. Quotes can be found at http://www.pinksheets.com/ NYSE Regulation, Inc. on August 4, 2008, determined that the WCI's common stock should be suspended immediately. This decision was reached in view of the fact that the Company's August 4, 2008, announcement that it and approximately 130 of its wholly-owned subsidiaries had filed voluntary petitions to restructure their debt and capital under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in the District of Delaware in Wilmington. WCI said it has determined it will not request a hearing to appeal the New York Stock Exchange's determination to suspend trading in, and seek delisting of, WCI's common stock. The New York Stock Exchange said application to the U.S. Securities and Exchange Commission to delist the issue is pending the completion of applicable procedures, as the Company will not contest this determination. NYSE Regulation noted that it may, at any time, suspend a security if it believes that continued dealings in the security on the NYSE are not advisable. WCI said there is no assurance as to what values, if any, will be ascribed in the chapter 11 cases as to the value of WCI's common stock or any other WCI security. Accordingly, the company urged that caution be exercised with respect to existing and future investments in its securities as the value and prospects are highly speculative. About WCI Communities Headquartered in Bonita Springs, Florida, WCI Communities, Inc. -- http://www.wcicommunities.com/-- is a fully integrated homebuilding and real estate services company. It has operations in Florida, New York, New Jersey, Connecticut, Massachusetts, Virginia and Maryland. The company directly employs roughly 1,800 people, as well as roughly 1,800 sales representatives as independent contract employees. The company and 126 of its affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Lead Case No.08-11643 through 08-11770). Eric Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at Bayard, P.A, are the Debtors local bankruptcy counsels. Lazard Freres & Co. represents the Debtors as financial advisors. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims & notice agent. When the Debtors filed for protection against their creditors, they listed total assets of $2,178,179,000 and total debts of $1,915,034,000. (WCI Communities Bankruptcy News, Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WCI COMMUNITIES: S&P Cuts Rating to 'D' After Bankruptcy Filing --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on WCI Communities Inc. to 'D' from 'CC' after the company announced that it had voluntarily filed for relief under Chapter 11 of the U.S. Bankruptcy Code. Concurrently, we lowered our ratings on $650 million of senior subordinate notes to 'D' from 'C' and withdrew our rating on a recently rated $375 million second-lien note issue that ultimately was not sold. The company reports that it has reached an agreement with its principal secured lenders to gain access to more than $40 million of cash to continue operating its business on an interim basis. This Bonita Springs, Fla., residential developer also announced that its lenders have offered to provide an additional $100 million of excess liquidity through a debtor-in-possession loan facility. RATINGS LOWERED WCI Communities Inc. Rating To From Corporate credit D CC/Developing/-- Senior subordinated D (recov rtg: 6) C (recov rtg: 6) RATING WITHDRAWN WCI Communities Inc. Rating To From Senior secured NR C (recov rtg: 5) WICHITA RENTALS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Wichita Rentals Inc. 4806 Johnson Road Wichita Falls, TX 76310 Tel: (940) 322-1199 Bankruptcy Case No.: 08-70315 Chapter 11 Petition Date: August 4, 2008 Court: Northern District of Texas (Wichita Falls) Debtor's Counsel: John A. Leonard, Esq. Leonard, Key & Key 900 Eighth St., Suite 320 P.O. Box 8385 Wichita Falls, TX 76307 Tel: (940) 322-5217 Email: lenbiz@rlklaw.net Judge: Harlin DeWayne Hale Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. XL CAPITAL: Best Puts 'bb+' Rating on $500MM Preference Shares -------------------------------------------------------------- A.M. Best Co. has assigned a debt rating of "bb+" to XL Capital Ltd's (Cayman Islands) $500 million series C preference shares issued in connection with the company's exercise of the put option under its Mangrove Bay Pass Through Trust (Bermuda) contingent capital facility. The rating is under review with negative implications. Concurrently A.M. Best has withdrawn the debt rating of "bb+" on Mangrove Bay's $500 million 6.102% trust preferred shares. These rating actions follow XL Capital's recently announced capital action plan in response to its agreement with Syncora Holdings Ltd. (fka Security Capital Assurance Ltd.). On July 29, 2008, A.M. Best placed all XL Capital financial strength, issuer credit and debt ratings under review with negative implications. The ratings will remain under review pending the successful completion of the capital action plan followed by A.M. Best's assessment of the SCA impact on XL Capital's core business franchise and the containment of any negative effects that may have occurred. ZIFF DAVIS: CNET Wants 800 Jorie's Claim in Lease Dispute Denied ---------------------------------------------------------------- 800 Jorie Blvd. LLC, as landlord, initiated a state action in the Circuit Court of the Eighteenth Judicial Circuit, DuPage County, Illinois against CNET Networks, Inc., Ziff Davis Publishing, Inc, and Ziff Davis Media, Inc. In its State Action, 800 Jorie sought $1,300,000 in damages for CNET's and the Ziff Entities' alleged breach of a commercial lease. CNET is the successor to an original tenant, and the Ziff Entities are the assignees of tenant's rights and obligors of tenant's rental obligations. Andrew R. Poyton, Esq., at Mulherin Rehfeldt & Varchetto PC, in Wheaton, Illinois, states that on information and belief, 800 Jorie was not the owner of the commercial space located at 800 Jorie Boulevard pursuant to a lease agreement with 800 Jorie's predecessor-in-interest, CEP Investors VI, L.P. and the Debtors. Mr. Poyton points out that the Lease identified CEP Investors as the "landlord" but did not mention 800 Jorie as the owner. He also adds that at no time has CNET been in actual physical possession of the Premises. In its complaint, 800 Jorie alleged that CNET assumed the Debtors' obligations pursuant to a merger. However, CNET denies that it assumed all of the Debtors' obligations as a result of the merger. Mr. Poyton says that CNET does not even have knowledge of a "Landlord's Five-Day Notice," which 800 Jorie allegedly mailed to CNET. CNET asserts that at no time did 800 Jorie serve it a notice of default of lessee's obligations, nor demand for payment of any rents or other amounts reported due under the Lease. 800 Jorie asserted that CNET owes rental for six months, for $153,677. Mr. Poyton also points out that 800 Jorie's counsel did not believe CNET was responsible for any obligations due and owing under the Lease, and dismissed CNET as a defendant on April 26, 2007. Relying on its dismissal as defendant within the proceedings, and because it did not receive the Landlord's Five-Day Notice, CNET was induced to forego any attempts to mitigate the liability, Mr. Poyton recounts. Subsequently, 800 Jorie filed a second complaint, under which it asserted damages against CNET for an amount exceeding those sought in its Initial Complaint by $200,000, Mr. Payton tells the Circuit Court. Mr. Poyton tells Judge Burton Lifland that Ziff Davis Publishing, Inc., has admitted that it is the true party-in-interest and only party against which 800 Jorie can properly seek recourse. Based on these reasons, CNET asks the Circuit Court to deny all relief sought by 800 Jorie and award CNET its costs and expenses incurred in answering the Complaint. About Ziff Davis Media, Inc. Headquartered in New York city, New York, Ziff Davis Media, Inc. -- http://www.ziffdavis.com/-- and its affiliates are integrated media companies serving the technology and videogame markets. They are information services and marketing solutions providers of technology media, including publications, Websites, conferences, events, eSeminars, eNewsletters, custom publishing, list rentals, research and market intelligence. Their US-based media properties reach over 22 million people per month at work, home and play. They operate in three segments: the Consumer Tech Group, which includes PC Magazine and pcmag.com; the Enterprise Group, which includes eWEEK and eweek.com, and the Game Group, which includes Electronic Gaming Monthly and 1up.com. The company and six debtor-affiliates filed for bankruptcy protection on March 5, 2008 (Bankr. S.D.N.Y., Case No. 08-10768). Carey D. Schreiber, Esq. at Winston & Strawn, LLP represents the Debtors in their restructuring efforts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on June 17, 2008. (Ziff Davis Bankruptcy News, Issue No. 17, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstandor 215/945-7000) * Best Takes Rating Actions on Various Mezzanine Notes ------------------------------------------------------ A.M. Best Co. has affirmed the debt ratings of "aaa" on various senior notes with a stable outlook. A.M. Best also has affirmed the debt ratings of "a-" on various mezzanine notes, revising the outlook to negative from stable. Concurrently, A.M. Best has downgraded the debt rating to "bb" from "bbb" on $16.0 Million Floating Rate Class C Mezzanine Notes, due December 11, 2032. The outlook has been revised to negative from stable. These rating actions were taken on a multi-tranche collateralized debt obligation debt issuance co-issued by two bankruptcy remote special purpose vehicles, I-Preferred Term Securities I, Ltd. and I-Preferred Term Securities I, Inc. The $191.5 million current principal balance of the rated notes are collateralized by a pool of trust preferred securities, surplus notes and secondary market securities, issued primarily by small to medium-sized U.S. insurance entities. The capital securities are pledged as security to the notes. Interest paid by the issuers of the capital securities is the primary source of funds to pay operating expenses of the issuer and interest on the notes. Repayment of the note principal will be funded primarily from the redemption of the capital securities. Since Dec. 4, 2007, the date on which capital securities could be prepaid without penalty, prepayments totaling $134.0 million have reduced the amount of capital securities in the pool to $217.0 million. In addition, the Floating Rate Class A-1 Senior Notes due December 11, 2032 have been reduced to $37.5 million from $174.0 million due to prepayments and payment diversions as prescribed by the "waterfall". Major considerations in rating the notes included collateral default risk and associated recoveries; structural protection through the "waterfall" and other mechanisms; counterparty swaps protection; legal documentation; and ongoing monitoring of the transaction. Structural protection: Among the mechanisms used to protect note holders are: -- a "waterfall" that determines the priority of interest and principal payments; -- note prepayments based on the senior and mezzanine coverage tests; -- a requirement that the most senior notes are amortized by an amount equal to the defaults and deferrals of the capital securities by using cash flows that would otherwise go to the income notes; -- beginning in the 10th year, the requirement that the trustee solicits and accepts a bid on the capital securities if the senior and mezzanine notes can be fully retired from the proceeds; -- beginning in the 10th year, the diversion of 60% of the cash flow that would otherwise go to the income notes to the senior and mezzanine notes; -- the option to prepay the capital securities after a five-year non-callable period; and -- the option afforded to the income note holders to purchase defaulted or deferred capital securities. The aggregate effect of these structural protection features is to reduce the overall default risk of the rated notes. A.M. Best's rating actions reflect stochastic modeling that takes into consideration: (1) the reduced level of capital securities in the pool; (2) the rating of the individual capital securities remaining in the pool; 3) impact of defaulted securities, as define by the transaction documents, of $17.5 million; and (4) the revised subordination levels resulting from the termination of the capital securities. These debt ratings have been affirmed: -- "aaa" on $37.5 Million Floating Rate Class A-1 Senior Notes, due December 11, 2032 -- "aaa" on $12.0 Million Fixed/Floating Rate Class A-2 Senior Notes, due December 11, 2032 -- "aaa" on $24.0 Million Fixed/Floating Rate Class A-3 Senior Notes, due December 11, 2032 -- "a-" on $40.6 Million Floating Rate Class B-1 Mezzanine Notes, due December 11, 2032 -- "a-" on $33.2 Million Fixed/Floating Rate Class B-2 Mezzanine Notes, due December 11, 2032 -- "a-" on $28.2 Million Fixed/Floating Rate Class B-3 Mezzanine Notes, due December 11, 2032 These debt rating has been downgraded: -- to "bb" from "bbb" on $16.0 Million Floating Rate Class C Mezzanine Notes, due December 11, 2032 * Fitch: Weak Economy to Worsen Dealer Floorplan ABS Performance ---------------------------------------------------------------- The weakened U.S. economy, declining dealership profitability impacted by a stressed U.S. vehicle sales environment, and the weak credit profiles of U.S. auto manufacturers will lead to worsening asset performance of U.S. auto-related dealer floorplan asset-backed securities during second half-2008, according to Fitch Ratings. Dealer floorplan ABS, including those supported by auto-related receivables, has performed within expectations through the second quarter-2008 in spite of the increased concerns, resulting in rating affirmations on all outstanding dealer floorplan ABS transactions, as per Fitch's recently completed comprehensive portfolio review. However, Senior Director Ravi Gupta says that the expected continued financial weakness of U.S. auto manufacturers and dealers may begin to manifest itself in a declining asset performance outlook of auto-related dealer floorplan ABS. Particular stress may be experienced in monthly payment rates for these transactions as an already weak new vehicle sales environment may be further impacted by the expected curtailments in retail vehicle lease financing programs offered by captive finance companies of the major auto manufacturers. 'Rating volatility in the auto-related dealer floorplan sector also has the potential to increase in the second half of this year,' said Gupta. 'In contrast, diversified floorplan, or non- auto related, receivables are expected to continue to demonstrate rating stability despite weakness related to the softening U.S. economy.' Fitch's new research report provides an overview and further details on the U.S. floorplan ABS sector resulting from the annual portfolio review and provides commentary on the lifetime performance of 18 outstanding transactions rated by Fitch totaling approximately $23.9 billion. Additionally, the report provides an overview of dealer floorplan mechanics, describes key performance variables, and summarizes performance trends through May 2008. Fitch conducts is dealer floorplan ABS review annually in addition to ongoing monthly transaction surveillance. This review included transactions supported by auto-related as well as diversified floorplan receivables currently rated by Fitch and is detailed in the new research report, 'U.S. Dealer Floorplan ABS - Checking up on Dealers'. * SitkaPacific Advisor Lists Homebuilders with Highest CDS Spread ----------------------------------------------------------------- An article at Seeking Alpha by Michael Shedlock, a registered investment advisor representative for SitkaPacific Capital Management, responds to questions about which homebuilder will most likely file for bankruptcy after the fall of WCI Communities Inc. this month. Basing on credit market players' perception, Mr. Shedlock said that Hovnanian Enterprises Inc., Beazer Homes USA Inc., and Lennar Corp. are now the top three candidates for bankruptcy. Five-year data from Bloomberg shows the cost of insuring the credit risk of these companies are the highest in the industry. Company Spread Company Spread Company Spread ------- ------ ------- ------ ------- ------ (bps) (bps) (bps) Hovnanian 1,427.2 Meritage Homes 676.7 Ryland 442.6 Beazer Homes 1,158.1 Standard-Pacific 663.3 Pulte 325.0 Lennar 793.8 DH Horton 527.8 Toll 282.8 Centex 470.8 MDC Holdings 160.8 KB homes 447.5 Mr. Shedlock notes that in December 2007, Standard Pacific was the least likely to go bankrupt. Gretchen Morgenson in a July 2008 International Herald Tribune article states that the CDS market is one of the hottest investment arenas nowadays. She said in a February 2008 article that the market for these securities has grown from $900 billion since 2000 to more than $45.5 trillion this year. While CDS is considered a large market, lack of disclosure rules, however, makes it an obscure market. This may change shortly, though. According to Ms. Morgenson, the Financial Accounting Standards Board has suggested a list of disclosures to help investors understand the financial implications for companies that have sold credit default swaps. The disclosure requirements will be effective in financial statements for fiscal years that end after Nov. 15, 2008. The deadline may "ensnare some of the biggest U.S. brokerage firms with fiscal years ending in November -- Lehman Brothers, Morgan Stanley and Goldman Sachs," according to Ms. Morgenson. ********* 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 ***