/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/081023.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 23, 2008, Vol. 12, No. 253 Headlines 720-728 LLC: Case Summary & Two Largest Unsecured Creditors 3 DAY BLINDS: Case Summary & 20 Largest Unsecured Creditors ALLBRITTON COMMS: S&P Cuts $455MM Subordinated Notes Rating to 'B' AMACORE GROUP: Clark Marcus Quits as Board Chairman AMACORE GROUP: COO Gerald Smith Discloses De Minimis Stake AMERICAN AXLE: SUV Trucks Market Erosion Cues Moody's Rating Cut AMERICAN INT'L: To Freeze $19MM in Payments to Martin Sullivan AMERICAN INTERNATIONAL: Inks Settlement on Derivative Action AMERIMARK DIRECT: Moody's Withdraws Ratings on Insufficient Info ARIAD PHARMACEUTICALS: Merck Starts deforolimus 2nd Clinical Trial ASARCO LLC: Terminates Purchase Contract with Sterlite ASARCO LLC: To Suspend Solicitation Process on Plans ASCENDIA BRANDS: Panel May Retain Amper as Financial Advisors ASCENDIA BRANDS: Panel May Retain Landis Rath as Counsel ASHTON WOODS: Posts $15 Million Net Loss for Quarter Ended Aug. 31 AZ CON CONCRETE: Voluntary Chapter 11 Case Summary BARRINGTON II: Moody's Downgrades Ratings and Left Under Watch BRUNSWICK: Moody's Chips Unsecured Notes' Rating to 'Ba3' BUFFALO THUNDER: Moody's Cuts Ratings to 'B3'; On Neg. Outlook CABLEVISION SYSTEMS: Names Michael Huseby as Finance Chief CALIFORNIA OIL: Posts $127,622 Net Loss for Quarter Ended Aug. 31 CALPINE CORP: To Release Third Quarter 2008 Results on November 7 CALPINE CORP: To Get $97MM from Rosetta Resources to Settle Claims CAMPBELL RESOURCES: TSX to Review Listing Requirement Compliance CASH TECHNOLOGIES: Posts $826K Net Loss for Qtr. Ended August 31 CASH TECHNOLOGIES: Delays Form 10QSB Filing with SEC CASH TECHNOLOGIES: Posts $827,076 Net Loss for August 2008 Quarter CHAMPION ENTERPRISES: Moody's Junks Ratings; Outlook Stable CHEM RX: Moody's Keeps 'B2' Ratings, Negative Outlook CHENG HENG: Files for Bankruptcy Protection CHENG HENG: Case Summary & Five Largest Unsecured Creditors CITIBANK OMNI: Moody's Rates $23MM Class 2008-D1 Notes 'Ba2' COLLEZIONE EUROPA: Files Chapter 11 Plan in New Jersey COMM 2007-C9: S&P Affirms Ratings on 27 Classes of Certificates CONEXANT SYSTEMS: Amends Bylaws to Allow Director Resignation CONSTAR INT'L: Moody's Junks CF Rating; Outlook Revised to Neg CRITICAL THERAPEUTIC: Posts $2 Million Net Loss for Sept. 20, 2008 DANA CORP: Draws $200 Mil. from Revolver Facility to Add Liquidity DANA CORP: Court Dismisses Asbestos Ad Hoc Committee's Appeal DECODE GENETICS: Conducting Long-Term Business Strategic Review DELPHI CORP: Equity Holders Say Plan Disregarded their Concerns DELTA AIR: Files Financial Results for Quarter Ended Sept. 30 DERCO JEWELERS: Emerges From Chapter 11 Bankruptcy ER URGENT: Case Summary & 10 Largest Unsecured Creditors EXECUTE SPORTS: Sells Sugar Sand Assets to Coosaw Capital EXECUTE SPORTS: Inks Intercreditor and Standby Agreement FELCOR LODGING: S&P Cuts Corp. Credit Rating to 'B+' From 'BB-' FMA CBO: Moody's Trims $47MM Class B Notes Rating to Caa3 from B3 FORSTER DRILLING: Names Frederick Doutel as CEO and Board Chairman FRIEDMAN'S INC: Wants Plan Exclusivity Period Extended to Feb. 23 GATEHOUSE MEDIA: East Peak Partners, et al., Disclose 7% Stake GOE LIMA: Wants to Access $2.9 Million SunTrust DIP Facility GOODY'S FAMILY: GE Corporate Provides $175MM Credit Facility GOTTSCHALKS INC: NYSE to Delist Common Stock on October 27 GSV INC: Gains Maturity Extension for $160,000 Promissory Note GWLS HOLDINGS: Gets Initial OK to Access $45 Million UBS Facility HEALTHTRONICS INC: Increased Corp. Debt Cues Moody's Ratings Cut INTERSTATE BAKERIES: Says Disclosure Statement Has Adequate Info IRVINE SENSORS: Transfers Optex Asset to Longview to Kill Debt ISCHUS HIGH GRADE: Moody's Cuts Ratings on Six Classes of Notes ISCHUS MEZZANINE: Moody's Slashes Two Notes Ratings to 'Ca' JOHNSON BROADCASTING: Files for Chapter 11 Protection in Houston JONES APPAREL: Moody's Cuts CF and PD Ratings to 'Ba2' from 'Ba1' JUPITER FINANCE: S&P Cuts Ratings on Two Classes to 'D' KEVIN LAM: Case Summary & Nine Largest Unsecured Creditors KIMBALL HILL: Court OKs Bid Procedures for Texas Property Sale KIMBALL HILL: Court Extends Removal Period to Plan Confirmation KIMBALL HILL: Court Extends Plan Filing Period Until January 16 KLEROS PREFERRED: Moody's Cuts Ratings on Notes, Leaves on Review LITTLE PROFESSIONALS: Court Orders Closure of Day Care Center LOS ROBLES CDO: Moody's Lowers Ratings on Seven Classes of Notes MDWERKS INC: Names CEO Howards Katz as President MELROSE INVESTORS: Moody's Cuts Class A Notes Rating to 'B3' MERVYN'S LLC: Ceases Operations; Hearing Today on Bidding Protocol METROMEDIA STEAKHOUSE: Files for Chapter 11 Bankruptcy in Delaware METROMEDIA STEAKHOUSES: Case Summary & 40 Largest Unsec. Creditors MILLSTONE II: Moody's Reviews Notes Ratings for Possible Cut MOUNT AIRY: Moody's Cuts Ratings on Weak Operating Results MOTOR COACH: 1st Day Motions Ok'd; May Continue Customer Programs NATIONAL BEEF: S&P's 'B+' Rating Unaffected by Oct. 20 Lawsuit NEBRASKA BOOK: Moody's Cuts Corporate Family Rating to B3 from B2 NRG ENERGY: S&P Puts 'B+' Corp. Credit Rating Under Pos. Watch PACE UNIVERSITY: Moody's Affirms Bonds Ratings at 'Ba1' PARCS MASTER: S&P Cuts PARCS Master Trust Rating to 'B' from 'BBB' PINE TREE IV: Moody's Slashes $3MM Secured Notes Rating to 'Caa1' PROPEX INC: Amends Schedules of Assets and Liabilities QPC LASERS: Warns of Possible Bankruptcy Absent Funding RED VALLEY: Section 341(a) Meeting Scheduled for November 12 REGENT BROADCASTING: Moody's Trims PD Rating to 'Caa1' from 'B3' SANKATY HIGH YIELD: Collateral Erosion Cues Moody's Rating Actions SANKATY HIGH YIELD: Moody's Chips Ratings on Collateral Erosion SKILLSOFT PLC: S&P Lifts Credit Rating to 'BB-' From 'B+' STRATUS GROUP: To Pay 45% to Unsecured Creditors; Leedom Steps In SYNTAX-BRILLIAN: OIG Appeals Order to Consummate Asset Purchase SUMMIT GLOBAL: U.S. Trustee Wants Case Converted to Chapter 7 TIERS(R) MISSOURI: Moody's Cuts $31MM Certificates Rating to 'Ba1' TWL CORP: Defaults on $8.7MM Notes, Files for Chapter 11 UAL CORP: Posts $779MM Net Loss in Quarter Ended September 30 US BIODEFENSE: Posts $601,141 Net Loss for August 31, 2008 VALEO INVESTMENT: Moody's Junks $12.5MM Subordinated Notes Rating VERSO TECH: May Use Cash Collateral Through Nov. 14, 2008 VISION DEV'T: Parent's Townhome Project to be Sold in November WACHOVIA CORP: Posts $$23.89 Billion Third Quarter Net Loss WASHINGTON MUTUAL: Wilmington Trust to Serve in Creditors Panel WING HENG: Case Summary & 14 Largest Unsecured Creditors WM WRIGLEY: Moody's Withdraws Ratings on Voluntary SEC Delisting WM WRIGLEY: S&P Withdraws BB+ Corp. Credit Rating at Co.'s Request WORLDSPACE INC: Gains Access to $2M in Interim Dip Financing WP HICKMAN: Court Okays Campbell & Levine as Bankruptcy Counsel WP HICKMAN: Seeks Court OK to Hire Marsalese as Special Counsel * Proskauer Rose Creates Economic Crisis Response Group * Garden City Expands Capabilities w/ Addition of Two Team Members * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* 720-728 LLC: Case Summary & Two Largest Unsecured Creditors ----------------------------------------------------------- Debtor: 720-728 LLC 2275 Atlantic Blvd. Neptune Beach, FL 32266 Bankruptcy Case No.: 08-06471 Chapter 11 Petition Date: October 21, 2008 Court: Middle District of Florida (Jacksonville) Judge: Jerry A. Funk Debtor's Counsel: Albert H. Mickler, Esq. court@planlaw.com Law Offices of Mickler & Mickler 5452 Arlington Expressway Jacksonville, FL 32211 Tel: (904) 725-0822 Total Assets: $375,000 Total Debts: $1,752,000 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/flmd08-06471.pdf 3 DAY BLINDS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: 3 Day Blinds, Inc. 2220 E. Cerritos Avenue Anaheim, CA 92806 Bankruptcy Case No.: 08-16696 Type of Business: The Debtor sells home accessories. See: http://www.3dayblinds.com/ Chapter 11 Petition Date: October 21, 2008 Court: Central District Of California (Santa Ana) Judge: Erithe A. Smith Debtor's Counsel: Christopher O. Rivas, Esq. crivas@reedsmith.com Reed Smith LLP 355 S. Grand Ave., Suite 2900 Los Angeles, CA 90071-1514 Tel: (213) 457-8000 Fax: (213) 457-8080 --- and --- Daniel A. Lev, Esq. dlev@sulmeyerlaw.com SulmeyerKupetz 333 S. Hope St. 35th Floor Los Angeles, CA 90071 Tel: (213) 626-2311 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Paul, Hasting, Janofsky & legal $320,186 Walker LLP Attn: Gregg Vignos 55 Second St. 24th Floor San Francisco, CA 94105-3441 Tel: (415) 856-7210 State Board of Equaliz sales tax $292,120 Attn: Victo Guillen P.O. Box 942879 Sacramento, CA 94279 Tel: (949) 274-6839 Offshore Promotion, Inc. mexico operations $282,630 Attn: Roxanne Ojeda 3065 Beyer Blvd., Suite 103 Sand Diego, CA 92154 Tel: (619) 690-2622 Federal Express freight $267,432 Attn: Judy Snyder P.O. Box 7221 Pasadena, CA 91109-7321 Tel: (412) 809-4937 Mediaspot, Inc. marketing $253,378 Attn: Quinn Troung 1550 Bayside Drive Corona Del Mar, CA 92625 Tel: (949) 721-0500 Hunter Douglas-Components inventory $236,537 Danmer Inc. fabricators $234,738 Alumafold Pacific Inc. inventory $207,268 Comfortex Corporation inventory $190,864 Components California Overnight freight out $183,995 Armstrong/Robitaille insurance $178,163 Concept Packaging & Des. inventory $170,113 Inc. Microsoft Licensing, GP maintenance $169,196 Hunter Douglas- fabricators $156,100 Intermountain Blue Shield of California insurance $131,287 The Great Indoors rent $130,887 Valassis Direct Mail Inc. trade debt $125,792 Wasau Underwriters insurance $120,595 Enstrom Corporation inventory $114,318 Springs Window Fashions inventory $101,702 ALLBRITTON COMMS: S&P Cuts $455MM Subordinated Notes Rating to 'B' ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Arlington, Virginia-based Allbritton Communications Corp. to 'B' from 'B+'. The rating outlook is stable. At the same time, S&P lowered the issue-level rating on Allbritton's $455 million senior subordinated notes to 'B' from 'B+'. The recovery rating remains unchanged at '4', indicating our expectation of average (30% to 50%) recovery in the event of a payment default. "The ratings downgrade reflects our expectation that, against the backdrop of economic pressures on ad spending -- especially in Allbritton's key Washington, D.C. market -- and absent debt reduction, the company's covenant compliance cushion could be narrowed to the point of limiting borrowing availability," said S&P's credit analyst Deborah Kinzer. The 'B' rating on Allbritton reflects financial risk from high leverage, potential for covenant compliance pressure, cash flow concentration from limited portfolio diversity, and advertising cyclicality. The company's good positions in its TV markets, TV broadcasting's good margins, and its discretionary cash flow potential only partially offset these factors. Allbritton owns and operates a modest TV station portfolio covering one large and six midsize markets ranked from No. 9 to No. 100 and reaching 4.9% of U.S. TV households. Cash flow is heavily concentrated in the Washington, D.C. market. The bulk of the company's stations are affiliated with the ABC Network; Allbritton is the third-largest independent owner of ABC Network affiliates. This lack of operational diversity makes the company vulnerable to shifts in ABC's prime-time ratings and in the Washington/Virginia/Maryland economy. Allbritton's news programs rank No. 1 or No. 2 in early and late news in a majority of its markets. EBITDA fell 17% on a 1% revenue decline in the 12 months ended June 30, 2008, because of the cyclical absence of political advertising and economic weakness in a majority of the company's markets and higher employee compensation expense. Higher headcount from The Politico, a Capitol Hill-targeted newspaper that Allbritton launched in January 2007, contributed a significant proportion of the expense increase. The company's EBITDA margin for the 12 months ended June 30, 2008 was 31.8%, down from 37.9% for the same period in 2007. Discretionary cash flow remains negative, although the deficit has narrowed significantly since last year, when the company paid larger-than- usual distributions to its parent (about 75% of EBITDA in fiscal 2007). Leverage remains a key rating concern, particularly in light of Allbritton's concentrated cash flow base and ongoing distributions to its parent company. Lease-adjusted total debt to EBITDA deteriorated to 7.2x as of June 30, 2008, from 6.0x as of June 30, 2007, because of lower EBITDA. Using an average trailing-eight- quarter EBITDA figure to adjust for the variability between election and nonelection years, Allbritton's lease-adjusted leverage ratio was 6.5x as of June 30, 2008. The company is owned and operated by the Allbritton family through Perpetual Corp. Distributions to Perpetual typically consume the company's discretionary cash flow, and sometimes even more than that; S&P expects that this will continue. Lease-adjusted EBITDA coverage of interest expense was 1.8x for the 12 months ended June 30, 2008. AMACORE GROUP: Clark Marcus Quits as Board Chairman --------------------------------------------------- The Amacore Group, Inc. disclosed in a Securities and Exchange Commission filing that Clark A. Marcus resigned from his position as Chairman of the Board of Directors and as a member of the Board of Directors. Based in Tampa, Florida, The Amacore Group Inc. (OTC BB: ACGI) -- http://www.amacoregroup.com/-- provides health-related membership benefit programs, insurance programs, and other innovative and high-quality solutions to individuals, families and employer groups nationwide. Through its wholly owned subsidiary, LifeGuard Benefit Solutions Inc., Amacore now has the ability to provide administrative and back-office services to other healthcare companies in addition to expanding its own call center capability through its wholly-owned subsidiary, JRM Benefits Consultants LLC and US Heath Benefits Group Inc., a call center-based marketing company. Zurvita Inc., Amacore's newly formed, wholly-owned subsidiary specializing in direct to consumer multi-level marketing, provides yet another channel for Amacore's ever-increasing range of healthcare and healthcare-related products Going Concern Doubt The company believes that existing conditions raise substantial doubt about the company's ability to continue as a going concern. The company has sustained operating losses in recent years. In addition, the company reported a net loss of $2,592,655 for the quarter ended June 30, 2008. The company's consolidated financial statements at June 30, 2008, also showed strained liquidity with $9.4 million in total current assets available to pay $11.3 million in total current liabilities. AMACORE GROUP: COO Gerald Smith Discloses De Minimis Stake ---------------------------------------------------------- Gerald Scott Smith, The Amacore Group Inc.'s chief operating officer and interim chief financial officer, disclosed in a Securities and Exchange Commission filing that he beneficially owns 30,000 shares of the company's Class A common stock, representing less than one percent of the 143,220,225 Class A Common Shares issued and outstanding as of Aug. 13, 2008. Based in Tampa, Florida, The Amacore Group Inc. (OTC BB: ACGI) -- http://www.amacoregroup.com/-- provides health-related membership benefit programs, insurance programs, and other innovative and high-quality solutions to individuals, families and employer groups nationwide. Through its wholly owned subsidiary, LifeGuard Benefit Solutions Inc., Amacore now has the ability to provide administrative and back-office services to other healthcare companies in addition to expanding its own call center capability through its wholly-owned subsidiary, JRM Benefits Consultants LLC and US Heath Benefits Group Inc., a call center-based marketing company. Zurvita Inc., Amacore's newly formed, wholly-owned subsidiary specializing in direct to consumer multi-level marketing, provides yet another channel for Amacore's ever-increasing range of healthcare and healthcare-related products Going Concern Doubt The company believes that existing conditions raise substantial doubt about the company's ability to continue as a going concern. The company has sustained operating losses in recent years. In addition, the company reported a net loss of $2,592,655 for the quarter ended June 30, 2008. The company's consolidated financial statements at June 30, 2008, also showed strained liquidity with $9.4 million in total current assets available to pay $11.3 million in total current liabilities. AMERICAN AXLE: SUV Trucks Market Erosion Cues Moody's Rating Cut ---------------------------------------------------------------- Moody's Investors Service lowered American Axle & Manufacturing Holdings, Inc.'s Corporate Family Rating to B2 from B1 and is reviewing the rating for further possible downgrade. The downgrade results from the continued erosion in the North American market for SUVs and light trucks, and the resulting pressure on the company's credit metrics. Although American Axle may realize important structural cost benefits from the constructive labor contact that was completed in May 2008 and from other restructuring actions, the benefits of these initiatives will be significantly offset by the continuing erosion of demand for SUV's and light trucks in the wake of high fuel costs and global economic uncertainty. While the company's earlier announcement of $1.4 billion of new business wins are expected to further diversify among the company's customers, products and geographically, American Axle's revenue will continue to be concentrated with General Motors. Moody's review is focusing on the degree to which American Axle will be able to further adjust its cost structure to contend with the severe downturn in North American automotive markets, which is expected to continue into 2009. The review will also assess the level of liquidity that American Axle will likely be able to maintain during this downturn. The Speculative Grade Liquidity Rating of SGL-3 reflects the expectation of negative free cash flow over the next twelve months as a result of restructuring costs and the weakening automobile production in North America. At June 31, 2008 the company reported $196 million of cash and had $572 million of availability under its $600 million revolving credit facility. Principal financial covenants measure net debt to EBITDA and net worth. Both covenants exclude special and non-recurring items such as the costs related to restructuring under the new labor agreement. However, cushions under the financial covenants are expected to diminish in the near term reflecting the impact of lower production in North America on the company's key platforms. All of the company's bank obligations and notes are currently unsecured, which establishes some flexibility to generate alternative liquidity, subject to lien baskets and sale/leaseback limitations in the respective indentures. Ratings lowered and under review: American Axle & Manufacturing Holdings, Inc. -- Corporate Family, to B2 from B1 -- Probability of Default, to B2 from B1 -- Unsecured guaranteed convertible note, to B2 (LGD4, 54 %) from B1 (LGD4, 54%) American Axle & Manufacturing, Inc. -- Unsecured guaranteed notes, to B2 (LGD4, 54 %) from B1 (LGD4, 54%) -- Unsecured guaranteed term loan, to B2 (LGD4, 54 %) from B1 (LGD4, 54%) Holdings' obligations are guaranteed by American Axle and vice versa. The last rating action was on June 26, 2008 when American Axle's ratings were lowered. American Axle & Manufacturing, Inc., headquartered in Detroit, Michigan, is a world leader in the manufacture, design, engineering and validation of driveline systems and related components and modules, chassis systems, and metal formed products for light truck, SUV's and passenger cars. The company has manufacturing locations in the USA, Mexico, the United Kingdom, Brazil, China and Poland. AMERICAN INT'L: To Freeze $19MM in Payments to Martin Sullivan -------------------------------------------------------------- Chad Bray at The Wall Street Journal reports that American International Group, Inc., will freeze about $19 million in payments to former CEO, Martin Sullivan. Mr. Sullivan was forced out by AIG's board in June. WSJ relates that New York Attorney General Andrew Cuomo said in a conference call with reporters that Mr. Sullivan was owed $19 million plus other benefits under his employment contract. According to WSJ, Mr. Cuomo is reviewing executive compensation and other expenditures AIG paid out as the company neared its collapse. WSJ relates that some regulators are troubled by outsized compensation packages being paid to departing executives in the financial industry, particularly if those companies sought help from the federal government. Mr. Cuomo said he believes some of the company expenditures, including payments to departing executives, may breach New York state law and are fraudulent conveyances, the report states. The report says that Mr. Cuomo and AIG agreed to work together to recover any expenditures considered to be improper. AIG, says WSJ, also agreed not to distribute any funds from its $600 million deferred-compensation and bonus pools of its AIG Financial Products subsidiary. According to the report, Mr. Cuomo thinks that AIG Financial was largely responsible for AIG's near collapse. AIG Financial's former chief, Joseph Cassano, the former head of AIG Financial Products, has a share of about $69 million in the deferred-compensation and bonus pool, while five top executives in that unit have a combined share of funds totaling $93 million, the report states, citing Mr. Cuomo. WSJ relates that Mr. Cuomo said in a letter to AIG's CEO Edward M. Liddy, "To be clear, it is my position that until the taxpayers are repaid with interest the more than $120 billion that has been used in the rescue financing of AIG, no funds should be paid out of these pools to any executives. As AIG recovers using taxpayer money, these pools should not be used to reward executives ahead of taxpayers." AIG, according to WSJ, will form a special governance committee to implement new expense-management controls and cancel perks that aren't strictly justified by legitimate business needs. AIG will cancel more than 160 conferences and events, saving more than $8 million, WSJ reports. About American International Based in New York City, American International Group Inc. -- http://www.aig.com/-- (NYSE: AIG) is an international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. The company is engaged through subsidiaries in General Insurance, Life Insurance & Retirement Services, Financial Services and Asset Management. The company's British headquarters are located on Fenchurch Street in London, continental Europe operations are based in La Defense, Paris, and its Asian HQ is in Hong Kong. AIG owns Ocean Finance, a United Kingdom based company providing home owner loans, mortgages and remortgages. AIG operates in the UK with the brands AIG UK, AIG Life and AIG Direct. It has about 3,000 employees, and sponsors the Manchester United football club. In response to redemption demands, AIG Life (UK) suspended redemptions of its AIG Premier Bond money market fund on Sept. 19, 2008, in order to provide an orderly withdrawal of assets. The Federal Reserve Bank of New York has extended to AIG a revolving credit facility up to $85 billion. AIG's borrowings under the revolving credit facility will bear interest, for each day, at a rate per annum equal to three-month Libor plus 8.50%. The revolving credit facility will have a 24-month term and will be secured by a pledge of assets of AIG and various subsidiaries. The revolving credit facility will contain affirmative and negative covenants, including a covenant to pay down the facility with the proceeds of asset sales. The summary of terms also provides for a 79.9% equity interest in AIG. The corporate approvals and formalities necessary to create this equity interest will depend upon its form. In a statement, the company said "AIG is a solid company with over $1 trillion in assets and substantial equity, but it has been recently experiencing serious liquidity issues." Standard & Poor's Ratings Services revised the CreditWatch status of most of its ratings on the AIG group of companies -- including its 'A-' long-term counterparty credit ratings on American International Group Inc. and the 'A+' counterparty credit and financial strength ratings on most of AIG's insurance operating subsidiaries -- to CreditWatch developing from CreditWatch negative. S&P raised its ratings on preferred stock of International Lease Finance Corp. (ILFC; A-/Watch Dev/A-1) to 'BBB' from 'B', and revised the CreditWatch implications to developing from negative. All other ILFC ratings remain on CreditWatch with developing implications. Fitch Ratings revised its Rating Watch on American International Group, Inc. to Evolving from Negative. Fitch viewed this transaction as a favorable development that alleviates significant near-term liquidity concerns. * * * In a U.S. Securities and Exchange Commission filing dated Aug. 6, 2008, AIG reported a net loss for the second quarter of 2008 of $5.36 billion compared to 2007 second quarter net income of $4.28 billion. Second quarter 2008 adjusted net loss was $1.32 billion, compared to adjusted net income of $4.63 billion for the second quarter of 2007. The continuation of the weak U.S. housing market and disruption in the credit markets, as well as global equity market volatility, had a substantial adverse effect on AIG's results in the second quarter. Net loss for the first six months of 2008 was $13.16 billion, compared to net income of $8.41 billion in the first six months of 2007. Adjusted net loss for the first six months of 2008 was $4.88 billion, compared to adjusted net income of $9.02 billion in the first six months of 2007. AMERICAN INTERNATIONAL: Inks Settlement on Derivative Action ------------------------------------------------------------ American International Group, Inc., disclosed in a Securities and Exchange Commission filing that it has entered with Teachers' Retirement System of Louisiana, individually and derivatively on behalf of AIG, and defendants Maurice R. Greenberg, Edward E. Matthews, Howard I. Smith, Thomas R. Tizzio and C.V. Starr & Co., Inc. into a Stipulation of Settlement in connection with a 2002 derivative action captioned Teachers' Retirement System of Louisiana v. Aidinoff, et al., C.A. No. 20106, before the Court of Chancery of the State of Delaware The parties intend for the stipulation to fully, finally, and forever resolve, discharge, and settle the derivative action and any and all AIG and defendant released claims. Full-text copy of the stipulation of settlement is available free of charge at: http://researcharchives.com/t/s?3416 Full-text copy of the notice stipulation of settlement is available free of charge at: http://researcharchives.com/t/s?3417 Based in New York City, American International Group Inc. -- http://www.aig.com/-- (NYSE: AIG) is an international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. The company is engaged through subsidiaries in General Insurance, Life Insurance & Retirement Services, Financial Services and Asset Management. The company's British headquarters are located on Fenchurch Street in London, continental Europe operations are based in La Defense, Paris, and its Asian HQ is in Hong Kong. AIG owns Ocean Finance, a United Kingdom based company providing home owner loans, mortgages and remortgages. AIG operates in the UK with the brands AIG UK, AIG Life and AIG Direct. It has about 3,000 employees, and sponsors the Manchester United football club. In response to redemption demands, AIG Life (UK) suspended redemptions of its AIG Premier Bond money market fund on Sept. 19, 2008, in order to provide an orderly withdrawal of assets. The Federal Reserve Bank of New York has extended to AIG a revolving credit facility up to $85 billion. AIG's borrowings under the revolving credit facility will bear interest, for each day, at a rate per annum equal to three-month Libor plus 8.50%. The revolving credit facility will have a 24-month term and will be secured by a pledge of assets of AIG and various subsidiaries. The revolving credit facility will contain affirmative and negative covenants, including a covenant to pay down the facility with the proceeds of asset sales. The summary of terms also provides for a 79.9% equity interest in AIG. Standard & Poor's Ratings Services revised the CreditWatch status of most of its ratings on the AIG group of companies -- including its 'A-' long-term counterparty credit ratings on American International Group Inc. and the 'A+' counterparty credit and financial strength ratings on most of AIG's insurance operating subsidiaries -- to CreditWatch developing from CreditWatch negative. S&P raised its ratings on preferred stock of International Lease Finance Corp. (ILFC; A-/Watch Dev/A-1) to 'BBB' from 'B', and revised the CreditWatch implications to developing from negative. All other ILFC ratings remain on CreditWatch with developing implications. Fitch Ratings revised its Rating Watch on American International Group, Inc. to Evolving from Negative. Fitch viewed this transaction as a favorable development that alleviates significant near-term liquidity concerns. The Troubled Company Reporter reported on Sept. 19, 2008, that that Edward Liddy replaced Robert Willumstad as AIG's CEO. * * * In a U.S. Securities and Exchange Commission filing dated Aug. 6, 2008, AIG reported a net loss for the second quarter of 2008 of $5.36 billion compared to 2007 second quarter net income of $4.28 billion. Second quarter 2008 adjusted net loss was $1.32 billion, compared to adjusted net income of $4.63 billion for the second quarter of 2007. The continuation of the weak U.S. housing market and disruption in the credit markets, as well as global equity market volatility, had a substantial adverse effect on AIG's results in the second quarter. Net loss for the first six months of 2008 was $13.16 billion, compared to net income of $8.41 billion in the first six months of 2007. Adjusted net loss for the first six months of 2008 was $4.88 billion, compared to adjusted net income of $9.02 billion in the first six months of 2007. AMERIMARK DIRECT: Moody's Withdraws Ratings on Insufficient Info ---------------------------------------------------------------- Moody's Investors Service withdrew all ratings of AmeriMark Direct, LLC. The ratings have been withdrawn because Moody's believes it lacks adequate information to maintain ratings. Ratings withdrawn include these: -- Corporate family rating of B2; -- Probability of default rating of B2; -- Revolving credit facility at Ba3; -- First lien term loan at Ba3, and -- Second lien term loan at Caa1. The most recent rating action for AmeriMark was the July 27, 2007 initial assignment of ratings. AmeriMark Direct LLC, headquartered in Cleveland, Ohio, is a leading direct and catalog marketer. ARIAD PHARMACEUTICALS: Merck Starts deforolimus 2nd Clinical Trial ------------------------------------------------------------------ ARIAD Pharmaceuticals, Inc., disclosed in a Securities and Exchange Commission filing the initiation of a Phase 2 clinical trial by Merck & Co., Inc., to evaluate the safety and efficacy of oral deforolimus, ARIAD's investigational mTOR inhibitor, in patients with advanced prostate cancer. In collaboration with Merck, deforolimus is currently being studied in multiple clinical trials, both alone and in combination with other therapies, in patients with several different types of cancer. Under the terms of the agreement, ARIAD will receive a $12.5 million milestone payment from Merck upon treatment of the first patient in this clinical study. About ARIAD Pharmaceuticals Headquartered in Cambridge, Mass., ARIAD Pharmaceuticals Inc. (Nasdaq: ARIA) -- http://www.ariad.com/-- is engaged in the discovery and development of breakthrough medicines to treat cancer by regulating cell signaling with small molecules. ARIAD has a global partnership with Merck & Co. Inc. to develop and commercialize deforolimus, ARIAD's lead cancer product candidate, which is in Phase 3 clinical development. At June 30, 2008, the company's consolidated balance sheet showed $82.0 million in total assets and $121.1 million in total liabilities, resulting in a $39.1 million total stockholders' deficit. ASARCO LLC: Terminates Purchase Contract with Sterlite ------------------------------------------------------ ASARCO LLC said it is terminating its contract with Sterlite (USA), Inc., for the sale of its operating assets. ASARCO also announced that it will draw on the $50 million letter of credit posted by Sterlite when it signed the purchase contract on May 30, 2008. "We are taking this action in light of Sterlite's disclosure to us last week that it 'cannot and will not' close the sale unless ASARCO agrees to a price reduction," stated Joseph F. Lapinsky, President and Chief Executive Officer of ASARCO. "Sterlite has repudiated the contract, which gives us the right to terminate it," he added. "By terminating the contract, we are not waiving any of our rights or remedies, and ASARCO is exploring all possible options to obtain the highest and best value for the estate. We look forward to the court-ordered mediation on October 30-31, including Sterlite's participation," Lapinsky continued. ASARCO announced Sterlite's repudiation of the contract during a court-ordered status conference on October 14, 2008. Sterlite had agreed to purchase the operating assets of ASARCO for $2.6 billion. The Purchase and Sale Agreement was part of ASARCO's plan of reorganization, which had been mailed to creditors in a solicitation package on September 29. The U.S. Bankruptcy Court in Corpus Christi, TX issued an order on October 20, suspending the solicitation procedures, including balloting and confirmation hearings that had been scheduled to begin November 17, 2008. The order applies to both ASARCO's plan and the competing plan submitted by its parent companies, Americas Mining Corporation and ASARCO Incorporated. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The company filed for Chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former Judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). The Debtors submitted to the Court a joint plan of reorganization and disclosure statement on July 31, 2008. The plan incorporates the sale of substantially all of the Debtors' assets to Sterlite Industries, Ltd., for US$2,600,000,000. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted a reorganization plan to retain its equity interest in ASARCO LLC, by offering full payment to ASARCO's creditors in connection with ASARCO's Chapter 11 case. AMC would provide up to US$2.7 billion in cash as well as a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Amended versions of the competing plans have been filed with the Court. Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York. (ASARCO Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: To Suspend Solicitation Process on Plans ---------------------------------------------------- In light of plan sponsor Sterlite (USA), Inc.'s inability to perform as buyer under the Purchase and Sale Agreement embodied in Asarco LLC's proposed Chapter 11 plan, the Hon. Robert Schmidt of the United States Bankruptcy Court for the Southern District of New York suspended all deadlines set forth in the Court's Plan Confirmation Objection Procedures Order. The Debtors, however, note that the Court did not suspend the deadline for creditors and interest holders to vote on the Plans of Reorganization for ASARCO LLC and its debtor affiliates. The current deadline for voting on the Plans is October 27. The Debtors' balloting agent mailed solicitation packages to creditors entitled to vote in late September 2008. The Debtors note that various parties have approached them for a suspension of the Plan Voting Deadline. Accordingly, at the Debtors' behest, Judge Schmidt suspends the current solicitation and balloting process of the ASARCO Plans to avoid creditor confusion and unnecessary costs to the Debtors' estates. Creditors who are entitled to vote are not required to complete and submit any ballots received in connection with the voting on the Plans at this time, the Court clarifies. Any ballots received by AlixPartners, LLC, as the Debtors' balloting agent, will be disregarded for all purposes, and those ballots will not constitute a waiver of a creditor's or interest holder's rights. ASARCO, Inc., the parent company of the Debtors, supports the suspension request. The Court has also approved the form of a notice of suspension of the Solicitation Procedures and Balloting on the Debtors' and the Parent's Plans of Reorganization for ASARCO LLC and its debtor affiliates. For any questions on the Suspension Notice, creditors are encouraged to contact Alix Partners at 2100 McKinney Avenue, Suite 800, in Dallas Texas 75201; call (888)727-9235 or (972)535- 7137; or email CMS_Noticing@alixpartners.com with reference as "ASARCO" in the subject line. Court Suspends Plan-Related Dates The Court vacated its order setting deadlines with respect to discovery in connection with objections to the confirmation of the competing Chapter 11 plans in the Debtors' cases. Judge Schmidt held that the deadline for filing plan confirmation objections is suspended until further Court order. Judge Schmidt, however, clarified that nothing in his order will vacate the Plans' confirmation hearings scheduled to commence on November 17, 2008. ASARCO LLC has previously announced that its plan sponsor, Sterlite (USA), Inc., is unable to close the sale transaction that was expected to fund the Debtors' Plan. Moreover, U.S. District Judge Andrew Hanen ordered the parties to mediation to address confirmation issues and resolution of the fraudulent conveyance suit brought by ASARCO against AMC. The mediation will take place on October 30 and 31, 2008, before the Honorable Marvin Isgur. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for Chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). The Debtors submitted to the Court a joint plan of reorganization and disclosure statement on July 31, 2008. The plan incorporates the sale of substantially all of the Debtors' assets to Sterlite Industries, Ltd., for US$2,600,000,000. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted a reorganization plan to retain its equity interest in ASARCO LLC, by offering full payment to ASARCO's creditors in connection with ASARCO's Chapter 11 case. AMC would provide up to US$2.7 billion in cash as well as a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York. (ASARCO Bankruptcy News Issue No. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ASCENDIA BRANDS: Panel May Retain Amper as Financial Advisors ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has granted the Official Committee of Unsecured Creditors appointed in Ascendia Brands Inc., and its debtor-affiliates' bankruptcy cases, permission to retain Amper, Politziner & Mattia, LLP as its accountants and financial advisors, nunc pro tunc to Aug. 21, 2008. As the Creditors Committee's accountants and financial advisors, Amper is expected to: a) analyze the financial operations of the Debtors pre- and postpetition as necessary; b) perform forensic investigating services as requested by the Committee and counsel regarding pre-petition activities of the Debtors to identify potential causes of action; c) perform claims analysis for the Committee, as necessary; d) verify the physical inventory of supplies, equipment and other material assets and liabilities, as necessary; e) assist the Committee in its review of monthly statements of operations to be submitted by the Debtor; f) analyze the Debtors' budgets, cash flow projections, restructuring programs, selling and general administrative structure and other reports or analyses prepared by the Debtor or its professionals in order to advise the Committee on the status of the Debtors' operations; g) scrutinize cash disbursements on an on-going basis for the period subsequent to the Petition Date; h) analyze transactions with insiders, related or affiliated companies; i) prepare and submit reports to the Committee as necessary; j) assist the Committee in its review of the financial aspects of a plan of reorganization to be submitted by the Debtors; k) attend meetings of Creditors and conferences with representatives of the creditor groups and their counsel; l) prepare hypothetical orderly liquidation analyses; m) monitor the sale or liquidation of any of the Debtors' assets; n) analyze the financial ramifications of any proposed transactions for which the Debtors seek Bankruptcy Court approval including, but not limited to, post-petition financing, sale of all or a portion of the Debtors' assets, management compensation and/or retention and severance plans; o) render expert testimony on behalf of the Committee; p) provide assistance and analysis in support of potential litigation (including avoidance power actions) that may be investigated and/or prosecuted by the Committee; and q) analyze transactions with the Debtors' financing institutions. As compensation for their services, Amper's professionals bill: Hourly Rate ----------- Directors/Partners $375-$425 Managers/Senior Managers $275-$375 Seniors/Supervisors $180-$250 Staff $130-$175 Paraprofessionals $105 The principal professionals at Amper designated to represent the Committee and their current hourly rates are: Edward A. Phillips (Partner) $425 Allen D. Wilen $425 M. Jay Lindenberg (Director) $400 Laura Patt (Manager) $300 Various associates $130-$250 Stephanie Prinston $105 Edward A. Phillips, CPA, a partner at Amper, Politziner & Mattia, LLP, assured the Court that the firm does not hold or represent any interest adverse to the Debtors or their estates, their creditors or other parties-in-interest in these cases. Amper also advised the Committee that it has no connection with the Debtors, their creditors or other parties-in-interest in these cases, but because it is a large firm with a national practice it may have represented certain of the Debtors' creditors or equity holders in matters unrelated to the Debtors' cases. Headquartered in Hamilton, New Jersey, Ascendia Brands, Inc. -- http://www.ascendiabrands.com/-- makes and sells branded consumer products primarily in North America and over 80 countries as well. The company's customers include Walmart, Walgreens, Kmart, Meijer Stores, Target, and CVS. The company and six of its affiliates filed for Chapter 11 protection on Aug. 5, 2008 (Bankr. D. Del. Lead Case No.08-11787). Kenneth H. Eckstein, Esq., and Robert T. Schmidt, Esq., at Kramer Levin Naftalis & Frankel LLP, represent the Debtors in their restructuring efforts. M. Blake Cleary, Esq., Edward J. Kosmoswki, Esq., and Patrick A. Jackson, Esq., at Young, Conaway, Stargatt & Taylor, LLP, serve as the Debtors' Delaware counsel. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims agent. When the Debtors filed for protection from their creditors, they listed total assets of $194,800,000 and total debts of $279,000,000. ASCENDIA BRANDS: Panel May Retain Landis Rath as Counsel -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted the Official Committee of Unsecured Creditors appointed in Ascendia Brands Inc., and its debtor-affiliates' bankruptcy cases, authority to retain Landis Rath & Cobb LLP as its counsel, nunc pro tunc to Aug. 14, 2008. As the Creditors Committee's counsel in these cases, Landis Rath is expected to: a) render legal advice with respect to the powers and duties of the Committee and the other participants in the Debtors' cases; b) assist the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors, the operation of the Debtors' businesses and any other matter relevant to the Debtors' cases, as and to the extent such matters may affect the Debtors' creditors; c) participate in negotiations with parties-in-interest with respect to any disposition of the Debtors' assets, plan of reorganization and disclosure statement in conection with such plan, and otherwise protect and promote the interests of the Debtors' creditors; d) prepare all necessary applications, motions, answers, orders, reports and papers on behalf of the Committee, and appear on behalf of the Committee at Court hearings as necessary and appropriate in connection with the Debtors' cases; e) render legal advice and perform legal services in connection; and f) perform all other legal necessary legal services in connection with these Chapter 11 cases, as may be requested by the Committee. The primary Landis Rath attorneys who will be representing the Committee and their corresponding rates are: Professional Hourly Rate ------------ ----------- Richard S. Cobb, Esq., partner $475 per hour Kerri K. Mumford, Esq., associate $335 per hour Mona A. Parikh, Esq., associate $240 per hour Richard S. Cobb, Esq., a partner at Landis Rath, assured the Court that the firm neither holds or represents any interest adverse to the Debtors or their estates, and that the firm is a "disinterested person" as defined in Sec. 101(14) of the Bankruptcy Code. Headquartered in Hamilton, New Jersey, Ascendia Brands, Inc. -- http://www.ascendiabrands.com/-- makes and sells branded consumer products primarily in North America and over 80 countries as well. The company's customers include Walmart, Walgreens, Kmart, Meijer Stores, Target, and CVS. The company and six of its affiliates filed for Chapter 11 protection on Aug. 5, 2008 (Bankr. D. Del. Lead Case No.08-11787). Kenneth H. Eckstein, Esq., and Robert T. Schmidt, Esq., at Kramer Levin Naftalis & Frankel LLP, represent the Debtors in their restructuring efforts. M. Blake Cleary, Esq., Edward J. Kosmoswki, Esq., and Patrick A. Jackson, Esq., at Young, Conaway, Stargatt & Taylor, LLP, serve as the Debtors' Delaware counsel. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims agent. When the Debtors filed for protection from their creditors, they listed total assets of $194,800,000 and total debts of $279,000,000. ASHTON WOODS: Posts $15 Million Net Loss for Quarter Ended Aug. 31 ------------------------------------------------------------------ Ashton Woods USA L.L.C. posted $14.97 million in net losses on $78.26 million in net revenues for the three months ended Aug. 31, 2008, compared with $10.62 million in net losses on $97.5 billion in net revenues for the three months ended Aug. 31, 2007. The company's balance sheet as of Aug. 31, 2008, showed $252 million in total assets, $207.86 million in total liabilities, and $43.73 million in shareholders' equity. The company is currently in default of certain covenants of its senior credit facility and the interest payment requirements of the Subordinated Notes. One consequence of its default under the senior credit facility is that it is not currently permitted to perform its outstanding repurchase offer obligation regarding the Subordinated Notes. If the company is able to negotiate an acceptable resolution to the current defaults under these facilities and is able to remain in compliance in the future, it believes that it will be able to continue to fund its operations and its future cash needs (including debt maturities) through a combination of cash flows from operating activities and its existing senior credit facility. There can be no assurance that the company will be able to negotiate such a resolution or remain in compliance in the future. If it is not able to secure an acceptable resolution to the current defaults, it will need to consider available options and remedies, which may include seeking additional financing to repay its outstanding indebtedness and to continue to fund its operations and future cash needs. To the extent sought, there can be no assurance that it will be able to secure such financing on terms acceptable to the company, or at all. The company's failure to secure financing when required could have a material adverse effect on its solvency and its ability to continue as a going concern. As of Aug. 31, 2008, the ratio of total debt to total capitalization was 78.3%, compared to 71.8% as of May 31, 2008. Total debt to total capitalization consists of notes payable divided by total capitalization. A copy of Ashton Woods' financial report for the quarter ended Aug. 31, 2008, is available free of charge at http://researcharchives.com/t/s?341c Headquartered in Atlanta, Georgia, Ashton Woods USA L.L.C. is a homebuilder with operations in Atlanta, Dallas, Houston, Orlando, Phoenix, Denver and Tampa. * * * Standard & Poor's Ratings Services lowered its corporate credit ratings on Ashton Woods USA LLC and its subsidiary, Ashton Woods Finance Co., to 'D' from 'CCC' and downgraded Ashton Woods' $125 million 9.5% senior subordinated notes due 2015 to 'D' from 'CC' after the company failed to make its Oct. 1, 2008, interest payment on this obligation. The recovery rating on the senior subordinated notes remains a '6'. The ratings were on CreditWatch negative before being lowered, where they were placed on Aug. 6, 2008. AZ CON CONCRETE: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: AZ Con Concrete, Inc. 6015 S. El Mirage Road Tolleson, AZ 85353 Bankruptcy Case No.: 08-14695 Chapter 11 Petition Date: October 21, 2008 Court: District of Arizona (Phoenix) Judge: Randolph J. Haines Debtor's Counsel: Donald W. Powell, Esq. d.powell@cplawfirm.com Carmichael & Powell, P.C. 7301 N. 16th St., #103 Phoenix, AZ 85020 Tel: (602) 861-0777 Fax: (602) 870-0296 Estimated Assets: $1,571,250 Estimated Debts: $1,881,348 The Debtor did not file a list of 20 largest unsecured creditors. BARRINGTON II: Moody's Downgrades Ratings and Left Under Watch -------------------------------------------------------------- Moody's Investors Service has downgraded and left on watch for possible downgrade the ratings on the notes issued by Barrington II CDO Ltd.: Class Description: $154,000,000 Class A-1S Floating Rate Notes Due 2052 -- Prior Rating: Aa1, on review for possible downgrade -- Prior Rating Date: June 2, 2008 -- Current Rating: Ba1, on review for possible downgrade In addition, Moody's has downgraded the ratings on these notes: Class Description: $692,200,000 Class A1-M Floating Rate Notes Due 2052 -- Prior Rating: B1, on review for possible downgrade -- Prior Rating Date: June 2, 2008 -- Current Rating: Ca Class Description: $203,800,000 Class A1-Q Floating Rate Notes Due 2052 -- Prior Rating: B1, on review for possible downgrade -- Prior Rating Date: June 2, 2008 -- Current Rating: Ca Class Description: $270,400,000 Class A1J-M Floating Rate Notes Due 2052 -- Prior Rating: B2, on review for possible downgrade -- Prior Rating Date: June 2, 2008 -- Current Rating: Ca Class Description: $79,600,000 Class A1J-Q Floating Rate Notes Due 2052 -- Prior Rating: B2, on review for possible downgrade --Prior Rating Date: June 2, 2008 -- Current Rating: Ca Class Description: $189,000,000 Class A-2 Floating Rate Notes Due 2052 -- Prior Rating: Ca -- Prior Rating Date: June 2, 2008 -- Current Rating: C Class Description: $78,750,000 Class A-3 Floating Rate Notes Due 2052 -- Prior Rating: Ca -- Prior Rating Date: June 2, 2008 -- Current Rating: C Class Description: $43,750,000 Class B Floating Rate Notes Due 2052 -- Prior Rating: Ca -- Prior Rating Date: June 2, 2008 -- Current Rating: C According to Moody's, these rating actions are as a result of the deterioration in the credit quality of the transaction's underlying collateral pool consisting primarily of structured finance securities. BRUNSWICK: Moody's Chips Unsecured Notes' Rating to 'Ba3' --------------------------------------------------------- Moody's Investors Service downgraded the rating on Brunswick's unsecured notes to Ba3 from Baa3 and downgraded its commercial paper rating to not prime from P3, concluding a review for possible downgrade initiated on October 10, 2008. At the same time, Moody's assigned a Ba2 corporate family rating and a Ba2 probability of default rating to Brunswick. The ratings remain on review for possible additional downgrade, with the LGD assessments and point estimates also being subject to change. "The downgrade reflects our concerns that the continuing turmoil in the financial markets will result in a significant contraction in discretionary consumer spending over the foreseeable future and may put pressure on the company's dealer network and its liquidity position" said Kevin Cassidy, Senior Credit Officer at Moody's Investors Service. While Moody's believes that Brunswick will continue to attempt to protect its credit metrics and liquidity, Moody's are concerned about the company's reduced financial flexibility as its ability to comply with a financial covenant is uncertain. Moody's review will continue to focus on the outlook for the company's profitability and cash flow generation over the medium term as well as the expected financial condition of its dealers. Moody's will also analyze the company's liquidity position, including the cushion for covenant compliance in its bank agreement and in its joint venture agreement with GECC. The rating for the unsecured notes reflects both the overall probability of default of the company, to which Moody's assigns a PDR of Ba2, and a loss given default assessment of LGD 5. The notes are unsecured and are not guaranteed by Brunswick's subsidiaries. Ratings assigned and on review for possible downgrade include: -- Corporate family rating at Ba2; -- Probability of default rating at Ba2; Rating downgraded/assessment assigned, with rating on review for possible additional downgrade: -- Senior unsecured notes to Ba3 (LGD 5, 71%) from Baa3; Rating downgraded: -- Commercial Paper to not prime from Prime-3 Brunswick is headquartered in Lake Forest, Illinois. The company manufactures marine engines, pleasure boats, bowling capital equipment and fitness equipment, and operates retail bowling centers. Sales in the twelve months ended June 2008 approximated $5.6 billion. BUFFALO THUNDER: Moody's Cuts Ratings to 'B3'; On Neg. Outlook -------------------------------------------------------------- Moody's Investors Service lowered Buffalo Thunder Development Authority's corporate family rating, probability of default rating and senior notes rating to B3 from B2. The rating outlook is changed to negative. The rating action reflects the risk that the ramp-up of the new Buffalo Thunder Resort could be materially affected by the economic headwinds in its first year of operation, which could result in Moody's opinion in a higher leverage than initially expected but also stretched liquidity in the near term. Moody's believes that lower tourist visitation in the Santa Fe area in the context of weakening consumer spending and leisure travel budgets could represent a major drag on BTDA's revenues, while the fixed costs associated with a high-quality destination resort such as Buffalo Thunder are significant. Although the more stable local demand could provide a degree of cushion, Moody's cautions that Buffalo Thunder competes with three locals-focused casinos within 30 miles, excluding two other small facilities operated by BTDA, and three larger resorts in Albuquerque, New Mexico, which is the largest population center in the area. Additionally, while the macro-economic indicators for New Mexico are still better than those for the national economy, they are deteriorating, including unemployment rate. As a result, Moody's expects BTDA's leverage to be more in line with the B3 category after one year of operations. In Moody's opinion, the negative outlook considers the near-term risk that a weak ramp-up and insufficient cash flow generation could result in stretched liquidity, considering that the interest reserve does not fully cover the December 8 interest payment on the $245 million notes and that BTDA will start amortizing its FF&E loan in early 2009. The rating outlook could return to stable, should BTDA's liquidity position significantly improve as a result of the build-up of the cash balance. Moody's assigned a B2 corporate family rating to BTDA on November 29, 2006. Ratings downgraded to B3 from B2: -- Corporate Family Rating -- Probability of Default Rating -- $245 million Senior Notes Rating (LGD assessment revised to LGD4/52% from LGD4/57%) BTDA is a political subdivision of the Pueblo of Pojoaque, which was created in 2006 to oversee all of the Pueblo's gaming operations. BTDA operates in Santa Fe, New Mexico, The Cities of Gold Casino, the Sports Bar Casino, and since August 2008 Buffalo Thunder Resort. CABLEVISION SYSTEMS: Names Michael Huseby as Finance Chief ---------------------------------------------------------- Cablevision Systems Corporation disclosed in a Securities and Exchange Commission filing that on Oct. 16, 2008, it entered into a new employment agreement with Michael Huseby, its Executive Vice President and Chief Financial Officer. The Employment Agreement replaces Mr. Huseby's prior employment agreement that was set to expire on March 1, 2009, and will automatically terminate on Oct. 16, 2010. The Employment Agreement provides for a minimum annual base salary of $950,000, subject to review and potential increase by the Company in its sole discretion. Mr. Huseby is also eligible to participate in the Company's discretionary annual bonus program with an annual target bonus opportunity equal to 90% of salary. Mr. Huseby is also eligible to participate in such equity and other long-term incentive programs that are made available to similarly situated executives at the Company. Mr. Huseby remains eligible for the Company's standard benefits programs at the levels that are made available to similarly situated executives at the Company. If Mr. Huseby's employment with the Company is terminated prior to Oct. 16, 2010, (i) by the company or (ii) by Mr. Huseby for good reason, then, subject to his execution of a satisfactory severance agreement, the Company has agreed to provide him with: -- severance in an amount no less than two times the sum of Mr. Huseby's annual base salary and annual target bonus as in effect at the time of termination of employment; -- continued eligibility for a prorated bonus based on the amount of Mr. Huseby's base salary actually earned during the calendar year through the termination date if conditions outlined in the Employment Agreement are otherwise met; -- any restricted shares granted to Mr. Huseby by the Company prior to the date of the Employment Agreement shall fully vest and all restrictions related thereto shall be eliminated; and -- a prorated target award amount of any performance awards granted to Mr. Huseby prior to the date of the Employment Agreement shall vest based on the number of full months of the three-calendar year performance period of the relevant award that Mr. Huseby was employed by the Company, with any payment remaining subject to the relevant performance objectives and other conditions outlined in the Employment Agreement. Mr. Huseby's employment is at will and may be terminated by him or the Company at any time, with or without notice or reason. About Cablevision Systems Corp. Headquartered in Bethpage, New York, Cablevision Systems Corp. (NYSE: CVC) -- is a cable operator in the United States that operates cable programming networks, entertainment businesses and telecommunications companies. Through its wholly owned subsidiary, Rainbow Media Holdings LLC, Cablevision owns interests in and manages numerous national and regional programming networks, the Madison Square Garden sports and entertainment businesses, and cable television advertising sales companies. Through Cablevision Lightpath Inc., its wholly owned subsidiary, the company provides telephone services and Internet access to the business market. At June 30, 2008, the company's consolidated balance sheet showed $9.4 billion in total assets and $14.4 million in total liabilities, resulting in a $5.0 billion total stockholders' deficit. * * * As disclosed in the Troubled Company Reporter on June 6, 2008, Standard & Poor's Ratings Services affirmed all its ratings, including its 'BB' corporate credit rating, on based Cablevision Systems Corp., a major cable operator in the New York City metropolitan area, and its subsidiaries. The outlook is negative. On June 2, 2008, TCR said that Moody's Investors Service assigned a B1 rating to the proposed new $500 million of senior unsecured debt to be issued by Cablevision Systems Corporation's subsidiary CSC Holdings, Inc. Existing ratings for the company and CSC were also affirmed. The rating outlook remains stable. CALIFORNIA OIL: Posts $127,622 Net Loss for Quarter Ended Aug. 31 ----------------------------------------------------------------- California Oil & Gas Corp. posted $127,622 in net losses on $21,777 in net revenues for the three months ended Aug. 31, 2008, compared with $99,678 in net losses on $65,806 in net revenues for three months ended Aug. 31, 2007. The company's balance sheet as of Aug. 31, 2008, showed $1,292,816 in total assets, $1,127,667 in total liabilities, and $165,149 in shareholders' equity. The company also had $4,238,795 in accumulated deficit. At Aug. 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $417,552 in total current assets available to pay $1,127,667 in total current liabilities. Full-text copy of California Oil & Gas Corp.'s financial statement for the quarter ended Aug. 31, 2008, is available free of charge at http://researcharchives.com/t/s?3410 Going Concern Doubt LBB & Associates Ltd., LLP in Houston, Texas, expressed substantial doubt about California Oil & Gas Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Nov. 30, 2007. The auditing firm pointed to the company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2008. About California Oil Headquartered in Calgary, Alberta, California Oil & Gas Corp. (OTC BB: COGC) -- http://www.caloilandgas.com/-- is a publicly traded oil and gas company with assets in the San Joaquin Basin of California and in Louisiana. The company is focussed on exploring high yield oil and gas prospects both domestically and internationally. The company is a gas producer and is targeting the acquisition of late stage exploration or early stage development projects around the globe. CALPINE CORP: To Release Third Quarter 2008 Results on November 7 ----------------------------------------------------------------- Calpine Corporation plans to release third quarter 2008 financial results on Friday, Nov. 7, 2008, before the opening of the New York Stock Exchange. Senior management will discuss the results during an investor call scheduled for 10 a.m. EST or 9 a.m. CST on Nov. 7, 2008. Based in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company and its affiliates filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2007, the Debtors disclosed total assets of $18,467,000,000, total liabilities not subject to compromise of $11,207,000,000, total liabilities subject to compromise of $15,354,000,000 and stockholders' deficit of $8,102,000,000. On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC, and Silverado Geothermal Resources, Inc., filed voluntary chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198). On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another affiliate, also filed a voluntary chapter 11 petition (Bankr. S.D.N.Y. Case No. 07-12967). On June 20, 2007, the Debtors filed their Chapter 11 Plan and Disclosure Statement. On Aug. 27, 2007, the Debtors filed their Amended Plan and Disclosure Statement. Calpine filed a Second Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a Third Amended Plan. On Sept. 25, 2007, the Court approved the adequacy of the Debtors' Disclosure Statement and entered a written order on September 26. On Dec. 19, 2007, the Court confirmed the Debtors' Plan. The Amended Plan was deemed effective as of Jan. 31, 2008. (Calpine Bankruptcy News, Issue No. 96; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000) CALPINE CORP: To Get $97MM from Rosetta Resources to Settle Claims ------------------------------------------------------------------ Calpine Corporation disclosed a settlement with Rosetta Resources, Inc., of all claims related to Calpine's July 7, 2005 sale of substantially all of its oil and gas business to Rosetta. The settlement provides for a $97 million payment to Calpine from Rosetta and the conveyance of certain residual oil and gas properties by Calpine to Rosetta. This settlement resolves disputes that were the subject of litigation in the U.S. Bankruptcy Court for the Southern District of New York, including Calpine's fraudulent conveyance claim against Rosetta and Rosetta's claims against Calpine. The companies also are executing a 10-year extension of an existing dedicated reserves gas purchase agreement for Rosetta's California production located near Calpine's CPN Pipeline Company. "This is a win-win settlement," Calpine Chief Executive Officer Jack Fusco, said. "Our disputes over past events have been amicably resolved, and we have entered into a mutually beneficial 10-year gas supply agreement that assures Calpine of a continued relationship with Rosetta and a reliable supply of natural gas for our California plants through 2019." The settlement also means that the 2,717,654 shares of Calpine common stock, which had been specifically reserved for the claims asserted by Rosetta Resources in Calpine's bankruptcy case, will become part of the general reserve of Calpine common stock established under Calpine's confirmed plan of reorganization, which, if not required to satisfy unresolved claims remaining in Calpine's bankruptcy case, would be available for further distributions to Calpine's general unsecured creditors. Based in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company and its affiliates filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2007, the Debtors disclosed total assets of $18,467,000,000, total liabilities not subject to compromise of $11,207,000,000, total liabilities subject to compromise of $15,354,000,000 and stockholders' deficit of $8,102,000,000. On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC, and Silverado Geothermal Resources, Inc., filed voluntary chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198). On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another affiliate, also filed a voluntary chapter 11 petition (Bankr. S.D.N.Y. Case No. 07-12967). On June 20, 2007, the Debtors filed their Chapter 11 Plan and Disclosure Statement. On Aug. 27, 2007, the Debtors filed their Amended Plan and Disclosure Statement. Calpine filed a Second Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a Third Amended Plan. On Sept. 25, 2007, the Court approved the adequacy of the Debtors' Disclosure Statement and entered a written order on September 26. On Dec. 19, 2007, the Court confirmed the Debtors' Plan. The Amended Plan was deemed effective as of Jan. 31, 2008. CAMPBELL RESOURCES: TSX to Review Listing Requirement Compliance ---------------------------------------------------------------- The Toronto Stock Exchange said that it is reviewing the common shares of Campbell Resources, Inc., with respect to meeting the continued listing requirements. The Company has been granted 30- days in which to regain compliance with these requirements, pursuant to the remedial review process. Headquartered in Montreal, Canada, Campbell Resources Inc. (Symbol: CCH) -- http://www.ressourcescampbell.com-- operates a mining company. CASH TECHNOLOGIES: Posts $826K Net Loss for Qtr. Ended August 31 --------------------------------------------------------------- Cash Technologies, Inc., reported $826,076 net loss on net revenues of $290,089 for the fiscal quarter ended Aug. 31, 2008, compared to $10,776,128 net loss on net revenues of $43,586 for the same period a year ago. The company's condensed consolidated balance sheet at Aug. 31, 2008, showed $17,899,881 in total assets and $10,552,771 in total liabilities resulting in a $7,469,751 total stockholders' equity. Going Concern Doubt According to the Troubled Company Reporter on Sept. 29, 2008, Vasquez & Company LLP expressed substantial doubt about Cash Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended May 31, 2007. The auditing firm noted that the company has suffered significant recurring losses and is in immediate need of substantial working capital to continue its business and operations. At Feb, 29, 2008, the company had a working capital deficit of $8,511,620 compared to working capital deficit of $6,662,505 at May 31, 2007. The large change is a direct result of a write off of the Champion note receivable. To date, the company has been funding its operations primarily through the issuance of equity in private placement transactions with existing stockholders or affiliates of stockholders. A full-text copy of the company's regulatory filing is available for free at http://ResearchArchives.com/t/s?341b About Cash Technologies Headquartered in Los Angeles, Cash Technologies Inc. (AMEX: TQ) -- http://www.cashtechnologies.com/-- develops and markets innovative data processing solutions in the healthcare and financial services industries. CASH TECHNOLOGIES: Delays Form 10QSB Filing with SEC ---------------------------------------------------- Cash Technologies, Inc., disclosed in a Securities and Exchange Commission filing that it was unable to file its Form 10QSB for the first fiscal quarter ended Aug. 31, 2008, without unreasonable expense and effort because its consolidation of the financial results of its CPI Holdings, LLC subsidiary, which recently acquired certain assets of Champion Parts, Inc., has not been completed. Going Concern Doubt Vasquez & Company LLP expressed substantial doubt about Cash Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended May 31, 2007. The auditing firm noted that the company has suffered significant recurring losses and is in immediate need of substantial working capital to continue its business and operations. At Feb, 29, 2008, the company had a working capital deficit of $8,511,620 compared to working capital deficit of $6,662,505 at May 31, 2007. The large change is a direct result of a write off of the Champion note receivable. To date, the company has been funding its operations primarily through the issuance of equity in private placement transactions with existing stockholders or affiliates of stockholders. About Cash Technologies Headquartered in Los Angeles, Cash Technologies Inc. (AMEX: TQ) -- http://www.cashtechnologies.com/-- develops and markets innovative data processing solutions in the healthcare and financial services industries. CASH TECHNOLOGIES: Posts $827,076 Net Loss for August 2008 Quarter ------------------------------------------------------------------ Cash Technologies Inc. posted $826,076 in net losses on $290,089 in net revenues for the second quarter ended Aug. 31, 2008, compared with $10,826,128 in net losses on $43,587 in net revenues for the second quarter ended Aug. 31, 2007. Cash Technologies' balance sheet as of Aug. 31, 2008, showed $17,899,882 in total assets, $10,552,771 million in total liabilities, and $7,469,751 million in shareholders' equity. The company also had $47,442,297 in accumulated deficit. Since inception, the company satisfied its working capital requirements through limited revenues generated from operations, the issuance of equity and debt securities, borrowing under a line of credit and loans from our security holders. Its independent certified public accountant included an explanatory paragraph in its report for the year ended May 31, 2008, which indicated a substantial doubt as to its ability to continue as a going concern. This concern is primarily due to substantial debt service requirements and working capital needs. Full-text copy of Cash Technologies' financial report for the second quarter ended Aug. 31, 2008, is available free of charge at http://researcharchives.com/t/s?341b Going Concern Doubt Vasquez & Company LLP expressed substantial doubt about Cash Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended May 31, 2007. The auditing firm noted that the company has suffered significant recurring losses and is in immediate need of substantial working capital to continue its business and operations. At Feb. 29, 2008, the company had a working capital deficit of $8,511,620 compared to working capital deficit of $6,662,505 at May 31, 2007. The large change is a direct result of a write off of the Champion note receivable. To date, the company has been funding its operations primarily through the issuance of equity in private placement transactions with existing stockholders or affiliates of stockholders. About Cash Technologies Headquartered in Los Angeles, Cash Technologies Inc. (AMEX: TQ) -- http://www.cashtechnologies.com/-- develops and markets innovative data processing solutions in the healthcare and financial services industries. CHAMPION ENTERPRISES: Moody's Junks Ratings; Outlook Stable ----------------------------------------------------------- Moody's Investors Service downgraded Champion Enterprises' corporate family rating to Caa1 from B2 reflecting the continued weakness in the company's core U.S. operations and the outlook for further softness. The ratings outlook is stable. These ratings/assessments were affected at Champion Enterprises, Inc.: -- Corporate Family Rating, downgraded to Caa1 from B2; -- Probability of default, downgraded to Caa1 from B2; -- $6.7 million 7.625% senior notes, due 2009, downgraded to B2 (LGD2, 27%) from Ba3 (LGD2, 28%); -- Speculative Grade Liquidity Rating, affirmed at SGL-4. These ratings/assessments were affected at Champion Home Builders Co.: -- $200 million ($56 million outstanding) senior secured term loan facility, due 2012, downgraded to B2 (LGD2, 27%) from Ba3 (LGD2, 28%); -- $40 million senior secured revolving credit facility, due 2010, downgraded to B2 (LGD2, 27%) from Ba3 (LGD2, 28%); -- $60 million senior secured synthetic letter-of-credit back-up facility, due 2012, downgraded to B2 (LGD2, 27%) from Ba3 (LGD2, 28%). The downgrade of Champion's corporate family rating to Caa1 reflects Moody's projections for weak cash flow generation, ongoing pressure on the company's core U.S. operations, weak overall profitability, and concerns related to the financial covenants governing the company's first lien facilities. In particular, general economic weakness and tight credit are expected to be difficult to offset even though management has been aggressively reducing its costs. Furthermore, the two notch downgrade reflects the company's multi year attempt to right size its business for market conditions. Although the company has been closing manufacturing plants, it seems to always be behind the demand curve. As a result, its plant utilization was only 41% as of the second quarter of 2008. The company's debt to EBITDA for the period ended June 30, 2008 was over 7 times and was high for the previous rating category within the building products portfolio. Moody's anticipates these metrics to remain under pressure well into 2009 due to weak demand. The stable ratings outlook reflects the belief that the company's large cash position partially mitigates some of the near term challenges it faces, thus mitigating near-term rating pressure. Longer term stability depends on the company's ability to right- size its operations, drive down costs and benefit from a firming demand environment when it ultimately materializes. Headquartered in Troy, Michigan, Champion Enterprises, Inc. is a leader in factory-built construction, operates 31 manufacturing facilities in North America and the United Kingdom. Revenues for the trailing twelve month period ended June 28, 2008 were $1.3 billion. CHEM RX: Moody's Keeps 'B2' Ratings, Negative Outlook ----------------------------------------------------- Moody's Investors Service downgraded the speculative grade liquidity rating of Chem Rx Corporation to SGL-4 from SGL-3. The downgrade to SGL-4 reflects Moody's concern over the company's ability to comply with the financial covenants governing its credit facilities in light of tightening covenants and its declining financial performance. Additionally, Moody's is concerned that earnings may continue to contract given the trend of declining year-over-year EBITDA for the first half of 2008, rising costs, as well as its generally weaker than expected operating performance. Despite concerns over covenant compliance, Moody's acknowledges that the company has reduced debt levels since the end of the March 2008 quarter. These ratings remain unchanged: -- Corporate family rating at B2; -- Probability-of-default rating at B2; -- $25 million senior secured revolving credit facility due 2012 at B1 (LGD3, 38%); -- $80 million first lien senior secured term loan due 2013 at B1 (LGD3, 38%); -- $37 million second lien senior secured term loan due 2014 at Caa1 (LGD5, 84%). The ratings outlook remains negative. Headquartered in Long Beach, New York, Chem Rx Corporation provides institutional pharmacy services to skilled nursing facilities and other long-term healthcare institutions. For the twelve months ended June 30, 2008, Chem Rx generated sales of approximately $343 million. CHENG HENG: Files for Bankruptcy Protection ------------------------------------------- Michael Bathon of Bloomberg News reports that Cheng Heng, Inc., and affiliate Wing Heng, Inc., filed for Chapter 11 bankruptcy protection on Oct. 22, 2008 with the U.S. Bankruptcy Court for the District of Minnesota (Lead Case No. 08-35467) without giving a reason. Kevin Cheng Lam, the Debtors' owners, also filed for Chapter 11 bankruptcy protection on Oct. 21, according to the report. Lam has about $11.7 million in unsecured claims that he owes to multiple banks, including $5.7 million to Brickwell Community Bank for personally guaranteeing loans he received from them. Best Western Corp. has an $180,000 unsecured claim against the Debtors, and won a civil judgment against them in April 2007 for trademark infringement, according to the report. The Debtors, according to the report, were sued by Best Western in September 2006 when they continued to use the Best Western logo on its hotel after its membership agreement had been terminated. St. Paul, Minnesota-based Cheng Heng, Inc., owns and operates The South St. Paul Hotel and Conference Center, while Wing Heng, Inc., owns and operates the LaQuinta Hotel. Matthew L. Fling, Esq., represents the Debtors in its restructuring efforts. The Lead Debtor listed between $10 million and $50 million in assets and between $10 million and $50 million in estimated debts in its filing. CHENG HENG: Case Summary & Five Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Cheng Heng Inc. dba South St. Paul Hotel & Conference Ctr. 448 University Ave. W. St Paul, MN 55078 Bankruptcy Case No.: 08-35467 Type of Business: The Debtor operates leasing and accommodation company. Chapter 11 Petition Date: October 21, 2008 Court: District of Minnesota (St Paul) Judge: Robert J Kressel Debtor's Counsel: Matthew L. Fling, Esq. fling@pro-ns.net 4018 West 65th Street, Suite 100 Edina, MN 55435 Tel: (952) 926-5337 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Best Western Corp. trade debt $180,000 6201 N. 24th Pkwy. Phoenix, AZ 85016 Tel: (602) 957-4200 Jim Murr Plumbing trade debt $50,000 Attn: Jim Murr 780 19th St. Newport, MN 5055 Tel: (651) -457-1377 Vito Mechanical trade debt $25,000 Attn: Mike Vito 7840 Alberta Way West Inver Grove Heights, MN 55077 Tel: (651) 227-1432 Focus Electric trade debt $10,000 City of Saint Paul assumed loan $3,500 CITIBANK OMNI: Moody's Rates $23MM Class 2008-D1 Notes 'Ba2' ------------------------------------------------------------ Moody's Investors Service has assigned a rating of Ba2 to the Floating Rate Class 2008-D1 Notes issued as part of the Omniseries from the Citibank Omni Master Trust. The complete ratings action is: Issuer: Citibank Omni Master Trust -- $23,000,000 Extendible Floating Rate Class 2008-D1 Notes, rated Ba2 COLLEZIONE EUROPA: Files Chapter 11 Plan in New Jersey ------------------------------------------------------ The Deal's Jamie Mason reports that Collezione Europa USA Inc. delivered to the Hon. Morris Stern of the United States Bankruptcy Court for the District of New Jersey a plan of liquidation on Oct. 10, 2008. The company has yet to file a disclosure statement describing the plan, Mr. Mason adds. According to Mr. Mason, administrative and priority claims will be paid in full from the company's cash on hand, the liquidation of its assets, and proceeds from avoidance actions and causes of actions on the plan's effective date. Secured creditor Bank of America NA will be entitled to receive its legal fees and expenses under a settlement agreement dated Oct. 3, 2008, among the Debtor and BofA, which cuts the bank's claim to $4.83 million from $5.55 million, the Deal relates. Other secured claims will be paid in full on the plan's effective date, the report notes. The report says unsecured creditors will get a pro rata share from a liquidation trust. Equity interest will be retained under the plan, the report notes. Details of the trust will be included in a plan supplement to be filed with the Court before the plan's confirmation hearing, the report relates. Mr. Mason says the company sold its office building in Englewood, New Jersey, to Progressive Promotions Inc. for $2.1 million, after it topped designated stalking-horse bidder Ellkay LLC's $1.6 million offer at an auction. The sale was completed on Oct. 3, 2008, he adds. Fulca Enterprises Inc. purchased the company's warehouse in Claremont, North Carolina, for $11 million, which sale closed on July 31, 2008, he continues. The company has some intangible assets to be liquidated, the report says. About Collezione Europa Based in Englewood, N.J., Collezione Europa USA, Inc. -- http://www.czeusa.com/-- was founded in 1984. Since the inception of the company, the sole focus has been imports from different parts of the world. The Company presently imports from the Philippines, China, Taiwan and Mexico. Collezione Europa maintains an inventory of more than 250,000 items. The Company operates a 450,000 square foot warehouse in Claremont, North Carolina. In July 2005 Collezione established a new showroom at the Las Vegas World Market Center, Las Vegas. The Company also has a showroom in High Point, North Carolina. The company and two of its subsidiaries filed for bankruptcy protection on Feb. 29, 2008 (Bankr. D.N.J., Case No. 08-13599). Sam Della Fera, Esq. at Trenk, DiPasquale, Webster, Della Fera & Sodono represents the Debtors in their restructuring efforts. When the company filed for bankruptcy petition, it listed assets of $10 million to $50 million and debts of $10 million to $50 million. COMM 2007-C9: S&P Affirms Ratings on 27 Classes of Certificates --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 27 classes of pooled commercial mortgage pass-through certificates and three classes of nonpooled certificates from COMM 2007-C9. The affirmed ratings on the pooled certificates reflect credit enhancement levels that provide adequate support through various stress scenarios. The affirmed ratings on the raked certificate classes reflect S&P's analysis of the credit characteristics of the 135 East 57th Street loan, which is the sole source of cash flow for the 'E57' certificates. As of the Oct. 10, 2008, remittance report, the collateral pool consisted of 109 loans with an aggregate trust balance of $2.89 billion, compared with the same number of loans totaling $2.88 billion at issuance. The master servicers, Capmark Finance Inc. and KeyBank Real Estate Capital, reported financial information for 92% of the pool; 60% of the information was full- year 2007 data, and the remainder was interim-2008 data. Standard & Poor's calculated a weighted average debt service coverage of 1.41x for the pool, compared with 1.40x at issuance. No loans are delinquent or with the special servicer, and the trust has not experienced any losses to date. The top 10 loans have an aggregate outstanding balance of $1.52 billion (53%) and a weighted average DSC of 1.44x, down from 1.45x at issuance. S&P's reviewed property inspections provided by the master servicer for two of the assets underlying the top 10 exposures. Both properties were characterized as "good." The credit characteristics of the 135 East 57th Street and Georgian Towers loans are consistent with those of investment- grade rated obligations. Details of these two loans are: -- 135 East 57th Street is the 10th-largest loan in the pool and has a whole-loan balance of $85.0 million, consisting of a $67.5 million (3%) senior pooled component and a $15.5 million subordinate nonpooled component. The subordinate component is raked to the 'E57' certificates. The interest-only loan is secured by the leasehold interest in a 427,483-sq.-ft. office property in midtown Manhattan. DSC was 1.68x for the year ended Dec. 31, 2007, and occupancy was 84% as of June 30, 2008. The borrower and the owner of the fee interest in the land underneath the property are currently arbitrating the current ground rent due. The ground rent was scheduled to increase on Jan. 1, 2008. Standard & Poor's adjusted valuation at this time is comparable to its level at issuance; however, the final determination of the arbitration could have an impact on our value of the property. -- Georgian Towers is the 13th-largest loan, with a trust balance of $65.0 million and a whole-loan balance of $185.0 million. The interest-only loan is split into two senior pari passu notes, one of which serves as trust collateral in the CD 2007-CD5 transaction. In addition, the borrower's equity interest is secured by $30.0 million of mezzanine debt. The loan is secured by an 890-unit multifamily property in Silver Springs, Maryland. The property is undergoing a major renovation and repositioning. For the period ended June 30, 2008, the property was 94% leased and the in-place rent was 11% higher than Standard & Poor's expectations at issuance. Standard & Poor's adjusted valuation is comparable to its level at issuance. S&P has credit concerns with two ($18.6 million) of the 16 loans ($217.0 million, 8%) in the pool that have reported low DSCs, excluding those with the special servicer. The two loans that are credit concerns are secured by multifamily properties and have experienced a decline in occupancy. The 16 loans with low DSCs are secured by a variety of property types with an average balance of $13.6 million and have experienced a weighted average decline in DSC of 36% since issuance. For loans with DSCs that S&P had expected to stabilize over a period of time, S&P used the DSC at issuance on an as-is basis in order to calculate the decline. The 14 loans that are not credit concerns have significant debt service reserves or are in various stages of lease-up, and we expect the net cash flow available for debt service to improve in the future. S&P identified four loans ($141.7 million; 8%) backed by properties in areas affected by Hurricane Ike. The properties have not suffered any damage. Capmark and KeyBank reported a watchlist of 11 loans ($225.4 million, 8%). Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the affirmed ratings. Ratings Affirmed (POOLED) COMM 2007-C9 Commercial mortgage pass-through certificates Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 30.03% A-1A AAA 30.03% A-2 AAA 30.03% A-3 AAA 30.03% A-4 AAA 30.03% A-AB AAA 30.03% AM AAA 20.02% AM-FL AAA 20.02% AJ AAA 13.27% AJ-FL AAA 13.27% B AA+ 12.14% C AA 11.14% D AA- 10.01% E A+ 9.14% F A 8.38% G A- 7.51% H BBB+ 6.26% J BBB 5.01% K BBB- 3.88% L BB+ 3.13% M BB 2.63% N BB- 2.25% O B+ 2.00% P B 1.63% Q B- 1.38% XS AAA N/A XP AAA N/A Ratings Affirmed (NONPOOLED) COMM 2007-C9 Commercial mortgage pass-through certificates Class Rating Credit enhancement ----- ------ ------------------ E57-1 A- N/A E57-2 BBB N/A E57-3 BB+ N/A N/A -- Not applicable. CONEXANT SYSTEMS: Amends Bylaws to Allow Director Resignation ------------------------------------------------------------- Conexant Systems, Inc., disclosed in a Securities and Exchange Commission filing that on Oct. 15, 2008, it amended its Bylaws to provide for the resignation of any director who does not receive more than half of the votes cast in an Election for Directors that is not a Contested Election. Pursuant to the provisions in the Bylaws, each nominee for director will tender an irrevocable resignation, as authorized by Section 141(b) of the Delaware General Corporation Law, that will be effective upon: -- the failure of the director to receive a greater number of votes "for" his or her election than votes "withheld" from his or her election in an election that is not a Contested Election; and -- acceptance of that resignation by the Board of Directors in accordance with policies and procedures adopted by the Board of Directors for that purpose. In determining whether to accept the resignation, the Board will consider, among other things, whether accepting the resignation of a director who receives a Majority Withheld Vote would cause the Company to fail to meet any applicable Securities and Exchange Commission or NASDAQ Stock Market requirement. A copy of Conexant Systems' amended Bylaws is available free of charge at http://researcharchives.com/t/s?3419 About Conexant Headquartered in Newport Beach, California, (NASDAQ: CNXT) -- http://www.conexant.com/-- has a comprehensive portfolio of innovative semiconductor solutions which includes products for Internet connectivity, digital imaging, and media processing applications. Conexant is a fabless semiconductor company that recorded revenues of US$809.0 million in fiscal year 2007. Outside the United States, the company has subsidiaries in Northern Ireland, China, Barbados, Korea, Mauritius, Hong Kong, France, Germany, the United Kingdom, Iceland, India, Israel, Japan, Netherlands, Singapore and Israel. At June 27, 2008, the company's consolidated balance sheet showed US$624.7 million in total assets and US$757.2 million in total liabilities, resulting in a US$132.5 million stockholders' deficit. The company's consolidated balance sheet at June 27, 2008, also showed strained liquidity with US$428.0 million in total current assets available to pay US$471.4 million in total current liabilities. * * * Conexant currently carries Standard & Poor's Ratings Services' B- rating with a negative outlook. Moody's Investor Service placed Conexant Systems Inc.'s long term corporate family and probability of default ratings at 'Caa1' in October 2006. The ratings still hold to date with a stable outlook. CONSTAR INT'L: Moody's Junks CF Rating; Outlook Revised to Neg -------------------------------------------------------------- Moody's Investors Service downgraded the Corporate Family Rating of Constar International Inc. to Caa1 from B3. Additional instrument ratings are detailed below. The outlook was revised to stable from negative. Moody's downgraded these ratings: -- $220 million floating rate first mortgage note, due 2012, to B3 (LGD3, 34%) from B2 (LGD3, 34%) -- $175 million 11% senior subordinated notes, due 2012, to Caa3 (LGD5, 84%) from Caa2 (LGD5, 87%) -- Corporate Family Rating to Caa1 from B3 -- Probability of Default Rating to Caa1 from B3 The ratings outlook is revised to stable from negative. The downgrade in the Corporate Family Rating to Caa1 reflects material operating under performance relative to expectations and the company's failure to transition to higher margin products in the anticipated time frame. The company's credit metrics have deteriorated over the last twelve months due to rising input costs, delays in the start up of higher margin custom product contracts and volume declines in certain key products. Constar may be challenged to accomplish its transition to higher margin custom products and maintain volumes in other key products in a soft economic environment with potentially volatile input costs. The company needs to win significant additional new custom contracts to replace the scheduled decline in volumes for the recently renewed Pepsi cold fill contract and improve margins and cash flow. Mitigating factors include a good liquidity profile, several new custom contract wins and a planned restructuring to reduce costs. Based in Philadelphia, Constar International Inc. is a producer of PET (polyethylene terephthalate) plastic containers for food, soft drinks, and water. Consolidated revenue for the twelve months ended June 30, 2008 was approximately $886 million. CRITICAL THERAPEUTIC: Posts $2 Million Net Loss for Sept. 20, 2008 ------------------------------------------------------------------ Critical Therapeutic Inc. posted posted a net loss of $2.0 million for the three months ended Sept. 30, 2008, compared to $7.8 million net loss for the same period in 2007. As of Sept. 30, 2008, the company had 43.1 million common shares outstanding, excluding warrants and stock options. The company's cash and investments totaled $7.3 million at Sept. 30, 2008, compared with $11.2 million at June 30, 2008 and $34.1 million at Dec. 31, 2007. Net cash expenditures were $3.9 million in the third quarter of 2008, compared with net cash expenditures of $6.4 million in the third quarter of 2007. Financial Results for the Nine Months Ended September 30, 2008 and 2007 The company's total revenue for the nine months ended Sept. 30, 2008 increased approximately 30 percent to $13.2 million from $10.1 million for the same period in 2007. Its total revenue for the first nine months of 2007 included collaboration and license revenue of $1.8 million, whereas no collaboration or license revenue was recorded in 2008. The company's total operating expenses for the nine months ended Sept. 30, 2008 totaled $32.8 million, compared with $37.0 million for the same period in 2007. For the nine months ended Sept. 30, 2008, the Company posted a net loss of $19.4 million compared with a net loss of $25.4 million for the same period in 2007. Proposed Merger with Cornerstone BioPharma On May 1, 2008, the company signed a definitive merger agreement with Cornerstone BioPharma Holdings, Inc., a privately-held specialty pharmaceutical company focused on developing and commercializing prescription medications for respiratory disorders. Under the terms of the agreement, all outstanding shares of Cornerstone's common stock will be converted into and exchanged for shares of Critical Therapeutics' common stock and all outstanding Cornerstone options and warrants will be assumed by Critical Therapeutics and become options and warrants to acquire Critical Therapeutics' common stock. Immediately following the effective time of the merger, the holders of Cornerstone's common stock, options and warrants will own approximately 70 percent, and Critical Therapeutics' stockholders will own approximately 30 percent, of the combined company's common stock, after giving effect to shares issuable under outstanding Cornerstone options and warrants, but excluding shares issuable under outstanding Critical Therapeutics' options and warrants. Consummation of the merger is subject to a number of closing conditions, including the approval of both Critical Therapeutics' stockholders and Cornerstone's stockholders, approval by NASDAQ of the re-listing of Critical Therapeutics' common stock in connection with the merger, the continued availability of Critical Therapeutics' products and other customary closing conditions. On Oct. 3, 2008, the company said that the Securities and Exchange Commission had declared effective its Registration Statement on Form S-4 in connection with the merger. Critical Therapeutics' stockholders of record on Sept. 29, 2008 will vote on the issuance of the shares pursuant to the merger agreement and the other proposals set forth in the Proxy Statement/Prospectus included in the Registration Statement at a special meeting of stockholders to be held on Friday, Oct. 31, 2008. Settlement of Litigation Relating to Proposed Merger As disclosed in the Proxy Statement/Prospectus, on Sept. 17, 2008, a purported shareholder class action lawsuit was filed by a single plaintiff against Critical Therapeutics and each of its directors in the Court of Chancery of The State of Delaware in connection with Critical Therapeutics' proposed merger with Cornerstone. The complaint alleges, among other things, that the defendants breached fiduciary duties of loyalty and good faith, including a fiduciary duty of candor, by failing to provide Critical Therapeutics' stockholders with a proxy statement/prospectus adequate to enable them to cast an informed vote on the proposed merger and by possibly failing to maximize stockholder value by entering into an agreement that effectively discourages competing offers. On Oct. 17, 2008, the company and the other defendants entered into a memorandum of understanding with the plaintiff regarding the settlement of the lawsuit. In connection with the settlement, the parties agreed that the Company would make certain additional disclosures to its stockholders, which are contained in a supplement to the proxy statement/prospectus that has been mailed to the company's stockholders. Subject to the completion of certain confirmatory discovery by counsel to the plaintiff, the memorandum of understanding contemplates that the parties will enter into a stipulation of settlement. The stipulation of settlement will be subject to customary conditions, including court approval. If the court approves the settlement, the settlement will resolve all of the claims that were or could have been brought in the action being settled, including all claims relating to the Merger, the Merger Agreement and any disclosure made in connection therewith. In addition, in connection with the settlement, the parties contemplate that plaintiff's counsel will petition the court for an award of attorneys' fees and expenses to be paid by the company, the amount of which has not been determined and will either be agreed to by the parties or awarded by the court. A full-text copy of the company's regulatory filing is available for free at http://ResearchArchives.com/t/s?3421 Going Concern Doubt As reported in the Troubled Company Reporter on April 18, 2008, Deloitte & Touche LLP, in Boston, expressed substantial doubt about the Critical Therapeutics Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring losses from operations, recurring negative cash flows from operations and an accumulated deficit of $191,372,000 as of Dec. 31, 2007. As of March 31, 2008, the company had an accumulated deficit of approximately $202,151,000. About Critical Therapeutics Based in Lexington, Mass., Critical Therapeutics Inc. (Nasdaq: CRTX) -- http://www.crtx.com/-- is developing and commercializing innovative products for respiratory and inflammatory diseases. Critical Therapeutics owns worldwide rights to two FDA-approved drugs: ZYFLO CR(TM)(zileuton) extended-release tablets and ZYFLO(R)(zileuton tablets). DANA CORP: Draws $200 Mil. from Revolver Facility to Add Liquidity ------------------------------------------------------------------ Dana Holding Corporation has drawn $200 million in principal amount under its existing $650 million secured revolving credit facility to solidify its liquidity during the current uncertainty in the financial markets. "Drawing down these funds is a prudent liquidity measure," said Dana Executive Vice President and Chief Financial Officer James A. Yost. "Ensuring access to our liquidity to the fullest extent possible at a time of ambiguity in the capital markets is in the best interest of our customers, suppliers, shareholders, and employees." Mr. Yost added that drawing the revolver provides additional strength to the company's cash position. Prior to the draw, Dana had more than $1 billion on hand. The additional liquidity will be available to support seasonal working capital needs and for other ordinary business needs. The $650 million secured revolving credit facility was established in January 2008 with a consortium of banks and provides liquidity that Dana can draw on from time to time in order to fund working capital and other needs. Following this draw, Dana has access to additional borrowing capacity from the revolving credit facility as well as its international credit facilities, the company said. Other Companies are Doing the Same The Wall Street Journal said on October 16 that many other companies are doing the same thing for fear that the $700 billion U.S. bail-out plan may not reach them. On October 15, automotive interior supplier LEAR Corporation drew $400 million from its revolving credit facility. In September, General Motors Corp. drained the remaining $3.5 billion it had available on a $4.5 billion credit line. Goodyear Tire & Rubber Co., also tapped its credit line. The Associated Press said in an article dated October 2 that automakers reported that sales in the U.S. plunged 27% in September 2008. Calpine Corporation, which emerged from bankruptcy on almost the same time as Dana, drew $725 million under its $1 billion revolving facility. Crafts retailer Michaels Store, Inc., said it would draw $120 million. Gannett Co., and American Electric Power, Inc., said they have accessed their revolving credit lines. According to WSJ, before the credit crunch hit last year, many lenders entered into revolving credit lines under the assumption that clients probably would never actually tap them. As a result, the revolving facilities generally had low interest rates and few strings attached, WSJ notes. Dana Downgraded to Neutral Bloomberg reported on October 21 that JP Morgan Chase downgraded Dana to "neutral" from "overweight." Dana's shares slid 42 cents, or 14%, to $2.59 on the same date, the report said. JPMorgan also downgraded TRW Automotive Holdings Corp. and Lear Corp from "neutral" to "underweight." JP Morgan further downgraded American Axle to "neutral" from "overweight." Dana May Breach Credit Pact Covenants Bloomberg, citing two analysts, said Dana and American Axle may breach terms of their credit agreements as auto sales decline. Dana posted a $140 million net loss for the quarter ended June 30, 2008, and its debt is at $1.38 billion. JP Morgan, the report related, estimated that carmakers will produce 11,200,000 light vehicles in North America in 2009, down 13% from this year, and 19,000,000 in Europe, down 10%. Ford Motor Co., which accounts for 19% of Dana's first half sales, continue to cut production, Brian Johnson, analyst at Barclays Capital, told Bloomberg. Mr. Johnson said that Dana and American Axle are "likely to violate covenants over the next several quarters. 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. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. -- pls. delete this, Tar, kai not applicable na. 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. 83; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000) DANA CORP: Court Dismisses Asbestos Ad Hoc Committee's Appeal ------------------------------------------------------------- The Hon. Paul A. Crotty of the Unites States District Court for the Southern District of New York granted request of Dana Corporation to dismiss the consolidated appeals of the Ad Hoc Committee of Asbestos Personal Injury Claimants and Jose Angel Valdez from the Hon. Burton Lifland's order confirming the Debtors' Plan of Reorganization. According to Judge Crotty, the Appeals may not be resolved by a simple interlineation as the Appellants have proposed. Rather, the Appeal would reopen the entire bankrupt estate and would substantially change the Bankruptcy Court's Order, which approved the reorganization set forth in the Third Amended Plan. This strongly suggests that the appeal should be dismissed as equitably, Judge Crotty held. The presumption of equitable mootness, however, may be overcome if the five factor Chateaugay test is satisfied -- that (i) the Court can still order some effective relief; (ii) the relief will not affect the reemergence of the debtor as a revitalized entity; (iii) the relief will not "knock the props" out from under the authorization of the transactions that have taken place; (iv) the parties adversely affected have notice and an opportunity to participate; and (v) Appellants diligently pursued a stay of execution of the objectionable Order. Judge Crotty determined that none of these factors are present in the Appeal. Furthermore, Judge Crotty said that the Appellants have not shown that any of the asbestos personal injury claims have been impaired by the Plan. He found that the Appellants' arguments proceed on the fallacious assumption that their claims could have proceeded against the entire Dana structure of corporations. In fact and in law, he said, claimants can recover only from the assets of a particular entity against which they had or could assert the claim. If the Court were to grant Appellants' request, it would give them rights they did not possess prepetition, Judge Crotty held. There is no reason in law or logic to expand the PI claimants' rights beyond what they had when the claims first accrued, he said. With respect to the Appellants' challenge of whether the Plan is feasible under Bankruptcy Code, Judge Crotty noted that guaranteed feasibility of the Plan is not the standard. The Plan must offer only a reasonable prospect for success, he emphasized. With respect to the Appellants' argument -- that the Bankruptcy Court had no jurisdiction to issue the injunction in the Confirmation Order based on the Johns-Mansville decision where the Second Circuit held that the Bankruptcy Court may not enjoin creditors seeking recovery from non-debtors where the claim against the non-debtors were never part of the bankrupt estate ? Judge Crotty ruled that that holding has no application to an injunction that is related directly to claims arising out of the administration of the estate property. The appeal is equitably moot, Judge Crotty held. Accordingly, the Ad Hoc Committee's appeal is dismissed and the case closed. 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. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. -- pls. delete this, Tar, kai not applicable na. 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. 83; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000) DECODE GENETICS: Conducting Long-Term Business Strategic Review --------------------------------------------------------------- deCODE genetics, Inc., disclosed in a Securities and Exchange Commission filing on Oct. 15, 2008, that it is carrying out a review of its long-term business strategy. Over the past few years deCODE has utilized its capabilities in medicinal chemistry, structural biology and human genetics to develop product and intellectual property portfolios in both therapeutics and DNA-based diagnostics. The goal of this strategic review is to optimize the value of these assets for its shareholders by sharpening the focus of its business, selling non-core assets, securing strategic partnerships, and utilizing the resources generated to underpin product development and marketing efforts in its core business. deCODE has engaged the Stanford Group Company to assist in evaluating its strategic alternatives and in executing swiftly on the results of this review through the identification of buyers and partners for non-core business units, programs and intellectual property. deCODE plans to provide an update on the process in its third quarter financial results conference call to be webcast live on Nov. 6, 2008. In order to provide more time for the completion of this review and the execution of alternatives including the sale of assets, it has elected to utilize a 30-day grace period for the scheduled Oct. 15 interest payment on its outstanding 3.5% Senior Convertible Notes due 2011. About deCODE genetics deCODE genetics Inc. (Nasdaq: DCGN) -- http://www.decode.com/-- operates as a biopharmaceutical company that applies discoveries in human genetics to develop drugs and diagnostics for common diseases. The company serves pharmaceutical companies, biotechnology firms, pharmacogenomics companies, government institutions, universities, and other research institutions primarily in the United States, Europe, and internationally. The company was founded in 1996 and is headquartered in Reykjavik, Iceland. deCODE genetics Inc.'s consolidated balance sheet at June 30, 2008, showed $110.6 million in total assets and $297.2 million in total liabilities, resulting in a $186.8 million total stockholders' deficit. DELPHI CORP: Equity Holders Say Plan Disregarded their Concerns --------------------------------------------------------------- The Official Committee of Equity Security Holders in Delphi Corporation and its debtor-subsidiaries' Chapter 11 cases has said that the Debtors have not addressed the Equity Committee's concerns with respect to General Motors Corp.'s wrongful conduct prior to, during, and subsequent to GM's spin-off of Delphi in 1999. This is the Equity Panel's statement in response to the Debtors' request to extend the periods in which they, and the statutory committees, have exclusive authority to file a Plan of Reorganization. The proposed amendments to the confirmed Plan of Reorganization does not have the $2,550,000,000 equity financing to be provided by Appaloosa Management, L.P., and other plan investors, under the terms of the previous plan, but provides more funding by General Motors. Bonnie Steingart, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP, in New York, tells the U.S. Bankruptcy Court for the Southern District of New York that the Debtors, in their zeal to emerge from chapter 11, have formulated a modified plan structure that fails to provide existing equity with just compensation for the harm and damage caused by GM. The amended Global Services Agreement and the Master Restructuring Agreement, which are incorporated in the proposed Plan amendments, provide for a release of claims against GM, in exchange for more funding from GM to Delphi. "The Debtors are attempting to use the momentum of this Court's approval of the GM Settlement as an accelerant for the Debtors' emergence from chapter 11 notwithstanding the infirmities of the Debtors' proposed Modified Plan." The Debtors should not be allowed to use momentum to push through to confirmation a plan that wrongfully forfeits value that belongs to existing equity, Ms. Steingart asserts. The Equity Committee reiterates that the Debtors' current circumstances are the direct result of a scheme perpetrated by GM pursuant to which the auto-maker used the Debtors to improperly prop up GM's balance sheet and operating performance at the expense of the Debtors' estates and Delphi's existing equity holders. "The Debtors and Delphi's existing equity holders have been harmed and damaged since the Debtors' inception and every day thereafter by GM's domination and control," Ms. Steingart avers. Ms. Steingart notes that as recompense for this harm and for its own business, financial and legal benefits, GM has agreed to make contributions to the Debtors' estates, the net value of which the Debtors estimate at approximately $10.6 billion. "Distributions of value from GM must be made on the basis of the wrongful acts and the resulting and repeated harm and damage to existing equity." In that regard, a fair and appropriate portion of the value obtained from GM through the GM Settlement -- clearly greater than the insufficient distribution offered under the Modified Plan -- should and must be allocated to existing equity holders, Ms. Steingart tells the Court. In the context of the hearing on the Modified Disclosure Statement and the hearing on the Modified Plan, the Equity Committee says it will pursue recourse before the Court to protect and preserve the right of Delphi's existing equity holders to recover from the enhanced value of the Debtors' estates attributable to the GM Settlement and any other contributions by GM. According to the Committee, the Debtors' emergence from chapter 11 by year end is, and must be, subject to two essential requirements: -- There should and must be fair and appropriate allocation of a portion of the GM Settlement to existing equity holders. -- the Debtors and all parties in interest should and must ensure that the Debtors' plan is feasible by obtaining requisite financing and liquidity for the reorganized Debtors. The Equity Committee says it is willing to negotiate with GM, the Debtors and the Official Committee of Unsecured Creditors regarding the allocation of proceeds from the GM settlements. The Equity Committee adds that the feasibility of the plan is subject to a favorable market for financing and capital, which is not available today and likely unavailable prior to December 31, 2008. LSI Wants Disclosure on Contracts Liquidity Solutions, Inc., a creditor for the Debtors and a holder of various claims which have been identified prior to the Chapter 11 cases, as assignee, asks the Court to deny Delphi Corporation's proposed amendment to the First Amended Plan of Reorganization. LSI also asks Judge Drain to direct the Debtors to provide a list of other executory contracts and other unexpired leases that relate to LSI's claims so that LSI would amend its Cure Claims with specific cure amounts. According to Paul N. Silverstein, Esq., at Andrews Kurth LLP, in New York, Chapter 11 of the Bankruptcy Code is a debtor statute -- intended to foster reorganization and rehabilitation of business and should not be employed to result in unwarranted forfeitures by creditors. "The previously approved 'cure procedures' were apparently designed to maximize creditor forfeiture", he says. Mr. Silverstein notes that the Debtors' motion proposes that procedures to be used in connection with the modified Plan will be the same as the "procedures" previously approved by the Court, except that the Debtors propose "changes to the Cure Claim Procedures pursuant to the Modified Plan." Moreover, Mr. Silverstein declares, the motion state that 'cure payments' under the "Modified Plan" (i) would be made only in cash; and (ii) in all other respects the "previously established procedures" would govern. The Debtors' motion indicates that the illusory plan currency is no longer being used by the Debtor. Instead, only cash is being paid to cure claims, Mr. Silverstein points out. As to other executory contracts and unexpired leases, the Debtors turned to tables and required creditors to take the affirmative step to file a "cure claim" by March 10, 2008, instead of providing a list of other contracts that the Debtors intended to assume at exit or providing proposed cure amounts to the affected creditors, asserting what the creditor believed the cure amount should be. The Debtors' request to amend the First Amended Plan should be denied because it is patently unfair and legally improper, in the context of a new plan to lock creditors with "other" executory contracts and unexpired leases into an artificial March 10, 2008 bar date for cure claims, Mr. Silverstein contends. Delphi Stockholder Wants Stake Retained Robert W. Ward, a semi-retired engineer and stockholder of Delphi only, asks Judge Drain that whenever the reorganized Delphi finally emerge from bankruptcy, he hopes to still own the same percentage of the reorganized Delphi as owned before Delphi entered into bankruptcy. In a scribbled letter to Judge Drain, Sheryl Y. Carter tells Judge Drain that she objects not only to Delphi's plan but also to Delphi's filing of bankruptcy itself. She also disagrees with Delphi's procedures for treating and resolving claims. She asks Judge Drain that the settlement for her claim be made in cash and not in stocks. * * * Bloomberg News notes that the Amended Plan provides unsecured creditors with a 38.8% recovery, compared with a 100% recovery under the Court-confirmed Plan. At the Sept. 25 hearing, the parties said that they are working together for Delphi to have a reasonable rational exit from Chapter 11 before year-end. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue 148; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELTA AIR: Files Financial Results for Quarter Ended Sept. 30 ------------------------------------------------------------- Delta Air Lines reported results for the quarter ended Sept. 30, 2008. Key points include: * Excluding special items, Delta's net loss for the September 2008 quarter was $26 million, or $0.07 per diluted share, despite a more than $800 million year-over- year increase in fuel costs related to higher prices; * Delta's reported GAAP net loss for the September 2008 quarter was $50 million, or $0.13 per diluted share; * Delta and Northwest remain on track to close their merger during the fourth quarter of 2008; and * As of September 30, 2008, Delta had $3.1 billion in unrestricted cash, cash equivalents and short-term investments. Delta reported a pre-tax loss of $50 million for the September 2008 quarter. Excluding special items, Delta reported a pre-tax loss of $26 million in the third quarter of 2008 compared to pre-tax income of $363 million in the third quarter of 2007. The year-over-year decrease in pre-tax income was driven by higher fuel prices, partially offset by a 9% increase in operating revenue. "As the industry deals with turbulent times in the financial markets and an uncertain demand environment, Delta holds a strong hand that will allow us to manage through the current crisis strong revenue growth, best-in-class cost structure and a solid liquidity position. In addition, our game-changing merger with Northwest significantly improves our ability to deal with the economic problems facing the industry and clearly differentiates Delta from its peers by creating a premier global carrier with a more durable financial future," said Richard Anderson, Delta's chief executive officer. "Throughout these challenging times, the persistence and dedication of Delta people never wavers. We are committed to building a world class global airline that provides our customers with safe, reliable operations and exceptional customer service," Mr. Richardson adds. Merger with Northwest During the September 2008 quarter, Delta and Northwest achieved many significant milestones on the path toward closing the merger and completing a seamless integration of the airlines, including: * Ratification of a joint collective bargaining agreement by Delta and Northwest pilots. The contract will apply to both pilot groups upon closing of the Delta-Northwest merger and run through 2012; * Acceptance by the Federal Aviation Administration of the plans the airlines submitted for the transition to a Single Operating Certificate. This significant milestone lays the groundwork for a smooth integration of the companies' operations over the next 18 months; * Overwhelming approval by both Delta and Northwest stockholders of the pending merger. Delta stockholders approved (i) the issuance of 1.25 shares of Delta common stock for each outstanding share of Northwest stock to be distributed upon closing of the merger, and (ii) an amendment to Delta's broad-based employee compensation program that will allow the company to distribute equity to U.S.-based employees of the combined Company shortly after the merger closes; * Amendment of the terms of the Northwest exit facility to allow both the Delta and Northwest exit facilities to remain outstanding until the companies are fully integrated; and * Unconditional clearance from the European Commission of the proposed merger, with the Commission noting the transaction would not impede effective competition in Europe or trans-Atlantic markets. Revenue Momentum Delta's total operating revenue grew 9%, or almost $500 million, in the September 2008 quarter, despite a 1% decrease in capacity. The company has continued to deliver strong top-line growth through its international expansion, pricing actions, increased passenger fees, and growth in cargo and ancillary revenue. Based on the most recently available ATA data, Delta achieved a revenue premium to the industry -- its consolidated length of haul adjusted passenger unit revenue was 102% of industry average PRASM for the first eight months of the year. During the September 2008 quarter, 41% of Delta's capacity was deployed on international routes and 59% on domestic routes. Revenue from Cargo operations increased 35% year over year, to $162 million, due to improved yields and higher volume, particularly in international markets. Other, net revenue grew 23%, to $579 million, reflecting an increase in passenger fees, and growth in third-party Maintenance Repair and Overhaul business. "While near-term demand remains solid, the current economic crisis creates uncertainty about the longer-term revenue outlook. We believe the diversity we've built into our network, coupled with fleet flexibility, will help mitigate revenue risk; however, we are monitoring the demand environment at a market level and are prepared to take quick and decisive action at the first sign of weakness." said Edward Bastian, Delta's president and chief financial officer. "At the same time, economic concerns have driven the price of fuel down steeply, which will provide significant savings to us." Cost Discipline Delta's operating expenses increased $814 million, or 17%, compared to the September 2007 quarter, which reflects a more than $800 million increase in fuel costs due to higher prices. Delta's mainline unit cost increased 18% to 11.96 cents for the September 2008 quarter compared to the prior year period, reflecting the significant increase in fuel costs and the special charges. Excluding fuel expense, special charges and 2007 profit sharing, mainline CASM increased 3% to 6.72 cents compared to the September 2007 quarter. This increase was driven primarily by higher revenue-related expenses, foreign exchange pressures, and favorable items recorded in the prior year. Non-operating expenses, increased $90 million in the September 2008 quarter. This increase includes $26 million in foreign exchange losses, $25 million in FAS 133 charges related to fuel hedges, and a $13 million impairment charge related to Delta's investment in the Reserve Primary Fund money market fund (Primary Fund). Liquidity Position At Sept. 30, 2008, Delta had $3.1 billion in unrestricted cash, cash equivalents and short-term investments. During the quarter, Delta borrowed the entire amount of its $1 billion revolving credit facility to increase financial flexibility as the company moves toward closing the merger with Northwest. At the end of the third quarter, the company's unrestricted liquidity balance included an $818 million investment in the Primary Fund, after giving effect to the impairment charge, which is classified as short-term investments at September 30. Based on information received from the Primary Fund, the company expects to receive approximately $300 million in the initial distribution this month. In July, Delta amended its Visa/MasterCard credit card processing agreement to extend the contract period through Dec. 31, 2011. There continues to be no cash holdback, or reserve, required under the amended agreement. Capital expenditures during the September 2008 quarter were $288 million, including $246 million for investments in aircraft, parts and modifications. Fuel Hedging During the September 2008 quarter, Delta hedged 51% of its fuel consumption, resulting in an average fuel price of $3.45 per gallon. September 2008 Quarter Highlights During the September 2008 quarter, Delta continued the positive momentum in its business, demonstrating its ongoing commitment to maintain strong employee relations and deliver an industry-leading customer experience. Highlights include: * Providing superior operational performance by ranking in the top tier of its competitive set for on-time performance for the last 12 months and by reducing the number of mishandled bags by 40% year-over-year in the September quarter; * Joining with Aircell(R) to announce that Delta customers traveling throughout the continental United States will experience the convenience of broadband Wi-Fi on board Delta's domestic fleet of more than 330 mainline aircraft by the summer of 2009; * Accepting delivery of four new B737-700 aircraft that will allow the addition of service at unique airports with short runways, extreme temperatures and high altitudes such as Tegucigalpa, Honduras, beginning in December 2008; * Announcing new nonstop flights between Hartsfield-Jackson Atlanta International Airport and Mumbai, India, and Kuwait City, Kuwait beginning in November 2008; * Announcing plans to add new full-flat beds on Boeing 767- 400 aircraft to offer customers the comfort of a 180- degree full flat bed on every Delta flight between the United States and London's Heathrow Airport by summer 2009; * For the fourth year in a row, Delta employees and customers partnered with the Breast Cancer Research Foundation to add to the nearly $1 million already raised through pink product sales and donations made on board; and * The National Mediation Board upheld the decision by Delta flight attendants to reject union representation and dismissed the Association of Flight Attendants' allegations of interference in the May 2008 representation election at Delta. Special Items Delta recorded special charges totaling $24 million in the September 2008 quarter, including: * A $14 million charge for early termination fees under contract carrier arrangements; * $7 million in merger related expenses; and * A $3 million net charge primarily for facilities restructuring and severance. December 2008 Quarter and Full Year 2008 Guidance The company projects the following for the December 2008 quarter and full year 2008: 4Q 2008 Forecast 2008 Forecast ---------------- ------------- Non-passenger revenue $700 million $2.8 billion Fuel price, including taxes and hedges $3.21 $3.17 Operating margin, 1% to 3% Flat to 2% excluding special items 4Q 2008 Forecast 2008 Forecast (compared to (compared 4Q 2007) to 2007) ---------------- ------------ Consolidated passenger unit revenue Up 8 - 10% Up 7 - 9% Mainline unit costs, excluding fuel and related taxes and special items Flat to up 2% Flat to up 2% System capacity Down 4 - 6% Flat Domestic Down 12 - 14% Down 8 - 10% International Up 13 - 15% Up 14 - 16% Mainline capacity Flat to down 2% Flat to up 2% Domestic Down 11 - 13% Down 9 - 11% International Up 13 - 15% Up 14 - 16% Ancillary Businesses Delta's ancillary businesses include TechOps, the largest airline MRO organization in North America, which serves more than 100 aviation and airline customers around the world, and DAL Global Services, which provides general aviation services, training and technical services, and staffing to airlines including Delta. MRO operating revenue increased more than 40% year over year in the September 2008 quarter and continued to post double-digit margins. Delta's third quarter results on Form 10-Q may be accessed at no charge at: http://ResearchArchives.com/t/s?341d DELTA AIR LINES, INC. Unaudited Consolidated Balance Sheet As of September 30, 2008 ASSETS CURRENT ASSETS: Cash and cash equivalents $2,160,000,000 Short-term investments 921,000,000 Restricted cash 228,000,000 Accounts receivable, net of an allowance for uncollectible accounts of $24 at 09/30/08 1,240,000,000 Expendable parts and supplies inventories, net of an allowance for obsolescence of $24 at 09/30/08 243,000,000 Deferred income taxes, net 99,000,000 Prepaid expenses and other 597,000,000 --------------- Total current assets 5,488,000,000 PROPERTY AND EQUIPMENT: Flight equipment 10,264,000,000 Accumulated depreciation (642,000,000) --------------- Flight equipment, net 9,622,000,000 Ground property and equipment 2,069,000,000 Accumulated depreciation (499,000,000) --------------- Ground property and equipment, net 1,570,000,000 Flight & ground equipment under capital leases 621,000,000 Accumulated amortization (128,000,000) --------------- Flight and ground equipment under capital leases, net 493,000,000 Advance payments for equipment 375,000,000 --------------- Total property and equipment, net 12,060,000,000 OTHER ASSETS: Goodwill 5,168,000,000 Identifiable intangibles, net of accumulated amortization of $305 at 09/30/08 2,291,000,000 Other noncurrent assets 591,000,000 --------------- Total other assets 8,050,000,000 --------------- Total assets $25,598,000,000 =============== LIABILITIES AND SHAREOWNERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Current maturities of long-term debt and capital leases $865,000,000 Air traffic liability 2,460,000,000 SkyMiles deferred revenue 1,077,000,000 Accrued salaries and related benefits 572,000,000 Taxes payable 345,000,000 Accounts payable 347,000,000 Note payable - Other accrued liabilities 1,122,000,000 --------------- Total current liabilities 6,788,000,000 NONCURRENT LIABILITIES: Long-term debt and capital leases 9,274,000,000 Pension and related benefits 2,979,000,000 Skymiles deferred revenue 2,058,000,000 Deferred income taxes, net 714,000,000 Postretirement benefits 857,000,000 Other noncurrent liabilities 537,000,000 --------------- Total noncurrent liabilities 16,419,000,000 COMMITMENTS AND CONTINGENCIES SHAREOWNERS' EQUITY (DEFICIT): Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 316,059,820 shares issued at 09/30/08 - Additional paid-in capital 9,561,000,000 Accumulated deficit (7,170,000,000) Accumulated other comprehensive income 152,000,000 Stock held in treasury, at cost, 7,517,662 shares at 9/30/08 (152,000,000) --------------- Total shareowners' equity 2,391,000,000 --------------- Total liabilities and shareowners' equity $25,598,000,000 =============== DELTA AIR LINES, INC. Unaudited Consolidated Statement of Operations Three Months Ended September 30, 2008 OPERATING REVENUE Passenger: Mainline $3,921,000,000 Regional Affairs 1,057,000,000 Cargo 162,000,000 Other, net 579,000,000 --------------- Total Operating Revenue 5,719,000,000 OPERATING EXPENSE Aircraft Fuel and related taxes 1,952,000,000 Salaries and related costs 1,086,000,000 Contract carrier arrangements 905,000,000 Depreciation and amortization 293,000,000 Aircraft maintenance materials and other outside repairs 273,000,000 Contracted services 272,000,000 Passenger commissions & other selling expenses 259,000,000 Landing fees and other rents 190,000,000 Passenger service 122,000,000 Aircraft rent 70,000,000 Impairment of goodwill - Impairment of intangible assets - Restructuring and related items 24,000,000 Profit sharing - Other 142,000,000 --------------- Total Operating Expense 5,588,000,000 OPERATING INCOME (LOSS) 131,000,000 OTHER (EXPENSE) INCOME: Interest expense (140,000,000) Interest income 21,000,000 Miscellaneous, net (62,000,000) --------------- Total other expense, net (181,000,000) --------------- LOSS BEFORE REORGANIZATION ITEMS, NET (50,000,000) REORGANIZATION ITEMS, NET - --------------- LOSS INCOME BEFORE INCOME TAXES (50,000,000) INCOME TAX (PROVISION) BENEFIT - --------------- NET LOSS ($50,000,000) =============== DELTA AIR LINES, INC. Unaudited Condensed Consolidated Statement of Cash Flow Nine Months Ended September 30, 2008 Net cash provided by operating activities $282,000,000 Cash Flows From Investing Activities: Property and equipment additions: Flight equipment, including advance payments (1,056,000,000) Ground property and equipment, including technology (160,000,000) Decrease in restricted cash 2,000,000 Proceeds of sales of flight equipment 110,000,000 Redesignation of cash equivalents to short-term investments (818,000,000) Proceeds from sales of investments - Purchase of short-term investments - Other, net 7,000,000 --------------- Net cash used in investing activities (1,915,000,000) Cash Flows From Financing Activities: Payments on long-term debt and capital lease obligations (857,000,000) Proceeds from Exit Facilities - Proceeds from long-term obligations 2,014,000,000 Payments on DIP Facility - Other, net 12,000,000) --------------- Net cash provided by financing activities 1,145,000,000 Net decrease in cash and cash equivalents (488,000,000) Cash and cash equivalents at beginning of period 2,648,000,000 --------------- Cash and cash equivalents at end of period $2,160,000,000 =============== About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE: DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DERCO JEWELERS: Emerges From Chapter 11 Bankruptcy -------------------------------------------------- Jeff Miller at Rapaport News reports that Derco Jewelers, Inc., has emerged from Chapter 11 bankruptcy. According to Rapaport News, the Hon. Dennis Montali of the U.S. Bankruptcy Court for the Northern District of California confirmed Derco Jewelers' status on Oct. 15, 2008. Rapaport News quoted Derco Jewelers' vice president Ohan Der- Abrahamian as saying, "We are pleased to have come out of this process so soon, and want to thank our vendors for their support during this time." San Francisco, California-based Derco, Inc. -- http://www.dercodiamonds.com/-- was founded in 1939 by Krikor Der Abrahamian, who specialized in trading diamonds and colored gemstones, the Debtor manufactures and retails diamonds and jewelry in the U.S. The company filed for Chapter 11 protection (Bankr. N. D. Calif. Case No. 07-31675). Iain A. Macdonald, Esq., at Macdonald & Associates assists the company in its restructuring effort. The company listed assets of $1 million to $100 million and debts of $1 million to $100 million when it filed for bankruptcy. ER URGENT: Case Summary & 10 Largest Unsecured Creditors -------------------------------------------------------- Debtor: ER Urgent Care Holding, Inc. 700 Ives Dairy Road North Miami Beach, FL 33179 Bankruptcy Case No.: 08-25688 Type of Business: The Debtor operates a health care company. Chapter 11 Petition Date: October 21, 2008 Court: Southern District of Florida (Miami) Judge: Laurel M. Isicoff Debtor's Counsel: Charles L. Neustein, Esq. 777 Arthur Godfrey Rd. 2 Floor Miami Beach, FL 33140 Tel: (305) 531-2545 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $500,000 to $1,000,000 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/flsb08-25688.pdf EXECUTE SPORTS: Sells Sugar Sand Assets to Coosaw Capital --------------------------------------------------------- Execute Sports Inc. disclosed in a Securities and Exchange Commission filing that on October 13, 2008, it entered into an Asset Purchase Agreement selling its Sugar Sand boat molds and fiber glass work-in-process inventory, along with the SUGAR SAND trade names and associated trade names, trademarks, service marks and service names, and the associated logos and their goodwill, and all associated domain names, in particular the domain www.sugarsand.com, trades secrets and copyrights and their goodwill, and all designs, plans and customer and vendor lists related to Sugar Sand boats and the Bill of Materials for each Sugar Sand model, and one Sugar Sand 2008 Tango Extreme GT and trailer. The Assets were acquired by Coosaw Capital Partners LLC, the owner of Bentley Marine Group, headquartered in Lexington, South Carolina. Bentley is a manufacturer of marine products employing approximately 450 people. The purchase price for the Assets was $25,000 plus a Residual Fee equal to 2% of the gross sales of all models of Sugar Sand boats sold by Bentley in the period beginning on the Effective Date through until Jan. 1, 2014. Gross sales of Sugar Sand boats made during the Residual Fee Period will be the total of the amount received for each Sugar Sand boat including equipment or optional equipment included with each boat sale (but not including the proceeds from the sale of any trailer included with a boat, if any), prior to any rebate or dealer promotion or allowance. The Residual Fee will be paid on a quarterly basis for all sales made in the period ending through the last day of the month immediately prior to the month that the Residual Fee is due. The Residual Fee will be due on the 15th day of each January, April, July and October beginning on January 15, 2009, through January 15, 2014. Going Concern Doubt Bedinger & Company, in Concord, Calif., expressed substantial doubt about Execute Sports 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 losses from operations. In addition, the company has yet to generate an internal cash flow from its business operations. Execute Sports Inc.'s consolidated balance sheet at June 30, 2008, showed $1,174,024 in total assets and $7,859,871 in total liabilities, resulting in a $6,685,847 stockholders' deficit. At June 30, 2008, the company's consolidated balance sheet also showed strained liquidity with $746,547 in total current assets available to pay $3,368,759 in total current liabilities. The company reported a net loss of $5,063,712 on total net sales of $1,771,024 for the second quarter ended June 30, 2008, compared with a net loss of $527,017 on total net sales of $798,037 in the corresponding period last year. About Execute Sports Headquartered in Torrance, Calif., Execute Sports Inc. (OTC BB: EXCS) -- http://www.executesports.com/-- engages in the design, manufacture, and distribution of water sports products in North America, Europe, Mexico, Australia, South Africa, the Middle East, and Asia. Its water sports products include wetsuits, life vests, rash guards, wakeskates, spray tops, dry tops, and an assortment of accessories primarily to the wakeboard, wake skate, water ski, and PWC markets. The company markets its Execute branded product line through a network of independent dealers in the United States; and through distributors internationally. It also sells its products through various online retailers, as well as through sporting goods stores and outlets, marine dealers, and independently owned pro shops. EXECUTE SPORTS: Inks Intercreditor and Standby Agreement -------------------------------------------------------- Execute Sports, Inc., disclosed in a Securities and Exchange Commission filing that on Oct. 13, 2008, it entered into an Intercreditor and Standby Agreement that governs the relationship between the Company and its senior secured creditors as well as the interrelationship between senior secured creditors. The Intercreditor Agreement: -- identifies the collateral that secures the company's senior debt, which is all of the company's assets; -- defines secured senior debt and what constitutes senior loan documents and requires that certain minimum documentation accompany any senior debt, including a signed Intercreditor Agreement; -- requires the company to receive the approval of the holders of a majority of the company's senior debt in order to issue additional senior debt; -- prioritizes the liens against the collateral that the company's senior debt has by making all senior debt, that is accompanied by the appropriate senior loan documents, equal in rank with one another regardless of the date that a UCC Financing Statement has been filed; -- governs the distribution of proceeds from any liquidation or foreclosure of the Collateral -- Senior Lenders share pro rata in such proceeds; -- permits the holders of a majority of the Senior Debt to compromise, exchange or restructure the Senior Debt and that such compromise, exchange or restructuring shall be binding upon all holders of Senior Debt; -- prevents any senior lender from taking any collection action of any kind without the approval of the holders of a majority of the senior debt; and -- allows that any sale of the Company's assets, not made in the ordinary course of business (including the Collateral, or portions), and the disposition of proceeds , if any, shall be deemed to have been done in accordance with the procedures outlined in the Intercreditor Agreement if such asset sale was approved by the holders of a majority of the Senior Debt. Going Concern Doubt Bedinger & Company, in Concord, Calif., expressed substantial doubt about Execute Sports 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 losses from operations. In addition, the company has yet to generate an internal cash flow from its business operations. Execute Sports Inc.'s consolidated balance sheet at June 30, 2008, showed $1,174,024 in total assets and $7,859,871 in total liabilities, resulting in a $6,685,847 stockholders' deficit. At June 30, 2008, the company's consolidated balance sheet also showed strained liquidity with $746,547 in total current assets available to pay $3,368,759 in total current liabilities. The company reported a net loss of $5,063,712 on total net sales of $1,771,024 for the second quarter ended June 30, 2008, compared with a net loss of $527,017 on total net sales of $798,037 in the corresponding period last year. About Execute Sports Headquartered in Torrance, Calif., Execute Sports Inc. (OTC BB: EXCS) -- http://www.executesports.com/-- engages in the design, manufacture, and distribution of water sports products in North America, Europe, Mexico, Australia, South Africa, the Middle East, and Asia. Its water sports products include wetsuits, life vests, rash guards, wakeskates, spray tops, dry tops, and an assortment of accessories primarily to the wakeboard, wake skate, water ski, and PWC markets. The company markets its Execute branded product line through a network of independent dealers in the United States; and through distributors internationally. It also sells its products through various online retailers, as well as through sporting goods stores and outlets, marine dealers, and independently owned pro shops. FELCOR LODGING: S&P Cuts Corp. Credit Rating to 'B+' From 'BB-' --------------------------------------------------------------- Standard & Poor's Rating Services lowered its corporate credit rating on Irving, Texas-based FelCor Lodging Trust Inc. to 'B+' from 'BB-'. At the same time, S&P removed the ratings from CreditWatch with negative implications, where they were placed on Aug. 1, 2008. The outlook is negative. At the same time S&P assigned its '2' recovery rating to FelCor Lodging L.P.'s $215 million floating-rate senior secured notes and outstanding $300 million 8.5% senior secured notes, both due in 2011. Both notes issues and the company's revolving line of credit (unrated) are secured by a pledge of the limited partner interest in FelCor Lodging L.P. and rank pari passu. The assigned recovery rating of '2' indicates that lenders can expect substantial recovery in the event of a payment default and results in an upgrade of the rating on the notes to 'BB-' from 'B+'. The previous 'B+' rating on the notes reflected criteria different from what S&P currently use in its recovery analysis. "The downgrade considers prospects for an extended economic slowdown in the U.S.," said S&P's credit analyst Liz Fairbanks, "likely to cause U.S. industry revenue per available room to be flat to down slightly in 2008 and to decline in the 5% area in 2009." FelCor's credit measures are already weak for the ratings, and we expect the lodging downturn to preclude an improvement to these measures in the next several quarters. FMA CBO: Moody's Trims $47MM Class B Notes Rating to Caa3 from B3 ----------------------------------------------------------------- Moody's Investors Service has downgraded the rating on the notes issued by FMA CBO Funding II, L.P.: Class Description: $47,000,000 Class B Second Priority Senior Floating Rate Notes due 2011 -- Prior Rating: B3 -- Prior Rating Date: July 28, 2006 -- Current Rating: Caa3 The rating downgrade action reflects deterioration in the credit quality of the underlying portfolio, as well as the occurrence, as reported by the Trustee on September 26, 2008, of an event of default caused by a failure of the Class A/B Overcollateralization Ratio to equal or exceed 100%, as required under Section 5.1(j) of the Indenture dated September 15, 1999. FMA CBO Funding II, L.P. is a collateralized debt obligation backed primarily by a portfolio of high-yield debt securities. The rating action taken reflects the increased expected loss associated with Class B Notes. Losses are attributed to diminished credit quality on the underlying portfolio. FORSTER DRILLING: Names Frederick Doutel as CEO and Board Chairman ------------------------------------------------------------------ Forster Drilling Corporation disclosed in a Securities and Exchange Commission filing that Fred Forster, III, President, Chief Executive Officer, and Chairman of the Board, stepped down, effective Oct. 6, 2008. In his place, Frederick C. Doutel, Jr., has been elected by the board to serve as acting President, Chief Executive Officer, and Board Chairman. This executive management change is being effected to strengthen and streamline the operations structure. Forster has two rigs currently operating under long-term drilling contracts in the Permian Basin. Headquartered in Houston, Forster Drilling Corporation (OTC BB: FODL.OB) -- http://www.forsterdrilling.com/-- is engaged in in the refurbishing land drilling rigs and deploying them for use by oil and natural gas producers. Currently, the company provides contract land drilling services in New Mexico to two different oil and gas company customers. Forster Drilling Corp.'s consolidated balance sheet at Feb. 29, 2008, showed $15,050,904 in total assets and $16,088,602 in total liabilities, resulting in a $1,037,698 total stockholders' deficit. Going Concern Doubt LBB & Associates Ltd., LLP, in Houston, expressed substantial doubt about Forster Drilling Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Nov. 30, 2007. The auditing firm pointed to the company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2008. FRIEDMAN'S INC: Wants Plan Exclusivity Period Extended to Feb. 23 ----------------------------------------------------------------- Friedman's Inc. and Crescent Jewelers ask the U.S. Bankruptcy Court for the District of Delaware to further extend their exclusive periods to: a) file a plan by approximately 90 days through and including Feb. 23, 2009; and b) solicit acceptances of the plan by approximately 90 days through and including April 23, 2009. The Court previously extended the Debtors' Exclusive Periods on May 2, 2008, and Sept. 5, 2008. The current Exclusive Filing Period Expires on Nov. 24, 2008, and the current Exclusive Solicitation Period expires on Jan. 23, 2009. The Debtors maintain that a further extension of the Exclusive Periods is justified by the progress they have made in liquidating and maximizing the value of their estates. Moreover, the Debtors tell the Court that they would need the additional extension to negotiate the terms of a plan of reorganization without pressure from creditors. The Debtors say that the large scale and sophisticated nature of their cases by themselves justify the extension of the Exclusive Periods. While they have made significant progress conducting store liquidation sales, selling accounts receivable and liquidating substantially of of their tangible assets, there is still much to do to maintain the day-to-day administration of the cases. In addition, the Debtors will need more 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 add that the requested extension of the exclusive periods is in the best interests of the Debtors, their estates, and other and other parties in interest. About Friedman's Inc. Addison, Texas-based Friedman's Inc. -- http://www.friedmans.com/ -- and -- http://www.crescentonline.com/-- prior to the filing of their bankruptcy cases, comprised a leading specialty jewelry retail company. On Jan. 14, 2005, Friedman's and eight of its affiliates filed for Chapter 11 in 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 July 13, 2006, the California Bankruptcy Court confirmed Crescent Jewelers' Second Amended Plan of Reorganization. On July 28, 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 petitioners were Rosy Blue, Inc.; Rosy Blue Jewelry Inc.; Jay Gems, Inc., dba Jewelmark; Simply Diamonds Inc.; and Paul Winston-Eurostar LLC. As of commencement of these cases, Friedman's operated 388 stores in 20 states with over 2,890 employees while Crescent Jewelers operated 85 stores 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 Athanasios E. Agelakopoulos, Esq., and Paul M. Rosenblatt, Esq., at Kilpatrick Stockton LLP, Chun I. Jang, Esq., Jason M. Madron, Esq., Mark D. Collins, Esq., and Michael Joseph Merchant, Esq., at Richards, Layton & Finger, P.A., Jocelyn Keynes, Esq., John D. Demmy, Esq., Joseph H. Huston, Jr., and Nicholas F. Kajon, Esq., at Stevens & Lee, P.C. An Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. Charlene D. Davis, Esq., and Justin K. Edelson, Esq., at Bayard, P.A., and Mary E. Augustine, Esq., at Ciardi Ciardi & Astin, P.C. represent the Creditors Committee as counsel. On April 4, 2008, the Debtors obtained permission to sell to Whitehall Jewelers Inc., the inventory and related property located at 78 of the Debtors' stores, and to assume and assign to Whitehall the leases with respect to those 78 stores. As of Dec. 28, 2007, the Debtors listed total assets of $245,787,000 and total liabilities of $171,877,000. GATEHOUSE MEDIA: East Peak Partners, et al., Disclose 7% Stake -------------------------------------------------------------- East Peak Partners, L.P., and JGE Capital Management, LLC disclosed in a Securities and Exchange Commission filing that they may be deemed to beneficially own 4,000,000 shares of Gatehouse Media, Inc.'s common stock, representing 6.88% of the shares issued and outstanding. Jeffrey G. Edwards, JGE Capital president, disclosed that he may be deemed to beneficially own 4,010,500 shares of the company's common stock, representing 7.07% of the shares issued and outstanding. About GateHouse Media Inc. Headquartered in Fairport, New York, GateHouse Media Inc. (NYSE:GHS) -- http://www.gatehousemedia.com/-- is a publisher of locally based print and online media in the United States. The company's products include 101 daily newspapers with total paid circulation of approximately 906,000; 282 weekly newspapers (published up to three times per week) with total paid circulation of approximately 606,000 and total free circulation of approximately 905,000; 132 shoppers (generally advertising-only publications) with total circulation of approximately 2.3 million; more than 250 locally focused Web sites, which extend its franchises onto the Internet, and seven yellow page directories with a distribution of approximately 810,000 that covers a population of approximately two million people. The company also produces publications that address specific local market interests, as recreation, sports, healthcare and real estate. GateHouse operates in five geographic regions: Northeast, Western, Northern Midwest, Southern Midwest and Atlantic. The company's consolidated balance sheet as of June 30, 2008, shows $1.41 billion in total assets, $1.43 billion in total liabilites, resulting in $18.7 million in shareholders' deficit. The company posted $443.25 million in net losses on $184.07 million for quarter ended June 30, 2008. GOE LIMA: Wants to Access $2.9 Million SunTrust DIP Facility ------------------------------------------------------------ The Deal's Carolyn Okomo reports GOE Lima LLC asked the Hon. Mary Ann Whipple of the United States Bankruptcy Court for the Northern District of Ohio for authority to obtain up to $2.9 million in debtor-in-possession financing from SunTrust Bank NA. The company also asked the Court for permission to access cash collateral securing its obligation to its lenders, the report says. The bank's $2.9 million facility will incur interest at 10% per annum, which will move up another 200 basis points if the company defaulted, the Deal says. The facility is subject to a $317,740 carve-out for payment of professional expenses, the report notes. According to the Deal, the absence of the bank's facility may cause problem to the company's ability to maximize the value of its assets and could compel it stop its business operations in the short term. Headquartered in Lima, Ohio, GOE Lima LLC -- http://www.go-ethanol.com/-- operates an ethanol production facility. The company filed for protection on Oct. 14, 2008 (Bankr. N.D. Ohio Case No. 08-35508). Timothy J. Hurley, Esq., at Taft, Stettinius & Hollister LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its listed assets and debts between $100 million to $500 million each. GOODY'S FAMILY: GE Corporate Provides $175MM Credit Facility ------------------------------------------------------------ GE Commercial Finance Corporate Lending said it provided a $175 million plan of reorganization credit facility to Goody's Family Clothing Inc., a moderately priced family apparel retailer. The loan was used to refinance the company's debtor-in-possession (DIP) financing upon the company's emergence from a Chapter 11 bankruptcy. In June, GE Corporate Lending also provided the company with a $175 million DIP credit facility. GE Capital Markets arranged both transactions. Founded in 1953 in Knoxville, Tennessee, Goody's is an apparel retailer providing clothing and accessories for all ages. The company operates 287 stores primarily within the Southeastern U.S. "GE made a significant financial commitment allowing us to keep our bank group to a minimum and have access to capital when we needed it," said David Peek, executive vice president and CFO for Goody's. "We valued having a lender with both restructuring and retail expertise who could provide financing in such uncertain times." "The combination of our retail and restructuring expertise allows us to quickly understand the unique needs of retailers seeking financing to reorganize and reenergize their businesses," said Tom Quindlen, president and CEO of GE Corporate Lending. "Whether in good or challenging times, we specialize in providing customers with smarter capital to help support their business strategies." To better meet the unique financing needs of customers, GE Corporate Lending has a team of Industry Leaders supported by research analysts. These industry experts help build smarter financing solutions for companies across key industries: Aerospace & Defense; Automotive; Chemicals & Plastics; Construction; Food, Beverage & Agribusiness; Financial & Business Services; Forest Products; Metals and Mining; Restructuring; Retail; Technology & Electronics; and Transportation. With $16 billion in assets, GE Commercial Finance Corporate Lending is one of North America's largest providers of asset- based, cash flow, structured finance and other financial solutions for mid-size and large companies. From over 30 offices throughout the U.S. and Canada, GE Corporate Lending specializes in serving the unique needs of borrowers seeking $20 million to $2 billion and more for working capital, growth, acquisitions, project finance and turnarounds. Visit www.gelending.com/clnews to learn more. GE Commercial Finance, which offers businesses around the globe an array of financial products and services, has assets of over $300 billion and is headquartered in Norwalk, Connecticut. GE (NYSE: GE) is a diversified global infrastructure, finance and media company that is built to meet essential world needs. From energy, water, transportation and health to access to money and information, GE serves customers in more than 100 countries and employs more than 300,000 people worldwide. GE is Imagination at Work. For more information, visit the company's Web site at http://www.ge.com. Emergence from Chapter 11 Bankruptcy Cooley Godward Kronish announced that Goody's Family Clothing, Inc. has emerged from Chapter 11 bankruptcy. Cooley was counsel to Goody's official committee of unsecured creditors. Goody's plan for reorganization was confirmed by order of the United States Bankruptcy Court for the District of Delaware on October 7, 2008. Its emergence from bankruptcy marks only the second successful reorganization of a retailer's operations since amendments to the U.S. Bankruptcy Code were implemented in 2005. The other successful retail bankruptcy reorganization was Hancock Fabrics Inc. in June 2008. Cooley also represented the official committee of unsecured creditors of Hancock Fabrics. "The cards have been stacked against retailers since amendments to the bankruptcy code were passed in 2005," said Lawrence C. Gottlieb, chair of the Bankruptcy & Restructuring practice who recently testified before Congress on the impact of the 2005 amendments. "In practice, the changes effectively re-structured retail Chapter 11 to act predominantly as a vehicle for secured lenders to sell the assets of a company through a quick sale process that provides very little, if any, opportunity for retailers to restructure their debt and rehabilitate their business." "Given the recent economic climate and, specifically, the lack of credit, it has been even more challenging for retailers to emerge from bankruptcy as reorganized companies," said Partner Cathy Hershcopf. About Goody's Family Headquartered in Knoxville, Tennessee, Goody's Family Clothing Inc. -- http://www.shopgoodys.com/-- operates chains 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, and Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represent the Debtors. The Debtors selected Logan and Company Inc. as their claims agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Frederick Brian Rosner, Esq., at Duane Morris LLP, and Lawrence C. Gottlieb, Esq., Cathy Herschopf, Esq., and Jeffrey L. Cohen, Esq., at Cooley Godward Kronish LLP, represent the Committee in these cases. When the Debtors filed for protection against their creditors, they listed assets 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. GOTTSCHALKS INC: NYSE to Delist Common Stock on October 27 ---------------------------------------------------------- The New York Stock Exchange informed Gottschalks, Inc., that it is in non-compliance with Section 802.01B of the NYSE Listed Company Manual, because over a consecutive 30-day trading period, the company's average global market capitalization was less than $25 million. As a result, the NYSE plans to suspend trading of Gottschalks' stock prior to the market opening on Monday, Oct. 27, 2008. The company has informed the exchange it plans to appeal the ruling. During the review, the company will take all necessary actions to have its common stock quoted on the OTC Bulletin Board and will consider all available alternatives. Under applicable NYSE procedures, the company plans to request a review of the determination by the committee of the board of directors of the NYSE by filing a request with the secretary of the NYSE within 10 business days from the time the company received the aforementioned notice. The review will be scheduled for the first Review Day, which is at least 25 business days from the date the request for review is filed with the Secretary of the NYSE. Based on the outcome of the appeal process the company's stock could then be delisted from the exchange. The company will separately disclose the appeal date and OTC symbol when available. The company noted that not being listed on the NYSE is not a default under the company's credit agreement. In addition, it will not affect the company's business operations and the company remains in active negotiations regarding its current proposed transaction with Everbright Development Overseas, Ltd. "In recent months, the challenges in the macroeconomic environment have intensified due to unprecedented and mounting events in the financial markets," Jim Famalette, chairman and chief executive officer of Gottschalks said. "Clearly, these challenges have had an adverse effect on our stock performance. Nonetheless, we remain committed to managing the areas of our business within our control. In particular, we strengthened our liquidity through the recent sale of certain real estate assets, we have streamlined our operations, and have reduced inventory levels consistent with sales trends. Additionally, we signed a letter of intent with Everbright Development Overseas, which will provide for a significant infusion of capital into our business and create opportunities to enhance our operations. We believe all of our proactive actions will better position our company for the future as we continue to focus on maximizing long-term value for our shareholders." About Gottschalks Inc. Headquartered in Fresno, California, Gottschalks Inc. (NYSE:GOT) -- http://www.gottschalks.com/-- is a regional department store chain, operating 58 department stores and three specialty apparel stores in six western states, including California (38), Washington (7), Alaska (5), Oregon (4), Nevada (2) and Idaho (2). Gottschalks offers better to moderate brand-name fashion apparel, cosmetics, shoes, accessories and home merchandise. GSV INC: Gains Maturity Extension for $160,000 Promissory Note -------------------------------------------------------------- GSV, Inc., disclosed in a Securities and Exchange Commission filing that on Oct. 17, 2008, it entered into an agreement with Brooks Station Holdings, Inc., pursuant to the parties agreed to amend and restate the terms of an 8% promissory note in the principal amount of $160,000 in the form of a substitute note dated as of Sept. 1, 2008. Pursuant to the Waiver and Extension Agreement, Brooks Station agreed to extend the maturity date of the Original Note from Sept. 1, 2008, to March 1, 2009, and to waive any claim against GSV or its assets arising from GSV's failure to repay the Original Note on the maturity date. The Original Note was issued July 21, 2003, and had previously been amended by agreements dated August 31, 2007 and March 11, 2008 between the parties. Also, pursuant to the Waiver and Extension Agreement, GSV and Brooks Station agreed to amend a security agreement between them to provide that Brooks Station's security interest in GSV's assets would continue to support GSV's obligations under the Substitute Note. Contemporaneously with the execution of the Waiver and Extension Agreement, GSV paid Brooks Station $10,000 of the principal balance of the Original Note, thus reducing the outstanding principal balance of the Substitute Note to $150,000. As of September 1, 2008, the accrued and unpaid interest of the Substitute Note was $28,933.33. The Substitute Note provides that upon the occurrence of an event of default, all amounts remaining unpaid on the Substitute Note will become immediately due and payable. Events of default include GSV's application for appointment of a receiver, GSV's admission in writing of its inability to pay its debts as they become due, GSV's making of a general assignment for the benefit of creditors, the filing against GSV of an involuntary petition in bankruptcy or other insolvency proceeding, or a petition or an answer seeking reorganization or an arrangement with creditors, the filing by GSV of an application for judicial dissolution or the entry of an order, judgment or decree by any court of competent jurisdiction, approving a petition seeking reorganization of GSV or all or a substantial part of the properties or assets of GSV or appointing a receiver, trustee or liquidator for GSV. Going Concern Doubt The company said that in recent periods cash flows provided by the its oil and gas investments have been sufficient to enable it to fund operating, investing and financing needs. However, the company will be required to obtain additional financing to fund drilling and development and to pay certain indebtedness as it becomes due. The company believes these conditions raise substantial doubt about its ability to continue as a going concern. GSV Inc. reported net income of $268,224 for the second quarter ended June 30, 2008, compared with net income of $61,333 in the corresponding period last year. Revenues for the quarter increased by $253,180 or 123.5%, to $458,149 in 2008 from $204,969 in 2007. This increase was due to increased production and increased oil and gas prices. At June 30, 2008, the company's consolidated balance sheet showed $3,293,303 in total assets, $879,045 in total liabilities, and $2,414,257 in total stockholders' equity. About GSV Inc. Headquartered in Westport, Conn., GSV Inc. (OTC BB: GSVI) -- http://www.gsv.com/-- holds working interests in two oil and gas wells in the state of Louisiana. An independent reserve study, effective January 2008, estimated that the remaining reserve in the wells, including PDP and PDNP, net of expenses and discounted at 10%, was $985,829. In June 2008 the well that had been producing oil and gas started to produce some water, and production of oil and gas from the well has fallen as a result. Through Cybershop the company also owns interests in certain oil and gas properties in Texas and an interest in Century Royalty LLC, a Texas limited liability company that manages the oil and gas properties in Texas and holds a portion of the company's interests in the oil and gas wells in Louisiana. GWLS HOLDINGS: Gets Initial OK to Access $45 Million UBS Facility ----------------------------------------------------------------- The Hon. Peter J. Walsh of the United States Bankruptcy Court for the District of Delaware authorized GWLS Holdings Inc. and its debtor-affiliates to obtain, on an interim basis, up to $45,000,000 in debtor-in-possession financing from a syndicate of financial institutions including (i) UBS AG, Stamford Branch, as administrative agent and issuing lender; (ii) General Electric Capital Corporation, as collateral agent; (iii) UBS Securities LLC, as documentation and syndication agent, and bookrunner; and (iv) Ableco Finance LLC, as joint lead lender. Judge Walsh also authorized the Debtors to access cash collateral securing repayment of the secured loan to the lenders in accordance with a 13-week budget. A hearing is set for Nov. 24, 2008, at 11;00 a.m., at 824 North Market Street, 6th Floor, Courtroom #2 in Wilmington, Delaware, to consider final approval of the motion. Objections, if any, are due Nov. 19, 2008, at 5:00 p.m. On a final basis, the lenders agreed to provide as much as $73.6 million in financing under a senior secured, superpriority debtor-in-possession credit agreement dated Oct. 22, 2008. The DIP facility will terminate by March 31, 2009, subject to extension to Dec. 31, 2009, if approved by the lenders. The loans will bear interest at Base Rate greater of 5.25% and the greater of (i) the "Federal Funds Rate" plus 3%, and (ii) the prime commercial lending rate of UBS AG, Stamford Branch, plus the applicable margin of 6%. The proceeds of the DIP facility will be used to pay: -- postpetition operating and other working capital requirements; -- certain transaction fees, costs and expenses; -- certain prepetition claims as may be approved by the lenders and the Court; and -- amount necessary to cash collaterilize certain loans. The DIP facility is subject to carve-outs to pay fees and expenses incurred by the professionals of the Debtors and any committee, and unpaid fees of the clerk of the Court and the U.S. Trustee. There is a $1,950,000 carve-out to pay fees and expenses incurred by professionals of the Debtors and any committee. Under the agreement, the Debtors will pay a host of fees including, among other things, a $100,000 administrative agency fees payable on the closing date; an annual $250,000 collateral agency fee payable on the closing date and annually thereafter. To secured their DIP obligations, the lenders will be granted superpriority administrative expense claims over all administrative expense under Section 362(c)(1) of the Bankruptcy Code. The DIP agreement contains customary and appropriate events of default. On Dec. 19, 2006, the Debtors entered into a credit facility agreements with UBS AG to provide as much as $594 million in financing comprised of: -- $370 million consists secured credit facility of (i) a $300 million first lien term loan; and (ii) a $70 million revolving credit facility under a first lien credit agreement; -- $117 million second lien credit facility under a second lien guarantee and collateral agreement. -- $107 million unsecured mezzanine facility under an amended and restated senior holdings credit agreement. The first and second lien facilities are secured by all of the Debtors' assets. As of Sept. 30, 2008, the outstanding amount under the first lien term loan was $296.25 million, while the first lien revolving credit facility was $69.9 million, inclusive of $31.5 million in outstanding letters of credit. A full-text copy of the Debtors' 13-Week Budget is available for free at http://ResearchArchives.com/t/s?3428 A full-text copy of Senior Secured, Superpriority Debtor-In- Possession Credit Agreement date Oct. 22, 2008, is available for free at http://ResearchArchives.com/t/s?3428 About GWLS Holdings Headquartered in Dallas, Texas, GWLS Holdings Inc. -- http://www.greatwide.com/-- operate trucking and logistics company. The company and 50 of its affiliates filed for Chapter 11 protection on Oct. 20, 2008 (Bankr. D. Del. Lead Case No. 08-12430). Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, as the Debtors' counsel. Willkie Farr Gallagher LLP, represents as the Debtors' co-counsel. Miller Buckfire & Co., LLC, represents as the Debtors' financial advisor. When the Debtors filed for protection from their creditors, they listed assets and debts between $500 million and $1 billion each. HEALTHTRONICS INC: Increased Corp. Debt Cues Moody's Ratings Cut ---------------------------------------------------------------- Moody's Investors Service downgraded the Corporate Family Rating of HealthTronics, Inc. to B2 from B1 and changed the outlook to stable from negative. Concurrently Moody's downgraded the rating on the $60 million senior secured revolving credit facility to B1 from Ba3. The last rating action was on October 31, 2007 when Moody's affirmed both the B1 Corporate Family Rating and the negative outlook. The downgrade reflects HealthTronics' recent increase in corporate debt to fund acquisitions and stock repurchases. Moody's believes it is highly likely that the company will need to incur increased financial leverage over the next several years to support its long-term growth initiatives, including expansion into the radiation therapy services business which it expects will require significant growth capital expenditures. Moody's had previously stated that a growth strategy that resulted in a releveraging of the corporate balance sheet could lead to downward rating pressure. The change in outlook is supported by the stabilization of the core lithotripsy business over the past several quarters. The B2 Corporate Family Rating is primarily supported by the low financial leverage and good interest coverage that the company currently maintains. The ratings are also supported by the company's leading position in the urology market and its potential for growth if the company is able to successfully execute on its strategy to expand into radiation therapy. The ratings are constrained by HealthTronics' very small scale, minimal free cash flow and potential risks to the company's business model and growth strategy, including reimbursement and regulatory changes and an increasingly competitive environment. Moody's downgraded these ratings: -- $60 million senior secured revolving credit facility, to B1 (LGD2, 29%) from Ba3 (LGD2, 27%) -- Corporate Family Rating, to B2 from B1; -- Probability of Default Rating, to B3 from B2; The ratings outlook is stable. Headquartered in Austin, Texas, HealthTronics is a leading provider of urology services and products in the US. The company provides urologists with cost-effective access to lithotripters and other capital equipment as well as practice management services. The company operates primarily through partnerships with urology practices in which HealthTronics owns a minority stake. For the twelve months ended June 30, 2008, the company generated adjusted EBITDA of $17 million. INTERSTATE BAKERIES: Says Disclosure Statement Has Adequate Info ---------------------------------------------------------------- Interstate Bakeries Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the Western District of Missouri to find that the Disclosure Statement accompanying their new Plan of Reorganization dated October 4, 2008, provides adequate information within the meaning of Section 1125(a)(1) of the Bankruptcy Code. Section 1125(b) prohibits postpetition solicitation of a reorganization plan unless the plan and "a written disclosure statement approved, after notice and a hearing, by the court as containing adequate information" are transmitted to those persons whose votes are being solicited. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, asserts that the Debtors' Disclosure Statement is both extensive and comprehensive, and contains descriptions and summaries of, among other things: (a) the Plan, (b) the Debtors' history and prepetition capital structure, (c) certain events leading to the commencement of the chapter 11 cases, (d) the significant events during the chapter 11 cases, (e) the claims asserted against the Debtors' estates, (f) the new securities to be issued under the Plan, (g) various risk factors affecting the Plan and the Debtors' restructuring, (h) a liquidation analysis setting forth the estimated return that creditors would receive in a hypothetical chapter 7 case, (i) financial information and valuations relevant to creditors' determinations of whether to accept or reject the Plan, (j) certain securities law and tax law consequences of the Plan, and (k) a disclaimer indicating that no statements or information concerning the Debtors and their assets and securities are authorized other than those set forth in the Disclosure Statement. For these reasons, Mr. Ivester says, the Disclosure Statement contains adequate information within the meaning of Section 1125. About IBC 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, 2007. 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 did 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. (Interstate Bakeries Bankruptcy News, Issue No. 113; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) IRVINE SENSORS: Transfers Optex Asset to Longview to Kill Debt -------------------------------------------------------------- Irvine Sensors Corporation disclosed in a Securities and Exchange Commission filing that on Oct. 14, 2008, it transferred to an entity controlled by its senior lenders, Longview Fund, L.P and Alpha Capital Anstalt all of the assets and specified liabilities of Optex in exchange for the extinguishment of certain of the Company's debt due with a principal balance of approximately $13.5 million and approximately $1.5 million of accrued but unpaid interest, for an aggregate amount of $15 million. The transaction took the form of a foreclosure on the transferred Optex net assets by the Senior Lenders that was effected through a credit bid. About Irvine Sensors Based in Costa Mesa, Calif., Irvine Sensors Corporation (Nasdaq: IRSN) -- http://www.irvine-sensors.com/-- is a vision systems company engaged in the development and sale of miniaturized infrared and electro-optical cameras, image processors and stacked chip assemblies, the manufacture and sale of optical systems and equipment for military applications through its Optex subsidiary and research and development related to high density electronics, miniaturized sensors, optical interconnection technology, high speed network security, image processing and low- power analog and mixed-signal integrated circuits for diverse systems applications. Going Concern Doubt The company generated net losses in fiscal 2005, fiscal 2006, fiscal 2007 and the 39 weeks ended June 29, 2008. At June 29, 2008, the company's accumulated deficit was $156,444,700. The company said it engaged an investment banking firm in June 2008 to assist it in raising additional capital. Failure to successfuly raise capital would have a material and adverse effect on the company's financial condition, which may result in defaults under its loan and preferred stock instruments. The company said these conditions create substantial doubt about its ability to continue as a going concern. Balance Sheet At June 29, 2008, the company's consolidated balance sheet showed $31,519,400 in total assets, $28,794,000 in total liabilities, and $2,725,400 in total stockholders' equity. The company's consolidated balance sheet at June 29, 2008, also showed strained liquidity with $12,104,000 in total current assets available to pay $12,667,800 in total current liabilities. The decline in working capital was substantially due to the reclassification of the $2.0 million debt owed by Optex Systems Inc., a wholly owned subsidiary, to TWL Group, LP, an entity owned by Timothy Looney, that is due upon the earlier of Feb. 27, 2009, or sixty days after all debt to the company's senior lenders is refinanced or retired in full. ISCHUS HIGH GRADE: Moody's Cuts Ratings on Six Classes of Notes --------------------------------------------------------------- Moody's Investors Service has downgraded the ratings on six classes of notes issued by Ischus High Grade Funding I Ltd. and left one of these ratings on review for possible downgrade. The notes affected by today's rating actions are: Class Description: $1,041,500,000 Class A1S Senior Floating Rate Notes Due 2046 -- Prior Rating: Aa1, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade -- Prior Rating Action Date: April 23, 2008 Class Description: $85,000,000 Class A1J Senior Floating Rate Notes Due 2046 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Ca -- Prior Rating Action Date: April 23, 2008 Class Description: $17,000,000 Class A2 Senior Floating Rate Notes Due 2046 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ca -- Prior Rating Action Date: April 23, 2008 Class Description: $30,500,000 Class A3 Deferrable Floating Rate Notes Due 2046 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: C -- Prior Rating Action Date: April 23, 2008 Class Description: $12,500,000 Class B Deferrable Floating Rate Notes Due 2046 -- Prior Rating: Ca -- Current Rating: C -- Prior Rating Action Date: April 23, 2008 Class Description: $3,000,000 Class C Deferrable Floating Rate Notes Due 2046 -- Prior Rating: Ca -- Current Rating: C -- Prior Rating Action Date: April 23, 2008 According to Moody's, these rating actions are as a result of the continued deterioration in the credit quality of the transaction's underlying collateral pool, consisting primarily of structured finance securities. ISCHUS MEZZANINE: Moody's Slashes Two Notes Ratings to 'Ca' ----------------------------------------------------------- Moody's Investors Service has placed on review for possible downgrade the ratings of these notes issued by Ischus Mezzanine CDO IV, Ltd.: Class Description: $17,500,000 Class X First Priority Senior Secured Amortizing Notes Due 2013 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade -- Prior Rating Action Date: 6/29/2007 Additionally, Moody's has downgraded the ratings of these notes: Class Description: $150,000,000 Super Senior Swap dated as of June 27, 2007 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: Ca -- Prior Rating Action Date: 4/22/2008 Class Description: $100,000,000 Class A-1 Second Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: Ca -- Prior Rating Action Date: 4/22/2008 Class Description: $80,000,000 Class A-2 Third Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C -- Prior Rating Action Date: 4/22/2008 Class Description: $50,000,000 Class A-3 Fourth Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C -- Prior Rating Action Date: 4/22/2008 Class Description: $54,000,000 Class B Fifth Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C -- Prior Rating Action Date: 4/22/2008 According to Moody's, these rating actions are as a result of the deterioration in the credit quality of the transaction's underlying collateral pool consisting primarily of structured finance securities. JOHNSON BROADCASTING: Files for Chapter 11 Protection in Houston ---------------------------------------------------------------- Johnson Broadcasting Inc., the owner of KNWS (Channel 51) in Houston, has filed for Chapter 11 bankruptcy protection, David Barron of the Houston Chronicle reported Thursday. In court filings, the company said that revenues have not kept pace with operating expenses due to the economic downturn. The company also said that IFC Credit Corp., which had provided equipment lease financing to the company, filed a case in federal court enjoining Channel 51 from using the equipment in Dallas. Johnson Broadcasting of Dallas Inc., which owns KLDT (Channel 54) in Dallas, filed a separate Chapter 11 petition with the same Court. Douglas Johnson, the owner of Channel 51, also filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. "The company is making money, but certain steps had to be taken to stop things that could damage the assets of the company," Mr. Johnson said. "We're very optimistic going forward. Sales are happening, advertising is good. We've got a good lineup of programming this fall, and we'll continuing with what we're doing." KNWS (Channel 51) began broadcasting in 1993 as an all-news station but later changed that format to include infomercials, network reruns and syndicated programs. Based in Houston, Texas, Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. own and operate television stations in Texas. Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. filed separate petitions for Chapter 11 relief on Oct. 13, 2008 (Bankr. S.D. Texas Case No. 08-36583 and 08-36585, respectively). John James Sparacino, Esq., and Timothy Alvin Davidson, II, Esq., at Andrews and Kurth, represents the Debtors as counsel. When Johnson Broadcasting Inc. filed for protection from its creditors, it listed assets and debts of between $10 million to $50 million each. JONES APPAREL: Moody's Cuts CF and PD Ratings to 'Ba2' from 'Ba1' ----------------------------------------------------------------- Moody's Investors Service lowered Jones Apparel Group, Inc.'s corporate family rating and probability of default ratings to Ba2 from Ba1. At the same time the company's speculative grade liquidity rating was affirmed at SGL-2. The rating outlook is stable. The downgrade of Jones' ratings reflects the company's recent downward revision to full year earnings guidance. The company stated its retail operations trended negatively during the third quarter and that its comparable store sales fell significantly in September and also anticipates a more promotional fourth quarter given the current economic climate. As a result of this update, earnings for the second half of 2008 are now expected to be significantly weaker than Moody's previous expectations for the company's performance and as a result key credit metrics are unlikely to recover to levels appropriate for the higher rating category. The stable rating outlook reflects the company's good liquidity position and Moody's expectations that the company will be able to maintain credit metrics appropriate for the rating category. The stable outlook also reflects the improved penetration of the company in the mass market channel which will help provide a greater degree of earnings stability. These ratings were lowered: -- Corporate family rating and probability of default rating to Ba2 from Ba1; -- $250 million senior unsecured notes due 2009 -- to Ba2 (LGD 4, 55%) from Ba1 -- $250 million senior unsecured notes due 2014 -- to Ba2 (LGD 4, 55% from Ba1 -- $250 million senior unsecured notes due 2034 -- to Ba2 (LGD 4, 55%) from Ba1 Moody's last rating action on Jones Apparel Group was on August 5, 2008 when the company's Ba1 corporate family rating and probability of default ratings were confirmed with a negative rating outlook. Jones Apparel Group Inc., headquartered in Bristol, Pennsylvania, is a leading designer, marketer and wholesaler of branded apparel, footwear, and accessories. The company also markets directly to consumers through various mall based specialty retail stores and outlet stores. Jones owns a number of nationally recognized brands including Jones New York, Anne Klein, Nine West, Gloria Vanderbilt and l.e.i. JUPITER FINANCE: S&P Cuts Ratings on Two Classes to 'D' ------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on two classes from Jupiter Finance Ltd.'s series 2006-002 and REVE SPC's series 2007-1 to 'D' and removed them from CreditWatch with negative implications. The downgrades reflect the default of the underlying collateral, the debt obligations issued by Sigma Finance Corp.; the issuers purchased the underlying collateral using note proceeds in both transactions. The rating actions do not reflect any changes in the reference portfolios of the affected deals. Ratings Lowered and Removed from Creditwatch Negative Jupiter Finance Ltd. Series 2006-002 Rating ------ Class To From ----- -- ---- Cr link D A/Watch Neg REVE SPC Series 2007-1 Rating ------ Class To From ----- -- ---- A series 6 D AAA/Watch Neg KEVIN LAM: Case Summary & Nine Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Kevin Cheng Lam Kunrath Van Lam 2230 Periwinkle Ave. WEST LAKELAND, MN 55082 Bankruptcy Case No.: 08-35468 Chapter 11 Petition Date: October 21, 2008 Court: District of Minnesota (St Paul) Judge: Robert J Kressel Debtor's Counsel: Matthew L. Fling, Esq. fling@pro-ns.net 4018 West 65th Street, Suite 100 Edina, MN 55435 Tel: (952) 926-5337 Estimated Assets: $1 million to $10 million Estimated Debts: $10 million to $50 million A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/mnb08-35468.pdf KIMBALL HILL: Court OKs Bid Procedures for Texas Property Sale -------------------------------------------------------------- Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, notes that the United States Bankruptcy Court for the Northern District of Illinois approved uniform bid procedures for the sale of the undivided underground mineral interests related to property of Debtor Kimball Hill Homes Texas, Inc., located in the Southwind Subdivision in Arlington, Tarrant County, Texas. The Bid Procedures provided that (i) all bids for the purchase of the Mineral Estate must be submitted to the Debtors by Sept. 26, 2008, (ii) the Debtors would file a notice of winning bidder no later than October 6, 2008, and seek approval of the sale to the winning bidder at the omnibus hearing on October 14, 2008, and (iii) the Bid Procedures were subject to change in the Debtors' discretion. Mr. Schrock notifies the Court that the Debtors received multiple bids for the Mineral Estate by September 26, 2008. The Debtors also received indications of interest in submission of late bids. Based upon those indications, the Debtors tell Judge Sonderby that they believe that extending the Bid Deadline will maximize the Bids received for the Mineral Estate. Accordingly, the Debtors notify parties-in-interest that the Bid Deadline is hereby extended to October 31, 2008, at 3:00 p.m. Central Time. The Debtors intend to file a notice of the winning bidder on or before November 10, 2008, and seek approval of the Sale at the November 18, 2008 omnibus hearing. The deadline to object to the Sale will be November 14, at 4:00 p.m. Central Time. The Bid Procedures remain unchanged in all other respects. Headquartered 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. (Kimball Hill Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). KIMBALL HILL: Court Extends Removal Period to Plan Confirmation --------------------------------------------------------------- The United States Bankruptcy Court for the Northern District of Illinois extended Kimball Hill Inc. and its debtor-affiliates' time by which they may file notices of removal with respect to civil actions through the effective date of a confirmed Chapter 11 plan in their bankruptcy cases. The Debtors noted that with more than 70 actions pending in which they are a party to, they need more time to conduct full analyses on those actions. The Actions include employment-related litigation and administrative proceedings, contract disputes, product liability, and personal injury cases. Headquartered 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. (Kimball Hill Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). KIMBALL HILL: Court Extends Plan Filing Period Until January 16 --------------------------------------------------------------- The United States Bankruptcy Court for the Northern District of Illinois extended Kimball Hill Inc. and its debtor-affiliates' exclusive plan filing period through and including Jan. 16, 2009. The Debtors' exclusive right to solicit and obtain acceptance for that plan is also extended through and including March 16, 2009. The Debtors noted that they intend to use the Exclusivity Period extension to continue negotiations with their Prepetition Lenders and the Official Committee of Unsecured Creditors on the terms of a consensual Chapter 11 plan. Headquartered 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. The Debtors have until Oct. 20, 2008, to exclusively file a bankruptcy plan. (Kimball Hill Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). KLEROS PREFERRED: Moody's Cuts Ratings on Notes, Leaves on Review ----------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible downgrade the ratings of the two classes of notes issued by Kleros Preferred Funding II, Ltd.: Class Description: $250,000 Class A-1V First Priority Senior Secured Voting Floating Rate Notes Due December 2042 -- Prior Rating: Aa2, on review for possible downgrade -- Prior Rating Date: 5/18/2008 -- Current Rating: Ba3, on review for possible downgrade Class Description: $869,750,000 Class A-1NV First Priority Senior Secured Non-Voting Floating Rate Notes Due December 2042 -- Prior Rating: Aa2, on review for possible downgrade -- Prior Rating Date: 5/18/2008 -- Current Rating: Ba3, on review for possible downgrade Additionally, Moody's has downgraded the ratings of these five classes of notes: Class Description: $60,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due December 2042 -- Prior Rating: Baa2, on review for possible downgrade -- Prior Rating Date: 5/18/2008 -- Current Rating: Ca Class Description: $34,000,000 Class B Third Priority Senior Secured Floating Rate Notes Due December 2042 -- Prior Rating: Ba2, on review for possible downgrade -- Prior Rating Date: 5/18/2008 -- Current Rating: Ca Class Description: $8,000,000 Class C Fourth Priority Senior Secured Floating Rate Notes Due December 2042 -- Prior Rating: B1, on review for possible downgrade -- Prior Rating Date: 5/18/2008 -- Current Rating: Ca Class Description: $9,650,000 Class D Fifth Priority Mezzanine Secured Deferrable Floating Rate Notes Due December 2042 -- Prior Rating: Ca -- Prior Rating Date: 5/18/2008 -- Current Rating: C Class Description: $11,000,000 Class E Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes Due December 2042 -- Prior Rating: Ca -- Prior Rating Date: 5/18/2008 -- Current Rating: C According to Moody's, these rating actions are as a result of the deterioration in the credit quality of the transaction's underlying collateral pool consisting primarily of structured finance securities. LITTLE PROFESSIONALS: Court Orders Closure of Day Care Center ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts has ordered the closure of Little Professionals Inc.'s day care center in North Andover, Mass., Bill Kirk of the Eagle Tribune reported Friday. "We were trying to work out a plan with the court," owner Jim Richards said. "But not everyone was going along with it. I truly expected that not to happen on Wednesday. We were told if it (the court-ordered closure) did happen, we'd be given days or a week to tell the staff and parents. They said yesterday morning that I had yesterday to do it." Jim Richards and his wife Connie opened their first center in Chelmsford in 1994, followed by the Woburn facility. Both locations are leased and have been closed, Mr. Richards said. According to the report, the couple financed the North Andover facility with $2.5 million from Salem Five and New England Certified Development Corp., which provides Small Business Administration loans. Mr. Richards said the company also owed back taxes to the IRS. Based in North Andover, Mass., Little Professionals Inc. operates a child care center. The company filed for Chapter 11 relief on March 6, 2007 (Bankr. D. Mass. Case No. 07-40769). Michael B. Feinman, Esq., at Feinman Law Offices, represented the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed total assets of $183,025, and total debts of $3,324,716. LOS ROBLES CDO: Moody's Lowers Ratings on Seven Classes of Notes ---------------------------------------------------------------- Moody's Investors Service has downgraded the ratings on seven classes of notes issued by Los Robles CDO, Ltd and left two of these ratings on review for possible downgrade. The notes affected by the rating action are: Class Description: $187,500,000 Class A-1a Floating Rate Notes Due August 12, 2047 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade -- Prior Rating Action Date: March 27, 2008 Class Description: $112,500,000 Class A-1b Floating Rate Notes Due August 12, 2047 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade -- Prior Rating Action Date: July 30, 2008 Class Description: $225,000,000 Class A-2 Floating Rate Notes Due August 12, 2047 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Ca -- Prior Rating Action Date: July 30, 2008 Class Description: $67,500,000 Class A-3 Floating Rate Notes Due August 12, 2047 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: Ca -- Prior Rating Action Date: July 30, 2008 Class Description: $33,000,000 Class B Floating Rate Notes Due August 12, 2047 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: Ca -- Prior Rating Action Date: July 30, 2008 Class Description: $37,500,000 Class C Deferrable Interest Floating Rate Notes Due August 12, 2047 -- Prior Rating: Ca -- Current Rating: C -- Prior Rating Action Date: May 1, 2008 Class Description: $30,750,000 Class D Deferrable Interest Floating Rate Notes Due August 12, 2047 -- Prior Rating: Ca -- Current Rating: C -- Prior Rating Action Date: May 1, 2008 According to Moody's, these rating actions are as a result of the continued deterioration in the credit quality of the transaction's underlying collateral pool consisting primarily of structured finance securities. MDWERKS INC: Names CEO Howards Katz as President ------------------------------------------------ MDwerks, Inc., disclosed in a Securities and Exchange Commission filing that on Oct. 10, 2008, Howard B. Katz, its Chief Executive Officer, was appointed by the Board of Directors of the Company to also serve as President, a position that has been vacant since June 20, 2008. There was no change made to the terms of Mr. Katz's Employment Agreement as a result of this appointment. Mr. Katz has been Chief Executive Officer since Nov. 16, 2005. Going Concern Doubt Sherb & Co., LLP, in Boca Raton, Florida, expressed substantial doubt about MDwerks 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 losses from operations. Revenues have not been significant enough to support the company's daily operations. Management may need to raise additional funds by way of a public or private offering and make strategic acquisitions. MDWerks Inc. reported a net loss of $4,124,154 on total revenue of $262,249 for the second quarter ended June 30, 2008, compared with a net loss of $2,605,134 on total revenue of $132,775 in the same period of 2007. The company recorded compensation expense of $2,408,892 during the three months ended June 30, 2008, as compared to $1,426,431 for the three months ended June 30, 2007. For the three months ended June 30, 2008, interest expense was $1,898,320 as compared to $508,638 for the three months ended June 30, 2007, an increase of $1,389,682. This increase was due to an increase in borrowings and amortization of debt discount and deferred fees in connection with the company's notes payable. At June 30, 2008, the company's consolidated balance sheet showed $7,535,252 in total assets, $4,081,502 in total liabilities, and $3,453,750 in total stockholders' equity. About Mdwerks Inc. Based in Deerfield Beach, Florida, MDwerks Inc. (OTC BB: MDWK) -- http://www.mdwerks.com/-- provides healthcare professionals with automated electronic insurance claims management solutions and advance funding of medical claims. MELROSE INVESTORS: Moody's Cuts Class A Notes Rating to 'B3' ------------------------------------------------------------ Moody's Investors Service has downgraded the Class A notes issued by Melrose Investors LLC. The notes are backed by film receivables and have a legal final maturity of July 29, 2009. The downgrade is based on a weaker than expected performance of the film slate backing the transaction. Given the collateral performance to date, it is possible that the notes will not be paid in full by their legal final maturity. The rating, which was originally placed on review for possible downgrade on August 7, 2008, remains under review due to uncertainty as to the extent and timing of future payments to the noteholders. The complete rating actions are: Issuer: Melrose Investors LLC -- Securities: Class A Notes downgraded to B3, previous rating of Baa2; the notes remain on review for possible downgrade. MERVYN'S LLC: Ceases Operations; Hearing Today on Bidding Protocol ------------------------------------------------------------------ Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware will convene: (a) a hearing today Oct. 23, 2008, at 1:30 p.m., to consider approval of bidding and auction procedures related to Mervyn's LLC and its debtor-affiliates' plan to hold going out of business sales at all of their remaining 149 locations and to wind down their business, pursuant to Section 363 of the U.S. Bankruptcy Code; and (b) a hearing to consider approval of the sale on Oct. 30, 2008, at 12:00 p.m., with October 27 as the Objection deadline. The GOB Sales is intended to maximize recoveries for creditor constituents. A list of the 149 locations is available for free at http://ResearchArchives.com/t/s?341e Christopher M. Samis, Esq., at Richards, Layton & Finger, PA, in Wilmington, Delaware, relates that since the Petition Date, the Debtors have taken steps to streamline their operations and have undertaken several initiatives to improve profitability. Specifically, Mr. Samis notes, shortly after the Petition Date, consistent with the Debtor-in-possession Loan Agreement, the Debtors, with their advisors, identified 26 under-performing stores and have sought and obtained approval to conduct store closing sales at 26 store locations. Mr. Samis says the Debtors and their advisors, in consultation with the Committee and other parties-in-interest, have also explored various strategic alternatives in connection with their efforts to emerge from Chapter 11 as a going concern. The Debtors conducted an extensive search for an investor capable of meeting their need for an equity infusion and conducted negotiations with one interested party, which, unfortunately, did not result in a commitment, Mr. Samis relates. "In that regard, the Debtors and their advisors entered into a non-disclosure agreements and had preliminary conversations with several interested parties which conducted due diligence," Mr. Samis says. "Unfortunately, the Debtors ultimately could not reach agreement with any buyers for the Debtors' business as a going concern." Together with their financial and legal advisers, the Debtors completed a thorough analysis of all available options, including a sale of the Company, prior to undertaking this course of action, the Company's official statement disclosed. The company and its board of directors determined that holding going out of business sales during the holiday season is the best way to maximize value for creditors. "We are disappointed with this outcome but the Company's declining liquidity position and the extremely challenging retail environment, together with the fact that we have exhausted all other possibilities, requires that we take this action," said John Goodman, Chief Executive Officer of Mervyns. "Consumers know Mervyns for our style, quality, and great value and we are confident that the deep discounts available through going out of business sales will drive significant traffic in our stores." "I want to thank the many talented Mervyns associates for their outstanding efforts. Although we took a number of steps to improve our financial performance, we were unable to return the company to profitability. We appreciate the hard work and loyalty of our store associates, whose continued assistance we will rely upon during our going out of business sales," Mr. Goodman added. Auction and Bid Procedures To maximize recovery on the assets to be included in the Store Closing Sales at the Closing Stores, the Debtors intend to obtain the assistance of one of the national liquidation firms that specializes in, among other things, the large scale liquidation of assets. In this vein, the Debtors ask the Court to issue: -- on an expedited basis, an order (A)(i) approving proposed auction procedures, (ii) setting the date, time and place of the Auction, and (iii) approving the form of notice of the Auction and Store Closing Sales; (B) setting a hearing on October 30, 2008, at 12:00 p.m. and (C) approving the break-up fee and expense reimbursement sought by the Stalking Horse, if applicable. -- an order approving an agency agreement with the party submitting the highest or otherwise Qualified Bid at the Auction, and the Store Closing Sales, and waiving the Debtors' compliance with state and local laws, statutes, rules, ordinances and lease provisions restricting the Store Closing Sales. According to the Debtors, it is critical to commence the Store Closing Sales as soon as possible for these reasons: -- to maximize value from the sale of Liquidation Assets at the Store Closing Sales by commencing the Store Closing Sales by or before the Thanksgiving and Christmas holiday seasons; -- delays in the liquidation process could cause the Merchandise to become out of season, thus, diminishing in value; -- commencing the Store Closing Sale expeditiously avoids the risk of inventory "shrinkage"; and -- an immediate start to the Store Closing Sales will relieve the Debtors of the substantial administrative expenses for the Closing Stores. Mr. Samis avers that the solicitation of bids from Liquidation Firms to act as the Debtors' agent in connection with the conduct of the Store Closing Sales is the best way to maximize the value of the Liquidation Assets and an auction will result in the most beneficial arrangement for the Debtors and their creditors. The terms of the Agency Agreement provides that: (i) The agent will guarantee that the Debtors will recover a fixed percentage of the aggregate cost value of the Merchandise included in the Sale; (ii) From the first day after the entry of the order approving the sale -- the Sale Commencement Date -- through Dec. 31, 2008, the Agent will be unconditionally responsible for all expenses enumerated in the Agency Agreement, incurred in conducting the Sale during the Sale Term, which expenses may be funded and paid from proceeds of the Sale to the extent available and in accordance with other applicable provisions of the Agency Agreement; (iii) The Agent would receive a fee, calculated as a percentage of the aggregate cost of value of the Merchandise included in the Sale; (iv) To the extent that proceeds exceed the sum of the Guaranteed Amount, expenses of the sale, and the Agent's Base Fee, the Agent will share the excess proceeds with the Debtors, in the ratio of 70% to the Debtors and 30% to the Agent. All amounts to be received by the Debtors in excess of the Sharing Threshold is the "Recovery Amount"; (v) On the first business day following the issuance of the Approval Order, the Agent will wire to the Debtors a percentage of the Estimated Guaranteed Amount and secure the remaining portion of the Estimated Guaranteed Amount with a letter of credit. The balance of the Guaranteed Amount will be paid on the earlier of: -- the second business day following the issuance of the Final Inventory Report, and -- 30 days following the Sale Commencement Date. (vi) The Guaranteed Amount is conditioned upon there being agreed upon minimum amount of Merchandise at Cost Value included in the Sale. (vii) The Debtors and the agent will jointly conduct a physical inventory taking in all of the Closing Stores purposes of calculating the aggregate Cost Value of the Merchandise in the Closing Stores. (viii) Agent will have the right to conduct the Store Closing Sales commencing the day after entry of the Approval Order through and including certain date to be agreed upon between the Debtors and the Agent; (ix) The Store Closing Sales will be conducted in accordance with the Sale Guideline set forth in the Agency Agreement. The Agent will be authorized to advertise and promote the sales as a store closing or similar themed sale; (x) The Agent will have the right to use the Debtors' store- level employees during the Sale Term and will reimburse the Debtors for actual payroll and Employee Benefits up to an agreed upon cap based upon a percentage of the aggregate base payroll. The employees will remain the Debtors' employees at all times; (xi) Although sales of all items of Merchandise sold during the Sale Term will be a final sale, the Agent will accept returns of Merchandise sold prior to the Sale Commencement Date at the Closing Stores during the first 14 days of the Sale Term. In addition, the Agent will accept Gift Cards during the entire Sale Term. The Debtors will reimburse the Agent for Refunds issued or Gift Cards that were honored at the Closing Stores in accordance with the terms of the Agency Agreement; and (xii) Subject to (a) the Agent's obligation to pay the Guaranteed Amount, reimburse Expenses of the Sale, and pay the Recovery Amount, if any, to the Debtors, and (b) the DIP Lender's written consent, the Agent will be granted a first priority lien on the Merchandise and the Proceeds from the Store Closing Sale. A full-text copy of the Agency Agreement is available for free at http://ResearchArchives.com/t/s?341f Furthermore, the Debtors propose these Auction Procedures: (a) The Debtors will provide the Liquidation Firms and any other potential bidder access to various financial dates and other relevant information in connection with the Closing Stores, as well as the opportunity to visit certain of the Closing Stores; (b) Within two business days following the entry of the Procedures Order, the Debtors will serve the Auction and Store Closing Sales Notice on the U.S. Trustee, counsel to the DIP Agent, counsel to the Committee, counsel to the Prepetition Second Lien Lenders, counsel to Lubert-Adler and Klaff, counsel to Cerberus Capital Management, LP, counsel to the MDS entities, all parties asserting a lien in the Debtors' Liquidation Assets in the Closing Stores, each of the Debtors' landlords for the Closing Stores, all state attorneys general in states in which the Closing Stores are located; (c) Prior to forming a joint venture between two or more Potential Bidders, the Potential Bidders must obtain prior written approval from the Debtors; (d) On or before October 27, 2008, at 12:00 p.m., each Potential Bidder must submit a Qualified Bid to the Debtors, Richards, Layton & Finger, PA, FTI Consulting, Morgan, Lewis & Bockius LLP, counsel to the DIP Agent, Kirkland & Ellis LLP; (e) Bids must be unconditional and not contingent upon any event, including, without limitation, any additional due diligence investigation, inventory evaluation, or financing. Neither the Debtors, nor any of the other Bid recipients will be permitted to share the bids received among the bidders; (f) A Qualified Bid must be based on the terms and conditions of the Agency Agreement, and will be, at a minimum, for an amount higher than or equal to the sum of the Guaranteed Amount. To the extent that the Debtors have selected a Stalking Horse Bidder, a Qualified Bid must be based on the terms and conditions of the Stalking Horse Agreement, and will be, at a minimum initial overbid, provided for under the Stalking Horse Agreement; (g) Qualified Bids must meet these conditions: -- Potential Bidders will be required to complete and execute a confidentiality agreement, in form and substance acceptable to the Debtors; -- Potential Bidders will send the bid to Bid Recipients; -- The Bid must: (i) provide for consideration payable only in cash; (ii) give sufficient indicia that the Bidder or its representative is legally empowered, by power of attorney or otherwise; (iii) provide written evidence of the bidder's ability to consummate the transaction; and (iv) do not contain any contingencies materially greater than what is in the Agency Agreement; -- The Debtors will determine whether an offer is a Qualified Bid and whether a Qualified Bid constitutes the most favorable transaction for the Debtors' estates; -- The Bid Recipients and each bidder and all other entities will keep bids confidential, provided that the Debtors reserve their right to reveal the bids to any other entity; -- Each bidder will be deemed to acknowledge that is bound by the bidding procedures and that it had an opportunity to inspect and examine the Liquidation Assets and to review pertinent documents and information with respect to the Liquidation Assets before making its offer; -- At the commencement of the Auction, the Debtors will announce the best Qualified Bid received and will open the Auction for other Qualified Bidders to improve upon their bid. (h) The Auction will be conducted on October 28, 2008, at 12:00 p.m., at the offices of Morgan, Lewis & Bockius LLP, or other location as may be selected by the Debtors. Only Qualified Bidders who have complied with the Auction may bid at the Auction. Bidding at the Auction will continue until the time as the highest or otherwise best Qualified Bid is determined; (i) The Debtors request that the Sale Hearing be held on October 30, 2008, at 12:00 p.m.; (j) The Debtors also request that the Court establish October 27, 2008, at 4:00 p.m., as the deadline for objections to the Motion and the entry of the Approval Order. (k) The Debtors reserve their right to (a) adjourn the Auction with respect to some or all of the Liquidation Assets at or prior to the Auction, (b) modify the Bidding Procedures Hearing or the Auction or (c) remove any Liquidation Assets from the Store Closing Sales if the Debtors determine that the action will maximize the value of the estate; and (l) Any Bidder failing to comply with the requirements may not be considered a Qualified Bidder. The Debtors seek the Court's authority to, at any time prior to the Auction, in their sole discretion, accept a "Stalking Horse" bid from the bids received and enter into an agreement with the Stalking Horse Bidder. "Time is of the essence to preserve and maximize the value of the Debtors' liquidation Assets. Each of the Closing Stores contains significant levels of Merchandise that will be included in the Store Closing Sales," says Mr. Samis. "The realization of fair value for these Liquidation Assets as promptly as possible will inure to the benefit of all stakeholders, especially if the process can begin in time to capture the crucial holiday season consumers." The Debtors further seek a waiver of the 10-day stay required under Rule 6004(h) of the Federal Rules of Bankruptcy Procedure. Mr. Samis avers that the Debtors risk a potential decline in value of the Merchandise. About Mervyn's LLC Headquartered in the San Francisco Bay Area, Mervyn's LLC -- http://www.mervyns.com/-- provides a mix of top national brands and exclusive private labels. Mervyn's has 176 locations in seven states. Mervyn's stores have an average of 80,000 retail square feet, smaller than most other mid-tier retailers and easier to shop, and are located primarily in regional malls, community shopping centers, and freestanding sites. The company and its affiliates filed for Chapter 11 protection on July 29, 2008, (Bankr. D. Del. Lead Case No.: 08-11586). Howard S. Beltzer, Esq., and Wendy S. Walker, Esq., at Morgan Lewis & Bockius LLP, and Mark D. Collins, Esq., Daniel J. DeFranceschi, Esq., Christopher M. Samis, Esq. and L. Katherine Good, Esq., at Richards Layton & Finger P.A., represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants LLC is the Debtors' claims agent. The Debtors' financial advisor is Miller Buckfire & Co. LLC. Mervyn's LLC's balance sheet at Aug. 30, 2008, showed $665,493,000 in total assets and $717,160,000 in total liabilities resulting in a $51,667,000 total stockholders' deficit. (Mervyn's Bankruptcy News, Issue 9; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) METROMEDIA STEAKHOUSE: Files for Chapter 11 Bankruptcy in Delaware ------------------------------------------------------------------ Metromedia Steakhouses Company, L.P. together with certain of its affiliates filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The company will reorganize around its franchise operations and a profitable core of company-operated restaurants. In connection with the filing, the company said that it has received a commitment of secured debtor-in-possession financing from an affiliate, Metromedia Company, the company's existing secured creditor. Upon receipt of bankruptcy-court approval, the company will use the DIP financing and cash from operations to fund operating expenses. According to court documents, the company listed assets between $1 million and $10 million, and debts between $100 million and $500 million. The company owes $,744,528 to its unsecured creditors including Gordon Food Services Inc. owing $1,341,888; GE Capital Franchise Finance owing $668,880; and Tracy Locke Partnership LP owing $446,624. The company stressed that it will continue operating and that it will be business as usual. Bob Hoffman, president of the company, emphasized that the filing will have a positive long-term impact on the company's domestic and international operations. As part of the filing, the company is seeking relief from the bankruptcy court to protect its major constituencies. The company intends to fully and seamlessly serve its customers and satisfy its employee wage and benefit obligations as it did before the Chapter 11 filing. The company selected Irell & Manella LLP and Pachulski, Stang, Ziehl Young & Jones LLP as its bankruptcy counsels, and AlixPartners LLP as its claims agent. Ponderosa Franchising Company, Ponderosa International Development, Inc. and Bonanza Restaurant Company, which are subsidiaries of the Company and are the franchisors of the Ponderosa Steakhouse and Bonanza Steakhouse brands, were not included in the Chapter 11 filing. About Metromedia Steakhouses Headquartered in Plano, Texas, Metromedia Steakhouses Company, L.P. owns, operates and franchises family-focused restaurants operating under the Ponderosa Steakhouse and Bonanza Steakhouse brands directly and through its affiliates. METROMEDIA STEAKHOUSES: Case Summary & 40 Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Metromedia Steakhouses Company, L.P. 6500 International Parkway, Suite 1000 Plano, TX 75093 Bankruptcy Case No.: 08-12490 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- JOST Restaurant Financing, Inc. 08-12492 Puerto Rico Ponderosa, Inc. 08-12493 Pon Realty I, Inc. 08-12495 Type of Business: The Debtors own, operate and franchise family-focused restaurants operating under the Ponderosa Steakhouse and Bonanza Steakhouse brands directly and through its affiliates. Chapter 11 Petition Date: October 22, 2008 Court: District of Delaware (Delaware) Judge: Mary F. Walrath Debtor's Counsel: Bruce Grohsgal, Esq. bgrohsgal@pszyj.com Laura Davis Jones, Esq. ljones@pszjlaw.com Pachulski, Stang, Ziehl Young & Jones LLP 919 N. Market Street, 16th Floor Wilmington, DE 19899-8705 Tel: (302) 778-6403 Fax: (302) 652-4400 Claims Agent: AlixPartners LLP Estimated Assets: $1 million to $10 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Gordon Food Service Inc. trade debt $1,341,888 Dept. CH10490 Palatine, IL 60055-0490 Tel: (616) 530-7000 Fax: (616) 717-7600 GE Capital Franchise Finance trade debt $668,880 Attn: Sheila Samples 8377 East Hartford Drive, Suite 200 Tel: (425) 450-2196 Fax: (425) 709-9534 Tracy Locke Partnership LP trade debt $446,624 Attn: Tracy Locke P.O. Box 910023 Dallas, TX 75391 Tel: (214) 259-3500 Fax: (214) 259-3550 Propaganda, Inc. trade debt $305,655 Telestar Direct LLC trade debt $194,005 Appert's Foodservice trade debt $194,000 Renzi Bros Inc. trade debt $178,234 Professional Retail Outlet trade debt $142,858 Services LLC Paragon-Montaverdes trade debt $95,190 McDonald Media trade debt $88,966 Lawson Software Americas trade debt $60,730 Edward Don & Company trade debt $56,429 Horven Industries Inc. trade debt $56,005 The Deerfield Co. trade debt $49,250 Ron Foth Advertising trade debt $47,956 Gountanis Enterprises trade debt $47,000 Rheem MFG, Co. trade debt $38,072 Pancerella Business Solutions trade debt $37,725 WPXI trade debt $36,699 William J. Doughty trade debt $36,496 William V. Depado trade debt $33,232 RoofConnect trade debt $32,804 WPGH trade debt $32,385 Krasta Properties trade debt $31,412 Central Investment Co. trade debt $30,000 Catherine E. Asher trade debt $28,267 WTAE trade debt $27,689 National Wholesale Supply trade debt $27,601 Inc. Helping Plumbing Inc. trade debt $25,565 Moore Food Distribution Inc. trade debt $23,968 Nexstar Broadcasting Group trade debt $22,490 Inc. Joseph T. Berrena Mechanicals trade debt $22,490 Inc. DHL Express (USA) Inc. trade debt $22,035 Harohl Construction Inc. trade debt $21,358 Kendall Center Management trade debt $20,397 Tom's General Repair Service trade debt $20,343 KDKA-TC trade debt $19,608 Beanor H. Davies trade debt $19,200 RJR Investment LLC trade debt $18,454 MILLSTONE II: Moody's Reviews Notes Ratings for Possible Cut ------------------------------------------------------------ Moody's Investors Service has downgraded and left on review for possible downgrade the ratings on the following two classes of notes issued by Millstone II CDO Ltd.: Class Description: $1,125,000,000 Class A-1M Floating Rate Notes Due 2051 -- Prior Rating: Ba3, on review for possible downgrade -- Prior Rating Date: 5/30/2008 -- Current Rating: Caa3, on review for possible downgrade Class Description: $209,500,000 Class A-1Q Floating Rate Notes Due 2051 -- Prior Rating: Ba3, on review for possible downgrade -- Prior Rating Date: 5/30/2008 -- Current Rating: Caa3, on review for possible downgrade Additionally, Moody's has downgraded the ratings on the following two classes of notes: Class Description: $84,000,000 Class A-2 Floating Rate Notes Due 2051 -- Prior Rating: B1, on review for possible downgrade -- Prior Rating Date: 5/30/2008 -- Current Rating: Ca Class Description: $46,000,000 Class B Deferrable Floating Rate Notes Due 2051 -- Prior Rating: B3, on review for possible downgrade -- Prior Rating Date: 5/30/2008 -- Current Rating: Ca Moody's has also withdrawn the rating on the class of notes since it has been paid in full: Class Description: $10,500,000 Class X Floating Rate Notes Due 2051 -- Prior Rating: Aaa -- Prior Rating Date: 6/8/2006 -- Current Rating: WR Millstone II CDO Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. On July 24, 2008, the transaction experienced an event of default caused by a failure of the Class A Principal Coverage Ratio to be greater than or equal to the required amount set forth in Section 5.1(h) of the Indenture dated May 25, 2006. That event of default is continuing. Also, Moody's has received notice from the Trustee that it has been directed by a majority of the controlling class to declare the principal of and accrued and unpaid interest on the Notes to be immediately due and payable. The rating actions taken today reflect continuing deterioration in the credit quality of the underlying portfolio and the increased expected loss associated with the transaction. Losses are attributed to diminished credit quality on the underlying portfolio. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, the Controlling Class may be entitled to direct the Trustee to take particular actions with respect to the Collateral. The severity of losses may depend on the timing and choice of remedy to be pursued by the Controlling Class. Because of this uncertainty, the rating of Class A-1M Notes and Class A1-Q Notes issued by Millstone II CDO Ltd. is on review for possible further action. MOUNT AIRY: Moody's Cuts Ratings on Weak Operating Results ---------------------------------------------------------- Moody's Investors Service downgraded Mount Airy #1, L.L.C's Probability of Default rating to Caa3 from Caa2, and downgraded the Corporate Family Rating to Caa3 from Caa1. Moody's also downgraded the company's senior secured bank facilities to Caa3 from Caa1. The rating outlook is negative. The downgrade reflects weaker than anticipated operating results caused by declining gaming demand and competition from Mohegan Sun's Pocono Downs facility that opened in July. Moody's expects the company to be in technical default of its minimum EBITDA covenant for the quarter ended September 30, 2008, and so Mount Airy will lose access to its $15 million revolving credit facility. Given the negative demand environment, recovery prospects in a default scenario have dimmed, and so, the family recovery rate has been changed to 50% from 65%. The negative outlook reflects the high probability that Mount Airy will be unable to generate sufficient cash flow to cover all interest and mandatory debt amortization in 2009 given Moody's expectation that earnings are not likely to increase materially in light of weak economic conditions. Ratings downgraded are: -- Corporate family rating to Caa3 from Caa1 -- Probability of Default from Caa2 to Caa3 -- $15 million senior secured first lien revolving credit facility to Caa3 (LGD 4, 51%) from Caa1 (LGD 3, 35%) -- $275 million senior secured first lien term loan to Caa3 (LGD 4, 51%) from Caa1 (LGD 3, 35%) Mount Airy #1, LLC was formed in 2004 to construct and operate the Mount Airy Casino Resort. Mount Airy was awarded one of five Category 2 slot machine licenses in Pennsylvania which allows for a maximum of 5, 000 slot machines. MOTOR COACH: 1st Day Motions Ok'd; May Continue Customer Programs ----------------------------------------------------------------- Motor Coach Industries announced the final approval of all of its "first day motions" by the United States Bankruptcy Court for the District of Delaware. MCI was granted final approval of all remaining "first day motions" by the Bankruptcy Court on Friday, October 17, 2008. The Company was granted final approval to continue all customer programs and services without interruption. MCI will also continue to honor all standard limited warranties on its coaches. The Bankruptcy Court had previously granted final approval of other "first day motions," including authority to pay pre-petition claims of critical vendors. Additionally, MCI received final approval of its $311 million debtor-in-possession financing facilities. GE Capital is the arranger and largest lender of the senior DIP facility that will refinance MCI's existing first lien debt and provide additional liquidity necessary for day-to-day operations. Goldman Sachs Credit Partners, L.P. is the arranger of and a lender in, and Monarch Alternative Capital LP (through certain of its affiliates and funds under its management) is participating in, the junior DIP facility. MCI also received approval to perform under the "lock up" agreement with Franklin Mutual Advisers, LLC and certain of its affiliates, a key element of the Company's pre-negotiated restructuring plan. "We are very pleased with the Bankruptcy Court's decision to grant final approval on these motions, which are critical to MCI implementing our voluntary financial restructuring," said Tom Sorrells, President and CEO. "Approval to continue customer programs and honor standard limited warranties is excellent news for our customers, who have been extremely supportive of MCI through the initial weeks of this process. Full access to our financing facility will provide MCI the added liquidity to reimburse vendors and continue customer support programs and assembly operations without interruption. We remain focused on executing our plan to emerge from Chapter 11 by February 2009." MCI and its U.S. subsidiaries filed voluntary petitions for Chapter 11 on September 15, 2008, to implement a pre-negotiated restructuring plan to be funded in part by Franklin Mutual Advisers, LLC and/or certain of its affiliates. The Company's Canadian operations are not included in the filing. MCI's filing has been assigned case number 08-12136 (BLS), and the Bankruptcy Court has ordered that all of the Company's Chapter 11 cases be administered under that case number. MCI is advised by Rothschild Inc., AlixPartners LLP and Simpson Thacher & Bartlett LLP. Wilmington, Delaware-based Motor Coach Industries International, Inc.-- http://www.mcicoach.com/-- and its subsidiaries manufacture intercity coaches for the tour, charter, line-haul, scheduled service, and commuter transit sectors in the U.S. and Canada. They also operate seven sales centers and nine service centers in the U.S. and Canada and is the industry's supplier of aftermarket parts for most makes and models. The Company and its debtor-affiliates filed for separate Chapter bankrupty protection with the United States Bankruptcy Court for the District of Delaware on September 15, 2008 (Lead Case No. 08- 12136), to implement a pre-negotiated restructuring plan to be funded by Franklin Mutual Advisors, LLC and certain of its affiliates. The Company's Canadian operations are not included in the filing. Kenneth S. Ziman, Esq., and Elisha D. Graff, Esq., at Simpson Thacher & Bartlett LLP, in New York; and Jason M. Madron, Esq., and Lee E. Kaufman, Esq., at Richards Layton & Finger, P.A., in Wilmington, Delaware, represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants LLC serves as claims and notice agent. Rothschild Inc. and AlixPartners LLP also provide restructuring advice. At the time of filing, the Debtors listed assets of between $500,000,000 and $1,000,000,000 and liabilities of between $100,000,000 and $500,000,000. NATIONAL BEEF: S&P's 'B+' Rating Unaffected by Oct. 20 Lawsuit -------------------------------------------------------------- Standard & Poor's Ratings Services said that the ratings and outlook on National Beef Packing Co. LLC. (B+/Negative/--) currently would not be affected following the announcement that the U.S. Justice Department filed a lawsuit on Oct. 20, 2008, to prevent Brazilian-based JBS S.A. (B+/Negative/--) from acquiring National Beef's membership interests for about $560 million. The Justice Department alleges in its suit that the acquisition will likely cause more than 80% of the nation's beef packing capacity to be dominated by three companies\u2014-JBS, Tyson Foods Inc. (BB/Negative/--), and Cargill Inc. (A/Stable/A-1) -- and would lead to higher prices for consumers and food service companies, as well as lower prices for cattle producers, ranchers, and feedlots. In March 2008, S&P affirmed the ratings on National Beef following the announced acquisition by JBS and expected that at closing of the deal, JBS would assume or repay all of National Beef's debt outstanding, including the $160 million 10.5% senior unsecured notes due 2011. S&P will monitor the situation and review the ratings and outlook as needed, depending on developments in the lawsuit. NEBRASKA BOOK: Moody's Cuts Corporate Family Rating to B3 from B2 ----------------------------------------------------------------- Moody's Investors Service lowered the Corporate Family Rating and Probability of Default ratings for Nebraska Book Company 's parent NBC Acquisition Corp to B3 from B2. Rating actions on various rated debt instruments are detailed below. All ratings remain under review for a possible further downgrade. The rating action reflects Moody's concerns on heightened refinancing risk resulting from the company's need to refinance its $85 million revolving credit facility which expires on March 4, 2009. Access to the revolving credit facility is vital in order for the company to finance its seasonal working capital needs, primarily related to purchasing used textbooks at the end of the Fall and Spring college semesters. In addition, the rating action reflects Moody's belief that there is limited headroom under the company's financial covenants in the near future. This is due to the step down in the company's maximum permitted leverage covenant as of March 31, 2009. Covenant pressure may also arise under the company's interest coverage and fixed charge coverage tests. This could occur due to rising cash interest expense as debt at NBC Acquisition Corp is now payable in cash as well as the possibility of higher interest expense under a refinanced and amended secured credit facility as general market pricing has increased. Ratings remain under review for a possible further downgrade. Moody's continuing review will focus on Nebraska Book's ability to extend the expiration of its revolving credit facility, the level of financial covenant headroom in the financing arrangements, and the terms, conditions, and costs of any extensions or amendments. Moody's review will also focus on the company's operating performance in view of current pressures on discretionary spending, although Moody's acknowledge that the company operates in a segment with relatively stable demand. If Nebraska Book is unable to make substantive progress toward concluding an extension of its revolving credit facility and/or obtain covenant relief by early in the first quarter of 2009, ratings could be lowered further. If the company is able extend the expiration of its revolving credit facility in a timely manner, Moody's review will focus on the terms associated with the extended facility, the level of cushion under financial covenants, and costs of any amendment in terms of fees and on the rates paid by the company under its various financing agreements. If the incremental costs associated with a refinancing and/or amendments are manageable and liquidity is adequate, ratings could be confirmed at their current levels. These ratings were lowered, and remain under review for a possible downgrade. LGD Assessments are subject to change: NBC Acquisition Corporation -- Corporation Family Rating to B3 from B2 -- Probability of Default Rating to B3 from B2 -- $77 million Sr Discount Debentures due 2013 to Caa2 from Caa1 Nebraska Book Company -- $85 million Sr Secured Revolving Credit Facility due 2009 to Ba3 from Ba2 -- $195 million Sr Secured Term Loan due 2011 to Ba3 from Ba2 -- $175 m Sr Subordinated Notes due 2012 to Caa1 from B3 Moody's last rating action on Nebraska Book and NBC Acquisition Corporation was on April 10, 2006 when the corporate family rating was confirmed at B2 following its announced acquisition of College Bookstores of America. NBC Acquisition Corp., headquartered in Lincoln, Nebraska, is a holding company whose sole asset is Nebraska Book Company, Inc. Nebraska Book Company, Inc. is a leading wholesaler of used textbooks and operates approximately 260 college bookstores across the United States. The company also offers other affiliated services. Revenues for the LTM period ended June 30, 2008 were approximately $585 million. NRG ENERGY: S&P Puts 'B+' Corp. Credit Rating Under Pos. Watch -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Exelon Corp., subsidiaries Exelon Generation Co. LLC, and PECO Energy Co. to 'BBB' from 'BBB+'. S&P also placed the ratings of Exelon, and all its subsidiaries, including Commonwealth Edison Co., on CreditWatch with negative implications. At the same time, S&P placed the 'B+' corporate credit rating of NRG Energy Inc. on CreditWatch with positive implications. S&P affirmed the short-term ratings of all entities and have not placed them on CreditWatch.. The rating change and CreditWatch listings follow the announcement that Exelon's board has approved an all-stock offer to purchase all of the outstanding shares of NRG at an exchange ratio of 0.485 shares of Exelon for each share of NRG, or a premium of 37% on NRG's closing price on Oct. 18, 2008. The offer is unsolicited and is subject to approval by NRG's board and shareholders. It is unclear how long it would take before a formal transaction is agreed upon, if at all. S&P expects the transaction to also require regulatory approvals from California, Texas, New York, Pennsylvania, the Department of Justice, the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission. There are many factors that can derail the merger. Yet, Exelon's willingness to pursue an aggressive growth at the detriment of creditworthiness results in the lower rating. "In our view, by proposing a transaction with a merchant power generation company that has a significantly weaker business profile, Exelon has demonstrated a willingness to increase its own business risk profile. Management has also relaxed its policy of limiting debt to levels commensurate with the 'BBB+' level by contemplating a transaction with a highly leveraged company," said S&P's credit analyst Aneesh Prabhu. If the merger proceeds to completion, Exelon's acquisition of a much more leveraged NRG would likely result in the combined company having lower ratings. However, S&P also believes Exelon's management considers investment-grade ratings as important. S&P notes that formal discussions between the two companies are just beginning and some terms of a successful close could support bondholders, such as use of proceeds from asset sales, the generation hedging policy going forward, and the use of free cash flow generation. NRG's lenders benefit from merging with a company that has a much stronger balance sheet, free cash flow, and one that has a much smaller carbon footprint. NRG's lenders also have the opportunity to put back notes that are out of the money under current market conditions. The risk to the completion from the NRG side is the shareholder vote because the offer price is still substantially lower than where NRG traded a few months ago. There are both negatives and positives from a credit perspective that will influence a final outcome: Under the terms of NRG's debt, a change of control is an event of default and an acceleration event. An acquisition would require refinancing or repricing of this debt, which was committed before the credit crisis in a supportive debt market. While Exelon may be able to arrange for the refinancing of NRG's debt and also appropriately address the lien facility with trading counterparties, an increased cost of borrowing is a credit negative. The all-stock transaction structure currently proposed is the least detrimental to Exelon's credit quality, but the final transaction structure is uncertain. An important determinant of the rating outcome at closure is the deal's financing structure. As noted above, the deal needs NRG shareholder approval. It is unclear if Exelon would be willing to increase its offer if NRG shareholders require a higher valuation. An increase in the all- stock offer will require the extraction of higher synergies, or efficiencies, which may not be forthcoming. Exelon and NRG own substantial capacity in the PJM and ERCOT markets. As part of obtaining regulatory approval for the merger, the combined company expects to divest about 3,000 megawatts of assets in these regions. The combined credit profile would be strengthened if the company uses sales proceeds to pay down debt, especially if the debt reduction is greater than loss of cash flow from the disposed assets. Benefits of scope and scale will be significant. The combined company will have a capacity of more than 47,000 megawatts, and will offer geographical diversity and scale across several markets. The combination will have a stronger market position in each region with the ability to better capitalize on wholesale market movements. The combination will have an improved dispatch profile with a balanced mix of base load, mid-merit, and peaking facilities in all regions where it owns generation. While fuel diversity will also improve meaningfully, the combined company will be more carbon-intensive compared with the stand- alone Exelon. The combined company's financial measures will weaken significantly if the transaction goes through. However, each company currently generates free cash flow, which is projected to increase. S&P expects most of this cash flow to go toward debt reduction, which S&P will view favorably. S&P expects to resolve the CreditWatch placement before the consummation of the transaction following more detailed analysis of management's capitalization plan and business strategy. S&P will also resolve the CreditWatch if the offer fails to get approvals, or is withdrawn. PACE UNIVERSITY: Moody's Affirms Bonds Ratings at 'Ba1' ------------------------------------------------------- Moody's Investors Service has affirmed Pace University's Ba1 debt rating on its Series 1997, 2000, 2005A, and 2005B bonds. The affirmation affects $127 million of rated debt issued through the Dormitory Authority of the State of New York. The bonds are insured by MBIA. The rating outlook remains negative reflecting Moody's concerns about Pace's already thin liquidity and $26.3 million of funds currently locked in the Commonfund Short Term Fund, negative operating performance with higher debt service caused by auction rate market volatility, and challenging student market position. However, Moody's affirmation of the rating at this time heavily incorporates confidence in management's positive cash flow forecasts, fall 2008 enrollment growth, and improved operating performance in FY 2008. Legal Security: Loan payments are a general obligation of the University secured by debt service reserve funds and a security interest in Pledged Revenues equal to maximum annual debt service. The University's obligations to the Authority under the Loan Agreement are additionally secured by a mortgage on certain property, which is not initially pledged to bondholders unless an event of default occurs and the bond insurer requests that the Authority assign the mortgage to the Trustee. Debt-Related Rate Derivatives: Pace has entered into a floating to fixed interest rate swap agreement to hedge the interest rate on its Series 2005A bonds. Under the swap agreement with Merrill Lynch Capital Services, Pace pays a fixed rate and receives a percentage of LIBOR. As of September 30, 2008, the fair value of the swap is close to negative $2.3 million. The swap is insured by MBIA, and downgrade of MBIA (currently rated A2 on watchlist for possible downgrade) below A3 would constitute an Additional Termination Event per the swap schedule. Should MBIA be downgraded, Pace could enter into a credit support annex and post collateral for the full negative mark-to-market value of the swap, in order to prevent termination of the swap. Moody's have factored these credit risks into Moody's Ba1 long-term rating on Pace. Strengths * Renewed focus of senior management on enrollment growth, balancing of operating performance, and growth of unrestricted cash and investments; * Multiple real estate holdings in various high value locations in the New York City area including Manhattan and nearby Westchester County. * Large operating size ($262.8 million of total operating revenue and close to 10,000 full-time equivalent students), with diverse array of undergraduate, graduate, and professional degree offerings including schools of business, law, and education. Challenges * Past enrollment declines due to weak oversight of enrollment management, poor execution of tuition-setting and financial aid strategies, and challenges retaining and graduating students. However, Pace reports strong freshmen application volume in fall 2008 and enrollment of 1,645 new freshmen, the largest entering freshmen class in the past ten years. This will be the second consecutive year in which the University has increased the size of the incoming freshmen class. Further, Moody's believes that fall 2008 net tuition revenue demonstrated healthy growth over fall 2007 levels. * Thin balance sheet liquidity and heavy reliance on proceeds of note issuance for seasonal cash flow needs, with approximately $26.3 million of working capital currently illiquid in the Commonfund Short Term Fund. Pace's financial resource base is depressed by a large and growing post-retirement liability ($59.4 million in FY 2007). The University had $39.6 million of adjusted expendable financial resources (excluding post- retirement liability) at close of FY 2007, covering debt a thin 0.2 times and operations 0.14 times. Management has instituted more formal budget monitoring and reporting procedures and devised a 13 week cash forecasting model. Nevertheless, levels of unrestricted cash throughout the year for an institution of this size are very thin, with a projected 13 week low point of approximately $43 million of unrestricted cash (including proceeds of $60 million note issuance, which is managed as an internal line of credit). This projected cash low point also includes any remaining illiquid balances in the Commonfund (currently $26.3 million). The University does not currently have any bank operating lines of credit and does not have near-term plans to liquidate any portion of its endowment, which had a market value of $105.5 million as of Sept. 29, 2008. * Operating deficits in recent years (-4.6% three-year operating deficit) and 0.6 times debt service coverage in FY 2007 largely due to fall 2006 significant enrollment shortfall. Management has worked with various enrollment and financial consultants over the past two years, focused heavily on expense containment, and now expects a smaller operating deficit for FY 2008 with a target of balancing operations in FY 2009. Interest rates on the University's R-FLOATS bonds have been very volatile in 2008 which is in line with broader market volatility (current reset rates are 6.5% on tax-exempt Series 2005A and 9% on taxable Series 2005B). Moody's is heavily weighing Moody's expectations for positive cash flow in FY 2008 and further improvement in FY 2009 and 2010 operating performance into Moody's current rating affirmation. * Slowed capital spending (64%, cash spent on plant divided by depreciation expense in FY 2007) and limited debt or fundraising capacity for investment in facilities. Pace must also continue to evaluate its multi-campus structure and the possibility of consolidating or eliminating campuses in the future. Outlook The negative outlook reflects Moody's concerns about the University's challenging student market position and thin liquidity levels given its operating size. Failure to achieve goals for enrollment growth and improved cash flow could result in pressure on the rating. Alternatively, the University's ability to more clearly define its market position, achieve improvement in operations, and build liquidity could lead to longer-term credit improvement. What could change the rating-UP Significant growth of liquid financial resources to better cushion debt and operations coupled with stronger annual cash flow and enrollment growth What could change the rating-DOWN Further enrollment declines and pressure on net tuition per student; further deterioration of operating cash flow or unrestricted cash balances; additional borrowing without compensating growth of financial resources Key Indicators (FY 2007 financial data and preliminary fall 2008 enrollment data) -- Fall 2008 Total Full-Time Equivalent Enrollment: 10,020 FTE -- Fall 2008 Freshmen Selectivity: 77.7% -- Fall 2008 Freshmen Matriculation: 19.7% -- Adjusted Total Financial Resources (adding back $59 million post-retirement liability): $108.9 million -- Total Cash and Investments: $170.1 million -- Direct Debt: $192.8 million -- Adjusted Expendable Financial Resources-to-Direct Debt: 0.2 times (excluding post-retirement liability) -- Adjusted Expendable Financial Resources-to-Operations: 0.1 times (excluding post-retirement liability) -- Average Operating Margin: -4.6% -- Operating Cash Flow Margin: 2% -- Average Debt Service Coverage: 1.0 time -- Reliance on Student Charges: 87.6% Rated Debt Series 1997, 2000, 2005A and 2005B bonds: Ba1 underlying rating, insured by MBIA (MBIA's current financial strength rating is A2 on watchlist for possible downgrade) Series 2000 Insured Lease Revenue Bonds (State Judicial Institute, included as indirect debt of the University): A1 underlying rating, insured by Ambac (Ambac's current financial strength rating is Aa3 on watchlist for possible downgrade) PARCS MASTER: S&P Cuts PARCS Master Trust Rating to 'B' from 'BBB' ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on PARCS Master Trust's class 2007-4 Calvados units to 'B' from 'BBB' and removed the rating from CreditWatch with negative implications where it was placed Sept. 17, 2008. PARCS Master Trust is a synthetic, corporate, investment-grade collateralized debt obligation. The rating action reflects the reference portfolio's ratings migration and a transaction restructuring that changed the transaction from fixed recoveries to a combination of fixed and floating recoveries. The outcome is a reference portfolio with a degraded overall credit quality that supports a 'B' rating, the highest rating for which the synthetic rating overcollateralization percentage is greater than 100%. Rating Lowered and Removed from Creditwatch Negative PARCS Master Trust Class Rating ----- ------ To From -- ---- 2007-4 B BBB/Watch Neg S&P's Ratings Services affirmed its 'B' corporate credit rating on Boca Raton, Florida-based Waste Services Inc. and removed the rating from CreditWatch, where it was placed with negative implications on Sept. 23, 2008. The outlook is stable. At the same time, S&P affirmed its 'B-' issue rating on the company's $160 million senior subordinated notes and left the recovery rating unchanged at '5', indicating a modest recovery in the event of a default. S&P also removed the issue rating from CreditWatch. Waste Services refinanced its senior secured credit facilities, including a term loan due 2011 and a revolving credit facility that was set to mature in April 2009, with senior secured facilities due in October 2013. The new senior secured facilities, which are unrated, total approximately $300 million and include a $140 million multicurrency revolving credit facility and $160 million term loan, split between a $120 million Canadian tranche and a $40 million U.S. tranche. "The new facilities relieve the refinancing concerns associated with the current difficult credit market environment and provide increased flexibility with respect to covenants," said S&P's credit analyst Ket Gondha. The new structure comes with a manageable increase in interest expenses but is subject to a significantly more aggressive amortization schedule as it approaches maturity. The ratings on Waste Services reflect the company's highly leveraged financial risk profile, a vulnerable business risk profile due to its acquisitive growth strategy, and its modest scale of operations relative to its peers. These factors are only partially offset by favorable industry characteristics, including high barriers to entry and recession resiliency; some geographic diversity; and the ownership of several permitted, well- positioned, long-lived landfills. Waste Services, which has annual sales of approximately $490 million, is a multiregional, integrated solid waste services company providing collection (74% of sales), transfer (12%), landfill disposal (9%), and recycling and other services (5%) to commercial, industrial, and residential customers in the U.S. and Canada. PINE TREE IV: Moody's Slashes $3MM Secured Notes Rating to 'Caa1' ----------------------------------------------------------------- Moody's Investors Service has downgraded its rating on the notes issued by Pine Tree IV - Series 2006-2: Class Description: $3,000,000 Secured Floating Rate Credit Linked Notes due 30 June, 2013 -- Prior Rating: Ba2 -- Prior Rating Date: 7/7/2008 -- Curent Rating: Caa1 According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's reference portfolio, which includes but is not limited to exposure to Lehman Brothers Holdings Inc., which filed for protection under Chapter 11 of the U.S. Bankruptcy Code on September 15, 2008, and Washington Mutual Inc., which was seized by federal regulators on September 25, 2008 and subsequently virtually all of its assets were sold to JPMorgan Chase. PROPEX INC: Amends Schedules of Assets and Liabilities ------------------------------------------------------ Propex, Inc., amended its Schedules of Assets and Liabilities on Oct. 9, 2008. Under the Amended Schedules, Propex recorded a decrease of $940,706 of its previously declared assets. Propex also reported an increase in its liabilities from $431,632,790 to $437,090,653: Original Amended Schedules Schedules --------- --------- A. Assets Real Property $48,949,308 $49,164,308 Personal Property $276,208,174 $275,052,468 B. Liabilities Secured Priority Claims $229,271,140 $234,559,029 Unsecured Priority Claims $2,186,221 $2,184,857 Unsecured Non-priority Claims $200,175,428 $200,346,766 A full-text copy of Propex Inc.'s Amended Schedules is available for free at http://ResearchArchives.com/t/s?3415 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. The Court extended the exclusive plan filing period of the Debtors through Oct. 20, 2008, and their exclusive solicitation period through Dec. 19, 2008. As of June 29, 2008, the Debtors' balance sheet showed total assets of $562,700,000, and total debts of $551,700,000. (Propex Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) QPC LASERS: Warns of Possible Bankruptcy Absent Funding ------------------------------------------------------- QPC Lasers, Inc., disclosed in a regulatory filing that effective October 15, 2008, Paul Rudy has resigned as Vice President of Sales & Marketing of QPC Lasers, Inc. As of October 20, 2008, the Company resumed manufacturing, engineering and sales operations on a limited basis. The Company had previously reported, on October 14, 2008, a suspension of operations pending receipt of new funding. The Company said it was in discussions with customers and investors with regard to restructuring the Company's finances and securing funding in order to continue operations. If the Company does not succeed in its efforts, the Company may file for protection under either Chapter 11 or Chapter 7 of the Federal Bankruptcy laws. On Oct. 14, QPC Lasers also disclosed that effective as of October 13, 2008, Blima Tuller has resigned as Vice President of Finance and Chief Accounting Officer. Ms. Tuller will remain as an employee to assist the Company with accounting and finance matters as necessary. The company said in the filing, it has been unsuccessful in its previously announced efforts to raise the additional funds necessary to continue operations. As a result, effective as of October 12, 2008, the Company suspended most of its operations and terminated a majority of its employees. While management is continuing to explore certain options that might enable the Company to survive and continue operations, unless significant funding is secured in the next few days, the Company anticipates it will file for protection under Chapter 7 of the federal bankruptcy laws. QPC Lasers, Inc. designs and manufactures laser diodes through its wholly-owned subsidiary, Quintessence Photonics Corporation. Quintessence was incorporated in November 2000 by Jeffrey Ungar, Ph.D. and George Lintz, MBA. The Founders began as entrepreneurs in residence with DynaFund Ventures in Torrance, California and wrote the original business plan during their tenure at DynaFund Ventures from November 2000 to January 2001. The business plan drew on Dr. Ungar's 17 years of experience in designing and manufacturing semiconductor lasers and Mr. Lintz's 15 years of experience in finance and business; the primary objective was to build a state of the art wafer fabrication facility and hire a team of experts in the field of semiconductor laser design. RED VALLEY: Section 341(a) Meeting Scheduled for November 12 ------------------------------------------------------------ The U.S. Trustee for Region 14 will convene a meeting of Red Valley Investments, LLC 's creditors on Nov. 12, 2008, at 11:00 a.m., at the US Trustee Meeting Room, 230 North First Avenue, Suite 102, Phoenix, Arizona. This is the first meeting of creditors required under Section 341(a) of the U.S. Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Scottsdale, Arizona-based Red Valley Investments, LLC, filed for Chapter 11 protection on Oct. 7, 2008 (Bankr. D. Ariz. Case No. 08-13724). Paul Sala, Esq., at Allen, Sala & Bayne, P.L.C., assists the company in its restructuring effort. The company listed assets of $1 million to $10 million and debts of $1 million to $10 million when it filed for bankruptcy. REGENT BROADCASTING: Moody's Trims PD Rating to 'Caa1' from 'B3' ---------------------------------------------------------------- Moody's Investors Service downgraded Regent Broadcasting LLC's corporate family rating to B3 from B2, probability of default rating to Caa1 from B3, and speculative grade liquidity rating to SGL-4 from SGL-3. Moody's expects radio broadcasting revenues, which are highly reliant on cyclical advertising, to come under increasing pressure due to the slowdown in consumer spending, its impact on corporate profits, and the resulting cutbacks in advertising and marketing budgets by several industries. Despite these concerns with the radio broadcasting industry, Regent has performed better than its rated peers and Moody's expects that this trend could persist through the advertising downturn in part due to its strong market positions and below average exposure to the automotive industry. The depth and severity of the expected decline nevertheless exceeds the cyclicality built into the B2 corporate family rating. Moody's expects that mid to high single digit revenue declines will likely pressure Regent's ability to maintain adjusted leverage in the low 7 times range as assumed by the prior B2 rating. The SGL-4 reflects concern over Regent's ability to comply with tightening financial covenants under its bank credit facility. The recent negative events in the U.S. financial markets and their impact on the availability of credit could hamper Regent's ability to remedy potential covenant problems. The stable outlook is highly susceptible to greater than expected revenue declines and is predicated on the maintenance of sufficient liquidity on a quarterly basis throughout the near term. The B3 corporate family rating reflects Regent's significant leverage, concern over its ability to comply with financial covenants, and the maturity and inherent cyclicality of the radio industry. Regent's local market focus and presence in more stable mid-sized markets, diverse revenue mix, favorable geographic coverage, and expected positive free cash flow support the ratings. The ratings actions were: Regent Broadcasting LLC -- Corporate Family Rating, Downgraded to B3 from B2 -- Probability of Default Rating, Downgraded to Caa1 from B3 -- Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3 -- Senior Secured Bank Credit Facility , Downgraded to B3, LGD3, 35% from B2, LGD3, 35% Moody's last rating action for Regent was in November 2007, when the company was downgraded to B2 from B1. Regent Broadcasting LLC owns and operates 62 stations located in 13 markets. SANKATY HIGH YIELD: Collateral Erosion Cues Moody's Rating Actions ------------------------------------------------------------------ Moody's Investors Service has downgraded its ratings of the senior facility and classes of notes issued by Sankaty High Yield Partners II, L.P., and left them on review for possible further downgrade: Class Description: up to $250,000,000 Senior Facility -- Prior Rating: Aaa, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Aa3, on review for possible downgrade Class Description: $22,000,000 Class A-1 Fixed Rate Notes -- Prior Rating: Aaa, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Aa3, on review for possible downgrade Class Description: $325,000,000 Class A-1 Floating Rate Notes -- Prior Rating: Aaa, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Aa3, on review for possible downgrade Class Description: $45,000,000 Class A-2 Fixed Rate Notes -- Prior Rating: Aa2, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: A3, on review for possible downgrade Class Description: $30,000,000 Class A-2 Floating Rate Notes -- Prior Rating: Aa2, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: A3, on review for possible downgrade Class Description: $26,000,000 Class B Fixed Rate Notes -- Prior Rating: Baa2, on review for possible downgrade -- Prior Rating Date: 10/14/2008 -- Current Rating: B3, on review for possible downgrade Class Description: $31,000,000 Class B Floating Rate Notes -- Prior Rating: Baa2, on review for possible downgrade -- Prior Rating Date: 10/14/2008 -- Current Rating: B3, on review for possible downgrade Class Description: $43,000,000 Class C Fixed Rate Notes -- Prior Rating: Ba2, on review for possible downgrade -- Prior Rating Date: 10/14/2008 -- Current Rating: Caa1, on review for possible downgrade Class Description: $34,000,000 Class C Floating Rate Notes -- Prior Rating: Ba2, on review for possible downgrade -- Prior Rating Date: 10/14/2008 -- Current Rating: Caa1, on review for possible downgrade Class Description: $16,500,000 Class D Fixed Rate Notes -- Prior Rating: B2, on review for possible downgrade -- Prior Rating Date: 10/14/2008 -- Current Rating: Caa2, on review for possible downgrade Class Description: $21,000,000 Class D Floating Rate Notes -- Prior Rating: B2, on review for possible downgrade -- Prior Rating Date: 10/14/2008 -- Current Rating: Caa2, on review for possible downgrade Class Description: $22,500,000 Class E Floating Rate Notes -- Prior Rating: Caa2, on review for possible downgrade -- Prior Rating Date: 10/14/2008 -- Current Rating: Caa3, on review for possible downgrade The rating actions reflect deterioration in the market value of the underlying collateral pool as well as the increased volatility and decreased liquidity in the bank loan market. Sankaty High Yield Partners II, L.P. is a market value collateralized loan obligation transaction backed primarily by bank loans. SANKATY HIGH YIELD: Moody's Chips Ratings on Collateral Erosion --------------------------------------------------------------- Moody's Investors Service has downgraded its ratings of the following classes of loans and notes issued by Sankaty High Yield Partners III, L.P., and left them on review for possible further downgrade: Class Description: $95,000,000 Class A-1A First Senior Secured Variable Funding Notes Due 2011 -- Prior Rating: Aaa, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Aa3, on review for possible downgrade Class Description: $105,000,000 Class A-1B First Senior Secured Variable Funding Multi-Currency Notes Due 2011 -- Prior Rating: Aaa, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Aa3, on review for possible downgrade Class Description: $35,000,000 Class A-1C First Senior Secured Variable Funding Swingline Notes Due 2011 -- Prior Rating: Aaa, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Aa3, on review for possible downgrade Class Description: $220,000,000 Class A-1 First Senior Secured Floating Rate Notes Due 2011 -- Prior Rating: Aaa, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Aa3, on review for possible downgrade Class Description: $14,000,000 Class A-2 Second Senior Secured Floating Rate Notes Due 2011 -- Prior Rating: Aa2, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: A3, on review for possible downgrade Class Description: $22,500,000 Second Senior Loans Due 2011 -- Prior Rating: Aa2, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: A3, on review for possible downgrade Class Description: $29,500,000 Class B Third Senior Secured Fixed Rate Notes Due 2011 -- Prior Rating: A2, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: B3, on review for possible downgrade Class Description: $11,000,000 Class B Third Senior Secured Floating Rate Notes Due 2011 -- Prior Rating: A2, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: B3, on review for possible downgrade Class Description: $7,500,000 Class C Senior Subordinated Secured Fixed Rate Notes Due 2011 -- Prior Rating: Baa2, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Caa1, on review for possible downgrade Class Description: $43,000,000 Class C Senior Subordinated Secured Floating Rate Notes Due 2011 -- Prior Rating: Baa2, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Caa1, on review for possible downgrade Class Description: $3,500,000 Class D Subordinated Secured Fixed Rate Notes Due 2011 -- Prior Rating: Ba2, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Caa2, on review for possible downgrade Class Description: $17,500,000 Class D Subordinated Secured Floating Rate Notes Due 2011 -- Prior Rating: Ba2, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Caa2, on review for possible downgrade Class Description: $12,500,000 Class E Junior Subordinated Secured Floating Rate Notes Due 2011 -- Prior Rating: B2, on review for possible downgrade -- Prior Rating Date: 10/10/2008 -- Current Rating: Caa3, on review for possible downgrade The rating actions reflect deterioration in the market value of the underlying collateral pool as well as the increased volatility and decreased liquidity in the bank loan market. Sankaty High Yield Partners III, L.P. is a market value collateralized loan obligation transaction backed primarily by bank loans. SKILLSOFT PLC: S&P Lifts Credit Rating to 'BB-' From 'B+' --------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Nashua, New Hampshire-based SkillSoft PLC to 'BB-' from 'B+'. The rating outlook is stable. At the same time, S&P raised the issue-level rating on subsidiary SkillSoft Corp.'s senior secured debt to 'BB' from 'B+'. S&P revised the recovery rating to '2', which indicates that lenders can expect substantial recovery of principal in the event of payment default, from '3'. "The upgrade is based on the company's successful integration of its Netg acquisition, which improved the company's scale and profitability, as well as its continued resilience in the current economic environment," said Standard & Poor's credit analyst Joseph Spence. The 'BB-' rating reflects SkillSoft's narrow product focus within a fragmented and highly competitive market with low barriers to entry and evolving technology standards--which create uncertainty regarding the ultimate structure of the industry--and the mid- to long-term sustainability of SkillSoft's success. These factors are offset partially by moderate leverage for the rating, the double-digit growth of SkillSoft's core market, which provides room for growth despite competitive factors, as well as its diverse, contractually bound installed base of more than 3,000 accounts, which provides a large portion of recurring revenues and a near-term offset to current economic conditions. SkillSoft focuses exclusively on the e-learning industry primarily within the corporate training market. It provides on-demand e- learning and performance support solutions, as well as training in business skills, information technology, desktop applications, and compliance issues. In addition to global enterprises and small- to medium-size businesses, the company also offers its services to governments and educational institutions. STRATUS GROUP: To Pay 45% to Unsecured Creditors; Leedom Steps In ----------------------------------------------------------------- Bill Rochelle of Bloomberg News reports that The Stratus Group, Inc., and its debtor-affiliates filed a modified Chapter 11 plan last week with the U.S. District Court for the Middle District Georgia. The plan is underpinned on a settlement with their Official Committee of Unsecured Creditors and secured lender Leedom Financial Services, LLC. Leedom Financial, owed $42.5 million, will take over ownership of the Debtors while unsecured creditors, with claims totaling $9.8 million, will be paid approximately 45% over time, according to the report. The Court, according to the report, was instrumental in opening the door to the plan when it ended the Debtors' exclusive right to file a Chapter 11 plan in September. The Court, according to the report, also allowed the Debtors' turnaround manager to file a plan even if the Debtors' owners didn't approve. Leedom Financial and the Committee at the time told the Court they had agreement on a reorganization plan they hoped to implement "on an expedited basis", according to the report. Leedom Financial contends that more than $12 million in fraudulent leases were submitted to lenders before bankruptcy, according to the report. The chief restructuring officer reported under oath earlier that the Debtors last year began "intentionally submitting inaccurate borrowing requests" to one of the lenders, according to the report. Leesburg, Georgia-based Stratus Group, Inc., does business as Freeway Auto Credit and Xpressway Auto Credit. It filed a chapter 11 petition together with two debtor-affiliates on July 15, 2008 (Bankr. M.D. Ga. Case No. 08-11096). Judge James D. Walker, Jr., presides over the case. Paul K. Ferdinands, Esq., at King and Spalding, LLP, represents the Debtors in their restructuring efforts. An Official Committee of Unsecured Creditors has been appointed in this case. The Debtors estimated both of their assets and debts to be between $10,000,000 and $50,000,000. William Rochelle reports that the Debtors had $45.8 million in assets and $53.2 million in debts, including $42.9 million in secured claims. SYNTAX-BRILLIAN: OIG Appeals Order to Consummate Asset Purchase --------------------------------------------------------------- Olevia International Group LLC filed on Oct. 14, 2008, an appeal from the U.S. Bankruptcy Court for the District of Delaware's order dated Oct. 10, 2008, denying OIG's emergency request to excuse it from its obligations relating to the purchase of the business assets of Syntax-Brillian Corp. and its debtor- affiliates, and entering judgment in favor of the Debtors. In the Oct. 10, 2008 Court order, OIG, its officers and directors, Michael Wu and John Wu were ordered to: a) close and consummate OIG's purchase of the Purchased Assets pursuant to the Purchase Agreement, and to consummate all other Transactions contemplated by the Purchase Agreement; b) make all payments at Closing required to be paid in accordance with the terms of the Purchase Agreement, including the payment to the Lenders of the first amortization due under the New Term Loan Documents in the amount of $18,000,000; c) prior to Oct. 16, 2008, take all action necessary to satisfy all conditions precedent set forth in the Debt Assumption Agreement and New Term Loan Documents, including, without limitation, all such conditions relating to the granting of liens on the Specified Collateral satisfactory to the Lenders and all legal opinions with respect thereto; d) enter into and cause to become effective all other agreements, documents and instruments provided for in or contemplated by the Purchase Agreement, including, without limitation, the Debt Assumption Agreement and the New Term Loan Documents; e) close and consummate at the Closing, all Transactions contemplated by the Purchase Agreement, which shall take place no later than 3 p.m. prevailing estern time on Oct. 16, 2008, or at such other later date or time as designated by the Debtors and Silver Point. On Sept. 10, 2008, OIG told the Court that the Debtors irreparably breached various covenants and representations contained in the Purchase Agreement, causing various Closing Conditions to fail, and rendering it unable to comply with its obligations under the Purchase Agreement. OIG also accused the Debtors of violating their sale contract by losing business from Target Corp., the Debtors' main customer. The following day, the Debtors filed a lawsuit asking the Court to compel Olevia International to complete the purchase. About Syntax-Brillian Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq: BRLC) -- http://www.syntaxbrillian.com/-- manufactures and markets LCD HDTVs, digital cameras, and consumer electronics products including Olevia(TM) brand high-definition widescreen LCD televisions and Vivitar brand digital still and video cameras. Syntax-Brillian is the sole shareholder of California-based Vivitar Corporation. The company and two of its affiliates -- Syntax-Brillian SPE, Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection on July 8, 2008 (Bankr. D. Delaware Lead Case No.08-11409 through 08-11409. Nancy A. Mitchell, Esq., Allen G. Kadish, Esq., and John W. Weiss, Esq., at Greenberg Traurig LLP in New York, represent the Debtors as counsel. Victoria Counihan, Esq., at Greenburg Traurig LLP in Wilmington, Delaware, is the Debtors' Delaware counsel. Five members compose the Official Committee of Unsecured Creditors. Epiq Bankruptcy Solutions, LLC is the Debtors' balloting, notice, and claims agent. When the Debtors filed for protection from their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. SUMMIT GLOBAL: U.S. Trustee Wants Case Converted to Chapter 7 ------------------------------------------------------------- Roberta A. DeAngelis, the U.S. Trustee for Region 3, asks the United States Bankruptcy Court for the District of New Jersey to convert the Chapter 11 reorganization cases of Summit Global Logistics Inc. and its debtor-affiliates to Chapter 7 liquidation proceedings. A hearing is set for Oct. 28, 2008, at 10:00 a.m., to consider the U.S. Trustee's request. The hearing will take place at DHS � Courtroom 3B in Newark, New Jersey. The U.S. Trustee argues that the Debtors do not have sufficient funds to pay accrued administrative fees including accrued fees of Lowenstein Sandler PC, which has filed a request to withdraw as the Debtors' counsel. The Debtors are administratively insolvent, the U.S. Trustee asserts. The Debtors must pay quarterly fees for 17 estates until their cases are closed, if they remain in Chapter 11, the Trustee notes. According to the Troubled Company Reporter on April 21, 2008, the Court, at the behest of the U.S. Trustee, appointed Traxi LLC's partner Perry M. Mandrino, CPA, as examiner to evaluate the bona fides of the sale of substantially all of the Debtors' assets to TriDec Acquisition Co. Inc. for $56.5 million in cash plus assumption of certain liabilities. The U.S. Trustee objected to the sale because of the broad releases and the cause of action being given up by the Debtors from TriDec's purchase assets. As a result, the U.S. Trustee negotiated for a fund of at least $50,000 to be put aside if a trustee was appointed to pursue any causes of action. The sale was approved by the Court on March 26, 2008. About Summit Global Headquartered in East Rutherford, New Jersey, Summit Global Logistics Inc. fdba Aeorbic Creations Inc. -- http://www.summitgl.com/-- offers a network of strategic logistics services, such as non-vessel operating common carrier ocean services, overseas consolidation, air freight forwarding, warehousing & distribution, cross-dock, transload, customs brokerage and trucking. The Company and its 17 affiliates filed for Chapter 11 protection on January 30, 2008 (Bankr. N.J. Case No. 08-11566). Lowenstein Sandler, P.C., initially represented the Debtors in their restructuring efforts. In September, Lowenstein Sandler said it is withdrawing from the case. No Official Committee of Unsecured Creditors has been appointed in this cases. When the Debtors filed for protection against their creditors, they listed assets of between $50 million and $100 million, and debts of between $100 million and $500 million. TIERS(R) MISSOURI: Moody's Cuts $31MM Certificates Rating to 'Ba1' ------------------------------------------------------------------ Moody's Investors Service has downgraded the rating on the trust certificates issued by TIERS(R) Missouri Floating Rate Credit Linked Trust, Series 2007-1: Class Description: $31,000,000 TIERS(R) Missouri Floating Rate Credit Linked Trust Certificates, Series 2007-1 -- Prior Rating: Baa2 -- Prior Rating Date: 8/20/2008 -- Current Rating: Ba1 According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's reference portfolio, which includes but is not limited to exposure to Lehman Brothers Holdings Inc., which filed for protection under Chapter 11 of the U.S. Bankruptcy Code on September 15, 2008. TWL CORP: Defaults on $8.7MM Notes, Files for Chapter 11 -------------------------------------------------------- TWL Corp. along with its affiliate, TWL Knowledge Group Inc., filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Texas. According to Bloomberg News, the Chapter 11 filing was made after the company defaulted on its debt obligations under its $8.7 million of 15% senior secured convertible debentures held by Trinity Investment GP dba Laird Cagan, who owns 56% of the company. However, the company did not disclose events leading to the filing, the report notes. On Sept. 30, 2008, Mr. Cagan resigned as chairman of the company's board. Board member Dennis Cagan and chief executive officer Danny Hammet also resigned from the company. The company appointed Patrick R. Quinn as its CFO, CEO, president, treasurer and board member. The company listed assets between $1 million and $10 million, and debts between $10 million and $50 million in its filing. Bloomberg, citing papers filed with the Court, says that the company has $14.3 million in assets and $37.6 million in debts as of March 31, 2008. The company reported $2.8 million in net loss on total revenues of $5.4 million for the three months ended March 31, 2008, compared to $2.2 million net loss on total revenues of $5.5 million for the same period a year ago. On Oct. 27, 2007, KBA Group LLP, in Dallas, Texas, expressed substantial doubt about the company's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing firm reported that the company has suffered recurring losses from operations, has used significant cash flows in operating activities and has liabilities significantly in excess of assets. J. Mark Chevallier, Esq., at McGuire, Craddock & Strother, P.C., represents the company as its counsel. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2cf7 About TWL Corporation Headquartered in Carrollton, Texas, TWL Corporation (OTC BB: TWLO) -- http://www.twlk.com/-- through its subsidiary TWL Knowledge Group Inc., is a global provider of integrated workplace learning solutions for skill development, compliance, safety, and emergency preparedness in the workplace. UAL CORP: Posts $779MM Net Loss in Quarter Ended September 30 ------------------------------------------------------------- UAL Corporation, the holding company whose primary subsidiary is United Airlines, reported a third quarter net loss of $779 million, if non-cash, net mark- to-market losses on fuel hedge contracts and certain accounting charges are excluded, despite an increase of $946 million in consolidated fuel expense. For the third quarter ended Sept. 30, 2008, the company: -- the company recorded a $519 million non-cash, net mark-to- market losses on its fuel hedge contracts during the quarter as a result of the recent drop in the price of oil. The non- cash loss reflects the change in book value of the hedges during the quarter. -- the company received approximately $1.4 billion through various transactions it closed during the quarter. This includes approximately $1 billion from revising the Chase Bank U.S.A., N.A. and Paymentech L.L.C. contracts, $300 million in new aircraft financings, $50 million from the release of restricted cash, and $43 million in proceeds from asset sales. -- the company ended the quarter with an unrestricted cash balance of $2.9 billion, restricted cash balance of $248 million and $378 million in cash deposits held by its fuel hedge counterparties. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. US BIODEFENSE: Posts $601,141 Net Loss for August 31, 2008 ---------------------------------------------------------- US Biodefense, Inc., nka Elysium Internet, Inc., reported $601,141 net loss on total revenues of $22,199 for the three months ended Aug. 31, 2008, compared to $89,716 net loss on no revenues for the same period a year ago. The company's balance sheet at Aug. 31, 2008, showed $1,655,726 in total assets and $3,689,917 in total liabilities resulting in a $2,034,191 stockholders' deficit. The company's balance sheet also showed strained liquidity with $264,081 in total current assets available to pay $3,386,231 in total current liabilities. Going Concern Doubt On March 13, 2008, Gruber & Company LLC expressed substantial doubt about the company's ability to continue as a going concern after auditing its financial statement for the years ended Nov. 30, 2007, and 2006. The firm reported that the company must general sufficient cash flows to meet its obligations and sustain its operations. A full-text copy of the company's regulatory filing is available for free at http://ResearchArchives.com/t/s?3420 US Biodefense, Inc., makes and sells candy and gift items to hospital shops across the United States. In 1986, the company filed for Chapter 11 bankruptcy protection and emerges in 1993. VALEO INVESTMENT: Moody's Junks $12.5MM Subordinated Notes Rating ----------------------------------------------------------------- Moody's Investors Service has upgraded the notes issued by Valeo Investment Grade CDO: Class Description: $12,250,000 Class A-2 Floating Rate Senior Subordinated Notes due January 15, 2013 -- Prior Rating: Caa3 -- Prior Rating Date: 5/12/2003 -- Current Rating: B2 According to Moody's, the rating action on the Class A-2 Notes is a result of the ongoing delevering of the transaction and improvement in the credit quality of the transaction's underlying collateral pool -- consisting primarily of bonds -- since May 2003. VERSO TECH: May Use Cash Collateral Through Nov. 14, 2008 --------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia authorized Verso Technologies Inc. and its debtor-affiliates to use cash collateral securing their obligations to their lenders through the earlier to occur of (a) Nov. 14, 2008, or (b) payment of a settlement amount to Clarent Corp. The Debtors require the immediate use of cash in order to continue the operation of their remaining "Telemate" business, to maintain the value of all other remaining property pending further sales and to effectively propose a plan of liquidation. Clarent's Objection to Use of Cash Collateral On Sept. 10, 2008, Clarent Corp. filed its opposition to the Debtor's use of Cash Collateral. Clarent asserts a security interest in certain assets which it sold to Verso on Dec. 13, 2002, as a portion of the purchase price was payable over time as evidenced by a $3,000,000 secured subordinated promissory note dated Feb. 12, 2003. Clarent further asserted that the proceeds received from any of the Clarent Collateral is "cash collateral" as defined in Sec. 363(a) of the Bankruptcy Code. The Debtors told the Court, however, that Clarent's security interests are junior to the security interests in substantially all the assets of the Debtors as of the Petition Date by the Debtors' senior pre- and post- petition secured lender, Laurus, pursuant to the terms of a Subordination Agreement between Laurus and Clarent dated Sept. 20, 2006, and orders entered in this case authorizing the Debtors to obtain post-petition financing from Laurus. The Debtors also contend that the value of any remining Clarent Collateral does not exceed $180,000, because most, if not all, of the Clarent Collateral has been liquidated in these cases and used to make payments under the DIP Orders and to Laurus. Proposed Settlement At the October 3 Final Hearing to consider the Motion for Authority to Use Cash Collateral, counsel for the Debtors and Clarent announced that their clients had reached an agreement in principle which would resolve all claims between them, subject to approval of the U.S. Bankruptcy Court for the Northern District of Georgia; and the U.S. Bankruptcy Court for the Northern District of California, where Clarent's case is pending. The U.S. Bankruptcy Court for the Northern District of California confirmed the Clarent's Chapter 11 Plan on April 1, 2004. The proposed Settlement provides, inter alia, that Clarent will be paid $180,000 by the Debtors immediately following the entry of the final orders approving the Settlement, and Clarent will retain all sums paid by the Debtors to Clarent todate, specifically including, but not limited to, those sums in the approximate amount of $778,000 paid to Clarent during the preference period (which Debtors and the Committee have argued are a preferential transfer), in complete satisfaction of all claims by Clarent against the Debtors' bankruptcy estates, and that the Debtors will release all claims against Clarent. The Court's authority allowing the Debtors' use of cash collateral, is subject further to the following conditions: Projected Use of Cash Unless Clarent shall otherwise agree in writing, the amount of Cash Collateral which Debtors may use during the Usage Period shall not exceed in aggregate 115% of each line item set forth in the budget; provided, however, that in addition to items set forth in the Budget, the Debtors shall be permitted to pay U.S. Trustee quarterly fees. Notwithstanding anything to the contrary contained in the order, any expenditures made by the Debtors during the Usage Period shall be deemed to be paid first from property which is not subject to any security interest held by Clarent. Authorized Disbursements The Debtors will only be authorized to use Cash Collateral pursuant to the Budget. Unless otherwise authorized by order of the Court, Debtors shall not use Cash Collateral for payment of any dividends or distributions to shareholders, or any pre- petition indebtedness or obligations, of, or pre-petition claims against, the Debtors. Until the Settlement Payment has been made by the Debtors to Clarent following the entry of the approval Orders, Debtors shall only be permitted to make payments set forth in the Budget to any current or former employee for unpaid vacation pay accrued pre-petition to the extent the total amount paid to any such employee following the Petition Date by the Debtors for pre-petition wages, salary or commission within the scope of Sec. 507(a)(4) of the Bankruptcy Code does not exceed the statutory $10,950 priority limit. Lien on Post-Petition Collateral As adequate protection for its interests in the Cash Collateral, to the extent Debtors use Cash Collateral, Clarent will be given a replacement lien in the Debtors' remaining assets in the same order of priority as existed pre-petition. Termination Upon the occurrence of an Event of Default, Clarent may elect to terminate the Debtors' right to use Cash Collateral hereunder by giving written notice of termination to counsel for the Debtors and counsel for the Committee and filing a copy of such written notice with the Court. These will constitute an "Event of Default": a) The occurrence of any material breach, default or non- compliance with the terms of the Court's Order; b) Conversion of the Debtors cases to Chapter 7; and c) Appointment of a trustee in this Chapter 11 case. About Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. (OTC:VRSOQ) -- http://www.verso.com/-- provides telecommunications service in the United States. The company and its affiliates manufacture, deliver, and provide support for hardware, software and service solutions primarily to large wireline, cellular, wireless and satellite carriers. The company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga. Lead Case No. 08-67659). J. Robert Williamson, Esq., at Scroggins and Williamson, James R. Sacca, Esq., and John D. Elrod, Esq., at Greenberg Traurig, LLP represent the Debtors as counsel. The Debtors selected Logan and Company Inc. as their claims agent. Darryl S. Laddin, Esq., and Stephen M. Dorvee, Esq., at Arnall Golden Gregory LLP represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. VISION DEV'T: Parent's Townhome Project to be Sold in November -------------------------------------------------------------- Brian Bandell at South Florida Business Journal reports that a 14.2-acre townhome project by Vision Development Group of Broward County LLC's parent, Vision Development Partners, will be up for public sale at 10 a.m. on Nov. 6, 2008, at the Palm Beach County courthouse in West Palm Beach. Coscan Homes is Vision Development's partner on the project. According to Business Journal, the court ruled in favor of Regions Bank in a $8.4 million foreclosure lawsuit against the developers. Coscan Homes said in a statement that its subsidiary Palm Springs Town Homes has planned to build 232 townhomes in March 2009. Business Journal relates that the project hasn't been finished. The report says that several contractors also filed construction liens against the project before the foreclosure. Palm Springs Town Homes purchased the land for almost $10.5 million in May 2006. It obtained a mortgage from Regions Bank for $26.4 million. Regions Bank filed its foreclosure lawsuit in May 2008, naming Coscan Corp., CEO Albert Piazza, and other executives as co-defendants. Headquartered in Sunrise, Florida, Vision Development Group of Broward County L.L.C. is a real estate developer. The company filed for Chapter 11 on Sept. 20, 2007 (Bankr. S.D. Fla. Case No. 07-17778). Peter D. Russin, Esq., Meland, Russin & Budwick P.A., represents the Debtor in its restructuring efforts. When the Debtor filed for protection against its creditors, it listed assets and debts of between $1 million and $100 million. The Debtor's managing member, Isadore M. Cohen, also filed a voluntary chapter 11 petition on Sept. 20, 2007 (Bankr. S.D. Fla. Case No. 07-17779). The Debtor's exclusive period to file a Chapter 11 plan expired on Jan. 18, 2008. WACHOVIA CORP: Posts $$23.89 Billion Third Quarter Net Loss ----------------------------------------------------------- Wachovia Corp. reported a $23.89 billion net loss in the third quarter of 2008, representing a net loss per share of $11.18, including a provision for credit losses of $6.63 billion to cover $1.87 billion in net charge-offs and to build reserves by $4.76 billion. Third Quarter 2008 Compared With Third Quarter 2007: -- Net loss of $23.9 billion includes the following on a pre-tax basis: a) $18.8 billion of goodwill impairment, b) $4.8 billion credit reserve build to a 3.24% reserve- to-loan ratio, c) $2.5 billion of market disruption losses including $1.2 billion of securities impairments, and d) $310 million principal investing loss -- Results also reflect costs relating to previous announcements on the auction rate securities settlement, support of Evergreen money market fund exposure to Lehman Brothers and losses on government sponsored entity preferred stock, amounting to $1.1 billion -- Traditional businesses remained focused on customer service and sales execution; customer satisfaction rating of 6.62 and customer loyalty at 51% remained at top of industry -- Average core deposits up 4 percent on growth in retail CDs and retail brokerage deposits -- Way2Save campaign hits milestone 1.1 million accounts and $439 million in new account balances -- A.G. Edwards integration proceeding smoothly; integration over 50% complete Wachovia's core businesses generated higher loans and average core deposits, as well as strength in traditional banking and insurance fees; however, market-related businesses and deposit trends reflected market turmoil. The General Bank grew revenue 8 percent over last year and maintained industry-leading customer satisfaction. The retail brokerage business increased in both the number and quality of financial advisors and generated solid cross-sales with other Wachovia businesses. Sales growth in the Wealth Management business offset declines in equity valuations. The Corporate and Investment Bank continued to execute on its transition to a more customer-centric model. Robert K. Steel, CEO and president said, "In these unprecedented times, my colleagues have demonstrated that Wachovia always puts the interests of our customers and clients first. Although this has been a challenging quarter, Wachovia's underlying businesses remain solid and our franchise exceptionally attractive. We look forward to the opportunities that lie ahead as we join forces with Wells Fargo." "Wachovia's third quarter results were very much in line with our expectations," said Wells Fargo's President and CEO John Stumpf. "We're more encouraged than ever by what we've seen in their franchise, and we're pleased that Wachovia's team continues to focus on serving customers." "We believe that it was prudent for Wachovia to put these losses behind them," said Wells Fargo's Chief Financial Officer Howard Atkins. "The asset write-downs, reserve build, and other items are consistent with our acquisition assumptions. The goodwill impairment will have no impact on tangible capital or our planned capital raise. Monday, Wachovia issued preferred stock to Wells Fargo as contemplated in our share exchange agreement, which represents 39.9 percent of Wachovia's voting power, and we're on track to complete the merger as planned in the fourth quarter." The third quarter 2008 net loss compared with earnings of $1.62 billion or 85 cents per share in the third quarter of 2007. Excluding goodwill impairment of $18.7 billion after tax, net merger-related and restructuring expense of $414 million, results in the third quarter of 2008 were a net loss of $4.76 billion, or a net loss per share of $2.23. The pre-tax loss stemmed from: -- The $18.8 billion in noncash goodwill impairment reflecting declining market valuations and the terms of the merger with Wells Fargo; the recognition of the impairment affected the retail and small business, commercial, wealth management and asset management subsegments. The goodwill impairment charge has no impact on Wachovia's tangible capital levels or regulatory capital ratios, because goodwill is deducted when computing those ratios; -- A $6.6 billion credit loss provision, including $3.4 billion to build reserves for the Pick-a-Pay mortgage portfolio and $1.4 billion to build other loan loss reserves; -- $2.5 billion in market disruption-related losses, including $619 million in investment portfolio securities impairments; -- $682 million valuation decline in principal investing; -- $515 million in non-merger severance charges related to expense reductions announced in the second quarter of 2008; -- $497 million of auction rate securities settlement costs ($398 million, net of minority interest); and -- $397 million in losses related to planned securities sales, including $171 million from the sale of government sponsored entity preferred shares. Key trends in the third quarter of 2008 compared with the third quarter of 2007 included: -- A significant decline in fee and other income largely due to increased net market disruption-related valuation losses and lower principal investing results, which overshadowed strength in traditional banking. A 25% rise in fiduciary and asset management fees and 33% higher commissions resulted from the A.G. Edwards acquisition. -- Net interest income of $5.0 billion, up 10 percent, with a net interest margin of 2.94 percent on increased average loans. Average commercial loans were up 20% and average consumer loans were up 6%. Average loan growth was driven by strength in commercial, commercial real estate and traditional mortgage, which more than offset the $6.8 billion average net decrease effect of sales/securitization and loan transfer activity. Average core deposit growth of 4 percent was led by retail CDs and money market accounts. Period end core deposits decreased 2% driven by a significant decline in higher cost commercial deposits reflecting significant market turmoil at the end of the third quarter of 2008. -- An increase in noninterest expense largely reflecting the impact of A.G. Edwards, as well as growth in credit- related sundry expense and a planned $497 million ($398 million net of minority interest) in costs related to the settlement of auction rate securities. -- Provision for credit losses of $6.6 billion, which included $4.8 billion to build reserves. The provision largely reflected the weakening economy and current and anticipated severe deterioration in the residential housing market, particularly in specific markets in California and Florida. Net charge-offs were $1.9 billion, or an annualized 1.57% of average net loans. Total nonperforming assets including loans held for sale were $15.0 billion, or 3.05% of loans, foreclosed properties and loans held for sale, largely reflecting increases in consumer real estate-related nonperforming assets due to the effects of the weakened housing industry. Lines of Business In accordance with Wachovia's business segment methodology, goodwill impairment of $18.8 billion and provision expense in excess of charge-offs and other credit losses, which amounted to $4.8 billion in the third quarter of 2008, are not allocated to business segments. General Bank Three Months Ended September 30, June 30, September 30, (In millions) 2008 2008 2007 Net interest income (Tax-equivalent) $3,763 $3,697 $3,466 Fee and other income 1,003 1,000 935 Total revenue (Tax-equivalent) 4,816 4,754 4,460 Provision for credit losses 1,340 922 207 Noninterest expense 2,127 2,061 1,898 Segment earnings 857 1,124 1,495 Cash overhead efficiency ratio (Tax-equivalent) 44.16% 43.35% 42.54% Average loans, net $318,573 $317,969 $295,188 Average core deposits 292,653 290,313 290,099 Economic capital, average 19,302 16,777 10,904 The General Bank includes retail, small business and commercial customers. The third quarter of 2008 compared with the third quarter of 2007 included: -- Earnings of $857 million, down $638 million, driven by rising credit costs and related expenses, primarily in the mortgage business, which overshadowed sales momentum elsewhere as reflected in total revenue of $4.8 billion, up 8%. -- 9% higher net interest income on deposit growth and improved loan spreads despite rising nonperforming assets. -- Average loan growth of 8 percent, led by consumer real estate secured, commercial lending and auto. Growth in consumer real estate secured was driven by mortgage and home equity and included slower prepayments. Auto loan originations declined 24%. -- Average core deposit growth of $2.6 billion. -- Growth in net new retail checking accounts of 208,000 in the third quarter of 2008 compared with an increase of 263,000 in the third quarter of 2007. -- 442,000 new retail checking accounts were tied to the Way2Save campaign. This product, which launched in mid- January 2008, reached 1.1 million accounts in the third quarter and $439 million in deposits at Sept. 30, 2008. -- 7% growth in fee and other income, with strength in service charges, interchange income and higher mortgage banking fee income. Strong interchange income reflected a 14% increase in debit/credit card volume from the third quarter of 2007. -- A 12% increase in noninterest expense due to growth in credit-related sundry expense, FDIC expense, as well as continued strategic investment in de novo branch activity and Western expansion. During the third quarter of 2008, 13 de novo branches were opened and seven branches were consolidated. As a result of performance initiatives, operating leverage continued to improve, which enabled continued strategic investment. -- A $1.1 billion increase in the provision for credit losses to $1.3 billion, largely reflecting higher net charge-offs in the Pick-a-Pay portfolio and auto. Wealth Management Three Months Ended September 30, June 30, September 30, (In millions) 2008 2008 2007 Net interest income (Tax-equivalent) $194 201 184 Fee and other income 192 208 184 Total revenue (Tax-equivalent) 388 412 372 Provision for credit losses 8 5 6 Noninterest expense 246 252 240 Segment earnings 84 98 80 Cash overhead efficiency ratio (Tax- equivalent) 63.55% 61.24% 64.71% Average loans, net $22,765 $22,557 $20,996 Average core deposits 14,690 17,609 17,180 Economic capital, average 729 720 609 Wealth Management includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. The third quarter of 2008 compared with the third quarter of 2007 included: -- 5% earnings growth to $84 million on 4% revenue growth in challenging markets. -- 5% growth in net interest income on 8% loan growth and wider deposit spreads despite a 14% decline in average core deposits, which reflected the market turmoil. -- 4% growth in fiduciary and asset management fees as the benefits of a pricing initiative implemented in the third quarter of 2007 and sales growth overcame declines in equity valuations and in assets under management. Insurance commissions rose 5% compared with a weak 2007 third quarter. -- A 3% increase in noninterest expense driven by investments in private banking and Western expansion, offset by efficiency initiatives. -- A 13% decline in assets under management from year-end 2007 to $73.2 billion largely due to market depreciation as well as net outflows. Corporate and Investment Bank Three Months Ended September 30, June 30, September 30, (In millions) 2008 2008 2007 Net interest income (Tax-equivalent) $1,043 $1,132 $838 Fee and other income (416) 656 176 Total revenue (Tax-equivalent) 570 1,736 962 Provision for credit losses 525 438 1 Noninterest expense 1,154 963 626 Segment earnings (loss) (703) 212 212 Cash overhead efficiency ratio (Tax-equivalent) 202.09% 55.50% 65.12% Average loans, net $109,323 106,680 82,979 Average core deposits 27,497 31,686 37,208 Economic capital, average 14,732 13,821 9,791 The Corporate and Investment Bank includes corporate lending, investment banking, and treasury and international trade finance. Unless otherwise noted, third quarter 2008 results are compared with the third quarter of 2007. These results included: -- A loss of $703 million due to continued net valuation losses related to disruption in the capital markets, and increased provision for credit losses. -- A 24% increase in net interest income, which reflected 32% growth in average loans including fourth quarter 2007 and first quarter 2008 transfer into the loan portfolio at fair value of certain loans originally slated for distribution, as well as loan growth in the commercial lending businesses. -- A decline in fee and other income due to significantly lower principal investing results from lower valuations and a decrease in advisory and underwriting fees despite lower market disruption-related losses from the third quarter a year ago. -- Market disruption-related losses of $940 million compared with $565 million in the second quarter of 2008 and $1.2 billion in the third quarter of 2007. Market disruption-related valuation losses, net of applicable hedges, were: -- $235 million in subprime residential asset-backed collateralized debt obligations and other related exposures, compared with $238 million in the second quarter and $230 million in the third quarter of 2007; -- $347 million in commercial mortgage structured products, compared with $209 million in the second quarter and $488 million in the third quarter of 2007; -- $146 million in consumer mortgage structured products, compared with $68 million in the second quarter and $82 million in the third quarter of 2007; -- $22 million gain in leveraged finance net of fees, compared with a net $102 million gain in the second quarter and a net $272 million loss in the third quarter of 2007; and -- $234 million in non-subprime collateralized debt obligations and other structured products, compared with $152 million in the second quarter and $109 million in the third quarter of 2007. -- A loss of $317 million in principal investing revenue, down from net gains of $361 million in the third quarter of 2007 due to lower valuations on both the direct and fund investment portfolios. -- An 84% increase in noninterest expense primarily due to higher variable compensation and $65 million of auction rate securities settlement costs. -- A provision of $525 million largely reflecting residential-related commercial real estate and other corporate lending losses. Capital Management Three Months Ended September 30, June 30, September 30, (In millions) 2008 2008 2007 Net interest income (Tax-equivalent) $388 $308 $268 Fee and other income 968 1,995 1,444 Total revenue (Tax-equivalent) 1,360 2,295 1,704 Provision for credit losses 1 - - Noninterest expense 2,145 2,328 1,241 Segment earnings (loss) (499) (21) 294 Cash overhead efficiency ratio (Tax-equivalent) 157.72% 101.39% 72.82% Average loans, net $3,223 $2,878 $2,142 Average core deposits 54,734 48,647 31,489 Economic capital, average 2,033 2,118 1,310 Capital Management includes retail brokerage services and asset management. The third quarter of 2008 compared with the third quarter of 2007 included: -- A loss of $499 million due to auction rate securities settlement costs and continued market disruption-related losses; -- A 45% increase in net interest income driven by retail brokerage deposit growth of $23.3 billion primarily due to the A.G. Edwards acquisition, as well as organic growth since the acquisition, partially offset by spread compression; -- A 33% decline in fee and other income driven by $931 million in market disruption-related losses compared with $118 million in the second quarter of 2008 and $40 million in the third quarter of 2007; -- $737 million in valuation losses relating to the support of Evergreen money market funds, compared with $24 million in the second quarter of 2008 and $40 million in the third quarter of 2007; -- $83 million in valuation losses relating to the liquidation of an Evergreen fund compared with $89 million in the second quarter of 2008; -- $80 million in valuation losses relating to auction rate securities held on the balance sheet, compared with $5 million in the second quarter of 2008; -- $31 million relating to other securities impairment. -- 73% growth in noninterest expense largely due to the effect of the auction rate securities settlement and the A.G. Edwards merger. Total assets under management were $209.1 billion at Sept. 30, 2008, down 24% from Dec. 31, 2007, driven by net outflows of $40.6 billion as well as $25.0 billion in lower market valuations. Quarterly Loss Among the Largest Dan Fitzpatrick at The Wall Street Journal reports that Wachovia's quarterly loss is among the largest ever posted by a U.S. company. According to WSJ, the loss indicates more pain ahead for other U.S. financial institutions. WSJ quoted RBC Captial Markets analyst Gerard Cassidy as saying, "It is a warning to bank-stock investors that there are many more losses coming. Most commercial-bank assets are being carried at much greater value than they are truly worth." According to WSJ, Golden West's former CEO, Herb Sandler, said that too much blame is being placed on the company. Losses on the Golden West portfolio over a one-year period ending June 30, 2008, "paled" compared to losses at Wachovia, WSJ states, citing Mr. Sandler. According to the report, Mr. Sanlder said that other missteps, like an alleged telemarketing scam that Wachovia had to settle in April 2008 for as much as $144 million, show that the Wachovia management "had lost control of the company." About Wachovia Corporation Based in Charlotte, North Carolina, Wachovia Corporation (NYSE:WB) -- http://www.wachovia.com/-- is one of the nation's diversified financial services companies, with assets of $812.4 billion at June 30, 2008. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to customers through 3,300 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses. Clients are served in selected corporate and institutional sectors and through more than 40 international offices. Its retail brokerage operations under the Wachovia Securities brand name manage more than $1.1 trillion in client assets through 18,600 registered representatives in 1,500 offices nationwide. Online banking is available at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services at evergreeninvestments.com. Wachovia is exposed to large mortgage losses as a result of its 2006 purchase of mortgage lender Golden West Financial Corp., according to The Wall Street Journal. The company, WSJ stated, now believes total losses for Golden West's payment option loan portfolio could eventually reach 12%, up from previous forecasts. Wachovia has lowered its second-quarter results to account for a possible legal settlement. Wachovia said its second-quarter net loss will be $9.11 billion instead of $8.86 billion. It has disclosed a $500 million pretax increase to legal reserves. Wachovia has also disclosed plans to lay off 6,950 people to reduce expenses. As reported in the Troubled Company Reporter on Oct. 8, 2008, Fitch has upgraded Wachovia's IDR to 'A+' from 'BB-' and placed it on Rating Watch Positive, along with the 'A+' senior debt of Wachovia and subsidiaries, following Wells Fargo & Company's definitive agreement to acquire Wachovia Corporation and subsidiaries. As reported in the Troubled Company Reporter on Oct. 1, 2008, Standard & Poor's Ratings Services placed all its ratings on Wachovia Corp. and Wachovia Bank on CreditWatch with negative implications. S&P also lowered its DRD Series J and K and convertible preferred stock Series L ratings on Wachovia Corporation to 'BB' from 'A-', as these securities will not be acquired and will continue to reside with the new Wachovia. WASHINGTON MUTUAL: Wilmington Trust to Serve in Creditors Panel --------------------------------------------------------------- Wilmington Trust said that, in its capacity as indenture trustee, it has been appointed by the U.S. Trustee to serve as a member of the official unsecured creditors' committee for holders of $43 million of debt guaranteed by Washington Mutual, Inc. In this role, Wilmington Trust provides trustee and administrative services for some creditors of Washington Mutual. Wilmington Trust is paid a fee for these services, which are specified in documents that govern the trust. Wilmington Trust has no credit or investment exposure to Washington Mutual in either its loan or investment securities portfolios. Through its Corporate Client Services business, Wilmington Trust is a leading provider of institutional trustee, agency, and administrative services. "Our appointment in this case reflects our position as a premier provider of trustee and administrative services for corporate clients," said Ted T. Cecala, Wilmington Trust�s chairman and chief executive officer. "We receive engagements such as this because, unlike investment banks that perform trustee services, we do not have lending or securities underwriting conflicts of interest. Washington Mutual, Inc.'s bankruptcy filing does not affect our balance sheet or bottom line, and it poses no credit or investment risk to us." About Wilmington Trust Wilmington Trust Corporation is a financial services holding company that provides Regional Banking services throughout the mid-Atlantic region, Wealth Advisory Services for high-net-worth clients in 36 countries, and Corporate Client Services for institutional clients in 86 countries. Its wholly owned bank subsidiary, Wilmington Trust Company, which was founded in 1903, is one of the largest personal trust providers in the United States and the leading retail and commercial bank in Delaware. Wilmington Trust Corporation and its affiliates have offices in Arizona, California, Connecticut, Delaware, Florida, Georgia, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Pennsylvania, South Carolina, Vermont, the Cayman Islands, the Channel Islands, London, Dublin, Frankfurt, Luxembourg, and Amsterdam. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its debtor-affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). WaMu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) WING HENG: Case Summary & 14 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Wing Heng Inc. dba LaQuinta Hotel 448 University Avenue W. St. Paul, MN 55103 Bankruptcy Case No.: 08-35466 Type of Business: The Debtor operates a restaurant. Chapter 11 Petition Date: October 21, 2008 Court: District of Minnesota (St Paul) Judge: Robert J. Kressel Debtor's Counsel: Matthew L. Fling, Esq. fling@pro-ns.net The Law Offices of Matthew Fling 4018 West 65th Street, Suite 100 Edina, MN 55435 Tel: (952) 926-5337 Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cheng-Heing Inc. trade debt $705,714 Attn: Najib Mailyatar 448 University Ave. W St. Paul, MN 55103 Tel: (651) 455-3600 Integrity Work Construction trade debt $80,344 Attn: Joe Rodriguez 3350 Lester Ave. Hastings, MN 55033 Tel: (651) 428-0131 J-Z Electric Inc. trade debt $69,730 Attn: Nick Zagaros 2525 Nevada Avenue N. Golden Valley, MN 55427 Tel: (763) 545-2002 The Mahoney Group trade debt $20,000 La Quinta Franchising LLC trade debt $19,000 NewMech Companies Inc. trade debt $15,725 Standard Textile trade debt $13,018 Vingard Time Lox trade debt $9,228 All City Elevator Inc. trade debt $8,768 Milwaukee Casualty Insurance trade debt $7,158 Guest Supply Inc. trade debt $6,769 QuiltCraft trade debt $4,926 A-Z Painting trade debt $4,073 Focus Electric trade debt $3,603 WM WRIGLEY: Moody's Withdraws Ratings on Voluntary SEC Delisting ---------------------------------------------------------------- Moody's Investors Service withdrew all public debt ratings of the Wm. Wrigley Jr. Company following the company's termination of all its securities registrations with the Securities and Exchange Commission. Wrigley will no longer be required to file reports with the SEC and is not expected to furnish financial reports to Moody's in the foreseeable future for the purpose of maintaining public debt ratings. The voluntary delistings follow Wrigley's completion of its merger with Mars, Incorporated on October 6, 2008. Ratings withdrawn: -- Corporate family at Ba2; -- Probability of default at Ba2; -- Senior unsecured debt at Ba2/LGD4; -- Senior unsecured shelf at (P)Ba2; -- Subordinated shelf at (P)Ba3; -- Preferred shelf at (P)B1; -- Short term debt at Not prime. Wrigley, based in Chicago, Illinois, is a leading global confectionery products company and the largest manufacturer of chewing gum in the world. Wrigley's products are sold in over 180 countries. Key brands include: Doublemint, Juicy Fruit, Orbit, Extra, Airwaves, Eclipse, Altoids and Life Savers. Net revenues in fiscal 2007 totaled $5.4 billion. Mars, headquartered in McLean, Virginia, is a family owned leading producer of confectionery, food, and pet care products. Mars operates in over 66 countries. Key brands include Dove, M&M's, and Snickers confectionery products, Uncle Ben's rice, and Pedigree and Whiskas pet care products. The company's global sales are $22 billion annually. WM WRIGLEY: S&P Withdraws BB+ Corp. Credit Rating at Co.'s Request ------------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its 'BB+' long-term corporate credit rating and other ratings on Chicago, Illinois- based Wm. Wrigley Jr. Co. at the company's request. On Oct. 20, 2008, Wrigley filed a Form 15, indicating it would no longer file with the SEC. There are 85 bondholders of the notes due 2010 and 83 bondholders of the notes due 2015. WORLDSPACE INC: Gains Access to $2M in Interim Dip Financing ------------------------------------------------------------ WorldSpace(R), Inc., received approval of the United States Bankruptcy Court in Delaware for the first part of an interim Debtor-in-Possession (DIP) financing in an amount up to $2 million, which will enable the Company to meet payroll obligations to critical employees and commence a process to sell the Company or its assets. The Company, along with its U.S. subsidiaries WorldSpace Systems Corporation and AfriSpace, Inc., filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in Delaware on Friday, October 17, 2008. In accordance with the terms of the DIP financing facility for which the Company has received initial court approval and intends to seek further approvals in the coming weeks, the Company has commenced a process to market and sell the Company or its assets, or complete an alternative restructuring transaction. The Bank Street Group LLC -- http://www.bankstreetgroup.com-- has been appointed as the Company's financial advisor in support of the sale and/or restructuring process and all interested parties should contact Bank Street (Gary Grant, ggrant@bankstreetgroup.com or Richard Lukaj, rlukaj@bankstreetgroup.com) for further information. In other announcements, WorldSpace appointed Robert Schmitz of Quest Turnaround Advisors, LLC as its Chief Restructuring Officer reporting to Chairman and Chief Executive Officer Noah Samara to assist the Company through an orderly sale or recapitalization process. WorldSpace India, a wholly owned independent business unit operating in the market where most of the Company's customers are located and revenues are generated, has not filed for protection from its creditors and continues its business activities in the ordinary course. WorldSpace will continue to operate its business and manage its assets as a "debtor-in-possession" under the jurisdiction of the court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the court. The holders of the Company's existing senior secured and convertible notes have agreed to provide, subject to the satisfaction of certain conditions, a DIP financing facility of up to $13 million for a period of 90 days in order to facilitate a sale transaction. The financing facility is expected to enable the Company to continue to pay salaries of critical employees and continue operations which are critical to preserving the value of its core assets through the term of the facility. WorldSpace, Inc. (WSI) -- http://www.1worldspace.com/-- was organized on July 29, 1990, and incorporated in the State of Maryland on November 5, 1990. WorldSpace, Inc. and Subsidiaries is engaged in the design, development, construction, deployment and financing of a satellite-based radio and data broadcasting service, which serve areas of the world where traditional broadcast media or internet services are limited. The Company, which operates in 10 countries, has one satellite in orbit over Africa, another over Asia and a completed third satellite currently in storage. This satellite, which can be used to replace either of the Company�s two operational satellites may also be modified and launched to provide DARS in Western Europe. The Debtor and two of its affiliates filed for Chapter 11 bankruptcy protection on Oct. 17, 2008 (Bankr. D.Del., Case No. 08-12412 - 08-12414). Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, and Shearman & Sterling LLP, are the Debtors' counsel. When the Debtors filed for bankruptcy, they listed total assets of $307,382,000 and total deebts of $2,122,904,000. WP HICKMAN: Court Okays Campbell & Levine as Bankruptcy Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Pennsylvania granted W.P. Hickman Systems, Inc., permission to employ Campbell & Levine, LLC, as bankruptcy counsel, nunc pro tunc Oct. 2, 2008. The Firm will, among other things, advise the Debtors on their powers and duties as debtors-in-possession in the operation of their businesses and management of their assets. Douglas A. Campbell $450 Stanley E. Levine $450 David B. Salzman $450 Mark S. Frank $375 Jonathan G. Babyak $375 Philip E. Milch $400 Ronald B. Roteman $315 Shannon M. Clougherty $275 Kenneth L. Dorsney $275 Erik Sobkiewicz $350 Paul J. Cordaro $280 Aurelius Robleto $175 Kathleen Campbell Davis $275 Fred Rapone $275 Marla R. Eskin $385 Michele Kennedy $125 Suzanne D. Schreiber $110 David B. Salzman, a member at the Firm, assured the Court of the Firm's disinterestedness and that the firm doesn't represent any interest adverse to the Debtors' estates or the Debtors' creditors. Solon, Ohio-based W.P. Hickman Systems, Inc. -- http://www.wphickman.com/-- offers commercial roofing products. The Debtors engage in providing services to the federal government through its GSA certification and are involved in major buying groups including Sodexho-USA, Horizon Resource Group and U.S Community Services. The company and its affiliates filed for Chapter 11 protection on Oct. 2, 2008 (Bankr. W. D. Pa. Case No. 08-26591). Paul J. Cordaro, Esq., at Campbell & Levine LLC represents the Debtors in their restructuring efforts. W.P. Hickman listed assets of $10 million to $50 million and debts of $10 million to $50 million. WP HICKMAN: Seeks Court OK to Hire Marsalese as Special Counsel --------------------------------------------------------------- W.P. Hickman Systems, Inc., and its affiliates seek the U.S. Bankruptcy Court for the Western District of Pennsylvania's permission to employ Marsalese Law Group, PLLC as Special Counsel, nunc pro tunc Oct. 2, 2008. The Firm will, among other things, take all necessary action to protect, preserve, and enhance the Debtors' estates, including the prosecution of actions on behalf of the Debtors, the defense of any actions commenced against the Debtors, negotiations concerning all litigation in which the Debtors are involved, and objection to claims filed against the Debtors' estates. Michael P. Marsalese, Esq., the managing at the Firm, will charge the Debtors $450 per hour. Mr. Marsalese assures the Court of the Firm's disinterestedness. The Debtors tell the Court that the Firm doesn't represent or hold any interest adverse to the Debtors or to their estates. A hearing on the Debtors' request is set for Nov. 18, 2008, at 1:30 p.m. Solon, Ohio-based W.P. Hickman Systems, Inc. -- http://www.wphickman.com/-- offers commercial roofing products. The Debtors engage in providing services to the federal government through its GSA certification and are involved in major buying groups including Sodexho-USA, Horizon Resource Group and U.S Community Services. The company and its affiliates filed for Chapter 11 protection on Oct. 2, 2008 (Bankr. W. D. Pa. Case No. 08-26591). Paul J. Cordaro, Esq., at Campbell & Levine LLC represents the Debtors in their restructuring efforts. W.P. Hickman listed assets of $10 million to $50 million and debts of $10 million to $50 million. * Proskauer Rose Creates Economic Crisis Response Group ------------------------------------------------------- Proskauer Rose LLP formed a multi-disciplinary response group to counsel and respond to clients affected by the turmoil in the world's financial markets and institutions, as well as to monitor, analyze and disseminate information on new developments as they arise. The firm's Economic Crisis Response Group includes lawyers with experience representing private and public companies, institutional investors, financial services companies, hedge funds, lenders, commercial banks and individuals in the complex and interrelated areas impacted by the financial situation, including the new legislation and implementing rules being enacted well as investigations being pursued by Congress, the Securities and Exchange Commission and other government and regulatory bodies. "The current cycle of massive de-leveraging, institutional stress and government intervention in the world's financial markets is advancing at a frantic pace, making it imperative for businesses to have counsel who are integrating their resources to not only provide advice on how to proceed through this crisis, but how to anticipate problems and protect themselves as disputes and conflicts arise," Stephen L. Ratner, co-head of Proskauer's Financial Services Practice, said. "This initiative also encompasses our litigation capabilities, particularly as they pertain to complex financial instruments and transactions, well as a broad range of other areas such as corporate governance and defense, insurance coverage, reductions in force and other employment and benefit-related issues, securities regulation and bankruptcy and restructuring matters." In addition to Mr. Ratner, who is also a member of Proskauer's executive committee, the coordinators of the Economic Crisis Response Group include partners Jeffrey A. Horwitz, co-head of the firm's Mergers & Acquisitions Group, Bruce L. Lieb, a member of the firm's executive committee and longtime leader in private equity and corporate and securities transactions, and David W. Tegeler, co-head of the firm's Private Investment Funds Group. About Proskauer Rose Proskauer Rose LLP, -- http://www.proskauer.com/-- founded in 1875, is an international law firm providing a wide variety of legal services to clients worldwide from offices in Boca Raton, Boston, Chicago, London, Los Angeles, New Orleans, New York, Newark, Paris, Sao Paulo, and Washington, D.C. The firm has wide experience in all areas of practice important to businesses and individuals including corporate finance, mergers and acquisitions, general commercial litigation, corporate governance matters, conducting internal corporate investigations, white collar criminal defense, private equity and fund formation, patent and intellectual property litigation and prosecution, labor and employment law, real estate transactions, bankruptcy and reorganizations, trusts and estates, and taxation. Its clients span industries including chemicals, entertainment, financial services, health care, information technology, insurance, Internet, lodging and gaming, manufacturing, media and communications, pharmaceuticals, real estate investment, sports, and transportation. * Garden City Expands Capabilities w/ Addition of Two Team Members ------------------------------------------------------------------ Jeffrey N. Leibell, Esq., CPA, and Kay E. Sickles, Esq. have joined The Garden City Group, Inc. (GCG) the recognized leader in class action administration, legal notification programs and Chapter 11 business reorganization. Mr. Leibell, a nationally recognized expert in class action litigation and settlement and a published author, spent thirteen years at Bernstein Litowitz Berger& Grossmann LLP, one of the nation's leaders in representing institutional and other investors in securities fraud and derivative litigation. Most recently he was the partner responsible for negotiating the terms of documenting and administering Bernstein Litowitz's class action settlements. In that role Leibell was responsible for effecting and administering over $13.5billion in class action recoveries, most notably in such high profile cases as: In re WorldCom Inc. Securities Litigation; In re Nortel Networks Corp. Securities Litigation; Ohio Public Employees Retirement System v. Freddie Mac; In re Williams Securities Litigation; In re Bristol-Myers Squibb Co. Securities Litigation; and In re Refco, Inc. Securities Litigation. Mr. Leibell also has worked closely with the Securities and Exchange Commission having coordinated joint claims administration and distributions in connection with, among others, the Bristol- Meyers Squibb settlement. He has also developed highly complex plans of allocation, including in settlements that involved multiple securities with different federal securities claims against different settling defendants for varying claims periods. "I could have gone to various firms," said Mr. Leibell "but I chose GCG because, as a former client, I knew that GCG provides the highest level of service in the industry. I saw firsthand the results this team achieved on the Worldcom matter -- the Court had to be impressed with an audit result of 99.97% processing accuracy -- I know I was." A Certified Public Accountant, Leibell received his B.S., cum laude, in Accounting from Brooklyn College of the City University of New York, and a J.D. from Columbia University, where he was the Senior Notes Editor of the Columbia Business Law Review and a Harlan Fiske Stone Scholar. Prior to attending law school, Leibell spent over ten years as an auditor for Deloitte & Touche LLP, where he audited "Fortune 500" and other companies. He is a member of the New York, and American Bar Associations and is admitted to practice in New York; the United States District Courts for the Southern and Eastern Districts of New York, the Eastern District of Michigan, the District of Colorado; and the United States Court of Appeals for the Second, Third, Fourth and Sixth Circuits. Ms. Sickles comes to GCG after nearly six years with Schiffrin Barroway Topaz & Kessler, LLP, where she was a Partner/Department Head in charge of its securities settlements. In that capacity, Sickles was one of a handful of attorneys across the country specializing in the settlement process for class action litigation and handled more than 75 settlements, including In re Tyco International Ltd. Securities Litigation, In re Delphi Securities Derivative and ERISA Litigation, and In re Tenet Healthcare Corporation Securities Litigation. Prior to joining Schiffrin Barroway Topaz & Kessler, LLP, Sickles was a Complex Litigation Associate at Sandals & Langer, LLP, where she handled all phases of ERISA, Antitrust, Consumer, and RICO class actions. Ms. Sickles brings a decade of class action litigation experience, which she will draw upon in advising both GCG and its clients. According to Sickles, "I am committed to applying the expertise gained through 10 years' experience as a class action litigator for the benefit of GCG and its clients." Ms. Sickles received her J.D. from the University of Pennsylvania School of Law in 1994, and graduated with honors with a B.A. in history from Colgate University in 1991. She has been admitted to practice in Pennsylvania, New Jersey, the Eastern District of Pennsylvania, and the United States Court of Appeals for the Seventh and Ninth Circuits. In 2005, 2006 and 2007, Sickles was named a "Pennsylvania Rising Star" by Pennsylvania Super Lawyers and Philadelphia Magazine. Ms. Sickles is a member of the Philadelphia and American Bar Associations. "Jeff's and Kay's decision to join GCG is further validation of our market leadership," said GCG Chief Executive Officer David Isaac. "Adding Jeff and Kay to our experienced team further guarantees clients' 'peace of mind'." "No one in the industry can bring GCG's resources to national and international class action cases," said Neil L. Zola, GCG president and chief operating officer. "Having worked closely with Jeff and Kay for many years, I know they are two of the top class action attorneys in the country. Their addition to GCG further distinguishes us from the competition." The Garden City Group, Inc. -- http://www.gardencitygroup.com-- a subsidiary of Crawford & Company, administers class action settlements, designs legal notice programs, manages Chapter 11 administrations, and provides expert consultation services. Based in Atlanta, Georgia, Crawford & Company -- http://www.crawfordandcompany.com-- is the world's largest independent provider of claims management and related solutions to the risk management and insurance industry as well as self-insured entities, with a global network of more than 700 locations in 63 countries. Major service lines include property and casualty claims management; warranty inspections; integrated claims and medical management for workers' compensation; legal settlement administration, including class action and bankruptcy claims administration; and risk management information services. The Company's shares are traded on the NYSE under the symbols CRDA and CRDB. * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent Chapter 11 cases filed with assets and liabilities below $1,000,000: In Re Scampi, Inc. aka Russell's Steakhouse aka Russell Steak & Sea Food House Bankr. N.D. N.Y. Case No. 08-62457 Chapter 11 Petition Filed October 8,2008 See http://bankrupt.com/misc/nynb08-62457.pdf In Re Thomas Hillside, LLC Bankr. C.D. Calif. Case No. 08-27156 Chapter 11 Petition Filed October 14,2008 See http://bankrupt.com/misc/cacb08-27156.pdf In Re The Washery, LLC Bankr. D. N.J. Case No. 08-29920 Chapter 11 Petition Filed October 14,2008 See http://bankrupt.com/misc/njb08-29920.pdf In Re Canales Dyer Construction, Inc. Bankr. E.D. Tex. Case No. 08-42738 Chapter 11 Petition Filed October 14,2008 See http://bankrupt.com/misc/txeb08-42738.pdf In Re Action Concrete, Inc. Bankr. N.D. Ga. Case No. 08-22942 Chapter 11 Petition Filed October 15,2008 See http://bankrupt.com/misc/ganb08-22942.pdf In Re Janene Caracaus Bankr. D. Hawaii Case No. 08-01531 Chapter 11 Petition Filed October 15,2008 See http://bankrupt.com/misc/hib08-01531.pdf In Re Sports Publishing, LLC Bankr. C.D. Ill. Case No. 08-91780 Chapter 11 Petition Filed October 15,2008 See http://bankrupt.com/misc/ilcb08-91780.pdf In Re D&T Automotive Sales & Services Inc. Bankr. S.D. Ind. Case No. 08-12837 Chapter 11 Petition Filed October 15,2008 See http://bankrupt.com/misc/insb08-12837.pdf In Re Symphony Homes, LLC dba Real Estate One/Symphony Homes Bankr. E.D. Mich. Case No. 08-34253 Chapter 11 Petition Filed October 15,2008 See http://bankrupt.com/misc/mieb08-34253.pdf In Re Copy Quick, Inc. Bankr. D. N.J. Case No. 08-30024 Chapter 11 Petition Filed October 15,2008 See http://bankrupt.com/misc/njb08-30024.pdf In Re Coi Shawn Gentzel & Helen Louise Gentzel Bankr. S.D. Ohio Case No. 08-59999 Chapter 11 Petition Filed October 15,2008 See http://bankrupt.com/misc/ohsb08-59999.pdf In Re Gayle Holdings, LLC Bankr. D. Md. Case No. 08-23333 Chapter 11 Petition Filed October 15,2008 Filed as Pro Se In Re SESJ, LLC Bankr. E.D. Va. Case No. 08-16358 Chapter 11 Petition Filed October 15,2008 Filed as Pro Se In Re KARMA LV1, LLC Bankr. D. Nev. Case No. 08-22102 Chapter 11 Petition Filed October 15,2008 Filed as Pro Se In Re David Mark Faylor Bankr. C.D. Calif. Case No. 08-16549 Chapter 11 Petition Filed October 15,2008 Filed as Pro Se In Re Jack Weichman Bankr. N.D. Ind. Case No. 08-23482 Chapter 11 Petition Filed October 16,2008 See http://bankrupt.com/misc/innb08-23482.pdf In Re James & Gail Dougherty Enterprises, Inc. dba Char-House Bankr. E.D. Mich. Case No. 08-23096 Chapter 11 Petition Filed October 16,2008 See http://bankrupt.com/misc/mieb08-23096.pdf In Re KM Investments of Harltand, LLC Bankr. E.D. Mich. Case No. 08-65367 Chapter 11 Petition Filed October 16,2008 See http://bankrupt.com/misc/mieb08-65367.pdf In Re James F. Kamp & Geraldine M. Kamp Bankr. W.D. Penn. Case No. 08-26915 Chapter 11 Petition Filed October 16,2008 See http://bankrupt.com/misc/pawb08-26915.pdf In Re Roger C. Lemasters & Delphia S. Lemasters Bankr. W.D. Penn. Case No. 08-26916 Chapter 11 Petition Filed October 16,2008 See http://bankrupt.com/misc/pawb08-26916.pdf In Re B&J Creamery, Inc. Bankr. W.D. Penn. Case No. 08-26923 Chapter 11 Petition Filed October 16,2008 See http://bankrupt.com/misc/pawb08-26923.pdf In Re Club Kpendecor Bankr. E.D. Penn. Case No. 08-16823 Chapter 11 Petition Filed October 16,2008 Filed as Pro Se In Re Chuck's Calabash, Inc. Bankr. E.D. Va. Case No. 08-16379 Chapter 11 Petition Filed October 16,2008 See http://bankrupt.com/misc/vaeb08-16379.pdf In Re Z Family Enterprises, LLC Bankr. D. Ariz. Case No. 08-14474 Chapter 11 Petition Filed October 17,2008 See http://bankrupt.com/misc/azb08-14474.pdf In Re Bailey Auto Body, Inc. dba Conifer Auto Body & Paint Bankr. D. Colo. Case No. 08-26390 Chapter 11 Petition Filed October 17,2008 See http://bankrupt.com/misc/cob08-26390.pdf In Re Mulhall Acquisitions, LLC Bankr. D. Conn. Case No. 08-33377 Chapter 11 Petition Filed October 17,2008 See http://bankrupt.com/misc/ctb08-33377.pdf In Re McConcrete Construction, Inc. Bankr. C.D. Ill. Case No. 08-91789 Chapter 11 Petition Filed October 17,2008 See http://bankrupt.com/misc/ilcb08-91789.pdf In Re Bagasse USA, LLC Bankr. W.D. La. Case No. 08-51212 Chapter 11 Petition Filed October 17,2008 See http://bankrupt.com/misc/lawb08-51212.pdf In Re River Valley Power Equipment, Inc. Bankr. D. Minn. Case No. 08-35413 Chapter 11 Petition Filed October 17,2008 See http://bankrupt.com/misc/mnb08-35413.pdf In Re First Resource Title Agency LLC Bankr. D. N.J. Case No. 08-30235 Chapter 11 Petition Filed October 17,2008 See http://bankrupt.com/misc/njb08-30235.pdf In Re Catskill Laser Tag, Inc. Bankr. S.D. N.Y. Case No. 08-23514 Chapter 11 Petition Filed October 17,2008 See http://bankrupt.com/misc/nysb08-23514.pdf In Re Pickens Corp. Bankr. W.D. N.Y. Case No. 08-14597 Chapter 11 Petition Filed October 17,2008 See http://bankrupt.com/misc/nywb08-14597.pdf In Re Niagara Street Properties, Ltd. Bankr. W.D. N.Y. Case No. 08-14621 Chapter 11 Petition Filed October 17,2008 See http://bankrupt.com/misc/nywb08-14621.pdf In Re KDM Development, Inc. Bankr. N.D. Ga. Case No. 08-80959 Chapter 11 Petition Filed October 17,2008 Filed as Pro Se In Re Nevada Tax Planners, Inc. Bankr. D. Nev. Case No. 08-22167 Chapter 11 Petition Filed October 17,2008 Filed as Pro Se In Re Galca Mexican Food, Inc. dba Del Comal Tortilla Factory Bankr. S.D. Texas Case No. 08-36666 Chapter 11 Petition Filed October 17,2008 See http://bankrupt.com/misc/txsb08-36666.pdf In Re Tri-State Land Surveyors, Inc. Bankr. M.D. Fla. Case No. 08-06437 Chapter 11 Petition Filed October 19,2008 See http://bankrupt.com/misc/flmb08-06437.pdf In Re Paul Buxton & Marilyn Buxton Bankr. S.D. Fla. Case No. 08-25571 Chapter 11 Petition Filed October 19,2008 See http://bankrupt.com/misc/flsb08-25571.pdf In Re Debtor ElevenTest Bankr. S.D. Tex. Case No. 99-11111 Chapter 11 Petition Filed October 19,2008 Filed as Pro Se In Re DNA General Contracting Co. Bankr. N.D. Ill. Case No. 08-28139 Chapter 11 Petition Filed October 20,2008 See http://bankrupt.com/misc/ilnb08-28139.pdf In Re David Taylor & Michelle Taylor Bankr. S.D. Ind. Case No. 08-13018 Chapter 11 Petition Filed October 20,2008 See http://bankrupt.com/misc/insb08-13018.pdf In Re Grand Orleans Ventures, LLC Bankr. W.D. Mich. Case No. 08-09261 Chapter 11 Petition Filed October 20,2008 See http://bankrupt.com/misc/miwb08-09261.pdf In Re Forbes Transport, LLC Bankr. E.D. N.C. Case No. 08-07297 Chapter 11 Petition Filed October 20,2008 See http://bankrupt.com/misc/nceb08-07297.pdf In Re Charles Williams Bankr. N.D. Calif. Case No. 08-46008 Chapter 11 Petition Filed October 20,2008 Filed as Pro Se In Re P&E Enterprises, Inc. Bankr. M.D. Tenn. Case No. 08-09677 Chapter 11 Petition Filed October 20,2008 Filed as Pro Se In Re Neighbors Mortgage, Inc. Bankr. D. Utah Case No. 08-27195 Chapter 11 Petition Filed October 20,2008 Filed as Pro Se In Re Gregory William Elliott, Jr. aka Gregory William Elliott Bankr. N.D. Ill. Case No. 08-28136 Chapter 11 Petition Filed October 20,2008 Filed as Pro Se In Re Dee M. L'Archeveque Bankr. C.D. Calif. Case No. 08-24453 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/cacb08-16710.pdf In Re YV Estates, LLC Bankr. C.D. Calif. Case No. 08-16710 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/cacb08-16710.pdf In Re Dee M. L'Archeveque Bankr. C.D. Calif. Case No. 08-24453 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/cacb08-24453.pdf In Re Joy Rosenthal Bankr. D. Conn. Case No. 08-51027 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/ctb08-51027.pdf In Re Mid-Florida Trust and Properties, Inc. Bankr. M.D. Fla. Case No. 08-06473 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/flmb08-06473.pdf In Re James C. Sanderson, M.D., LLC Bankr. M.D. Fla. Case No. 08-16386 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/flmb08-16386.pdf In Re J. D. Hunter & Associates, Inc. dba Hunter Executive Suites (Trade Name) Bankr. N.D. Ill. Case No. 08-28344 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/ilnb08-28344.pdf In Re ABKJJT, LLC Bankr. D. Mass. Case No. 08-17960 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/mab08-17960.pdf In Re Green Papaya, Inc. Bankr. D. Md. Case No. 08-23652 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/mdb08-23652.pdf In Re Albenco, Inc. Bankr. D. Maine Case No. 08-11113 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/meb08-11113.pdf In Re Sugar Brook Farm, Inc. Bankr. D. Minn. Case No. 08-51017 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/mnb08-51017.pdf In Re Midwest Vehicle Professionals, Inc. Bankr. D. Neb. Case No. 08-42492 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/neb08-42492.pdf In Re Premier Asset Holdings, LLC Bankr. D. Neb. Case No. 08-42493 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/neb08-42493.pdf In Re Jim Tee's, Inc. Bankr. E.D. Okla. Case No. 08-81390 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/okeb08-81390.pdf In Re Iqbal Singh & Pinky Sangha Bankr. W.D. Penn. Case No. 08-27018 Chapter 11 Petition Filed October 21,2008 See http://bankrupt.com/misc/pawb08-27018.pdf In Re Tidewater Lodging Group, LLC Bankr. S.D. Fla. Case No. 08-25694 Chapter 11 Petition Filed October 21,2008 Filed as Pro Se In Re Treviso By The Sea Joint Venture, LLC Bankr. S.D. Fla. Case No. 08-25698 Chapter 11 Petition Filed October 21,2008 Filed as Pro Se ********* 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. Julybien D. Atadero, Sheryl Joy P. Olano, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, 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 ***