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/raid1/www/Hosts/bankrupt/TCR_Public/080822.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 22, 2008, Vol. 12, No. 200 Headlines ABITIBIBOWATER INC: Inks Consulting Agreement with John Weaver ACCELENT INC: Posts $1.3 Million Net Loss in Quarter Ended June 30 ACTIVE POWER: Receives NASDAQ Global Listing Non-compliance Notice ALANCO TECHNOLOGIES: Announces $2.5 Million New Financing ALLIED DEFENSE: Reports Income for Second Quarter Ended June 30 AMERICAN SEAFOODS: Moody's Rates $50 Million Term Loan at B APPEL NEMARUNDWE: Case Summary & 20 Largest Unsecured Creditors ARTHORCARE CORP: Receives NASDAQ Listing Non-compliance Notice ASG CONSOLIDATED: Moody's Holds $251MM Senior Notes' Rating at B BALTIMORE GAS: Moody's Holds Ba1 Rating on Preference Stock BEAR STEARNS ABS: S&P Junks Rating on 5 Classes of Securities BEATRICE BIODIESEL: Financial Woes Blamed for Chapter 11 Filing BEATRICE BIODIESEL: Case Summary & 20 Largest Unsecured Creditors BILTMORE CDO: S&P Assigns 'CC' Rating on 7 Classes of Securities BOMBAY COMPANY: Court Confirms Amended Chapter 11 Plan BOSCOV'S INC: Taps Klehr Harrison as Special Real Estate Counsel BOSCOV'S INC: Commences Store Closing Sale on Ten Locations CANADIAN TRUSTS: Court Drops Creditors' Appeal on Sanction Order CARBON CAPITAL: S&P Affirms BB Rating on Classes I, J Securities CENTRAL GARDEN: Gets NASDAQ Non-compliance Determination Letter CFM US: Allowed to Sell Indiana Real Property to Onward for $2MM CFM US: Court Extends Exclusive Plan Filing Period to October 7 CHANCELLOR GROUP: Court Dismisses Chapter 11 Case CHATEAU SENIOR: Case Summary & 20 Largest Unsecured Creditors CHEROKEE INT'L: Posts $600,000 Net Loss in Quarter Ended June 29 CHOCTAW RESORT: Moody's Rates Two Senior Notes Ba3 CIRTRAN CORPORATION: June 30 Balance Sheet Upside-Down by $773,654 CLAYMONT STEEL: Moody's Withdraws B3 Rating on Sr. Unsecured Note CONSTELLATION COPPER: Cash Liquidity Woes Cues Possible Bankruptcy DANA CORP: Posts $140 Million Net Loss in Quarter Ended June 30 DELTA FINANCIAL: Has Until Sept. 19 to File Chapter 11 Plan DELTA FINANCIAL: Wants Delta Residual's $82MM Claim Pegged at $0 DELTA FINANCIAL: Westchester Continues to Refute Insurance Claim DELTA FINANCIAL: Delays Filing of 2nd Quarter Results with SEC DEUTSCHE ALT-A: Moody's Junks Ratings on 62 of 177 Tranches DOUGLAS FURNITURE: Heller Financial Wants Case Dismissed EARTH BIOFUELS: June 30 Balance Sheet Upside-Down by $122.1MM ECCO ENERGY: Posts $164,232 Net Loss in 2008 Second Quarter EDISON HOTELS: Court Orders Former Owner to Pay Employees EDWARD THOMPSON: Case Summary & 20 Largest Unsecured Creditors FEDDERS CORP: Delaware Court Confirms Amended Liquidation Plan FEDERAL-MOGUL: Earns $90 Million in Second Quarter Ended June 30 FEDERAL-MOGUL: Admin Claims Objection Period Extended to Dec. 27 FERRO CORP: Closes $150 Million Convertible Senior Notes Offering FLAGSHIP GLOBAL: Halts Operations, Files for Chapter 7 FRIEDMANS INC: May File Plan Next Month, Wants Exclusivity Moved FULTON STREET: Fitch Junks $103 Million Class A-1B Notes GENERAL MOTORS: Allows Navistar Medium Duty Truck MOU to Expire GENERAL MOTORS: Navistar Deal Canceled; S&P Ratings Unaffected GOODY'S FAMILY: Can Reject 59 Unexpired Non-Residential Leases GRIDER EXCAVATING: Case Summary & 20 Largest Unsecured Creditors GSRPM MORTGAGE TRUST: S&P Cuts Ratings on Two Classes to BB, B HELP-U-SELL: Files for Chapter 11 Bankruptcy Protection HI-LINE CONSTRUCTION: Case Summary & 8 Largest Unsec. Creditors HOWD MANOR: Voluntary Chapter 11 Case Summary HSI ASSET: Moody's Junks Eight Class Certificates' Ratings INDEPENDENCE TAX: June 30 Balance Sheet Upside-Down by $18.4MM INDYMAC BANK: FDIC Implements Distressed Mortgage Loan Program INTERMET CORP: Can Use CapitalSource's Cash Collateral on Interim INTERSTATE BAKERIES: Union, Ripplewood Inks Deal to Protect Jobs JEFFERSON COUNTY: Bankruptcy Decision to Depend on Nov. Referendum JOE GIBSONS: Hearing on Ch. 11 Case Conversion Set Sept. 4 KIMBALL HILL: Ken Love, Diane Hill to Serve as Directors LIBERTY TAX II: June 30 Balance Sheet Upside-Down by $14,027,016 LUBBOCK MEDICAL: Lender Wants PostPetition Loan Reinstated LYNNKOHN LLC: Files for Bankruptcy to Stave Off LNB's Foreclosure LYNNKOHN LLC: Case Summary & 20 Largest Unsecured Creditors MAGNA ENTERTAINMENT: Amends Credit Deals to Address Liquidity Woes MAJESTIC STAR: June 30 Balance Sheet Upside-Down by $184.7MM MASTER ASSET: Moody's Junks Nine Class Certificates' Ratings MERRILL LYNCH: Moody's Junks Seven Class Certificates' Ratings MICHAEL VICK: Gov't Wants Chapter 11 Trustee Appointed in Case MICROSTRUCTURE TECHNOLOGIES: Involuntary Chapter 11 Case Summary MORTGAGES LTD: Can Hire Greenberg Traurig as Special Counsel MORGAN STANLEY ACES: S&P Cuts 2006-8 Class A-14 Rating to 'B+' MORGAN STANLEY: Moody's Junks 11 Class Certificates' Ratings MORTGAGE LENDERS: Drops $17 Million Money Market Investment Plan MZT HOLDINGS: To Distribute Common Stock to Holders on August 25 NANOGEN INC: Announces Merger Agreement with Elitech Group NATHAN GLICK: Case Summary & 20 Largest Unsecured Creditors NAVISTAR INT'L: Allows GM Medium Duty Truck MOU to Expire NAVISTAR INT'L: GM Deal Canceled; S&P Ratings Unaffected NEXIA HOLDINGS: Issues Shares to Satisfy $300,000 Note Obligation OCH-ZIFF CAPITAL: June 30 Balance Sheet Upside-Down by $423MM PEFORMANCE TRANS: Ritchie Bros. to Auction Assets on October 3 PEGASI ENERGY: Posts $535,109 Net Loss in 2008 Second Quarter PESE LLC: Case Summary & 20 Largest Unsecured Creditors PHOENIX FOOTWEAR: Posts $2.1MM Net Loss in Quarter Ended June 28 PIERRE FOODS: May Hire Perella as Investment Banker and Advisor PIERRE FOODS: May Hire Lightning Mgt. as Operational Consultant PIERRE FOODS: May Employ Thompson Hine as Special Counsel PROPEX INC: May Employ Richard Franks as Sales and Marketing VP PROTECTED VEHICLES: Files Liquidation Plan with Creditors' Panel RESMAE MORTGAGE: Moody's Junks Three Class Certificates' Rating RIVER BEND: Dispute with Secured Lender Placed Under Mediation ROCKPOINT GROUP: Expects to Default on Manhattan Unit Next Month S & A RESTAURANT: Trustee Wants to Retain Rosen as Auctioneer S & A RESTAURANT: Court Okays Co-Counsel for Ch. 7 Trustee S & A RESTAURANT: Meadowbrook Wants to Foreclose Peabody Property SAGECREST FINANCIAL: Unit Files Chapter 11 Petition in Bridgeport SAGECREST HOLDINGS: Voluntary Chapter 11 Case Summary SEA CONTAINERS: Wants Disclosure Statement Approved SEA CONTAINERS: Wants GECC Tolling Agreement Approved SEA CONTAINERS: Wants Voting and Solicitation Procedures Approved SEALY CORP: To Close Clarion Manufacturing Plant in Pennsylvania SECURTIZED ASSET: Moody's Junks Seven Class Certificates' Ratings SEMGROUP ENERGY: Receives Delisting Notice from Nasdaq SEQUOIA ALTERNATIVE: Moody's Rates Two Class B Loans to C SEQUOIA COMMUNITY: Gets $9.8 Million Bid from Non-Profit CSV SHARPER IMAGE: Gift Card Holder Rep. Wants Case Converted to Ch. 7 SHARPER IMAGE: ARG Seeks Payment of $2.6MM Admin. Expense Claim SHOE PAVILION: Appellate Court Reinstates Patent Infringement Suit SHOE PAVILION: El Paso Stores to Remain Open, Manager Says SHOE PAVILION: Securities Now Trade Over The Counter SOUNDVIEW HOME: Moody's Junks 16 Class Certificates' Ratings SPHERICS INC: Assignee to Auction Pharmaceutuical IP on October 10 STEVE & BARRY'S: Release Provisions in Sale Agreement Criticized STONY HILL: Moody's Junks $50 Million Notes' Rating STRUCTURED ASSET: Moody's Junks Six Class Certificates' Ratings TEAM NATION: June 30 Balance Sheet Upside-Down by $321,487 TEKNI-PLEX INC: To Sell 10.875% Secured Notes to Avenue Capital TIMBER LODGE: Taher Inc. Buys Restaurant Business TOUSA INC: December 31 Balance Sheet Upside-Down by 475,500,000 TRIAD GUARANTY: Moody's Withdraws B1 Rating on Financial Strength TRONOX INC: Dennis Wanlass Named as Interim Chairman of the Board UNIGENE LABORATORIES: Board Elected Allen Bloom as Lead Director WDS HOLDINGS: Faces Involuntary Chapter 11 Petition WEDAFAB INC: Files for Bankruptcy in Pennsylvania WHITEHALL JEWELERS: Michael Hill to Buy 17 Stores for $5,000,000 WICKES FURNITURE: Can Access Wells Fargo's $17 Million Facility WOODSIDE GROUP: Involuntary Chapter 11 Case Summary * S&P Sees Mixed Outlook for U.S. Capital Goods Companies * S&P Junks Rating on 5 Classes Related to Prime Jumbo RMBS Deals * S&P Cuts Ratings on 453 U.S. Subprime RMBS Classes * S&P Revises Projected Losses for 2006, 2007 Subprime RMBS * BOOK REVIEW: Bailout: An Insider's Account of Bank Failures and Rescues ********* ABITIBIBOWATER INC: Inks Consulting Agreement with John Weaver -------------------------------------------------------------- In connection with the retirement of John W. Weaver, effective July 1, 2008, AbitibiBowater Inc. and Mr. Weaver entered into a consulting agreement on August 15, 2008. Pursuant to the Consulting Agreement, Mr. Weaver will provide consulting services to the company until March 31, 2009. The company will pay Mr. Weaver a consulting fee of $40,000 per month plus reimbursement for reasonable business expenses as consideration for his services. The foregoing description is qualified in its entirety by reference to the Consulting Agreement, a copy of which is available at: http://ResearchArchives.com/t/s?3105 In addition, Mr. Weaver is entitled to severance and other benefits as set out in the Severance Compensation Agreement, dated February 18, 2006, between Abitibi-Consolidated Inc. and Mr. Weaver, which is filed as Exhibit 10.9 to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007. The company previously disclosed that Mr. Weaver will continue to serve as non-Executive Chairman and a member of the company's Board of Directors until March 31, 2009. In consideration for Mr. Weaver acting as non-Executive Chairman, the company has agreed to pay Mr. Weaver a fee of $10,000 per month. About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. AbitibiBowater's shares trade under the stock symbol ABH on both the New York Stock Exchange and the Toronto Stock Exchange. AbitibiBowater Inc. still carries Fitch's 'CCC+' Issuer Default Rating assigned on April 1, 2008. Outlook is Negative. ACCELENT INC: Posts $1.3 Million Net Loss in Quarter Ended June 30 ------------------------------------------------------------------ Accellent Inc., a wholly owned subsidiary of Accellent Holdings Corp., disclosed results for the fiscal second quarter ended June 30, 2008. The company reported a net loss of $1.3 million in the second quarter of 2008 compared with a net loss of $4.1 million in the second quarter of 2007. Net sales increased 14.0 % to $135.8 million in the second quarter of 2008 compared with $119.1 million in the second quarter of 2007. Sales improved sequentially for the sixth consecutive quarter and improved 5.3% compared to the first quarter of 2008. Adjusted EBITDA for the second quarter of 2008 was $27.3 million, or 20.1% of sales, compared to Adjusted EBITDA of $21.3 million, or 17.9 % of sales, in the second quarter of 2007. "Our focus on increasing value for our customers has continued to drive revenue growth. Our second quarter 2008 revenue marks our sixth consecutive quarter of sequential revenue growth and is the highest quarterly revenue amount in the company's history," said Robert Kirby, President and CEO of Accellent. "In addition, our focus on continuous improvement in the areas of cost reduction and working capital utilization have benefited our second quarter 2008 results." A net loss of $9.0 million was recorded in the first half of 2008 compared with a net loss of $89.8 million in the first half of 2007. During the first half of 2007 we completed a goodwill impairment analysis resulting in a goodwill impairment charge of $82.3 million which is reflected in the net loss for that period. Net sales increased 14.8 % to $264.8 million in the first half of 2008 compared with $230.6 million in the first half of 2007. Adjusted EBITDA for the first half of 2008 was $52.5 million or 19.8% of sales compared to Adjusted EBITDA of $43.2 million, or 18.7% of sales in the first half of 2007. At June 30, 2008, the company's consolidated balance sheet showed $1.1 billion in total assets, $814.4 million in total liabilities, and $309.5 million in total stockholders' equity. About Accellent Inc. Headquartered in Wilmington, Massachusetts, Accellent Inc. -- http://www.accellent.com/-- provides fully integrated outsourced manufacturing and engineering services to the medical device industry in the cardiology, endoscopy, drug delivery, neurology and orthopaedic markets. * * * As reported in the Troubled Company Reporter on Dec. 12, 2007, Moody's Investors Service downgraded Accellent Inc.'s corporate family rating to Caa1 from B3 and assigned a negative outlook. At the same time, Moody's downgraded these ratings: (i) secured revolver to B2 (LGD2, 29%) from B1 (LGD2, 29%); (ii) secured term loan to B2 (LGD2, 29%) from B1 (LGD2, 29%); (iii) sr. subordinated notes to Caa3 (LGD5, 83%) from Caa2 (LGD5, 83%); (iv) PDR to Caa1 from B3; and speculative grade liquidity rating to SGL-4 from SGL-3. ACTIVE POWER: Receives NASDAQ Global Listing Non-compliance Notice ------------------------------------------------------------------ Active Power, Inc. received on Aug. 18, 2008, a letter from The NASDAQ Stock Market stating that for the previous 30 consecutive business days, the bid price of the Company's common stock closed below the minimum $1.00 per share requirement for continued inclusion on The NASDAQ Global Market pursuant to NASDAQ Marketplace Rule 4450(a)(5). The NASDAQ letter has no immediate effect on the listing of the Company's common stock. In accordance with Marketplace Rule 4450(e)(2), Active Power will be provided with a grace period of 180 calendar days or until Feb. 17, 2009, to regain compliance with the Minimum Bid Price Rule. If at any time before Feb. 17, 2009, the bid price of the Company's stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, NASDAQ will notify the Company that it has achieved compliance with the Minimum Bid Price Rule. If the company does not regain compliance with the Minimum Bid Price Rule by Feb. 17, 2009, NASDAQ will notify the Company that its common stock will be delisted from The NASDAQ Global Market. In the event the Company receives notice that its common stock is being delisted from The NASDAQ Global Market, NASDAQ rules permit the Company to appeal any delisting determination by the NASDAQ staff to a NASDAQ Listing Qualifications Panel. Alternatively, NASDAQ may permit the Company to transfer its common stock to The NASDAQ Capital Market if it satisfies the requirements for initial inclusion set forth in Marketplace Rule 4310(c), except for the bid price requirement. If its application for transfer is approved, the Company would have an additional 180 calendar days to comply with the Minimum Bid Price Rule in order to remain on The NASDAQ Capital Market. Active Power Inc.(ACPW) -- http://www.activepower.com-- provides uninterruptible power supply systems. ALANCO TECHNOLOGIES: Announces $2.5 Million New Financing --------------------------------------------------------- Alanco Technologies, Inc., disclosed a new financing totaling $2.5 million, comprising $2.0 million of additional equity from the sale of non-convertible Series D Preferred Stock, and a $0.5 million increase in the company's current credit line. Company directors and officers will be the primary investors in the new financing, expected to be completed by August 22, 2008. Some $1.4 million of the proceeds will be used to pay down a term note with a current balance of approximately $2.4 million, with the remaining $1.1 million to provide additional working capital. Robert R. Kauffman, Alanco chairman and chief executive officer, commented, "While these are obviously challenging times in which to raise new capital, this $2.5 million insider financing plan is non-dilutive and will benefit all company shareholders as our new fiscal year profitability turnaround proceeds on schedule." "We are gratified that our board and senior management are again enthusiastically endorsing the Company's business plan and future prospects through this additional significant investment. The new financing will eliminate substantial current monthly term note repayment obligations, and provide $1.1 million of additional working capital to fund accelerating sales growth in our TSI PRISM and StarTrak businesses", Mr. Kauffman added. Headquartered in Scottsdale, Ariz., Alanco Technologies Inc. (Nasdaq: ALAN) -- http://www.alanco.com/-- is a provider of wireless tracking and asset management solutions through its StarTrak Systems and Alanco/TSI PRISM subsidiaries. At March 31, 2008, the company's consolidated balance sheet showed $29,715,600 in total assets, $11.0 million in total liabilities, $0.8 million in preferred stock, and $17.8 million in total stockholders' equity. Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 4, 2007, Semple, Marchal & Cooper LLP, in Phoenix, Arizona, expressed substantial doubt about Alanco Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended June 30, 2007, and 2006. The auditing firm reported that the company incurred significant losses from operations, anticipates additional losses in fiscal 2008, and has insufficient working capital as of June 30, 2007, to fund the anticipated losses. ALLIED DEFENSE: Reports Income for Second Quarter Ended June 30 --------------------------------------------------------------- The Allied Defense Group Inc.'s net income for the quarter was $0.9 million versus a $24.1 million loss in the second quarter of 2007. Revenue for the second quarter ended June 30, 2008, was $46.2 million, an increase of 872% over second quarter 2007 revenue of $4.7 million. Operating income was $2.6 million for the quarter, an improvement over the first quarter of 2008. Operating income margin for the second quarter was 6% compared with a loss in the first quarter of 2008. Cash flow from operations for the six months ended June 30, 2008, was a use of $20.0 million. This use of cash resulted from increased working capital associated with the higher revenue base. Contract backlog at June 30, 2008, was $153 million which is more than a 300% increase over the prior year. In addition, the company had unfunded backlog equal to $85 million. The second quarter 2008 results were affected by improved financial performance at all of the company's subsidiaries and the improved management of general and administrative costs in the current period as compared to the prior comparable period in 2007. The new ammunition services sector is growing at a particularly strong rate. It has grown backlog to approximately $36 million as of June 30, 2008, driven in part by new procurement contracts received in 2008 as compared to $1 million at June 30, 2007. The potential revenues associated with this backlog now exceed the revenues of the subsidiaries we have divested to date. Liquidity The company faces significant cash constraints in the summer months of August and September as a result of MECAR's limited ability to ship to certain Middle Eastern clients in the summer months based on the contractual terms of the sales agreements. The company is managing through this cash constrained period. MECAR was required, based on the restructured terms of its bank credit facility, to repay one-half of the cash line, EUR5.1 million, by July 31, 2008 but did not meet that deadline. MECAR paid down EUR2 million on Aug. 6, 2008, and the company is working with the bank group on a repayment arrangement for the remaining EUR3.1 million cash line. The company has proposed to make the repayment in September 2008 with the earlier of the cash proceeds of certain late July shipments or the proceeds of the company's anticipated sale of its GMS subsidiary, both of which are expected in September. On Aug. 14, 2008, the company committed to a formal plan to sell GMS. The sale of this subsidiary will provide additional liquidity to the company and the cash to satisfy a potential "put" of the company's senior secured convertible notes that may be made in December 2008 and/or January 2009. At June 30, 2008, the company's balance sheet showed total assets of $188.9 million, total liabilities of $142.9 million and stockholders' equity of $ 46.0 million. About The Allied Defense Group Inc. Headquartered in Vienna, Virginia, The Allied Defense Group Inc. (Amex: ADG) -- www.allieddefensegroup.com -- is a diversified international defense and security firm which develops and produces conventional medium caliber ammunition marketed to defense departments worldwide. The company also designs, produces and markets sophisticated electronic and microwave security systems principally for European and North American markets. Going Concern Doubt BDO Seidman LLP, in Bethesda, Maryland, expressed substantial doubt about The Allied Defense Group Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm reported that in 2007 and 2006 the company suffered losses from operations. The auditing firm added that, in January and February 2008, the banking group of the company's key subsidiary sent notifications to the company of their intentions to terminate the credit facilities. Subsequently, in March 2008, the members of the banking group notified the company of their intentions to continue with the credit facility contingent upon the resolution of additional requirements. AMERICAN SEAFOODS: Moody's Rates $50 Million Term Loan at B ----------------------------------------------------------- Moody's Investors Service assigned a rating of Ba3 to the $50 million add-on to American Seafoods Group LLC's term loan B. Moody's also affirmed the existing ratings for American Seafoods and its parent ASG Consolidated LLC, including its corporate family rating and probability of default rating at B1. The rating outlook remains stable. Rating assigned: American Seafoods Group LLC -- $50 million add-on to Term Loan B at Ba3 (LGD3, 33%) Ratings affirmed: ASG Consolidated LLC -- Corporate family rating at B1 -- Probability of default rating at B1 Ratings affirmed, and LGD% revised ASG Consolidated LLC -- $251 million (accreted value at maturity) 11.5% senior discount notes due 2011 at B3 (LGD5); LGD % to 87% from 85% American Seafoods Group LLC -- $75 million senior secured revolving credit expiring in 2011 at Ba3 (LGD3); LGD % to 33% from 32% -- Senior secured Term Loan A and existing Term Loan B at Ba3 (LGD3); LGD % to 33% from 32% Proceeds of the add-on will fund a portion of the acquisition of the factory trawler HIGHLAND LIGHT and the fishing vessel TRACY ANNE from subsidiaries of Yardarm Knot, Inc. The acquisition of these assets further expands ASG's Alaskan catcher-processor fleet, which is used primarily to harvest whitefish in the waters of the Bering Sea and the Pacific Northwest coast. The affirmation of the company's other ratings was based on ASG's stability in operating cash flow, relative to other natural products processors. Free cash flow generation before payments to members is likely to continue because ASG has the ability to raise prices, as competing proteins become more expensive and as reductions in 2007 and 2008 in the regulatory-allowed catch for Pollack reduces potential industry supply. Thus, cash generation and profitability will allow for a reduction in leverage following the increase for the debt to fund this acquisition, and following the previously announced large distribution to shareholders in fiscal 2008. Moody's anticipates that debt to EBITDA in fiscal 2008 is likely to be approximately 5 times. ASG's ratings consider the company's relatively small size, its limited product diversification, the concentration of raw materials from a single country, and large periodic distributions to members. However, the company's market position is quite solid at over 40% of the catcher-processor Pollock allocation, and well in excess of the second largest player. ASG's raw material supply is fairly stable, as it is provided by its quota-protected fishing rights. Headquartered in Seattle, Washington, ASG Consolidated LLC is one of the world's largest integrated seafood companies, harvesting and processing primarily Pollock, Pacific whiting and catfish. At- sea operations are concentrated in the U.S. Bering Sea. ASG's revenues for the twelve months ended June 30, 2008 were approximately $598 million. APPEL NEMARUNDWE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Appel Nemarundwe Carol Nemarundwe 8105 NE Couch St. Portland, OR 97213 Bankruptcy Case No.: 08-34261 Chapter 11 Petition Date: August 20, 2008 Court: District of Oregon Judge: Randall L. Dunn Debtor's Counsel: Michael A. Day, Esq. (mday@michaeldaylaw.com) 1001 SW 5th Ave., #1100 Portland, OR 97204 Tel: (503) 228-0893 http://michaeldaylaw.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/orb08-34261.pdf ARTHORCARE CORP: Receives NASDAQ Listing Non-compliance Notice -------------------------------------------------------------- ArthroCare Corp. received on Aug. 13, 2008, a NASDAQ Staff Determination Letter, stating that the company is not in compliance with NASDAQ Marketplace Rule 4310(c)(14), and that its common stock is therefore subject to delisting. The letter was issued in accordance with NASDAQ procedures because the Company did not timely file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2008. The Company is appealing this determination and intends to request a hearing before the NASDAQ Listing Qualifications Panel. There can be no assurance that the Panel will grant the Company's request for continued listing. Pending a decision by the Panel, the Company's common stock will remain listed on The NASDAQ Global Select Market. ArthroCare Corp. -- http://www.arthrocare.com-- develops, manufactures and markets surgical products. ASG CONSOLIDATED: Moody's Holds $251MM Senior Notes' Rating at B ---------------------------------------------------------------- Moody's Investors Service assigned a rating of Ba3 to the $50 million add-on to American Seafoods Group LLC's term loan B. Moody's also affirmed the existing ratings for American Seafoods and its parent ASG Consolidated LLC, including its corporate family rating and probability of default rating at B1. The rating outlook remains stable. Rating assigned: American Seafoods Group LLC -- $50 million add-on to Term Loan B at Ba3 (LGD3, 33%) Ratings affirmed: ASG Consolidated LLC -- Corporate family rating at B1 -- Probability of default rating at B1 Ratings affirmed, and LGD% revised ASG Consolidated LLC -- $251 million (accreted value at maturity) 11.5% senior discount notes due 2011 at B3 (LGD5); LGD % to 87% from 85% American Seafoods Group LLC -- $75 million senior secured revolving credit expiring in 2011 at Ba3 (LGD3); LGD % to 33% from 32% -- Senior secured Term Loan A and existing Term Loan B at Ba3 (LGD3); LGD % to 33% from 32% Proceeds of the add-on will fund a portion of the acquisition of the factory trawler HIGHLAND LIGHT and the fishing vessel TRACY ANNE from subsidiaries of Yardarm Knot, Inc. The acquisition of these assets further expands ASG's Alaskan catcher-processor fleet, which is used primarily to harvest whitefish in the waters of the Bering Sea and the Pacific Northwest coast. The affirmation of the company's other ratings was based on ASG's stability in operating cash flow, relative to other natural products processors. Free cash flow generation before payments to members is likely to continue because ASG has the ability to raise prices, as competing proteins become more expensive and as reductions in 2007 and 2008 in the regulatory-allowed catch for Pollack reduces potential industry supply. Thus, cash generation and profitability will allow for a reduction in leverage following the increase for the debt to fund this acquisition, and following the previously announced large distribution to shareholders in fiscal 2008. Moody's anticipates that debt to EBITDA in fiscal 2008 is likely to be approximately 5 times. ASG's ratings consider the company's relatively small size, its limited product diversification, the concentration of raw materials from a single country, and large periodic distributions to members. However, the company's market position is quite solid at over 40% of the catcher-processor Pollock allocation, and well in excess of the second largest player. ASG's raw material supply is fairly stable, as it is provided by its quota-protected fishing rights. Headquartered in Seattle, Washington, ASG Consolidated LLC is one of the world's largest integrated seafood companies, harvesting and processing primarily Pollock, Pacific whiting and catfish. At- sea operations are concentrated in the U.S. Bering Sea. ASG's revenues for the twelve months ended June 30, 2008 were approximately $598 million. BALTIMORE GAS: Moody's Holds Ba1 Rating on Preference Stock ----------------------------------------------------------- Moody's Investors Service placed the long-term and short-term ratings for Constellation Energy Group, Inc. under review for possible downgrade. Separately, Moody's affirmed the ratings of its electric utility subsidiary Baltimore Gas and Electric Company, as well as those of its finance affiliate, BGE Capital Trust II. The rating outlook for BGE and its finance affiliate BGE Capital Trust II remains stable. Constellation Energy Group ratings placed under review for possible downgrade include: Baa1 senior unsecured debt and senior unsecured bank credit facilities; -- Prime-2 short-term rating for commercial paper; -- Baa2 Series A Junior Subordinated Debentures; -- (P)Baa1 shelf rating for senior unsecured debt; -- (P)Baa3 shelf rating for preferred stock. Baltimore Gas & Electric Company ratings affirmed with a stable outlook include: -- Baa2 senior unsecured debt and Issuer Rating; -- Ba1 preference stock; -- Prime-2 short-term rating for commercial paper; VMIG-2 rating for short-term tax-exempt debt BGE Capital Trust II ratings affirmed with a stable outlook include: -- Baa3 trust preferred securities The review for possible downgrade is triggered by concerns surrounding the company's risk management and control processes, a weakened liquidity profile, and an aggressive investment and acquisition strategy. Concerns surrounding risk management and control processes were heightened by a recent disclosure that CEG's collateral obligations under certain hypothetical debt rating downgrade scenarios were larger than previously stated as well as a $1.7 billion exposure to one non-investment counterparty. CEG's liquidity profile has been impacted by rising commodity prices that has required the company to post additional collateral.c At the end of July 2008, CEG had $3.6 billion in letters of credit outstanding plus approximately $630 million in commercial paper borrowings. These amounts are backstopped by various committed bank lines of credit totaling $5.7 billion, of which approximately $1.4 billion are scheduled to expire in December 2008. While CEG's consolidated cash balance at June 30, 2008 stood at $1.2 billion, this amount includes more than $900 million of cash collateral provided by counterparties and therefore should be viewed more as restricted in Moody's opinion. This rating action also takes into account a continuing aggressive capital expenditure and acquisition strategy for CEG's non- regulated utility businesses. Capital expenditures totaled $1.2 billion in 2007 and $705 million for the six months ended June 30, 2008 while acquisitions during this same timeframe totaled approximately $350 million and $310 million, respectively. CEG has previously estimated total capital expenditures of $1.9 billion in 2008 and $1.3 billion in 2009 for its non-regulated businesses. Our review for possible downgrade will evaluate the adequacy of the company's risk management and control processes, the transparency of its financial reporting and its expected internal cash flow generation. Additionally, we plan to review CEG's near- term liquidity profile, the financing plan for its capital spending program, and any progress the company may achieve in pursuing strategic alternatives for its existing Global Commodities business. Constellation Energy Group, Inc. is a diversified energy company, whose businesses largely include merchant energy companies, along with Baltimore Gas & Electric Company, a regulated electric and gas utility in central Maryland. The company is headquartered in Baltimore, Maryland. BEAR STEARNS ABS: S&P Junks Rating on 5 Classes of Securities ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on six classes of asset-backed certificates from Bear Stearns Asset Backed Securities Trust 2005-3. In addition, we affirmed our ratings on three classes from this series. The lowered ratings reflect pool performance that has caused actual and projected credit support for the affected classes to decline. This transaction has experienced losses that have eroded overcollateralization (O/C) to $0 from its target level of approximately $5,290,886, resulting in the write-down of class M-7, which prompted us to downgrade this class to 'D'. The affirmations reflect current credit support percentages and projected credit support percentages (as a percent of the adjusted pool balance) that we believe are sufficient to support the notes at their current rating levels. Class CCS (%) (i) PCS (%) (ii) ----- ----------- ------------ A-1, A-3 55.33 59.30 M-1 32.44 30.00 (i) CCS-Current credit support. (ii) PCS-Projected credit support. As of the July 2008 remittance period, cumulative realized losses were 3.95% of the original pool balance. Total delinquencies were 34.48% of the current pool balance, while severe delinquencies (90-plus days, foreclosures, and real estate owned {REO}) were 20.89%. Furthermore, delinquencies have escalated over the past six remittance periods. For this transaction, losses have, on average over the past six months, been approximately 1.81x monthly excess interest. -- These performance trends have caused projected credit support for the transaction to fall below the required level. Standard & Poor's will continue to closely monitor the performance of this transaction. If the transaction incurs further losses and delinquencies continue to erode projected credit support, we will likely take further negative rating actions. This transaction is 33 months seasoned and has a pool factor of 35.59%. Subordination, excess interest, and O/C originally provided credit support for this transaction. The underlying collateral backing the certificates originally consisted of 30- year prime, subprime, scratch-and-dent, or reperforming fixed- and/or adjustable-rate first- and second-lien mortgage loans secured by one- to four-family residential properties. RATINGS LOWERED Bear Stearns Asset Backed Securities Trust 2005-3 Asset-backed certificates Rating Series Class To From ------ ----- -- ---- 2005-3 M-2 BBB A 2005-3 M-3 BB A- 2005-3 M-4 B+ BBB+ 2005-3 M-5 B BBB 2005-3 M-6 CCC B 2005-3 M-7 D CCC RATINGS AFFIRMED Bear Stearns Asset Backed Securities Trust 2005-3 Asset-backed certificates Series Class Rating ------ ----- ------ 2005-3 A-1, A-3 AAA 2005-3 M-1 AA BEATRICE BIODIESEL: Financial Woes Blamed for Chapter 11 Filing --------------------------------------------------------------- Erik Larson of Bloomberg News reports that Beatrice Biodiesel LLC filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Nebraska due to financial difficulties arising from increased food prices. "[Beatrice Biodiesel] was badly affected from high international food prices driven by feedstock demands from the biofuels sector," Bloomberg quoted Peter Anderton, chief executive officer of Agri Energy Ltd. in West Perth, Australia. Agri Energy owns Beatrice Biodiesel, the report notes. After all cash resources were depleted at parent level, the company is now asking for new financing so it can commence production at its facility in Beatrice, Nebraska, the report says. Bloomberg citing papers filed with the Court, says the company has more than $100 million in assets, and debts of between $10 million and $50 million. Floods in Iowa and Illinois severely destroyed soybean plantation of company this year, the report says. Headquartered in Beatrice, Nebraska, Beatrice Biodiesel LLC -- http://www.beatricebiodieselcam.com/-- produces biofuels from vegetable oil and animal fats as well as ethanol from sugar and grains. BEATRICE BIODIESEL: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Beatrice Biodiesel, LLC 722 Kinney Drive P.O. Box 726 Beatrice, NE 68310 Bankruptcy Case No.: 08-41927 Business: Beatrice Biodiesel, LLC owns 100% of the Beatrice Biodiesel Project being developed near the town of Beatrice, 35 miles south of the state capital, Lincoln, Nebraska. Chapter 11 Petition Date: August 21, 2008 Court: District of Nebraska (Lincoln Office) Debtor's Counsel: John L. Horan, Esq. Cline, Williams, Wright, Johnson 233 South 13th Street 1900 U.S. Bank Building Lincoln, NE 68508 Tel: (402) 474-6900 Fax: (402) 474-5393 Email: jhoran@clinewilliams.com Estimated Assets: $50 million - $100 million Estimated Debts: $10 million - $50 million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Community Redevelopment Unknown Authority of the City of Nebraska c/o Wells Fargo Bank, N.A. Dissemination Agent 1248 "O" Street Lincoln, NE 68310 Provista Renewable Fuels Unknown Marketing 5500 Cenex Drive Inner Grove Heights, MN 55077 Siemens Energy & Unknown Automation, Inc. P.O. Box 91433 Chicago, IL 60693 NARSTCO Inc. Unknown 300 Ward Road Midlothian, TX 76065 Axens North America Unknown 650 College Road East Suite 1200 Princeton, NJ 08540 Echo Group, Inc. Unknown P.O. Box 336 Council Bluffs, IA 51502 BNSF Railway Unknown 3110 Solutions Center Chicago, IL 60677-3301 Alfa Laval Inc. Unknown P.O. Box 8500-52788 Philadelphia, PA 19178 JCI Unknown P.O. Box 411114 Kansas City, MO 64141 Brown Minneapolis Tank Unknown 8301 Broadway Boulevard SE Albuquerque, NM 87105 Nortstar Insulation Unknown 1120 South 46th Street P.O. Box 5354 Grand Forks, ND 58206 Aquila Inc. Unknown P.O. Box 4649 Carol Stream, IL 60197-4649 D.L. Ricci Corp. Unknown 501 Moundview Drive Red Wing, MN 55066 Franken Filtertechnik KG Unknown P.O. Box 1201 50329 Huerth Germany USA Tank Storage Systems Unknown P.O. Box 506 Seneca, MO 64865 Biodiesel Analytical Unknown Solutions 2287 Oakhurst Drive Delaware, OH 43015 Perry Products Corp. Unknown 25 Mt. Laurel Road P.O. Box 10 Hainesport, NJ 08036 NCS Equipment Inc. Unknown Div. of DAB Inc. 73779 Road 438 Bertand, NE 68927 Continental Alarm & Unknown Detection P.O. Box 45977 Omaha, NE 68145-0977 Hall Technologies Unknown 36 Douglas Ridge Close S.E. Calgary, Alberta T2Z 2M2 Canada BILTMORE CDO: S&P Assigns 'CC' Rating on 7 Classes of Securities ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating on the class A-1 notes issued by Biltmore CDO 2007-1 Ltd., a cash flow collateralized debt obligation (CDO) of asset-backed securities (ABS) transaction, to 'AA' from 'BBB-' and removed it from CreditWatch negative. The revised rating reflects a financial guarantee insurance policy on the class A-1 notes issued by MBIA Insurance Corp. (AA/Negative/--). Standard & Poor's inadvertently lowered its rating on the class A- 1 notes on Aug. 7, 2008, based on the transaction's available credit support. S&P's action reinstates the 'AA' rating on the class, which reflects the financial guarantee insurance policy. RATING REVISED Biltmore CDO 2007-1 Ltd. Rating Class To From ----- -- ---- A-1 AA BBB-/Watch Neg OTHER OUTSTANDING RATINGS Biltmore CDO 2007-1 Ltd. Class Rating ----- ------ A-2 CC A-3 CC A-4 CC B CC C CC D CC E CC TRANSACTION INFORMATION Issuer: Biltmore CDO 2007-1 Ltd. Co-issuer: Biltmore CDO 2007-1 LLC Collateral manager: ING Clarion Capital LLC Insurance provider: MBIA Insurance Corp. Transaction type: Cash flow CDO of ABS BOMBAY COMPANY: Court Confirms Amended Chapter 11 Plan ------------------------------------------------------ The Bombay Company Inc. said that it obtained a commitment from the United States Bankruptcy Court for the Northern District of Texas to sign a confirmation order approving the Debtor's amended Chapter 11 plan, Bloomberg News reports. All objections to the plan were resolved before the August 20 confirmation hearing, according to a person with knowledge of the matter. John Franks, director of AlixPartners LLP, disclosed that majority of holders of Class 3 general unsecured claims and Class 4 Bombay Gift Card Convenience claims accepted the plan. Accepted Rejected ------------------- ------------------ Classes Amount Number Amount Number ------- ------------------- ------------------ 3 $20,077,717 174 $161,295 6 4 $183,680 2,297 $44,722 613 A full-text copy of the AlixPartners' ballot tabulation summary is available for free at http://ResearchArchives.com/t/s?3102 As reported in the Troubled Company Reporter on July 9, 2008, the Court approved an amended disclosure statement explaining an amended Chapter 11 plan of liquidation filed by the Debtor together with the Official Committee of Unsecured Creditors, as co-proponent, on July 2, 2008. The Court held that the proponents' amended disclosure statement contains adequate information within the meaning of Section 1125 of the U.S. Bankruptcy Code. Postpetition Financing On Oct. 11, 2007, the Court authorized the Debtors to obtain, on a final basis, up to $115 million in postpetition financing from GE Corporate Lending and GE Canada Finance Holdings Company. The loan incurs interest rate of the higher of bank prim loan rate and the Federal Fund Rate plus 0.50% per annum, according the Debtors' regulatory filing with the Securities and Exchange Commission. The loan will be used to fund operations, including employees salaries and benefits as well as postpetition vendor payments during Chapter 11 reorganization process. Asset Sales During an October 2007 auction, the Debtors accepted a bid by a joint venture comprised of Gordon Brothers Retail Partners LLC and Hilco Merchants Resources LLC of 109.5% of the actual cost value of the Debtors' United States inventory. Furthermore, the Debtors also shared with GB Hilco Merchants in proceeds of the inventor liquidation after GB Hilco recovered its investment plus an agreed return. On Nov. 8, 2007, the Court authorized the Debtors to sell their corporate headquarters located at 550 Bailey Avenue in Fort Worth, Texas, to Goff Capital Inc. for $16.35 million. The Debtors realized at least $1.8 million in the disposition of lease designation rights. As reported in the Troubled Company Reporter, Goff Capital will be assuming the unexpired leases of office spaces at the complex. The Debtor also provided adequate assurance of future performance pursuant to Section 365(f)(2) of the U.S. Bankruptcy Code, and no cure amounts are required to be paid to the office tenants pursuant to Section 365(b)(1). On Oct. 11, 2007, the Debtors began negotiations with a Canadian bidder -- Benix & Co. and affiliates of Hilco Consumer Capital -- for the sale of their Canadian operations. The bidder offered to pay 110% of the cost value of the Canadian inventory and proposed to assume all of the obligations of the Debtors' Canadian assets. The sale of the Debtors' Canadian assets was approved by the Canadian Bankruptcy Court on Oct. 23, 2007. The Court approved on Jan. 23, 2008, the sale of the Debtors' intellectual property to Bombay Brands LLC for $2 million. The Debtors retained a 25% ownership in Bombay Brands. Overview of the Plan Under the Plan, Elaine D. Crowley, the appointed liquidation trustee, will issue a share of common stock for The Bombay Company Inc. and become the sole shareholders, officer and director of The Bombay Company Inc. replacing its existing shareholders and company officers. All other shares of any class of stock of each of the Debtors will be canceled on the Plan's effective date. A liquidation trust will be created for the benefit of all creditors of the estates holding allowed claims. According to the Plan, the Debtors are expected to transfer any of their assets including (i) cash and accounts, (ii) litigation causes of action, (iii) ownership interest in Bombay Brands LLC, (iv) all other property interests, rights, claims, defenses and causes of action with respect to any and all non-debtor intercompany claims or the Debtors. The amended plan classifies interests against and liens in the Debtors in seven classes. The classification of interests and claims are: Treatment of Claims and Interests Class Type of Claims Treatment ----- -------------- --------- unclassified administrative claims unclassified priority tax claims 1 priority-non-tax claims unimpaired 2 secured claims unimpaired 3 general unsecured claims impaired 4 unsecured Bombay Gift impaired Card Convenience Class 5 subordinated claims impaired 6 intercompany claims impaired 7 interests impaired Classes 1, 2, 5, 6 and 7 are not entitled to vote on the proponents Chapter 11 Plan. Each holder in Class 1 will be paid 100% of the unpaid amount of allowed claim in cash after the distribution date. Holders may receive other less favorable treatment as may be agreed upon by the claimant and the liquidation trustee. At the liquidation trustee's option, holders of Class 2 Secured Claims are entitled to get, either: a) 100% of the net proceeds from the sale of relevant collateral, up to the unpaid allowed amount of the claims; b) the return of the relevant collateral; or c) an alternative treatment as leaves unaltered the legal, equitable and contractual rights of the holder of the allowed claim. On the effective date, holders of Class 3 General Unsecured Creditors are expected to receive between 16.4% and 28.9% of the allowed amount of their claims, plus their pro rata shares of any value realized from the litigation causes of action. The earlier plan version provides a recovery to Class 3 holders between 18.5% and 31.5% of the allowed amount of their claims. Each holder of Class 4 Bombay Gift Card Convenience Claim will get cash equal to 25% of the allowed amount of its claim in full on the plan's effective date. Class 4 holders will not be entitled to any future distribution from the liquidation truste. Holders of classes 5, 6 and 7 will not receive any distribution from the Debtors. A full-text copy of the Amended Disclosure Statement is available for free at: http://ResearchArchives.com/t/s?2f37 A full-text copy of the Amended Joint Chapter 11 Plan of Reorganization is available for free at: http://ResearchArchives.com/t/s?2f38 About Bombay Company Based in Fort Worth, Texas, The Bombay Company Inc., (OTC Bulletin Board: BBAO) -- http://www.bombaycompany.com/-- designs, sources and markets a unique line of home accessories, wall decor and furniture through 384 retail outlets and the Internet in the U.S. and internationally, including Cayman Islands. The company and five of its debtor-affiliates filed for Chapter 11 protection on Sept. 20, 2007 (Bankr. N.D. Tex. Lead Case No. 07-44084). Robert D. Albergotti, Esq., John D. Penn, Esq., Ian T. Peck, Esq., and Jason B. Binford, Esq., at Haynes and Boone, LLP, represent the Debtors. The Bombay Furniture Company of Canada Inc. - La Compagnie de Mobilier Bombay Du Canada Inc., sough protection from its creditors from the Ontario Superior Court of Justice on Sept. 20, 2007. The U.S. Trustee for Region 6 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Attorneys at Cooley, Godward, Kronish LLP act as counsel to the Unsecured Creditors Committee. As of May 5, 2007, the Debtors listed total assets of $239,400,000 and total debts of $173,400,000. * * * The Debtors' consolidated monthly operating report for April 30, 2008, showed total assets of $34,100,177 and total liabilities of $31,780,942. BOSCOV'S INC: Taps Klehr Harrison as Special Real Estate Counsel ---------------------------------------------------------------- Boscov's Inc. and its affiliated debtors seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Klehr Harrison Harvey Branzburg & Eller LLP, as their special real estate counsel. The Debtors assert that they need Klehr Harrison's services to advise them with respect to: (a) their rights, powers and duties with respect to leases of real property; and (b) their rights, powers and duties related to any real estate issues that may arise in their Chapter 11 cases. The Debtors' executive vice president Michael J. Hughes says Klehr Harrison has considerable expertise in the field of commercial real estate and commercial real estate finance. He discloses that the firm has historically represented Boscov's Inc., and Boscov's Department Store LLC, in related matters. The firm has thus become "uniquely familiar" with the Debtors' real estate affairs, he adds. Klehr Harrison will bill the Debtors for its professionals' services at these normal hourly rates: Professional Hourly Rate ------------ ----------- Stephan L. Cutler, Esq. $525 Domenic E. Pacitti, Esq. $450 Heather Levine, Esq. $430 Randi Rubin, Esq. $280 Jennifer Kessler $195 Melissa Hughes $150 Stephan L. Cutler, Esq., one of Klehr Harrison's partners, disclosed that in the month preceding the Petition Date, the firm has performed services and received compensation from the Debtors. As of July 31, 2008, the firm holds a general security retainer for payment of professional fees and expense reimbursements amounting to $214,565. On August 1, 2008, the firm applied $21,894 of the retainer for prepetition services, which amount, it says is a good faith estimate of fees and expenses of all services and fees the firm has recorded in its billing system. The firm will submit a reconciliation of actual prepetition fees and expenses in the near future, Mr. Cutler tells the Court. Mr. Cutler assures the Court that his firm does not have any adverse interest to the Debtors, their creditors, or any party- in-interest, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. 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. The Debtors disclosed estimated assets of $500 million to $1 billion and estimated debts of $100 million to $500 million. (Boscov's Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BOSCOV'S INC: Commences Store Closing Sale on Ten Locations ----------------------------------------------------------- A joint venture led by Gordon Brothers Group and Hilco Merchant Resources LLC commenced strategic store closing sales for Boscov's Department Stores to support the company's restructuring plan. As reported in the Troubled Company Reporter on Aug. 11, 2008, Boscov's Inc. and its affiliated debtors seek to close and liquidate the inventory and other assets of 10 of their stores located at: * Monroeville Mall, in Monroeville, Pennsylvania, * South Hills Village Mall, in Pittsburgh, Pennsylvania, * Oxford Valley Mall, in Langhorne, Pennsylvania, * Montgomery Mall, in North Wales, Pennsylvania, * Harrisburg East Mall, in Harrisburg, Pennsylvania, * Monmouth Mall, in Eatontown, NJ, * White Marsh Mall, in Baltimore, Maryland, * Marley Station Mall, in Glen Burnie, Maryland, * Owings Mills Mall, in Owings Mills, Maryland, and * Piedmont Mall, in Danville, VA. The U.S. Bankruptcy Court for the District of Delaware approved the sale and liquidation of inventory. On Aug. 16, store closing sales began in 10 Boscov's locations. Consumers will find incredible savings on a huge assortment of quality, brand name apparel and accessories for men, women and kids, and home products, too. Top brands include Nautica, Carters, Nike, Oshkosh, Nine West, Sperry, Franc Sarto, Liz Claiborne, and Jones New York, to name a few. "Merchandise will be marked down to sell fast," Stephen Miller, principal and managing director, Gordon Brothers Group, said. "Everything must go. The timing couldn't be better for consumers looking to save a bundle on back-to-school clothing and accessories, or to get a jump start on the holiday season." "Consumers will find great values on everything from men's, women's and children's apparel to consumer electronics and home furnishings," Michael Keefe, president and CEO, Hilco Merchant Resources, added. "Many items will be discounted like never before. Consumers who arrive at the start of the sale will certainly have the best selection of products from which to choose. We don't expect this sale to last very long." 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). Judge Kevin Gross presides over the cases. David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day, serve as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq. at Richards, Layton & Finger, P.A., serve as the Debtors' local Delaware counsel. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers Inc. The Debtors' claims agent is Kurtzman Carson Consultants, L.L.C. Boscov's listed assets of $538 million and liabilities of $479 million in its bankruptcy filing. CANADIAN TRUSTS: Court Drops Creditors' Appeal on Sanction Order ---------------------------------------------------------------- In a unanimous decision, the Ontario Court of Appeal dismissed on Aug. 18, 2008, an appeal filed by about 30 corporate noteholders of the June 5 order of the Honorable Justice Colin Campbell sanctioning the Plan of Compromise and Arrangement proposed by the Pan-Canadian Investors Committee for Third Party Structured Asset Backed Commercial Paper for the Canadian ABCP under the Companies' Creditors Arrangement Act. The Troubled Company Reporter said that on June 18, the noteholders questioned the legality of the broad range of the ABCP Plan release provisions, under which parties that sold, brokered, and endorsed the Affected ABCP are protected from lawsuits, except in cases of fraud. The three-judge appellate panel that reviewed the Sanction Order was composed of Honorable Justices Robert A. Blair, J.I. Laskin, and E.A. Cronk. The Appellants are The Jean Coutu Group (PJC) Inc., Aeroports de Montreal, Aeroports de Montreal Capital Inc., Domtar Inc., Domtar Pulp and Paper Products Inc., Giro Inc., Interquisa Canada LP, Labopharm Inc., Vetements de sport R.G.R. Inc., 131519 Canada Inc., Air Jazz LP, Petrifond Foundation Company Limited, Petrifond Foundation Midwest Limited, Services hypothecaires La Patrimoniale Inc. Societe Generale de Financement du Quebec, VibroSystM Inc., Redcorp Ventures Ltd, Jura Energy Corporation, Ivanhoe Mines Ltd, Webtech Wireless Inc., Wynn Capital Corporation Inc., Hy Bloom Inc., Cardacian Mortgage Services Inc., West Energy Ltd, Sabre Energy Ltd., Petrolifera Petroleum Ltd., Vaquero Resources Ltd., and Standard Energy Inc. Appellants Air Transat A.T. Inc. and Transat Tours Canada Inc. partially abandoned their Appeal when they entered into credit facilities with National Bank of Canada for up to C$107.6 million, or 75% of the nominal amount of Transat's ABCP holdings. The Court of Appeal noted two principal questions for determination on the Appeal: * As a matter of law, may a CCAA plan contain a release of claims against anyone other than the debtor company or its directors? * If the answer to that question is yes, did the application judge err in the exercise of his discretion to sanction the Plan as fair and reasonable given the nature of the releases called for under it? Mr. Justice Blair held that the standard review of whether, as a matter of law, a CCAA plan may contain third-party releases is correctness. Mr. Justice Blair stated that he does not give effect to submissions made by the Appellants that a court has no jurisdiction or legal authority under the CCAA to sanction a plan that imposes an obligation on creditors to give releases to third parties other than the directors of the debtor company. On a proper interpretation, the Court of Appeal opined, the CCAA permits the inclusion of third party releases in a plan of compromise or arrangement to be sanctioned by the court where those releases are reasonably connected to the proposed restructuring. "I am led to this conclusion by a combination of (a) the open-ended, flexible character of the CCAA itself, (b) the broad nature of the term "compromise or arrangement" as used in the Act, and (c) the express statutory effect of the 'double- majority' vote and court sanction which render the plan binding on all creditors, including those unwilling to accept certain portions of it," Mr. Justice Blair explained. The CCAA is skeletal in nature, Mr. Justice Blair pointed out. "It does not contain a comprehensive code that lays out all that is permitted or barred. Judges must therefore play a role in fleshing out the details of the statutory scheme." Mr. Justice Blair also maintained that the exercise of a statutory authority requires the statute to be construed. The statute ought to be read as a whole, being mindful that the words of the CCAA are to be read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the CCAA, the object of the CCAA, and the intention of Parliament, he said. It is important that courts first interpret the statute before them and exercise their authority pursuant to the statute, before reaching for other tools in the judicial toolbox, he added. The Court of Appeal agree with Mr. Justice Campbell's Sanction Order, noting that the restructuring of ABCP underpins the financial viability of the Canadian ABCP market itself. Mr. Justice Blair does not agree with the Appellants' argument that Mr. Justice Campbell erred in treating the Plan and in treating the proceedings as an attempt to restructure the ABCP market rather than simply the affairs between the debtor corporations who caused the ABCP Notes to be issued and their creditors. He opined that the Appellants' perspective is flawed for two reasons: -- It reflects a view of the purpose and objects of the CCAA that is too narrow; and -- It overlooks the reality of the ABCP marketplace and the context of the restructuring in question. The Court of Appeal acknowledged Mr. Justice Campbell's focus on the effect of the restructuring, a perfectly permissible perspective, given the broad purpose and objects of the CCAA. "I see no error on the part of the application judge in approaching the fairness assessment or the interpretation issue, which provide the context in which the purpose, objects and scheme of the CCAA are to be considered," Mr. Justice Blair averred. Compromise or Arrangement While there may be little practical distinction between "compromise" and "arrangement" in many respects, the two are not necessarily the same, Mr. Justice Blair noted. "Arrangement" is broader than "compromise" and would appear to include any scheme for reorganizing the affairs of the debtor, he clarified. The CCAA is a sketch, an outline, a supporting framework for the resolution of corporate insolvencies in the public interest, Mr. Justice Blair said. Parliament wisely avoided attempting to anticipate the myriad of business deals that could evolve from the fertile and creative minds of negotiators restructuring their financial affairs, he added. "I see no reason why a release in favour of a third party, negotiated as part of a package between a debtor and creditor and reasonably relating to the proposed restructuring cannot fall within that framework." Mr. Justice Blair, however, does not suggest that any and all releases between creditors of a debtor company seeking to restructure and third parties be made the main subject of a compromise or arrangement between that debtor and its creditors. "Nor do I think the fact that the releases may be 'necessary' in the sense that the third parties or the debtor may refuse to proceed without them, of itself, advances the argument in favour of finding jurisdiction (although it may well be relevant in terms of the fairness and reasonableness analysis). . . The release of the claim in question must be justified as part of the compromise or arrangement between the debtor and its creditors." In short, Mr. Justice Blair held, there must be a reasonable connection between the third party claim being compromised in the plan and the restructuring achieved by the plan to warrant inclusion of the third party release in the plan. Accordingly, Mr. Justice Blair found that the wording of the CCAA supports the jurisdiction and authority of the Ontario Superior Court to sanction the Plan, including the contested third-party releases contained in it. The Court of Appeal imparted that it would not interfere with Mr. Justice Campbell's decision with regards to the fairness and reasonableness of the Plan. "In the absence of a demonstrable error, an appellate court will not interfere." While the notion of releases in favor of third parties -- including leading Canadian financial institutions -- that extend to claims of fraud is distasteful, there is no legal impediment to the inclusion of a release for claims based in fraud in a plan of compromise or arrangement, Mr. Justice Blair elaborated. He affirmed that the Ontario Superior Court has concluded the benefits of the Plan to the creditors as a whole and to the debtor companies outweighed the negative aspects of compelling the unwilling appellants to execute the releases as finally put forward. The Appellants all contend that the obligation to release the third parties from claims in fraud, tort and breach of fiduciary duty is confiscatory and amounts to a requirement that they -- as individual creditors -- make the equivalent of a greater financial contribution to the Plan, the Court of Appeal noted. "All of these arguments are persuasive to varying degrees when considered in isolation. However, the Ontario Superior Court did not have that luxury," Mr. Justice Blair said. The Court of Appeal affirm that Mr. Justice Campbell was required to consider the circumstances of the restructuring as a whole, including the reality that many of the financial institutions were not only acting as Dealers or brokers of the ABCP Notes but also as Asset and Liquidity Providers, with the financial institutions making significant contributions to the restructuring in those capacities. "In insolvency restructuring proceedings almost everyone loses something," Mr. Justice Blair held. "Here, the debtor corporations being restructured represent the issuers of more than $32-billion in non-bank sponsored ABCP notes. The proposed compromise and arrangement affects that entire segment of the ABCP market and the financial markets as a whole," Mr. Justice Blair said. "In that respect, [Justice Campbell] was correct in adverting to the importance of the restructuring to the resolution of the ABCP liquidity crisis and to the need to restore confidence in the financial system in Canada." The Court of Appeal affirmed that Mr. Justice Campbell did what was required of him -- to consider and balance the interests of all noteholders and not just the interests of those who launched the Sanction Order Appeal, whose notes represent only about 3 per cent of that total. A full-text copy of the Court of Appeal's Dismissal of the ABCP Sanction Order is available for free at: http://bankrupt.com/misc/ABCP_CourtofAppealDecision.pdf Appellants Have to Make a Choice The Appellants have a choice of accepting the ABCP Plan or taking their case to the Supreme Court of Canada, Globe and Mail reports. Allan Sternberg, Esq., counsel for Appellant Hy Bloom, told Globe and Mail that his client still has to decide whether to take his Appeal a step further. "There are cost consequences," Globe and Mail quoted Mr. Sternberg as saying. An appeal would likely cost Hy Bloom more than $50,000, he added. Howard Shapray, Esq., counsel for Appellant Ivan hoe Mines, said he hasn't spoken with his client about another appeal. "But it is a fair expectation that somebody is going to apply for leave to appeal," Mr. Shapray told Globe and Mail. "It's an issue of national importance, which is the primary ground the Supreme Court of Canada looks to, and they also look to the issue of whether there's a conflict at the appellate level, which we clearly have in this case." Pan-Canadian Committee chairman Purdy Crawford relayed to Globe and Mail, "[A]ll we're doing is getting ready as soon as we reasonably can to close this transaction. We don't know whether there will be an appeal or not. If there is an appeal, we will deal with it." Mr. Crawford, however, did not comment whether the ABCP restructuring could be completed if there is an outstanding application to appeal, the news source cited. "We don't want to play games with anybody," Mr. Crawford told Globe and Mail. "On the other hand, we have a lot of clients that need their money, so we'll do the best we can to move this forward as fast as possible." According to the report, the Pan-Canadian Committee continues to encourage "people who sold the paper to the potential appellants to do whatever they can to arrive at a reasonable settlement with them." "The reality is that some of the [Appellants] are damn lucky they didn't win the appeal here, because they begin to realize they'd be a hell of a lot better off with the restructured paper," the report quoted Mr. Crawford as saying. Smaller Investors Are Happy Over Decision About 2,000 smaller investors are happy over the Court of Appeal decision, stating that they are "one step closer" to recovering their funds, Bloomberg News discloses. "This is a good thing for the small individual investor in that the likelihood of this matter even being heard by the Supreme Court is unlikely," Murray Candlish, a retired hog farmer who holds C$350,000 of ABCP, told Bloomberg through e-mail. Brian Hunter, a Calgary oil and gas engineer who has become an informal leader of the small investors, said, "I think we're done here, and should be moving forward," according to Globe and Mail. Pan-Canadian Committee Welcomes Court of Appeal's Decision The Pan-Canadian Investors Committee for Third-Party Structured ABCP in a statement said it welcomed the unanimous decision of the Ontario Court of Appeal, which affirmed the decision of the Ontario Superior Court approving the Committee's Plan to restructure $32-billion of third-party asset-backed commercial paper. The Court of Appeal agreed with the lower court's decision, announced in early June, that the plan is fair and reasonable and meets the criteria of the Companies' Creditors Arrangement Act. The decision means that the Committee's restructuring plan, which was approved by the overwhelming majority of affected noteholders in April, can now move forward to completion. Purdy Crawford, Chair of the Investors Committee stated, "Our Committee is now in a position to put the final steps in place to complete the restructuring plan and Noteholders can look forward to the issuance of new notes and the establishment of a liquid market for them. Absent any further appeals, we expect the restructuring to close by September 30, 2008." About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of Sept. 14, 2007, these 21 Canadian Trusts had approximately C$33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting C$32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CARBON CAPITAL: S&P Affirms BB Rating on Classes I, J Securities ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 10 classes from Carbon Capital II Real Estate CDO 2005-1 Ltd. and removed five from CreditWatch with negative implications. The CreditWatch negative placements on classes F through J were due to the failure of all three of the transaction's par value coverage tests following the classification of two assets as impaired collateral interests. The transaction has failed its par value coverage tests for two consecutive payment periods, as referenced in the note valuation reports issued in March and June. The rating affirmations follow S&P's analysis of the transaction, including an examination of the current credit characteristics of the transaction's assets and liabilities. S&P will continue to monitor the transaction for additional impaired collateral interests, which may result in negative CreditWatch placements or rating actions. According to the trustee report dated July 31, 2008, the transaction's current assets included 21 commercial real estate loans ($399.5 million, 94%), as well as class L ($25 million, 6%) from GS Mortgage Securities Corp. II's series 2007-EOP commercial mortgage-backed securities (CMBS) pass-through certificates. The commercial real estate loans include whole loans, junior participations, subordinate B-notes, and mezzanine debt. The only assets that represent concentrations of 10% or more of the total assets are the Hilton Pittsburg ($49.6 million, 12%) and Lembi Open Pool 8 ($43.4 million, 10%). Currently there are three impaired collateral interests ($52.5 million, 12%): --- East Village ($22.8 million, 5%); --- MPH Mezzanine IV - Macklowe EOP/NYC Portfolio ($17.7 million, 4%); and --- Bermuda Dunes ($12 million, 3%). The aggregate liabilities totaled $434.1 million as of the July 31 trustee report, down from $455 million at issuance. The $20.9 million reduction in the aggregate liabilities is due to the reallocation of transaction's cash flows to pay down the balance of class A, which is the most senior class, as a result of the par value coverage test failures. The reallocation resulted in a delevering of the transaction, which benefited the transaction. However, interest to classes I and J was deferred during the same payment periods as the par value coverage test failures. Standard & Poor's rates both classes according to the ultimate payment of interest, and at this time, S&P expects that both classes will ultimately be repaid the deferred interest. Excluding the three impaired collateral interests, S&P's analysis indicates that the current asset pool exhibits weighted average credit characteristics consistent with 'B-' rated obligations. Standard & Poor's rates the CMBS asset, and S&P reanalyzed its outstanding credit estimates for the other assets. RATINGS AFFIRMED Carbon Capital II Real Estate CDO 2005-1 Ltd. Collateralized debt obligations Class Rating ----- ------ A AAA B AA C A+ D A E A- RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH NEGATIVE Carbon Capital II Real Estate CDO 2005-1 Ltd. Collateralized debt obligations Rating Class To From ----- -- ---- F BBB+ BBB+/Watch Neg G BBB BBB/Watch Neg H BBB- BBB-/Watch Neg I BB+ BB+/Watch Neg J BB BB/Watch Neg CENTRAL GARDEN: Gets NASDAQ Non-compliance Determination Letter --------------------------------------------------------------- Central Garden and Pet Company received on Aug. 13, 2008, a Nasdaq Staff Determination letter because it has delayed the filing of its Form 10-Q for the quarter ended June 28, 2008, as its Audit Committee completes a review of issues raised in a letter from a company employee. The company expects to file the Quarterly Report as soon as practicable after the completion of the review. The Audit Committee's review is primarily related to whether a reserve should have been established for the end of fiscal 2005 relating to a customer dispute that was settled in early fiscal 2006. The filing of the Quarterly Report will enable the Company to become current in its filing obligations. The Nasdaq Staff Determination letter indicated that the Company is not in compliance with Nasdaq Marketplace Rule 4310(c)(14) because it did not timely file the Quarterly Report. As a result, unless the Company requests a hearing in accordance with Nasdaq Marketplace Rules, the Company's securities would be delisted from Nasdaq at the opening of business on Aug. 22, 2008. The company intends to timely request a hearing before a Nasdaq Listing Qualifications Panel to appeal the Nasdaq's Staff determination, which will stay the delisting until the Panel has reached a decision. The decision is generally made in approximately 60 days from the request. However, there can be no assurance that the Panel will grant the Company's request for continued listing of its Class A common and/or its common stock. If the company files its quarterly report before the hearing or the Panel's decision, it will once again be in compliance with the Nasdaq Marketplace Rules and the potential delisting will be moot. Headquartered in Walnut Creek, California, Central Garden & Pet Company markets and produces lawn and garden products including feeds, decorative outdoor products. The company provides pet brands and supplies. CFM US: Allowed to Sell Indiana Real Property to Onward for $2MM ---------------------------------------------------------------- CFM U.S. Corp. and CFM Majestic U.S. Holdings, Inc. obtained authority from the U.S. Bankruptcy Court for the District of Delaware to sell its real property in Huntington, Indiana for $2 million, William Rochelle writes for Bloomberg News. The new owner of the property is Onward Multi-Corp. Mr. Rochelle notes that the current sale is not part of last month's order approving the sale of substantially all of the Debtors' assets. The Troubled Company Reporter reported on July 1, 2008, that the Hon. Kevin J. Carey authorized the Debtors to sell substantially all of their assets to Monessen Hearth Systems Company and Vermont Castings Holding Company for $42.5 million, free and clear of interests and liens, pursuant to an asset purchase agreement dated June 23, 2008. In May, the Debtors were also authorized to sell other assets for $4.6 million to two buyers, according to Mr. Rochelle. About CFM Headquartered in Huntington, Indiana, CFM U.S. Corp. -- http://www.majesticproducts.com/-- manufactures two product categories: Hearth and Heating Products and Barbecue and Outdoor Products. The company and its affiliate, CFM Majestic U.S. Holdings, Inc., filed for Chapter 11 protection on April 9, 2008 (Bankr. D. Del. Lead Case No. 08-10668). William Pierce Bowden, Esq., at Ashby & Geddes, represents the Debtors. The Debtors selected Administar Services Group LLC as their claims agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Patrick J. Reilley, Esq., at Cole Schotz Meisel Forman & Leonard, P.A., represents the Committee in these cases. As reported in the Troubled Company Reporter on June 18, 2008, the Debtors' summary of schedules showed total assets of $91,316,300 and total debts of $32,7367,890. The Debtors' Canadian affiliates filed protection under Companies' Creditors Arrangement Act with the Ontario Court of Justice on April 9, 2008. The Debtors' exclusive rights to file a chapter 11 plan will expire on Aug. 8, 2008. CFM US: Court Extends Exclusive Plan Filing Period to October 7 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended until Oct 7, 2008 the exclusive period, within which CFM U.S. Corp. and CFM Majestic U.S. Holdings, Inc. may file a chapter 11 plan, William Rochelle of Bloomberg News says. About CFM Headquartered in Huntington, Indiana, CFM U.S. Corp. -- http://www.majesticproducts.com/-- manufactures two product categories: Hearth and Heating Products and Barbecue and Outdoor Products. The company and its affiliate, CFM Majestic U.S. Holdings, Inc., filed for chapter 11 protection on April 9, 2008 (Bankr. D. Del. Lead Case No. 08-10668). William Pierce Bowden, Esq., at Ashby & Geddes, represents the Debtors. The Debtors selected Administar Services Group LLC as their claims agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Patrick J. Reilley, Esq., at Cole Schotz Meisel Forman & Leonard, P.A., represents the Committee in these cases. As reported in the Troubled Company Reporter on June 18, 2008, the Debtors' summary of schedules showed total assets of $91,316,300 and total debts of $32,7367,890. The Debtors' Canadian affiliates filed protection under Companies' Creditors Arrangement Act with the Ontario Court of Justice on April 9, 2008. The Debtors' exclusive rights to file a chapter 11 plan will expire on Aug. 8, 2008. CHANCELLOR GROUP: Court Dismisses Chapter 11 Case ------------------------------------------------- BankruptcyData.com reports that the U.S. Bankruptcy Court for Northern District of Texas issued an order dismissing the Chapter 11 case of Chancellor Group, and of its two operating subsidiaries, Gryphon Production Company and Gryphon Field Services. The Company filed for bankruptcy protection in October 2007. The Debtor listed total prepetition assets of $6 million. BankruptcyData.com, citing documents filed with the Securities and Exchange Commission, on July 22, 2008, Chancellor Group entered into a purchase and sale agreement with: -- Gryphon Production Company and Gryphon Field Services, collectively acting as sellers, and -- Legacy Reserves Operating, acting as buyer, and -- Capwest Resources and Western National Bank, collectively acting as the sellers' lenders. The agreement, BankruptcyData.com relates, provides for the sale of certain of the Debtors' oil and gas properties and other assets for $13,250,000. The Company expects closing under the agreement to occur in the week of August 25, 2008, BankruptcyData.com says. About Chancellor Group About Chancellor Group Headquartered in Pampa, Texas, Chancellor Group Inc. (PNK: CHAG.PK) -- http://www.thechancellorgroup.net/-- is in the business of acquisition, exploration, and development of natural gas and oil properties. The company and two of its debtor- affiliates filed for Chapter 11 protection on Oct. 30, 2007 (Bankr. N.D.Tex. lead Case No. 07-20512). Bill Kinkead, Esq. represents the Debtors in their restructuring efforts. When the Debtors filed for protection against its creditors, they listed total assets of $5,649,018 and total debts of $6,228,336. CHATEAU SENIOR: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Chateau Senior Services, LLC dba Brighten at Bryn Mawr 956 E. Railroad Ave. Suite 201 Bryn Mawr, PA 19010 Bankruptcy Case No.: August 20, 2008 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Ambler Senior Services, LLC 08-15319 Brighten Health Group, LLC 08-15320 Church Lane Senior Services, LLC 08-15321 Julio Ribaudo Senior Services, LLC 08-15322 Winthrop House Senior Services, LLC 08-15324 Type of Business: Healthcare Business Chapter 11 Petition Date: August 20, 2008 Court: Eastern District of Pennsylvania (Philadelphia) Debtor's Counsel: David B. Smith, Esq. Smith Giacometti, LLC 270 West Lancaster Ave. Building I Malvern, PA 19355 Tel: (610) 407-7217 Fax: (610) 407-7218 Email: dsmith@sgclegal.com Estimated Assets: $0 to $50,000 Estimated Debts: $1 million to $10 million Debtors' List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Advantage Ambulance Trade Debt $23,917 Group, Inc. 4710 North 6th Street Philadelphia, PA 19120 All Staffing, Inc. Trade Debt $221,619 100 West Ridge Street Lansford, PA 18232-0219 American Medical Equipment Trade Debt $67,993 Inc. 691 Green Crest Drive Westerville, OH 43081 Ceres Purchasing Solutions Trade Debt $128,409 PO Box 1386 Fort Smith, AR 72902 Dept. of Public Welfare, Government $1,726,000 Office of MA Contract Programs- Attn: James Williamson Bureau of Long Term Care Programs 1107 N. 7th Street Harrisburg, PA 17102 DNA Ambulance Trade Debt $17,705 PO Box 63416 Philadelphia, PA 19114 Healthcare Services Group, Trade Debt $461,188 Inc. 3220 Tillman Drive Glenview Corp. Center, Suite 300 Bensalem, PA 19020 Keystone Health Plan East Trade Debt $25,353 1901 Market Street, 40th Floor Philadelphia, PA 19103 Keystone Quality Transport Trade Debt $28,954 P.O. Box 34647 Philadelphia, PA 19101-3464 Klehr Harrison Harvey Trade Debt $31,000 Branzburg & Ellers 260 South Broad Street Philadelphia, PA 19102-5003 Philadelphia, PA 19102 Madsen, Inc. $17,514 P.O. Box 406 Broomall, PA 19008-0406 Medline Industries, Inc. Trade Debt $200,592 P.O. Box 92301 Chicago, IL 60675-2301 Neighborcare Trade Debt $1,206,049 P.O. Box 15326 Newark, NJ 07192 Peco Energy Company - Utility Debt $38,295.95 Electric P.O. Box 7888 Philadelphia, PA 19101 Pennsylvania Manufacturers' Trade Debt $35,575 Assoc. Insurance Co. 380 Sentry Parkway Blue Bell, PA 19422 Protocol Trade Debt $37,000 2659 Townsgate Road Suite 203 Westlake Village, CA 91361- 2774 Rehab Care Trade debt $34,752 Contract Therapy Division P.O. Box 503534 Saint Louis, MO 63150-3534 Select Rehabilitation, Inc. Trade Debt $587,119 35338 Eagle Way Chicago, IL 60678-1353 Tiffany Daye Civil Suit Debt $42,500 5910 Cedar Avenue Philadelphia, PA 19143 Transcare ML, Inc. $22,210 306 West Central Avenue Paoli, PA 19301 A copy of Ambler Senior Services, LLC's petition is available for free at: http://bankrupt.com/misc/paeb08-15319.pdf A copy of Brighten Health Group, LLC's petition is available for free at: http://bankrupt.com/misc/paeb08-15320.pdf A copy of Church Lane Senior Services, LLC 's petition is available for free at http://bankrupt.com/misc/paeb08-15321.pdf A copy of Julio Ribaudo Senior Services, LLC 's petition is available for free at http://bankrupt.com/misc/paeb08-15322.pdf A copy of Winthrop House Senior Services, LLC 's petition is available for free at http://bankrupt.com/misc/paeb08-15324.pdf CHEROKEE INT'L: Posts $600,000 Net Loss in Quarter Ended June 29 ---------------------------------------------------------------- Cherokee International Corporation disclosed its financial results for the second quarter ended June 29, 2008, marked by record global sales and further improvement in its gross margins. Net loss for the second quarter of 2008 was $600,000. Included in these results is a non-cash impairment charge, related to the company's European operation, for goodwill under SFAS 142 of $1.1 million, and a non-cash $1.7 million charge for a valuation allowance against the company's European deferred tax assets, as required by SFAS No. 109. Net of these non-recurring items, the company had non-GAAP net income for the second quarter of 2008 of $2.2 million. The company reported a GAAP net loss of $1.7 million for the second quarter of 2007, and GAAP net income of $12 thousand for the first quarter of 2008. Net sales for the second quarter of 2008 were $40.5 million, up 37% compared to $29.6 million for the second quarter ended July 1, 2007. Sequentially, net sales for the second quarter of 2008 were up $5.8 million or 17% when compared to $34.7 million for the first quarter of 2008. The company's backlog at June 29, 2008 was $54.1 million compared with $47.6 million at July 1, 2007. The book to bill for the second quarter of 2008 was 0.98 to 1.00, compared to 0.94 to 1.00 for the second quarter of 2007. "We experienced continued improvement in our operating results, in which sales, gross margin, and operating profit all improved significantly and continue on a positive trend," Jeffrey M. Frank, Cherokee's President and Chief Executive Officer, said. "We were pleased to report non-GAAP net income of $2.2 million or $0.11 per share, net of the non-recurring items. We continue to experience improved gross margin and operating leverage through increased production levels at our China facility." Gross profit for the second quarter of 2008 was $11.3 million, up 104%, or $5.8 million, compared to $5.6 million for the same period in 2007, and up 31% sequentially from the first quarter of 2008. Gross profit was higher sequentially during the second quarter due primarily to higher net sales from existing programs along with the continued introduction of new programs. Gross margin increased to 28.0% for the second quarter of 2008, up from the 18.8% realized in the second quarter of 2007 and up sequentially from 24.9% in the first quarter of 2008. Gross margins improved due primarily to increased production volumes in China, the introduction of new models and better overall volumes of products. Operating expenses were $9.5 million for the second quarter of 2008. Excluding the non-cash impairment charge for goodwill of $1.1 million, operating expenses, on a non-GAAP basis, were $8.4 million for the second quarter of 2008. This compares to GAAP operating expenses of $8.1 million for the second quarter of 2007, and $8.1 million for the first quarter of 2008 on a GAAP basis. As a percentage of sales, operating expenses were 23.5% on a GAAP basis and 20.7% net of non-recurring items. This compares to GAAP operating expenses as a percentage of sales of 27.2% in the second quarter of 2007 and 23.3% sequentially for the first quarter of 2008. Operating income increased by $4.3 million to $1.8 million for the second quarter of 2008 compared to a loss of $2.5 million in the second quarter of 2007. Excluding the non-cash impairment charge for goodwill of $1.1 million, non-GAAP operating income increased by $5.4 million to $2.9 million. This compares to a GAAP operating loss of $2.5 million for the second quarter of 2007. GAAP operating margin for the second quarter of 2008 increased to 4.5% income from an 8.5% loss in the prior year period. On a non- GAAP basis, the operating margin was 7.2% for the second quarter of fiscal 2008, net of non-recurring items. "Overall, we experienced anywhere from 20% to 40% growth in each of our markets, and more importantly, a 104% increase in gross profit over the second quarter last year," Mr. Frank added. For the six months ended June 29, 2008, net sales increased approximately 26.3%, or $15.7 million, to $75.3 million, compared to $59.6 million for the same period in 2007. Gross profit increased by 77.3%, or $8.7 million, to $20.0 million compared to $11.3 million for the six months ended July 1, 2007. Gross margin for the six months ended June 29, 2008 increased to 26.5% from 18.9% in the prior year period. Operating income on a GAAP basis increased by $7.0 million to $2.4 million for the six months ended June 29, 2008, compared to an operating loss of $4.6 million for the same period in 2007. Excluding the non-cash impairment charge for goodwill of $1.1 million, non-GAAP operating income for the six months ended June 29, 2008 increased to $3.5 million. Net loss for the six months ended June 29, 2008 was $0.6 million. Excluding the non-cash impairment charge for goodwill of $1.11 million and the non-cash valuation allowance charge of $1.7 million, non-GAAP net income for the six months ended June 29, 2008 was $2.2 million. This compares to a GAAP net loss of $3.7 million for the six months ended July 1, 2007. At June 29, 2008, the company's balance sheet showed total assets of $95.8 million and total debts of $83.9 million, resulting in a stockholders' equity of $11.8 million. Based in Tustin, California, Cherokee International Corp. (NASDAQ:CHRK) -- http://www.cherokeellc.com/-- is a designer and manufacturer of a range of switch mode power supplies for original equipment manufacturers in the telecommunications, networking, high-end workstations and other electronic equipment industries. The company has offices and manufacturing plants in Tustin and Irvine, California, Wavre, Belgium, Bombay, India, Guadalajara, Mexico, and Penang, Malaysia. Going Concern Doubt Mayer Hoffman McCann P.C. in Orange County, California, expressed substantial doubt about the company's ability to continue as a going concern after auditing the consolidated financial statements of Cherokee International Corporation and subsidiaries as of Dec. 30, 2007, and Dec. 31, 2006. The company's management anticipates that there will be insufficient cash balances available to repay the outstanding debt at its maturity. CHOCTAW RESORT: Moody's Rates Two Senior Notes Ba3 -------------------------------------------------- Moody's Investors Service downgraded Choctaw Resort Development Enterprise's corporate family rating, probability of default rating and debt ratings to Ba3 from Ba2. The rating outlook was also changed to negative from stable. The rating actions reflect Choctaw Resort's poor year-to-date operating performance, increase in financial leverage and reducing leeway under a financial covenant, as well as the risk of further EBITDA erosion in the near term, due to the combined impact of the weak economy and competitive challenges in Moody's opinion. Ratings downgraded to Ba3 from Ba2: -- Corporate Family Rating -- Probability of Default Rating -- Senior Unsecured Notes due 2019 (LGD assessment revised to LGD4/56% from LGD4/57%) -- Senior Secured Term Loan due 2011 (LGD assessment revised to LGD3/42% from LGD3/44%) Moody's believes that challenging economic conditions in central Mississippi and high gas prices, as well as the competition of renovated facilities in the Gulf Coast resulted in lower visitation to the Choctaw Resort's properties, significantly weaker revenues and EBITDA in the first nine months of fiscal year ended September 30, 2008. While the Enterprise's financial metrics as of June 30, 2008 were still solid for the "Ba" category, as illustrated by total debt/EBITDA of less than 3 times, Choctaw Resort's financial profile has deteriorated over recent months and is expected to remain pressured in the near term. Additionally, the rating agency cautions that the leeway under the total leverage covenant of the loan agreement has materially reduced. The negative outlook reflects the risk of further EBITDA deterioration, which could make the total leverage covenant test more challenging in the near term, despite anticipated optional repayments under the term loan through the use of unrestricted cash. Should the new management team's strategy, which aims at repositioning Choctaw Resort's properties towards the high-end destination segment, be successful and EBITDA level off, the rating outlook could return to stable. Choctaw Resort is a component unit of the Mississippi Band of Choctaw Indians, which was created by the Tribe in October 1999 to run its gaming operations. It owns and operates in central Mississippi the Silver Star Hotel and Casino and the Golden Moon Hotel and Casino, which commenced operations in 1994 and 2002, respectively. CIRTRAN CORPORATION: June 30 Balance Sheet Upside-Down by $773,654 ------------------------------------------------------------------ CirTran Corporation's balance sheet at June 30, 2008, showed total assets of $14,638,907 and total liabilities of $15,412,561, resulting in a stockholders' deficit of $773,654. CirTran reported a loss from operations for the second quarter ended June 30, 2008, of $991,052, an improvement of 19% over its operating loss of $1,226,983 for the second quarter of 2007. CirTran also reported sales for 2008's second quarter of $4,200,000, a 47% increase over sales of $2,878,156 for the same period in 2007, and also a 48% increase in quarter-over-quarter sales of $2,800,000 million for the first quarter of fiscal 2008. Sales for the six months ended June 30, 2008, were $7,100,000, a 37% improvement over sales of $5,100,000 for the first half of fiscal 2007. The company has sustained losses of $723,013 and $3,546,411 for the six months ended June 30, 2008, and 2007. As of June 30, 2008, the company had an accumulated deficit of $30,137,216. In addition, the company used, rather than provided, cash in its operations in the amount of $2,709,966 and $1,660,480 during the six months ended June 30, 2008 and 2007. These conditions raise substantial doubt about the company's ability to continue as a going concern. Liquidity and Financing Arrangements The company has a history of substantial losses from operations, and of using rather than providing cash in operations. During the first half of 2008, the company has used, rather than provided, cash in our operations. As of June 30, 2008, its monthly cash operating costs plus interest expense payable in cash averaged approximately $250,000 per month. In conjunction with its efforts to improve its results of operations the company is also seeking infusions of capital from investors, and is seeking sources to repay its existing convertible debentures. In its current financial condition, it is unlikely that it will be able to obtain additional debt financing at a reasonable cost. Even if the company did acquire additional debt, it would be required to devote additional cash flow to servicing the debt, and either securing the debt with assets, or paying a premium cost. Accordingly, the company is looking to obtain equity financing to meet its anticipated capital needs. There can be no assurance that it will be successful in obtaining such capital. If it issues additional shares for equity or in connection with debt, this will dilute the value of its common stock and existing shareholders' positions. There can be no assurance that it will be successful in obtaining more debt and equity financing in the future or that its results of operations will materially improve in either the short or the long term. If the company fails to obtain the financing and improve its results of operations, it will be unable to meet its obligations as they become due. That would raise substantial doubt about its ability to continue as a going concern. About CirTran Corporation Headquartered in Salt Lake City, Utah, CirTran Corporation (OTC BB: CIRC) -- http://www.CirTran.com/-- is an international, full- service contract manufacturer. CirTran's operations include: CirTran-Asia, a subsidiary with principal offices in ShenZhen, China, which manufactures high-volume electronics, fitness equipment, and household products for the multi-billion-dollar direct response industry; CirTran Online, which offers products directly to consumers through major retail web sites, and CirTran Beverage, which has partnered with Play Beverages LLC to introduce the Playboy Energy Drink(TM). CLAYMONT STEEL: Moody's Withdraws B3 Rating on Sr. Unsecured Note ---------------------------------------------------------------- Moody's Investors Services withdrawn all of its ratings for Claymont Steel, Inc including the B3 (LGD 5; 75%) senior unsecured note rating, the B2 probability of default rating, the B2 corporate family rating, and the SGL-1 liquidity rating. Claymont Steel Inc.'s existing rated debt has been repaid after its acquisition by Evraz Group S.A. CONSTELLATION COPPER: Cash Liquidity Woes Cues Possible Bankruptcy ------------------------------------------------------------------ Constellation Copper Corporation stated that it may consider filing for legal protection from its creditors in both Canada and the United States if cash liquidity problems can not be resolved. At June 30, 2008, the company's balance sheet showed total assets of C$61.2 million and total liabilities of C$99.0 million, resulting in a stockholders' deficit of approximately C$37.8 million. The company indicated that there is significant doubt about the company's ability to continue as a going concern. The company continues to pursue various near term financing alternatives, including bank financing, equity investment, mergers, and sale of certain assets or sale of the entire company. On March 31, the company said that approximately C$1.9 million of interest due on March 31, 2008, on its C$69 million convertible unsecured senior debentures has not been paid, resulting in a default under the terms of the convertible debentures. The outstanding principal and accrued interest on the convertible debentures is C$68,310,000 and C$2,820,000 as of June 30, 2008. Computershare Trust Company of Canada, the trustee under the indenture governing the convertible debentures, has been notified of the Event of Default. In addition to not paying interest on its convertible debentures and only paying a portion of forward sales settlements, the company has been unable to pay many of its vendor obligations when they were originally due, which may eventually result in vendors requiring payment before delivery of goods and services necessary to continue operations. The company, however, has made substantial progress in reducing its vendor payables. On July 28, Glencore International AG and Jaguar Financial Corporation and four holders representing over two-thirds of Constellation Copper Corporation's outstanding convertible unsecured senior debentures have entered into a letter agreement for a proposed restructuring of the company. The letter agreement has been provided to Constellation and has been forwarded to the special committee of the board of directors for their review and response. Todate, no update has been provided on this matter. Glencore-Jaguar and the Debenture Holders have indicated that this restructuring is subject to certain conditions, including satisfactory completion of due diligence which will begin soon as possible. Delisting In July 2008, the company was notified by the Toronto Stock Exchange that the TSX had further extended their review of the common shares of the company with respect to meeting the continued listing requirements until Sept. 1, 2008. The TSX has advised the company that the reason for this review is that it believes the financial condition and operating results of the company do not meet the continued listing requirements under sections 709 and 710(a)(i) of the TSX Company Manual and the price of the company's securities have been reduced so as not to warrant continued listing pursuant to section 711 of the TSX Company Manual. About Constellation Copper Headquartered in Lakewood, Colorado, Constellation Copper Corporation (CCU: TSX) -- http://www.constellationcopper.com/-- evaluates and develops mineral properties in the United States and Mexico. The company holds its properties primarily through three of its wholly owned subsidiaries, Lisbon Valley Mining Co. LLC, Minera Terrazas S.A. de C.V. and San Javier del Cobre S.A. de C.V. LVMC operates the Lisbon Valley copper mine, which comprises three main deposits: Sentinel, Centennial and GTO, plus the Cashin satellite deposit, with reserves and resources totaling +50 million tons and grading an average 0.48% copper. Minera Terrazas holds the company's interest in the Terrazas zinc-copper project located in north- central Mexico. The property has a total resource of 90 million tonnes grading 1.37% zinc and 0.32% copper in two adjacent deposits. San Javier del Cobre S.A. de C.V. holds the company's interest in the San Javier copper property located in northwestern Mexico. Constellation Copper Corporation's balance sheet at March 31, 2008, showed total assets of $65.6 million and total liabilities of $105.0 million, resulting in a total shareholders' deficit of $39.4 million. Going Concern As reported in the Troubled Company Reporter on Jan. 15, 2008, the company related that there is significant doubt about its ability to continue as a going concern. The cash balance of $10.87 million at September 30, has been reduced further to approximately $3.20 million at Dec. 31, 2007, and in order to provide liquidity, the company is pursuing various near term financing alternatives, including bank financing, equity investment, mergers, and sale of certain assets or sale of the entire company. In late November 2007, as a result of a comprehensive management evaluation of Lisbon Valley operations, the company disclosed its decision to cease mining and crushing activities and convert the Lisbon Valley mine to a leach only operation in early 2008. The evaluation included analyses of various mining plans, waste stripping requirements, contract mining arrangements, available mining equipment, projected copper prices and extensive operating cost and cash flow projections. In connection with the evaluation and conversion to a leach only operation, the company recorded an asset impairment of $92.9 million. DANA CORP: Posts $140 Million Net Loss in Quarter Ended June 30 --------------------------------------------------------------- Dana Holding Corporation (NYSE: DAN) announced its second-quarter 2008 results. Second-quarter highlights include: -- Sales of $2,333 million, a 2-percent increase compared to 2007, primarily because of currency effects; -- Net loss of $140 million, including an $82 million non- cash impairment charge. This compares to a net loss of $133 million in the second quarter of 2007; -- Earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDA) of $128 million, compared with $143 million in 2007; -- Strong cash balance of $1.2 billion and total liquidity of $1.6 billion at June 30, 2008; and -- Free cash flow of $38 million. Dana Making Progress in Turnaround "We are making progress in our turnaround despite unprecedented headwinds in North America," said Executive Chairman John Devine. "The combination of much lower production volumes and higher steel costs has put considerable pressure on our 2008 operating results." "But we are working to offset these challenges through pricing, additional restructuring, and cost reductions," he added. "And we remain focused on our game plan to turn around Dana by rebuilding the management team, improving operations, tightening our strategic direction, and employing a strong balance sheet." Added Chief Executive Officer Gary Convis, "For the near term, we continue to scale our North American operations -- through facility consolidations and workforce reductions -- to reflect a market that's very different than what was expected just six months ago. This will necessitate the reduction of approximately 3,000 positions over the course of 2008, including the planned reduction of 500 salaried positions announced last week. At the same time, we are experiencing modest employment growth in the markets where our business is performing better. "Longer term, we're picking up speed with introducing what is essentially a new way of managing our business, manufacturing our products, and measuring our performance worldwide," he added. "The new Dana Operating System is already enabling our people to drive improved product quality, customer satisfaction, and financial performance." Business Highlights Total EBITDA of $128 million in the second quarter was $15 million below 2007 results for the same period. This primarily reflected higher steel costs of $25 million (net of recovery actions), lower North American production of $22 million, unfavorable currency effects of $26 million, and reduced non-steel pricing of $6 million. These negative developments were partially offset by cost savings of $64 million. At June 30, 2008, cash balances remained strong at $1.2 billion, with available global liquidity of $1.6 billion. Free cash flow was $38 million for the second quarter, which was largely achieved through reduced working capital of $69 million during the period. Six-Month Results Sales for the six months ended June 30, 2008 were $4,645 million which compares to $4,434 million for the same period in 2007. For the first six months of 2008, the company reported net income of $545 million compared to a net loss of $225 million for the same period in 2007. The six-month 2008 results include a net gain of $754 million recognized in connection with the company's emergence from bankruptcy and application of fresh start accounting in January. EBITDA of $275 for the first six months of 2008 improved from the $247 million for the same period in 2007, as cost reduction actions initiated during the first half of 2008, combined with previously achieved annual cost savings and pricing improvements more than offset the earnings reduction attributable to lower North American production levels and higher steel costs. Dana Holding Corporation Unaudited Consolidated Balance Sheet As of June 30, 2008 ASSETS CURRENT ASSETS Cash and cash equivalents $1,191,000,000 Restricted cash 0 Accounts receivable Trade, net of $23,000,000 allowance 1,431,000,000 Other 295,000,000 Inventories Raw materials 401,000,000 Work in process and finished goods 640,000,000 Assets of discontinued operations 0 Other current assets 147,000,000 -------------- Total current assets 4,105,000,000 Goodwill 248,000,000 Intangibles 649,000,000 Investments and other assets 269,000,000 Investments in affiliates 172,000,000 Property, plant and equipment, net 2,039,000,000 --------------- Total Assets $7,482,000,000 =============== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable, including current portion of long-term debt $62,000,000 Debtor-in-possession financing 0 Accounts payable 1,203,000,000 Accrued payroll and employee benefits 265,000,000 Liabilities of discontinued operations 0 Taxes on income 160,000,000 Other accrued liabilities 501,000,000 -------------- Total current liabilities 2,191,000,000 Liabilities subject to compromise Deferred employee benefits and other non-current liabilities 879,000,000 Long-term debt 1,318,000,000 Minority interest in consolidated subsidiaries 115,000,000 Commitments and contingencies 0 -------------- Total liabilities 4,503,000,000 Shareholders' Equity: Preferred Stock, Series A 242,000,000 Preferred Stock, Series B 529,000,000 Common stock 1,000,000 Prior Dana common stock 0 Additional paid-in capital 2,310,000,000 Retained earnings (deficit) (177,000,000) Accumulated other comprehensive income 74,000,000 -------------- Total stockholders' equity 2,979,000,000 -------------- Total Liabilities & Stockholders' Equity $7,482,000,000 ============== Dana Holding Corporation Unaudited Consolidated Statement of Operations For Three Months Ended June 30, 2008 Net sales $2,333,000,000 Costs and expenses Cost of sales 2,206,000,000 Selling, general and administrative expenses 84,000,000 Amortization of intangibles 19,000,000 Realignment charges, net 40,000,000 Impairment of goodwill 75,000,000 Impairment of intangible assets 7,000,000 Other income, net 20,000,000 -------------- Loss from continuing operations before interest, reorganization items and income taxes (78,000,000) Interest expense 35,000,000 Reorganization items, net 12,000,000 -------------- Loss from continuing operations before income axes (125,000,000) Income tax expense (12,000,000) Minority interests (3,000,000) Equity in earnings of affiliates 2,000,000 -------------- Loss from continuing operations (138,000,000) Loss from discontinued operations (2,000,000) -------------- Net income (loss) ($140,000,000) ============== Dana Holding Corporation Unaudited Consolidated Statement of Cash Flows For Three Months Ended June 30, 2008 OPERATING ACTIVITIES: Net income ($140,000,000) Depreciation and amortization expense 72,000,000 Amortization of intangibles 23,000,000 Amortization of inventory valuation 0 Amortization of deferred financing charges and original issue discount 7,000,000 Impairment of goodwill and other intangible assets 82,000,000 Non-cash portion of U.K. pension charge 0 Minority interest 3,000,000 Reorganization: Gain on settlement of liabilities subject to compromise 0 Payment of claims (9,000,000) Reorganization items net of cash payments (5,000,000) Fresh start adjustments 0 Payments to VEBAs 0 Loss on sale of businesses and assets 0 Changes in working capital 69,000,000 Other, net (26,000,000) ------------- Net cash provided by (used for ) operating activities 76,000,000 ------------- INVESTING ACTIVITIES: Purchase of property, plant and equipment ($47,000,000) Proceeds from sale of businesses and assets 0 Change in restricted cash 0 Other adjustments (12,000,000) ------------- Net cash provided by (used for) investing activities ($59,000,000) -------------- FINANCING ACTIVITIES: Proceeds from (repayment of) DIP facility 0 Net change in short-term debt (81,000,000) Payment of DCC Medium Term Notes 0 Proceeds from Exit Facility Debt 0 Original issue discount fees 0 Deferred financing fees (1,000,000) Repayment of Exit Facility Debt (3,000,000) Issuance of Series A and Series B preferred stock 0 Preferred dividends paid (11,000,000) Other adjustments (7,000,000) ------------- Net cash provided by (used for) financing activities (103,000,000) ------------- Net (decrease) in cash and cash equivalents (86,000,000) Cash and cash equivalents, beginning of period 1,283,000,000 Effect of exchange rate changes on cash balances (6,000,000) Net change in cash of discontinued operations 0 -------------- Cash and cash equivalents, end of period $1,191,000,000 ============== About DANA Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of June 30, 2008, the Debtors listed $7,482,000,000 in total debts, resulting in $2,979,000,000 in total shareholders' deficit. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represens the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served as counsel to the Official Committee of Non- Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on Dec. 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of Jan. 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELTA FINANCIAL: Has Until Sept. 19 to File Chapter 11 Plan ----------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware extended on August 18, 2008, the exclusive rights of Delta Financial Corp. and its debtor-affiliates to file a plan of reorganization through September 19, 2008, and solicit and obtain acceptances of that plan through November 21, 2008. According to David B. Stratton, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, the Debtors and the Official Committee of Unsecured Creditors are continuing to negotiate and draft the terms of a proposed plan of liquidation and review the claims filed against the Debtors' estates. Mr. Stratton says while the plan process is moving forward, the Debtors and the Committee must first resolve complex inter- company issues that are integral to the Plan. The parties, he says, are sill working on developing the parameters of an inter- company settlement that will benefit the interests of the Debtors' creditors and the Debtors' estates. Once those issues are settled, the parties will then finalize the Plan, he informs the Court. A two-month extension of the exclusivity periods is warranted because among other things, the Debtors' Chapter 11 cases are large and complex, and although the plan negotiation process is moving forward, the parties have not yet finalized the Plan Documents, Mr. Stratton avers. According to Mr. Stratton, the Debtors have also made good progress in their Chapter 11 cases by initially dedicating the majority of their time to marketing and selling their assets, minimizing estate claims and dealing with issues related to their leased locations, and the Debtors' management have focused on responding to the many time-consuming demands related to their bankruptcy cases. In addition, Mr. Stratton notes the Debtors are paying their bills as they become due and they have sufficiently liquidity to continue paying those bills. The Debtors' extension request is not a negotiation tactic but it will permit them to continue their consensual settlement discussions with parties-in-interest, including the Creditors Committee, which would lead to a viable plan of liquidation, Mr. Stratton relates. Mr. Stratton assures the Court that no party-in-interest will be harmed by the Debtors' request because it will not prejudiced the right of any party to request a termination of the exclusivity for cause at any time under Section 1121(d) of the Bankruptcy Code. The Court earlier approved the Debtors' second request for an extension, extending their Plan Proposal Period to July 25, 2008, and Exclusive Solicitation Period to September 26, 2008. AG Delta Objects AG Delta Holdings, LLC, asks the Court to deny the Debtors' 3rd motion to extend their Exclusivity Periods. Christopher P. Simon, Esq., at Cross & Simon, LLC, in Wilmington, Delaware, contends that the Debtors' cases are neither large nor particularly complex. He says claimants have filed only 407 claims totaling $500,000,000 and the Debtors need to engage with only a limited number of stakeholders to negotiate a plan of reorganization. Mr. Simon asserts that the Debtors are not operating or seeking to reorganize their businesses. Rather, he says, the Debtors are conducting a simple-staged liquidation. The Debtors have not made significant progress towards a plan of reorganization, Mr. Simon further contends. He says the Debtors and the Creditors Committee have not developed the parameters of an inter-company settlement. There is no evidence that the Debtors will successfully formulate a plan of reorganization, he adds. According to Mr. Simon, the ongoing delay in confirming a plan of reorganization is eroding the value from the Debtors' estate. He notes that the Debtors have paid no less than $3,000,000 for administrative expenses. The Debtors will not be creating any going concern value to offset the mounting costs because the cases are a staged liquidation, he adds. Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. The company filed a chapter 11 petition on December 17, 2007 (Bankr. D. Del. Lead Case No. 07-11880). On the same day, three affiliates filed separate chapter 11 petitions -- Delta Funding Corp., Renaissance Mortgage Acceptance Corp., and Renaissance R.E.I.T. Investment Corp. -- (Bankr. D. Del. Case Nos. 07-11881 to 07-11883). The Debtors' petition listed D.B. Structured Products Inc. as their largest unsecured creditor holding a $19,500,000 claim. The Debtors selected Morrison & Foerster LLP as their general bankruptcy counsel and David B. Stratton, Esq. and James C. Carignan, Esq. at Pepper Hamilton LLP as their counsel. The Debtors hired AlixPartners LLP as their claims agent. The Official Committee of Unsecured Creditors retained Landis Rath & Cobb LLP as its Delaware counsel. The Debtors have asked for further extension to their exclusive plan filing period through July 25, 2008, and solicit and obtain acceptances of that plan, through Sept. 26, 2008. (Delta Financial Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). DELTA FINANCIAL: Wants Delta Residual's $82MM Claim Pegged at $0 ---------------------------------------------------------------- Delta Financial Corp. and its debtor-affiliates asked the United States Bankruptcy Court for the District of Delaware to peg the $82,000,000 claim of Delta Residual Exchange Co., LLC, at zero, for purposes of voting on confirmation of a plan, as well as establishing an amount that the Liquidating Trust must reserve for future distributions to holders of allowed general unsecured claims. David B. Stratton, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, says Delta Residual's claim relates to a lawsuit it commenced in the Supreme Court of New York, asserting $110,000,000 in damages on account of its supposed loss resulting from an alleged misstatement by Delta Financial Corporation in an exchange offer of the value of certain excess cashflow certificates. Mr. Stratton relates that in August 2001, in an effort to address its then-existing liquidity concerns, DFC closed an exchange offer transaction in which holders of DFC's secured notes chose voluntarily, after conferring with independent financial and legal advisors, to exchange their notes for membership interests of Delta Residual, whose assets were comprised primarily of excess cashflow certificates. He notes that Delta Residual bases its claim here on a supposed promise from DFC that the excess cashflow certificates were worth $150,000,000 when their real values were $80,000,000 less. Mr. Stratton further notes that according to Delta Residual, the difference is a loss against which DFC supposedly agreed to indemnify Delta Residual. Contrary to Delta Residual's current assertions, at the time of the exchange offer, DFC did not guarantee that the excess cashflow certificates had any particular value at all, much less $150,000,000, which was essentially the face amount of the secured notes being tendered, Mr. Stratton asserts. The absence of the promise is clear from the documents, he says. In addition, DFC would never make the promise because if the excess cashflow certificates generated sufficient cashflow that DFC could guarantee a present value of $150,000,000, then DFC would (a) not have needed to conduct the exchange offer and (b) have grossly overpaid for the notes, since the market value of the notes at the time of the exchange offer was about $0.20 to $0.30 on the dollar -- or $30,000,000, to $45,000,000. Mr. Stratton further relates that DFC only estimated the future cashflows for the certificates being exchanged, and retained one certificate. He says a few months after closing the exchange offer, as a result of the terrorists attacks on September 11, 2001, and declining interest rates, DFC revised its cash flow assumptions related to the excess cashflow certificate it retained. Delta Residual construed the revision as an admission that DFC's earlier valuation was knowingly false, he tells the Court. However, Delta Residual ignored the changed corporate circumstances, like DFC holding a single certificate on its books and being desirous of presenting a conservative balance sheet in its post-exchange era, and, more importantly, the changed economic circumstances, he adds. To date, Delta Residual has failed to convince the New York Court that DFC is responsible for Delta Residual's alleged loss, Mr. Stratton notes. Nonetheless, Delta Residual filed a general unsecured claim against DFC for $81,500,000 -- the single largest claim in the Debtors' estates, he says. Delta Residual does not explain why it is seeking $30,000,000 less than what is sought in its second amended complaint, and the it also failed to explain why the claim should be allowed, he further tells the Court. Delta Residual's claim is meritless, contingent and unliquidated, and it is ripe for estimation by the Court, mr. Stratton asserts. According to Mr. Stratoon, Section 502(c) of the Bankruptcy Code provides that if a claim is contingent or unliquidated and the fixing or liquidation of that claim would cause an undue delay in the administration of the debtor's case, then the bankruptcy court must estimate the claim. The goal of estimation should be to fix a value for a claim that will ensure that the claimant's voting power is consistent with the extent of the claimant's economic interest, he says. In the next few weeks, the Debtors will be filing with the Court a plan of liquidation and the related disclosure statement jointly with the Official Committee of Unsecured Creditors, and confirming the Plan soon after. The Debtors assert that the Delta Residual's claim is based on a series of misguided allegations. In order to ensure that all of the creditors' interests are properly and proportionately represented in the confirmation and distribution aspects of the Debtors' cases, the Court should estimate the Delta Residual's claim. Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. The company filed a chapter 11 petition on December 17, 2007 (Bankr. D. Del. Lead Case No. 07-11880). On the same day, three affiliates filed separate chapter 11 petitions -- Delta Funding Corp., Renaissance Mortgage Acceptance Corp., and Renaissance R.E.I.T. Investment Corp. -- (Bankr. D. Del. Case Nos. 07-11881 to 07-11883). The Debtors' petition listed D.B. Structured Products Inc. as their largest unsecured creditor holding a $19,500,000 claim. The Debtors selected Morrison & Foerster LLP as their general bankruptcy counsel and David B. Stratton, Esq. and James C. Carignan, Esq. at Pepper Hamilton LLP as their counsel. The Debtors hired AlixPartners LLP as their claims agent. The Official Committee of Unsecured Creditors retained Landis Rath & Cobb LLP as its Delaware counsel. The Debtors have asked for further extension to their exclusive plan filing period through July 25, 2008, and solicit and obtain acceptances of that plan, through Sept. 26, 2008. (Delta Financial Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). DELTA FINANCIAL: Westchester Continues to Refute Insurance Claim ---------------------------------------------------------------- Westchester Surplus Lines Insurance Co. reiterates its assertions that the United States Bankruptcy Court for the District of Delaware should dismiss the contention of Delta Financial Corp. and its debtor-affiliates that it has to pay for the defense costs the Debtors incurred in a lawsuit filed by Delta Funding Residual Exchange Co., LLC (DFREC). The lawsuit involves alleged misrepresentations by the Debtors about the value of the cashflow certificates transferred to DFREC in connection with an exchange transaction. Carl N. Kunz, III, Esq., at Morris James LLP, in Wilmington, Delaware, asserts that the Court should dismiss the Debtors' complaint because the Debtors' claim against it in the underlying action -- Delta Funding Residual Exchange Company, LLC's lawsuit against Delta Financial Corporation's officers and directors -- clearly fall within the terms of the inadequate consideration exclusion of the policy. Aside from that, the underlying claim was precluded because the Debtors' waiver claims are barred, he says. The Debtors have failed to allege primary facts necessary to warrant it waiver, estoppel, bad faith, punitive damages and attorneys fees claims under New York law, he adds. In addition, Mr. Kunz says, there is no coverage for the Underlying Action because it: a. seeks to compel the insureds to return the allegedly ill- gotten gain they obtained from failing to pay the agreed upon consideration for the senior notes; and b. does not allege an insurable Loss under the Policy and New York law. Mr. Kunz asserts that the Debtors' allegation that Westchester delayed issuing a coverage position letter is insufficient to support adequately the claims under New York law. Weschester responded to the Debtors' complaint shortly after excess insurers Axis Specialty Insurance Company and United States Fire Insurance Company did, because Westchester intended to transfer the case back to the District Court while, at the same time, preserve its right to argue the meaning and construction of its own policy language, either before the Bankruptcy Court or the District Court, Mr. Kunz relates. In the hope of protecting its right to a jury trial and having this coverage dispute heard in a single proceeding before the District Court, Westchester responded to the Debtors' complaint by filing an answer with a jury demand and a statement declining to accept the final judgment of the Court, accompanied by the filing of motions to withdraw the reference and for a determination that the proceeding is non-core. As soon as the excess insurers filed their respective motions to dismiss, Westchester promptly requested for judgment on the pleadings - which is the functional equivalent of a motion to dismiss, Mr. Kunz notes. Westchester did not intend to wait for a ruling on its application to withdraw the reference while substantive requests proceeded with respect to the meaning of its own policy language, he tells the Court. Mr. Kunz contends that the Debtors do not and cannot dispute that Westchester's judgment request is timely and subject to the same standard applicable to the excess insurers' pending requests, and the Debtors do not contend that it was prejudiced in any way. "Therefore, there is no basis for DFC's allegation that [Westchester's] motion is meritless, and was filed as a tactical ploy," Mr. Kunz tells the Court. The Debtors tell the Court that the parties are engaged in discovery which they expect to close by November 14, 2008. Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. The company filed a chapter 11 petition on December 17, 2007 (Bankr. D. Del. Lead Case No. 07-11880). On the same day, three affiliates filed separate chapter 11 petitions -- Delta Funding Corp., Renaissance Mortgage Acceptance Corp., and Renaissance R.E.I.T. Investment Corp. -- (Bankr. D. Del. Case Nos. 07-11881 to 07-11883). The Debtors' petition listed D.B. Structured Products Inc. as their largest unsecured creditor holding a $19,500,000 claim. The Debtors selected Morrison & Foerster LLP as their general bankruptcy counsel and David B. Stratton, Esq. and James C. Carignan, Esq. at Pepper Hamilton LLP as their counsel. The Debtors hired AlixPartners LLP as their claims agent. The Official Committee of Unsecured Creditors retained Landis Rath & Cobb LLP as its Delaware counsel. The Debtors have asked for further extension to their exclusive plan filing period through July 25, 2008, and solicit and obtain acceptances of that plan, through Sept. 26, 2008. (Delta Financial Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). DELTA FINANCIAL: Delays Filing of 2nd Quarter Results with SEC -------------------------------------------------------------- Delta Financial Corporation and its debtor-subsidiaries have not yet submitted their quarterly report on Form 10-Q for the quarter ended June 30, 2008 with the United States Securities and Exchange Commission. The Debtors informed the Commission that they have been unable to complete the preparation of their annual report because of the demands associated with their bankruptcy filing and related activities, and due to limited personnel and resources. The Debtors also noted that the Richard Blass' employment as their chief financial officer expired March 31, 2008. The Form 10-Q was due 40 days following the end of the company's fiscal quarter. The Debtors anticipate that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or a portion of it. The Debtors say they are currently unable to provide a reasonable estimate of their 2008 second quarter results of operations because of they have been focused on their bankruptcy cases. Accordingly, they cannot at this time estimate what significant changes will be reflected in their 2008 second quarter results of operations compared to their 2007 second quarter results of operations. The Debtors note their 2007 results of operations were prepared on the assumption that they would continue to operate as a going concern, which was not necessarily the case as of June 30, 2008, in light of their bankruptcy cases. Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. The company filed a chapter 11 petition on December 17, 2007 (Bankr. D. Del. Lead Case No. 07-11880). On the same day, three affiliates filed separate chapter 11 petitions -- Delta Funding Corp., Renaissance Mortgage Acceptance Corp., and Renaissance R.E.I.T. Investment Corp. -- (Bankr. D. Del. Case Nos. 07-11881 to 07-11883). The Debtors' petition listed D.B. Structured Products Inc. as their largest unsecured creditor holding a $19,500,000 claim. The Debtors selected Morrison & Foerster LLP as their general bankruptcy counsel and David B. Stratton, Esq. and James C. Carignan, Esq. at Pepper Hamilton LLP as their counsel. The Debtors hired AlixPartners LLP as their claims agent. The Official Committee of Unsecured Creditors retained Landis Rath & Cobb LLP as its Delaware counsel. The Debtors have asked for further extension to their exclusive plan filing period through July 25, 2008, and solicit and obtain acceptances of that plan, through Sept. 26, 2008. (Delta Financial Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). DEUTSCHE ALT-A: Moody's Junks Ratings on 62 of 177 Tranches ----------------------------------------------------------- Moody's Investors Service downgraded the ratings of 177 tranches from 19 Alt-A transactions issued by Deutsche Bank. Eighteen downgraded tranches remain on review for possible downgrade. Additionally, 27 senior tranches were confirmed at Aaa. The collateral backing these transactions consists primarily of first- lien, fixed and adjustable-rate, Alt-A mortgage loans. Complete rating actions are: Issuer: Deutsche Alt-A Securities, Inc. Mortgage Loan Trust Series 2005-6 -- Cl. I-A-3, Downgraded to A1 from Aaa -- Cl. I-A-4, Downgraded to Aa2 from Aaa -- Cl. I-A-5, Downgraded to A1 from Aaa -- Cl. I-A-6, Downgraded to A1 from Aaa -- Cl. I-A-7, Downgraded to A1 from Aaa -- Cl. I-A-PO, Downgraded to A1 from Aaa -- Cl. II-A-1, Downgraded to A1 from Aaa -- Cl. II-A-2, Downgraded to A1 from Aaa -- Cl. II-A-PO, Downgraded to A1 from Aaa -- Cl. II-A-3, Downgraded to Aa2 from Aaa -- Cl. I-A-8, Downgraded to A2 from Aa1 -- Cl. II-A-4, Downgraded to A2 from Aa1 Issuer: Deutsche Alt-A Securities Mortgage Loan Trust, Series 2006-AR4 -- Cl. A-1, Downgraded to Aa2 from Aaa -- Cl. A-2, Downgraded to Aa2 from Aaa -- Cl. A-3, Downgraded to Ba2 from Aaa -- Cl. M-1, Downgraded to B3 from B2; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Ca from B3 -- Cl. M-3, Downgraded to Ca from B3 -- Cl. M-4, Downgraded to Ca from B3 -- Cl. M-5, Downgraded to Ca from B3 -- Cl. M-6, Downgraded to Ca from B3 Issuer: Deutsche Alt-A Securities Mortgage Loan Trust, Series 2006-AR5 -- Cl. I-A-1, Downgraded to Baa1 from Aaa -- Cl. I-A-2, Downgraded to Aa2 from Aaa -- Cl. I-A-3, Downgraded to Baa1 from Aaa -- Cl. I-A-4, Downgraded to B3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. II-1A, Downgraded to A1 from Aaa -- Cl. II-2A, Downgraded to A1 from Aaa -- Cl. II-3A, Downgraded to A2 from Aaa -- Cl. II-X1, Downgraded to A1 from Aaa -- Cl. II-X2, Downgraded to A1 from Aaa -- Cl. II-PO, Downgraded to A1 from Aaa -- Cl. I-M-1, Downgraded to Ca from B3 -- Cl. I-M-2, Downgraded to Ca from B3 -- Cl. I-M-3, Downgraded to Ca from Caa1 -- Cl. I-M-4, Downgraded to Ca from Caa1 -- Cl. I-M-5, Downgraded to Ca from Caa1 -- Cl. I-M-6, Downgraded to Ca from Caa1 Issuer: Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-1 -- Cl. I-A-1, Downgraded to Aa1 from Aaa -- Cl. I-A-2, Downgraded to Aa3 from Aaa -- Cl. I-A-3A, Downgraded to A1 from Aaa -- Cl. I-A-3B, Downgraded to A1 from Aaa -- Cl. I-A-3C, Downgraded to A1 from Aaa -- Cl. I-A-4B, Downgraded to A2 from Aaa -- Cl. II-A-1, Downgraded to Aa3 from Aaa -- Cl. A-5, Downgraded to Ba3 from Aaa -- Cl. M-1, Downgraded to B3 from B1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Caa2 from B1 -- Cl. M-3, Downgraded to Ca from B1 -- Cl. M-4, Downgraded to Ca from B2 -- Cl. M-5, Downgraded to Ca from B3 Issuer: Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-2 -- Cl. I-A-2, Downgraded to Baa3 from Aaa -- Cl. II-A-2, Downgraded to Baa3 from Aaa -- Cl. M-1, Downgraded to Ba2 from A1 -- Cl. M-2, Downgraded to B1 from Baa1 -- Cl. M-3, Downgraded to B1 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B2 from Ba1; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B3 from Ba3; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to Caa1 from B1; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to Ca from B1 -- Cl. M-8, Downgraded to Ca from B1 -- Cl. M-9, Downgraded to Ca from B1 Issuer: Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-AR2 -- Cl. A-1, Confirmed at Aaa -- Cl. A-2, Downgraded to Baa2 from Aaa -- Cl. A-3, Downgraded to Ba3 from Aaa -- Cl. A-4, Confirmed at Aaa -- Cl. A-5, Confirmed at Aaa -- Cl. A-6, Downgraded to Baa2 from Aaa -- Cl. A-7, Downgraded to Baa2 from Aaa -- Cl. M-2, Downgraded to Ca from B3 -- Cl. M-3, Downgraded to Ca from Caa1 -- Cl. M-4, Downgraded to Ca from Caa1 -- Cl. M-5, Downgraded to Ca from Caa1 Issuer: Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-BAR1 -- Cl. A-1, Downgraded to Aa2 from Aaa -- Cl. A-2, Downgraded to A1 from Aaa -- Cl. A-3, Downgraded to Ba1 from Aaa -- Cl. A-4, Downgraded to Ba2 from Aaa -- Cl. A-5, Downgraded to B3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa1 from Aa1 -- Cl. M-2, Downgraded to Caa2 from Aa2 -- Cl. M-3, Downgraded to Caa3 from Aa3 -- Cl. M-4, Downgraded to Ca from Baa3 -- Cl. M-5, Downgraded to Ca from Ba2 -- Cl. M-6, Downgraded to Ca from Ba3 -- Cl. M-7, Downgraded to Ca from B2 -- Cl. M-8, Downgraded to Ca from Caa1 -- Cl. M-9, Downgraded to Ca from Caa3 Issuer: Deutsche Alt-A Securities, Inc. Mortgage Loan Trust Series 2006-AF1 -- Cl. A-5, Downgraded to A1 from Aaa -- Cl. M-5, Downgraded to Ca from B3 -- Cl. M-6, Downgraded to Ca from B3 Issuer: Deutsche Alt-A Securities, Inc. Mortgage Loan Trust Series 2006-AR1 -- Cl. I-A-2, Downgraded to Aa2 from Aaa -- Cl. I-A-3, Downgraded to Aa3 from Aaa -- Cl. I-A-4, Downgraded to Ba3 from Aaa -- Cl. I-M-1, Downgraded to B2 from Ba1; Placed Under Review for further Possible Downgrade -- Cl. I-M-3, Downgraded to Ca from B3 -- Cl. I-M-4, Downgraded to Ca from B3 -- Cl. I-M-5, Downgraded to Ca from B3 -- Cl. I-M-6, Downgraded to Ca from Caa1 Issuer: Deutsche Alt-A Securities, Inc. Mortgage Loan Trust Series 2006-AR2 -- Cl. A-1-1, Confirmed at Aaa -- Cl. A-1-2, Confirmed at Aaa -- Cl. A-2, Downgraded to Baa2 from Aaa -- Cl. M-5, Downgraded to Ca from B3 -- Cl. M-6, Downgraded to Ca from B3 Issuer: Deutsche Alt-A Securities, Inc. Mortgage Loan Trust Series 2006-AR3 -- Cl. A-1, Downgraded to Baa1 from Aaa -- Cl. A-2, Downgraded to Baa1 from Aaa -- Cl. A-3, Downgraded to A1 from Aaa -- Cl. A-4, Downgraded to A2 from Aaa -- Cl. A-5, Downgraded to A3 from Aaa -- Cl. A-6, Downgraded to Baa2 from Aaa -- Cl. A-7, Downgraded to B3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Ca from B3 -- Cl. M-2, Downgraded to Ca from B3 -- Cl. M-3, Downgraded to Ca from Caa1 -- Cl. M-4, Downgraded to Ca from Caa1 Issuer: Deutsche Alt-A Securities, Inc. Mortgage Loan Trust Series 2006-AR6 -- Cl. A-1, Confirmed at Aaa -- Cl. A-2, Downgraded to Aa1 from Aaa -- Cl. A-3, Downgraded to Aa1 from Aaa -- Cl. A-4, Downgraded to A2 from Aaa -- Cl. A-5, Downgraded to A3 from Aaa -- Cl. A-6, Confirmed at Aaa -- Cl. A-7, Downgraded to A3 from Aaa -- Cl. A-8, Downgraded to Ba3 from Aaa -- Cl. M-1, Downgraded to B3 from B2; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Ca from B3 -- Cl. M-3, Downgraded to Ca from B3 -- Cl. M-4, Downgraded to Ca from B3 -- Cl. M-5, Downgraded to Ca from B3 -- Cl. M-6, Downgraded to Ca from Caa1 Issuer: Deutsche Alt-A Securities, Inc. Mortgage Loan Trust Series 2007-AR1 -- Cl. A-1, Downgraded to Baa1 from Aaa -- Cl. A-2, Downgraded to Baa1 from Aaa -- Cl. A-3A, Downgraded to Aa2 from Aaa -- Cl. A-3B, Confirmed at Aaa -- Cl. A-3C, Downgraded to Aa3 from Aaa -- Cl. A-4, Downgraded to Baa1 from Aaa -- Cl. A-5, Downgraded to Baa2 from Aaa -- Cl. A-6, Downgraded to B1 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to B3 from B2; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Ca from B3 -- Cl. M-3, Downgraded to Ca from B3 -- Cl. M-4, Downgraded to Ca from B3 Issuer: Deutsche Alt-A Securities, Inc. Mortgage Loan Trust Series 2007-AR3 -- Cl. II-A-1, Downgraded to Aa3 from Aaa -- Cl. II-A-2A, Confirmed at Aaa -- Cl. II-A-2B, Confirmed at Aaa -- Cl. II-A-3, Downgraded to A2 from Aaa -- Cl. II-A-4, Downgraded to A1 from Aaa -- Cl. II-A-5, Downgraded to Aa1 from Aaa -- Cl. II-A-6, Downgraded to A2 from Aaa -- Cl. II-A-7, Downgraded to Ba3 from Aaa -- Cl. I-M-1, Downgraded to Ca from B3 -- Cl. I-M-2, Downgraded to Ca from B3 -- Cl. II-M-2, Downgraded to B3 from B2; Placed Under Review for further Possible Downgrade -- Cl. II-M-3, Downgraded to Ca from B3 -- Cl. II-M-4, Downgraded to Ca from B3 -- Cl. II-M-5, Downgraded to Ca from B3 Issuer: Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB1 -- Cl. A-1-A, Downgraded to Baa1 from Aaa -- Cl. A-1-B, Downgraded to Baa1 from Aaa -- Cl. A-1-C, Downgraded to Baa2 from Aaa -- Cl. A-4, Downgraded to Baa2 from Aaa -- Cl. A-X-2, Downgraded to Baa2 from Aaa -- Cl. A-2-A, Confirmed at Aaa -- Cl. A-2-B, Downgraded to Baa2 from Aaa -- Cl. A-2-C, Downgraded to Baa2 from Aaa -- Cl. A-2-D, Downgraded to Baa2 from Aaa -- Cl. A-X, Confirmed at Aaa Issuer: Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB4 -- Cl. A-1A, Confirmed at Aaa -- Cl. A-1B-1, Confirmed at Aaa -- Cl. A-1C, Downgraded to Aa1 from Aaa -- Cl. A-2, Downgraded to Baa2 from Aaa -- Cl. A-3, Downgraded to Baa2 from Aaa -- Cl. A-3A-1, Downgraded to Aa2 from Aaa -- Cl. A-4B, Downgraded to Baa3 from Aaa -- Cl. A-4C, Downgraded to Baa3 from Aaa -- Cl. A-6A-1, Confirmed at Aaa -- Cl. A-6A-2, Confirmed at Aaa -- Cl. M-5, Downgraded to Ca from B3 -- Cl. M-6, Downgraded to Ca from B3 -- Cl. M-7, Downgraded to Ca from B3 -- Cl. M-8, Downgraded to Ca from B3 -- Cl. M-9, Downgraded to Ca from Caa1 -- Cl. M-10, Downgraded to Ca from Caa1 Issuer: Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1 -- Cl. A-1, Downgraded to A1 from Aaa -- Cl. AI-1, Downgraded to A1 from Aaa -- Cl. X, Downgraded to A1 from Aaa -- Cl. PO, Downgraded to B2 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to B3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. AI-2, Downgraded to B3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to Caa2 from B2 Issuer: Deutsche Alt-B Securities, Inc. Mortgage Loan Trust Series 2006-AB2 -- Cl. A-1, Confirmed at Aaa -- Cl. A-2, Confirmed at Aaa -- Cl. A-3, Confirmed at Aaa -- Cl. A-5B, Confirmed at Aaa -- Cl. A-8, Confirmed at Aaa -- Cl. M-5, Downgraded to Ca from B3 -- Cl. M-6, Downgraded to Ca from B3 Issuer: Deutsche Alt-B Securities, Inc. Mortgage Loan Trust Series 2006-AB3 -- Cl. A-1, Confirmed at Aaa -- Cl. A-2, Confirmed at Aaa -- Cl. A-3, Confirmed at Aaa -- Cl. A-5B, Confirmed at Aaa -- Cl. A-7, Confirmed at Aaa -- Cl. A-8, Confirmed at Aaa Cl. M-1, Downgraded to B2 from Ba3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Ca from B3 -- Cl. M-5, Downgraded to Ca from B3 -- Cl. M-6, Downgraded to Ca from B3 -- Cl. M-7, Downgraded to Ca from Caa1 Ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. Certain tranches were confirmed due to additional enhancement provided by structural features. DOUGLAS FURNITURE: Heller Financial Wants Case Dismissed -------------------------------------------------------- Heller Financial asked the U.S. Bankruptcy Court for the Central District Of California on August 15, 2008, to dismiss Douglas Furniture of California, LLC's Chapter 11 bankruptcy case on the basis that the Debtor has no realistic prospects of resuming operations, according to Larry Thomas of Furniture Today. The Court has set a hearing on Heller's request on Sept. 2, 2008. Mr. Thomas says that Heller claims that the assets are worth less than the Debtor's $9.02 million debt to the lender. The lender says that allowing the Debtor to remain in Chapter 11 will merely burn through cash that could be used to repay its debt to it, according to Mr. Thomas. Mr. Thomas also adds that Heller argues that the sale of the Debtor's assets could be accomplished more efficiently, and with fewer administrative fees, out of court. Heller said all that's left of Douglas are accounts receivable, which, according to Heller's court filing, have a book value of $5.33 million. The Debtor's inventory has a book value of $5.72 million, according to Heller. An obstacle is the fact that the inventory is located at the company's two shuttered factories in Mexico, and under Mexican law, the company doesn't have access to those goods. If the Court doesn't dismiss the case outright, Mr. Thomas reports that Heller is asking that it be converted to a Chapter 7 bankruptcy, with liquidation overseen by a court-appointed trustee. El Segundo, California-based Douglas Furniture of California, LLC,-- http://www.douglasfurniture.com/-- manufactures upholstery and casual dining furniture. The Company filed for Chapter 11 bankruptcy protection on July 25, 2008 (Bankr. C.D. Calif. Case No. 08-21292). Ron Bender, Esq., at Levene Neale Bender Rankin & Brill, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed between $1,000,000 and $10,000,000 in estimated assets and between $10,000,000 and $50,000,000 in estimated debts. EARTH BIOFUELS: June 30 Balance Sheet Upside-Down by $122.1MM ------------------------------------------------------------- Earth Biofuels Inc.'s consolidated balance sheet at June 30, 2008, showed $14.8 million in total assets, $135.7 million in total liabilities, and $1.2 million in redeemable preferred stock, resulting in a $122.1 million stockholders' deficit. At June 30, 2008, the company's consolidated balance sheet also showed strained liquidity with $400,000 in total current assets available to pay $135.7 million in total current liabilities. The company reported a net loss of $65.4 million on sales revenue of $7.4 million for the second quarter ended June 30, 2008, compared with a net loss of $34.4 million on sales revenue of $6.7 million in the same period last year. Of the net loss of $65.4 million for the second quarter ended June 30, 2008, $18.8 million relates to the losses on sale of the company's LNG subsidiary, and $12.8 million relates to fixed asset impairments on the company's Durant plant. The company had approximately $48,000 in cash and cash equivalents at June 30, 2008. The company's working capital deficit at June 30, 2008, was approximately $135.3 million. Sale of LNG Subsidiary On June 30, 2008, the company sold its wholly owned subsidiary New ELNG to PNG Ventures Inc. via a Share Exchange Agreement, in exchange for the issuance of 7 million shares of the common stock of the PNG. Prior to the completion of the Share Exchange, Earth LNG Inc., a Texas corporation had transferred to New ELNG all right and marketable title to the member interests of Applied LNG Technologies USA, LLC and Arizona LNG, L.L.C. and all their other assets (other than receivables from the company and other subsidiaries of the company) that, together, comprise the liquefied natural gas (LNG) business, resulting in the characterization of the transfer as an asset sale of the company's subsidiary. The investors holding $52.5 million in senior unsecured notes were granted an irrevocable proxy regarding the 7 million shares the company received in the exchange. 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?3107 Going Concern Doubt Montgomery Coscia Greilich LLP, in Plano, Tex., expressed substantial doubt about Earth Biofuels Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring operating losses and working capital deficit. The company has incurred significant losses from operations through June 30, 2008, and has limited financial resources. The company also has an accumulated deficit of $279.3 million, negative current ratios and negative tangible net worth at June 30, 2008. In addition, investors holding $52.5 million in senior unsecured notes filed with the bankruptcy courts a Chapter 7 Involuntary Liquidation against the company during the second quarter of 2007. However, on Nov. 14, 2007, the company negotiated and executed a settlement agreement with the above note holders. The agreement required the creditors to dismiss their petition of bankruptcy. About Earth Biofuels Headquartered in Dallas, Texas, Earth Biofuels Inc. (OTC BB: EBPF) -- http://www.earthbiofuels.com/-- is engaged in the domestic production, supply and distribution of alternative based fuels consisting of biodiesel and previously liquid natural gas and ethanol. Earth's primary bio-diesel operations are located in Oklahoma and Texas. Earth sold its subsidiary which produced LNG, at the end of the second quarter 2008, and restructured its debts with significant investors. ECCO ENERGY: Posts $164,232 Net Loss in 2008 Second Quarter ----------------------------------------------------------- ECCO Energy Corp. reported a net loss of $164,232 on revenue of $129,237 for the second quarter ended June 30, 2008, compared with a net loss of $40,055 on revenue of $116,935 for the same period last year. For the three months ended June 30, 2008, the company incurred operating expenses of $274,465 compared to $113,360 for the three months ended June 30, 2007. At June 30, 2008, the company's consolidated balance sheet showed $11,096,677 in total assets, $1,636,895 in total liabilities, and $9,459,782 in total shareholders' equity. The company's consolidated balance sheet at June 30, 2008, also showed strained liquidity with $56,192 in total current assets available to pay $1,572,401 in total current liabilities. 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?30fa Going Concern Doubt Malone & Bailey, PC, in Houston, expressed substantial doubt about ECCO Energy Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's negative working capital and recurring losses from operations. About ECCO Energy Headquartered in Houston, Texas, ECCO Energy Corp. (OTC BB: ECCE) -- http://www.eccoenergy.com/-- engages in the development, exploration, and production of oil and natural gas properties in the United States. The company owns a 69% working interest in the Wilson Lease, which is located in the Nueces County, Texas. EDISON HOTELS: Court Orders Former Owner to Pay Employees --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Mississippi ordered Earl E. Gaylor, the former owner of Edison Walthall Hotel, to pay employees, who reportedly have not been paid since July, according to Marquita Brown of The Clarion-Ledger. The Court ordered payment of employees' wages and associated taxes immediately, Ms. Brown says. Ms. Brown reports that Edison Walthall Hotel was sold on Aug. 11 for almost $4 million to Roberts Hotels Group, a subsidiary of St. Louis-based Roberts Cos., and is now called the Roberts Vista Hotel. Mr. Gaylor will be responsible for the employees' wages through Aug. 11 when the sale closed, Stephen Rosenblatt, the examiner assigned to the case, said in an e-mail, according to Ms. Brown. Ms. Brown pointed out that the purchase agreement included $70,000 for employees' pay. According to Ms. Brown, brothers Michael and Steven Roberts, co- owners of The Roberts Cos. and hotel, said they paid all they were required to pay, including the money for employee wages, in bankruptcy court. Employees were scheduled to be paid Aug. 7 and have not received a paycheck since July 22. Based in Jackson, Mississippi, Edison Hotels and Resorts Company -- http://www.edisonwalthallhotel.com/-- operates the Edison Walthall Hotel, which offers 208 guest rooms with 23 suites, banquet facilities and food. The company and certain of its affiliates filed for chapter 11 protection on Aug. 31, 2007 (Bankr. S. D. Miss. Case Nos. 07-02737 and 07-02743). Craig M. Geno, Esq. at Harris, Jernigan & Geno, P.L.L.C. represents the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed assets and debts of between $1 million to $100 million, each. EDWARD THOMPSON: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Edward Dennis Thompson 805 Plaza Dr. San Jose, CA 95125 Bankruptcy Case No.: 08-54525 Chapter 11 Petition Date: August 18, 2008 Court: Northern District of California (San Jose) Judge: Roger L. Efremsky Debtor's Counsel: David A. Boone, Esq. Email: ecfdavidboone@aol.com 1611 The Alameda San Jose, CA 95126 Tel: (408) 291-6000 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 A copy of Edward Dennis Thompson's petition is available for free at: http://bankrupt.com/misc/canb08-54525.pdf FEDDERS CORP: Delaware Court Confirms Amended Liquidation Plan -------------------------------------------------------------- Steven Church at Bloomberg News reports that the Hon. Brendan Linehan Shannon of the United States Bankruptcy Court for the District of Delaware confirmed yesterday an amended joint plan of liquidation filed by Fedders North America, Inc., and its affiliated debtors, and the Debtors' term lenders. The Plan and related settlement among the Term Lenders, the Official Committee of Unsecured Creditors and the Debtors provide for the liquidation and distribution of the Debtors' assets. Under the Plan, Term Lenders, whose claims total $45.6 million and are secured by their duly perfected liens on substantially all of the Debtors' assets, have agreed to waiver their Adequate Protection Claims, which could range from $9 million to more than $20 million. The Term Lenders, in turn, will receive roughly 53% to 60% of their Secured Claims. The Term Lenders will also provide $1.8 million in cash to a liquidating trust to pay down general unsecured claims. The GUC Liquidating Trust will also receive the avoidance actions. General unsecured creditors asserted $2.6 billion in claims. All classes of creditors impaired under the Plan have voted to accept the Plan. Holders of Equity Interests in Class 56 have rejected the Plan. Objections to the confirmation of the Plan have filed by, among others, the United States Trustee and the Debtors' insurers. The U.S. Trustee argues that the Plan does not meet the substantive consolidation standard set forth by the Third Circuit in In re Owens Corning, 419 F.3d 195 (3d Cir. 2007); and the release provisions under the Plan is not permissible. The Debtors, however, argue that their assets and liabilities are sufficiently scrambled that separating them is cost-prohibitive and would hurt all creditors. The Debtors also note that the Term Lenders and the Committee support substantive consolidation. The Debtors note that the Term Lenders are entitled to a release for postpetition conduct. Several insurance companies also objected to the Plan, arguing that the plan shouldn't be confirmed because it impinges on their contractual rights, the American Bankruptcy Institute cited a report from Bankruptcy Law360. The insurers, including ACE Property and Casualty Insurance Co., filed an objection to the liquidation plan as it was modified last month. Maryland Casualty Company and Liberty Mutual Insurance Co. lodged a separate plan objection Wednesday, while ACE American Insurance Co. and ESIS Inc. filed a limited objection. According to the report, ACE and Century Indemnity argue that while the plan seems to rely on the proceeds of insurance agreements to satisfy some claims, it doesn't provide acceptable treatment of those agreements and insurers' claims. The objection claims that the plan would require the continued enforceability of insurance polices that would cover claims against the debtors, but rob the insurers of their ability to fully enforce their contractual rights and the debtors' reciprocal contractual obligations. The Amended Plan was filed on August 18, 2008. The Amended Plan clarifies that insurance policies, insured claims, and potentially insured claims will not be treated on a substantively consolidated basis, so that coverage under any applicable insurance policy and the proceeds from any insurance policies will be applied only to insured claims or potentially insured claims asserted against the Debtors that are named insured under the policy. The Amended Plan provides for the defense and settlement of potentially insured claims. Nothing in the Plan, the GUC Liquidating Trust Agreement provided in the Plan, the Term Lenders Liquidating Trust Agreement, any order confirming the Plan, will impair the rights of any insurer to assert any claim against parties other than the Debtors, the plan administrator and the GUC Trustee. BankruptcyData.com says the Amended Joint Plan states that potentially insured claims means any claim or demand for which any of the Debtors, the term lenders liquidating trust or the GUC liquidating trust may claim coverage under one or more insurance policies. A potentially insured claim includes, but is not limited to, an insured claim; provided, however, nothing in the Plan, the GUC liquidating trust agreement, the term lenders' liquidating trust agreement, the confirmation order or any other Plan document will be construed as an acknowledgement or inference that any insurance policy covers or otherwise applies to any potentially insured claim or that any potentially insured claim is eligible for payment under any insurance policy. A potentially insured claim, BankruptcyData.com notes, will become a general unsecured claim if and when it is determined that the potentially insured claim is not an insured claim, either (a) by agreement of the insurers from whom coverage is sough and (i) the term lenders liquidating trust or (ii) the GUC liquidating trust, as applicable or (b) by a final order of a Court competent jurisdiction. A clean copy of the Amended Liquidation Plan is available at no charge at: http://ResearchArchives.com/t/s?3101 A black-lined copy of the Amended Liquidation Plan is available at no charge at: http://ResearchArchives.com/t/s?3100 About Fedders Corporation Based in Liberty Corner, New Jersey, Fedders Corporation -- http://www.fedders.com/-- manufactures and markets air treatment products, including air conditioners, air cleaners, dehumidifiers, and humidifiers. The company has production facilities in the United States in Illinois, North Carolina, New Mexico, and Texas and international production facilities in the Philippines, China and India. The company and several affiliates filed for Chapter 11 protection on Aug. 22, 2007, (Bankr. D. Del. Lead Case No. 07-11182). Norman L. Pernick, Esq., and J. Kate Stickles, Esq., at the Wilmington, Delaware office of Cole, Schotz, Meisel, Forman & Leonard P.A.; and Irving E. Walker, Esq., at Cole Schotz's Baltimore, Maryland, office represent the Debtors in their restructuring efforts. The Debtors have selected Logan & Company Inc. as claims and noticing agent. The Official Committee of Unsecured Creditors is represented by Brown Rudnick Berlack Israels LLP. When the Debtors filed for protection from creditors, they listed total assets of $186,300,000 and total debts of $322,000,000. The Debtors and their term lenders filed an amended joint plan of liquidation on August 18, 2008. Goldman Sachs Credit Partners LP serves as administrative agent and collateral agent for the term lenders. Goldman is represented by Stephen Karotkin, Esq., and Christina F. Pullo, Esq., at Weil, Gotshal & Manges, LLP, in New York; and Mark D. Collins, Esq., at Richards, Layton & Finger, PA, in Wilmington, Delaware. Highland Capital Management LP is represented by Judith Elkin, Esq., at Haynes and Boone LLP, in New York; and Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP in Wilmington. FEDERAL-MOGUL: Earns $90 Million in Second Quarter Ended June 30 ---------------------------------------------------------------- Federal-Mogul Corporation (NASDAQ: FDML) reported record second quarter sales of $2,000,000,000 and an eighth consecutive quarter of year-over-year increased sales combined with a sharp rise in quarterly net income to $90,000,000. Highlights of Federal-Mogul's Q2 financial performance include: * Record quarterly sales of $2,000,000,000, a 13% increase, versus $1,800,000,000 in Q2 2007 and eighth consecutive quarter of year-over-year sales increase; * Gross margin improved by 23% or $74,000,000 to $396,000,000 or 19.8%, compared to $322,000,000 in second quarter 2007; * SG&A at 10.6% of sales, compared to 12.1% of sales during the same period in 2007; * Operational EBITDA increased 21% to $257,000,000 from $212,000,000 in Q2 2007; * Net income improved to $90,000,000 or earnings per share of $0.90, compared to $4,000,000 in Q2 2007; * Strong balance sheet and liquidity of $1,300,000,000; and * Market, customer and product diversification with no single customer accounting for more than 6% of revenue. Sales for the three-month period ending June 30, 2008, were a record $1,995,000, an increase of 13%, compared to $1,763,000 for the same period a year ago. Federal-Mogul reported a gross margin of $396,000,000 or 19.8% of sales, compared to $322,000,000 or 18.3% of sales, representing an increase of $74,000,000, or 23% over the prior year. Federal-Mogul's Operational EBITDA was $257,000,000 or 12.9% of sales, compared to $212,000,000 or 12.0% of sales during the same period in 2007, representing an increase of $45,000,000 or 21%. The company recorded net income of $90,000,000 or earnings per share of $0.90, up from $4,000,000 in second quarter 2007. "We experienced another record sales quarter with strong earnings performance. We have anticipated and reacted to changing market conditions including a market downturn in mature automotive markets. We implemented numerous successful actions to offset macro-economic factors and benefited from our strong market, customer and product diversification," said Jose Maria Alapont, Federal-Mogul President and Chief Executive Officer. "Federal-Mogul's global market presence and customer base is well diversified. We serve over 250 vehicle platforms and over 700 vehicle powertrain programs. No single customer represents more than 6% of our global revenue and over 60% of our revenue is generated from sales outside the United States and Canada. Further, we have a significant global aftermarket business with well-recognized leading brands and we generate over 10% of our revenue from a global commercial and industrial customer base. This diversification strengthens our performance and compensates for market and customer volatility," Mr. Alapont continued. Financial Summary (in millions) Three Months Ended Six Months Ended --------------------------------------- June 30 June 30 --------------------------------------- 2008 2007 2008 2007 --------------------------------------- Net sales $1,995 $1,763 $3,854 $3,480 Gross margin 396 322 662 630 Adjusted gross margin 396 322 730 630 Selling, general and administrative expenses (212) (213) (421) (420) Net income 90 4 58 9 Adjusted net income 90 4 121 9 Operational EBITDA 257 212 462 412 Federal-Mogul reported sales of $1,995,000 for the three-month period ending June 30, 2008, up from $1,763,000 in the same period of 2007. Sales increased by $232,000,000 or 13% and were positively impacted by favorable foreign exchange of $125,000,000. The company has reported year-over-year quarterly sales increases for eight consecutive quarters as a result of expanding sales to customers in Europe, Asia and South America. Gross margin for the quarter was $396,000,000 or 19.8% of sales, as compared to $322,000,000 or 18.3% of sales during the same period a year ago, an increase of 23% or $74,000,000. The automotive market has faced decreasing regional production volumes, rising energy prices, inflationary raw material costs and other economic challenges. The company effectively offset the impact of these and other macro-economic factors through profitable incremental revenue from new business contracts and improved productivity from operations. Gross margin was also favorably impacted by reduced depreciation and foreign exchange. Selling, General and Administrative, SG&A expenses were reduced to 10.6% of sales during the quarter, compared to 12.1% of sales in the same period of 2007. The company realized a reduction in SG&A expense despite an adverse foreign exchange impact of $11,000,000. Federal-Mogul's Operational EBITDA for the second quarter was $257,000,000, a 21% or $45,000,000 increase, compared to $212,000,000 during the same period in 2007. Net income was $90,000,000 in the second quarter 2008, with earnings per share of $0.90, compared to $4,000,000 of net income in second quarter 2007. Federal-Mogul continued to make progress executing its sustainable global profitable growth strategy by growing in emerging markets and strengthening its presence in mature markets. The company achieved 50 percent growth in sales to customers in BRIC (Brazil, Russia, India and China) markets during the quarter. The company recently completed the successful launch of a new powertrain component plant in Araras, Brazil and launched its new portfolio of wipers and brake pads in the Russian market. Federal-Mogul reported sales of $3,854,000 for the six-month period ending June 30, 2008, an increase of $374,000,000 or 11% versus $3,480,000 for the same period in 2007. Gross margin increased to $662,000,000 in the first half of 2008 versus $630,000,000 in 2007, despite a non-cash charge of $68,000,000 recorded in the first quarter of 2008 relating to re- valuation of inventory, as required by fresh-start reporting. Operational EBITDA increased 12%, or $50,000,000, to $462,000,000 in the first half of 2008, as compared to $412,000,000 in the same period the prior year. Adjusted net income rose $112,000,000 to $121,000,000 or 3.1% of sales during the first half of 2008, versus $9,000,000 in the first half of 2007. The company recorded strong operating cash flow of $116,000,000 in the first half of 2008, which compares to $79,000,000 in the same period of 2007. "Federal-Mogul's results demonstrate the solid foundation we have put in place through our sustainable global profitable growth strategy. Global customer, regional and product portfolio diversification, together with leading product technologies and brands, development in best cost locations and strong commitment to customer service differentiate Federal-Mogul and contribute to our strong performance in this challenging market environment," Mr. Alapont said. Federal-Mogul held a conference call on July 24 to discuss the the second quarter financial results. An audio replay of the call will be available beginning two hours following the call and will be accessible until August 7, 2008 at: Domestic calls: 888-286-8010 International calls: 617-801-6888 Pass code I.D.: 35689660 A full-text-copy of Federal-Mogul Corp.'s Second Quarter 2008 Results filed on Form 10-Q is available at no charge at: http://ResearchArchives.com/t/s?30ff Reorganized Federal-Mogul Corporation Balance Sheet (In millions) ASSETS Successor Company June 30 Dec. 31 2008 2007 --------- -------- Current assets: Cash and equivalents $843.9 $425.4 Accounts receivable, net 1,382.6 1,095.9 Inventories, net 1,052.6 1,074.3 Prepaid expenses and other current assets 357.6 526.4 --------- -------- Total current assets 3,636.7 3,122.0 Property, plant and equipment, net 2,094.7 2,061.8 Goodwill & indefinite-lived intangible assets 1,636.7 1,852.0 Definite-lived intangible assets, net 577.9 310.0 Other non-current assets 486.4 520.5 --------- -------- Total Assets $8,432.4 $7,866.3 ========= ======== LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities: Short-term debt, including current portion of long-term debt $128.2 $117.8 Accounts payable 707.3 726.6 Accrued liabilities 505.5 496.0 Current portion of postemployment benefit liability 62.3 61.2 Other accrued liabilities 194.9 167.3 --------- -------- Total current liabilities 1,598.2 1,568.9 Long-term debt 2,806.2 2,517.6 Post-employment benefits 965.7 936.9 Long-term portion of deferred income taxes 350.7 331.4 Other accrued liabilities 289.7 300.3 Minority interest in consolidated affiliates 98.2 87.5 Shareholders' equity: Common Stock 1.0 1.0 Additional paid-in capital, including warrants 2,122.7 2,122.7 Retained earnings 58.1 - Accumulated other comprehensive income 141.9 - --------- -------- Total Shareholders' Equity 2,323.7 2,123.7 --------- -------- Total Liabilities & Shareholders' Equity $8,432.4 $7,866.3 ========= ======== Federal-Mogul Corporation Statement of Operations (In millions) Successor Predecessor Company Company --------- ----------- Six Months Ended June 30 ------------------------- 2008 2007 ---------- ---------- Net sales $3,854.4 $3,479.9 Cost of products sold (3,192.4) (2,849.7) ---------- ---------- Gross margin 662.0 630.2 Selling, general & admin expenses (421.1) (419.6) Interest expense, net (90.6) (101.9) Amortization expense (35.3) (9.3) Chapter 11 & U.K. Administration expenses (13.0) (41.2) Equity earnings of unconsolidated affiliates 16.5 18.0 Restructuring expense, net (2.7) (29.6) Other income (expense), net (4.3) 14.1 ---------- ---------- Income before income taxes 115.5 60.7 Income tax expense, net (53.4) (52.2) ---------- ---------- Net income $58.1 $8.5 ========== ========== Federal-Mogul Corporation Unaudited Statement of Cash Flows (In Millions) Successor Predecessor Company Company --------- ----------- Six Months Ended June 30 ------------------------- 2008 2007 ---------- ---------- Cash Provided From (Used By) Operating Activities: Net earning (loss) $58.1 $8.5 Adjustments to reconcile net earnings to net cash from (used by) operating activities: Depreciation and amortization 171.1 172.1 Cash received from 524(g) Trust 225.0 - Change in postemployment benefits 4.1 (27.1) Changes in deferred taxes 3.9 3.8 Changes in operating assets & liabilities: Accounts receivable (249.8) (157.8) Inventories 55.0 0.9 Accounts payable (49.1) 106.5 Other assets & liabilities 39.3 79.0 ---------- ---------- Net Cash Provided From Operating Activities 257.6 185.9 Cash Provided From (Used By) Investing Activities: Expenditures for property, plant & equipment (148.0) (132.0) Net proceeds from the sale of property, plant & equipment 10.9 18.1 Proceeds from sale of investment - 13.8 Payments to acquire minority interests - (6.8) Payments to acquire business (4.7) - ---------- ---------- Net Cash Used By Investing Activities (141.8) (106.9) Cash Provided From (Used By) Financing Activities: Proceeds from borrowings on exit facility 2,082.0 - Repayment of Tranche A, Revolver & PIK Notes (1,790.8) - Proceeds from borrowings on DIP credit facility - 550.0 Principal payments on DIP credit facility - (228.1) Repayment of pre-petition Tranche C debt - (330.4) Increase in short-term debt 2.4 8.7 Decrease in other long-term debt (7.9) (5.8) Increase (decrease) in factoring arrangements 6.3 (58.9) Debt refinance fees (0.4) (0.3) ---------- ---------- Net Cash Provided From (Used By) Financing Activities 291.6 (64.8) Effect of foreign currency exchange rate fluctuations on cash 11.1 4.6 ---------- ---------- Increase in cash and equivalents 418.5 18.8 Cash and equivalents at beginning of period 425.4 359.3 ---------- ---------- Cash and equivalents at end of period $843.9 $378.1 ========== ========== About Federal-Mogul Federal-Mogul Corporation (OTCBB: FDMLQ) -- http://www.federal- mogul.com/ -- is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin LLP, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from chapter 11 on Dec. 27, 2007. (Federal- Mogul Bankruptcy News, Issue No. 170; Bankruptcy Creditors' Service Inc.,http://bankrupt.com/newsstand/or 215/945-7000) FEDERAL-MOGUL: Admin Claims Objection Period Extended to Dec. 27 ---------------------------------------------------------------- Federal-Mogul Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend the period within which they may object to administrative claims until Dec. 27, 2008. A previous objection deadline expired on July 24, 2008. The Court will convene a hearing on the Debtors' request on Sept. 12, 2008. By application of Rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedures of the U.S. Bankruptcy Court for the District of Delaware, the Debtors' administrative claims objection deadline is automatically extended through the conclusion of that hearing. Objections to the Debtors' extension request were due August 15. The Reorganized Debtors clarify that the the proposed extension is without prejudice to their right to seek further extensions of the Administrative Claims Objection Deadline. James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, states that the Confirmation Order set a bar date for Administrative Claims against the U.S. Debtors on April 25, 2008. However, he says the April 25 Administrative Claims Bar Date applied only to administrative expense claims incurred outside the ordinary course of the Reorganized Debtors' business and was not intended to apply to ordinary course vendor, tax, or similar claims. The Plan provides that the Reorganized Debtors and any other party-in-interest had until July 24, 2008, to review and object to the Administrative Claims . . . provided that the 90-day period of review may be extended by the Court upon request of any of the Plan Proponents. The Reorganized Debtors relate that 23 claims were timely submitted. Most of the claims, Mr. O'Neill says, were submitted by state taxing authorities, as a protective measure so as not to have any potential rights cut off by the Administrative Claims Bar Date. The Reorganized Debtors believe that all of the state tax claims are ordinary course claims that are not subject to the Administrative Claims Bar Date. The Debtors have been working with the state tax authorities asserting the claims to obtain either the withdrawal of the claims or other comparable consensual resolutions of the claims, with several withdrawals already obtained, Mr. O'Neill tells the Court. Mr. O'Neill adds that the Administrative Claims that were non-tax related have already been satisfied or will not result in a payment by the Reorganized Debtors. He says the Reorganized Debtors have contacted the claimants asserting the claims to obtain the consensual resolution or withdrawal of those claims. With respect to both the tax and non-tax claims, the Debtors seek an extension of the Administrative Claims Objection Deadline to allow time for the process to be completed. The Reorganized Debtors also relate that 335 claims are purported to have some postpetition or administrative component. The Reorganized Debtors believe that most of the claims were resolved through payment of the claim in the ordinary course of business during their Chapter 11 cases. Many of the claims are asbestos- related claims that will be addressed by the Federal-Mogul Asbestos Personal Injury Trust established under the Plan, Mr. O'Neill says. The Reorganized Debtors have notified the holders of the claims. Although the Debtors have been able to obtain the consensual resolution of many of the purported Administrative Claims prior to the July 24 deadline, Mr. O'Neill says there remain a number of pending Administrative Claims that remain to be addressed. Without the requested extension, the Debtors will be forced to file numerous objections to the Administrative Claims that will increase the costs to the Reorganized Debtors and the claimants, and the administrative burdens on the Court. Rather than subject all parties to the costs and burdens, the Court should extend the Administrative Claims Objection Deadline for the period requested, he asserts. About Federal-Mogul Federal-Mogul Corporation (OTCBB: FDMLQ) -- http://www.federal- mogul.com/ -- is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin LLP, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from chapter 11 on Dec. 27, 2007. (Federal- Mogul Bankruptcy News, Issue No. 170; Bankruptcy Creditors' Service Inc.,http://bankrupt.com/newsstand/or 215/945-7000) FERRO CORP: Closes $150 Million Convertible Senior Notes Offering ----------------------------------------------------------------- Ferro Corporation completes its offering of $150 million aggregate principal amount of 6.50% Convertible Senior Notes due 2013, and that it accepted and paid for the 9-1/8% Senior Notes due 2009 validly tendered and not withdrawn as of Aug. 18, 2008, pursuant to the tender offer and consent solicitation commenced June 20, 2008. The Company has granted the underwriters an option to purchase $22.5 million aggregate principal amount of Convertible Notes, within 30 days of the initial issuance of the Convertible Notes, to cover over-allotments. The net proceeds to the Company from the sale of the Convertible Notes were approximately $145.4 million. The Company used the net proceeds from the sale of the Convertible Notes and available cash, including borrowings under the Company's revolving credit facility, to purchase the 9-1/8% Notes tendered and accepted in the tender offer and consent solicitation, to pay accrued and unpaid interest on all such indebtedness, and to pay all premiums and transaction expenses associated therewith. The Convertible Notes are convertible, at the holder's option under certain circumstances, using a net share settlement process, into a combination of cash and, if applicable, shares of the Company's common stock. The initial base conversion rate for the Convertible Notes is 30.9253 shares of the Company's common stock per $1,000 principal amount of Convertible Notes, subject to adjustment upon the occurrence of certain events. In addition, if the price of the Company's common stock exceeds the base conversion price during the settlement averaging period applicable to a conversion, holders who convert will receive up to an additional 18.5552 shares of the Company's common stock per $1,000 principal amount of Convertible Notes, as determined pursuant to a specified formula. The initial base conversion price represents a premium of approximately 60% based on the closing sale price of $20.21 per share of the Company's common stock on Aug. 13, 2008. The Convertible Notes may not be redeemed by the Company. Holders of the Convertible Notes may require the Company to repurchase their Convertible Notes at a purchase price equal to the principal amount, plus accrued and unpaid interest, if any, if the Company is involved in certain types of corporate transactions that constitute a fundamental change, as defined by the terms of the Convertible Notes. A total of $198,987,000, or approximately 99.494% of the aggregate principal amount of the 9-1/8% Notes, were validly tendered and not withdrawn prior to the Early Acceptance Date. The tender offer and consent solicitation is scheduled to expire at 5:00 p.m., New York City time, on Aug. 26, 2008. The final settlement with respect to the 9-1/8% Notes validly tendered and not withdrawn after the Early Acceptance Date and prior to the Expiration Date will be made promptly following the Expiration Date. T he Company has called any remaining 9-1/8% Notes that are not tendered and purchased in the tender offer and consent solicitation for redemption on Sept. 18, 2008 pursuant to the terms of the 9-1/8% Notes. The Company received valid tenders and a sufficient number of consents to adopt the proposed amendments to the indenture governing the 9-1/8% Notes. Such amendments were adopted on Aug. 19, 2008 pursuant to a supplemental indenture entered into with the 9-1/8% Notes trustee. The amendments to the indenture have eliminated certain restrictive covenants, events of default, conditions to legal and covenant defeasance and related provisions with respect to the 9-1/8% Notes. Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. acted as joint bookrunning managers for the Convertible Notes offering. About Ferro Corporation Based in Cleveland, Ohio, Ferro Corporation (NYSE: FOE) -- http://www.ferro.com/-- is a producer of specialty chemicals including coatings, enamels, pigments, plastic compounds, and specialty chemicals for use in industries ranging from construction, pharmaceuticals and telecommunications. The company has approximately 6,300 employees worldwide. Ferro operates through these five primary business segments: Performance Coatings, Electronic Materials, Color and Performance Glass Materials, Polymer Additives, and Specialty Plastics. Ferro Corp. has locations in Argentina, Australia, Belgium, Brazil, China, among others. * * * As reported in the Troubled Company Reporter on Aug. 19, 2008, Standard & Poor's Ratings Services assigned a 'B' rating to Ferro Corp.'s proposed $150 million 6.5% convertible senior unsecured notes and a recovery rating of '5', indicating the expectation for modest (10% to 30%) recovery in the event of a payment default. At the same time, S&P affirmed its 'B+' corporate credit and secured debt ratings on the company. The outlook is stable. S&P also withdrew ratings on the proposed $200 million senior unsecured notes due 2016 which the company no longer plans to issue. Proceeds from the offering, along with cash and borrowings under the revolving credit facility, will be used to redeem $200 million of secured debt maturing in January 2009. The notes are convertible into Ferro common stock at a specified threshold price at the option of the holder. FLAGSHIP GLOBAL: Halts Operations, Files for Chapter 7 ------------------------------------------------------ The Board of Directors of Flagship Global Health, Inc., resolved that it is in the best interests of the company to file a petition in the United States Bankruptcy Court under Chapter 7 of the United States Bankruptcy Code. On August 19, 2008, the Company filed the Bankruptcy Petition in the United States Bankruptcy Court for the Southern District of New York and ceased to do business. The bankruptcy trustee has yet to be appointed. Flagship Global said it has filed a Notification of Late Filing on Form 12b-25 with the Securities and Exchange Commission relating to its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2008. The Company's Quarterly Report on Form 10-Q was due to be filed with the SEC on August 14, 2008. The Company stated in its Notification of Late Filing on Form 12b-25 that it could not complete the preparation of its Quarterly Report on Form 10-Q on a timely basis because the Company does not have sufficient financial resources available to enable it to complete the preparation of such Quarterly Report on Form 10-Q. The Company can provide no assurance as to whether or when it will be in a position to file its Quarterly Report on Form 10-Q. In July, Flagship Global postponed its previously scheduled annual stockholders' meeting which had been set for July 22, 2008. The Company stated that it continues to explore strategic alternatives. The Company further stated that its cash position continues to deteriorate and that it may have to cease operations or seek protection under the federal bankruptcy laws. About Flagship Global Flagship Global Health, Inc. (OTB: FGHH) is an international membership-based organization dedicated to providing the highest level of healthcare quality for its members, whether they are at home or traveling. Flagship is focused on providing priority appointments to renowned and clinically acclaimed physicians, who are typically difficult to access. Rather than simply providing names, Flagship also offers emergent care needs, a personal electronic Internet-based medical record repository and air evacuation to its members. FRIEDMANS INC: May File Plan Next Month, Wants Exclusivity Moved ---------------------------------------------------------------- Friedman's Inc. and Crescent Jewelers ask the U.S. Bankruptcy Court for the District of Delaware to further extend the period during which the Debtors have the exclusive right to file a chapter 11 plan by roughly 60 days through and including November 24, 2008; and extending the period during which the Debtors have the exclusive right to solicit acceptances of that plan through and including January 23, 2009. Lee E. Buchwald, president of Buchwald Capital Advisors LLC, in New York, says the Debtors hope to file a plan and disclosure statement in the next month. Based on current projections, which are subject to material change, distributions under the plan to general unsecured creditors of (a) Friedman's are projected to be between 23% and 28% and (b) Crescent are projected to be between 13% and 17%, according to Mr. Buchwald. Mr. Buchwald was appointed sole director of Friedman's and Crescent Jewelers on May 21, 2008, by the company's board pursuant to a global settlement among Harbinger, the Debtors, Official Creditors Committee and other parties-in-interest. Mr. Buchwald says the projections are based on, among other things, allocating overhead and administrative expenses of the Debtors' estates between Friedman's and Crescent based on the ratio of stores of each Debtor. In addition, the projections assume that an intercompany claim of Friedman's against Crescent would be allowed. Mr. Buchwald says the intercompany claim represents, in principal part, the goods received by Friedman's from merchandise vendors and distributed to the Crescent stores. The Debtors believe, subject to the passage of the bar date and further review of filed claims, that all merchandise creditors shipped their goods to Friedman's, which then may have distributed some or all of the goods to Crescent stores. Mr. Buchwald clarifies the projections are not guaranties of recovery. Mr. Buchwald explains that the actual distributions may differ substantially based on a number of factors outside the Debtors' control. "The projections do not include any potential preference recoveries or any potential benefits that may be derived from corporate recoveries that the Debtors may pursue, both of which which remain highly speculative at this time. In addition, because the claims bar date has not yet passed, these projections are based substantially on scheduled, not filed, claims. These projections are also based on assumptions, including, without limitation, those concerning the ability to recharacterize as equity certain shareholder loans and the amount of administrative expenses," Mr. Buchwald says. John D. Demmy, Esq., at STEVENS & LEE, P.C., in Wilmington, Delaware, the Debtors' counsel, notes that in the seven months since the bankruptcy filing, the Debtors' have made major accomplishments in marketing and selling their assets, complying with post-sale obligations, engaging in store closings and finalizing a global settlement with their secured lenders. Despite the progress, Mr. Demmy says the Debtors require additional time to thoroughly review their remaining assets and the potential claims that will be asserted against the estates to determine the structure of the eventual plan. The Debtors anticipate working with the creditors' committee to craft a plan, the members of the Committee, other creditors of the estates and other parties-in-interest, Mr. Demmy says. About Friedman's Inc. Addison, Texas-based Friedman's Inc. -- http://www.friedmans.com/ -- and -- http://www.crescentonline.com/-- is the parent company of a group of companies that operate fine jewelry stores located in strip centers and regional malls in the southeastern United States. On Jan. 14, 2005, Friedman's and eight of its affiliates filed for chapter 11 before the United States Bankruptcy Court for the Southern District of Georgia, Case No. 05-40129. On Nov. 23, 2005, the Court confirmed the Debtors' Amended Plan and that Plan became effective on Dec. 9, 2005. Crescent Jewelers, the largest jewelry retailer on the West Coast, filed for Chapter 11 protection on Aug. 12, 2004 (Bankr. N.D. Calif. Case No. 04-44416). On June 15, 2006, the California Bankruptcy Court confirmed Crescent Jewelers' Second Amended Plan of Reorganization on July 13, 2006. In 2006, Friedman's acquired Crescent's equity in Crescent's own chapter 11 bankruptcy case in California. Crescent became a wholly owned subsidiary of Friedman's. On Jan. 22, 2008, five parties declaring claims aggregating $9,081,199, filed an involuntary Chapter 7 petition against Friedman's. The petitions were Rosy Blue, Inc.; Rosy Blue Jewelry Inc.; Jay Gems, Inc., dba Jewelmark; Simply Diamonds Inc.; and Paul Winston-Eurostar LLC. As of Jan. 28, 2008, Friedman's operated 388 stores in 19 states with over 2,890 employees while Crescent Jewelers operated 85 stories in 3 states with over 600 employees. Friedman's and Crescent Jewelers filed for chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case Nos. 08-10161 and 08-10179). The Debtors are represented by John D. Demmy, Esq., at STEVENS & LEE, P.C., in Wilmington, Delaware, and Nicholas F. Kajon, Esq., David M. Green, Esq., and Jocelyn Keynes, Esq., at STEVENS & LEE, P.C., in New York. An Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. Alan Kolod, Esq., Lawrence L. Ginsburg, Esq., Christopher J. Caruso, Esq., at Moses & Singer LLP, in New York, and Charlene D. Davis, Esq., Justin K. Edelson, Esq., and Mary E. Augustine, Esq., at Bayard P.A., in Wilmington, Delaware. In April 2008, the Debtors obtained permission to sell to Whitehall Jewelers, Inc., inventory located at 78 of the Debtors' store locations, and to assume and assign to Whitehall the underlying leases with respect to those 78 locations. As of Dec. 28, 2007, the Debtors listed total assets of $245,787,000 and total liabilities of $171,877,000. FULTON STREET: Fitch Junks $103 Million Class A-1B Notes -------------------------------------------------------- Fitch downgrades and removes from Rating Watch Negative four classes of notes and withdraws one class of notes issued by Fulton Street CDO Ltd./Funding Corp. These rating actions are effective immediately: -- $125,560,245 class A-1A Notes to 'WD' from 'AAA'; -- $103,238,424 class A-1B Notes to 'CCC' from 'AAA'; -- $34,000,000 class A-2 Notes to 'CC' from 'A+'; -- $9,771,531 class B-1 Notes to 'C' from 'B-'; -- $10,727,157 class B-2 Notes to 'C' from 'B-'; -- $7,097,741 class C Notes remain at 'C/DR6'. Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically subprime residential mortgage-backed securities, Alternative-A RMBS, and structured finance (SF) collateralized debt obligations with underlying exposure to subprime RMBS. Fitch withdraws the rating of the class A-1A notes based on the withdrawal of MBIA's Insurer Financial Strength (IFS) rating, which Fitch no longer rates. Fulton Street is a cash flow SF CDO that closed on March 27, 2002, and is managed by Clinton Group Inc. Presently 15.6% of the portfolio is comprised of 2005 and 2006 vintage U.S. subprime RMBS, 9.0% consists of pre-2005, 2005 and 2006 vintage U.S. SF CDOs, and 2.8% is comprised of 2006 vintage U.S. Alt-A RMBS. Since Aug. 21, 2007, approximately 42.7% of the portfolio has been downgraded with 21.0% of the portfolio currently on Rating Watch Negative. Further, 48.0% of the portfolio is now rated below investment grade, of which 24.2% of the portfolio is rated 'CCC+' and below. The negative credit migration experienced since the last review on August 21, 2007 has resulted in the Weighted Average Rating Factor deteriorating to 'BB-/B+' from 'BBB/BBB-'. The collateral deterioration has caused each of the overcollateralization ratios and interest coverage ratios to fail their respective tests. As of the trustee report dated July 15, 2008, the class A-1 OC ratio was 105.8%, the class A-2 OC ratio was 93.1%, the class B OC ratio was 86.9%, and the class C OC ratio was 85.0%. The class A-1, A-2, B, and C OC trigger levels are 115.0%, 104.0%, 101.0%, and 100.0%, respectively. All of the IC tests are also failing. The class A-1 IC ratio was 125.0% compared to the 126.0% trigger level, the class A-2 IC ratio was 108.7% compared to the 115.0% trigger level, and the class B IC ratio was 95.1% compared to the 109.0% trigger level. In addition, although the weighted average spread was passing at 2.1 compared to the 2.0 trigger level, the weighted average coupon was failing at 7.4 compared to the 7.7 trigger level. Moreover, as a result of the failed class A-1 OC and IC tests, interest proceeds are diverted from the class B and C notes to cure the failing coverage tests, and all principal proceeds are also being diverted to the class A notes to cure the failing class A-1 and A-2 IC tests. So, the class A-1 notes are currently paid principal, pro-rata. The class A-2 notes are receiving interest payments only, and payment of interest to the class B-1, B-2, and C notes has been made in kind by writing up the principal balance of each class by the amount of interest owed. The classes are removed from rating watch, as Fitch believes further negative migration in the portfolio will have a lesser impact on the class. 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 on the class A-1B and A-2 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, B-2, and C notes address the ultimate receipt of interest payments and ultimate receipt of principal as per the transaction's governing documents. The ratings are based upon the capital structure of the transaction, the quality of the collateral, and the protections incorporated within the structure. Fitch will continue to monitor and review this transaction for future rating adjustments. GENERAL MOTORS: Allows Navistar Medium Duty Truck MOU to Expire --------------------------------------------------------------- Due to significant marketplace and economic changes, General Motors Corp. and Navistar International Corp. have decided not to renew the memorandum of understanding to purchase GM's medium duty truck business, which has expired. GM will continue to run the medium duty business as it has in the past, including providing sales, service and marketing support to GM dealers for its medium duty trucks. GM will continue to review strategic options for the business, including continued discussions with Navistar. Navistar International Corporation (NYSE: NAV) produces International(R) brand commercial and military vehicles, MaxxForce(TM) brand diesel engines, IC brand school and commercial buses, and Workhorse(R) brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. Navistar is also a provider of truck and diesel engine parts. Another affiliate offers financing services. On the Net: http:www.navistar.com/ GENERAL MOTORS: Navistar Deal Canceled; S&P Ratings Unaffected -------------------------------------------------------------- Standard & Poor's Ratings Services said its ratings on General Motors Corp. (B-/Negative/--) and Navistar International Corp. (BB-/Negative/--) and are not affected by the companies' announcement that the companies are exiting a preliminary agreement for Navistar to purchase GM's medium-duty truck business. "The GM unit produces about 25,000 to 35,000 Class 4-7 medium-duty trucks per year, depending on the phase of the industry cycle. Demand in these segments has been under severe pressure because of the weak U.S. economy and high diesel fuel prices, which have reduced freight volumes and deterred trucking companies from ordering new equipment. We do not expect a meaningful rebound in demand until early 2009 at the earliest. Although the acquisition would have provided Navistar with substantial additional revenues and some long-term potential to reduce its per-unit manufacturing costs, cash flow and profitability likely would have been minimal to negative for the first few years. We had factored neither potential benefits nor much incremental acquisition-related financial risk into Navistar's ratings," S&P relates. "For GM, proceeds from the unit's sale would not have provided a significant source of increased liquidity. GM recently announced that it is exploring making between $2 billion and $4 billion of asset sales by the end of 2009 as part of a series of actions to bolster liquidity, but we believe the medium-duty truck business proceeds would have been small to negligible." GOODY'S FAMILY: Can Reject 59 Unexpired Non-Residential Leases -------------------------------------------------------------- The Hon. Christopher Sontchi of the United States Bankruptcy Court for the District of Delaware authorized Goody's Family Clothing Inc. and its debtor-affiliates to reject 59 unexpired leases of non-residential real property and abandon personal property. Landlords will take control of the premises immediately; however, they will have to surrender any security deposits to the Debtors. On July 30, 2008, the Debtors' estate advisor, DJM Realty Services LLC, said the leases have no marketable value and no bids were received to justify an auction of the leases. The Debtors spent about $21 million in cost for the leases annually, the firm pointed out. A full-text copy of the Debtors' list of unexpired leases of non- residential real property is available for free at: http://ResearchArchives.com/t/s?3104 Headquartered in Knoxville, Tennessee, Goody's Family Clothing Inc. -- http://www.shopgoodys.com/-- operates a chain of clothing stores. The company is owned by Goody's Holdings Inc., a non- debtor entity. As of May 31, 2008, the company operates 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. The company and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No.08-11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors. When the Debtors filed for protection against their creditors, they listed assets of between $100 million and $500 million and debts of between $100 million and $500 million. As of May 3, 2008, the Debtors' records reflected total assets of $313,000,000 -- book value -- and total debts of $443,000,000. GRIDER EXCAVATING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Grider Excavating Inc. 18910 N. Walnut Street Muncie, IN 47303 Bankruptcy Case No.: 08-09536 Chapter 11 Petition Date: Aug. 6, 2008 Court: Southern District of Indiana (Indianapolis) Judge: Anthony J. Metz III Debtor's Counsel: Jeffrey M. Hester Tucker Hester LLC Suite 100, 429 N Pennsylvania St. Indianapolis, IN 46204-1816 Tel: (317) 833-3030 Fax: (317) 833-3031 E-mail: jeff@tucker-hester.com Total Assets: $302,515 Total Debts: $1,698,018 A list of the Debtor's largest unsecured creditors is available for free at http://bankrupt.com/misc/insb08-09536.pdf GSRPM MORTGAGE TRUST: S&P Cuts Ratings on Two Classes to BB, B -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class B-2 and B-3 mortgage pass-through certificates from GSRPM Mortgage Loan Trust 2004-1. At the same time, S&P affirmed the ratings on the six remaining classes from this transaction. The downgrades of class B-2 and B-3 reflect collateral performance that has eroded available credit support. Monthly realized losses for this transaction have exceeded excess interest for nine out of 12 remittance periods over the course of the past year. Additionally, losses have exceeded monthly excess interest by an average of approximately 1.98x over the past 12 months. Moreover, the failure of excess interest to cover monthly losses has resulted in the deterioration of overcollateralization (O/C). For the July 2008 remittance period, O/C was $2,608,256.02, which is below its target of $7,742,939.66, resulting in a deficiency of approximately $5,134,683.64. The affirmations reflect current credit support percentages and projected credit support percentages (as a percent of the adjusted pool balance) that S&P believes are sufficient to support the notes at the current rating levels. Class CCS (%)(i) PCS (%) (ii) ----- ---------- ------------ A-1, A-2, A-3 89.89 102.19 M-1 66.29 73.18 M-2 46.37 49.35 B-1 34.56 34.71 (i) CCS-Current credit support. (ii) PCS-Projected credit support. As of the July 2008 remittance period, cumulative losses for series 2004-1 were 7.25% of the original principal balance, total delinquencies were 35.40% of the current principal balance, and severe delinquencies (90-plus days, foreclosures, and real estate owned {REO}) were 18.90% of the current principal balance. If delinquencies continue to translate into realized losses, S&P will likely take further negative rating actions on the outstanding classes from these transactions. The transaction is 45 months seasoned and has a pool balance of 33.89%. A combination of subordination, excess spread, and O/C provide credit support for this transaction. The underlying collateral originally consisted of subperforming and reperforming mortgage loans, which are secured by first and second liens on one- to four-family residential properties or multifamily properties. RATINGS LOWERED GSRPM Mortgage Loan Trust 2004-1 Mortgage pass-through certificates Rating Class To From ----- -- ---- B-2 BB BBB B-3 B BB RATINGS AFFIRMED GSRPM Mortgage Loan Trust 2004-1 Mortgage pass-through certificates Class Rating ----- ------ A-1, A-2, A-3 AAA M-1 AA M-2 A B-1 BBB+ HELP-U-SELL: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------- Glenn Roberts Jr. of Inman.com reports that The Help-U-Sell Real Estate franchise company entered Chapter 11 bankruptcy proceedings. The Chapter 11 filing follows a Chapter 7 bankruptcy petition filed in March by John D. LaFountaine, president of the Western Michigan region and Eastern Michigan region for Help-U-Sell, and Garrett Pagon, manager of Help-U-Sell FS3 LLC of Snohomish, Wash. The group sought a judgment of $1.04 million from the Debtor. According to the report, American Pacific Financial Corp. and its related entities assert in court documents "secured interests" in the Help-U-Sell franchise company's property. The claim includes receivables from home sales pursuant to loans that total more than $4 million. The company estimates it has about 450 franchise offices in the country. "...[F]ranchisees should not be impacted by corporate issues," according to Ashton Asensio, who is the consulting chief operating officer for Help-U-Sell. Mr. Asensio predicts the bankruptcy proceeding to take about six months. Founded in 1976, Help-U-Sell franchise offices offer flat-fee services to sellers and also offer services to buyers. Help-U- Sell franchise company, Realty Information Systems Inc. had filed for bankruptcy in the mid-1990s, and later emerged. HI-LINE CONSTRUCTION: Case Summary & 8 Largest Unsec. Creditors --------------------------------------------------------------- Debtor: Hi-Line Construction, Inc. 1200 Nevada Street, Suite 202 Redlands, CA 92374 Bankruptcy Case No.: 08-20718 Type of Business: The Debtor is a contractor. Chapter 11 Petition Date: August 20, 2008 Court: Central District Of California (Riverside) Judge: Meredith A. Jury Debtor's Counsel: Stephen R. Wade, Esq. (dp@srwadelaw.com) The Law Offices of Stephen R Wade 400 N Mountain Ave., Ste. 214B Upland, CA 91786 Tel: (909) 985-6500 Fax: (909) 985-2865 Total Assets: $741,000 Total Debts: $1,274,572 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/califcb08-20718.pdf HOWD MANOR: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Howd Manor Group, LLC P.O. Box 9013 Schenectady, NY 12309 Bankruptcy Case No.: 08-12762 Type of Business: The Debtor provides health care services. Chapter 11 Petition Date: August 20, 2008 Court: Northern District of New York (Albany) Debtor's Counsel: Francis J. Brennan, Esq. (fbrennan@nolanandheller.com) Nolan & Heller, LLP 39 North Pearl Street Albany, NY 12207 Tel: (518) 449-3300 http://nolanandheller.com/ Total Assets: $1,100,000 Total Debts: $496,691 The Debtor does not have any creditors who are not insiders. HSI ASSET: Moody's Junks Eight Class Certificates' Ratings ---------------------------------------------------------- Moody's Investors Service downgraded ten certificates from HSI Asset Securitization Corporation Trust 2007-WF1. One of the downgraded certificates will remain on review for possible further downgrade, while four other certificates have been placed on review for possible downgrade. Complete rating actions are: Issuer: HSI Asset Securitization Corporation Trust 2007-WF1 -- Cl. I-A, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Ba3 from Aa1 -- Cl. M-2, Downgraded to B1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to C from Aa3 -- Cl. M-4, Downgraded to C from Aa3 -- Cl. M-5, Downgraded to C from A1 -- Cl. M-6, Downgraded to C from A2 -- Cl. M-7, Downgraded to C from A3 -- Cl. M-8, Downgraded to C from Baa1 -- Cl. M-9, Downgraded to C from Ba2 -- Cl. M-10, Downgraded to C from B1 The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. INDEPENDENCE TAX: June 30 Balance Sheet Upside-Down by $18.4MM -------------------------------------------------------------- Independence Tax Credit Plus L.P.'s consolidated balance sheet at June 30, 2008, showed $90.3 million in total assets, $102.3 million in total liabilities, and $6.4 million in minority interests, resulting in a $18.4 million total partners' deficit. The Partnership reported a net loss of $2.2 million on total revenues of $2.4 million for the first quarter ended June 30, 2008, compared with net income of $64,966 on total revenues of $2.5 million for the quarter ended June 30, 2007. Loss from discontinued operations (including minority interest in loss of subsidiaries from discontinued operations) was $1.1 million in the 2008 first quarter, as compared to income from discontinued operations of $1.2 million in the 2007 first quarter. Liquidity and Capital Resources The Partnership's capital was originally invested in twenty-eight Local Partnerships. As of June 30, 2008, the Partnership sold its limited partnership interest in five Local Partnerships, the property and the related assets and liabilities of two Local Partnerships and transferred the deed to the property and the related assets and liabilities of one Local Partnership. In addition, as of June 30, 2008, four Local Partnerships have entered into agreements to sell their property and the related assets and liabilities and the Partnership entered into an agreement to sell its limited partnership interest in one Local Partnerships. 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?30fc About Independence Tax Credit Plus L.P. Based in New York, Independence Tax Credit Plus L.P., a Delaware limited partnership, was organized on Nov. 7, 1990, but had no activity until May 31, 1991, and commenced its public offering on July 1, 1991. The general partner of the Partnership is Related Independence Associates L.P., a Delaware limited partnership. The general partner of Related Independence Associates L.P. is Related Independence Associates Inc., a Delaware corporation. The ultimate parent of Related Independence Associates Inc. is Centerline Holding Company. The Partnership's business is to invest as a limited partner in other partnerships (Local Partnerships) that own leveraged apartment complexes that are eligible for the low-income housing tax credit enacted in the Tax Reform Act of 1986, some of which may also be eligible for the historic rehabilitation tax credit. Qualified Beneficial Assignment Certificates holders are entitled to tax credits over the period of the Partnership's entitlement to claim tax credits with respect to each Apartment Complex. The Partnership is currently in the process of disposing of its investments. INDYMAC BANK: FDIC Implements Distressed Mortgage Loan Program -------------------------------------------------------------- FDIC Chairman Sheila C. Bair announced this week that IndyMac Federal Bank, FSB will implement a new program to systematically modify troubled mortgages. The program is designed to achieve affordable and sustainable mortgage payments for borrowers and increase the value of distressed mortgages by rehabilitating them into performing loans. This in turn will maximize value for the FDIC as well as improve returns to the creditors of the former IndyMac Bank and to investors in those mortgages. The new program will help IndyMac Federal improve its mortgage portfolio and servicing by modifying troubled mortgages, where appropriate, into performing mortgages. "I have long supported a systematic and streamlined approach to loan modifications to put borrowers into long-term, sustainable mortgages achieving an improved return for bankers and investors compared to foreclosure," said Chairman Bair. "The program . . . will provide affordable mortgages for eligible borrowers primarily in the so-called 'Alt-A' market. It provides a systematic approach for modifying troubled loans with payment resets due to negative amortization and other resets -- a market where we are seeing growing defaults and foreclosures. The modified loans will be underwritten to an affordable debt-to-income ratio. By providing long-term sustainable payments, this program will reduce future defaults, improve the value of the mortgages, and cut servicing costs. Our goal is to get the greatest recovery possible on loans in default or in danger of default, while helping troubled borrowers remain in their homes. I believe we achieve that with this framework." Chairman Bair continued, "Foreclosure is often a lengthy, costly and destructive process. Avoiding foreclosure not only strengthens local neighborhoods where foreclosures are already driving down property values, it makes good business sense. This is a 'win-win' program all around." The former IndyMac Bank, F.S.B. Pasadena, California, was closed on July 11th by the Office of Thrift Supervision and the FDIC was appointed as receiver. On the same day, the FDIC was named as conservator for a new institution, IndyMac Federal Bank, FSB. IndyMac Federal is focusing first on helping those borrowers with mortgages that are seriously delinquent or in default, but will seek to work with others who are unable to pay their mortgages due to payment resets or changes in the borrowers' repayment capacities. Based on this analysis, IndyMac Federal will extend proposed modification offers to borrowers for modifications or other loss mitigation designed to achieve affordable, long-term payments. IndyMac Federal will send an estimated 4,000 modification proposals to borrowers this week and thousands of additional proposals in the coming weeks. Once a borrower receives a modification proposal, he or she should begin making the modified payments and provide information to verify his or her income. Finalization of the modification agreement is contingent on the borrower providing information to allow verification of income to confirm that he or she qualifies for the proposed modification. Under the IndyMac Federal program, eligible mortgages would be modified into sustainable mortgages permanently capped at the current Freddie Mac survey rate for conforming mortgages. Modifications would be designed to achieve sustainable payments at a 38 percent DTI ratio of principal, interest, taxes and insurance. To reach this metric for affordable payments, modifications could adopt a combination of interest rate reductions, extended amortization, and principal forbearance. Interest rate reductions below the current Freddie Mac survey rate may be made for a period of five years where such reductions are necessary to achieve a 38 percent DTI, and the reduced rate is consistent with maximizing net present value. For these loans, after five years, the interest rate would increase by no more than one percent per year until it is capped at the Freddie Mac survey rate where it would remain for the balance of the loan term. Other modification features could be combined with an interest rate reduction, as necessary and consistent with maximizing the value of the mortgage, to achieve sustainable payments. IndyMac Federal will only make modification offers to borrowers where doing so will achieve an improved value for IndyMac Federal or for investors in securitized or whole loans. Modification offers will be provided consistent with agreements governing servicing for loans serviced by IndyMac Federal for others. The modification program does not guarantee a modification offer for IndyMac Federal borrowers. Additional information about the Indymac Federal Bank FSB loan modification program is available at http://www.fdic.gov/consumers/loans/modification/indymac.html Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,494 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, namonitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars -- insured financial institutions fund its operations. About IndyMac Bancorp Based in Pasadena, California, IndyMac Bancorp Inc. (NYSE:IMB) -- http://www.indymacbank.com/-- is the holding company for IndyMac Bank FSB, a hybrid thrift/mortgage bank that originated mortgages in all 50 states of the United States. Through its hybrid thrift- mortgage bank business model, IndyMac designed, manufactured, and distributing cost-efficient financing for the acquisition, development, and improvement of single-family homes. IndyMac also provided financing secured by single-family homes to facilitate consumers' personal financial goals and strategically invests in single-family mortgage-related assets. On July 11, 2008, the Office of Thrift Supervision closed IndyMac Bank and appointed FDIC as the bank's receiver. Thacher Proffitt & Wood LLP was engaged as counsel to the FDIC. Indymac Bancorp filed for Chapter 7 bankruptcy protection on July 31, 2008 (Bankr. C.D.Calif., Case No. 08-21752). Representing the Debtor are Dean G. Rallis, Jr., Esq., and John C. Weitnauer, Esq. Bloomberg noted that Indymac had $32.01 billion in assets as of July 11, 2008. In court documents, IndyMac disclosed estimated assets of $50 million to $100 million and estimated debts of $100 million to $500 million. INTERMET CORP: Can Use CapitalSource's Cash Collateral on Interim ----------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware authorized Intermet Corp. and its debtor-affiliates to use, in an interim basis, cash collateral of several lenders including CapitalSource Finance LLC, as collateral agent. A hearing is set for Sept. 3, 2008, at 4:00 p.m., to consider final approval of the motion. A hearing will take place at 824 Market St., 6th Floor, Courtroom #3 in Wilmington, Delaware. Objections, if any, are due Aug. 28, 2008. The proceeds of the cash collateral will be used to maintain daily operations and to fund working capital needs. The Debtors are now in talks with its prepetition lenders to obtain postpetition financing. The Debtors tell the Court that the absence of cash collateral will cause irreparable harm and prejudice to their estates and all parties in interest. The Debtors are party to several prepetition credit facilities including: a) revolving credit agreement dated May 15, 2006, with CapitalSource Finance, Goldman Sachs Credit Partners LP and Caspian Capital. As of the Debtors' bankruptcy filing, the principal balance under the agreement was $20 million; b) first lien term loan, letter of credit and guarantee agreement dated Nov. 9, 2005, with Goldman Sachs. As of the Debtors' bankruptcy filing, the principal balance under the agreement was $24 million plus $29 million of letters of credit issued; and c) second lien term loan and guarantee agreement date Nov. 9, 2005, with Goldman Sach and LaSalle Bank Midwest N.A. As of the Debtors' bankruptcy filing, the principal balance under the agreement was $70 million. As adequate protection, the lenders will be granted: -- a replacement security interest in and lien upon all of the existing collateral, subject to carve out; -- a superpriority claim in the amount of the adequate protection obligations pursuant to Section 507(b) of the Bankruptcy Code; and -- current cash payments of all fees and expenses payable to the prepetiton agent including reasonable fees and disbursements of counsel to the prepetition agents. In addition, the adequate protection liens and superperiority claims is subject to a $500,000 carve-out for payment to fees payable to the U.S. Trustee and Clerk of the Court, and reasonable fees of professionals retained by the Debtors or the committee. About Intermet Headquartered in Fort Worth, Texas, Intermet Corp. designs and manufactures machine precision iron and aluminum castings for the automotive and industrial markets. The company and its debtor- affiliates filed for Chapter 11 protection on August 12, 2008 (D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878). James E. O'Neill, Esq., Laura davis Jones, Esq. and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, represent the Debtors. When the Debtors filed for protection from their creditors, they listed assets of between $50 million and $100 million and total debts of between $100 million and $500 million. INTERSTATE BAKERIES: Union, Ripplewood Inks Deal to Protect Jobs ---------------------------------------------------------------- Teamsters Union reached a deal with investor Ripplewood Holdings and creditors to save Interstate Bakeries Corporation from liquidation and protect Teamster jobs. Details of the plan will be disclosed in the next several weeks. "This deal is important in IBC's recovery from bankruptcy as we work to protect our members' jobs," said Teamsters General President, Jim Hoffa. "The Teamsters Union worked very hard to secure a workable plan to create a healthier company and secure good jobs for our members -- the true heart and soul of IBC." "After what looked like a drop off in negotiations, I'm pleased to announce that we were able to broker a settlement very late last night," said Richard Volpe, Director of the Teamsters Bakery Workers Conference. "Our priority from the beginning was to help IBC find a plan that would preserve the best chance for the company's long-term viability." Under the proposed settlement between the banks, Ripplewood Holdings and the Teamsters, IBC will be able to emerge as a stand- alone company after four years of bankruptcy. "This settlement was not without sacrifices from all parties involved," Mr. Volpe said. "But it will place the company on the best footing possible for its future success, and keep as many hardworking union men and women employed as possible." The Teamsters Bakery Conference represents more than 9,500 employees of IBC. The International Brotherhood of Teamsters was founded in 1903 and represents 1.4 million hardworking men and women in the United States, Canada and Puerto Rico. About Interstate Bakeries Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh-baked bread and sweet goods, under various national brand names, including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and Drake's(R). Currently, IBC employs more than 25,000 people and operates 45 bakeries, as well as approximately 800 distribution centers and approximately 800 bakery outlets throughout the country. The company and eight of its subsidiaries and affiliates filed for chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6% senior subordinated convertible notes due Aug. 15, 2014) in total debts. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 5, 2007. Their exclusive period to file a chapter 11 plan expired on November 8. On Jan. 25, 2008, the Debtors filed their First Amended Plan and Disclosure Statement. On Jan. 30, 2008, the Debtors received Court approval of the First Amended Disclosure Statement. IBC confirmed that it has not received any qualifying alternative proposals for funding its plan of reorganization in accordance with the Court-approved alternative proposal procedures. As a result, no auction was held on Jan. 22, 2008, as would have been required under those procedures. The deadline for submission of alternative proposals was Jan. 15, 2008. A new plan filing deadline was set for June 30, 2008; no plan was filed as of that date. JEFFERSON COUNTY: Bankruptcy Decision to Depend on Nov. Referendum ------------------------------------------------------------------ Commissioners for Jefferson County, Alabama's largest county, voted 3-2 to hold a referendum for residents to decide whether or not the county should file for bankruptcy, reports say. This was after they abandoned talks of raising taxes and fees due to fierce opposition. The referendum will coincide with the general election, set Nov. 4. A bankruptcy would put interest payments and lawsuits against the county on hold, while it restructures debt. But it could also damage the county's credit rating, force spending cuts and layoffs of some of the county's 4,000 employees as well as increase taxes, AHN reports. As reported by the Troubled Company Reporter on Aug. 4, 2008, Jefferson County reached an agreement with creditors to extend payment on a $3.2 billion sewer debt until Nov. 17, 2008. A $100 million payment on the debt was supposedly due Aug. 1. As part of agreement, the county will pay creditors $44 million of principal. XL Capital Assurance, the bond insurance unit of Security Capital Assurance and a major bond insurer for Jefferson County, would pay $35 million of the principal, county commission President Bettye Fine Collins said, according to a report by Melinda Dickinson of Reuters. Jefferson County has $4.6 billion in overall debt, including $3.2 billion in sewer bonds. The county was required to post a collateral on interest-rate swaps tied to the bonds after a series of downgrades on the debt. The Aug. 1 agreement was the fourth extension with creditors since the county failed to make a payment on April 1. The county's major creditors include investment banks JPMorgan Chase, Goldman Sachs and Lehman Brothers. Two of the firms that guarantee to make the payments on Jefferson County's sewer bonds in the event of default were FGIC Corp. and XL Capital Assurance Inc. FGIC insured $1.56 billion of Jefferson County auction-rate securities, and XL Capital backed $397 million of the bonds. XLCA said that as of June 2, 2008, the Company's exposure to Jefferson County was $810 million, net of reinsurance. XLCA has not established any loss reserves at this time in connection with Jefferson County. Citigroup Replaces Goldman Sachs as Adviser Citigroup Inc. was appointed as part of a new banking team advising Jefferson County after Goldman Sachs Group. Inc. refused to take the job, Martin Z. Braun and William Selway at Bloomberg News reported. As reported by the Troubled Company Reporter on July 9, 2008, the Jefferson County Commission dismissed current advisers Porter, White & Co., Merrill Lynch & Co., and Birmingham law firm Bradley Arant Rose & White as negotiators in their debt restructuring effort. They hired as replacement, Goldman, Sachs & Co.; Birmingham investment bank Sterne, Agee & Leach Inc. and Memphis-based investment firm Morgan Keegan & Co. About Jefferson County Jefferson County has its seat in Birmingham. It has a population of 660,000. It ended its 2006 fiscal year with a $42.6 million general fund balance, according to Standard & Poor's. Patrick Darby, a lawyer with the Birmingham firm of Bradley Arant Rose & White, represents Jefferson County. Porter, White & Co. in Birmingham is the county's financial adviser. A bankruptcy by Jefferson County stands to be the largest municipal bankruptcy in U.S. history. It could beat the record of $1.7 billion, set by Orange County, California in 1994. * * * As reported by the Troubled Company Reporter on June 10, 2008, Standard & Poor's Ratings Services' ratings on Jefferson County, Ala.'s series 1997A, series 2001A, series 2003 B-1-A through 2003 B-1-E, and series 2003 C-1 through 2003 C-10 sewer system revenue bonds ('CCC' underlying rating [SPUR]) remain on CreditWatch with developing implications. On April 1, 2008, Standard & Poor's lowered its SPUR on the county's variable-rate demand series 2003 B-2 through 2003 B-7 sewer revenue refunding warrants to 'D' from 'CCC' due to the sewer system's failure to make a principal payment on the bank warrants when due on April 1, 2008, in accordance with the terms of the standby warrant purchase agreement. As reported by the TCR on July 22, 2008, Moody's Investors Service's continues to review the Caa3 rating on Jefferson County's (AL) $3.2 billion in outstanding sewer revenue warrants for possible downgrade. JOE GIBSONS: Hearing on Ch. 11 Case Conversion Set Sept. 4 ---------------------------------------------------------- Craig Peters of The Spartanburg Herald-Journal reports that some 20 people with claims against auto dealerships owned by Paul Michael "Joe" Gibson asked him questions under oath during a creditors meetings on Aug. 15. The questions relate to complaints filed against the Debtor, including marketing, and alleged misleading service agreement terms. The dealerships Mr. Gibson owned face more than 100 lawsuits. According to the report, a hearing to determine whether the Chapter 11 filings will be converted to Chapter 7 or completely dismissed is scheduled for Sept. 4 in Spartanburg. The hearing will also determine if a Chapter 11 trustee should be put in charge of the case, according to News Channel 7 (S.C.). In a previous report, Mr. Peters said that the Debtors' businesses closed on Aug. 2, 2008. G. William McCarthy, Jr., Esq., attorney for Mr. Gibson, said the Debtor received three intentions of interests from unidentified potential buyers. According to the report, Mr. McCarthy said the potential sales of the dealerships would produce the most amount of cash to repay creditors and potential claimants if they won a pending suit; although the money might not be enough to pay all claims. About the Debtors Joe Gibson's Auto World, Inc., and its subsidiary, Joe Gibson Automotive, Inc., sell new & used automobiles in retail. Joe Gibson's Auto World, Inc., and Joe Gibson Automotive, Inc., filed separate voluntary petitions under Chapter 11 on July 16, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-04215). G. William McCarthy, Jr., Esq., represent the Debtors in their restructuring efforts. When Joe Gibson's Auto World, Inc. filed for bankruptcy, it listed estimated assets of between $1,000,0000 and $10,000,000 and estimated debts of between $10,000,0000 and $50,000,000. KIMBALL HILL: Ken Love, Diane Hill to Serve as Directors -------------------------------------------------------- Kimball Hill Inc. appointed Ken Love as executive chairman of the company and Diane Hill as a director. Mrs. Hill, wife of founder David K. Hill, will be a member of the board of directors. She retired from Northwestern University where she served for 32 years as senior lecturer, author and clinical supervisor in speech and language pathology. She is a member of several boards -- including Northwest Community Hospital, Augustana College, Northwest Community Cultural Council, the WINGS Advisory Board and is an active member of the Harper Community College Educational Foundation. Mr. Love succeeds David K. Hill. He joined the company in 2005 as vice chairman. In October 2007, he was appointed president and chief executive officer. He has served as a member of the board since 2005. Before joining Kimball Hill Homes, he held the position of senior partner with Deloitte & Touche LLP for nearly three decades. "I am honored to be following in the footsteps of such a great leader," said Mr. Love. "As I reflect on the strengths of everyone at Kimball Hill Homes I am awed by the level of commitment to Caring Excellence that David inspired. "With the addition of Diane to the Board, I believe Kimball Hill Homes will continue to build on these enduring principles of straightforward business practices, extraordinary customer satisfaction and an organization demonstrating Caring Excellence in all aspect of its dealings." About Kimball Hill Based in Rolling Meadow, Illinois, Kimball Hill Inc. -- http://www.kimballhillhomes.com/-- is one of the largest privately-owned homebuilders and one of the 30 largest homebuilders in the United States, as measured by home deliveries and revenues. The company designs, builds and markets single- family detached, single-family attached and multi-family homes. The company currently operate within 12 markets, including, among others, Chicago, Dallas, Fort Worth, Houston, Las Vegas, Sacramento and Tampa, in five regions: Florida, the Midwest, Nevada, the Pacific Coast and Texas. Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11 protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08- 10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated financial condition as of Dec. 31, 2007 reflected total assets of $795,473,000 and total debts $631,867,000. LIBERTY TAX II: June 30 Balance Sheet Upside-Down by $14,027,016 ---------------------------------------------------------------- Liberty Tax Credit Plus II L.P.'s consolidated balance sheet at June 30, 2008, showed $22,693,383 in total assets, $36,728,493 in total liabilities, and $8,094 in minority interests, resulting in a $14,027,016 partners' deficit. The Partnership reported net income of $315,564 on total revenues of $288,495 for the first quarter ended June 30, 2008, compared with a net loss of $54,040 on total revenues of $299,012 for the quarter ended June 30, 2007. Rental income increased approximately 2% for the three months ended June 30, 2008, as compared to the corresponding period in 2007, primarily due to an increase in rental rates at one Local Partnership. Other income decreased approximately $15,000 for the three months ended June 30, 2008, as compared to the corresponding period in 2007, primarily due to a decrease in the amount of cash being invested at the Partnership level. Total expenses, excluding general and administrative and general and administrative-related parties remained fairly consistent with a decrease of approximately 3% for the three months ended June 30, 2008, as compared to the corresponding period in 2007. General and administrative expenses decreased approximately $87,000 for the three months ended June 30, 2008 as compared to the corresponding period in 2007, primarily due to a decrease in accounting and legal fees due to less sales activity at the Partnership level and a decrease in salary costs at one Local Partnership. General and administrative-related parties expenses decreased approximately $78,000 for the three months ended June 30, 2008 as compared to the corresponding period in 2007, primarily due to a decrease in partnership management fees resulting from the sale of properties and a decrease in expense reimbursements at the Partnership level. Net income from discontinued operations (including minority interest) was $500,076 for the first quarter ended June 30, 2008, as compared to $292,051 for the first quarter ended June 30, 2007. Liquidity and Capital Resources The Partnership's capital was originally invested in twenty-seven Local Partnerships. As of June 30, 2008, the properties and the related assets and liabilities of fifteen Local Partnerships and the limited partnership interest in eight Local Partnerships were sold. In addition, as of June 30, 2008, the Partnership has entered into agreements to sell its limited partnership interests in two Local Partnerships. Full-text copies of the Partnership's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?30fb About Liberty Tax Credit Plus II Based in New York, Liberty Tax Credit Plus II L.P. invests in other limited partnerships owning leveraged low-income multifamily residential complexes that are eligible for the low-income housing tax credit enacted in the Tax Reform Act of 1986, and to a lesser extent in Local Partnerships owning properties that are eligible for the historic rehabilitation tax credit. The general partners of the Partnership are Related Credit Properties II L.P., a Delaware limited partnership, Liberty Associates II L.P., a Delaware limited partnership, and Liberty GP II Inc., a Delaware corporation. The general partner of Related Credit Properties II L.P. is Related Credit Properties II Inc., a Delaware corporation. The general partners of Liberty Associates II L.P. are Related Credit Properties II Inc., and Liberty GP II Inc. Liberty Associates II L.P. is also the special limited partner of the Partnership. The ultimate parent of the general partners of the Partnership is Centerline Holding Company. LUBBOCK MEDICAL: Lender Wants PostPetition Loan Reinstated ---------------------------------------------------------- Northstar Hospital LLC on Aug. 18, 2008, pressed the U.S. Bankruptcy Court for the Northern District of Texas to reinstate a $75,000 loan it is willing to advance to Lubbock, Texas-Highland Medical Center, L.P., or eliminate loan terms opposed by the U.S. Internal Revenue Service, William Rochelle of Bloomberg News relates. Mr. Rochelle says that the Court approved the Northstar loan on August 1 but revoked the order on August 8 after the IRS opposed some of the loan terms. Northstar extended the loan on August 1, according to the report. As reported by the Troubled Company Reporter on Aug. 7, 2008, Northstar was expected to make an offer to acquire Highland Medical Center, subject to approval by the Court. A lender, which previously agreed to advance the Debtor with an aggregate sum of $150,000, backed out prior to a July 31, 2008, hearing to approve the pospetition financing, Mr. Rochelle notes. About Lubbock Texas-Highland Medical Center Lubbock, Texas-Highland Medical Center, L.P., doing business as Highland Community Hospital and Highland Medical Center -- http://www.highlandcommunityhospital.com-- provides general medical and surgical care for inpatient, outpatient, and emergency room patients, and participates in the Medicare and Medicaid programs. Highland employs about 100 workers. The Debtor filed for chapter 11 bankruptcy protection on May 31, 2008, before the U.S. Bankruptcy Court for the Northern District of Texas (Case No. 08-50202). Max Ralph Tarbox, Esq., at McWhorter, Cobb & Johnson, LLP, in Lubbock, Texas, represents the Debtor. When it filed for bankruptcy, the Debtor disclosed $10 million to $50 million in estimated assets and debts of the same range. LYNNKOHN LLC: Files for Bankruptcy to Stave Off LNB's Foreclosure ----------------------------------------------------------------- Lynnkohn LLC filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code before the United States Bankruptcy Court for the Western District of Arkansas to avert a foreclosure of its property, Bloomberg News report. The company's condominium building in Fayetteville -- excluding seven condo units sold last year -- was scheduled for sale yesterday, Stacey Roberts of Arkansas Democrat Gazette reports. Mrs. Robert says, in conjunction with the Chapter 11 filing, the company sued: -- Legacy National Bank, which foreclosed on $18.7 million worth of loan in connection to the project on Jan. 2, 2008, and -- Flake & Kelley Commercial, which served as the bank's receiver to sell the company's building. In the lawsuit, the company is seeking at least $10 million in damages in the aggregate for breach of contract. Marshall Ney, Esq., at Mitchell, Williams, Selig, Gates & Woodyard, represents Legacy National, Arkansas Democrat notes. According to Bloomberg, the company disclosed total assets of $35.3 million and total debts of $31.6 million. Moreover, the company owes at least $3.88 million in claims to 86 unsecured creditors and real estate debt of about $25.3 million, Arkansas Democrat adds. Headquartered in Fayetteville, Arkansas, Lynnkohn LLC develops real estate in northwest Arkansas. Brandon Barber owns the company. LYNNKOHN LLC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Lynnkohn, LLC P.O. Box 8783 Fayetteville, AR 72703 Tel: (479) 756-8999 Bankruptcy Case No.: 08-73301 Type of Business: The Debtor is a real estate developer. Chapter 11 Petition Date: August 20, 2008 Court: Western District of Arkansas (Fayetteville) Debtor's Counsel: K. Vaughn Knight, Esq. Email: knight@knightlaw.net Knight Law Firm, PLC 509 W. Spring St., Ste. 460 Fayetteville, AR 72701 Tel: (479) 571-0014 Fax: (479) 571-0015 http://www.knightlaw.net/ Total Assets: $35,365,102 Total Debts: $31,618,598 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ FDIC as Receiver for ANB mortgage; value of $1,630,000 Financial security: $3,500,000 Attn: Sherry Miles Tel: (479) 878-3013 P.O. Box 699 Bentonville, AR 72712 World Granite & Stone Art, contract $1,341,782 Inc. Attn: Chuck Laminack 1000 Schmieding Ave. Springdale, AR 72764 Tel: (479) 872-7625 Legacy National Bank value of security: $645,740 P.O. Box 6490 $18,075,000 Springdale, AR 72766 Precept Builders, Inc. trade debt $509,633 Attn: Doug Deason 1909 Woodall Rodgers Fwy., Ste. 300 Dallas, TX 75201 Tel: (214) 953-5100 Lasco Acoustics & Drywall, trade debt $474,139 Inc. Attn: Jeff Thomas 2227 Joe Field Rd. Dallas, TX 75229 Tel: (972) 488-5556 Barber Developement trade debt $315,393 Attn: Brandon Barber P.O. Box 8783 Fayetteville, AR 72703 Tel: (479) 756-8999 Johnson Mechanical trade debt $265,492 Contractors, Inc. Attn: Stan Johnson Tel: (479) 442-5287 513 W. Prairie St. Fayetteville, AR 72701 Blair Electric, Inc. trade debt $230,303 David A. Ruff taxes $131,009 Dewberry Design Group, Inc. trade debt $122,081 Harness Roofing, Inc trade debt $121,004 National Home Centers, Inc. trade debt $72,726 Master Concrete Co., Inc. trade debt $68,283 Alpha Insulation & trade debt $48,168 Waterproofing, Inc. Legacy Building POA $40,000 Premium Financing Specialist, $21,457 Inc. Mid-Continent Concrete Co. trade debt $21,457 HKS, Inc. trade debt $20,532 Celebrate Northwest Arkansas- trade debt $17,900 MSF War Eagle Welding trade debt $15,226 MAGNA ENTERTAINMENT: Amends Credit Deals to Address Liquidity Woes ------------------------------------------------------------------ Magna Entertainment Corp. amended certain of its financing agreements including: -- extending the maturity date of its $40 million senior secured revolving credit facility with a Canadian chartered bank from Aug. 15, 2008, to Sept. 15, 2008; -- extending the maturity date of its bridge loan facility with a subsidiary of MI Developments Inc., MEC's controlling shareholder, from Aug. 31, 2008, to Sept. 30, 2008; and -- extending the due date of its $100 million repayment requirement under the Gulfstream Park project financing with the MID Lender from Aug. 31, 2008, to Sept. 30, 2008, during which time any repayments will not be subject to a make- whole payment. MEC incurred a fee of $0.4 million in connection with the extension of the Senior Bank Facility and a fee of $0.5 million in connection with the extension of the Bridge Loan. Consideration of the amendments to the financing arrangements with the MID Lender was supervised by the Special Committee of MEC's board of directors consisting of Jerry D. Campbell, chairman, Anthony J. Campbell and William J. Menear. The approval of MEC's board succeeded a recommendation of the special committee. MEC will file a material change report soon as practicable. The material change report will be filed less than 21 days prior to the closing of the loan amendments. The timing of the material change report is, in MEC's view, both necessary and reasonable because the terms of the amendments were settled and approved by MEC's board of directors on Aug. 13, 2008, and MEC requires immediate funding to address its short-term liquidity needs. About Magna Entertainment Headquartered in Aurora, Ontario, Magna Entertainment Corp. (NASDAQ: MECA; TSX: MEC.A) -- http://www.magnaentertainment.com/ -- owns and operates horse racetracks, based on revenue, acquires, develops, owns and operates horse racetracks and related pari- mutuel wagering operations, including off-track betting facilities. The company also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. The company owns and operates AmTote International Inc., XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, the company has a 50% interest in HorseRacing TV(TM), a 24-hour horse racing television network, and TrackNet Media Group, LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. MAJESTIC STAR: June 30 Balance Sheet Upside-Down by $184.7MM ------------------------------------------------------------ The Majestic Star Casino LLC's balance sheets at June 30, 2008, showed total assets of $505.3 million and total liabilities of $690.1 million, resulting in a member's deficit of roughly $184.7 million. The company released financial results for the three and six months ended June 30, 2008. The company incurred a net loss of $8.2 million for the three months ended June 30, 2008 compared to a net loss of $3.9 million for 2007. For the three months ended June 30, 2008, consolidated net operating revenues were $85.3 million compared to $92.8 million for the three months ended June 30, 2007, a decrease of approximately $7.5 million, or 8.0%. Net revenues decreased $4.1 million at the Majestic Properties, $2.2 million at Fitzgeralds Tunica and $1.1 million at Fitzgeralds Black Hawk. The company's consolidated net revenues were negatively impacted by the slow down in the economy, higher gasoline prices, increased competition in our markets, a smoking ban in Colorado and other factors discussed below, all of which reduced visitations to its properties and limited the gambling budgets of our customers. Operating income was $7.1 million, a decrease of $4.3 million, or 37.4%, compared to $11.4 million for the prior year. The company incurred a net loss of $15.6 million for the six months ended June 30, 2008 compared to a net loss of $8.6 million for the six months ended June 30, 2007. For the six months ended June 30, 2008, consolidated net operating revenues were $174.3 million compared to $184.3 million for 2007, a decrease of approximately $10.0 million, or 5.4%. Net revenues decreased $7.7 million at the Majestic Properties and $2.3 million at Fitzgeralds Black Hawk. Net revenues were unchanged at Fitzgeralds Tunica. The company's consolidated net revenues were negatively impacted by the slow down in the economy, higher gasoline prices, increased competition in its markets, poor weather and a smoking ban in Colorado, all of which reduced visitations to our properties and limited the gambling budgets of its customers. Operating income was $15.0 million, a decrease of $6.8 million, or 31.2%, compared to $21.8 million for the prior year. Debt outstanding at June 30, 2008 totaled $572.8 million, which includes $71.7 million drawn on its Senior Secured Credit Facility, $300.0 million of Senior Secured Notes, $200.0 million of Senior Notes and $1.2 million of capital leases and other debt. As of June 30, 2008, the company has unrestricted cash and cash equivalents of $27.7 million and there was $8.3 million available under its Senior Secured Credit Facility. About Majestic Star Headquartered in Las Vegas, Nevada, Majestic Star Casino LLC -- http://www.majesticstar.com/-- and its separate and distinct subsidiary limited liability companies and one corporation own and operate two riverboat gaming facilities and a dockside pavilion known as the Buffington Harbor complex located in Gary, Ind., and two Fitzgeralds brand casino-hotels located in Tunica County, Miss. and Black Hawk, Colorado (casino only). * * * As reported in the Troubled Company Reporter on May 1, 2008, Moody's Investors Service placed the ratings of Majestic Star Casino LLC on review for possible downgrade. Ratings placed on review for possible downgrade include Majestic Star Casino LLC's $300 million senior secured notes due 2010 currently rated at 'B2', and its $200 million senior secured notes due 2011 currently rated at 'Caa1'. MASTER ASSET: Moody's Junks Nine Class Certificates' Ratings ------------------------------------------------------------ Moody's Investors Service downgraded fifteen certificates from two MASTR Asset Backed Securities Trust transactions issued in 2007. Four of the downgraded certificates will remain on review for possible further downgrade, while three other certificates have been placed on review for possible downgrade. Complete rating actions are: Issuer: MASTR Asset Backed Securities Trust 2007-HE2 -- Cl. A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Baa2 from Aa1 -- Cl. M-2, Downgraded to Ba2 from Aa2 -- Cl. M-3, Downgraded to B1 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B2 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Caa1 from A2 -- Cl. M-6, Downgraded to C from A3 -- Cl. M-7, Downgraded to C from Baa1 -- Cl. M-8, Downgraded to C from Baa2 -- Cl. M-9, Downgraded to C from Baa3 -- Cl. M-10, Downgraded to C from Ba1 Issuer: Mastr Asset Backed Securities Trust 2007-NCW -- Cl. M-1, Downgraded to B1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to B1 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to Caa1 from A1 -- Cl. M-4, Downgraded to C from A2 -- Cl. M-5, Downgraded to C from A3 The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. MERRILL LYNCH: Moody's Junks Seven Class Certificates' Ratings -------------------------------------------------------------- Moody's Investors Service downgraded seventeen certificates from two Merrill Lynch First Franklin Mortgage Loan Trust transactions issued in 2007. Five of the downgraded certificates will remain on review for possible further downgrade, while Five other certificates have been placed on review for possible downgrade. Complete rating actions are: Issuer: Merrill Lynch First Franklin Mortgage Loan Trust, Series 2007-5 -- Cl. M-3, Downgraded to A1 from Aa3 -- Cl. M-4, Downgraded to Baa1 from A1 -- Cl. M-5, Downgraded to Baa2 from A2 -- Cl. M-6, Downgraded to Ba3 from A3 -- Cl. B-1, Downgraded to B1 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. B-2, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. B-3, Downgraded to C from Baa3 Issuer: Merrill Lynch First Franklin Mortgage Loan Trust, Series 2007-H1 -- Cl. 1-A3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A3A, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A3B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Ba2 from Aa1 -- Cl. M-2, Downgraded to B1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to C from A2 -- Cl. M-6, Downgraded to C from A3 -- Cl. B-1, Downgraded to C from Baa1 -- Cl. B-2, Downgraded to C from Baa2 -- Cl. B-3, Downgraded to C from Baa3 -- Cl. B-4, Downgraded to C from Ba1 The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. MICHAEL VICK: Gov't Wants Chapter 11 Trustee Appointed in Case -------------------------------------------------------------- The U.S. Trustee Program asked a judge in the bankruptcy case of athlete Michael Vick to appoint a Chapter 11 trustee. A motion by the Program states the trustee would help recover assets from third parties. Peter Ginsberg, an attorney for Vick, said he will oppose the motion because it would add an unnecessary and costly layer of bureaucracy, according to the report. Mr. Vick's lawyers has withdrawn their request to have David A. Talbot named as financial adviser in the bankruptcy case. As reported by the Troubled Company Reporter on Aug. 13, the man that Mr. Vick picked to help him in his bankruptcy filing was accused of helping swindle more than $500,000 from church members in New Jersey. According to the report, the government's motion for the trustee also questions the choice Mr. Vick made last year to get Mary Wong of Omaha, Neb. as business manager. She is accused of engaging in numerous unauthorized transactions. Michael Dwayne Vick, born June 26, 1980 in Newport News, Virginia, is a suspended National Football League quarterback under contract with the Atlanta Falcons team. In 2007, a U.S. federal district court convicted him and several co-defendants of criminal conspiracy resulting from felonious dog fighting and sentenced him to serve a 23 months in prison. He is being held in the United States Penitentiary at Leavenworth, Kansas. Mr. Vick is also under indictment for two related Virginia state felony charges for his role in the dogfighting ring and related gambling activity. His state trial has been delayed until he is released from federal prison. He faces a maximum 10-year state prison term if convicted on both counts. Mr. Vick filed his chapter 11 petition on July 7, 2008 (Bankr. E.D. Va. Case No. 08-50775). Dennis T. Lewandowski, Esq., and Paul K. Campsen, Esq., at Kaufman & Canoles, P.C., represent the Debtor in his restructuring efforts. Mr. Vick listed assets of $10 million to $50 million and debts of $10 million to $50 million. MICROSTRUCTURE TECHNOLOGIES: Involuntary Chapter 11 Case Summary ---------------------------------------------------------------- Alleged Debtor: MicroStructure Technologies Inc. 600 SE Assembly Ave. Bldg. 55 Suite 100 Vancouver, WA 98661 Case Number: 08-44074 Involuntary Petition Date: August 19, 2008 Court: Western District of Washington (Tacoma) Judge: Hon. Paul B. Snyder Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Todd Silberman Contract $3,882.15 Dave Cooke Contract $15,000.00 IPR Consultants LLC Contract $4,120.20 MORTGAGES LTD: Can Hire Greenberg Traurig as Special Counsel ------------------------------------------------------------ Judge Randolph Haines of the U.S. Bankruptcy Court for the District of Arizona approved a request by Mortgages Ltd. to hire law firm Greenberg Traurig as special counsel, Andrew Johnson of The Arizona Republic reports. The request faced opposition from developers that borrowed money from Mortgages Ltd. They accused the law firm of hiding reputed wrongdoing by the lender. In response to the objections, Judge Haines said in a ruling on Aug. 15 that objections do not justify why the firm should not be able to represent Mortgages Ltd. in matters outside the bankruptcy. The reason, mainly, is the law firm and lender agree that the accusations are false. According to the report, John Clemency, Esq. of Greenberg Traurig, said at a hearing the law firm plans to pursue foreclosure on Mortgages Ltd. borrowers who are in default, oversee banking and securities issues and represent the lender in a lawsuit brought by developer Rightpath Ltd. Development Group LLC. About Mortgages Ltd. Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/ -- originates, invests in, sells and services its own short-term real-estate secured loans on properties within the state of Arizona in the US. It underwrites loans for commercial, industrial and residential properties for acquisition, entitlement, development, construction and investment. Mortgages Ltd. was the subject of an involuntary chapter 7 petition dated June 20, 2008, filed by KGM Builders Inc. -- a contractor for Grace Communities, a borrower of the company -- before the U.S. Bankruptcy Court for the District of Arizona. Central & Monroe LLC and Osborn III Partners LLC, divisions of Grace Communities, sought the appointment of an interim trustee for Mortgages Ltd. in the chapter 7 proceeding. Mortgages Ltd. is also facing lawsuits filed by Grace Communities and Rightpath Limited Development Group for its alleged failure to fully fund loans. Mortgages Ltd. denied the charges. It has filed a motion to dismiss the Rightpath suit. The Debtor's case was converted to a chapter 11 proceeding on June 24, 2008 (Bankr. D. Ariz. Case No. 08-07465). Judge Sarah Sharer Curley presides over the case. Carolyn Johnsen, Esq., and Bradley Stevens, Esq., at Jennings, Strouss & Salmon P.L.C., replaced Todd A. Burgess, Esq., at Greenberg Traurig LLP, as counsel to the Debtor. As of Dec. 31, 2007, the Debtor had total assets of $358,416,681 and total debts of $350,169,423. MORGAN STANLEY ACES: S&P Cuts 2006-8 Class A-14 Rating to 'B+' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the $3.5 million class A-14 secured fixed-rate notes from Morgan Stanley ACES SPC's series 2006-8 to 'B+' from 'BB-'. The rating action reflects the July 31, 2008, lowering of the senior unsecured debt rating on American Axle & Manufacturing Holdings Inc. Morgan Stanley ACES SPC's series 2006-8 is a credit-linked note transaction. The rating on each class of notes is based on the lowest of (i) the rating on the respective reference obligations for each class (with respect to class A-14, the senior unsecured notes issued by American Axle & Manufacturing Holdings Inc. {'B+'}); (ii) the rating on the guarantor of the counterparty to the credit default swap, the interest rate swap, and the contingent forward agreement, Morgan Stanley (A+/Negative/A-1); and (iii) the rating on the underlying securities, the class A certificates issued by BA Master Credit Card Trust II's series 2001-B due 2013 ('AAA'). MORGAN STANLEY: Moody's Junks 11 Class Certificates' Ratings ------------------------------------------------------------ Moody's Investors Service downgraded seventeen certificates from two Morgan Stanley MBS transactions issued in 2007. Two of the downgraded certificates will remain on review for possible further downgrade, while one other certificate has been placed on review for possible downgrade. Complete rating actions are: Issuer: Morgan Stanley ABS Capital I Inc. Trust 2007-HE7 -- Cl. M-2, Downgraded to Baa2 from Aa2 -- Cl. M-3, Downgraded to Ba1 from A1 -- Cl. M-4, Downgraded to B1 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B2 from A3; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to Ca from Baa1 -- Cl. B-2, Downgraded to C from Baa2 -- Cl. B-3, Downgraded to C from Baa3 Issuer: Morgan Stanley Structured Trust I 2007-1 -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to B1 from Aa1 -- Cl. M-2, Downgraded to B2 from Aa2 -- Cl. M-3, Downgraded to Caa1 from Aa3 -- Cl. M-4, Downgraded to Caa2 from A1 -- Cl. M-5, Downgraded to Caa3 from A2 -- Cl. M-6, Downgraded to C from A3 -- Cl. B-1, Downgraded to C from Baa2 -- Cl. B-2, Downgraded to C from Ba1 -- Cl. B-3, Downgraded to C from B1 -- Cl. B-4, Downgraded to C from B2 The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. MORTGAGE LENDERS: Drops $17 Million Money Market Investment Plan ---------------------------------------------------------------- Mortgage Lenders Network USA Inc., has withdrawn its proposal to invest $17,000,000 of bankruptcy estate funds into Columbia Treasury Reserves, a money market mutual fund that invests at least 80% of its net assets in United States Treasury obligations, and repurchase agreements secured by the Treasury obligations. As reported in the Troubled Company Reporter on June 18, 2008, the Debtor asked the U.S. Bankruptcy Court for the District of Delaware to: (i) authorize the investment of its $17 million cash; and (ii) authorize a limited waiver of deposit and investment requirements under Section 345(b) of the Bankruptcy Code. Section 345(b) provides that any investment made by a debtor, except those insured or guaranteed by the United States or its agency, or backed by the full faith and credit of the United States, must be secured by a bond in favor of the United States that is secured by the undertaking of a corporate surety approved by the United States Trustee or by the deposit of securities of the kind specified in 31 U.S.C. Section 9303. Section 345(b) provides further, however, that a bankruptcy court may allow the use of alternatives to these approved investment guidelines "for cause." As of June 6, 2008, the Debtor has accumulated around $17 million from the sale of various assets and settlements reached in its bankruptcy case, related Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware. She said the the Debtor wishes to invest its funds into a money market account for a higher rate of interest and returns. Previously, Roberta A. DeAngelis, acting U.S. Trustee for Region 3, objected to the proposal, noting that while investing in Columbia provides for a potentially higher real rate of return, the investment is not guaranteed or insured. The Debtor, she noted, has not shown it has sufficient funds that it can afford any risk of loss of estate funds. About Mortgage Lenders Network Middletown, Connecticut-based Mortgage Lenders Network USA Inc. -- http://www.mlnusa.com/-- is a privately held company offering a full range of Alt-A/Non-Conforming and Conforming loan products through its retail and wholesale channels. The company filed for chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07- 10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor. Blank Rome LLP represents the Official Committee of Unsecured Creditors. In the Debtor's schedules of assets and liabilities filed with the Court, it disclosed total assets of $464,847,213 and total debts of $556,459,464. The exclusive plan filing period is extended through Aug. 6, 2008; and the exclusive solicitation period is extended through Oct. 6, 2008. (Mortgage Lenders Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945- 7000). MZT HOLDINGS: To Distribute Common Stock to Holders on August 25 ---------------------------------------------------------------- MZT Holdings, Inc.'s Board of Directors declared a liquidating distribution of $0.15 per share on each outstanding share of the company's common stock. The distribution will be made on Aug. 25, 2008. to all stockholders of record of the company's common stock as of the close of business on April 4, 2008. The liquidating distribution represents a partial distribution to the company's stockholders of funds that the Company received in connection with the December 2007 sale of substantially all of the company's assets to a wholly-owned subsidiary of Inverness Medical Innovations, Inc. After the sale, on Jan. 18, 2008, the company filed a certificate of dissolution with the Secretary of the State of Delaware. In addition, on the same date, the company's closed its stock transfer books as of the close of business and established a record date for liquidating distributions to the holders of its common stock of April 4, 2008. In establishing the amount of this initial liquidating distribution, the company's Board of Directors first established reserves in anticipation of any known, unknown or contingent future claims. Craig R. Jalbert, the company's President and a member of the Board of Directors, stated that "the Company's Board of Directors is pleased that, after establishing appropriate reserves, it is in a position to make an initial liquidation distribution in the amount of $0.15 per share, which is the minimum amount that the Company had initially disclosed it expected to be able to return to its stockholders in the proxy statement distributed in November 2007 in connection with the approval of the sale of substantially all of the Company's assets." Prior to finally winding up its affairs under Delaware law, the Company intends to make at least one additional liquidating distribution to the holders of record of its common stock as of April 4, 2008. Though the timing and amount of any future liquidating distribution or distributions are not yet known, the Company does not presently anticipate making a final liquidating distribution prior to the second quarter of 2012. About MZT Holdings Inc. Headquartered in Newton, Massachusetts, MZT Holdings Inc. fka Matritech Inc. (Amex: MZT) -- http://www.matritech.com/-- is a marketer and developer of protein-based diagnostic products for the early detection of cancer. The company uses its patented proteomics technology to develop diagnostics for the detection of a variety of cancers. The company's first two products, the NMP22(R) Test Kit and NMP22(R) BladderChek(R) Test, have been FDA cleared for the monitoring and diagnosis of bladder cancer. The company has discovered other proteins associated with cervical, breast, prostate, and colon cancer. NANOGEN INC: Announces Merger Agreement with Elitech Group ---------------------------------------------------------- Nanogen, Inc. and The Elitech Group, announced a definitive agreement to combine. The combination will create a global provider of products to the molecular, point-of-care, clinical chemistry and microbiology diagnostics markets with expected first year revenues of more than $150 million and positive EBITDA. The transaction combines Nanogen's technology leadership in molecular and point-of-care diagnostics with the strong revenue and profit base stemming from The Elitech Group's global manufacturing, sales and distribution of IVD products for the clinical chemistry and microbiology markets. The board of directors of both companies unanimously approved the agreement to combine the two companies. The combination is structured as a tax free stock for stock exchange of shares of Nanogen common stock for all of the Elitech capital stock and is a reverse acquisition of Nanogen by The Elitech Group. The combination is expected to create a transatlantic company that will continue to be listed on NASDAQ. The name of the combined company has not yet been determined. "The combination with Elitech will accelerate the transition of Nanogen into a global, profitable diagnostics company with the critical mass needed to bring our leading molecular and point-of- care technologies to customers worldwide," Howard Birndorf, Nanogen's chairman and CEO said. "I believe the resulting combination will create value for our shareholders, customers and employees", Mr. Birndorf added. "This is a true example of synergy between two companies in the in vitro diagnostics industry," Pierre Debiais, president of Elitech, commented. "We are delighted to be able to combine Nanogen's technology strength with our market reach in the international marketplace and collectively deliver the critical mass required to address the US diagnostic market." Elitech shareholders are expected to receive shares of Nanogen common stock that have a value of EUR66.5 million. Under the terms of the share exchange agreement, the number of Nanogen common shares issued to Elitech shareholders is subject to a "collar", which among other things, provides that Elitech shareholders will receive a minimum of 58.7% and a maximum of 68.7% of the total pro forma fully diluted shares outstanding upon completion of the merger subject to other limitations. In conjunction with the share exchange agreements, Nanogen has also entered into interim funding agreements with Elitech and certain existing Nanogen investors pursuant to which they will loan Nanogen $8 million to fund Nanogen's operations during the period between signing and closing of the combination. Nanogen will issue to these lenders senior secured convertible promissory notes that are convertible into shares of Nanogen common stock at the closing bid price of the Nanogen common stock immediately preceding the signing of the interim funding agreements. In connection with the interim funding agreements, Nanogen and existing investors also restructured Nanogen's existing convertible notes. Board of Directors and Management The combined company will be headquartered in San Diego under the leadership of Pierre Debiais as CEO. Michael Saunders, currently group vice president of marketing and business development for The Elitech Group will become COO, with a focus on European business and global commercial operations. David Ludvigson, currently president and COO for Nanogen, will become COO, with a focus on the United States business and global business and finance. Nick Venuto, currently vice president, CFO of Nanogen, will serve in the same capacity for the combined entity. It is contemplated that the new board of directors will have a majority of Board members from or nominated by Elitech, including Mr. Debiais. Howard Birndorf, currently Chairman and CEO of Nanogen is expected to serve as Chairman of the combined entity. Financial Considerations The combined company will be a global provider of products in the molecular, point-of-care, clinical chemistry and microbiology diagnostics market. The combined company will benefit from cost synergies and enhanced opportunities for revenue growth and increased profitability. The pro forma combined business is currently growing at more than 20% annually and in calendar year 2009 is expected to generate total revenues of more than $150 million, have an EBITDA margin of approximately 10% of revenue and be cash flow positive. The merged company's EBITDA and profitability will also benefit from significant operational synergies including cost reductions in sales, marketing, manufacturing and development as well as gross margin improvements through optimization of distribution channels and enhanced opportunities for revenue growth. Nanogen expects the combination to be substantially accretive to calendar year 2009 GAAP earnings per share, excluding one-time, transaction related adjustments and costs. Approvals and Time to Close The share exchange agreement is subject to approval by Nanogen's stockholders as well as customary closing conditions and regulatory approvals. The transaction is expected to close by the end first quarter of 2009. Advisors Cowen and Company, LLC is serving as financial advisor to Nanogen and Morgan, Lewis & Bockius LLP as legal counsel. BNP served as financial advisor to the Elitech Group and Jackson Walker LLP as legal counsel. About Elitech Group The Elitech Group -- http://www.Elitechgroup.com-- is a high growth, profitable in vitro diagnostic company with global sales and distribution capabilities in over 100 countries. The company is the independent distributor of in vitro diagnostic products in France. Elitech operates globally, leveraging products from its own biochemistry and microbiology equipment and reagents manufacturing facilities as well as third party products. In May 2007 Elitech acquired Wescor Inc, Utah USA to broaden its biomedical products platform and to provide a base for business expansion in the USA. In October 2007 Elitech acquired Vital Scientific in the Netherlands to allow the company to offer a complete biochemistry offering. About Nanogen Inc. San Diego, California-based Nanogen Inc. (NASDAQ: NGEN) -- http://www.nanogen.com/-- provides advanced diagnostic products. As of March 16, 2007, the company was developing several product lines that directly target specific markets within the advanced diagnostics field. Its diagnostic technologies focus on the identification of the nucleic acid sequences, gene variations and gene expressions associated with both genetic conditions and infectious diseases. Nanogen has four categories of advanced diagnostic technologies: molecular testing platforms molecular reagents point-of-care tests and advanced genetic markers. On Feb. 6, 2006, Nanogen acquired the rapid cardiac immunoassay point-of-care test business of Spectral Diagnostics Inc. The acquired products include rapid tests for levels of CKMB, Myoglobin and Troponin, all of which are frequently used in cardiac care. On May 1, 2006, it completed the acquisition of the diagnostics division of Amplimedical S.P.A. Going Concern Doubt Ernst & Young LLP, in San Diego, California, expressed substantial doubt about Nanogen Inc.'s ability to continue as a going concern after it audited the company's consolidated financial statements ended Dec. 31, 2007 and 2006 (restated). The auditing firm pointed to the company's recurring operating losses, working capital deficit and accumulated deficit of $400.6 million as of Dec. 31, 2007. NATHAN GLICK: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Nathan R. Glick 12785 Youth Street North Lawrence, OH 44666 Bankruptcy Case No.: 08-62767 Chapter 11 Petition Date: August 20, 2008 Court: Northern District of Ohio (Canton) Judge: Russ Kendig Debtor's Counsel: Kathryn A. Williams, Esq. (kathrynwms@gmail.com ) Law Office of Kathryn A. Williams 75 Public Square, Suite 800 Cleveland, OH 44113 Tel: (440) 989-8701 Fax: (216) 696-2212 Estimated Assets: $1 million to $10 million Estimated Debts: $50 million to $100 million A list of the Debtor's largest unsecured creditors is available for free at: http://ResearchArchives.com/t/s?3108 NAVISTAR INT'L: Allows GM Medium Duty Truck MOU to Expire --------------------------------------------------------- Due to significant marketplace and economic changes, General Motors Corp. and Navistar International Corp. have decided not to renew the memorandum of understanding to purchase GM's medium duty truck business, which has expired. GM will continue to run the medium duty business as it has in the past, including providing sales, service and marketing support to GM dealers for its medium duty trucks. GM will continue to review strategic options for the business, including continued discussions with Navistar. Navistar International Corporation (NYSE: NAV) produces International(R) brand commercial and military vehicles, MaxxForce(TM) brand diesel engines, IC brand school and commercial buses, and Workhorse(R) brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. Navistar is also a provider of truck and diesel engine parts. Another affiliate offers financing services. On the Net: http:www.navistar.com/ NAVISTAR INT'L: GM Deal Canceled; S&P Ratings Unaffected -------------------------------------------------------- Standard & Poor's Ratings Services said its ratings on General Motors Corp. (B-/Negative/--) and Navistar International Corp. (BB-/Negative/--) and are not affected by the companies' announcement that the companies are exiting a preliminary agreement for Navistar to purchase GM's medium-duty truck business. "The GM unit produces about 25,000 to 35,000 Class 4-7 medium-duty trucks per year, depending on the phase of the industry cycle. Demand in these segments has been under severe pressure because of the weak U.S. economy and high diesel fuel prices, which have reduced freight volumes and deterred trucking companies from ordering new equipment. We do not expect a meaningful rebound in demand until early 2009 at the earliest. Although the acquisition would have provided Navistar with substantial additional revenues and some long-term potential to reduce its per-unit manufacturing costs, cash flow and profitability likely would have been minimal to negative for the first few years. We had factored neither potential benefits nor much incremental acquisition-related financial risk into Navistar's ratings," S&P relates. "For GM, proceeds from the unit's sale would not have provided a significant source of increased liquidity. GM recently announced that it is exploring making between $2 billion and $4 billion of asset sales by the end of 2009 as part of a series of actions to bolster liquidity, but we believe the medium-duty truck business proceeds would have been small to negligible." NEXIA HOLDINGS: Issues Shares to Satisfy $300,000 Note Obligation ----------------------------------------------------------------- Nexia Holdings, Inc. authorized the delivery to Diversified Holdings X, Inc. of 38,600,000 restricted shares of the corporation's Common Stock on August 14, 2008. The issuance represents compensation and satisfaction of a promissory note in the face amount of $300,000 made by Gold Fusion Laboratories, Inc. that was made payable to Diversified Holdings X, Inc. a corporation wholly owned by Richard Surber, the CEO of the company. The transaction was handled as a private sale exempt from registration under Rule 506 of Regulation D and the Securities Act of 1933. This issuance will settle the debt in the current amount of $385,728 and remove the obligation as a current debt. On August 14, 2008, the company authorized the delivery to Almar Capital Advisors, LLC and RES Holdings Corp of 333,400 shares of restricted common stock pursuant to a consulting agreement between the company and the named parties. The consultants will provide assistance in locating financing and other management advice over the course of the contracts term of one year. The transaction was handled as a private sale exempt from registration under Rule 506 of Regulation D and the Securities Act of 1933. Upon completion of the issuance of these shares the total number of issued and outstanding shares of common stock of the company is 41,416,322. About Nexia Holdings Inc. Headquartered in Salt Lake City, Utah, Nexia Holdings Inc. (OTCBB: NEXA) -- http://www.nexiaholdings.com/-- is a diversified holdings company with operations in real estate, health & beauty, and fashion retail. As reported in the Troubled Company Reporter on June 4, 2008, Hansen Barnett & Maxwell, P.C., expressed substantial doubt on the ability of Nexia Holdings, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. At Dec. 31, 2007, the company's balance sheet showed $4,845,485 in total assets and $11,536,648 in total liabilities, resulting in $6,870,114 stockholders' deficit. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $1,036,555 in total current assets available to pay $2,731,003 in total current liabilities. OCH-ZIFF CAPITAL: June 30 Balance Sheet Upside-Down by $423MM ------------------------------------------------------------- Och-Ziff Capital Management Group LLC's balance sheet at June 30, 2008, showed total assets of $2.1 billion and total liabilities of $2.5 billion, resulting in shareholders' deficit $423 million. For the second quarter ended June 30, 2008, Och-Ziff reported a U.S. generally accepted accounting principles or GAAP net loss of $60.8 million. For the first half ended June 30, 2008, Och-Ziff reported a GAAP net loss of $328.9 million. The GAAP net loss in both periods resulted from second quarter and first half non-cash expenses of $425.6 million and $851.2 million, associated with the company's reorganization in connection with its initial public offering in November 2007. These expenses are related to the amortization of Och-Ziff Operating Group A Units, which represent equity interests in the company's principal operating subsidiaries that were awarded to the company's pre-IPO owners in exchange for their pre-IPO interests in those subsidiaries. The Group A Units vest annually over five years from the date of the IPO. Accordingly, amortization of these expenses is expected to result in a GAAP net loss each quarter through 2012. Once vested, the Group A Units may be exchanged on a one-to-one basis for Class A Shares. Also contributing to the GAAP net loss in the second quarter and first half of 2008 were non-cash expenses of $24.2 million and $50.2 million, for the amortization of equity-based compensation, primarily related to Class A restricted share units awarded to all of the company's employees in connection with the IPO. These RSUs vest annually over four years from the date of the IPO. Once vested, Class A Shares will be issued on a one-to-one basis. Och-Ziff's assets under management were $33.6 billion as of June 30, 2008, $357 million higher than the $33.3 billion in assets under management as of March 31, 2008, and up 16% from $29.1 billion in assets under management as of June 30, 2007. The $4.5 billion year-over-year increase was driven by net inflows and appreciation, primarily in each of the company's most significant master funds. The increase also included the fourth-quarter 2007 reinvestment by the company's partners and the Ziffs of approximately $1.6 billion in after-tax proceeds from the company's IPO and concurrent Class A Share sale to Dubai International Capital. These proceeds were invested in the OZ Global Special Investments Master Fund. During the 2008 second quarter, performance-related appreciation of $389 million was partially offset by net outflows of $32 million. During the first half of 2008, net inflows were approximately $232 million while the performance-related change to assets under management was not significant. About Och-Ziff Capital Management Group LLC Headquartered in New York City, Och-Ziff Capital Management Group LLC (NYSE:OZM) -- http://www.ozcap.com/-- is an international, institutional alternative asset management firm and an alternative asset manager. It is a holding company, and its primary assets are its ownership interests in the Och-Ziff Operating Group entities, which are held indirectly through two intermediate holding companies, Och-Ziff Corp and Och-Ziff Holding. The Och- Ziff Operating Group consists of OZ Management LP, OZ Advisors LP, OZ Advisors II LP. The company operates through a single operating segment, Och-Ziff Funds. PEFORMANCE TRANS: Ritchie Bros. to Auction Assets on October 3 -------------------------------------------------------------- Ritchie Bros. Auctioneers intends to sell approximately 1,000 specialized car carriers on behalf of the Trustee for Performance Transportation Services, Inc., (PTS) and about 1,190 vehicles -- including truck tractors, trailers and forklifts -- on behalf of the Trustee for Alvan Motor Freight, Inc. in two separate complete dispersal, unreserved, public auctions. Moreover, the firm will also be selling various equipment and other assets for both companies. All items will be available for inspection prior to the auctions. A. Auction Information For Performance Transportation: Date : Friday, October 3, 2008 Location : North East, MD Ritchie Bros. auction site -- 3201 West Pulaski Hwy RT40 Items : more than 1,000 open rack car carriers with Freightliner, International, Sterling and Volvo power units. Most of the carriers are Cottrell, Boydstun, Delavn and Teal. All PTS shop tools and equipment, parts and supplies, and office furniture and equipment will be sold at various upcoming Ritchie Bros. auctions B. Auction Information For Alvan: Date : Tuesday October 14, 2008 Location : Alvan Terminal in Detroit, Michigan -- 9911 Harrison Road, Romulus, Michigan Items : 350 International, Sterling, Freightliner and Volvo truck tractors; 700 Utility, Great Dane and Trailmobile van trailers; 140 various sized forklifts; shop tools and equipment; parts and supplies; and office furniture and equipment Registration is free at the public auctions and everything is sold "As is, where is" on auction day. Credit bidding is prohibited at the auctions. Both PTS and Alvan are currently subject to proceedings under Chapter 7 of the United States Bankruptcy Code and all remaining assets are being sold free and clear of liens and encumbrances. PTS was the second-largest transporter of new automobiles, sport utility vehicles and light trucks in North America, and was based in Allen Park, Michigan, while family-owned Alvan was Midwestern regional LTL motor carrier based in Kalamazoo, Michigan. "Both companies have assets located throughout the United States," said Rob Whitsit, Senior Vice President of Ritchie Bros. Auctioneers. "With our 'virtual ramp' style auctions, we are able to conduct the auctions in a timely and efficient manner to help liquidate the assets in an orderly fashion and maximize the returns to the Bankruptcy Estates. In both situations we worked with the Trustees, the creditors, the companies and their advisors to offer them commercially reasonable, turnkey auction solutions to facilitate the asset sales." "Ritchie Bros. was chosen because of our in-depth experience in the market and our ability to handle large and extremely complex dispersals," Mr. Whitsit continued. "Ritchie Bros. is uniquely qualified to manage the sale of all remaining assets of these two companies, offering flexible solutions to meet the needs of the various stakeholders." About Performance Transportation Performance Transportation Services Inc. is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, and operates under three key transportation business lines including: E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport. The company and 13 of its affiliates previously filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06- 00107). The U.S. Bankruptcy Court for the Western District of New York confirmed the Debtors' plan on Dec. 21, 2006, and that plan became effective on Jan. 29, 2007. Garry M. Graber, Esq. of Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day represented the Debtors in their restructuring efforts. When the Debtor filed for protection from their creditors it reported more than $100,000,000 in total assets. It also disclosed owing more than $100,000,000 to at most 10,000 creditors, including $708,679 to Broadspire and $282,949 to General Motors of Canada Limited. The company and its debtor-affiliates filed their second Chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746 thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve as the Debtors' local counsel. The Debtors' claims and balloting agent is Kutzman Carson Consultants LLC. As reported in the Troubled Company Reporter on July 18, 2008, the Court converted the Debtors' Chapter 11 cases to cases under Chapter 7 of the Bankruptcy Code, effective as of July 14, 2008. Mark S. Wallach was appointed as the trustee for Performance Transportation, Inc., et al.'s, Chapter 7 case. PEGASI ENERGY: Posts $535,109 Net Loss in 2008 Second Quarter ------------------------------------------------------------- Pegasi Energy Resources Corp. reported a net loss of $535,109 on total revenues of $858,722 for the second quarter ended June 30, 2008, compared with a net loss of $724,896 on total revenues of $705,415 in the same period a year ago. Total operating expenses for the second quarter of 2008 were $1,294,850, compared to $596,878 in the second quarter of 2007. This change is comprised of increases in general and administrative expenses and cost of gas purchased for resale, partially offset by small reductions in production and depreciation and depletion expense. In the second quarter of 2008 the company recognized deferred income tax expense of $17,392 and recognized deferred income tax expense of $688,390 in the second quarter of 2007. The $670,998 difference is primarily a result of FSC, 59 Disposal, and TR Rodessa converting from partnerships to taxable corporations in the second quarter of 2007 and represents temporary differences primarily created by oil and gas properties as well as property and equipment. Balance Sheet At June 30, 2008, the company's consolidated balance sheet showed $15,378,917 in total assets, $8,710,422 in total liabilities, and $6,668,495 in total stockholders' equity. The company's consolidated balance sheet at June 30, 2008, also showed strained liquidity with $3,610,963 in total current assets available to pay $6,994,157 in total current liabilities. 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?30f8 Going Concern Doubt At June 30, 2008, the company had a working capital deficit of $3,383,194 and an accumulated deficit of $4,561,218. For the six month period ended June 30, 2008, the company incurred a net loss of $1,241,373. The company said that these conditions raise substantial doubt about its ability to continue as a going concern. About Pegasi Energy Based in Tyler, Texa, Pegasi Energy Resources Corp. (OTC BB: PGSI) -- http://www.pegasienergy.com/-- is engaged in the exploration and production of natural gas and oil through the development of a repeatable, low geological risk, high potential project in the active East Texas oil and gas region. The company currently holds interests in properties located in Marion and Cass County, Texas, home to the Rodessa oil field, which has produced approximately 2.3 trillion cubic feet of gas and approximately 400 million barrels of oil. The company conducts its main exploration and production operations through its wholly-owned subsidiary, Pegasi Operating Inc. The company conducts additional operations through two other wholly owned subsidiaries: (i) TR Rodessa and (ii) 59 Disposal. PESE LLC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: PESE, LLC aka Phalen East Shore Estates, LLC dba Harbor Village 20200 Hillside Dr. Corcoran, MN 55374 Bankruptcy Case No.: 08-34241 Type of Business: The Debtor operates a restaurant and a marina. Chapter 11 Petition Date: August 20, 2008 Court: District of Minnesota (St Paul) Judge: Robert J. Kressel Debtor's Counsel: Chad J. Bolinske, Esq. Email: chad.bolinske@bolinskelaw.com Bolinske & Bolinske, PLLC 1660 S. Hwy. 100, Ste. 508 St. Louis Park, MN 55416 Tel: (952) 294-0144 Fax: (952) 294-0146 http://www.bolinskelaw.com/ Total Assets: $14,372,442 Total Debts: $8,643,558 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ David St. Germain Marketing and $48,322 490 Temperance St., Ste. 311 consulting services St. Paul, MN 55101 Tel: (952) 210-6962 Hay Dobbs Architecture Architectural $29,501 Attn: Tom Dobbs services 200 South Sixth St., Ste. 165 Minneapolis, MN 55402 Tel: (612) 338-4590 Xcel Energy $22,404 P.O. BOX 9477 Minneapolis, MN 55484-9477 Tel: (800) 481-4700 Cenex $9,037 Oak Leaf Tree Services Tree Services $5,525 Sysco Minnesota Restaurant purchases $5,542 Marine Canvas & Shrinkwrap Services $4,312 Meyer Sewer Service Sewer Services $3,900 Tennis Sanitation, LLC Sanitation services $3,094 AllPhase $2,841 State Fund Mutual $2,218 Peterson, Peterson & Assoc. Accounting services $1,375 PLC Regina Medical Center Medical Services $1,037 ADT Security Services Security services $1,231 Land & Sea $864 CANANWILL $821 Commercial Partners Title, LLC $830 Oxygen Service Co. $792 Johnson Bros. Liquor Co. Liquor purchases $708 South Suburban Rental $665 PHOENIX FOOTWEAR: Posts $2.1MM Net Loss in Quarter Ended June 28 ---------------------------------------------------------------- Phoenix Footwear Group, Inc. disclosed consolidated results for the second quarter and six months ended June 28, 2008. Net loss for the quarter ended June 28, 2008, was $2.1 million, compared to net loss of $929,000 a year ago. The 2008 net loss included the non-cash write-off of $622,000 in debt issuance costs previously capitalized under the company's previous credit facility, which was replaced during the second quarter of fiscal 2008. "In spite of the very challenging economic headwinds our company faced, we were able to expand gross margins and achieved flat operating loss compared to a year ago," Jim Riedman, Phoenix Footwear's Chairman, commented. The substantial progress we have made is underscored by our new revolving credit facility with Wells Fargo Bank. We ended the quarter with an improved balance sheet, as reflected by much lower debt and inventory levels. We have significantly strengthened our portfolio of brands, attracted an experienced management team, renewed our focus on managing costs and solidified our capital structure. These steps position us well for further financial and operational improvement. While we are very encouraged by our accomplishments over the past twelve months, our board and management team are intensely committed to translating these into improved equity value for our shareholders." Net sales from continuing operations decreased 10% to $17.9 million, compared to $19.8 million for the second quarter of fiscal 2007. The company's footwear brands were down 4% for the quarter while the company's accessories business declined 14%, reflecting the challenging retail environment, particularly within the mass channel. Gross margin expanded 40 basis points to 34.1%, compared to 33.7% for the second quarter of 2007. The increase was due to improved margins on sales to mass merchant customers by the company's accessories segment, which was offset by sales incentives and allowances in the footwear and premium footwear segments, as well as additional royalty fees associated with the Tommy Bahama Footwear brand. Operating expenses decreased 8% to $7.5 million, or 42% of net sales, compared to $8.1 million, or 41% of net sales, for the second quarter of fiscal 2007. The decrease in operating expenses is primarily attributable to expense reimbursements received under the Transition Services Agreement entered into concurrently with the company's divestiture of Altama Delta Corporation. Operating loss was flat at $1.4 million. "Our second quarter results were negatively impacted by the challenging economic environment and extraordinary softness at retail," Cathy Taylor, Phoenix Footwear's Chief Executive Officer, commented. "In spite of this hurdle Tommy Bahama maintained strong double digit growth and we were pleased with the sell through rates of products within our other brands. As our retail partners focused on inventory reduction however, reorders came in well below our expectations, resulting in lower sales overall. To best manage our business through this more uncertain environment, we continued to carefully review each of our brands with a particular focus on product quality, customer deliveries and achieving our primary goal of profitable growth." First Six Months of 2008 Results Net loss from continuing operations was $2.5 million, or $0.31 per share, on 8.1 million weighted-average shares outstanding. This compares to net loss of $2.0 million, or $0.25 per share, from continuing operations for the first six months of fiscal 2007. The 2008 net loss included the write-off of $622,000 in debt issuance costs previously capitalized under the company's old credit facility, which was replaced during the second quarter of fiscal 2008. Net sales from continuing operations decreased 3% to $39.9 million, compared to $41.1 million for the first six months of fiscal 2007. The net sales decrease was a result of growth in the company's footwear brands of 4% offset by a 9% decrease in its accessories business. Gross margin was 35.1%, compared to 36.5% for first six months of 2007. The decrease in gross margin was primarily attributable to an increase in sales incentives and allowances during the first quarter of 2008. Operating expenses decreased 11% to $15.3 million, or 38% of net sales, compared to $17.2 million, or 42% of net sales, for the first six months of fiscal 2007. The decrease was attributable to headcount reductions and decreased spending on brand expenses, as well as expense reimbursements received under the Transition Services Agreement entered into concurrently with the company's divestiture of Altama Delta Corporation. Operating loss narrowed to $1.3 million, compared to $2.2 million a year ago. Balance Sheet and Liquidity At June 28, 2008, the company's balance sheet showed total assets of $51.3 million and total liabilities of $22.4 million, resulting in a $28.8 million stockholders' equity. As of June 28, 2008, tangible net worth totaled $17.7 million. The company's bank debt, net of cash, totaled $7.0 million. As of June 28, 2008, the company had $16.2 million in working capital, an increase of $24.7 million from one year ago. During the second quarter, the company entered into a new $17 million revolving credit facility with Wells Fargo Bank. The facility replaces the company's previous facility with Manufacturers and Traders Trust company which has been retired. The new facility is expandable to $20 million with the consent of the lender. The new credit facility provides for interest at prime minus 0.25% or, LIBOR plus 2.4%. About Phoenix Footwear Headquartered in Carlsbad, California, Phoenix Footwear Group, Inc. (AMEX: PXG) -- http://www.phoenixfootwear.com/-- designs, develops and markets a diversified selection of men's and women's dress and casual footwear, belts, and other accessories. The company's moderate-to-premium priced brands and licenses include the Tommy Bahama Footwear(R), Trotters(R), SoftWalk(R), Strol(R), H.S. Trask(R), and Altama(R) footwear lines, Chambers Belts(R)and Wrangler(R). Going Concern Doubt As reported in Troubled company's Reporter on April 29, 2008, Grant Thornton LLP, in Irvine, California, expressed substantial doubt about Phoenix Footwear Group Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 29, 2007. The auditing firm reported that the company incurred a net loss from continuing operations of $16,593,000 for the year ended Dec. 29, 2007, and the company is not in compliance with financial covenants under its current credit agreement as of Dec. 29, 2007. The company has not requested a waiver for the respective defaults and is in the process of replacing the existing facility with a new lender. If the company is not successful in refinancing the existing facility through a new bank it will seek to refinance its debt on new terms with its existing bank. The company disclosed that presently it has insufficient cash to pay its bank debt in full. PIERRE FOODS: May Hire Perella as Investment Banker and Advisor --------------------------------------------------------------- The Hon. Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware gave Pierre Foods, Inc. and its debtor-affiliates authority to employ Perella Weinberg Partners, L.P., as their investment banker and financial advisor. The Troubled Company Reporter said on Aug. 19, 2008, that the firm will familiarize itself with the business of the Debtors, review their financial condition and all other related advisory services. Michael A. Kramer, Esq., a partner at the Firm, told the Court that it will bill the Debtors: (a) a financial advisory fee of $300,000; (b) a monthly financial advisory fee of $150,000, commencing on the earlier of July 1, 2008 or the date on which the Debtor is or becomes a debtor under Chapter 11 bankruptcy, and payable in advance on each monthly anniversary of such earlier date; (c) and a Transaction Fee of $2,000,000, payable promptly upon consummation of a Restructuring. Mr. Kramer assured the Court that the firm does not represent any interest adverse to the Debtors' estates. About Pierre Foods Headquartered in Cincinnati, Ohio, Pierre Foods, Inc. -- http://www.pierrefoods.com-- manufactures and sells ready-to-cook and pre-cook products. The company and and 13 of its affiliates filed for Chapter 11 protection on July 15, 2008 (Bankr. D. Del. Lead Case No. 08-11469). Paul Noble Heath, Esq., at Richards, Layton & Finger P.A., represents the Debtors in their restucturing efforts. The Debtors selected Kurtzman Carson Consultants LLC as their claims agent. When the Debtors filed for protection against their creditors, they listed estimated assets between $500 million and $1 billion, and estimated debts between $100 million and $500 million. PIERRE FOODS: May Hire Lightning Mgt. as Operational Consultant --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave authority to Pierre Foods, Inc. and its debtor-affiliates to employ Lightning Management, LLC as their operational consultant during the pendency of the bankruptcy case. Since November 2007, John Schaefer, the sole member and employee of Lightning Management, has been providing executive management and operational consulting services to Pierre pursuant to the terms of a services agreement. On Oct. 16, 2007, Mr. Schaefer was elected as a member of the board of directors of Pierre Holding Corp. Mr. Schaefer has received a total of $20,416 in fees for his services as director on the PHC board. Mr. Schaefer, however, wasn't elected as a director of any other Pierre entity. He is currently director of two public companies, The Parent Company and Russ Berrie Company, Inc. Because of Mr. Schaefer's membership on the PHC board, the United States Trustee for the District of Delaware has raised concerns about the engagement. However, Pierre has determined that it is in the best interest of all affected parties for Pierre to employ Mr. Schaefer directly as its chief operating officer. Mr. Schaefer will be paid $100,000 every month during the employment period. The compensation commenced on Aug. 1, 2008, and is payable prior to the first day of each calendar month during the term. In addition, Pierre will pay Mr. Schaefer a one- time signing bonus of $500,000 upon the execution of the employment agreement. After Dec. 31, 2008, the employment period will automatically renew for one-month periods unless either party notifies the other of its intention to terminate the employment period at least 10 days prior to the then-current term. About Pierre Foods Headquartered in Cincinnati, Ohio, Pierre Foods, Inc. -- http://www.pierrefoods.com-- manufactures and sells ready-to-cook and pre-cook products. The company and and 13 of its affiliates filed for Chapter 11 protection on July 15, 2008 (Bankr. D. Del. Lead Case No. 08-11469). Paul Noble Heath, Esq., at Richards, Layton & Finger P.A., represents the Debtors in their restucturing efforts. The Debtors selected Kurtzman Carson Consultants LLC as their claims agent. When the Debtors filed for protection against their creditors, they listed estimated assets between $500 million and $1 billion, and estimated debts between $100 million and $500 million. PIERRE FOODS: May Employ Thompson Hine as Special Counsel --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Pierre Foods, Inc. and its debtor-affiliates to hire Thompson Hine LLP as their special counsel, nunc pro tunc to July 15, 2008. Since September 1991, Thompson Hine has provided legal advice and represented Pierre on numerous significant matters. Currently, the firm advises and represents the Debtors in various environmental, general corporate, intellectual property, real estate, labor, employment, and general litigation matters in addition to a potential criminal investigation. Thompson Hine will continue to represent and provide legal services to Pierre with respect to these current matters. The firm bills at these hourly rates: Partners $315 - $600 Associates $190 - $460 Paraprofessionals $95 - $250 The Debtors have paid the firm a total of $899,159 for services provided prior to the commencement of the bankruptcy. To the best of Pierre's knowledge, Thompson Hine is a "disinterested person" as defined in section 101(14) of the U.S. Bankruptcy Code. The firm can be reached at: Linn S. Harson, Esq. Thompson Hine LLP 2000 Courthouse Plaza, Northeast 10 West, Second Street Dayton, OH 45402 About Pierre Foods Headquartered in Cincinnati, Ohio, Pierre Foods Inc. -- http://www.pierrefoods.com-- manufactures and sells ready-to-cook and pre-cook products. The company and and 13 of its affiliates filed for Chapter 11 protection on July 15, 2008 (Bankr. D. Del. Lead Case No. 08-11469). Paul Noble Heath, Esq., at Richards, Layton & Finger P.A., represents the Debtors in their restucturing efforts. The Debtors selected Kurtzman Carson Consultants LLC as their claims agent. When the Debtors filed for protection against their creditors, they listed estimated assets of between $500 million and $1 billion, and estimated debts of between $100 million and $500 million. PROPEX INC: May Employ Richard Franks as Sales and Marketing VP --------------------------------------------------------------- Propex Inc. and its debtor-affiliates sought and obtained authority from the U.S. Bankruptcy Court for the Eastern District of Tennessee to employ Richard Franks as their executive vice president of Sales and Marketing for Flooring/FBA as of July 1, 2008. According to the Debtors, Mr. Franks' employment is vital to their reorganization efforts and is in the best interest of their creditors and estates. Henry J. Kaim, Esq., at King & Spalding, LLP, in Houston, Texas, relates that the Debtors have executed an employment agreement with Mr. Franks whose contract expires in one year. The agreement provides a six-month extension unless terminated by either party with a 90-day written notice. Mr. Franks will be entitled to a $190,000 annual base salary, and will be included in the Debtors' Key Employee Incentive Plan. If terminated, Mr. Franks will be paid half the annual base salary together with the payment of other benefits not satisfied up to the date of termination. A non-compete provision also prevents Mr. Franks from pursuing similar profession within one year after his termination. Headquartered in Chattanooga, Tennessee, Propex Inc. -- http://www.propexinc.com/-- produces geosynthetic, concrete, furnishing, and industrial fabrics and fiber. It also produces primary and secondary carpet backing. Propex operates in North America, Europe, and Brazil. The company and its debtor-affiliates filed for Chapter 11 protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08- 10249). The Debtors have selected Edward L. Ripley, Esq., Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston, Texas, to represent them. The Official Committee of Unsecured Creditors have tapped Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, to be its counsel. As of Sept. 30, 2007, the Debtors' balance sheet showed total assets of $585,700,000, and total debts of $527,400,000. The Debtors' exclusive period to file a plan of reorganization will expire on Aug. 21, 2008. (Propex Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) PROTECTED VEHICLES: Files Liquidation Plan with Creditors' Panel ---------------------------------------------------------------- Protected Vehicles Inc. submitted to the U.S. Bankruptcy Court for the District of South Carolina its chapter 11 plan of liquidation and accompanying disclosure statement on Aug. 19, 2008, William Rochelle reports. The plan filing averted the conversion of the Debtor's case to a chapter 7 liquidation proceeding, the report says. The Court ruled on July 17, 2008, that the Official Committee of Unsecured Creditors was entitled to request the case conversion, Mr. Rochelle reports. The Court suggested that the Debtor and the Committee agree on a sale procedure and submit a joint chapter 11 liquidation plan. The chapter 11 case remained to allow both parties to reach an agreement, Mr. Rochelle states. The Troubled Company Reporter said on June 12, 2008, the Committee requested the conversion of the Debtor's chapter 11 case to one under chapter 7. Michael M. Beal, Esq., at McNair Law Firm, P.A., in Columbia, South Carolina, noted that the Court previously denied the Committee's initial conversion motion after finding that the losses to the estate continue but noting that the Committee failed to show, by the "narrowest of margins," the absence of a reasonable likelihood of rehabilitation. The Committee asserted that the conversion will be the most efficient and cost-effective way for the Debtor to maximize the value of its estate for the benefit of its creditors. An auction will be held today, Aug. 22, 2008, to determine if any buer will outbid Patriarch Partners LLC' offer of $5 million, Mr. Rochelle relates. A sale hearing will follow shortly after the auction. Provisions of the Plan In its disclosure statement, the Debtor said it owes its secured creditor $13.6 million. The plan contemplates on voiding the lender's security interest, Mr. Rochelle reveals. Unsecured creditors have asserted $67 million in claims. The Debtor listed unsecured creditors' claims of $58 million. According to Mr. Rochelle, through a chapter 11 plan confirmed in June 2008, Patriarch swapped its debt to ownership of American LaFrance LLC, a manufacturer of fire trucks and emergency vehicles that filed its chapter 11 petition on January 2008. The TCR said on July 29, 2008, that American LaFrance has successfully emerged from chapter 11 after a little over five months in bankruptcy. The effective date of the Debtor's third amended plan of reorganization occurred on July 23, 2008, Christopher A. Ward, Esq., at Polsinelli Shalton Flanigan Suelthaus PC, in Wilmington, Delaware, stated in a notice to the U.S. Bankruptcy Court for the District of Delaware. The Court confirmed the Debtor's plan May 23, 2008. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. Pepper Hamilton, LLP is the proposed counsel of the Official Committee of Unsecured Creditors. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. About Protected Vehicles North Charleston, South Carolina-based Protected Vehicles Inc. aka PVI -- http://www.protectedvehicles.com/-- founded in 2005, designs and manufactures ballistic and blast protected vehicles using technology derived from Rhodesian and South African vehicle development programs. The Debtor filed for chapter 11 protection on Feb. 5, 2008 (Bankr. S.C. Case No. 08-00783). G. William McCarthy, Jr., Esq., at McCarthy Law Firm LLC, represents the Debtor in its restructuring efforts. Its largest unsecured creditor, the United States Marine Corps, is owed $15,801,765. In February 2008, the Debtor listed assets of $24 million and debts of $54.1 million. RESMAE MORTGAGE: Moody's Junks Three Class Certificates' Rating --------------------------------------------------------------- Moody's Investors Service downgraded 10 certificates from ResMae Mortgage Loan Trust, Mortgage Pass-Through Certificates, Series 2007-1. Four of the downgraded certificates will remain on review for possible further downgrade. Issuer: ResMae Mortgage Loan Trust, Mortgage Pass-Through Certificates, Series 2007-1 -- Cl. M2, Downgraded to Baa1 from Aa2 -- Cl. M3, Downgraded to Baa3 from Aa3 -- Cl. M4, Downgraded to Ba2 from A1 -- Cl. M5, Downgraded to B1 from A2; Placed Under Review for further Possible Downgrade -- Cl. M6, Downgraded to B1 from A3; Placed Under Review for further Possible Downgrade -- Cl. M7, Downgraded to B2 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M8, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M9, Downgraded to C from Baa3 -- Cl. M10, Downgraded to C from Ba1 -- Cl. M11, Downgraded to C from Ba2 The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. The actions described below are a result of Moody's on-going surveillance process. RIVER BEND: Dispute with Secured Lender Placed Under Mediation -------------------------------------------------------------- River Bend Community LLP said last week that, together with its secured lender, it obtained appraisals and is set for mediation over a bankruptcy plan, William Rochelle of Bloomberg News. The report adds that the Debtor is asking for an extension of its exclusive right to file a reorganization plan until Dec. 26, 2008. About River Bend Headquartered in Lake Worth, Florida, River Bend Community, LLP owns a golf course and surrounding housing development near San Antonio. It filed for chapter 11 protection on May 30, 2008 (Bankr. S.D. Fla Case No. 08-17264). Alan J. Perlman, Esq., at Adorno & Yoss, LLP, represents the Debtor in its restructuring efforts. The Debtor's schedules showed total assets of $36,810,640 and total liabilities of $27,871,325. ROCKPOINT GROUP: Expects to Default on Manhattan Unit Next Month ---------------------------------------------------------------- Building developers Rockpoint Group LLC and Stellar Management told The Wall Street Journal that they expect, by next month, to default on the $225 million mortgage of their 1,230-unit Riverton Apartments in Manhattan, New York. The owners said that progress was slow on converting half of the apartment's units into market-rate housing, WSJ reports. A Rockpoint spokesperson did not return any comments. Based in Jacksonville, Florida, Rockpoint Group LLC is a real estate investment and management firm. The company was founded in 2003 and has with additional offices in Boston, Dallas, San Francisco, and Tokyo. S & A RESTAURANT: Trustee Wants to Retain Rosen as Auctioneer ------------------------------------------------------------- Michelle H. Chow, the Chapter 7 bankruptcy trustee for S & A Restaurant Corp., aka Bennigan's Grill & Tavern, and its debtor- affiliates, seek the authority of the U.S. Bankruptcy Court for the Eastern District of Texas to retain Rosen Systems, Inc., as agent and auctioneer. The Trustee notes that the Debtors' restaurants have numerous items of equipment, furniture and fixtures as well as perishable food inventory. In order to administer these items, Rosen will (i) remove all of the items from the stores, and (ii) possibly sell certain assets at auction. The Trustee avers that Rosen will be billed at $300 per store for cleaning out all inventory, furniture and fixtures. For any items sold at auction, Rosen will get an additional 10% buyers' premium. Furthermore, the Trustee's report of sale will contain the full accounting of all items removed and sold from the Restaurants, as well as the sums collected as buyer's premium. Rosen, when filing for its final fee application, will also include the full accounting of the clearing out and auction of the inventory. Rosen's final compensation and reimbursement of expenses will be subject for Court approval. Kyle Rosen, director of auction services at Rosen, tells the Court, that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Furthermore, Rosen is not a: (a) a creditor, equity security holder, or insider of the Debtor or the Trustee; (b) an investment banker for any outstanding security of the Debtor or the Trustee; (c) attorney for an investment banker of the Debtor or the Trustee; or (d) a director, officer, or employee of the Debtor or the Trustee or of any investment banker of the Debtor or the Trustee. About S & A Restaurant Based in Plano, Tex., S & A Restaurant Corp. -- http://www.metrogroup.com,http://www.steakandale.com, http://www.steakandalerestaurants.com,http://www.bennigans.com/ -- and other affiliated entities operate the Bennigan's Grill & Tavern, and the Steak & Ale restaurant chains under the Metromedia Restaurant Group. Bennigan's Grill & Tavern is a chain of more than 310 pub-themed restaurants offering sandwiches and burgers, as well as ribs, steaks, and seafood. The Steak & Ale chain offers a broader menu set in the atmosphere of an 18th century English country inn. The Metromedia Restaurant Group, a unit of closely held conglomerate Metromedia Company, is one of the world's leading multi-concept table-service restaurant groups, with more than 800 Bennigan's(R), Bennigan's SPORT(TM), Steak and Ale(R), Ponderosa Steakhouse(R) and Bonanza(TM) Steakhouse restaurants in the United States and abroad. MRG's annual U.S. sales are estimated at $1,000,000,000. S & A Restaurant and 38 of its affiliates filed Chapter 7 petition under the U.S. Bankruptcy Code on July 29, 2008 (Bankr. E.D. Tex. Case No. 08-41898). J. Michael Sutherland, Esq. at Carrington Coleman Sloman & Blumenthal, represents the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed estimated assets of between $100,000,000 and $500,000,000 and estimated debts of between $10,000,000 and $50,000,000. (Bennigan's and Steak & Ale Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). S & A RESTAURANT: Court Okays Co-Counsel for Ch. 7 Trustee ---------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Texas approved an application by Michelle H. Chow, the Chapter 7 bankruptcy trustee for S & A Restaurant Corp. aka Bennigan's Grill & Tavern and its debtor-affiliates, to retain Mark Ian Agee, Esq., of the law firm Mark Ian Agee, Attorney at Law, as co-counsel, nunc pro tunc July 31, 2008. The Trustee tells the Court that she intends to file, without delay, an application for the retention of Kane, Russell Coleman & Logan PC, as lead general counsel. However, because of the size, complexity, and nature of the Debtors' Chapter 7 cases, thus the Trustee seeks to employ Mr. Agee as co-general counsel. Furthermore, the Trustee informs the Court that Mr. Agee will be compensated for services rendered at his customary rate of $295 an hour. Mr. Agee will be reimbursed of actual and necessary expenses including his paralegals which bill at $40 per hour. Accordingly, the Trustee has agreed to compensate Mr. Agee for his for services rendered, and reimburse the actual expenses incurred incurred in the Debtors' Chapter 7 cases, upon Court approval of his fee applications pursuant to Sections 330 and 331 of the Bankruptcy Code. The Trustee relates that as of July 31, no Schedules and Statements have been filed, and the matrix containing 96,000 parties-in-interest has not been uploaded. Thus, Mr. Agee avers that due to the volumes of the documents, he has yet to examine them for potential conflicts. However, Mr. Agee, avers that though he is married to the Trustee and has represented her in certain Chapter 7 cases, he and his firm are "disinterested persons" as the term is defined under Section 101(14) of the Bankruptcy Code. He notes that he and his firm are not: (a) a creditor, equity security holder, or insider of the Debtor or the Trustee; (b) an investment banker of any outstanding security of the Debtor or the Trustee; (c) attorney for an investment banker of the Debtor or the Trustee; or (d) a director, officer or employee of the Debtor or the Trustee or of any investment banker of the Debtor or the Trustee. About S & A Restaurant Based in Plano, Tex., S & A Restaurant Corp. -- http://www.metrogroup.com,http://www.steakandale.com, http://www.steakandalerestaurants.com,http://www.bennigans.com/ -- and other affiliated entities operate the Bennigan's Grill & Tavern, and the Steak & Ale restaurant chains under the Metromedia Restaurant Group. Bennigan's Grill & Tavern is a chain of more than 310 pub-themed restaurants offering sandwiches and burgers, as well as ribs, steaks, and seafood. The Steak & Ale chain offers a broader menu set in the atmosphere of an 18th century English country inn. The Metromedia Restaurant Group, a unit of closely held conglomerate Metromedia Company, is one of the world's leading multi-concept table-service restaurant groups, with more than 800 Bennigan's(R), Bennigan's SPORT(TM), Steak and Ale(R), Ponderosa Steakhouse(R) and Bonanza(TM) Steakhouse restaurants in the United States and abroad. MRG's annual U.S. sales are estimated at $1,000,000,000. S & A Restaurant and 38 of its affiliates filed Chapter 7 petition under the U.S. Bankruptcy Code on July 29, 2008 (Bankr. E.D. Tex. Case No. 08-41898). J. Michael Sutherland, Esq. at Carrington Coleman Sloman & Blumenthal, represents the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed estimated assets of between $100,000,000 and $500,000,000 and estimated debts of between $10,000,000 and $50,000,000. (Bennigan's and Steak & Ale Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). S & A RESTAURANT: Meadowbrook Wants to Foreclose Peabody Property ----------------------------------------------------------------- Meadowbrook Meat Company, Inc., asks the U.S. Bankruptcy Court for the Eastern District of Texas to lift the automatic stay to allow it to foreclose on a property located at 71 Newbury Street, in Peabody, Massachusetts. Meadowbrook holds valid and enforceable secured claims against S & A Restaurant Corp., aka Bennigan's Grill & Tavern, and its debtor-affiliates for $10,264,997 consisting of (i) $4,565,739 for the inventory supplied to the Debtors, inclusive of $292,285 due under the Perishable Agricultural Commodities Act; and (ii) $5,699,258 for inventory Meadowbrook specifically bought for the Debtors. The Inventory Claims are secured by a mortgage deed on the Property. With the Property value pegged at $2,156,100, it is substantially less than the Claims alone. Thus, Meadowbrook asserts that "cause" exists for the automatic stay to be lifted as the Debtors have no equity in the Property and that the Property is not necessary for an effective reorganization by the Debtors. Meadowbrook has conferred to Michelle H. Chow, the Chapter 7 bankruptcy trustee for the Debtors, who does not oppose the Motion but reserves her right to contest at a later date the application of the sale proceeds to the Claims. Furthermore, under a distribution agreement, Meadowbrook supplied to the Debtors, among others, meat, cheese, fresh produce and janitorial supplies. Coterminous with the cessation of the Debtors' business is the Debtors' performance of the Agreement as well. Meadowbrook points out that the Agreement is unnecessary to an effective organization by the Debtors and would only add to the administrative expenses against the Debtors' estates. Thus, Meadowbrook asks the Court to lift the automatic stay to terminate the Agreement, nunc pro tunc to the Petition Date. About S & A Restaurant Based in Plano, Tex., S & A Restaurant Corp. -- http://www.metrogroup.com,http://www.steakandale.com, http://www.steakandalerestaurants.com,http://www.bennigans.com/ -- and other affiliated entities operate the Bennigan's Grill & Tavern, and the Steak & Ale restaurant chains under the Metromedia Restaurant Group. Bennigan's Grill & Tavern is a chain of more than 310 pub-themed restaurants offering sandwiches and burgers, as well as ribs, steaks, and seafood. The Steak & Ale chain offers a broader menu set in the atmosphere of an 18th century English country inn. The Metromedia Restaurant Group, a unit of closely held conglomerate Metromedia Company, is one of the world's leading multi-concept table-service restaurant groups, with more than 800 Bennigan's(R), Bennigan's SPORT(TM), Steak and Ale(R), Ponderosa Steakhouse(R) and Bonanza(TM) Steakhouse restaurants in the United States and abroad. MRG's annual U.S. sales are estimated at $1,000,000,000. S & A Restaurant and 38 of its affiliates filed Chapter 7 petition under the U.S. Bankruptcy Code on July 29, 2008 (Bankr. E.D. Tex. Case No. 08-41898). J. Michael Sutherland, Esq. at Carrington Coleman Sloman & Blumenthal, represents the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed estimated assets of between $100,000,000 and $500,000,000 and estimated debts of between $10,000,000 and $50,000,000. (Bennigan's and Steak & Ale Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SAGECREST FINANCIAL: Unit Files Chapter 11 Petition in Bridgeport ----------------------------------------------------------------- SageCrest Finance LLC's affiliate in Bermuda filed a chapter 11 petition on Aug. 20, 2008, with the U.S. Bankruptcy Court for the District of Connecticut (Bridgeport), case number 08-50763, Bloomberg News' William Rochelle says. SageCrest Holdings listed assets between $100 million and $500 million; and liabilities between $100 million and $500 million, Mr. Rochelle notes. Greenwich, Connecticut-based SageCrest Financial, LLC is managed by Windmill Management LLC. The company provides short-term financing. SageCrest Financial and SageCrest II, LLC filed their chapter 11 petition on Aug. 17, 2008 (Bankr. Conn. Case Nos. 08- 50755 and 08-50754). James Berman, Esq., at Zeisler and Zeisler P.C., represents the Debtors in their restructuring efforts. The Debtors listed assets between $100 million and $500 million and debts between $1 million and $10 million. According to the Troubled Company Reporter, the Debtor's counsel said that SageCrest Financial sought bankruptcy protection in order to avoid a foreclosure sale initiated by Deutsche Bank AG, which is owed $7 million. SAGECREST HOLDINGS: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: SageCrest Holdings Limited 22 Victoria Street Hamilton HM 12 Bermuda Bankruptcy Case No.: 08-50763 Chapter 11 Petition Date: August 20, 2008 Court: District of Connecticut (Bridgeport) Debtors' Counsel: James Berman, Esq. Zeisler and Zeisler 558 Clinton Avenue P.O. Box 3186 Bridgeport, CT 06605 Tel: (203) 368-4234 Email: jberman@zeislaw.com Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million The Debtor did not file a list of its largest unsecured creditors. SEA CONTAINERS: Wants Disclosure Statement Approved --------------------------------------------------- Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, informed the U.S. Bankruptcy Court for the District of Delaware that the disclosure statement accompanying the joint plan of reorganization filed by Sea Containers Caribbean Inc., Sea Containers Ltd., and Sea Containers Services Ltd. on July 31, 2008 contains "adequate information" within the meaning of Section 1125 of the U.S. Bankruptcy Code. Mr. Brady relates that before filing the Plan and Disclosure Statement, the Debtors shared Plan term sheets with the Official Committee of Unsecured Creditors and its advisors, and have worked diligently to ensure that the Disclosure Statement contains pertinent information necessary for holders of allowed Claims to make informed decisions about whether to vote to accept or reject the Plan. The Debtors, therefore, asks the Court to approve the Disclosure Statement. The Court will convene a hearing on Sept. 4, 2008, to consider the adequacy of the Disclosure Statement. The deadline for filing objections to the Disclosure Statement is August 28. About Sea Containers Based in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt and Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers disclosed total assets of $62,400,718 and total liabilities of $1,545,384,083. The Debtors filed their joint Chapter 11 plan of reorganization and disclosure statement on July 31, 2008. (Sea Containers Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEA CONTAINERS: Wants GECC Tolling Agreement Approved ----------------------------------------------------- Sea Containers Ltd. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve an agreement among Sea Containers Ltd., Sea Container Services Ltd., Quota Holdings Ltd., Sea Containers SPC Ltd., Sea Containers America, Inc., General Electric Capital Corporation and its subsidiaries, GE SeaCo SRL, and GE SeaCo America LLC tolling the statute of limitations of certain claims to be released pursuant to the Debtors' global settlement agreement with the GECC Parties. On June 4, 2008, the Court approved the Debtors' entry into a framework agreement with the GECC Parties, and authorized the Debtors to perform all obligations under that agreement. Over the last four months, the Debtors and the GECC Parties have negotiated and finalized the definitive documents contemplated by the Framework Agreement. One of the definitive documents is a mutual release agreement through which the Parties will agree to mutually settle and release outstanding claims among them, including claims related to the joint venture documents, the business of GE SeaCo, the various arbitrations between the Parties, and any claims or causes of action under Chapter 5 of the Bankruptcy Code. The Mutual Release will be executed and become effective with other definitive documents contemporaneously with the substantial consummation of the Debtors' recently-filed plan of reorganization, relates Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware. Pending confirmation and substantial consummation of the Plan and the Mutual Release becoming effective, the Parties desire to preserve, without concern as to the passing of any statutes of limitation in the interim, any claims they have or may have against each other in the presumably unlikely event that the global settlement is not consummated, Mr. Brady tells the Court. He explains that in the event that the Debtors have any avoidance actions against the GECC Parties, the deadline for the Debtors to commence those actions under Sections 544, 545, 547, 548 and 550 of the Bankruptcy Code might otherwise pass before the Plan is confirmed and the settlement realized. Mr. Brady contends that absent the Tolling Agreement, the GECC Parties might see a need to assert new claims against the Debtors. He notes that the Parties do not believe it would be productive to commence any actions against each other at this time, or to be forced to defend against new actions filed by another Party, when those actions will be rendered moot upon execution of the Mutual Release. Thus, he says, the Parties have agreed to toll the statute of limitations for all possible claims to be released by the Mutual Release. The Debtors, hence, ask the Court to approve the Tolling Agreement executed on Aug. 14, 2008, which tolls the statute of limitations period for all possible claims to be released by the Mutual Agreement, pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure and Section 363(b) of the U.S. Bankruptcy Code. For claims for which the statute of limitations had not expired as of August 14, Mr. Brady elaborates that the statute of limitations will be tolled from that date until 30 days after the termination or expiration of the stay of: (a) all proceedings in the arbitrations; (b) the commencement or continuation of any actions or claims that would be released by the Mutual Release; and (c) the pursuit of any discovery relating to any actions or claims that would be released by the Mutual Release. The Debtors believe the Tolling Agreement benefits the bankruptcy estates by allowing them to preserve any claims or causes of action against the GECC Parties in the event the Framework Agreement terminates prior to execution of the Mutual Release. The Tolling Agreement also preserves the current cooperative relationship between the Parties as they work together to realize the global settlement between them, and avoids the unnecessary expenditure of estate assets that would occur if the Debtors had to institute or defend actions that most likely will never be brought. To the extent that the relief requested is deemed a settlement subject to Section 363(b) and Rule 9019, the Debtors believe that entry of the Tolling Agreement is supported by sound business judgment and is in the best interest of the estates and creditors. They add that the the Tolling Agreement represents the most practical means to ensure that the rights of their estates are preserved without having to incur needless expense. About Sea Containers Based in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for Chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt and Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers disclosed total assets of $62,400,718 and total liabilities of $1,545,384,083. The Debtors filed their joint Chapter 11 plan of reorganization and disclosure statement on July 31, 2008. (Sea Containers Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEA CONTAINERS: Wants Voting and Solicitation Procedures Approved ----------------------------------------------------------------- Sea Containers Ltd. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to: (a) approve their solicitation and notice procedures with respect to the confirmation of their joint plan of reorganization; (b) approve the forms of various ballots and notices of the solicitation packages that will be distributed; and (c) fix: -- Sept. 4, 2008, as the Disclosure Statement hearing; -- September 22, as the deadline for distributing Solicitation Packages; -- November 1, as the deadline for filing objections to the Plan; -- November 1, as the deadline for voting on the Plan; -- November 10, as the hearing for the confirmation of the Plan; and -- the date that is 10 business days prior to the Plan's effective date, as the distribution record date. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, says that the Debtors' proposed Solicitation Procedures will allow them to distribute solicitation materials and tabulate acceptances of the Plan effectively and consistently with the requirements of the Bankruptcy Code and due process. He adds that the Solicitation Procedures and the Debtors' proposed Confirmation Hearing Notice, provide adequate notice to all holders of claims regarding the solicitation process as well as the relevant dates associated with the Solicitation Procedures. The Solicitation Procedures authorize and direct BMC Group, Inc., the Debtors' claims and solicitation agent, to assist them in distributing the Solicitation Packages, and tabulating ballots cast for or against the Plan. The Solicitation Package will contain copies of: -- a cover letter describing the contents of the Package and instructions on how paper copies of any materials that may be provided in CD-Rom format can be obtained at no charge, and urging holders in each of the voting classes to vote to accept the Plan, the Bermuda Scheme of Arrangement, and the U.K. Scheme of Arrangement, as applicable; -- an appropriate form of Ballot and Master Ballot, and applicable voting instructions, together with a pre- addressed postage pre-paid return envelope; -- the Solicitation Procedures and the order approving them; -- the approved form of the Disclosure Statement; -- the proposed forms of the Bermuda Scheme of Arrangement and U.K. Scheme of Arrangement, and their explanatory statements; and -- the Confirmation Hearing Notice. Mr. Brady says that the Disclosure Statement and Plan are more than 200 pages combined, and the Bermuda and U.K. Scheme of Arrangement are more than 175 pages combined. Thus, the Debtors seek the Court's approval to serve those documents in CD-Rom format instead of paper format. He contends that courts commonly permitted a debtor to transmit solicitation documents in CD-Rom format to save printing and mailing costs. The Debtors note that their proposed forms of the Ballots and the Master Ballot are based on Official Form No. 14, but have been modified to address the particular circumstances of their Chapter 11 cases, and to include certain additional information they believe to be relevant and appropriate for each class of claims entitled to vote on the Plan. Pursuant to the Solicitation Procedures, BMC Group will distribute the appropriate Ballots to holders of claims in Classes 2B, 2C, 3A, 3B, and 4A, who are entitled to vote on the Plan. All other Classes either are conclusively presumed to have (i) accepted the Plan because they are unimpaired or unclassified, or (ii) rejected the Plan because no distributions will be made on account of claims or interests in those Classes. Thus, holders of claims and interests in the non-voting Classes will receive the applicable notice of non-voting status in lieu of the Solicitation Package. Under the Plan, Class 2B or the SCL other unsecured claims consists, in part, of the senior note claims, which are based on publicly issued securities. In many instances, nominees of record hold the relevant securities rather than the beneficial holders themselves. Hence, to tabulate votes for the Beneficial Holders of securities in Class 2B, BMC Group will deliver Solicitation Packages to both Beneficial Holders and Nominees. A Master Ballot will also be distributed to Nominees. Pursuant to Section 502(a) of the Bankruptcy Code, a claim or interest is deemed allowed, unless a party-in-interest objects. Thus, Mr. Brady avers that holders of claims for which an objection is pending are not entitled to vote on the Plan. He notes, however, that Rule 3018(a) of the Federal Rules of Bankruptcy Procedure allows for temporary allowance of claims with pending objection, so that holders may vote on the Plan with their claims at a temporarily allowed amount. Accordingly, the Debtors will send the Confirmation Hearing Notice and a "Notice of Non-Voting Status with Respect to Disputed Claims" to the holders of the disputed claims, in lieu of the Solicitation Package. The Disputed Claim Notice will inform the relevant holders that their claim is subject to an objection, and that the holder cannot vote any disputed portion of its claim unless one or more of these resolution events has taken place at least five business days before the Voting Deadline: -- a Court order allowing the Claim; -- a Court order temporarily allowing the claim for voting purposes only; -- a stipulation or other agreement is executed between the claim holder and the Debtors: * resolving the objection, and allowing the disputed claim in an agreed upon amount; or * temporarily allowing the holder to vote its claim in an agreed upon amount; or -- the pending objection is voluntarily withdrawn by the Debtors. Because holders of claims or interests in Classes 1, 2A, 4B, and 5 are not entitled to vote on the Plan, the Debtors will not solicit votes from those holders. The Debtors propose, however, to send to the holders a Confirmation Hearing Notice, and a Notice of Non-Voting Status, in lieu of the Solicitation Package. In tabulating votes, the Debtors propose that this hierarchy will be used to determine the claim amount associated with each holder's vote: (1) the claim amount settled or agreed upon by the Debtors; (2) the claim amount allowed pursuant to a Resolution Event under the Solicitation Procedures; (3) the claim amount contained in a proof of claim that has been timely filed by the bar date, or deemed timely filed by the Court under applicable law; (4) the claim amount listed in the Debtors' schedules of assets and liabilities, provided that the claim is not scheduled as contingent, disputed, or unliquidated, and has not been paid; and (5) in the absence of any of the applicable claim amount, zero. For votes to be counted, all Ballots and Master Ballot must be properly executed, completed, and delivered by the Voting Deadline on November 1, 2008. Moreover, in addition to mailing the Confirmation Hearing Notice, the Debtors propose to publish the notice within 15 days prior to the Voting Deadline in The Wall Street Journal (Global Edition), Financial Times, London Gazette, Royal Gazette, and Lloyd's List. About Sea Containers Based in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for Chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt and Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers disclosed total assets of $62,400,718 and total liabilities of $1,545,384,083. The Debtors filed their joint Chapter 11 plan of reorganization and disclosure statement on July 31, 2008. (Sea Containers Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEALY CORP: To Close Clarion Manufacturing Plant in Pennsylvania ---------------------------------------------------------------- Sealy Corporation disclosed that production will be discontinued at the Clarion, Pennsylvania facility in October 2008. Sealy has operated the facility since 1981. "In light of current economic conditions and continued softness in the retail mattress environment, we determined that closing this plant is the best decision for the company," Larry Rogers, Sealy CEO, said. "We remain focused on managing those areas of our business that we can control, and we are better aligning capacity to meet our current manufacturing needs. We regret that this decision will impact a number of Sealy employees. This action is part of our strategic plan that includes streamlining our cost structure to become a leaner organization. I am confident that these actions will help position Sealy for even stronger growth potential over the long term." Production at the Clarion facility will shift to other plants in the region in order to maintain schedules for Sealy customers. Operations at Clarion will be permanently discontinued as of Oct. 17, 2008. This decision will affect 98 production and 16 office and supervisory personnel. In addition to the existing severance programs, Sealy will make counseling services available to employees through its Employee Assistance program. Based in Trinity, North Carolina, Sealy Corp. (NYSE: ZZ) -- http://www.sealy.com/-- manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), Stearns & Foster(R), and Bassett(R) brands. Sealy operates 26 plants in North America, and has the largest market share and highest consumer awareness of any bedding brand on the continent. In the United States, Sealy sells its products to 2,900 customers with more than 7,000 retail outlets. Sealy is also a leading supplier to the hospitality industry. * * * At June 1, 2008, the company's consolidated balance sheet showed $1.0 billion in total assets, $1.1 billion in total liabilities, and $8.1 million in common stock and options subject to redemption, resulting in a $105.3 million stockholders' deficit. SECURTIZED ASSET: Moody's Junks Seven Class Certificates' Ratings ----------------------------------------------------------------- Moody's Investors Service downgraded nine certificates from Securitized Asset Backed Receivables LLC Trust 2007-BR5. Three other certificates have been placed on review for possible downgrade. Issuer: Securitized Asset Backed Receivables LLC Trust 2007-BR5 -- Cl. A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-2B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-2C, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to B1 from Aa1 -- Cl. M-2, Downgraded to B2 from Aa2 -- Cl. M-3, Downgraded to Caa2 from Aa3 -- Cl. M-4, Downgraded to C from A1 -- Cl. M-5, Downgraded to C from A2 -- Cl. M-6, Downgraded to C from A3 -- Cl. B-1, Downgraded to C from Baa2 -- Cl. B-2, Downgraded to C from Ba1 -- Cl. B-3, Downgraded to C from B1 The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. SEMGROUP ENERGY: Receives Delisting Notice from Nasdaq ------------------------------------------------------ SemGroup Energy Partners, L.P. disclosed in a regulatory SEC filing Wednesday that on Aug. 19, 2008, it received a Staff Determination Letter from The NASDAQ Stock Market, stating that the company is not in compliance with NASDAQ's Marketplace Rule 4310(c)(14) because it did not timely file its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, with the Securities and Exchange Commission, and that its common units representing limited partner interests are therefore subject to delisting from NASDAQ. NASDAQ rules permit a company that has received a delisting notification to request a hearing with the NASDAQ Listing Qualifications Panel to appeal the staff's determination to delist its securities. The company intends to request such a hearing. There can be no assurance that the Panel will grant the company's request for continued listing. Pending a decision by the Panel, the company's common units will remain listed on NASDAQ. As previously disclosed, the company was unable to timely file the Form 10-Q due to uncertainties surrounding the filing of voluntary petitions SemGroup, L.P. and certain of its subsidiaries for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on July 22, 2008. The company said its management and the board of directors of its general partner are currently evaluating the impact of the bankruptcy filings and certain related matters on the financial statements. The company expects to file its Form 10-Q for the quarter ended June 30, 2008, as soon as is reasonably practicable after such evaluation has been completed. About SemGroup Energy Partners Headquartered in Tulsa, Oklahoma, SemGroup Energy Partners, L.P. -- http://www.SGLP.com/-- owns and operates a diversified portfolio of complementary midstream energy assets. SemGroup Energy Partners provides crude oil and liquid asphalt cement terminalling and storage services and crude oil gathering and transportation services. As a publicly traded master limited partnership, SemGroup Energy Partners' common units are traded on the NASDAQ Global Market under the symbol SGLP. The general partner of SemGroup Energy Partners is a subsidiary of SemGroup, L.P. On July 22, 2008, the company's parent, SemGroup, L.P., filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Various subsidiaries of SemGroup, L.P. also filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code on such date. None of the company, the general partner of the company, nor any of the subsidiaries of the company or the general partner were included in the bankruptcy filings. * * * As reported in the Troubled Company Reporter on July 29, 2008, at March 31, 2008, SemGroup Energy Partners, L.P.'s consolidated balance sheet showed $262.0 million in total assets and $316.6 million in total liabilities, resulting in a $54.6 million partners' deficit. SEQUOIA ALTERNATIVE: Moody's Rates Two Class B Loans to C --------------------------------------------------------- Moody's Investors Service downgraded the ratings of 4 tranches from Sequoia Alternative Loan Trust 2006-1. The collateral backing these transactions consists primarily of first-lien, adjustable-rate, Alt-A mortgage loans. Complete rating actions are: Issuer: Sequoia Alternative Loan Trust 2006-1 -- Cl. A-2, Downgraded to Ba3 from Aaa -- Cl. B-1, Downgraded to Ca from B2 -- Cl. B-2, Downgraded to C from Ca -- Cl. B-3, Downgraded to C from Ca Ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. SEQUOIA COMMUNITY: Gets $9.8 Million Bid from Non-Profit CSV ------------------------------------------------------------ The Fresno Bee reported that Clinica Sierra Vista filed a request with the U.S. Bankruptcy Court for the Eastern District of California to purchase Sequoia Community Health Foundation, Inc., dba Sequoia Community Health Centers Inc. The paper's Tracy Correa relates that the buyer's purchase agreement disclosed a purchase price of $9.8 million. Sequoia's board of directors has consented to its sale to Clinica Sierra Vista. The paper relates that with a debt of $11 million, non-profit Sequoia Community has been struggling to continue serving the indigent in Fresno, California. Even Clinica Sierra's CEO Peter Schilling said that the merger is "rare and risky," however, "we believe in the mission." According to Sequoia's counsel, a hearing on August 27 is set to consider bids and objections of the sale. Under a management deal, Clinica will aid Sequoia in its operations until the sale is completed. As disclosed in the Troubled Company Reporter on Aug. 5, 2008, Sequoia Community is under investigation by the state of California over alleged Medi-Cal fraud. The Debtor's counsel assured the public that the state investigation won't affect the Sequoia-Clinica merger. Fresno, California-based Sequoia Community Health Foundation, Inc., dba Sequoia Community Health Clinic, runs eight clinics. The health care provider filed its chapter 11 petition on June 24, 2008 (Bankr. E.D. Calif. Case No. 08-13653). Judge Hon. Whitney Rimel presides over the case. Riley C. Walter, Esq., represents the Debtor in its restructuring efforts. The Debtor has assets of between $1 million and $10 million and debts of between $1 million and $10 million. SHARPER IMAGE: Gift Card Holder Rep. Wants Case Converted to Ch. 7 ------------------------------------------------------------------ Frederic B. Prohov, representing a putative class of Sharper Image Gift Card holders, asks the U.S. Bankruptcy Court for the District of Delaware to convert the Debtor's Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code. Mr. Prohov tells the Court that the Debtor is in a precarious financial condition, indicated by its operating reports, filed fee applications, and the proceeds from asset sales. Specifically, Mr. Prohov points out that the Debtor's June operating report shows a negative net cash flow of $16,000,000. The Debtor also has no unrestricted cash, and most of its assets consist of prepaid expenses and professional retainers. Moreover, it shows in excess of $7,000,000 post-petition debts, and over $3,000,000 in professional fees that have been paid. The Debtor's quarterly financial report on Form 10Q filed with the Securities and Exchange Commission stated that its deferred revenue, representing uncashed gift cards, was $34,000,000. The Debtor's operating report for April 2008 also listed deferred revenue at $36,044,290. Mr. Prohov also related that the counsel for the Official Committee of Unsecured Creditors had intimated that despite cash coming into the estate, there might not be anything left for priority claimants. He adds that the Debtor's counsel has also told him to seek further continuance of the automatic stay of his requests for class certification and stay relief because asset sales were going very poorly and the estate was becoming administratively insolvent. The Debtor's counsel suggested that the Chapter 11 case may be headed toward a Chapter 7 case, in which priority creditors would receive nothing, Mr. Prohov tells the Court. Section 1112(b)(4)(A) of the Bankruptcy Code provides that "cause" for conversion exists if the estate is experiencing substantial or continuing loss, and there is no reasonable likelihood of rehabilitation, Mr. Prohov notes. The case should be converted simply because the Debtor and the Committee have acknowledged there is a significant risk of administrative insolvency, Mr. Prohov asserts. A Chapter 7 trustee is likely to retain counsel at rates that are economically in line with the estate's available resources, he adds. Mr. Prohov points out that the Debtor is in the process of liquidating its assets. It has sold its trademark, much of its inventory, and is now in the process of rejecting or selling leases. He says it is beyond dispute that any plan of reorganization in the Debtor's case will be a plan of liquidation and will not "rehabilitate" the Debtor. About Sharper Image Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. The company has operations in Australia, Brazil and Mexico. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Judge Kevin Gross presides over the case. Harvey R. Miller, Esq., Lori R. Fife, Esq., and Christopher J. Marcus, Esq., at Weil, Gotshal & Manges, LLP, serve as the Debtor's lead counsel. Steven K. Kortanek, Esq., and John H. Strock, Esq., at Womble, Carlyle, Sandridge & Rice, P.L.L.C., serve as the Debtor's local Delaware counsel. An Official Committee of UnsecuredCreditors has been appointed in the case. Cooley Godward Kronish LLP is the Committee's lead bankruptcy counsel. Whiteford Taylor Preston LLC is the Committee's Delaware counsel. When the Debtor filed for bankruptcy, it listed total assets of $251,500,000 and total debts of $199,000,000. As of June 30, 2008, the Debtor listed $52,962,174 in total assets and $39,302,455 in total debts. The Court extended the exclusive period during which the Debtor may file a Plan through and including Sept. 16, 2008. Sharper Image sought and obtained the Court's approval to change its name to "TSIC, Inc." in relation to an an Asset Purchase Agreement by the Debtor with Gordon Brothers Retail Partners, LLC, GB Brands, LLC, Hilco Merchant Resources, LLC, and Hilco Consumer Capital, LLC. (Sharper Image Bankruptcy News, Issue 18; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SHARPER IMAGE: ARG Seeks Payment of $2.6MM Admin. Expense Claim --------------------------------------------------------------- ARG Manufacturing, Inc., seeks the allowance and payment of a $2,651,230 administrative expense in connection with the breach of a postpetition license agreement by The Sharper Image, Corp., now known as TSIC, Inc. David W. Carickhoff, Esq, at Blank Rome LLP, in Wilmington, Delaware, relates that on March 11, 2008, the Debtor and ARG entered into a License Agreement, pursuant to which ARG may use "The Sharper Image" name and logos on manual, non-electric kitchen and food preparation tools and utensils and bakeware, as well as manual non-electric and non-battery powered barbecue tools. The initial term of the License Agreement was March 11, 2008 through December 31, 2011, subject to a renewal period from January 1, 2012 though December 31, 2014. Under the agreement, ARG will pay Sharper Image a royalty in the form of a percentage of the net sales of the Licensed Products. The License Agreement required ARG to make a $37,500 advance royalty payment on March 21, 2008, to be applied against future royalty payments due and payable for the first contract year. ARG made the Advance Royalty Payment on March 18, 2008. To meet its obligations under the License Agreement, ARG incurred upfront tooling costs for approximately $217,100, and package development costs for $10,043, Mr. Carickhoff relates. He notes that prior to the License Agreement, ARG shared its projected sales, profits, and royalty calculations with the Debtor. The projections formed the basis of the parties reasonable expectations under the License Agreement. ARG projected that it would have average profits of $2,651,230. According to Mr. Carickhoff , the sale of the Licensed Trademarks to the Joint Venture has rendered it impossible for the Debtor to meet its obligations under the License Agreement, and its material breach of the contract entitles ARG to damages. About Sharper Image Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. The company has operations in Australia, Brazil and Mexico. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Judge Kevin Gross presides over the case. Harvey R. Miller, Esq., Lori R. Fife, Esq., and Christopher J. Marcus, Esq., at Weil, Gotshal & Manges, LLP, serve as the Debtor's lead counsel. Steven K. Kortanek, Esq., and John H. Strock, Esq., at Womble, Carlyle, Sandridge & Rice, P.L.L.C., serve as the Debtor's local Delaware counsel. An Official Committee of UnsecuredCreditors has been appointed in the case. Cooley Godward Kronish LLP is the Committee's lead bankruptcy counsel. Whiteford Taylor Preston LLC is the Committee's Delaware counsel. When the Debtor filed for bankruptcy, it listed total assets of $251,500,000 and total debts of $199,000,000. As of June 30, 2008, the Debtor listed $52,962,174 in total assets and $39,302,455 in total debts. The Court extended the exclusive period during which the Debtor may file a Plan through and including Sept. 16, 2008. Sharper Image sought and obtained the Court's approval to change its name to "TSIC, Inc." in relation to an an Asset Purchase Agreement by the Debtor with Gordon Brothers Retail Partners, LLC, GB Brands, LLC, Hilco Merchant Resources, LLC, and Hilco Consumer Capital, LLC. (Sharper Image Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SHOE PAVILION: Appellate Court Reinstates Patent Infringement Suit ------------------------------------------------------------------ The U.S. Court of Appeals for the Federal Circuit overturned on Aug. 19, 2008, a lower court's ruling and reinstated a patent infringement case against Shoe Pavilion Inc., William Rochelle of Bloomberg News. Mr. Rochelle comments that the Debtor's creditors will increase due to the Circuit Court's action. On Jan. 11, 2008, the Intellectual Property Dispute Reporter said that Shoe Pavilion continues to defend against DSW Inc. and DSW Shoe Warehouse Inc.'s patent infringement suit in the U.S. District Court for the Central District of California. The plaintiffs sued the company in October 2006 alleging that the company had used an original and now a redesigned shoe display and storage fixture that infringes its patents. The company has counterclaimed that the asserted patents are invalid and not infringed. The plaintiffs initially moved for a preliminary injunction. The District Court denied the motion in late November 2006. The District Court, further, agreed primarily that the redesigned display did not infringe the asserted patent and that the claims of asserted patents were invalid. About Shoe Pavilion Sherman Oaks, California-based Shoe Pavilion, Inc. (OTC: SHOEQ) and Shoe Pavilion Corporation -- http://www.shoepavilion.com/-- operate independent off-price footwear retail stores that offer a broad selection of women's and men's designer label and name brand merchandise. The Debtors filed their chapter 11 petition on July 15, 2008 (Bankr. C.D. Calif. Case Nos. 08-14939 and 08-14941). Judge Maureen Tighe presides over the bankruptcy case. Ron Bender, Esq., at Levene, Neale, Bender, Rankin & Brill, represents the Debtors in their restructuring efforts. Shoe Pavilion disclosed total assets of $60,994,000 and total debts of $27,000,000. SHOE PAVILION: El Paso Stores to Remain Open, Manager Says ---------------------------------------------------------- Ivonne Ibanez, manager of Shoe Pavilion Inc. units in Las Cruces store at Mesilla Valley Mall said that the Debtor is not closing its El Paso stores, reports Las Cruces Sun-News -- McClatchy- Tribune News Service. Shoe Pavilion filed its chapter 11 petition on July 15, 2008. In court documents, Shoe Pavilion identified about 43 underperforming stores that needed "to be closed in an expeditious manner," the report says. Shoe Pavilion added that another 28 stores will be closed unless landlords provide rent concessions, the report quotes court documents as stating. A week earlier, management at the Bassett Place mall in El Paso said it received notice that the store must be vacated by November 1, the report adds. About Shoe Pavilion Sherman Oaks, California-based Shoe Pavilion, Inc. (OTC: SHOEQ) and Shoe Pavilion Corporation -- http://www.shoepavilion.com/-- operate independent off-price footwear retail stores that offer a broad selection of women's and men's designer label and name brand merchandise. The Debtors filed their chapter 11 petition on July 15, 2008 (Bankr. C.D. Calif. Case Nos. 08-14939 and 08-14941). Judge Maureen Tighe presides over the bankrutpcy case. Ron Bender, Esq., at Levene, Neale, Bender, Rankin & Brill, represents the Debtors in their restructuring efforts. Shoe Pavilion listed total assets of $60,994,000 and total debts of $27,000,000. SHOE PAVILION: Securities Now Trade Over The Counter ---------------------------------------------------- Shoe Pavilion, Inc.'s securities is currently trading at the Over The Counter using the trading symbol, SHOEQ. On July 17, 2008, the company received a Nasdaq Staff Determination letter from the Listing Qualifications Department of The Nasdaq Stock Market, indicating that it had determined to delist the company' securities from the Nasdaq Global Market. Trading in the company's common stock was suspended at the opening of business on July 28, 2008. This decision was made after review of the company's recent announcement that it had filed for protection under chapter 11, and using Nasdaq's broad discretionary authority under Marketplace Rules 4300, 4450(f) and IM-4300. About Shoe Pavilion Sherman Oaks, California-based Shoe Pavilion, Inc. (OTC: SHOEQ) and Shoe Pavilion Corporation -- http://www.shoepavilion.com/-- operate independent off-price footwear retail stores that offer a broad selection of women's and men's designer label and name brand merchandise. The Debtors filed their chapter 11 petition on July 15, 2008 (Bankr. C.D. Calif. Case Nos. 08-14939 and 08-14941). Judge Maureen Tighe presides over the bankrutpcy case. Ron Bender, Esq., at Levene, Neale, Bender, Rankin & Brill, represents the Debtors in their restructuring efforts. Shoe Pavilion disclosed total assets of $60,994,000 and total debts of $27,000,000. SOUNDVIEW HOME: Moody's Junks 16 Class Certificates' Ratings ------------------------------------------------------------ Moody's Investors Service downgraded thirty-four certificates from four Soundview Home Loan Trust transactions. Four of the downgraded certificates will remain on review for possible further downgrade, while eight other certificates have been placed on review for possible downgrade. Issuer: Soundview Home Loan Trust 2007-OPT2 -- Cl. I-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Ba1 from Aa1 -- Cl. M-2, Downgraded to B1 from Aa2 -- Cl. M-3, Downgraded to B2 from Aa3 -- Cl. M-4, Downgraded to Caa2 from A1 -- Cl. M-5, Downgraded to C from A2 -- Cl. M-6, Downgraded to C from A3 -- Cl. M-7, Downgraded to C from Baa1 -- Cl. M-8, Downgraded to C from Baa2 -- Cl. M-9, Downgraded to C from Baa3 -- Cl. M-10, Downgraded to C from Ba1 Issuer: Soundview Home Loan Trust 2007-OPT3 -- Cl. I-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Ba3 from Aa1 -- Cl. M-2, Downgraded to B2 from Aa2 -- Cl. M-3, Downgraded to Caa2 from Aa3 -- Cl. M-4, Downgraded to C from A1 -- Cl. M-5, Downgraded to C from A2 -- Cl. M-6, Downgraded to C from A3 -- Cl. M-7, Downgraded to C from Baa1 -- Cl. M-8, Downgraded to C from Baa2 -- Cl. M-9, Downgraded to C from Baa3 -- Cl. M-10, Downgraded to C from Ba1 Issuer: Soundview Home Loan Trust 2007-OPT4 -- Cl. M-3, Downgraded to A2 from Aa3 -- Cl. M-4, Downgraded to Baa1 from A1 -- Cl. M-5, Downgraded to Baa3 from A2 -- Cl. M-6, Downgraded to B1 from A3 -- Cl. M-7, Downgraded to B1 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to Ca from Baa3 Issuer: Soundview Home Loan Trust 2007-OPT5 -- Cl. M-3, Downgraded to A1 from Aa3 -- Cl. M-4, Downgraded to Baa1 from A1 -- Cl. M-5, Downgraded to Baa2 from A2 -- Cl. M-6, Downgraded to Ba2 from A3 -- Cl. M-7, Downgraded to B1 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to C from Baa3 The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. SPHERICS INC: Assignee to Auction Pharmaceutuical IP on October 10 ------------------------------------------------------------------ Joseph F. Finn, Jr., C.P.A., said that all pharmaceutical intellectual property of Spherics Inc., is up for sale at a sealed bid auction on Oct. 10, 2008. Mr. Finn is the assignee of Spherics' assets for the benefit of creditors. The successful bidder may make a new drug submission in fourth quarter 2009 with the remaining total cost to bring to market expected to cost about $7 million. A clear clinical pathway for SRx-502 has been defined by the MHRA for a regulatory submission. Mr. Finn is the founding partner of the firm Finn, Warnke & Gayton, Certified Public Accountants of Wellesley Hills, Massachusetts. He works in the area of management consulting for distressed enterprises, bankruptcy accounting and related matters, such as assignee for the benefit of creditors and liquidating agent for a corporation. Spherics Inc. has an intellectual property position around its drug delivery technologies and products. The company has a range of issued US and international patents through exclusive licenses from Brown University. These patents cover polyanhydride-based bioadhesive polymers and PIN. In addition to these issued patents, Spherics has filed numerous applications covering compositions of matters of its proprietary polymers (SPHEROMERS), novel oral delivery systems (including BIOGIT, BIOROD and PIN), manufacturing methods, methods of use, formulations and product compositions. STEVE & BARRY'S: Release Provisions in Sale Agreement Criticized ---------------------------------------------------------------- Bloomberg's Tiffany Kary reports that Judge Allan Gropper at the U.S. Bankruptcy Court for the Southern District of New York criticized Steve & Barry's LLC's bid to sell its assets for $168 million. Judge Gropper, at yesterday's hearing, said the sale agreement contained improper releases for the Debtors' executives, and that the Debtors cannot sell their assets to BHY S&B Holdings LLC, a newly formed affiliate of Bay Harbour Management LC and York Capital Management, under the current proposed agreement, Bloomberg relates. Steve & Barry's co-founders Steve Shore and Barry Prevor are investors in BHY S&B Holdings, Bloomberg notes. Judge Gropper, according to Bloomberg, found it "extremely improper use of Chapter 11 for a debtor to negotiate a sale of the business and a release for itself at the same time -- in the guise of that release being necessary for the purchaser's obligation." Judge Gropper said it has "never been done and it's not starting here today." Bloomberg says the deal would have returned about 2 cents on the dollar to unsecured creditors. "The unsecureds are getting little enough here," Ms. Kary quoted Judge Gropper as saying. "There are some principals of Chapter 11 that simply can't be ignored." "I'm not suggesting there is anything wrong with the principals buying into the reorganized company" Judge Gropper said, according to Ms. Kary. "But when I see a sale of all causes of action, without notifying anyone, it piques my interest." The hearing on the proposed sale agreement is scheduled to continue today, Bloomberg says. ABIWorld reports that Bay Harbour plans to keep open about 150 of the chain's 276 stores. ABIWorld says the Debtors' founders will sit on the Newco board. Bay Harbour has been negotiating around to win concessions on the company's leases and said that the purchase was contingent upon negotiating favorable terms from key landlords, ABIWorld says. About Steve & Barry's Headquartered in Port Washington, New York, Steve and Barry LLC -- http://www.steveandbarrys.com/-- is a national casual apparel retailer that offers high quality merchandise at low prices for men, women and children. Founded in 1985, the company operates 276 anchor and junior anchor shopping center and mall-based locations throughout the U.S. At STEVE & BARRY'S (R) stores, shoppers will find brands they can't find anywhere else, including the BITTEN(TM) collection, the first-ever apparel line created by actress and global fashion icon Sarah Jessica Parker, and the STARBURY(TM) collection of athletic and lifestyle apparel and sneakers created with NBA (R) star Stephon Marbury. Steve & Barry's, LLC, and 63 affiliates filed separate voluntary petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Diana G. Adams, United States Trustee for Region 2, has appointed seven members to the Official Committee of Unsecured Creditors in the Debtors' Chapter 11 cases. When the Debtors filed for bankruptcy, it listed $693,492,000 in total assets and $638,086,000 in total debts. STONY HILL: Moody's Junks $50 Million Notes' Rating --------------------------------------------------- Moody's Investors Service downgraded the rating of these notes issued by Stony Hill CDO SPC 2005-1: Class Description: $50,000,000 Notes of Stony Hill CDO SPC, Series 2005-1 Due 2012 Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Caa3 According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of corporate securities. STRUCTURED ASSET: Moody's Junks Six Class Certificates' Ratings --------------------------------------------------------------- Moody's Investors Service downgraded eleven certificates from Structured Asset Securities Corp., Mortgage Pass-Through Certificates, Series 2007-WF2. One other certificate has been placed on review for possible downgrade. Complete rating actions are: Issuer: Structured Asset Securities Corp., Mortgage Pass-Through Certificates, Series 2007-WF2 -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Baa2 from Aa1 -- Cl. M-2, Downgraded to Ba1 from Aa2 -- Cl. M-3, Downgraded to B1 from Aa3 -- Cl. M-4, Downgraded to B2 from A1 -- Cl. M-5, Downgraded to B3 from A2 -- Cl. M-6, Downgraded to Caa2 from A3 -- Cl. M-7, Downgraded to C from Baa1 -- Cl. M-8, Downgraded to C from Baa2 -- Cl. M-9, Downgraded to C from Baa3 -- Cl. B-1, Downgraded to C from Ba1 -- Cl. B-2, Downgraded to C from Ba2 The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. TEAM NATION: June 30 Balance Sheet Upside-Down by $321,487 ---------------------------------------------------------- Team Nation Holdings Corporation's consolidated balance sheet at June 30, 2008, showed $4,793,698 in total assets and $5,115,185 in total liabilities, resulting in a $321,487 stockholders' deficit. At June 30, 2008, the company's consolidated balance sheet also showed strained liquidity with $519,614 in total current assets available to pay $1,855,681 in total current liabilities. The company reported a net loss of $64,851 on revenues of $255,445 for the second quarter ended June 30, 2008, compared with a net loss of $318,408 on revenues of $12,000 in the same period last year. The company commenced limited operations in February 2007 and began full operations in May 2007. Selling, general and administrative expense amounted to $235,408 in 2008 as compared to $176,690 in the year earlier period. The increase is primarily from operating for the full three months in 2008 as compared to only two months of full operations in 2007. 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?30f9 Going Concern Doubt At June 30, 2008, the company had negative working capital of $1,336,067 which includes $1,600,823 in notes payable and the current portion of long-term debt, and had a deficit in stockholders' equity of $321,487. Currently scheduled notes payable and long-term debt payment requirements for 2008 exceed the amount that can be expected to be generated from operations. The company believes these conditions raise substantial doubt about its ability to continue as a going concern. About Team Nation Based in Irvine, Calif., Team Nation Holdings Corporation -- http://www.teamnationholdings.com/-- is a management and services company specializing in distressed asset acquisition, fund management, management solutions for title companies and title production services. The company leverages its significant business relationships, experience and high level analytics to analyze, evaluate, and acquire distressed security instruments, bonds (including RMBS, CMBS, CDO and CMO), REO and non-performing notes at significant discounts from illiquid institutions and banks. The company also focuses on counter-cyclical growth to acquire, manage and consult for title, escrow, mortgage, real estate and REO companies. TEKNI-PLEX INC: To Sell 10.875% Secured Notes to Avenue Capital --------------------------------------------------------------- Tekni-Plex, Inc. entered into a note purchase agreement with Avenue Capital and certain of its affiliates on August 14, 2008. Pursuant to which Avenue agreed to purchase all of the company's 10.875% Senior Secured Notes due 2012 tendered pursuant to the tender offer made by the company on June 27, 2008. The Offer was made pursuant to Section 4.15 of the company's first lien Indenture, dated as of June 10, 2005, by and among the company, the guarantors party thereto and HSBC Bank USA, National Association, as trustee thereto. Pursuant to the terms of the Offer, Avenue will purchase the Tendered Notes at 101% of the principal amount of the Tendered Notes and the company will pay any accrued and unpaid interest on the Tendered Notes. As consideration, the company will pay to Avenue a fee equal to the sum of: (i) $2,250,000 and (ii) 6.0% of the Purchase Price actually paid by Avenue. The closing of the Note Purchase Agreement, which is expected to occur simultaneously with the settlement of the Offer on August 22, 2008, will enable the company to fulfill its obligation to purchase the Tendered Notes on the Settlement Date as required by the Indenture and the Offer. About Tekni-Plex Inc. Based in Coppell, Texas, Tekni-Plex Inc. -- http://www.tekni- plex.com/ -- manufactures packaging, packaging products and materials as well as tubing products. The company primarily serves the food, healthcare and consumer markets. It has built leadership positions in its core markets, and focuses on vertically integrated production of highly specialized products. Tekni-Plex has operations in the United States, Europe, China, Argentina and Canada. Tekni-Plex Inc.'s consolidated balance sheet at March 28, 2008, showed $620.1 million in total assets and $1.05 billion in total liabilities, resulting in a $427.0 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on Dec. 27, 2007, Moody's Investors Service downgraded the Corporate Family Ratings of Tekni-Plex Inc. to Caa3 from Caa1. TIMBER LODGE: Taher Inc. Buys Restaurant Business ------------------------------------------------- John Vomhof Jr. of St. Paul Business Journal reports that Taher Inc. has acquired Timber Lodge Steakhouse Inc., which has 10 locations, eight of which are in Minnesota. According to the report, Taher plans to reopen an Eden Prairie store and expects the stores to generate a combined $20 million. The Debtor hired Plymouth-based investment banking firm Quazar Capital Corp. to seek a buyer for the locations after it exited bankruptcy last year. Timber Lodge filed for Chapter 11 bankruptcy protection in June 2006. At that time, it had 18 locations. About Taher Inc. Minnetonka-based Taher Inc. has as its founder and CEO Bruce Taher. The company provides foodservice management for schools, senior-housing facilities and corporate cafeterias in 10 states. About Timber Lodge Timber Lodge was founded in Minnesota in 1991. It operates restaurants that specializes in steak and grilled meat dishes. An ownership group, T. Lodge Acquisition, acquired the company from Carpinteria, Calif.-based CKE Restaurants Inc. for $8.8 million in September 2004. TOUSA INC: December 31 Balance Sheet Upside-Down by 475,500,000 --------------------------------------------------------------- TOUSA Inc., filed its annual report for the year ended Dec. 31, 2007, on Form 10-K with the U.S. Securities and Exchange Commission. Antonio B. Mon, TOUSA's president and chief executive officer, disclosed that the company's total revenues decreased 12% to $2,200,000,000 for the year ended Dec. 31, 2007, from $2,500,000,000 for the year ended Dec. 31, 2006. He says the decrease is attributable to a decrease in homebuilding revenues. TOUSA also incurred a $1,400,000,000 loss from continuing operations before benefit for income taxes, compared to a $243,600,000 loss for 2006. According to Mr. Mon, the loss from continuing operations, net of taxes, is $1,300,000,000 for the year ended Dec. 31, 2007, compared to the $200,800,000 loss in 2006. The company's home deliveries from continuing operations decreased by 9%, homebuilding revenues decreased by 12%, and net sales orders from continuing operations decreased by 21%. TOUSA's unconsolidated joint ventures decreased in deliveries by 58%, but increased in net sales orders by 79%, as compared to the year ended Dec. 31, 2006. The increase in net sales orders was due to the high cancellation rates by the Transeastern Joint Venture in the third quarter of 2007, Mr. Mon notes. Sales orders at TOUSA's other joint ventures declined by 15% due to worsening market conditions, decreased demand, and higher cancellation rates. In 2007, approximately 3% to 5% of TOUSA's homebuyers utilized mortgage subsidiary obtained sub-prime loans, including those in the company's unconsolidated joint ventures. The significant disruption in the mortgage markets led to a combination of reduced investor demand for mortgage loans and mortgage-backed securities, tighter credit underwriting standards, reduced mortgage loan liquidity and increased credit risk premiums, Mr. Mon avers. These conditions, he continues, affected the availability of non-conforming mortgage products and negatively impacted current homebuilding market conditions. At the end of the year, approximately 4% to 6% of the backlog that utilized TOUSA's mortgage subsidiary included homebuyers seeking sub-prime financing. A full-text copy of TOUSA 2007 Annual Report on Form 10-K is available for free at: http://www.sec.gov/Archives/edgar/data/1046578/000095014408006390/ g14602e10vk.htm TOUSA INC., and Subsidiaries Consolidated Balance Sheet As of December 31, 2007 ASSETS HOMEBUILDING: Cash and cash equivalents: Unrestricted $67,200,000 Restricted 5,100,000 Inventory: Deposits 56,900,000 Homesites and land under development 633,000,000 Residences completed and under construction 555,900,000 Inventory not owned 26,000,000 -------------- 1,271,800,000 Property and equipment, net 24,600,000 Investments in unconsolidated joint ventures 9,000,000 Receivables from unconsolidated joint ventures 300,000 Other assets 330,000,000 Goodwill 11,200,000 Assets held for sale 6,100,000 -------------- 1,725,300,000 FINANCIAL SERVICES: Cash and cash equivalents: Unrestricted 9,300,000 Restricted 5,600,000 Mortgage loans held for sale 15,000,000 Other assets 6,800,000 -------------- 36,700,000 -------------- Total assets $1,762,000,000 ============== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) HOMEBUILDING: Accounts payable and other liabilities $401,800,000 Customer deposits 33,900,000 Obligations for inventory not owned 32,000,000 Notes payable 1,585,300,000 Bank borrowings 168,500,000 Liabilities associated with assets held for sale 900,000 -------------- 2,222,400,000 FINANCIAL SERVICES: Accounts payable and other liabilities 7,300,000 Bank borrowings 7,800,000 -------------- 15,100,000 -------------- Total liabilities 2,237,500,000 Commitments and contingencies Stockholders' equity (deficit): Preferred stock, at $0.01 par value 3,900,000 Common stock, at $0.01 par value 600,000 Additional paid-in capital 570,700,000 Retained earnings (accumulated deficit) (1,050,700,000) -------------- Total stockholders' equity (deficit) (475,500,000) -------------- Total liabilities and stockholders' equity $1,762,000,000 ============== TOUSA, INC., and Subsidiaries Consolidated Statement of Operations For The Year Ended December 31, 2007 HOMEBUILDING: Revenues: Home sales $2,049,400,000 Land sales 109,400,000 -------------- 2,158,800,000 Cost of sales: Home sales 1,681,800,000 Land sales 137,400,000 Inventory impairments and abandonment costs 852,700,000 Other (5,700,000) -------------- 2,666,200,000 -------------- Gross profit (loss) (507,400,000) -------------- Selling, general and administrative expenses 362,700,000 Income from unconsolidated joint ventures, net 14,900,000 Impairments of investments in and receivables from unconsolidated joint ventures and related accrued obligations 194,100,000 Provision for settlement of loss contingency 151,600,000 Goodwill impairments 89,700,000 Interest expense 31,600,000 Other income, net (2,700,000) -------------- Homebuilding pretax income (loss) (1,349,300,000) FINANCIAL SERVICES: Revenues 36,500,000 Expenses 36,300,000 Goodwill impairment 3,900,000 -------------- Financial Services pretax income (loss) (3,700,000) -------------- Income (loss) from continuing operations before income taxes (1,353,000,000) Provision (benefit) for income taxes (33,300,000) -------------- Income (loss) from continuing operations, net of taxes (1,319,700,000) Discontinued operations: Income (loss) from discontinued operations (17,000,000) Loss from disposal of discontinued operations (13,600,000) Provision (benefit) for income taxes (7,800,000) -------------- Income (loss) from discontinued operations, net of taxes (22,800,000) -------------- Net income (loss) (1,342,500,000) -------------- Dividends and accretion of discount on preferred stock 4,700,000 -------------- Net income (loss) available to common stockholders ($1,347,200,000) ============== TOUSA, INC., and Subsidiaries Consolidated Statement of Cash Flows For The Year Ended December 31, 2007 Cash flows from operating activities: Net income (loss) ($1,342,500,000) (Income) loss from discontinued operations 22,800,000 -------------- Income (loss) from continuing operations (1,319,700,000) Adjustments to reconcile income (loss) from continuing operations to net cash used in operating activities, net of effects of acquisitions and dispositions: Depreciation and amortization 14,800,000 Non-cash compensation expense 4,100,000 Non-cash interest expense 19,700,000 Loss on early termination of debt 2,000,000 Provision for settlement of loss contingency 151,600,000 Inventory impairments and abandonment costs 852,700,000 Goodwill impairments 93,600,000 Deferred income taxes (160,600,000) Equity in (earnings) losses from unconsolidated joint ventures 14,900,000 Distributions of earnings from unconsolidated joint ventures 900,000 Impairment of investments in/receivables from unconsolidated joint ventures and related accrued obligations 194,100,000 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Restricted cash 25,600,000 Inventory (10,600,000) Receivables from unconsolidated joint ventures 5,200,000 Other assets 99,000,000 Mortgage loans held for sale 26,900,000 Accounts payable and other liabilities (63,000,000) Customer deposits (30,600,000) -------------- Net cash used in operating activities (79,400,000) Cash flows from investing activities: Acquisitions, net of cash acquired (7,600,000) Earn-out consideration paid for acquisitions - Net additions to property and equipment (8,900,000) Loans to unconsolidated joint ventures - Investments in unconsolidated joint ventures (31,800,000) Capital distributions from unconsolidated joint ventures 14,300,000 -------------- Net cash used in investing activities (34,000,000) Cash flows from financing activities: Net borrowings from revolving credit facilities 168,500,000 Principal payments on notes payable (1,000,000) Net proceeds from notes offering - Net proceeds from (repayments of) Financial Services bank borrowings (27,600,000) Payments for deferred financing costs (42,600,000) Net proceeds from sale of common stock - Payments for issuance costs associated with convertible preferred stock and stock warrants (2,900,000) Excess income tax benefit from exercise of - stock options Proceeds from stock option exercises - Dividends paid - -------------- Net cash provided by financing activities 94,400,000 -------------- Net cash provided by (used in) continuing operations (19,000,000) Cash flows from discontinued operations: Net cash provided by (used in) operating activities (15,200,000) Net cash provided by (used in) financing activities 56,500,000 -------------- Net cash provided by discontinued operations 41,300,000 -------------- Increase (decrease) in cash and cash equivalents 22,300,000 Cash and cash equivalents at beginning of year 54,200,000 -------------- Cash and cash equivalents at end of year $76,500,000 ============== About TOUSA Inc. Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and markets high-quality detached single-family residences, town homes, and condominiums to a diverse group of homebuyers, such as "first-time" homebuyers, "move-up" homebuyers, homebuyers who are relocating to a new city or state, buyers of second or vacation homes, active-adult homebuyers, and homebuyers with grown children who want a smaller home. It also provides financial services to its homebuyers and to others through its subsidiaries, Preferred Home Mortgage Company and Universal Land Title Inc. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No. 08-10928). The Debtors have selected M. Natasha Labovitz, Esq., Brian S. Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta, Esq., at Kirkland & Ellis LLP and Paul Steven Singerman, Esq., at Berger Singerman to represent them in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker and financial advisor. Ernst & Young LLP is the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. The Official Committee of Unsecured Creditors hired Patricia A. Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA Inc.'s financial condition as of Sept. 30, 2007, showed total assets of $2,276,567,000 and total debts of $1,767,589,000. Its consolidated balance sheet as of Feb. 29, 2008 showed total assets of $1,961,669,000 and total liabilities of $2,278,106,000. TOUSA's Exclusive Plan Filing Period expires Oct. 25, 2008. (TOUSA Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TRIAD GUARANTY: Moody's Withdraws B1 Rating on Financial Strength ----------------------------------------------------------------- Moody's Investors Service withdrawn the B1 insurance financial strength rating of Triad Guaranty Insurance Corporation. Moody's withdrawn this rating for business reasons. Triad Guaranty Insurance Corporation is the main insurance operating company of Triad Guaranty Inc. Triad provides private mortgage insurance coverage in the United States. For the six months ended June 30, 2008, Triad reported a GAAP net loss of $349 million. As of June 30, 2008, Triad had shareholders' equity of $141 million and cash and invested assets of $889 million. TRONOX INC: Dennis Wanlass Named as Interim Chairman of the Board ----------------------------------------------------------------- Dennis L. Wanlass has been appointed to the Tronox Incorporated board of directors, effective Aug. 15, 2008. In addition, the board of directors named Wanlass interim chairman and chief executive officer succeeding Thomas W. Adams, who, at this time, will continue to serve as a member of the board but no longer works for the company. Wanlass joined Tronox in July 2008 as executive vice president of special projects. Wanlass has more than 35 years of experience in management, finance and accounting. He held leadership positions at Special Metals Corporation from 2001 to 2008, initially serving as the chief financial officer, moving to chief operations officer and eventually becoming the chief executive officer. From 1988 to 2001, he held executive positions of increasing responsibility with Geneva Steel LLC, including vice president, chief financial officer and treasurer. His experience also includes 13 years with Eastman Christensen and five years with KPMG. About Tronox Incorporated Headquartered in Oklahoma City, Tronox Incorporated (NYSE:TRX) -- http://www.tronox.com/-- is a producer and marketer of titanium dioxide pigment. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The company's five pigment plants, which are located in the United States, Australia, Germany and the Netherlands, supply performance products to approximately 1,100 customers in 100 countries. In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide. At March 31, 2008, the company's consolidated balance sheet showed $1.74 billion in total assets, $1.29 billion in total liabilities, and $451.9 million in stockholders' equity. * * * As reported in the Troubled Company Reporter on Aug. 4, 2008, Standard & Poor's Ratings Services lowered its ratings on Tronox Inc., including its corporate credit rating to 'CCC+' from 'B'. At the same time S&P placed the ratings on CreditWatch with negative implications. UNIGENE LABORATORIES: Board Elected Allen Bloom as Lead Director ---------------------------------------------------------------- The Board of Directors of Unigene Laboratories, Inc. elected Dr. Allen Bloom as lead director on August 14, 2008. Mr. Bloom will hold office until the company's 2009 annual meeting of stockholders. Dr. Bloom, who has been a director of the company since 1998, will receive $8,000 additional compensation for serving as lead director. Currently Dr. Bloom is a member of the company's Nominating and Corporate Governance Committee and he chairs the company's Audit Committee. About Unigene Laboratories Based in Fairfield, N.J., Unigene Laboratories Inc. (OTC BB: UGNE) -- http://www.unigene.com/-- is a biopharmaceutical company focusing on the oral and nasal delivery of large-market peptide drugs. Due to the size of the worldwide osteoporosis market, Unigene is targeting its initial efforts on developing calcitonin and PTH-based therapies. Fortical(R), Unigene's nasal calcitonin product for the treatment of postmenopausal osteoporosis, received FDA approval and was launched in August 2005. Unigene has licensed the U.S. rights for Fortical to Upsher-Smith Laboratories, worldwide rights for its oral PTH technology to GlaxoSmithKline and worldwide rights for its calcitonin manufacturing technology to Novartis. As reported in the Troubled Company Reporter on March 28, 2008, Grant Thornton, in Edison, N.J., expressed substantial doubt about Unigene Laboratories Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring losses from operations and accumulated deficit. The company has incurred annual operating losses since inception and, as a result, at March 31, 2008, had an accumulated deficit of $125,106,934. The company says it needs additional cash from sales, milestones or upfront payments or from financings in order to meet its obligations for the next twelve months. WDS HOLDINGS: Faces Involuntary Chapter 11 Petition --------------------------------------------------- WDS Holdings Inc. and nine of its affiliates are facing involuntary Chapter 11 petitions filed in the United States Bankruptcy Court for the Central District of California. The petition was by five creditors including John Hancock Life Insurance Co., AXA Equitable Life Insurance Co., Metropolitan Life Insurance Co., New York Life Insurance Co. and Security Life of Denver Insurance Co., Bloomberg News reports. Bloomberg says the creditors asserted $155.9 million in claims against WDS Holding. Metropolitan Life, John Hancock Life, ING Investment, and New York Life were listed creditors of the company's affiliate, Woodside AMR 107 Inc., when it filed for bankruptcy in March 2008, Bloomberg says. Woodside AMR listed total assets of $7.3 million and total debts of $707 million, the report notes. WDS Holdings Inc. develops real estate. WEDAFAB INC: Files for Bankruptcy in Pennsylvania ------------------------------------------------- Beth Murtagh of Pittsburgh Business Times reports that Wedafab Inc. filed for Chapter 11 bankruptcy protection before the U.S. Bankruptcy Court for the Eastern District of Pennsylvania (Case No. 08-25079) on Aug. 1. The filing came after Enterprise Bank of Pittsburgh attempted to seize the company's machinery to pay off a debt, attorney Robert Lampl, Esq., said, according to the report. "The business is viable," Mr. Lampl said. Based in Coraopolis, Wedafab Inc., short for "we design and fabricate anything" manufactures customized display cases for retailers, ranging from jewelry displays to dressing room benches. It is a 17-year-old, family-run business. Its clients include American Eagle and Rue 21 clothing stores, said Elaine Williams, office manager and the wife of company President Colin Williams, according to the report. WHITEHALL JEWELERS: Michael Hill to Buy 17 Stores for $5,000,000 ---------------------------------------------------------------- Michael Hill International has entered into a conditional agreement to acquire 17 stores in Illinois and Missouri in the United States from the Chapter 11 bankruptcy of Whitehall Jewelers Holdings Inc. The purchase price is approximately USD$5.0 million -- NZD$7.0 million -- and is payable in cash upon settlement which is anticipated to occur on or before September 9 2008. This will be funded from existing bank facilities and cash resources. The purchase price is attributed primarily to the inventory and will be set at an amount equal to 80 cents on the dollar on the cost price of the inventory held at the 17 locations on the settlement date. The acquisition includes Whitehall\u2019s rights with respect to store fitouts and leases for all 17 stores and all other trading assets at those locations. The agreement is conditional upon receipt of any necessary regulatory approvals and approval of the transaction by the United States Bankruptcy Court overseeing the Whitehall Chapter 11 case. These conditions must be satisfied prior to closing date. At this stage, it is expected that the necessary court hearing to approve the transaction for the purpose of US bankruptcy laws will be held on August 28, 2008. Michael Hill International will take possession of the stores as soon as possible following the satisfaction of all relevant conditions. Michael Hill International considers that it has secured 17 prime locations that will provide a sound launching pad to the large US market. The majority of stores are clustered in and around Chicago with 2 stores in St. Louis, Missouri, which is located at the southern tip of Illinois. This grouping of stores fits with the company's historical pattern of building a concentration of stores in new markets to leverage efficiencies in logistics, marketing and management supervision. Michael Hill International views this as a strategic acquisition to test its retail model in the highly competitive US market, albeit at a time when the economy is challenging. The company does not expect these stores to achieve profitability for several years but believes the opportunity presented by the Whitehall Jewelers acquisition was one which would enable Michael Hill International to enter this market on favorable terms. The short to medium term focus will be on honing its retail formula for future growth from this base. About Whitehall Jewelers Headquartered in Chicago, Illinois, Whitehall Jewelers Holdings, Inc. -- http://www.whitehalljewellers.com/-- owns and operates 375 stores jewelry stores in 39 states. The company operates stores in regional and regional shopping malls under the names Whitehall and Lundstrom. The Debtors' retail stores operate under the names Whitehall (271 locations), Lundstrom (24 locations), Friedman's (56 locations, and Crescent (22 locations). As of June 23, 2008, the Debtors have about 2,852 workers. The company and its affiliates, Whitehall Jewelers Inc., filed for Chapter 11 protection on June 23, 2008 (Bankr. D. Del. Lead Case No. 08-11261). James E. O'Neill, Esq., Kathleen P. Makowski, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. Epiq Bankruptcy Solutions LLC acts as their claims, noticing and balloting agent. Roberta A. DeAngelis, the U.S. Trustee for Region 3, has appointed six members to the Official Committee of Unsecured Creditors of the Debtors' cases. When the Debtors filed for protection against their creditors, they listed total assets of total assets of $207,100,000 and total debts of $185,400,000. WICKES FURNITURE: Can Access Wells Fargo's $17 Million Facility --------------------------------------------------------------- Wells Fargo Retail Finance increased from $15 million to $17 million a postpetition financing for Wickes Furniture Company Inc. and its debtor-affiliate under a credit facility agreement dated June 23, 2008. The facility is composed of a senior revolving credit loan with a $4 million sublimit for letters of credit. Furthermore, the Debtors' professionals allowed fees and expenses were also increased from $1,847,000 to $2,047,000. The Hon. Kevin J. Carey of the United Bankruptcy Court for the District of Delaware approved on Aug. 15, 2008, the agreement entered between the DIP lender and the Debtors. The DIP loan will mature by Sept. 8, 2008. The Debtors prepared a DIP budget forecast from Aug. 9, 2008, to Sept. 6, 2008. A full-text copy of the Debtors' DIP budget forecast is available for free at: http://ResearchArchives.com/t/s?30f2 Based in Wheeling, Illinois, Wickes Furniture Company, Inc. -- http://www.wickesfurniture.com/-- is a furniture retailers in the U.S. with 43 retail stores serving greater Chicago, Los Angeles, Las Vegas, and Portland. Founded in 1971, Wickes offers attractive room packages featuring complete living rooms, dining rooms, bedrooms as well as bedding, home entertainment, accessories and accent furniture. Wickes employs over 1,700 employees and offers products from leading furniture and bedding manufacturers. The company and two of its debtor-affiliates filed for Chapter 11 protection on Feb. 3, 2008 (Bankr. D. Del. Lead Case No. 08- 10213). Donald J. Detweiler, Esq., at Greenberg Traurig LLP, represents the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims, noticing and balloting agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Margaret M. Manning, Esq., at Whiteford Taylor & Preston in Wilmington, Delaware, represents the Committee in these cases. When the Debtors filed for protection from their creditors, they listed consolidated estimated assets of $10 million to $50 million, and estimated debts of $50 million to $100 million. The Debtors have asked the Court to extend their exclusive plan filing period until Sept. 1, 2008. WOODSIDE GROUP: Involuntary Chapter 11 Case Summary --------------------------------------------------- Debtor-affiliates subject to separate Involuntary Chapter 11 petitions: Entity Case No. ------ -------- Woodside Group, LLC 08-20682 Pleasant Hill Investments, LC 08-20686 WDS Holdings, Inc. 08-20688 BCD 99, LLC 08-20690 Woodside 04N, LP 08-20692 Woodside 04S, LP 08-20694 Woodside 05N, LP 08-20699 Woodside 05S, LP 08-20701 Woodside 06N, LP 08-20704 Woodside 7N, LP 08-20706 TBB 03, LLC 08-20711 Menifee Woodside, LLC 08-20714 MHA02, LLC 08-20728 Monterey Woodside, LLC 08-20729 MWG 00, LLC 08-20730 MWL 01, LLC 08-20734 Woodside Autumn Ridge, LLC 08-20735 Woodside Glenmere, LLC 08-20736 Woodside Clarendon Hills, LLC 08-20737 Woodside Legacy, LLC 08-20738 Woodside Homes of Southern California, LLC 08-20742 Woodside AMR 91, LLC 08-20744 Woodside Paseo 5000, LLC 08-20746 Woodside Paseo 6000, LLC 08-20748 Woodside Paseo 7200, LLC 08-20750 Woodside Vista Montana, LLC 08-20751 Woodside Weston Ranch, LLC 08-20753 Foxboro 50's, LLC 08-20754 Foxboro Coventry, LLC 08-20755 Foxboro Estates, LLC 08-20756 Foxboro Villages, LLC 08-20757 Ivywood Interior Design, LLC 08-20758 Oquirrh Highlands Condominiums, LLC 08-20759 Pleasant Valley Investments, LC 08-20760 Portola Development Company, LC 08-20762 Portola Development, Arizona, LLC 08-20763 Portola Development, Utah, LC 08-20764 Saratoga Land Development, LLC 08-20765 Sonora HOA Management, LLC 08-20766 Sterling 69, LLC 08-20767 WDS GP, Inc. 08-20768 WGP Group, LLC 08-20770 Woodside 20/25, LLC 08-20772 Woodside Aberdeen, LLC 08-20774 Woodside Allerton, LLC 08-20775 Woodside Amberly, LLC 08-20776 Woodside Amelia Lakes, LLC 08-20777 Woodside Avalon Park, LLC 08-20778 Woodside Avalon, LLC 08-20779 Woodside Ballantrae, LLC 08-20780 Woodside Bella Fresca, Inc. 08-20782 Woodside Berkeley, LLC 08-20783 Woodside Blue Water Bay, LLC 08-20784 Woodside Bridges at Boulder Creek, LLC 08-20785 Woodside Brookstone, LLC 08-20786 Woodside Buffalo Ridge, LLC 08-20788 Woodside Cambria, LLC 08-20789 Woodside Canyon Creek, LLC 08-20790 Woodside Casa Palermo, LLC 08-20791 Woodside Castleton, LLC 08-20792 Woodside Cedar Creek, LLC 08-20793 Woodside Clearwater, LLC 08-20794 Woodside Colonial Charles SFD, LLC 08-20795 Woodside Colonial Charles Villas, LLC 08-20796 Woodside Communities - WDC, LLC 08-20797 Woodside Communities of North Florida, LLC 08-20798 Woodside Cortez Heights, LLC 08-20799 Woodside Daytona Land, LLC 08-20800 Woodside Eagle Marsh North, LLC 08-20801 Woodside Eagle Marsh South, LLC 08-20802 Woodside Encore at Sunset Ranch, LLC 08-20803 Woodside Exeter South, LLC 08-20804 Woodside Farmington Hollow Cottages, LLC 08-20805 Woodside Farmington Hollow Estates, LLC 08-20806 Woodside Farmington Meadows, LLC 08-20807 Woodside Fieldstone Ranch, LLC 08-20808 Woodside Fieldstone, LLC 08-20809 Woodside Finisterre, LLC 08-20810 Woodside Foothills Sunrise, LLC 08-20811 Woodside Foothills West, LLC 08-20812 Woodside Garden Gate, LLC 08-20813 Woodside Grande Premier, LLC 08-20814 Woodside Greyhawk, LLC 08-20815 Woodside Grouse Pointe, LLC 08-20816 Woodside Hearthstone, LLC 08-20817 Woodside Heritage Lake 129, Inc. 08-20818 Woodside Heritage Lake 150, Inc. 08-20820 Woodside Heritage Lake 7200, Inc. 08-20821 Woodside Highland Ridge, LLC 08-20825 Woodside Homes Corporation 08-20827 Woodside Homes of Arizona, Inc. 08-20830 Woodside Homes of California, Inc. 08-20832 Woodside Homes of Central California, Inc. 08-20834 Woodside Homes of Florida, LLC 08-20837 Woodside Homes of Fresno, Inc. 08-20840 Woodside Homes of Minnesota, Inc. 08-20842 Woodside Homes of Nevada, Inc. 08-20843 Woodside Homes of Northern California, Inc. 08-20844 Woodside Homes of Reno, LLC 08-20845 Woodside Homes of South Texas, LLC 08-20846 Woodside Homes of Southeast Florida, LLC 08-20847 Woodside Home Sales Corp. 08-20850 Woodside Hunters Creek, LLC 08-20852 Woodside Jackrabbit Estates, LLC 08-20855 Woodside Karston Cove, LLC 08-20861 Woodside Kinder Ranch, LLC 08-20864 Woodside Knoll Creek, LLC 08-20866 Woodside Land Holdings, LLC 08-20868 Woodside Las Colinas, LLC 08-20869 Woodside Legacy Oaks, LLC 08-20871 Woodside Madison Colony, LLC 08-20872 Woodside Magma Ranch, LLC 08-20874 Woodside Majestic Oaks, LLC 08-20875 Woodside Meadows of Big Lake, LLC 08-20877 Woodside Menifee 105, Inc. 08-20879 Woodside Montrose, Inc. 08-20881 Woodside Murabella, LLC 08-20882 Woodside North MPLS, LLC 08-20883 Woodside Northridge, LLC 08-20885 Woodside Palmilla, LLC 08-20886 Woodside Palomar, LLC 08-20893 Woodside Park Paseo, LLC 08-20895 Woodside Parkview, LLC 08-20899 Woodside Pebble Creek, LLC 08-20901 Woodside Preserve at Boulder Creek, LLC 08-20905 Woodside Provence,LLC 08-20906 Woodside Quail Crossing, LLC 08-20909 Woodside Rio Vista, LLC 08-20912 Woodside Riverwalk Preserve, LLC 08-20915 Woodside Rocking Horse, LLC 08-20916 Woodside Rockwell, LLC 08-20923 Woodside Rocky Pen, LLC 08-20927 Woodside Rogers Ranch, LLC 08-20937 Type of Business: The Debtors are into personalized-driven home building. Woodside Group, LLC, is based at 39 East Eagleridge Drive, Suite 102, North Salt Lake, Utah. See http://www.woodside-homes.com/ Involuntary Petition Date: August 20, 2008 Court: Central District Of California (Riverside) Judge: Peter Carroll Petitioner's Counsel: Susy Li, Esq. Bingham 355 S Grand Avenue, Suite 4400 Los Angeles, CA 90071-3106 Tel: (213) 680-6400 Fax: (213) 680-6499 Email: susy.li@bingham.com Woodside Group, LLC and debtor-affiliates' petitioners: Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ John Hancock Life Insurance Noteholder $51,900,000 Company 197 Clarendon Street C-2 Boston, MA 02117 AXA Equitable Life Insurance Noteholder $40,000,000 Company 1290 Avenue of the Americas New York, NY 10104 Metropolitan Life Insurance Noteholder $35,500,000 Company 10 Park Avenue Morristown, NJ 07962-1902 New York Life Insurance Noteholder $18,500,000 Company 51 Madison Avenue New York, NY 10010 Security Life of Denver Noteholder $10,000,000 Insurance Company by ING Investment Management LLC (as agent) 5780 Powers Ferry Road NW Suite 300 Atlanta, GA 30327-4349 * S&P Sees Mixed Outlook for U.S. Capital Goods Companies --------------------------------------------------------- Standard & Poor's Ratings Services sees a mixed economic outlook for U.S. capital goods companies, according to a research report. The report, "Capital Goods Snapshot: U.S. Companies Look To Emerging Market Growth To Offset Slow Domestic Growth," notes that persistent weakness in the U.S., the potential for a spillover into domestic nonresidential construction, and the beginning of a European slowdown may overpower growth from emerging markets in China, Russia, and the Middle East. "Organic growth remains positive for most companies both domestically and abroad, but weaker economic fundamentals, rising costs from inflation, and the tight credit environment may cut into operating performance," said Standard & Poor's credit analyst Dan Picciotto. Still, most companies haven't been hit very hard to this point. The report takes a look how a dozen major U.S. capital goods companies have fared during the past quarter. It also discusses what Standard & Poor's is scrutinizing most closely in its analysis of these companies. * S&P Junks Rating on 5 Classes Related to Prime Jumbo RMBS Deals ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes of mortgage pass-through certificates from two U.S. prime jumbo residential mortgage-backed securities (RMBS) transactions. At the same time, S&P lowered its ratings on eight classes from five HarborView Mortgage Loan Trust transactions. Lastly, S&P affirmed its ratings on 100 other classes from these and other U.S. prime jumbo RMBS transactions. The raised ratings reflect increases in the actual and projected credit support percentages of the upgraded classes. The higher credit support percentages stem from the shifting interest structure of the transactions, the significant paydown of the collateral pool, and relatively low delinquencies and losses. Total delinquencies for these deals range from 0.37% (Cendant Mortgage Capital LLC's series 2003-1) to 2.05% (HarborView Mortgage Loan Trust 2003-1) of the current pool balances. The lowered ratings reflect the deterioration of available credit support provided by the senior-subordinate structure of the transactions. Over the past six months, most of these transactions have experienced spikes in the dollar amount of loans in their delinquency pipelines, while realized losses have remained moderate to low. The affirmations are based on credit support percentages that are sufficient to support the ratings at their current levels. Subordination provides credit enhancement for the affected transactions. The collateral backing the certificates originally consisted of 15- to 30-year prime fixed- and adjustable-rate mortgage loans secured by one- to four-family residential properties. RATINGS RAISED Cendant Mortgage Capital LLC Series 2003-1 Rating Class CUSIP To From ----- ----- -- ---- B-2 15132ECT3 AA AA- B-3 15132ECU0 A- BBB+ B-4 15132ECW6 BB+ BB HarborView Mortgage Loan Trust 2003-1 Series 2003-1 Rating Class CUSIP To From ----- ----- -- ---- B-2 41161PBQ5 AA- A+ B-3 41161PBR3 A- BBB+ RATINGS LOWERED HarborView Mortgage Loan Trust 2003-3 Series 2003-3 Rating Class CUSIP To From ----- ----- -- ---- B-4 41161PCU5 B BB B-5 41161PCV3 CCC B HarborView Mortgage Loan Trust 2004-5 Series 2004-5 Rating Class CUSIP To From ----- ----- -- ---- B5 41161PFG3 CCC B HarborView Mortgage Loan Trust 2004-6 Series 2004-6 Rating Class CUSIP To From ----- ----- -- ---- B-4 41161PGA5 B BB B-5 41161PGB3 CCC B HarborView Mortgage Loan Trust 2004-7 Series 2004-7 Rating Class CUSIP To From ----- ----- -- ---- B-4 41161PGU1 B BB B-5 41161PGV9 CCC B HarborView Mortgage Loan Trust 2004-8 Series 2004-8 Rating Class CUSIP To From ----- ----- -- ---- B-5 41161PHM8 CCC B RATINGS AFFIRMED Cendant Mortgage Capital LLC Series 2002-1 Class CUSIP Rating ----- ----- ------ A-4 15131GMF8 AAA P 15131GMH4 AAA X 15131GMJ0 AAA B-1 15131GML5 AAA B-2 15131GMM3 AAA B-3 15131GMN1 AAA Cendant Mortgage Capital LLC Series 2003-1 Class CUSIP Rating ----- ----- ------ A-1 15132ECE6 AAA A-3 15132ECG1 AAA A-4 15132ECH9 AAA A-5 15132ECJ5 AAA A-8 15132ECM8 AAA A-9 15132ECN6 AAA A-10 15132ECP1 AAA P 15132ECQ9 AAA X 15132ECR7 AAA B-1 15132ECS5 AA+ B-5 15132ECX4 B HarborView Mortgage Loan Trust 2003-1 Series 2003-1 Class CUSIP Rating ----- ----- ------ A 41161PBM4 AAA B-1 41161PBP7 AA+ B-4 41161PBS1 BB+ B-5 41161PBT9 B HarborView Mortgage Loan Trust 2003-2 Series 2003-2 Class CUSIP Rating ----- ----- ------ 1-A 41161PBV4 AAA 2-A-1 41161PBX0 AAA 2-X 41161PBZ5 AAA 2-A-2 41161PBY8 AAA 3-A 41161PCB7 AAA B-1 41161PCD3 AA B-2 41161PCE1 A B-3 41161PCF8 BBB B-4 41161PCG6 BB B-5 41161PCH4 B HarborView Mortgage Loan Trust 2003-3 Series 2003-3 Class CUSIP Rating ----- ----- ------ 1A-1 41161PCK7 AAA 2A-1 41161PCL5 AAA 2A-2 41161PCM3 AAA 2A-3 41161PCN1 AAA A-X 41161PCP6 AAA B-1 41161PCR2 AA+ B-2 41161PCS0 A B-3 41161PCT8 BBB HarborView Mortgage Loan Trust 2004-1 Series 2004-1 Class CUSIP Rating ----- ----- ------ 1-A 41161PCX9 AAA 2-A 41161PCY7 AAA 3-A 41161PCZ4 AAA 4-A 41161PDA8 AAA X 41161PDB6 AAA B-1 41161PDD2 AA B-2 41161PDE0 A B-3 41161PDF7 BBB B-4 41161PDG5 BB B-5 41161PDH3 B HarborView Mortgage Loan Trust 2004-3 Series 2004-3 Class CUSIP Rating ----- ----- ------ 1-A 41161PEC3 AAA 2-A 41161PED1 AAA B-1 41161PEF6 AA B-2 41161PEG4 A B-3 41161PEH2 BBB B-4 41161PEJ8 BB B-5 41161PEK5 B HarborView Mortgage Loan Trust 2004-5 Series 2004-5 Class CUSIP Rating ----- ----- ------ 1-A 41161PER0 AAA 2-A-4 41161PEV1 AAA 2-A-5 41161PEW9 AAA 2-A-6 41161PEX7 AAA 3-A 41161PEZ2 AAA B1 41161PFC2 AA B2 41161PFD0 A B3 41161PFE8 BBB B4 41161PFF5 BB HarborView Mortgage Loan Trust 2004-6 Series 2004-6 Class CUSIP Rating ----- ----- ------ 1-A 41161PFP3 AAA 2-A 41161PFQ1 AAA 3-A-1 41161PFR9 AAA 3-A-2A 41161PFS7 AAA 3-A-2B 41161PFT5 AAA 4-A 41161PFU2 AAA 5-A 41161PFV0 AAA B-1 41161PFX6 AA B-2 41161PFY4 A B-3 41161PFZ1 BBB HarborView Mortgage Loan Trust 2004-7 Series 2004-7 Class CUSIP Rating ----- ----- ------ 1-A 41161PGF4 AAA 2-A-1 41161PGG2 AAA 2-A-2 41161PGH0 AAA 2-A-3 41161PGJ6 AAA 3-A-1 41161PGK3 AAA 3-A-2 41161PGL1 AAA 4-A 41161PGM9 AAA X-1 41161PGN7 AAA X-2 41161PGP2 AAA B-1 41161PGR8 AA+ B-2 41161PGS6 A B-3 41161PGT4 BBB HarborView Mortgage Loan Trust 2004-8 Series 2004-8 Class CUSIP Rating ----- ----- ------ 1-A 41161PGY3 AAA 2-A1 41161PGZ0 AAA 2-A2 41161PHA4 AAA 2-A3 41161PHB2 AAA 2-A4A 41161PHC0 AAA 2-A4B 41161PHD8 AAA 3-A1 41161PHE6 AAA 3-A2 41161PHF3 AAA X 41161PHQ9 AAA B-1 41161PHH9 AA+ B-2 41161PHJ5 A+ B-3 41161PHK2 BBB+ B-4 41161PHL0 BB * S&P Cuts Ratings on 453 U.S. Subprime RMBS Classes ---------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 453 classes from 112 U.S. residential mortgage-backed securities (RMBS) transactions backed by U.S. first-lien subprime mortgage collateral rated between January 2006 and June 2007. Additionally, S&P placed its ratings on 2,570 classes from 342 U.S. subprime RMBS transactions on CreditWatch with negative implications. Lastly, S&P affirmed its ratings on 1,914 classes from 239 U.S. subprime RMBS transactions, and concurrently removed S&P's ratings on 76 classes from CreditWatch negative. "The downgraded classes represent an original par amount of approximately $14.8 billion, or approximately 2% of the par amount of U.S. RMBS backed by first-lien subprime mortgage loans rated by Standard & Poor's between January 2006 and June 2007. We have taken previous rating actions on approximately $3.3 billion of the total amount of affected securities. In addition, the classes with ratings placed on CreditWatch represent an original par amount of approximately $309 billion. Lastly, the classes with affirmed ratings represent an original par amount of $164.3 billion of subprime RMBS certificates issued from January 2006 to June 2007," S&P says. The complete rating list, "U.S. Subprime RMBS Classes Affected By Aug. 19, 2008, Rating Actions," is available on RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at http://www.ratingsdirect.com/ The list is also on http://www.spviews.com/Standard & Poor's special Web site for subprime and related mortgage matters. "Today's rating actions reflect an increase in our loss severity and default assumptions, as outlined in "Standard & Poor's Revises U.S. Subprime, Prime, And Alternative-A RMBS Loss Assumptions," published on July 30, 2008, as well as a significant increase in delinquencies and defaults. We recently raised our loss severity assumptions for 2006 and first-half of 2007 transactions to 50% from 45%. The revised assumptions are based on our belief that continued foreclosures, distressed sales, higher carrying costs for properties in inventory, costs associated with foreclosures, and further declines in home sales will likely depress prices further and push loss severities higher than we had previously assumed," S&P says. "There has been a persistent rise in the level of delinquencies among the subprime mortgage loans supporting these transactions. As of the July 2008 distribution, severely delinquent loans (90- plus days, foreclosures, and REOs) accounted for approximately 30.27% of the 2006 transactions and approximately 22.82% of the transactions from the first half of 2007. Based on the delinquency trends, loan-level risk characteristics, and continuing deterioration in the macroeconomic outlook, we have increased our lifetime loss projections to 23% from 19% for transactions issued in 2006 and to 27% from 23% for transactions issued in the first half of 2007. "The downgrades affected approximately 25% of the transactions rated between January 2006 and June 2007, while the CreditWatch placements affected approximately 55% of the transactions rated during the same period of time. The downgrades affected certificates that were originally rated 'AA+' or lower, while the CreditWatch placements affected transactions that had at least one 'AAA' class affected. Since 'AAA' certificates can have different payment priorities, Standard & Poor's evaluates the creditworthiness of each class under three constant prepayment rate (CPR) scenarios. Because the analysis focuses on each individual class with varying maturities, prepayment scenarios may cause an individual class to prepay in full before it incurs the entire loss projection. Since we believe it is unlikely that subordinate certificates will prepay in full before the entire loss projection is realized, we took negative rating actions at this time. Beginning today and continuing throughout the next few weeks, Standard & Poor's will be simulating CPR scenarios to assess the creditworthiness of each class with a rating that we placed on CreditWatch. As a result of poor collateral performance and the revision in our projected losses, it is possible that we may lower many of the ratings that we placed on CreditWatch." * S&P Revises Projected Losses for 2006, 2007 Subprime RMBS ----------------------------------------------------------- Standard & Poor's Ratings Services revised its projected losses for U.S. residential mortgage-backed securities (RMBS) transactions backed by subprime mortgage collateral issued between January 2006 and June 2007. The complete list of transaction-specific projected losses is included in "Projected Losses For U.S. Subprime RMBS Issued Between January 2006 And June 2007." Given S&P's continued pessimistic outlook for the U.S. housing market, increased delinquencies and defaults, as well as the buildup of residential inventory, Standard & Poor's is projecting that subprime transactions issued in 2006 will experience cumulative losses ranging from 21% to 25%, and transactions issued in the first half of 2007 will experience cumulative losses ranging from 25% to 29%. "Our default curve for U.S. subprime RMBS is a key component of our loss projection analysis of U.S. RMBS transactions, which is discussed in "Standard & Poor's Revised Default And Loss Curves For U.S. Subprime RMBS," published Oct. 19, 2007. With the recent continued deterioration in U.S. RMBS performance, however, we are adjusting our loss curve forecasting methodology to more explicitly incorporate each transaction's current delinquency (including 60- and 90-day delinquencies), default, and loss trends. Some transactions are experiencing foreclosures and delinquencies at rates greater than our initial projections. We believe that adjusting our projected losses, which we derived from our default curve analysis, is appropriate in cases where the amount of current delinquencies indicates a different timing or level of loss. In addition, we recently revised our loss severity assumption for transactions issued in 2006 and the first half of 2007 as described in 'Standard & Poor's Revises U.S. Subprime, Prime, And Alternative-A RMBS Loss Assumptions,' published July 30, 2008. We based the revised assumption on our belief that continued foreclosures, distressed sales, increased carrying costs, and a further decline in home sales will continue to depress prices and push loss severities higher than we previously assumed," S&P says. * BOOK REVIEW: Bailout: An Insider's Account of Bank Failures and Rescues ---------------------------------------------------- Author: Irvine H. Sprague Publisher: Beard Books Hardcover: 312 pages List Price: US$34.95 Own your personal copy at http://amazon.com/exec/obidos/ASIN/1587980177/internetbankrupt During the high interest times of the 1970s and 1980s, banks and savings and loan associations were under heavy financial pressure. Hundreds of them failed. The Home Loan Bank Board permitted the savings and loan associations to treat goodwill as capital, thereby allowing them to remain open and to build up enormous losses that eventually cost the taxpayers billions of dollars. The Federal Deposit Insurance Corporation took a different approach. It closed the banks or sold them, all at no cost to taxpayers. Bailout is the engrossing story of how the FDIC handled four of these failures. ********* 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. Sheryl Joy P. Olano, 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 ***