/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/081126.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, November 26, 2008, Vol. 12, No. 282 Headlines 1537 WEBSTER: Voluntary Chapter 11 Case Summary 2712 MISSION: Files Pre-Packaged Plan and Disclosure Statement 2712 MISSION: Sec. 341(a) Meeting Set for December 23, 2008 AGRIPROCESSORS INC: Court Orders Appointment of Ch. 11 Trustee AGRIPROCESSORS INC: Chief Held Without Bond Over Bank Fraud AINSWORTH LUMBER: S&P Lifts Corporate Credit Rating to 'B-' ALLISON TRANSMISSION: Debt Repurchase Won't Affect S&P's Ratings AMERICAN HOSPITALITY: Files for Chapter 11 Bankruptcy in Tennessee AMERICAN HOSPITALITY: Case Summary & 20 Largest Unsec. Creditors AMERICAN INT'L: Freezes Pay & Takes Out Bonus; To Forgo Raises ANIXTER INT'L: Mulls Lien & Other Rights in Sales to NetVersant ANN TAYLOR: Weak Third Quarter Results Cue S&P's Negative Outlook ANTIOCH CO: Lists Up to $100 Mln. Assts & Up to $500 Mln. Debts BARNERT HOSPITAL: Obtains Confirmation of Liquidating Plan BEAR STEARNS: Moody's Cuts 17 Tranches' Ratings From 3 Jumbo Deals BEAR STEARNS: Moody's Pares Ratings on 100 Tranches From 10 Deals BEVERLY LEICHLITER: Court Keeps Claim Despite Non-Disclosure BH S&B: Fails To Get Nod in DIP Loan, But Gets OK on Salaries BOMBARDIER RECREATIONAL: S&P Cuts Corporate Credit Rating to 'B' BONTEN MEDIA: S&P Puts 'B' Corp. Rating on CreditWatch Negative BOSCOV'S INC: Gets $35-Mil. Ch. 11 Exit Loan from Pennsylvania BOSCOV'S INC: Sale to Boscov Lakin Family Expected to Close Today BOSCOV'S INC: Hurdles Objections to Sale to Boscov Lakin Family BOSCOV'S INC: Settlement Pact With Shareholders Gets Court OK BRINKER INTERNATIONAL: Fitch Downgrades Issuer Ratings to 'BB+' BTWW RETAIL: Final Liquidation Sale at 78 Locations Begins Today CAREFREE MULE: Files for Chapter 11 in Phoenix CARMELA VILLON: Voluntary Chapter 11 Case Summary CELL THERAPEUTICS: Sept. 30 Balance Sheet Upside Down by $133.3MM CENTENNIAL COMMS: AT&T Gets 17.7% Stake After Shareholder Deal CENTENNIAL COMMS: Inks Employment Pacts with CEO & Other Officers CHRYSLER LLC: Offers Workers Buyouts, to Impose Layoffs Year-End CITGO PETROLEUM: Fitch Retains Issuer Default Rating at 'BB-' CITIGROUP INC: Gov't Expects Firm to Consider Breaking Up Co. CITIGROUP INC: Gov't Rescue Gives Life Back to Company; Shares Up COHR HOLDINGS: Moody's Junks Rating on Senior Sec. Credit Facility COMPREHENSIVE CARE: Sept. 30 Balance Sheet Upside Down by $8.6MM CONCORD CAMERA: Posts $12.6 Million Net Loss in FY Ended June 28 COPPERFORD LLC: Court Sets Hearing on January 14, 2009 CPW ACQUISITION: Files For Chapter 11 w/ Related Firm CREATIVE DESPERATION: Claims Judge Biased in Bankruptcy Case CREDIT SUISSE: Fitch Downgrades Ratings on 4 Certificate Classes DAYJET CORP: Files for Chapter 7 Bankruptcy in Delaware DBSI INC: Investors Want Examiner Appointed DEAN C. HENNING: Case Summary & 20 Largest Unsecured Creditors DEI HOLDINGS: S&P Withdraws 'B' Rating at Company's Request DOWNEY FINANCIAL: S&P's Counterparty Credit Rating Tumbles to 'D' DIOMED HOLDINGS: Plan Confirmation Hearing Continued to December 4 DOWNEY FINANCIAL: Moody's Downgrades Senior Unsecured Rating to C EARTHFIRST CANADA: Can't File 3rd Quarter Financial Report on Time ECLIPSE AVIATION: Files for Chapter 11 Protection in Delaware ECLIPSE AVIATON: Case Summary & 56 Largest Unsecured Creditors EMAN REALTY: Case Summary & 6 Largest Unsecured Creditors EQUA-CHLOR LLC: Files Plan to Repay Creditors in Turn for Debt FALCON FINANCIAL: Moody's Reviews Ratings on 25 Classes FANNIE MAE: Appoints David M. Johnson as Chief Financial Officer FGIC CORP: Fitch Withdraws Junk Ratings FINANCIAL GUARANTY: S&P Junks Financial Strength Rating From 'BB' FIRSTLIGHT HYDRO: S&P Confirms 'BB-' Rating on $320 Mil. Bonds FIRSTLIGHT POWER: S&P Cuts Rating on First-Lien Facilities to 'B+' FRED LEIGHTON: Merrill Lynch Wants A Chapter 11 Trustee G SQUARED: Case Summary & 21 Largest Unsecured Creditors GE COMMERCIAL: S&P Affirms Low-B Ratings on 4 Classes of Certs. GENERAL GROWTH: Fidelity Discloses 13.9% Equity Stake GREATWIDE LOGISTICS: Gets Final Approval for $73.6MM Financing HEARTLAND AUTOMOTIVE: Files Plan to Stay with Jiffy Lube HEAVEN INVESTMENT: Files Amended Schedules of Assets and Debts HERNANDO OAKS: Case Summary & 20 Largest Unsecured Creditors HOME INTERIORS: Reports $5.6M Net Loss in October HRP MYRTLE: Court OKs. Dec. 15 Auction for Project INNOVATIVE STEEL: Case Summary & 20 Largest Unsecured Creditors INVESTMENTS & STRATEGIES: Case Summary & 3 Largest Creditors IOWA TELECOMMUNICATIONS: Moody's Ratings Unmoved by Sherburne Deal IOWA TELECOMMUNICATIONS: Sherburne Merger Cues S&P's Rating Cuts KATHY COX: Files for Chapter 7 Liquidation KNOBLAUCH BUILDERS: Judge Frank Approves Disclosure Statement KOSSIE R. POWEL: Case Summary & 20 Largest Unsecured Creditors LAND O'LAKES: Material Weakness Won't Affect Moody's 'Ba1' Rating LANDAMERICA FINANCIAL: Fitch Cuts Issuer Default Rating to 'B' LANDAMERICA FINANCIAL: S&P Cuts Counterparty Credit Rating to 'B-' LB UBS: S&P Affirms Low-B Ratings on Three Classes of Certificates LEVEL 3: Moody's Cuts Probability of Default Rating to Ca LEXINGTON PRECISION: Has Until Jan. 26 to File Chapter 11 Plan LEXINGTON PRECISION: US Trustee Objects to Amended Plan LIGHTPOINT CLO: Moody's Downgrades Ratings on Two Classes of Notes LODGENET INTERACTIVE: Moody's Cuts Corporate Family Rating to 'B3' LOOK COMMUNICATIONS: August 31 Balance Sheet Upside-Down by C$6MM MBD INC: Owner Andrew Meghdadi Blames Bankruptcy on Housing Slump MERCURY COMPANIES: Court Sets Jan. 30 Claims Bar Date MERCURY COMPANIES: May Employ General Aviation as Aircraft Broker MERCURY COMPANIES: May Employ Garden City as Claims Agent MERCURY COMPANIES: Committee Wants to Retain Jessop as Counsel MEZZ CAP: Fitch Cuts and Assigns Rating Outlooks to Six Classes MILANO, CLAURE LLC: Case Summary & 20 Largest Unsecured Creditors MORGAN STANLEY: S&P Puts 'D' Ratings 1999-FNVI Classes L and K MTM REALTY TRUST: Case Summary & 10 Largest Unsecured Creditors NEBRASKA EDUCATIONAL: Fitch Cuts Rating on $19.5 Mil. Bonds to BB NETVERSANT SOLUTIONS: Bankruptcy May Impact Anixter's Financials NETVERSANT SOLUTIONS: Anixter Int'l Mulls Lien & Other Rights OFFICEMAX INC: S&P Changes Outlook to Negative & Holds BB- Rating OPTI CANADA: Moody's Cuts Sr. Sec. Rating on $1.75BB Notes to B2 OXIGENE INC: Posts $7.1 Million Net Loss in Qtr. Ended Sept. 30 O'CHARLEY'S INC: S&P Keeps 'B+' Corp. Rating; Outlook Negative PASADENA CDO: S&P Downgrades Ratings on Class B and C Notes PEOPLE'S CHOICE: Settles $2.6-Mil. Claim By WaMu Bank PIERRE FOODS: Seeks Court Nod to Obtain $95 Million Exit Facility POLE & STEEL: Case Summary & 20 Largest Unsecured Creditors PREMIUM LOAN: Moody's Junks Rating on $7 Million Class D Notes PRIMUS GUARANTY: NYSE Assigns a .BC Indicator on Trading Symbol PROPEX INC: Court OKs Renewal of National Union Insurance Program PROPEX INC: Wants to Extend & Modify Insurance Policies PROPEX INC: Seeks to Sign AFCO Premium Financing Pact PULMISERVE: Case Summary & Five Largest Unsecured Creditors QUIKSILVER INC: Weak Credit Measures Cue S&P to Cut Rating to 'B+' REAL MEX: Moody's Lifts Corporate Family Rating to 'Caa2' SEA CONTAINERS: Wins Court Confirmation of 4th Amended Plan SEMGROUP ENERGY: NASDAQ Extends 10-Q Filing Deadline to Feb. 17 SEMGROUP LP: EBITDA is Negative $34.5 Million in September SOUTH DAKOTA: Owner Indicted on Bank, Wire & Mail Fraud STEVE & BARRY'S: New Owner Gets OK on Salaries; Loan Still Pending SUNWEST MANAGEMENT: Wins Court Nod to Sell 7 Facilities SUN-TIMES MEDIA: September 30 Balance Sheet Upside-Down by $321MM SUN-TIMES MEDIA: K Capital Considers Merger or Sale Transactions SUN-TIMES MEDIA: President, CEO Discloses Owning 307,916 Stake SYNTAX-BRILLAN: Judge Orders Arrest of Recalcitrant Buyers T H AGRICULTURE: Files for Ch. 11 Bankruptcy and Prepackage Plan T H AGRICULTURE: Case Summary & 30 Largest Unsecured Creditors TOXIN ALERT: Fails to File FY Results, Gets Cease Trade Order TRI-STATE FINANCIAL: South Dakota Ethanol Plant Files in Omaha TROPICANA ENTERTAINMENT: Inks Deal w/ Casino Buyer; Sale Cancelled USG CORP: Current Initiatives to Provide $125MM in Yearly Savings USG CORP: To Close Wallboard Manufacturing Lines in Some States USG CORP: To Sell $400M of Convert. Notes to W. Buffet and Fairfax USG CORP: Valerie Jarrett Steps Down as USG Director VERASUN ENERGY: Closes Dyersville & Woodbury Ethanol Plants VERASUN ENERGY: Corn Farmers Object to Supply Contracts Rejection VERASUN ENERGY: Farmers Form Ad Hoc Group in Chapter 11 Case VERASUN ENERGY: Receives Unsolicited Bid for All Assets VERASUN ENERGY: South Dakota & Iowa Regulators to Probe Firm VINEYARDS PROPERTY: Files for Chapter 11 on Nov. 20 WASHINGTON MUTUAL: Settles $2.6-Mil. Claim vs. People's Choice WASHINGTON MUTUAL: U.S. Trustee Opposes Support to WM Mortgage WASHINGTON MUTUAL: Wants Protocol for Sale of SCF Investments WELLS FARGO: Moody's Cuts Ratings on 77 Tranches From 15 Deals * 76% of Supplier Execs. Back Gov't Bailout for GM, Says PPI * Butler Rubin Launches Bankruptcy and Insolvency Practice * Ford's Rating Cut Cues S&P's Junk Ratings on Michigan Automakers * Moody's Says Newspaper Industry Outlook Remains Negative * Moody's Says Transit Systems to Get Less SILO/LILO Payments * Seyfarth Shaw Adds 14 Lawyers to Business Services Department * S&P Cuts Ratings on 158 Classes From Seven Alt-A RMBS Deals * S&P Downgrades Ratings on 78 Tranches From 21 Hybrid CDO Deals * S&P Downgrades Ratings on 238 Classes of RMBS Securities * S&P Report Says 868 Issuers Poised for Downgrades Globally * Upcoming Meetings, Conferences and Seminars ********* 1537 WEBSTER: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: 1537 Webster, LLC 1086 Grand Avenue P. O. Box 1027 South San Francisco, CA 94080 Case No.: 08-32255 Petition Date: November 24, 2008 Court: U.S. Bankruptcy Court Northern District of California (San Francisco) Debtor's Counsel: John S. Morken, Sr., Esq. Morken Law Office 760 Market St. #938 San Francisco, CA 94102 Tel: (415) 391-6140 Email: jomork@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Debtor did not file its list of 20 largest unsecured creditors when it filed its Chapter 11 petition. 2712 MISSION: Files Pre-Packaged Plan and Disclosure Statement -------------------------------------------------------------- 2712 Mission Partners, L.P. filed with the U.S. Bankruptcy Court for the Northern District of California on Nov. 20, 2008, a pre- packaged Plan of Reorganization and Disclosure Statement explaining that plan. The Debtor filed for Chapter 11 on Nov. 20, 2008, to avoid foreclosure on its 32,000 sq. ft., two-story brick office building located at 2712 Mission Street, in San Francisco, resolve all objectionable claims in the bankruptcy process, and restructure. Bill Rochelle of Bloomberg reports that the building, with $24.5 million in mortgages, is under lease with the city of San Francisco for $103,000 a month rent. The building was appraised for $13.5 million earlier this year. The owner disputes the validity of the $13.9 million third mortgage on the building, according to the report. The Plan calls for paying the mortgage holder $500,000 in complete satisfaction of the secured claim. The mortgage was given as additional security for an unrelated obligation of an insider. Debts Secured by the Mission Property In addition to unpaid property taxes, the Mission Property is encumbered by three deeds of trust. The first priority deed of trust is held by Los Angeles Financial Credit Union ("LAFCU"). The second priority deed of trust is held by Redwood Mortgage Investors VIII. The third priority deed of trust is held MKA Real Estate Opportunity Fund, LLC. The Mission Property is currently encumbered with the following liens with their approximate respective balances owing as of Nov. 18, 2008: LAFCU $9,229,000.00 Redwood $1,164,400.00 MKA $13,949,118.00 Property Tax $201,873.00 Total $24,544,391.00 Los Angeles Financial Credit Union, Redwood Mortgage Investors VIII, and MKA Real Estate Opportunity Fund, LLC have all recorded Notices of Default on the Mission Property. LAFCU also has filed complaints in state court seeking (1) judicial foreclosure and (2) the appointment of a receiver. Mission Partners disputes any obligation to MKA as well as the validity, extent and priority of the MKA lien. The Debtor believes that any obligation to MKA could be set aside as a fraudulent conveyance in its bankruptcy case, but as this would result in costly litigation, the parties have agreed to settle, with MKA releasing Mission Partners in exchange for a one time payment of $500,000. Plan Funding The key feature of the Plan is the Refinancing of the Mission Property through Redwood, the second priority deed of trust holder. Upon confirmation of the Plan, the Refinance will provide enough monthly to bring the first and second priority deeds of trust current, pay the property taxes, provide the $500,000 settlement payment to satisfy the obligation secured by the third priority lien, and pay remaining creditors. Classification and Treatment of Claims and Interests Class Type of Claim Treatment Status ----- ------------- --------- ------ A-1 Allowed Secured Default to be Unimpaired Claim of LAFCU Cured A-2 Allowed Secured Default to be Unimpaired Claim of Redwood Cured A-3 Allowed Secured To be paid $500,000 Impaired Claim of MKA in full satisfaction of secured claim A-4 Secured Property To be paid in full Unimpaired Taxes B Priority Unsecured To be paid in full Unimpaired Claims, if any C General Unsecured To be paid Pro Rata Impaired Creditors payments in Cash up to the amount of such Allowed Claims to the extent of the value of all property and assets belonging to Reorganized Debtor, if any Mission Partners anticipates that at least one Class of Secured Claims, whose Class is unimpaired, may reject the Plan. In such case, Mission Partners, as the Debtor, expects to seek confirmation notwithstanding such rejection pursuant to Sec. 1129(b)(2)(A) of the Bankruptcy Code.. Unclassified Claims Pursuant to the requirements of the Bankruptcy Code, the Plan provides that holders of Allowed Administrative Claims and U.S. Trustee Fees will receive Cash in the amount of their Claim as of the Effective Date of the Plan. The Debtor believes that no such Claims exist with the exception of the fees and expenses of professionals to be employed by the Debtor. The Debtor estimates that projected unpaid professional fees as of the Effective Date of the Plan will be less than $50,000. Pursuant to Sec. 1123(a)(1) of the Bankruptcy Code, Unclassified Tax Claims entitled to priority under Sec. 507(a)(8) of the Bankruptcy Code are not classified. Mission Partners believes that no such Unsecured Claims exist. Sec. 1129(a)(9)(c) of the Bankruptcy Code requires the Plan to provide certain minimum payments in cash to the holders of such claims plus interest thereon. The Plan provides that if any such Unclassified Tax Claims exist, such Claims will be paid in accordance with the forgoing requirement. Liquidation Analysis The Debtor tells the Court that the Plan provides for payment to Unsecured Claims that, for practical purposes, is more than what unsecured creditors would receive in a Chapter 7 liquidation. The Debtor adds that the encumbrances on the Mission Property are approximately $24,522,518, and that even if the property could be sold for $14.9 million, based on the Mission Partners' appraisal in January of 2008, without deducting costs of sale, a deficiency of about $9,622,518 would remain, leaving nothing for unsecured creditors. A full-text copy of 2712 Mission Partners, L.P.'s Pre-packaged plan of reorganization dated Nov. 19, 2008, is available for free at http://researcharchives.com/t/s?354d A full-text copy of 2712 Mission Partners, L.P.'s Disclosure Statement explaining the Debtor's Pre-packaged Plan of Reorganization dated Nov. 19, 2008, is available for free at: http://researcharchives.com/t/s?354e Redondo Beach, Calif.-based 2712 Mission Partners, L.P. was formed in March of 2000 for the purpose of acquiring, developing and managing the property commonly known as 2712 Mission Street, in San Francisco. Mission Partners' managing General Partner is Amigos Especiales Company Inc., which holds a 1% interest. Mission now has one limited partner, Michael Kilroy, who owns a 99% interest. The Debtor filed for Chapter 11 relief on Nov. 20, 2008 (Bankr. N.D. Calif. Case No. 08-32226). Marianne Dickson, Esq., and Scott H. McNutt, Esq., at McNutt Law Group, are the Debtor's proposed bankruptcy counsel. When the Debtor filed for protection from its creditors, it listed total assets of $13,638,938 and total debts of $26,205,163. 2712 MISSION: Sec. 341(a) Meeting Set for December 23, 2008 ----------------------------------------------------------- The United States Trustee for Region 17 will convene a meeting of 2712 Mission Partners, L.P.'s creditors at 1:00 p.m.., on Dec. 23, 2008, at the U.S. Trustee Office, 235 Pine Street, Suite 850, in San Francisco, California. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Redondo Beach, Calif.-based 2712 Mission Partners, L.P. was formed in March of 2000 for the purpose of acquiring, developing and managing the property commonly known as 2712 Mission Street, in San Francisco. Mission Partners' managing General Partner is Amigos Especiales Company Inc., which holds a 1% interest. Mission now has one limited partner, Michael Kilroy, who owns a 99% interest. The Debtor filed for Chapter 11 relief on Nov. 20, 2008 (Bankr. N.D. Calif. Case No. 08-32226). Marianne Dickson, Esq., and Scott H. McNutt, Esq., at McNutt Law Group, are the Debtor's proposed bankruptcy counsel. When the Debtor filed for protection from its creditors, it listed total assets of $13,638,938 and total debts of $26,205,163. AGRIPROCESSORS INC: Court Orders Appointment of Ch. 11 Trustee -------------------------------------------------------------- The United States Bankruptcy Court for the Eastern District of New York authorized the United States Trustee for Region 2 to appoint a Chapter 11 Trustee for the Chapter 11 case of Agriprocessors Inc., Bill Rochelle of Bloomberg News reports. Bill Rochelle of Bloomberg said that the Court said that there is an urgent need for financing, which necessitated the appointment of a trustee. The secured lender was unwilling to provide financing to the company without a third party in control, Mr. Rochelle reported. According to Bloomberg, the Chapter 11 Trustee will take control away from the Rubashkin family. The U.S. Trustee told the Court how the company's chief executive officer Sholom Rubashkin was arrested for defrauding the lender by diverting collateral and inflating accounts receivables, the report says. Mr. Rochelle adds the U.S. government alleged that the company's human resources department had a handful of fraudulent resident alien cards. Mr. Rushkin also allegedly violated the Iowa child labor laws, he adds. About Agriprocessors Headquartered in Postville, Iowa, Agriprocessors Inc. -- http://www.agriprocessor.com/-- operates a kosher meat and poultry packing processors located at 220 North West Street. The company maintains an executive office with 50 employees at 5600 First Avenue in Brooklyn, New York. The company filed for Chapter 11 protection on Nov. 4, 2008 (Bankr. E. D. N.Y. Case No. 08-47472). Kevin J. Nash, Esq., at Finkel Goldstein Rosenbloom & Nash represents the company in its restructuring effort. The company listed assets of $100 million to $500 million and debts of $50 million to $100 million. AGRIPROCESSORS INC: Chief Held Without Bond Over Bank Fraud ----------------------------------------------------------- A U.S. magistrate judge in Iowa decided to hold Agriprocessors Inc.'s chief executive officer, Sholom Rubashkin, without bond pending trial on bank fraud charges, Bloomberg News reports. The judge's ruling came after the U.S. Bankruptcy Court for Eastern District of New York appointed a Chapter 11 trustee for the Agriprocessors. The trustee has assumed management of the company from the CEO. According to the report, the magistrate decided to keep Mr. Rubashkin after evidence said that he had "thousands of dollars of cash at home in a bag containing passports for himself and some of his 10 children." Mr. Rubashkin was arrested on charges of defrauding the company's secured lender. About Agriprocessors Headquartered in Postville, Iowa, Agriprocessors Inc. -- http://www.agriprocessor.com/-- operates a kosher meat and poultry packing processors located at 220 North West Street. The company maintains an executive office with 50 employees at 5600 First Avenue in Brooklyn, New York. The company filed for Chapter 11 protection on Nov. 4, 2008 (Bankr. E. D. N.Y. Case No. 08-47472). Kevin J. Nash, Esq., at Finkel Goldstein Rosenbloom & Nash represents the company in its restructuring effort. The company listed assets of $100 million to $500 million and debts of $50 million to $100 million. AINSWORTH LUMBER: S&P Lifts Corporate Credit Rating to 'B-' ----------------------------------------------------------- Standard & Poor's Ratings Services raised the long-term corporate credit rating on Vancouver-based oriented strandboard producer Ainsworth Lumber Co. Ltd. to 'B-' from 'SD'. The outlook is negative. At the same time, S&P raised the rating on the company's senior secured loan to 'B+' (two notches higher than the corporate credit rating) from 'CCC'. The recovery rating has been revised to '1' from '2', indicating an expectation of very high (90%-100%) recovery in the event of default. S&P also raised the rating on the company's unsecured debt to 'B-' (the same as the corporate credit rating) from 'CC', and assigned a recovery rating of '3' to the debt, representing a meaningful (50%-70%) recovery in a default scenario. The ratings on both the senior secured and unsecured debts have been removed from CreditWatch positive, where they were placed July 31, 2008. "The upgrade is based on reduced debt levels and improved liquidity," said Standard & Poor's credit analyst Jatinder Mall. The ratings on Ainsworth Lumber reflect S&P's view of its exposure to the volatile OSB market, expectations of weak profitability in the next two years, and a highly leveraged capital structure. These risks are partially mitigated by the company's low cost position stemming from strong Canadian assets and adequate liquidity to weather weak industry conditions in the next two years. The negative outlook on the company reflects Standard & Poor's expectations of weak profitability and negative free cash generation if the current depressed industry conditions persist. S&P could lower the ratings on Ainsworth if OSB prices decline further, leading to a cash burn rate that is greater than anticipated, and if liquidity dips below C$100 million in the next 12 months. On the other hand, an upgrade is unlikely given industry conditions but would require improvement in the company's profitability, with a funds from operations-to-debt ratio of about 12%-15% and leverage of below 5.5x. ALLISON TRANSMISSION: Debt Repurchase Won't Affect S&P's Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on Allison Transmission Inc. (B+/Negative/--) are not immediately affected by the company's possible repurchase of term loan debt at a discount to par. Allison has not announced plans for a tender offer as of November 24, 2008. However, it recently received permission from holders of its $3.1 billion senior secured term loan to use up to $750 million to buy back debt at market prices over the life of the term loan, which matures in 2014. Lenders who elect to tender their debt to the company would be paid in cash, with the price determined through a Dutch auction process. Although such repayments would likely be made at a price significantly below par, which diverges from the original obligation terms, S&P acknowledges that the company would be making these payments with excess liquidity. Should Allison repurchase a significant amount of debt through a tender offer, S&P would assess the effect on the company's leverage and interest-coverage ratios, as well as its liquidity. As of Sept. 30, 2008, Allison's cash balances were $284 million, well in excess of the company's operating needs. In addition, Allison continues to generate free operating cash flow, and S&P expects it to continue doing so, although at slightly lower levels because of persistent weak demand in the U.S. commercial vehicle industry which, in S&P's view, will continue through most, if not all, of 2009. AMERICAN HOSPITALITY: Files for Chapter 11 Bankruptcy in Tennessee ------------------------------------------------------------------ Bloomberg News' Erik Larson reports that American Hospitality Corp. made a voluntary filing under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Tennessee due to a lawsuit filed by Bank of New York Mellon Corp. According to Bloomberg, the lawsuit is calling for a receiver and a $3.8 million prepayment penalty on a disputed $10.5 million loan deal. E. Thomas Wood of the NashvillePost.com says the company defaulted on its obligation with the bank. The lawsuit has named Farzin Ferdowsi, Homayoun Aminmadani and Michael Shahsavari as co- defendants, Mr. Wood notes. The company intended to pay back disputed intercompany transfers in 2007 but failed to do so, he adds. AHC President and Chief Financial Officer Michael Shahsavari said in a statement that severe decline in revenues of the company's Taco Bell business due to a nationwide negative publicity related to the E.coli event made it difficult for owners to raise funds. "The negative publicity related to the incidents resulted in a 1.79% decline in 2007 sales as compared to 2006, approximately $797,000. This decline in sales was the main cause leading to the technical default with financial covenants relating to restructured debt," Mr. Wood quoted the company's auditors Hill Harper & Associates as saying. The company and three units that franchise from Kentucky-based Yum! Brands Inc., Bloomberg citing papers filed with the Court, listed assets and debts more than $50 million each. The company owes $2.24 million in unsecured claims to McLane Foodservice Inc., the report says. In addition, the company owes $9.45 million to a group of lenders led by Archon Group LP and $9.47 million to unit of Capmark Financial Group Inc, Bloomberg says. A full-text copy of the bank's complaint is available for free at http://ResearchArchives.com/t/s?353e A full-text copy of the company's financial statements and schedules for the years ended 2007 and 2006 is available for free at http://ResearchArchives.com/t/s?353e About American Hospitality Based in Brentwood, Tennessee, American Hospitality Corp. operates a chain of restaurants in Alabama, Georgia, Kentucky, North Carolina, South Carolina and Tennessee. The company's subsidiaries are East West Enterprises, EW Huntsville and Restaurant Management of Carolina. AMERICAN HOSPITALITY: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: American Hospitality Corporation 1728 General George Patton Drive, Suite 200 Brentwood, TN 37027 Bankruptcy Case No.: 08-11013 Chapter 11 Petition Date: November 21, 2008 Court: Middle District of Tennessee (Nashville) Judge: Marian F. Harrison Debtor's Counsel: G. Rhea Bucy Rbucy@GSRM.com Linda W. Knight LKNIGHT@GSRM.COM Thomas H. Forrester TForrester@GSRM.COM Gullett, Sanford, Robinson, Martin P.O. box 198888 Nashville, TN 37219-8888 Tel: (615) 244-4994 Fax: (615) 256-6339 Estimated Assets: $10,000,000 to $50,000,000 Estimated Debts: $10,000,000 to $50,000,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ McLane Foodservice, Inc. distributor $2,247,319 c/o Bank of America 7188 Collection Center Dr. Chicago, IL 60693 Tel: (972) 364-2148 PrimeSource FSE trade debt $14,382 P.O. Box 678278 Dallas, TX 75267-8278 Tel: (214) 273-5977 UFPC, LLC trade debt $9,237 P.O. Box 32033 Louisville, KY 40232 Tel: (502) 896-5900 Easy Does It Landscaping landscaping $8,130 Butts Food, Inc. distributor $5,543 Hill, Harper & Associates, PC trade debt $3,984 Ceilbright, LLC trade debt $3,599 Tree of Life Landscape landscaping $2,400 Partech, Inc. trade debt $2,216 Shoes for Crews, Inc. uniforms $2,029 Waste Management waste removal $1,957 NUCO2, Inc. trade debt $1,620 Gregory O'Miller trade debt $1,500 R.F. Technologies, Inc. trade debt $1,268 Ready Access trade debt $1,230 Suburban Propane propane $1,109 South Central Sound trade debt $814 Barco of California, Inc. trade debt $631 Sparkman Electric repairs $614 Ecotech Recycling recycling $570 AMERICAN INT'L: Freezes Pay & Takes Out Bonus; To Forgo Raises -------------------------------------------------------------- Hugh Son and Karen Freifeld at Bloomberg News report that American International Group Inc. has frozen pay and scrapped bonuses for seven top leaders, and will forgo pay raises for the next 50 highest-ranked executives through 2009. Bloomberg relates that New York Attorney General Andrew Cuomo demanded last week that AIG disclose compensation plans. The report says that after lawmakers and regulators criticized AIG for bad bets that forced the insurer to turn to the government for bailout, Mr. Liddy is cutting costs. Mr. Cuomo said in a statement, "It is only fair that top executives, who benefit the most when firms do well, should also bear the burden of the difficult economic consequences their firms now face. Taxpayers have been slammed with a one-two punch, seeing their investments dwindle while simultaneously having to fund the Wall Street bailout." According to Bloomberg, AIG said that Chief Executive Officer Edward Liddy will get a $1 salary through 2009 and an unspecified number of equity grants that "show his confidence" in the company. He will also be eligible for a bonus in 2010 and won't get any severance, says Bloomberg. The report states that Mr. Liddy was previously working without pay. Bloomberg relates that Paula Rosput Reynolds, who was hired in October 2008 to lead AIG's restructuring, won't get any pay or bonus this year. Citing AIG, the report says that Ms. Reynolds' compensation next year, besides salary, will be tied to company progress. About American International Group Based in New York, American International Group, Inc. (AIG) is the leading international insurance organization with operation in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. During the third quarter of 2008, requirements to post collateral in connection with AIG Financial Products Corp.'s credit default swap portfolio and other AIGFP transactions and to fund returns of securities lending collateral placed stress on AIG's liquidity. AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76 on Sept. 15, 2008. On that date, AIG's long-term debt ratings were downgraded by Standard & Poor's, a division of The McGraw- Hill Companies, Inc., Moody's Investors Service and Fitch Ratings, which triggered additional requirements for liquidity. These and other events severely limited AIG's access to debt and equity markets. On Sept. 22, 2008, AIG entered into an $85 billion revolving credit agreement with the Federal Reserve Bank of New York and, pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000 shares of Series C Perpetual, Convertible, Participating Preferred Stock to a trust for the benefit of the United States Treasury. At Sept. 30, 2008, amounts owed under the facility created pursuant to the Fed Credit Agreement totaled $63 billion, including accrued fees and interest. Since Sept. 30, AIG has borrowed additional amounts under the Fed Facility and has announced plans to sell assets and businesses to repay amounts owed in connection with the Fed Credit Agreement. In addition, subsequent to Sept. 30, 2008, certain of AIG's domestic life insurance subsidiaries entered into an agreement with the NY Fed pursuant to which the NY Fed has borrowed, in return for cash collateral, investment grade fixed maturity securities from the insurance subsidiaries. On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through its Troubled Asset Relief Program, $40 billion of newly issued AIG perpetual preferred shares and warrants to purchase a number of shares of common stock of AIG equal to 2% of the issued and outstanding shares as of the purchase date. All of the proceeds will be used to pay down a portion of the Federal Reserve Bank of New York credit facility. The perpetual preferred shares will carry a 10% coupon with cumulative dividends. AIG and the Fed also agreed to revise the existing FRBNY credit facility. The loan terms were extended from two to five years to give AIG time to complete its planned asset sales in an orderly manner. The equity interest that taxpayers will hold in AIG, coupled with the warrants, will total 79.9%. At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated assets and $950.9 billion in total debts. Shareholders' equity was $71.18 billion, including the addition of $23 billion of consideration received for preferred stock not yet issued. ANIXTER INT'L: Mulls Lien & Other Rights in Sales to NetVersant --------------------------------------------------------------- Anixter International Inc. is evaluating its position with respect to lien or other rights it may have in connection with sales to NetVersant Solutions, Inc. On Nov. 19, 2008, NetVersant Solutions filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. In those filings, NetVersant Solutions showed Anixter International and its subsidiaries to be unsecured creditors in the amount of $28.6 million. Anixter International anticipates recording an expense of approximately $20 million to $22 million in the fourth quarter of 2008 to increase its reserve for doubtful accounts. Anixter International President and CEO Bob Eck said, "We are obviously disappointed with the bankruptcy of a customer with whom we have a long term working relationship. In this challenging economic environment we are continuing to work closely with all of our customers and suppliers to maintain constructive business relationships. A current assessment of our key customer relationships shows this situation to be unique in terms of the circumstances and relative size of the exposure." About NetVersant Solutions Headquartered in Houston, Texas, NetVersant Solutions, Inc. -- http://www.netversant.com/-- provides wireless network infrastructure services. The company also provides an array of voice, video and data communication services. About Anixter Anixter International Inc. -- http://www.anixter.com/-- is the world's largest distributor of communication products and electrical and electronic wire and cable, and a leading distributor of fasteners and other small parts ("C" class inventory components) to original equipment manufacturers. The company has nearly US$725 million in inventory of more than 325,000 products, logistics network of 197 warehouses with more than 5 million square feet of space. It has operations in Latin American countries including Mexico, Costa Rica, Brazil and Chile. * * * As reported in the Troubled Company Reporter-Latin America on Nov. 2, 2007, Fitch Ratings affirmed Anixter International Inc.'s 'BB+' issuer default rating and its 'BB-' senior unsecured debt ratings. Fitch also affirmed its 'BB+' issuer default, senior unsecured notes, and senior unsecured bank credit facility ratings on Anixter Inc. ANN TAYLOR: Weak Third Quarter Results Cue S&P's Negative Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on New York City-based Ann Taylor Inc. to negative from stable. At the same time, S&P affirmed its 'BB-' corporate credit rating on the company. "The outlook revision is due to ANN's very weak third-quarter performance," said Standard & Poor's credit analyst Jackie E. Oberoi, "including net sales that declined 12% from the third quarter of 2007." S&P expects continued soft performance through the fourth quarter, which is likely to result in credit metrics that will be weak for the rating, including leverage of more than 3x. "Further weakness into 2009 is also likely," added Ms. Oberoi. ANTIOCH CO: Lists Up to $100 Mln. Assts & Up to $500 Mln. Debts --------------------------------------------------------------- Sam Black at Minneapolis/St. Paul Business Journal reports that The Antioch Co. has listed assets of $50 million to $100 million and debts of $100 million to $500 million. Antioch blamed its bankruptcy on the weakening scrapbooking industry and obligations of its worker stock-ownership plan, Business Journal relates. According to Business Journal, Antioch hasn't laid off any of its 500 workers in St. Cloud since filing for Chapter 11 protection, nor has it changed its relationship with more than 55,000 independent contractors who sell its scrapbooking wares at Tupperware-style parties. Business Journal quoted Antioch CEO Asha Morgan Moran as saying, Antioch is "a really good company with a really bad balance sheet." The company's headquarters is listed as Yellow Springs, Ohio, says the report. About Antioch The Antioch Co. -- http://www.antiochcompany.com/coprofile.asp-- which owns St. Cloud-based Creative Memories. The company was founded in 1926. It consists of operating and business units located in Ohio, Minnesota, Nevada, and Virginia. The direct- selling division encompasses the U.S. and Puerto Rico, Canada, Australia, New Zealand, Germany, Japan and the United Kingdom, with expansion planned in other European countries. The Antioch employs more than 1,090 people and manufactures, packages and markets more than 3,000 products to tens of thousands of independent sales Consultants and retail dealers. As reported in the Troubled Company Reporter on Nov. 17, 2008, The Antioch Co. reached an agreement with its lenders to restructure its debt. To facilitate this agreement, Antioch and six of its subsidiaries filed voluntary petitions for Chapter 11 protection with the U.S. Bankruptcy Court for the Southern District of Ohio. BARNERT HOSPITAL: Obtains Confirmation of Liquidating Plan ---------------------------------------------------------- According to Bloomberg News, Nathan and Miriam Barnert Hospital obtained confirmation from the U.S. Bankruptcy Court for the District of New Jersey of its liquidating Chapter 11 plan last week. Bill Rochelle of Bloomberg notes that the Plan won't even pay administration claims in full unless the trustee of a liquidating trust is successful in bringing so-called avoidance actions, according to the disclosure statement. He adds that unsecured creditors with more than $24 million in claims will only receive a distribution from successful suits. The company closed its 256-bed acute-care hospital in Paterson, New Jersey, last February, and later sold the hospital in June. About Barnert Hospital Nathan and Miriam Barnert Memorial Hospital Association, dba Barnert Hospital -- http://www.barnerthospital.com/-- previously owned and operated a 256 bed general acute care community hospital located at 680 Broadway in Paterson, New Jersey. The company filed for chapter 11 protection on Aug. 15, 2007 (Bankr. D. N.J. Case No.07-21631). David J. Adler, Esq., at McCarter & English, LLP, represents the Debtor in its restructuring efforts. Warren J. Martin Jr., Esq. and John S. Mairo, Esq., at Porzio Bromberg & Newman, P.C., represent the Official Committee of Unsecured Creditors in this case. Donlin Recano & Company Inc. is the Debtor's claims, noticing, and balloting agent. The Debtor's schedules reflect total assets of $46,600,967 and total liabilities of $61,303,505. BEAR STEARNS: Moody's Cuts 17 Tranches' Ratings From 3 Jumbo Deals ------------------------------------------------------------------ Moody's Investors Service has downgraded 17 tranches and confirmed one tranche from 3 Jumbo transactions issued by Bear Stearns in 2006 and 2007. The collateral backing these transactions consists primarily of first-lien, adjustable-rate, prime Jumbo mortgage loans. The actions are triggered by higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to currently available credit enhancement levels. The actions reflect Moody's revised expected losses on the Jumbo sector announced in a press release on Sept. 18, and are part of Moody's on-going review process. Moody's final rating actions are based on current ratings, level of credit enhancement, collateral performance and updated pool- level loss expectations. Moody's also took into account credit enhancement provided by seniority, cross-collateralization, time tranching, and other structural features within the Aaa waterfalls. Complete rating actions are: Issuer: Bear Stearns ARM Trust 2006-1 -- Cl. A-1, Downgraded to Aa1 from Aaa -- Cl. A-2, Confirmed at Aaa -- Cl. A-3, Downgraded to Aa1 from Aaa -- Cl. A-4, Downgraded to Baa2 from Aaa Issuer: Bear Stearns ARM Trust 2007-2 -- Cl. I-A-1, Downgraded to B3 from Aaa -- Cl. I-A-2, Downgraded to Caa3 from Aaa -- Cl. II-A-1, Downgraded to B3 from Aaa -- Cl. II-A-2, Downgraded to Caa3 from Aaa -- Cl. III-A-1, Downgraded to B3 from Aaa -- Cl. III-A-2, Downgraded to Caa3 from Aaa -- Cl. IV-A-1, Downgraded to Baa1 from Aaa -- Cl. IV-A-2, Downgraded to Caa3 from Aaa Issuer: Bear Stearns ARM Trust 2007-4 -- Cl. I-1A-1, Downgraded to Baa1 from Aaa -- Cl. I-1A-2, Downgraded to B3 from Aa1 -- Cl. I-1X-1, Downgraded to Baa1 from Aaa -- Cl. I-2A-1, Downgraded to Baa1 from Aaa -- Cl. I-2A-2, Downgraded to B3 from Aa1 -- Cl. I-2X-1, Downgraded to Baa1 from Aaa Moody's calculates estimated losses for Jumbo RMBS in a two-stage process. First, serious delinquencies are projected through late 2009, primarily based upon recent historical performance. These projected delinquencies are converted into projected losses using lifetime roll rates (the probability of transition to default) averaging 40% for 60-day delinquencies, 75% for delinquencies greater than 90 days, and 90-100% for foreclosure or REO, and severity assumptions averaging 35%. The second step is to determine losses for the remaining life of the deal, following the projection period. Depending on a deal's performance, including delinquency, default, and prepayment rates, as well as collateral characteristics, such as loan type (fixed or adjustable), or loan-to-value ratios and geographic concentrations of remaining current loans, Moody's assumes varying degrees of slowing in the loss rate (which is measured by loss-to- liquidation) for the remaining life of the deal. Typical degrees of slowing in loss rate after late 2009 range from no slowing at all to 40% slowing. To take an example, a deal with very poor early performance due to relatively high loan-to-value ratios and dropping regional home values would be expected to see markedly high delinquency and loss rates for the next year. But the high rate of losses may be expected to slow afterwards, as economic factors and real estate values begin to stabilize, and a slowing of 20-40% may be used in the projection. On the other hand, a deal with stronger early performance that is demonstrating relative resiliency in the current market environment may not be expected to have high losses in the near- term, but may be expected to sustain a similar level of losses for the life of the deal, as the pool continues to be subject to factors that have more historically driven prime performance such as borrower life events, unemployment, and so on. Loss estimates are subject to variability and, as a result, realized losses could ultimately turn out higher or lower than Moody's current expectations. Moody's will continue to evaluate performance data as it becomes available and will assess the pattern of potential future defaults and adjust loss expectations accordingly if necessary. BEAR STEARNS: Moody's Pares Ratings on 100 Tranches From 10 Deals ----------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 100 tranches from 10 transactions issued by Bear Stearns ARM Trust. The collateral backing these transactions consists primarily of first-lien, adjustable-rate, Alt-A mortgage loans. Ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. The actions are a result of Moody's on-going review process. Complete rating actions are: Issuer: Bear Stearns ARM Trust 2004-10 -- Cl. I-1-A-1, Downgraded to Aa2 from Aaa -- Cl. I-2-A-1, Downgraded to Aa2 from Aaa -- Cl. I-2-X-1, Downgraded to Aa2 from Aaa -- Cl. I-2-A-2, Downgraded to Aa2 from Aaa -- Cl. I-2-X-2, Downgraded to Aa2 from Aaa -- Cl. I-2-A-3, Downgraded to Aa2 from Aaa -- Cl. I-2-X-3, Downgraded to Aa2 from Aaa -- Cl. I-2-A-4, Downgraded to Aa2 from Aaa -- Cl. I-2-A-5, Downgraded to Aa1 from Aaa -- Cl. I-3-A-1, Downgraded to Aa2 from Aaa -- Cl. I-4-A-1, Downgraded to Aa2 from Aaa -- Cl. I-5-A-1, Downgraded to Aa2 from Aaa -- Cl. III-1-A-1, Downgraded to Aa3 from Aaa -- Cl. III-2-A-1, Downgraded to Aa2 from Aaa -- Cl. I-2-A-6, Downgraded to Aa3 from Aa1 -- Cl. I-M-1, Downgraded to A2 from Aa1 -- Cl. I-B-1, Downgraded to A3 from Aa2 -- Cl. I-B-2, Downgraded to Ba1 from A2 -- Cl. I-B-3, Downgraded to Caa2 from Baa2 Issuer: Bear Stearns ARM Trust 2004-12 -- Cl. I-A-1, Downgraded to Aa3 from Aaa -- Cl. I-X-1, Downgraded to Aa3 from Aaa -- Cl. II-A-1, Downgraded to Aa3 from Aaa -- Cl. II-X-1, Downgraded to Aa3 from Aaa -- Cl. II-A-2, Downgraded to Aa3 from Aaa -- Cl. II-X-2, Downgraded to Aa3 from Aaa -- Cl. II-A-3, Downgraded to Aa3 from Aaa -- Cl. II-X-3, Downgraded to Aa3 from Aaa -- Cl. III-A-1, Downgraded to Aa3 from Aaa -- Cl. IV-A-1, Downgraded to Aa3 from Aaa -- Cl. M-1, Downgraded to A3 from Aa1 -- Cl. B-1, Downgraded to Baa2 from Aa2 -- Cl. B-2, Downgraded to B1 from A2 -- Cl. B-3, Downgraded to Ca from Baa2 Issuer: Bear Stearns ARM Trust 2004-3 -- Cl. I-A-1, Downgraded to Aa2 from Aaa -- Cl. II-A, Downgraded to Aa2 from Aaa -- Cl. III-A, Downgraded to Aa2 from Aaa -- Cl. IV-A, Downgraded to Aa2 from Aaa -- Cl. I-A-3, Downgraded to Aa3 from Aa1 -- Cl. B-1, Downgraded to A2 from Aa2 -- Cl. B-2, Downgraded to Ba1 from A2 -- Cl. B-3, Downgraded to Caa1 from Baa2 Issuer: Bear Stearns ARM Trust 2004-6 -- Cl. III-A, Downgraded to Aa2 from Aaa -- Cl. I-A-2, Downgraded to Aa3 from Aa1 -- Cl. II-A-2, Downgraded to Aa3 from Aa1 -- Cl. B-1, Downgraded to Baa1 from Aa2 -- Cl. B-2, Downgraded to Ba3 from A2 -- Cl. B-3, Downgraded to Ca from Baa2 Issuer: Bear Stearns ARM Trust 2004-7 -- Cl. II-A-1, Downgraded to Aa2 from Aaa -- Cl. II-X, Downgraded to Aa2 from Aaa -- Cl. III-A, Downgraded to Aa1 from Aaa -- Cl. IV-A, Downgraded to Aa2 from Aaa -- Cl. I-A-2, Downgraded to Aa3 from Aa1 -- Cl. B-1, Downgraded to Baa2 from Aa2 -- Cl. B-2, Downgraded to B2 from A2 -- Cl. B-3, Downgraded to Ca from Baa2 Issuer: Bear Stearns ARM Trust 2004-8 -- Cl. I-1-A-3, Downgraded to Aa1 from Aaa -- Cl. I-B-1, Downgraded to A2 from Aa2 -- Cl. I-B-2, Downgraded to Ba1 from A2 -- Cl. I-B-3, Downgraded to Caa3 from Baa2 Issuer: Bear Stearns ARM Trust 2005-3 -- Cl. I-A-1, Downgraded to Aa3 from Aaa -- Cl. II-A-1, Downgraded to Aa3 from Aaa -- Cl. II-A-2, Downgraded to Aa3 from Aaa -- Cl. II-X, Downgraded to Aa3 from Aaa -- Cl. B-1, Downgraded to A3 from Aa1 -- Cl. B-2, Downgraded to Baa2 from Aa2 -- Cl. B-3, Downgraded to Ba3 from A2 -- Cl. B-4, Downgraded to Caa3 from Baa2 Issuer: Bear Stearns ARM Trust 2005-4 -- Cl. I-A-1, Downgraded to Aa1 from Aaa -- Cl. II-A-1, Downgraded to Aa1 from Aaa -- Cl. II-A-2, Downgraded to Aa1 from Aaa -- Cl. II-A-3, Downgraded to Aa1 from Aaa -- Cl. II-X-1, Downgraded to Aa1 from Aaa -- Cl. III-A-1, Downgraded to Aa1 from Aaa -- Cl. IV-A-1, Downgraded to Aa1 from Aaa -- Cl. B-1, Downgraded to A1 from Aa1 -- Cl. B-2, Downgraded to A3 from Aa2 -- Cl. B-3, Downgraded to Baa1 from Aa3 -- Cl. B-4, Downgraded to Baa2 from A1 -- Cl. B-5, Downgraded to Ba1 from A2 -- Cl. B-6, Downgraded to Ba2 from A3 -- Cl. B-7, Downgraded to B1 from Baa1 -- Cl. B-8, Downgraded to B2 from Baa2 Issuer: Bear Stearns ARM Trust 2005-6 -- Cl. I-A-1, Downgraded to A3 from Aaa -- Cl. II-A-1, Downgraded to A3 from Aaa -- Cl. III-A-1, Downgraded to A3 from Aaa -- Cl. IV-A-1, Downgraded to A3 from Aaa -- Cl. V-A-1, Downgraded to A3 from Aaa -- Cl. B-1, Downgraded to B3 from Aa2 -- Cl. B-2, Downgraded to Caa1 from A3 -- Cl. B-3, Downgraded to Ca from Ba1 Issuer: Bear Stearns ARM Turst 2005-1 -- Cl. I-A-1, Downgraded to Aa2 from Aaa -- Cl. II-A-1, Downgraded to Aa2 from Aaa -- Cl. II-A-2, Downgraded to Aa2 from Aaa -- Cl. II-X-1, Downgraded to Aa2 from Aaa -- Cl. III-A-1, Downgraded to Aa2 from Aaa -- Cl. IV-A-1, Downgraded to Aa2 from Aaa -- Cl. B-1, Downgraded to A2 from Aa1 -- Cl. B-2, Downgraded to Baa1 from Aa2 -- Cl. B-3, Downgraded to Ba3 from A2 -- Cl. B-4, Downgraded to Caa3 from Baa2 BEVERLY LEICHLITER: Court Keeps Claim Despite Non-Disclosure ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Iowa, Central Division entered an order declining dismissal of the a discrimination suit filed by Beverly S. Leichliter against The Des Moines Register. In her lawsuit, Ms. Leichliter claims that Des Moines violated both state and federal law by terminating her employment based on her age, gender, and in retaliation for her objecting to discriminatory actions. Des Moines moved for summary judgment on the plaintiff's claims, arguing that plaintiff should be judicially estopped from pursuing these claims because she failed to disclose them on her Chapter 13 bankruptcy petition, which was filed approximately two months after plaintiff's termination. Ms. Leichliter, in response to Des Moines, motion says that she was unaware of the existence of her discrimination and retaliation claims against defendant at the time she filed bankruptcy, and that her failure to disclose this claim as part of her bankruptcy proceedings was inadvertent. Ms. Leichliter was terminated September 28, 2006, filed, together with her husband, for Chapter 13 bankruptcy on December 4, 2006, filed a discrimination complaint with the Iowa Civil Rights Commission in February 12, 2007, confirmed a Chapter 13 plan in April 2007, sued the former employer in January 2008, and eventually listed the lawsuit among her assets in September. The bankruptcy court confirmed plaintiff's repayment plan absent knowledge of her employment-based claims. In his ruling, U.S. District Judge John A. Jarvey held that Des Moines has not demonstrated, as a matter of law, that a miscarriage of justice will result if plaintiff is not judicially estopped from pursuing this lawsuit. According to Judge Jarvey, Des Moines failed to present evidence to refute Ms. Leichliter's explanation, that her failure to disclose was anything other than careless inadvertence. "The result can be seen as benefiting creditors as much as the bankrupt, Bloomberg's Bill Rochelle notes. "Success in the suit could bring an amendment in the Chapter 13 plan that currently calls for no recovery by unsecured creditors." While Ms. Leichliter's repayment plan under Chapter 11 was already confirmed, Judge Jarvey, Bloomberg News notes that the bankruptcy trustee could reopen her bankruptcy case, and require the plaintiff to increase payments to her creditors if she collects money in the suit. In Dec. 2006, Ms. Leichliter filed a repayment plan, which met opposition from the bankruptcy trustee, which said that the Plan was "not feasible" since "Plan payments alone will be insufficient to satisfy" even 3 the "mortgage arrearage claim on file herein" and "unsecured creditors will receive no dividend." The Plan was later confirmed after Ms. Leichliter filed a modified plan that provided for a $30 monthly increase for the fifty-seven remaining payments. The discrimination suit, Leichliter v. Des Moines Register, 08- 00065, is heard before the U.S. District Court, Southern District Iowa (Des Moines). BH S&B: Fails To Get Nod in DIP Loan, But Gets OK on Salaries ------------------------------------------------------------- BH S&B Holdings LLC, Steve & Barry's new owners, which filed for Chapter 11 in November, three months after buying the Steve & Barry's retail chain, failed to win temporary approval for $33 million in financing, although it did gain authority from the U.S. Bankruptcy Court for the Southern District of New York to pay $1.8 million in salaries, Bloomberg News reports. BH S&B bought the Steve & Barry's business in August -- after Steve & Barry's LLC, now known as Stone Barn Manhattan LLC, filed for bankruptcy protection in July 2008 and opted to sell its business and assets, including its corporate name to BH S&B, an entity formed by Bay Harbour Management and other parties. Bill Rochelle of Bloomberg also reported that Judge Martin Glenn, the bankruptcy judge assigned to the new case, held a joint hearing Nov. 24 with Allan Gropper, the bankruptcy judge handling the first Chapter 11 case, in light of the disputes between the two companies. The "old" company said last week that the "new" bankruptcy threatens to cut off its funding, Bloomberg said. Certain of the lenders to BH S&B's prepetition revolving credit facility are offering $60 million in secured financing for the liquidation to be conducted in the new case, according to Bloomberg. The Debtors are parties to a prepetition revolving credit agreement, dated October 14, 2008, with and Ableco Finance LLC, as collateral agent and as administrative agent. The Debtors owe approximately $90 million in principal under the credit facility. The loans were secured by liens on, and security interests in all of the Debtors' personal property assets of any kind or nature. About BH S&B BH S&B Holdings LLC filed for bankruptcy protection together with seven other affiliates on Nov. 19, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-14604). The seven debtor-affiliates are BH S&B Distribution LLC, BH S&B Lico LLC, BH S&B Retail LLC, BHY S&B Intermediate Holdco LLC, Cubicle Licensing LLC, Fashion Plate Licensing LLC, and Heritage Licensing LLC. BH S&B was formed by investment firms Bay Harbour Management and York Capital Management in August 2008 to acquire the business operations and assets of bankrupt retailer Steve & Barry's for $163 million in August 2008. Steve and Barry's, based in Port Washington, New York, was a specialty retailer of apparel and accessories, selling, among other things, university apparel and lifestyle brands, private-label casual clothing, and exclusive celebrity endorsed apparel. Steve & Barry's had 240 locations when it was bought and the new owners had planned to cut that down to 173 stores. BH S&B had intended to operate certain Steve & Barry's stores as going concerns and to liquidate inventory at other locations. Since the sale closing, however, for various reasons, including the general health of the American economy and the state of the retail market in particular, sales at all stores have been disappointing, and BH S&B's revenue has suffered. As a result, BH S&B was not in compliance with certain covenants under their senior secured credit facility and had no prospects for continued financing of their business as a going concern. In consultation with its lenders, BH S&B decided the appropriate course of action to maximize value for the benefit of all of its stakeholders was an orderly liquidation in Chapter 11. Bay Harbour Management is an SEC registered investment advisor with significant experience in purchasing distressed companies and effectuating their turnaround. The firm's holdings have included the retailer Barneys New York, the facilities based CLEC Telcove, and the former Aladdin Casino, now operating on the Las Vegas strip as the Planet Hollywood Resort and Casino following its rebranding and turnaround. York Capital Management is an SEC registered investment advisor with offices in New York, London, and Hong Kong with more than $15 billion in assets under management. York Capital was founded in 1991 and specializes in value oriented and event driven equity and credit investments. BH S&B is 100% owned by BHY S&B Intermediate Holdco LLC. BH S&B and its affiliates' chapter 11 cases are presided over by the Honorable Martin Glenn. Joel H. Levitin, Esq., and Richard A. Stieglitz, Jr., Esq., at Cahill Gordon & Reindel LLP, in New York, serve as bankruptcy counsel to BH S&B and its affiliates. RAS Management Advisors LLC acts as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and notice agent. About Steve & Barry's Steve & Barry's LLC, and 63 affiliates filed separate voluntary petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Pursuant to the Purchase Agreement, the Court authorized 51 entities to change their corporate names. Lead Debtor Steve & Barry's Manhattan LLC (Case No. 08-12579) was changed to Stone Barn Manhattan LLC. Parent company Steve & Barry's LLC (Case No. 08-12615) is now known as Steel Bolt LLC. When Steve & Barry's LLC and its affiliates filed for bankruptcy, they listed $693,492,000 in total assets and $638,086,000 in total debts. (Steve and Barry's Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). BOMBARDIER RECREATIONAL: S&P Cuts Corporate Credit Rating to 'B' ---------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its ratings on recreational products manufacturer Bombardier Recreational Products Inc., including the long-term corporate credit rating to 'B' from 'B+'. At the same time, S&P placed the ratings on CreditWatch with negative implications. The recovery ratings on the bank loan are unchanged. "The downgrade and CreditWatch placement reflect Standard & Poor's concerns that in the current economic downturn BRP's revenue, operating profit, credit protection measures, and financial flexibility will weaken significantly in the near term," said Standard & Poor's credit analyst Lori Harris. Consumer spending for "big ticket" discretionary items, such as BRP's personal watercraft, marine engines, and ATVs, has declined considerably this year, and S&P don't expect a recovery in 2009. While BRP has reduced production in light of lowered consumer demand, S&P doesn't believe this action will be sufficient to maintain margins given the company's relatively high fixed-cost base. With lower sales and high fixed costs, S&P believes operating profit could drop by up to 40% this fiscal year (ending Jan. 31, 2009), resulting in a significant weakening of credit protection measures. In addition, BRP's balance sheet exposure to foreign exchange risk in a weakened Canadian dollar environment, through its U.S. dollar-denominated term loan, will negatively affect credit protection measures. While the company had significant cushion in its 5.5x leverage covenant at quarter ended July 31, this will tighten considerably in the next couple of quarters, which will negatively affect BRP's liquidity position in S&P's view. Standard & Poor's will remove the ratings from CreditWatch after meeting with senior management to discuss BRP's ongoing business and financial strategies in light of the very challenging economic environment. BONTEN MEDIA: S&P Puts 'B' Corp. Rating on CreditWatch Negative --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on New York City-based Bonten Media Group Inc., including the 'B' corporate credit rating, on CreditWatch with negative implications. Bonten Media is a TV broadcaster that operates 16 stations in eight small and midsize markets. The company had total debt outstanding of approximately $191 million as of Sept. 30, 2008. The CreditWatch placement comes in response to the company's announcement that it has elected to pay interest in kind on its PIK toggle notes for the June 1, 2009 interest payment date. This will provide the company with some near-term flexibility next year, when its core advertising revenue is likely to be weak because of the economic downturn and no significant political ad revenues. It could, however, lead to a higher debt burden over the long run, and possibly to elevated cash interest obligations in 2011, when the maximum PIK period ends. Pro forma for the acquisition of two stations at year-end 2007, Bonten Media's EBITDA coverage of total interest was 1.1x for the 12 months ended Sept. 30, 2008. In resolving the CreditWatch listing, S&P will assess the outlook for Bonten Media's financial performance over the intermediate term, the length of time that the company intends to pay interest in kind on the toggle notes, and the planned use of the cash flow generated by the company's reduced cash interest burden during the PIK period. BOSCOV'S INC: Gets $35-Mil. Ch. 11 Exit Loan from Pennsylvania -------------------------------------------------------------- The State of Pennsylvania, through Governor Ed Rendell, has secured $35,000,000 in federal loans to help Boscov's, Inc., and its debtor affiliates, exit from Chapter 11. A November 20, 2008, Associated Press report said the loans will be financed through a program that allows governments to guarantee loans for economic development with federal community block grants. Gov. Rendell, according to the same report, says Boscov's won't have access to the federal loans if it can't obtain bridge loans that are part of more than $300,000,000 in financing the retail chain will need to exit bankruptcy. The Morning Call said that Albert Boscov, former chief executive of the Boscov's department stores, and founder of BLF Acquisition, Inc., who recently purchased the Boscov's assets, approached state officials sometime in October 2008 looking for financial help. John Blake, Pennsylvania's acting secretary of community and economic development, said that "the promise came after officials verified [Mr.] Boscov's eligibility for the program and his ability to repay the loan," the same report related. Other news reports said government officials in Vineland County and Atlantic County, both in New Jersey, have expressed interest to lend some amount to fill the financing that Boscov's need. The Press of Atlantic City related that Vineland will vote on whether to lend Boscov's $2,700,000 through the Community Development Block Grants. Atlantic County also said officials are deliberating whether they'd extend $4,000,000 of loans before the Nov. 26, 2008 closing of the sale. Additionally, the cities of Scranton and Wilkes-Barre, both in Pennsylvania, is said to contribute $3,000,000 each in federal community development funding to Boscov's, istockAnalyst disclosed. "What we look at is the overall regional effect," Wilkes-Barre Mayor Tom Leighton told istockAnalyst. "If Boscov's closes, we have a vacant, five-story department store on our main street. We cannot let that happen," he said. Times Leader also disclosed that Luzerne County, in Pennsylvania, offered a $3,000,000 bridge loan to open the stores in Wilkes- Barre and Hazleton. Alfred Boscov, acknowledging the support said in a Nov. 22, 2008 report by istockanalyst said, "We have an awful lot of promises on bridge loans and we just hope to get them in on time." "We took this step because of the reach of Boscov's in Pennsylvania," Gov. Rendell told The Morning Call. "It would be devastating for Pennsylvania to lose Boscov's." Shoppers, however, are wary about the state's decision, The Evening Sun disclosed. "In this extremely difficult economy, there is still the chance Boscov's could lose everything right after Christmas when sales slow down," Sharon Snyder of Chanceford Township, in Brogue, Pennsylvania, said in the report. ". . . I hope it works out because I hate seeing anyone lose their job," she said. About Boscov's Inc. Headquartered in Reading, Pennsylvania, Boscov's Inc. -- http://www.boscovs.com/-- is America's largest family-owned independent department store, with 49 stores in Pennsylvania, New York, New Jersey, Maryland, Delaware and Virginia. Boscov's Inc. and its debtor-affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637). Judge Kevin Gross presides over the cases. David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day, serve as the Debtors' lead counsel. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman Carson Consultants L.L.C. Boscov's listed assets of $538 million and liabilities of $479 million in its bankruptcy filing. (Boscov's Bankruptcy News; Bankruptcy Creditors' Service Inc., Issue No. 14, http://bankrupt.com/newsstand/or 215/945-7000) BOSCOV'S INC: Sale to Boscov Lakin Family Expected to Close Today ----------------------------------------------------------------- Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware authorized on November 21, 2008, the sale of substantially all of the assets of Boscov's, Inc., and its debtor-affiliates to BLF Acquisition, Inc., pursuant to the terms of an amended Asset Purchase Agreement filed with the Court on the same day. BLF, which stands for "Boscov Lakin Family," is led by former Boscov's executives, Alfred Boscov, and brother-in-law, Ed Lakin. According to Reuters, the deal is worth between $275,000,000 and $300,000,000. The report said the sale is due to close by November 26, 2008. The amended APA has set December 5, 2008, as the Termination Date. "In these very dark economic times, the Boscov family, through its purchase here, has indicated it has faith in the future," Reuters quoted Judge Gross as saying. "This is really a testament to the purchaser here," The Morning Call quoted Judge Gross as saying. "Time is of the essence in consummating the sale. In order to maximize the value of the Purchased Assets and preserve the viability of the business as a going concern, it is essential that the sale of the Purchased Assets occur within the time constraints set forth in the Sale Agreement," Judge Gross holds during the Sale Hearing. Pursuant to the Amended APA, the aggregate consideration for the Purchased Assets will be: * an aggregate amount equal to the sum of the Sellers' obligation under their First Lien DIP Facility with Bank of America, as agent to a syndicate of lenders, and the Second Lien Facility with GB Merchant Partners, LLC, as administrative and collateral agent and successor of Bear Stearns Corporate Lending; * all administrative professional claims up to the $8,000,000 administrative professional claim cap, minus the aggregate amount of administrative professional claims paid prior to Closing; * the cure amount, listed in a schedule, available for free at http://bankrupt.com/misc/3rdAmnddCureSched.pdf * an amount equal to the maximum aggregate amount owed under the Senior Executive Incentive Program; * all 503(b)(9) Claims up to a cap of $10,000,000; * an amount in cash equal to $3,000,000 plus the adjustment to the cash consideration, if any; * a promissory note executed by the Purchaser; and * the assumption of certain liabilities. The Purchaser will obtain $210,000,000 in Senior Working Capital Revolver and $47,000,000 in term loans, to secure the necessary capitalization to close the purchase. Claudia Springer, Esq., counsel to the Purchaser, told Judge Gross that a commitment letter was signed on November 21, with lenders including Bank of America Corp., Wells Fargo & Co., and GE Capital, the Associated Press reported. The amended APA provides that the Purchaser may not amend the APA to designate (i) the leases for the Sellers' unopened stores at Willow Grove and North Hanover Mall as Excluded Leases, and (ii) all agreements related to the Tom's River Mortgage as Excluded Contracts and the related owned real property encumbered by that Mortgage as an Excluded Owned Real Property. The Purchaser, until November 21, 2008, in its sole and absolute discretion, may amend the APA to remove from the schedule any contract, lease or owned real property, to cease to be an Excluded Contract, an Excluded Lease or Excluded Owned Real Property, and that there will be no reduction in the Purchase Price as a result of the modifications. The amended APA further provides that at least one business day prior to Closing, the Purchaser will deliver, or cause to be delivered to Sellers by wire transfer immediately available funds to the persons and accounts specified in writing by Sellers, the aggregate sum of: * the administrative professional claim closing amount; plus * the cure amount; plus * the aggregate amount owed under the Senior Executive Incentive Program; plus * the estimated 503(b)(9) claim amounts; plus * the cash consideration less the $2,000,000 escrow amount. * the Purchaser will forfeit, and the Sellers will be entitled to, all the rights to the Escrow Amount if the Agreement is terminated by the Sellers under specified conditions provided in the amended APA. Moreover, the amended APA provides that the Sellers will have received $8,000,000 pursuant to the terms of the Settlement Agreement among Boscov's Inc., Boscov's Investment Company, Boscov's Finance Company, inc., Boscov's Department Store, LLC, Boscov's Transportation Company LLC, Boscov's PSI Inc., SDS Inc., and Retail Construction & Development, Inc., and BLF Acquisition, Inc., and certain Boscov and Lakin family members. A copy of the amendment to the APA is available for free at: http://bankrupt.com/misc/Amendment_APA.pdf Howard Davidowitz, chairman of Davidowitz & Associates, in New York, commented that "while [Alfred Boscov's efforts] are heroic effort, the odds are against him," pointing out that the retail industry, where Boscov's belongs, is one of the worst sector, along with the automobile, residential housing, and financial service industries, the Times Leader said. Mr. Davidowitz, however, added, that "[i]f anybody can do it, it's the family. No one is more committed." Boscov's CEO Kenneth Lakin said he had mixed emotions about what the company has been through and where it was headed, a Nov. 22 report by pressofAtlanticCity.com reported. "You leave the dream behind [of growing], and you start a new dream," the newspaper quoted Mr. Lakin as saying. Ken Lakin, according to The Morning Call, called the November 21 hearing a bittersweet hearing. "We made a great run at the time," Mr. Lakin told Bloomberg News. "Now we've run into a time when pulling back is necessary." According to The Morning Call, Mr. Lakin didn't comment on whether his father or uncle will have control over Boscov's. According to the Philadelphia Inquirer, Ken Lakin disclosed that there would be changes in the upper echelons of management in the months to come. He, however, would not comment when asked if he would stay on as CEO, the report said. The report said it is widely believed Mr. Lakin will remain with the company but in a different role. Fin'l Advisor Assures Court of BLF's Future Performance J. Scott Victor, a senior managing director and co-head of the Special Situations Group of National City Investment Banking, which serves as the financial advisor to BLF, assures the Court, in a declaration, that Albert Boscov and Ed Lakin have more than 80 years experience in the operation of retail department stores, having each been involved with the operations of the Boscov's chain. According to Mr. Victor, BLF has not proposed any modifications to the nature of the business that will be conducted at the locations of the assigned leases. He says BLF intends to continue to operate Boscov's department stores at each of those shopping centers. The proposed assignment of leases will neither disrupt the tenant mix at the shopping centers nor will it cause any breach of provisions contained in any agreement relating to the shopping centers. Mr. Victor submitted to the Court BLF's income statement projections for the calendar years 2009, 2010, and 2011, a copy of which is available for free at: http://bankrupt.com/misc/boscov_blfprojections.pdf Mr. Victor says he has reviewed the projections and determined that the projections demonstrate the ability of BLF to pay future rent if it were to acquire Boscov's business and assets, including the Leases, from the Debtors. He adds that the $97,000,000 junior capital plus $210,000,000 senior working capital revolver provides BLF with sufficient financial strength to perform its obligations under each of the Leases. About Boscov's Inc. Headquartered in Reading, Pennsylvania, Boscov's Inc. -- http://www.boscovs.com/-- is America's largest family-owned independent department store, with 49 stores in Pennsylvania, New York, New Jersey, Maryland, Delaware and Virginia. Boscov's Inc. and its debtor-affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637). Judge Kevin Gross presides over the cases. David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day, serve as the Debtors' lead counsel. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman Carson Consultants L.L.C. Boscov's listed assets of $538 million and liabilities of $479 million in its bankruptcy filing. (Boscov's Bankruptcy News; Bankruptcy Creditors' Service Inc., Issue No. 14, http://bankrupt.com/newsstand/or 215/945-7000) BOSCOV'S INC: Hurdles Objections to Sale to Boscov Lakin Family --------------------------------------------------------------- Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware authorized on November 21, 2008, the sale of substantially all of the assets of Boscov's, Inc., and its debtor-affiliates to BLF Acquisition, Inc., pursuant to the terms of an amended Asset Purchase Agreement filed with the Court on the same day. During the November 21, 2008, Sale Hearing, Judge Gross resolved certain objections to the Sale Motion raised by various parties- in-interest: (a) Sovereign Bank The objection of Sovereign Bank is resolved to the effect that the Sale Order provides that BLF Acquisition, Inc., as the Purchaser, may not amend the Sale Agreement to designate the Tom's River Mortgage as an Excluded Contract and the Property encumbered by that mortgage as an Excluded Owned Real Property. Moreover, the Debtors will assume and assign the Tom's River Mortgage to the Purchaser upon Closing only on terms satisfactory to Sovereign Bank. (b) HSBC Bank of Nevada The Sale Order provides that on and after the Closing Date, the Purchaser will not use the Bank Licensed Marks granted to the Debtors under the Credit Card Program Agreement with HSBC Bank of Nevada, N.A., without further agreement between HSBC and the Purchaser. Judge Gross overruled HSBC's objection to the Sale Motion. Judge Gross also denied HSBC's request for a stay pending an appeal under Rule 8005 of the Federal Rules of Bankruptcy Procedure, and its request for an order certifying an appeal directly to the Third Circuit Court of Appeals. Judge Gross, in a memorandum of opinion with respect to HSBC's objection, refuted HSBC's contention -- that the language of Section 365(c) (2) of the Bankruptcy Code is plain and ambiguous -- and opines that the meaning of "benefit" is unclear. "If the benefit can be any benefit at all, no matter how incidental or de minimis, the result would indeed be absurd," Judge Gross opined. He added that if the Court assigns the meaning of "benefit" that HSBC asks, any benefit, the result would nullify the "for the benefit of the debtor" language. Judge Gross pointed out that since every contract, and particularly contracts that a debtor seeks to assume, provide a bargained-for benefit to both parties, every contract that qualifies as an extension of credit to a third party would qualify under this exception. He said the untenable result lead the Court to conclude that the meaning of the statute does not exempt the Agreement from the confines of Section 362(c)(2). According to Judge Gross, it is clear that HSBC is in reality seeking to renegotiate the terms of the Agreement and is using the objection and the appeal as leverage. "The Sale is too important and valuable to too many interest to permit a dubious argument to interfere with its consummation," Judge Gross said. (c) GSI Commerce The objection of GSI Commerce Solutions, Inc., is resolved so that upon Closing, the e-Commerce Agreement dated May 23, 2008, between GSI and the Debtors will be deemed rejected without further Court order. GSI, accordingly, will have 30 days to file rejection claims or be forever barred thereafter from asserting its claims. (d) Bank of America Bank of America, N. A., has consented to the assumption of the Merchant Agreement and assignment of the Agreement to the Purchaser without the need of a $12,000,000 reserve as the Bank previously specified. BANA's consent, however, will not constitute a finding that the Merchant Agreement is not a financial accommodation contact incapable of being assumed, the Sale Order provides. To cure the anticipated defaults and loss under the Merchant Agreement and to provide adequate assurance of future performance, the Purchaser will assume and become liable to BANA for all existing and unliquidated secured claim under the Merchant Agreement irrespective of whether any individual claim is classified as return, chargeback or whether the return or chargeback arose before or after Closing as a result of the going-out-of-business sales. Moreover, the Purchaser will be provided security for and payment of the secured claims by granting to BANA a security interest in all funds flowing through the Purchaser's accounts with BANA. (e) Gordon/Hilco Joint Venture The Debtors will, prior to or promptly upon consummation of the Closing, pay or cause to be paid to the joint venture of Gordon Brothers Retail Partners, LLC, and Hilco Merchant Resources, LLC, $400,000 in full and final satisfaction of all the Joint Venture's inventory and employee compensation-related claims in connection with their Agency Agreement dated August 3, 2008, governing the Store Closing Sales of 10 of the Debtors' stores. The Joint Venture will permanently retain all right and title to the $540,518 it currently holds for the benefit of the Debtors. The Debtors will permanently retain all rights and title to the sum of $190,511 they currently hold for the benefit of the Joint Venture. The Joint Venture will be released from further obligations with respect to certain letters of credit under the Agency Agreement. Upon payment of the Reconciliation Payment, the Debtors and the Lender Agents will be released from further obligations in connection with the Agency Agreement. The Debtors' and the Joint Venture's rights of indemnification under the Agency Agreement, however, will survive the Closing. (f) Versa With respect to Versa Capital Management's demand to be paid $4,000,000 in break-up fee from the Debtors, Judge Gross said, "I'm content with the fact that Versa's rights are what they are . . . I don't believe that the additional language is necessary or appropriate under these circumstances," an Associated Press report dated November 21 related. The dispute, according to a November 22 pressofAtlanticCity.com report, remains unresolved. (g) DFS Services With respect to DFS Services, LLC, to the extent additional claims arise under the Merchant Services Agreement between the Debtors and DFS post-closing from charge backs, returns, terminal subscription fees, and adjustment related to pre-assignment transactions, Purchaser is responsible for those claims and DFS is permitted to offset the claims against amounts that otherwise would be paid by DFS to the Purchaser. (h) WG Park-Anchor and PR Financing The objections of WG Park-Anchor B, L.P., and PR Financing Limited Partnership are resolved so that all references to the Lease Agreement dated June 2, 2006, for the Sellers' planned retail store at Willow Grove Park Shopping Center, Willow Grove, Montgomery County, Pennsylvania; and the Lease Agreement dated April 3, 2007, for Sellers' unopened retail store at North Hanover Mall, at 1155 Carlisle Street, Hanover, in York County, Pennsylvania, are deleted from the Sale Agreement with Purchaser. Those lease agreements will be deemed Purchased Assets pursuant to Section 2.1(b) of the Sale Agreement. The time period to assume or reject the leases relating to the Unopened Stores is extended until the earlier of (i) the Closing under the Sale Agreement, and (ii) December 31, 2008. Court-Approved Stipulations * National City In a Court-approved stipulation, National City Equipment Finance and National City Commercial Capital Company, LLC, withdrew their joint objection to the Debtors' request to reject leases on furniture, fixtures and equipment at South Hills Village, Monroeville Mall and Lehigh Valley Mall; and a request to assume and assign their furniture and fixtures at NCCC Logan Town Center and Lehigh Valley. The stipulation provides that: -- the Monroeville Master Lease Schedule is deemed rejected on October 31, 2008; -- the South Hills Village Master Lease Schedule is deemed rejected on September 30, 2008; -- National City, accordingly and without further Court approval, will be granted administrative expense claims for $49,975 on the South Hills Lease, and $67,347 on the Monroeville Lease; -- National City will be paid its administrative claims on the earlier of (i) the terms of a Chapter 11 plan of reorganization in the Debtors' cases, or (ii) payment by the Debtors of other allowed administrative claims arising from rejection; -- the cure amount for the assumption and assignment of the NCCC Logan Town Center Lease is at $92,883 as of October 31, 2008; and that of Lehigh Valley Lease is fixed at $66,096; -- Debtors will make timely monthly payments from and after Nov. 1, 2008 until the Leases are assumed and assigned, or rejected; and -- National City may file for rejection damages on or before the general clams bar date or thirty days after the rejection of the leases, whichever is later. The rental payments will be accorded administrative expense priority. * RBS Asset Finance, Inc. The Debtors and RBS Asset Finance, Inc., a successor-in-interest to General Electric Capital Corporation, entered into a Court- approved stipulation resolving their dispute on leases of furniture, fixtures and equipment at the Debtors' premises in Whitemarsh, Owings Mills, Oxford Valley, and Marley Station. The stipulation provides that: -- RBS' objection to the Debtors' rejection notices and proposed cure amount are withdrawn; -- the Marley Station Master Lease will be deemed rejected on October 31, 2008; -- the Whitemarsh Master Lease Schedule, the Oxford Valley Master Lease Schedule and the Owings Mills Master Lease Schedule will be deemed rejected on September 30, 2008; -- RBS will be granted, without further Court order, allowed administrative expense claim of $54,865 for the Marley Station Lease; $50,686 for the Whitemarsh Lease, $30,490 for the Oxford Valley Lease, and $36,541 for the Owings Mills Lease; -- The Debtors will pay the administrative claims to RBS on the earlier of (i) the terms of a confirmed Chapter 11 plan of reorganization in the Debtors' cases or (ii) payment by the Debtors of other allowed administrative claims of other similarly situated creditors in their cases; -- the cure amount upon assumption and assignment of the RBS Westminster Lease is fixed at $338,104 as of October 31, 2008, which the Debtors agree to pay from November 1, 2008 until the lease is assumed, assumed and assigned, or rejected; and -- RBS may file a proof of claim for rejection damages on or before the general claims bar date or 30 days after rejection of the lease, whichever is later. Judge Gross ruled that all objections to the Sale Motion or the assumption and assignment of contracts and leases and the related relief requested in the Sale Motion that have not been withdrawn, waived, or settled, are overruled in their entirety. Court Ruling on Lease Assumption & Cure Amounts Judge Gross held during the November 21, 2008, hearing that the Debtors and the Purchaser have satisfied the requirements of Section 365 of the Bankruptcy Code in connection with the sale and the assumption and assignment of the Purchased Contracts and Leases. Judge Gross ruled that the Purchaser has demonstrated adequate assurance of future performance with respect to the Purchased Contracts, and that the assumption and assignment is integral to the Sale Agreement. Judge Gross further ruled that on the closing date, the assignment and assumption agreement will be valid, binding and in full force pursuant to its terms, where the Purchaser will be liable for all monetary and non-monetary obligations arising on or after Closing, or that arise prior to the Closing to the extent the obligation require performance or payment after Closing. Judge Gross directed the Purchaser, upon consummation of the Closing, to promptly pay or cause to be paid to parties to purchased contracts and leases the requisite cure amounts, a list of which is available for free at: http://bankrupt.com/misc/3rdAmnddCureSched.pdf Judge Gross ruled that non-debtor counterparties to the Purchased Contracts and Leases are forever bound by the Cure Amounts and are enjoined from taking any action against the Debtors, the Purchaser or the Purchased Assets with respect to any claim for cure under any Purchased Contract or Lease. Provisions in any Purchased Contract or Lease that purports to declare a breach, default or payment right as a result of an assignment or a change of contract with respect to the Debtors is unenforceable, and all Purchased Contracts and Leases will remain in full force and effect, subject only to the payment of the appropriate cure amount, if any, Judge Gross ruled. In addition, Judge Gross prohibits non-debtor parties to the Purchased Contracts and Leases from charging any rent acceleration, assignment fees, increases or other fees to Purchaser as a result of the assumption and assignment of the Purchased Contracts and Leases. Judge Gross also authorized the Debtors, in connection with the Closing, to change their corporate names and the caption of their Chapter 11 cases. Judge Gross further authorized and directed the Debtors to remit or cause to be remitted on Closing Date from the cash payable to the Debtors pursuant to the Sale Agreement amounts necessary to pay in full the amounts outstanding under the First Lien DIP Facility and the Second Lien Facility unless otherwise agreed by the parties. The financing commitments of the lenders under the DIP Financing Agreements and the Second Lien Facility will be terminated as of the Closing Date, the Court ruled. Except for the payment of prepetition early termination fees that have not been waived, the Official Committee of Unsecured Creditors confirms that the challenge period has terminated and the prepetition First Lien Debt is allowed as fully secured claims within the meaning of Section 506 of the Bankruptcy Code. With respect to the Second Lien Debt, the Creditors' Committee confirms that the Challenge Period has not terminated but extended for a challenge by the Committee solely with respect to the amount of any early termination fees claimed by the Second Lien Lenders provided that the Challenge Period will automatically terminate on the earlier of the Closing Date or December 15, 2008, unless extended by prior written agreement by the Second Lien Lenders and the Committee; provided further that, in the event that the Sale Transactions close, any challenge asserted by the Committee on the Second Lien Debt prior to termination of the Challenge Period will be automatically waived, and the Second Lien Debt and any related early termination fees will be deemed allowed as fully secured claim within the meaning of Section 506(c) of the Bankruptcy Code. Judge Gross ruled that any disputed amounts for payment under the DIP Credit Agreement will be held in escrow pending resolution of the dispute. Judge Gross clarified that (i) the merchandise inventory and fixtures owned by Rugs America Corporation, (ii) inventory or cameras, film and other photographic and optical equipment and related merchandise owed by Ritz Camera Center Inc., as well as owned furnishings, fixtures and equipment maintained by Rugs America and Ritz Camera, and the proceeds of those merchandise, are not the property of the Debtors' estates and will not be considered part of any of the Debtors' assets. * * * Greg Barlage, of Kurtzman Carson Consultants, LLC, informed the Court that he has served a notice of the Sale and Solicitation of Bids to Melissa Santos, of Atlantic City, New Jersey. The Court approved BANA's request to file under seal its Merchant Agreement with the Debtors. BANA, immediately after entry of the order, filed a sealed Merchant Agreement in Court. About Boscov's Inc. Headquartered in Reading, Pennsylvania, Boscov's Inc. -- http://www.boscovs.com/-- is America's largest family-owned independent department store, with 49 stores in Pennsylvania, New York, New Jersey, Maryland, Delaware and Virginia. Boscov's Inc. and its debtor-affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637). Judge Kevin Gross presides over the cases. David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day, serve as the Debtors' lead counsel. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman Carson Consultants L.L.C. Boscov's listed assets of $538 million and liabilities of $479 million in its bankruptcy filing. (Boscov's Bankruptcy News; Bankruptcy Creditors' Service Inc., Issue No. 14, http://bankrupt.com/newsstand/or 215/945-7000) BOSCOV'S INC: Settlement Pact With Shareholders Gets Court OK ------------------------------------------------------------- Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware approved a settlement agreement by Boscov's, Inc., and its debtor-affiliates with certain of their current and former shareholders, including Albert Boscov of BLF Acquisition, Inc., with respect to potential claims of the Debtors' estates against certain the Debtors' current and former shareholders relating to capitalization transactions in 2006 and 2008. Pursuant to the Settlement Agreement, the Debtors will release the Shareholders from potential claims that may arise from those transactions and the Shareholders, in exchange for the releases, agree to pay $8,000,000 to the Debtors' estates. The Shareholders also agree to provide a $2,000,000 note, which is payable from any excess cash flow of BLF Acquisition over four years after the Closing of the Sale. The Settlement Agreement is said to be an integral part of the Sale. A copy of the Settlement Agreement is available for free at: http://bankrupt.com/misc/SettlementAgreement.pdf About Boscov's Inc. Headquartered in Reading, Pennsylvania, Boscov's Inc. -- http://www.boscovs.com/-- is America's largest family-owned independent department store, with 49 stores in Pennsylvania, New York, New Jersey, Maryland, Delaware and Virginia. Boscov's Inc. and its debtor-affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637). Judge Kevin Gross presides over the cases. David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day, serve as the Debtors' lead counsel. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman Carson Consultants L.L.C. Boscov's listed assets of $538 million and liabilities of $479 million in its bankruptcy filing. (Boscov's Bankruptcy News; Bankruptcy Creditors' Service Inc., Issue No. 14, http://bankrupt.com/newsstand/or 215/945-7000) BRINKER INTERNATIONAL: Fitch Downgrades Issuer Ratings to 'BB+' --------------------------------------------------------------- Fitch Ratings has downgraded the ratings of Brinker International, Inc. The Rating Outlook has been revised to Stable from Negative. Fitch has simultaneously withdrawn all ratings for this issuer. The withdrawn ratings are: -- Long-term Issuer Default Rating (IDR) to 'BB+' from 'BBB-'; -- Senior unsecured notes to 'BB+' from 'BBB-'; -- Bank credit facility at 'BB+'. At Sept. 24, 2008, Brinker had approximately $896 million of debt. The ratings downgrade reflects Fitch's expectations that, given the difficult operating environment, Brinker's credit statistics are not likely to improve to levels required to maintain its 'BBB- ' rating in the near term. Reduced capital expenditures and proceeds from the divestiture of Romano Macaroni Grill should improve discretionary cash flow; however, Fitch anticipates that operating cash flow will remain under significant pressure due to same-store sales declines and elevated commodity food costs. For the latest twelve month period ended Sept. 24, 2008, adjusted leverage (defined as total debt plus eight times [x] gross rent expense divided by operating earnings before interest, taxes, depreciation, amortization, and gross rent expense or EBITDAR) was 3.5x. Adjusted interest coverage (defined as EBITDAR divided by interest expense plus gross rent expense) was 3.1x and funds from operations fixed charge coverage was 2.9x. Fitch is not projecting material improvement in these credit measures in fiscal 2009. BTWW RETAIL: Final Liquidation Sale at 78 Locations Begins Today ---------------------------------------------------------------- BTWW Retail, LP disclosed a final liquidation sale on all merchandise at its remaining 78 retail locations. The going out of business sale will be managed by a consortium of asset recovery firms including Great American Group, LLC; Hudson Capital Partners, LLC; SB Capital Group, LLC; and Tiger Capital Group, LLC. The liquidation sale will be conducted under the orders of the U.S. Bankruptcy Court, which is supervising the BTWW bankruptcy proceedings. The final liquidation sale will begin today, Nov. 26, 2008. Merchandise will include western and work wear apparel and boots for the family, well as additional accessories including belts and hats in all of the remaining stores under the BTWW umbrella. These stores include Boot Town, Corral West, Western Warehouse, Sergeant's, Job Site and Work Wear Depot. "We are liquidating $70,000,000 million worth of merchandise from the largest seller of western apparel, footwear and accessories over the next several weeks. With the holiday season upon us, we are anticipating the merchandise to move quickly, as the sale offers consumers an excellent opportunity to buy great holiday gifts at substantial discounts," said Jim Schaye, oresident and CEO of Hudson Capital Partners. Dan Kane, Principal of Tiger Capital continued, "For years, consumers have looked to BTWW for its leading brands including Tony Lama, Justin, Carhartt and Resistol well as other well known brands. In addition to liquidating the entire inventory, all store fixtures throughout the chain will also be sold." The consortium of asset recovery firms represents the largest liquidation group in the country and is currently managing the going out of business sales for both Mervyn's and Steve & Barry's. BTWW has been operating under Chapter 11 of the Bankruptcy Code since Nov. 3, 2008 (U.S. Bankruptcy Court, Northern District of Texas, Case No. 0835725-BJH-11). For further information, please contact Jim Schaye at 617-630-1030. About BTWW Headquartered in Dallas, Texas, BTWW Retail, L.P. fka Boot Town, Inc. -- http://btwwretail.com/-- owns and operates more than 130 western, equine and workwear stores throughout the United States. The Debtor and its debtor-affiliates filed for Chapter 11 protection on Nov. 3, 2008, (Bankr. N.D. Tex. Lead Case No.: 08- 35725) Alexandra P. Olenczuk, Esq. and Michael D. Warner, Esq. at Warner Stevens LLP represent the Debtors in their restructuring efforts. Their financial advisor is Clear Thinking Group LLC led by Alan Minker as chief restructuring officer. The Debtors' assets range between $50 million to $100 million and their debts range between debts of $50 million to $100 million. CAREFREE MULE: Files for Chapter 11 in Phoenix ---------------------------------------------- Carefree Mule Train Ventures LLC filed, according to Bloomberg News, a "bare-bones" Chapter 11 petition on Nov. 21 in Phoenix. Bloomberg News adds that Orix Capital Markets LLC the same day filed a notice saying it didn't give permission for Carefree Mule to use cash representing collateral for its secured claim. Carefree Mule Train Ventures LLC owns and operate the Carefree Resort and Villas in Carefree, Arizona. Located in the Sonoran desert, the resort has 369 rooms, has a golf course and spa. The company filed for Chapter 11 on November 21, 2008 (Bankr. D. Ariz. Case No. 08-16838). In its bankruptcy petition, it estimated assets of less than $50 million and debts exceeding $50 million. CARMELA VILLON: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Carmela E. Villon 69 Claremont Ave #D Long Beach, CA 90803 Case No.: 08-30166 Petition Date: November 24, 2008 Court: U.S. Bankruptcy Court Central District Of California (Los Angeles) Judge: Alan M. Ahart Debtor's Counsel: Carlo O. Reyes, Esq. 22122 Sherman Way Ste 203 Canoga Park, CA 91303 Tel: 818-883-8838 Fax: 818-883-8118 Email: CarLaw2048@gmail.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file its list of 20 largest unsecured creditors when it filed its Chapter 11 petition. CELL THERAPEUTICS: Sept. 30 Balance Sheet Upside Down by $133.3MM ----------------------------------------------------------------- Cell Therapeutics, Inc.'s balance sheet as of Sept. 30, 2008, showed total assets of $93,746,000 and total liabilities of $218,723,000, resulting in total shareholders' deficit of $133,380,000. For the three months ended September 30, 2008, the company posted a net loss of $45,589,000 on total revenues of $2,600,000, compared with a net loss of $48,471,000 on total revenues of $20,000 for the same period a year earlier. James A. Bianco, M.D., the company's chief executive officer, relates that Cell Therapeutics has incurred losses since inception and it expects to generate losses from operations for at least the next year primarily due to research and development costs for Zevalin, OPAXIO (paclitaxel poliglumex), pixantrone and brostallicin. "Our available cash and cash equivalents, securities available- for-sale and interest receivable are approximately $11.7 million as of Sept. 30, 2008. In addition, in October 2008 we issued $24.7 million of 9.66% convertible senior notes, or 9.66% notes, for net proceeds, before fees and expenses, of $7.5 million after taking into account $7.2 million placed in escrow to fund make- whole payments and interest payments on the notes, our repurchase of $18.2 million of our 15% notes as well as $8.2 million in cash released from escrow related to the repurchased notes. Even with this additional financing, we will not have sufficient cash to fund our planned operations through the end of the fourth quarter, which raises substantial doubt about our ability to continue as a going concern," Dr. Bianco says. "Accordingly, we have implemented cost saving initiatives to reduce operating expenses and we continue to seek additional areas for cost reductions. However, we will also need to raise additional funds and are currently exploring alternative sources of equity or debt financing." "Additionally, the remaining amount under our line of credit is the lesser of approximately $8.0 million in gross proceeds or approximately 1.2 million shares of our common stock which, based on our stock price of $0.33 as of Nov. 3, 2008, would be approximately $0.4 million in gross proceeds. We may seek to raise capital through public or private equity financings, partnerships, joint ventures, disposition of assets, debt financings or restructurings, bank borrowings or other sources. However, additional funding may not be available on favorable terms or at all. If additional funds are raised by issuing equity securities, substantial dilution to existing shareholders may result. If we fail to obtain additional capital when needed, we may be required to delay, scale back, or eliminate some or all of our research and development programs," Dr. Bianco relates. In a Nov. 7, 2008, press release, Dr. Bianco said, "We continue to make significant progress on the commercial front with the submission for a label expansion of Zevalin in September and our plan to report top-line results from the pixantrone pivotal trial in November, which if positive, would lead to us submitting an NDA in 2009. Importantly, we have made this progress while keeping in line with our strategy of reducing our expenses. Our net cash used for operating activities in the third quarter averaged approximately $5.75 million per month, a decrease of 27% from last quarter, and we are on target to reach our goal of $4.5 million per month in ongoing operating expenses in 2009." Recent Highlights * Submitted supplemental Biologics License Application to the U.S. Food and Drug Administration (FDA) in September for use of Zevalin as consolidation therapy after remission induction in previously untreated patients with follicular non-Hodgkin's lymphoma based on First-line Indolent Trial data. * Announced that CTI has closed the data set for preliminary analysis of the primary endpoint in the phase III EXTEND (PIX301) trial of pixantrone (BBR2278) for patients with relapsed diffuse large B cell non-Hodgkin's lymphoma (NHL) and anticipates reporting top-line results in November. * Announced that Christina Waters, Ph.D. most recently President and COO of Tyr Pharma and formerly Director of Scientific Development at Genomics Institute of the Novartis Research Foundation, has been named President of CTI Europe and CTI's Systems Medicine subsidiary. Total operating expenses decreased $28.5 million, or 58 percent, to $20.5 million for the quarter ended Sept. 30, 2008, compared to $49.0 million for the same period in 2007 mainly as a result of decreased research and development expenses in the third quarter of 2008 and a one-time non-cash charge for the acquisition of Systems Medicine recorded in the third quarter of 2007. Research and development costs decreased $7.2 million, or 39 percent, to $11.3 million for the current quarter compared to $18.6 million for the same period in 2007 as the result of our cost reduction initiatives and expenses related to our clinical trial programs. Net loss attributable to common shareholders decreased to $47.6 million ($2.83 per share) for the quarter ended Sept. 30, 2008, compared to $52.6 million ($10.91 per share) for the comparable period in 2007. The company had approximately $11.7 million in cash and cash equivalents, securities available-for-sale, and interest receivable as of Sept. 30, 2008. This does not include $29.4 million in restricted cash held in escrow for future make- whole and interest payments on our 9%, 15%, 15.5% and 18.33% convertible senior notes. It also does not include net proceeds, before fees and expenses, of approximately $7.5 million from the purchase of 9.66% Convertible Senior Notes due 2011 by a single investor in October 2008. Even with this additional financing, the company will need to raise additional capital this year and is exploring alternatives to do so, which may include potential partnerships or joint ventures, public or private equity financings, debt financings or restructurings, dispositions of assets or through other means in order to fund its continued operations. A full-text copy of the company's latest Quarterly Report is available for free at http://researcharchives.com/t/s?3537 About Cell Therapeutics Headquartered in Seattle, Cell Therapeutics Inc. -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. Going Concern Doubt Stonefield Josephson Inc. in Los Angeles, California, expressed substantial doubt about Cell Therapeutics Inc.'s ability to continue as a going concern after auditing company's financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the company has substantial monetary liabilities in excess of monetary assets as of Dec. 31, 2007, including approximately $19.8 million of convertible subordinated notes and senior subordinated notes which mature in June 2008. CENTENNIAL COMMS: AT&T Gets 17.7% Stake After Shareholder Deal -------------------------------------------------------------- AT&T Inc. disclosed in a Schedule 13D filing with the Securities and Exchange Commission that it is the beneficial owner of 19,122,000 shares, or about 17.7%, of Centennial Communications Corp. common stock. AT&T says the shares are held pursuant to a Voting Agreement, dated as of Nov. 7, 2008, with Welsh, Carson, Anderson & Stowe VIII L.P., Centennial's largest shareholder, and Centennial, obligating Welsh Carson to vote the shares in accordance with the terms of the Voting Agreement. Centennial, AT&T and Independence Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of AT&T, entered into that the Agreement and Plan of Merger, dated as of Nov. 7, 2008. The Merger Agreement provides, among other things, for the merger of the Merger Sub with and into Centennial with Centennial surviving as a wholly owned subsidiary of AT&T. Each share of Centennial Common Stock issued and outstanding immediately prior to the Effective Time will be converted into and will thereafter represent the right to receive $8.50 in cash, without interest. The Centennial shares will be de-listed from the Nasdaq Global Select Exchange and de-registered under the Securities Exchange Act of 1934, as amended, as soon as practicable. Consummation of the Merger is subject to the satisfaction or waiver of certain conditions, including, but not limited to, (i) approval of the Merger Agreement by the holders of shares of Centennial Common Stock, (ii) conditions related to regulatory approval and (iii) other customary closing conditions. A full-text copy of the Agreement and Plan of Merger, dated as of November 7, 2008, among AT&T Inc., Independence Merger Sub Inc. and Centennial Communications Corp. is available at no charge at: http://ResearchArchives.com/t/s?3535 A full-text copy of the Voting Agreement, dated as of November 7, 2008, between AT&T Inc., Centennial Communications Corp. and Welsh, Carson, Anderson & Stowe VIII L.P. is available at no charge at: http://ResearchArchives.com/t/s?3536 About AT&T AT&T Inc. is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. Among their offerings are the world's most advanced Internet protocol-based business communications services and the nation's leading wireless, high speed Internet access and voice services. In domestic markets, AT&T is known for the directory publishing and advertising sales leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and the AT&T brand is licensed to innovators in such fields as communications equipment. About Centennial Communications Based in Wall, New Jersey, Centennial Communications Corp. (Nasdaq: CYCL) - http://www.centennialwireless.com/-- provides regional wireless and integrated communications services in the United States and the Puerto Rico with approximately 1.1 million wireless subscribers and 582,200 access lines and equivalents. The US business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Puerto Rico business owns and operates wireless networks in Puerto Rico and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe is a significant shareholder of Centennial. * * * As reported by the Troubled company Reporter on Nov. 13, 2008, Fitch Ratings has placed the ratings for Centennial Communications Corp. -- IDR 'B'; and Senior unsecured notes 'CCC+/RR6' -- and Centennial Cellular Operating Co. -- IDR 'B'; Senior secured credit facility to 'BB/RR1'; Senior unsecured notes to 'BB/RR1' -- on Rating Watch Positive. On November 12, TCR said Standard & Poor's Ratings Services placed selected ratings on Centennial on CreditWatch with positive implications, including the 'B' corporate credit rating and issue ratings on all unsecured debt, but excluding the 'BB-' rating on subsidiary Centennial Cellular Operating Co. LLC's credit facility. S&P said the CreditWatch excludes Centennial's secured bank facility since it contains mandatory change of control provisions which will be triggered at closing and therefore require repayment at that time. Centennial has about $1.9 billion in outstanding debt, of which about $1.4 billion are affected by the CreditWatch action. Moody's Investors Service placed the debt of Centennial -- Corporate Family Rating, currently B2; and Senior Unsecured Regular Bond/Debenture, currently Caa1 -- and Centennial Communications -- Senior Secured Bank Credit Facility, currently Ba2; and Senior Unsecured Regular Bond/Debenture, currently B2 -- on review for possible upgrade. CENTENNIAL COMMS: Inks Employment Pacts with CEO & Other Officers ----------------------------------------------------------------- Centennial Communications Corp. said in a regulatory filing with the Securities and Exchange Commission that on November 7, 2008, it entered into Employment Agreements and Change in Control Severance Agreements with each of: -- Michael J. Small, the company's Chief Executive Officer, -- Thomas J. Fitzpatrick, the company's Executive Vice President, Chief Financial Officer, -- Phillip H. Mayberry, the company's President, U.S. Wireless Operations, -- Carlos T. Blanco, the company's President, Puerto Rico Operations, and -- Tony L. Wolk, the company's Senior Vice President, General Counsel, and Secretary. The company said its Board of Directors approved the forms of Employment Agreement and Change in Control Severance Agreement on September 25, 2008, after several months of consideration. The employment agreements replace the employment agreements that the company had previously entered into with certain of the named executive officers. The Employment Agreements are intended to standardize a form of employment agreement for the company's executive officers and do not change the existing base salary or target bonus opportunity for any of the named executive officers, as previously approved by the company's Compensation Committee. The initial term of the Employment Agreements is one year, with automatic renewals for subsequent one-year terms unless the company or the named executive officer gives notice of non-renewal at least 90 days before the expiration of the initial term or any renewal term. The Employment Agreements provide that the named executive officer is entitled to certain severance benefits under these circumstances: -- If the named executive officer is terminated other than for Cause, death or disability; -- If the named executive officer quits for Good Reason; or -- If the company fails to renew the term of the Employment Agreement. Upon the occurrence of one of those events, the named executive officer will be entitled to (i) continued payment of his base salary at the time of termination for 12 months, (ii) payment of a pro-rata portion of the bonus that otherwise would have been payable in respect of the year of termination based on the degree to which performance targets are achieved, to be paid at the time bonuses are normally paid to executives, and (iii) continued medical and health insurance benefits for up to 12 months. To receive the severance benefits, the named executive officer must execute a general release of claims in favor of the company, its employees and affiliates. In addition, during the employment term and for a period of one year following the termination of employment, the named executive officer is subject to certain non- competition and non-solicitation provisions. In the event of a Change in Control of the company, the named executive officer's Employment Agreement will be of no further force and effect during the two years following the Change in Control, and instead the named executive officer will be entitled to the severance benefits set forth in the named executive officer's Change in Control Severance Agreement. The Change in Control Severance Agreements provide that the named executive officer is entitled to severance benefits under these circumstances: -- After the occurrence of both a Change in Control during the term of the agreement and a subsequent termination of employment within two years following the Change in Control, either by the company for a reason other than Cause, death or disability or by the named executive officer for Good Reason; and -- In the event the named executive officer's employment is terminated during the nine month period preceding a Change in Control either by the company for a reason other than Cause, death or disability or by the named executive officer for Good Reason, such termination or the circumstance or event which constitutes Good Reason occurs at the request or instruction of a person who has entered into an agreement with the company the consummation of which would constitute a Change in Control or is otherwise in connection with or in anticipation of a Change in Control, and the Change in Control actually occurs. Upon the occurrence of one of those events, the named executive officer will be entitled to these payments and benefits: -- payment of an amount equal to the sum of his base salary and target bonus, multiplied by the applicable Severance Multiplier; -- payment of a pro-rata portion of the target bonus payable in respect of the year of termination; -- accelerated vesting of all outstanding equity awards; -- continued life, medical and health insurance coverage for a period of time equal to 12 months multiplied by the applicable Severance Multiplier; and -- payment of $10,000 for tax and financial planning services and reimbursement of up to $10,000 for outplacement services for a 1-year period following termination. The Severance Multiplier is 2.5 for Mr. Small and 2.0 for each of the other named executive officers. To receive such severance benefits, the named executive officer must execute a general release of claims in favor of the company, its employees and affiliates. Payments are generally made in a lump sum following termination except, to the extent required by Section 409A of the Internal Revenue Code. In addition, the named executive officer will be entitled to a tax gross-up payment for excise taxes incurred by such named executive officer to the extent that any payment or benefits to be received by such named executive officer are considered to be excess parachute payments under Section 4999 of the Internal Revenue Code, but only if the payments and benefits the named executive officer will receive under the Change in Control Severance Agreement are more than 110% of the named executive officer's Safe Harbor Amount. During the term of the Change in Control Severance Agreement and for a number of years following the termination of employment equal to the applicable Severance Multiplier, the named executive officer is subject to certain non-solicitation provisions. A full-text copy of the Form of Employment Agreement between Centennial Communications Corp. and the named executive officers is available at no charge at: http://ResearchArchives.com/t/s?3538 A full-text copy of the Form of Change In Control Severance Agreement between Centennial Communications Corp. and the named executive officers is available at no charge at: http://ResearchArchives.com/t/s?3539 About Centennial Communications Based in Wall, New Jersey, Centennial Communications Corp. (Nasdaq: CYCL) - http://www.centennialwireless.com/-- provides regional wireless and integrated communications services in the United States and the Puerto Rico with approximately 1.1 million wireless subscribers and 582,200 access lines and equivalents. The US business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Puerto Rico business owns and operates wireless networks in Puerto Rico and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe is the largest shareholder of Centennial. Centennial, AT&T and Independence Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of AT&T, entered into that the Agreement and Plan of Merger, dated as of Nov. 7, 2008. The Merger Agreement provides, among other things, for the merger of the Merger Sub with and into Centennial with Centennial surviving as a wholly owned subsidiary of AT&T. Each share of Centennial Common Stock issued and outstanding immediately prior to the Effective Time will be converted into and will thereafter represent the right to receive $8.50 in cash, without interest. The Centennial shares will be de-listed from the Nasdaq Global Select Exchange and de-registered under the Securities Exchange Act of 1934, as amended, as soon as practicable. Consummation of the Merger is subject to the satisfaction or waiver of certain conditions, including, but not limited to, (i) approval of the Merger Agreement by the holders of shares of Centennial Common Stock, (ii) conditions related to regulatory approval and (iii) other customary closing conditions. On November 7, Centennial held a Q&A session with employees to explain the transaction. A transcript of the Employee Q&A is available at no charge at: http://ResearchArchives.com/t/s?353b AT&T Inc. is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. Among their offerings are the world's most advanced Internet protocol-based business communications services and the nation's leading wireless, high speed Internet access and voice services. In domestic markets, AT&T is known for the directory publishing and advertising sales leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and the AT&T brand is licensed to innovators in such fields as communications equipment. * * * As reported by the Troubled company Reporter on November 13, 2008, Fitch Ratings has placed the ratings for Centennial Communications Corp. -- IDR 'B'; and Senior unsecured notes 'CCC+/RR6' -- and Centennial Cellular Operating Co. -- IDR 'B'; Senior secured credit facility to 'BB/RR1'; Senior unsecured notes to 'BB/RR1' -- on Rating Watch Positive. On Nov. 12, TCR said Standard & Poor's Ratings Services placed selected ratings on Centennial on CreditWatch with positive implications, including the 'B' corporate credit rating and issue ratings on all unsecured debt, but excluding the 'BB-' rating on subsidiary Centennial Cellular Operating Co. LLC's credit facility. S&P said the CreditWatch excludes Centennial's secured bank facility since it contains mandatory change of control provisions which will be triggered at closing and therefore require repayment at that time. Centennial has about $1.9 billion in outstanding debt, of which about $1.4 billion are affected by the CreditWatch action. Moody's Investors Service placed the debt of Centennial -- Corporate Family Rating, currently B2; and Senior Unsecured Regular Bond/Debenture, currently Caa1 -- and Centennial Communications -- Senior Secured Bank Credit Facility, currently Ba2; and Senior Unsecured Regular Bond/Debenture, currently B2 -- on review for possible upgrade. CHRYSLER LLC: Offers Workers Buyouts, to Impose Layoffs Year-End ---------------------------------------------------------------- Neal E. Boudette and Alex P. Kellogg at The Wall Street Journal report that Chrysler will impose involuntary layoffs by Dec. 31, even though 25% of the company's 17,300 salaried and an undisclosed number of contract employees agree to leave. Chrysler, says WSJ, is offering salaried workers who would voluntarily leave the firm up to $75,000 and vouchers worth as much as $25,000 toward the purchase of new cars. According to the report, workers must inform Chrysler by Wednesday if they will accept the offer. WSJ relates that Chrysler is offering a buyout offer aimed at removing 5,000 salaried workers, as part of an effort to conserve cash as auto sales drop. Chrysler CEO Robert Nardelli told the Congress last week that Chrysler's cash could become insufficient by year-end, says WSJ. According to WSJ, workers who prefer to stay could still lose their jobs, and more cuts could be required if Chrysler fails to secure government bailout and the company goes bankrupt. WSJ relates that employees who take the buyout won't have to report to Chrysler after Nov. 26, but will continue to receive salary until Dec. 31. According to the report, workers said that more of them appear to be accepting the buyout offer, but they weren't sure if the 25% target would be reached. Citing people familiar with the matter, the report states that large percentages of workers at Chrysler's operations in Chelsea and at a Jeep engineering center in Detroit accepted the buyout. Chrysler's Chelsea and Detroit operations were expected to be the target of large-scale cutbacks, says the report. A source said that the mergers and acquisitions unit, engineering and development, and a group developing a new, mid-sized sedan, are also likely to see big cuts, according to the report. Chrysler spokesperson Shawn Morgan said that if the firm has to lay off employees who don't seek a buyout, it will inform them before the end of the year, WSJ reports. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. CITGO PETROLEUM: Fitch Retains Issuer Default Rating at 'BB-' ------------------------------------------------------------- Fitch Ratings has affirmed CITGO Petroleum Corp's Issuer Default Rating and outstanding debt ratings: -- IDR at 'BB-'; -- $1.15 billion senior secured revolving credit facility maturing in 2010 at 'BBB-'; -- $700 million secured term-loan maturing in 2012 at 'BBB-'; -- $515 million secured term-loan maturing in 2012 at 'BBB-'; -- Fixed-rate industrial revenue bonds at 'BBB-'. Ratings positives include: -- The competitiveness of CITGO's three heavy-conversion capacity refineries, which continue to support the company's secured facilities; -- Crude oil supply agreements from parent PDVSA; and -- Strong covenant projections for secured lenders, including: a debt-to-capitalization maximum of 55%; an interest coverage minimum of 3.0x; and change-in-control provisions. Ratings concerns center primarily on: -- The ownership of CITGO by Petroleos de Venezuela S.A (PDVSA; IDR rated 'BB-' with a Negative Outlook by Fitch), the national oil company of Venezuela. Currently, CITGO sends most of its excess cash to its parent, a policy which limits CITGO's free cash flow and financial flexibility. For the twelve months ending Sept. 30, 2008, CITGO paid $1.03 billion in distributions to its parent. Major asset sales to date have included pipelines, storage terminals, and the company's two US asphalt refineries. Cumulative distributions to the parent are approximately $3.6 billion, compared to a $4 billion limit as defined by covenants. Fitch also remains concerned about the impact that dramatically lower oil prices may have on the operating budgets of parent PDVSA and Venezuela, which could result in additional pressure on the CITGO subsidiary to generate cash for distributions. Late last year, PDVSA took out a $1 billion loan from CITGO, which was refinanced with a $515 million secured term loan due 2012, $450 million in A/R securitization, and the remainder in cash. Note that the new $515 million term loan shares in the security package on a pari passu basis. CITGO's refineries can process a high percentage of heavy sour crude, which typically sell at a substantial discount to lighter crudes such as benchmark West Texas Intermediate. CITGO's discounts, however, are limited somewhat by the crude contracts with Venezuela which account for a notable portion of CITGO's crude throughput. CITGO is an independent crude oil refiner in the U.S. with three modern, highly complex crude oil refineries. Following the sale of its stake in the CITGO-Lyondell joint-venture refinery in Houston, CITGO now owns approximately 759,000 barrels per day of crude refining capacity. CITGO branded fuels are marketed through more than 7,100 independently owned outlets. CITGO is owned by PDV America, an indirect, wholly owned subsidiary of PDVSA. CITIGROUP INC: Gov't Expects Firm to Consider Breaking Up Co. ------------------------------------------------------------- David Enrich and Deborah Solomon at The Wall Street Journal report that Citigroup Inc. executives confirmed on Monday that the U.S. government expects the company to consider more drastic actions, including breaking up the company. As reported in the Troubled Company Reporter on Nov. 25, 2008, the government entered into an agreement on Sunday to provide Citigroup a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve will be ready to backstop residual risk in the asset pool through a non-recourse loan. According to WSJ, Citigroup Chief Financial Officer said in an interview that the company has no "preconceptions" about its businesses and that "the constituent parts could change. We're looking all the time to see if there are different possible combinations, either buy or sell, that make sense for the organization." Citing people familiar with the situation, WSJ relates that Citigroup's executives and directors have discussed potential mergers with other financial institutions or the sale of major business lines. Damian Paletta and Deborah Solomon at WSJ report that the government's rescue of Citigroup is creating confusion about the government strategy to shore up volatile markets. The report says that the government had a broad-based plan of injecting capital into lenders to bolster the financial system, but over the weekend officials reverted to propping up a specific troubled institution, days after Treasury Secretary Henry Paulson assured that rescue programs had removed the dangers of a big financial institution collapsing. The Citigroup rescue, according to WSJ, fueled the criticism that the government is willing to bail out the biggest banks, while letting smaller ones, consumers, and small companies, fail. David Reilly at WSJ states that Phoenix Partners Group said that the cost of insuring against default on $10 million of Citigroup debt rose to $500,000 on Friday, compared with $215,000 two weeks ago. The report says that this showed how worried investors were that Citigroup could fail. On Monday, the cost of insuring against default at Citigroup dropped to $250,000, according to the report. Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. Citi had $2.0 trillion in total assets on $1.9 trillion in total liabilities as of Sept. 30, 2008. CITIGROUP INC: Gov't Rescue Gives Life Back to Company; Shares Up ----------------------------------------------------------------- David Enrich at The Wall Street Journal reports that Citigroup Inc. shares rose 2.2%, or 13 cents, to $6.08, in the New York Stock Exchange on Tuesday, after rising 58% on Monday, amid optimism that the government's rescue plan will stabilize the bank. As reported in the Troubled Company Reporter on Nov. 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve will backstop residual risk in the asset pool through a non-recourse loan. Citing some analysts, WSJ states that the government's decision to inject $20 billion of capital into Citigroup and absorb as much as $249 billion in potential losses on real-estate loans and securities held by the bank would keep nudging the stock higher. WSJ quoted Sandler O'Neill & Partners LP analyst Jeffery Harte as saying, "While we admit that [Citigroup's] balance sheet remains a bit of a black box, we think significantly diminished solvency concerns should drive additional share price appreciation." Mr. Harte, says WSJ, on upgraded his rating on Citigroup shares to "buy" from "hold" on Tuesday. Mr. Pandit said that Citigroup will emerge from the crisis as a "high-end retail bank" serving "clients that need our globality. We've gotten rid of a lot of businesses, we're going to get rid of a lot more over time," Bloomberg reports. "It's very hard to say we should invest all this money [from the government] in Citigroup and leave Citigroup management totally intact. If a private-equity firm made an investment in Citigroup, how many board members would it ask for?" Bloomberg quoted Peter J. Solomon & Co. chairperson, Peter Solomon, as saying. Still major rating firms warned that they might downgrade Citigroup debt, which would make it more expensive for the company to fund its daily operations, WSJ relates. John Donnelly Leaves Firm WSJ reports that John Donnelly will leave Citigroup as its human resources chief, to take the same position at J.P. Morgan. According to WSJ, Mr. Donnelly, who spent 30 years at Citigroup, will succeed John Bradley, who will stay with J.P. Morgan in "another senior capacity." Citigroup has appointed Paul McKinnon, a former Dell Inc. executive who joined Citigroup in January as talent management chief, will take Mr. Mr. Donnelly's place, WSJ says. Stockholders to File Lawsuit Martha Graybow at Reuters reports that stockholders will file a new version of their lawsuit in the U.S. District Court in Manhattan against Citigroup as their losses worsen. Reuters relates that investors sued Citigroup last year for fraud, after the company's shares dropped on the bank's subprime mortgage woes. The investors, according to Reuters, claimed that Citigroup and several individuals, including former CEO Charles Prince, breached securities law by artificially increasing the stock price by concealing its exposure to subprime-linked debt. This year, Citigroup's shares are trading at around $6 apiece compared with $31 a year ago, even after two government bailouts in the last two months, Reuters says. Shares have dropped and are down 54% in November, according to the report. Reuters states that the lead plaintiff is a group of former employees and directors at Automated Trading Desk, who received Citigroup stock in exchange for selling their electronic trading company to the bank in a $680 million deal disclosed in July 2007. Group members, through that deal got more than 3.9 million Citigroup shares, which were valued at about $52 a piece at the time the buyout was being negotiated, court documents say. Citing Automated Trading Desk, Reuters relates that the members had suffered $76.8 million in losses as of January 2008, which is much higher now that Citigroup's stocks declined this year. Bradley Keoun and Christine Harper at Bloomberg News report that Citigroup CEO Vikram Pandit blamed the management's concentration on real estate assets for the company's losses and decimated stock. According to the report, Mr. Pandit said in an interview with PBS's Charlie Rose show, "What went wrong is we had tremendous concentration in the sense that we put a lot of our money to work against U.S. real estate. It's a lot easier to get into these situations than it is to get out of them." Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. Citi had $2.0 trillion in total assets on $1.9 trillion in total liabilities as of Sept. 30, 2008. COHR HOLDINGS: Moody's Junks Rating on Senior Sec. Credit Facility ------------------------------------------------------------------ Moody's Investors Service downgraded Cohr Holdings, Inc.'s Corporate Family Rating and Probability of Default ratings to Caa2 from Caa1. Moody's also downgraded the ratings on the senior secured credit facility to Caa1 from B3. The outlook remains negative. The downgrade of the ratings follows the significant decline in EBITDA that Cohr reported for the quarter ended Sept. 30, 2008. In May 2008, Cohr was notified that its largest customer, a national hospital company, would not be renewing its contract for Biomedical and Diagnostic Imaging equipment servicing and maintenance. Moody's believes the decline in EBITDA in the quarter signals increasing risk that the company may not be able to sufficiently offset the lost business through cost cutting measures and new business wins. The downgrade to Caa2 reflects the company's highly leveraged position, very weak interest coverage and Moody's belief that a liquidity shortfall is increasingly likely in the next 12-24 months. The last rating action was on June 5, 2008, when Moody's downgraded Cohr's Corporate Family Rating to Caa1 from B2 citing the loss of Cohr's largest customer and materially weaker than expected operating performance in the year since the ratings were first assigned. These ratings were downgraded: -- Corporate Family Rating; to Caa2 from Caa1 -- Probability of Default Rating; to Caa2 from Caa1 -- $20 million Senior Secured Revolver; to Caa1 (LGD3/39%) from B3 (LGD3/39%) -- $140 million Senior Secured Term Loan; to Caa1 (LGD3/39%) from B3 (LGD3/39%) The ratings outlook remains negative. Headquartered in Chatsworth, California, Cohr Holdings, Inc., is a leading independent service organization in the diagnostic imaging and biomedical equipment maintenance and repair services industry. For the twelve months ended Sept. 30, 2008, the company generated revenue of $154 million. COMPREHENSIVE CARE: Sept. 30 Balance Sheet Upside Down by $8.6MM ---------------------------------------------------------------- Robert J. Landis, Chairman, chief financial officer and treasurer of Comprehensive Care Corporation, discloses that the company's balance sheet as of Sept. 30, 2008, showed total assets of $4,945,000 and total liabilities of $13,643,000, resulting in total stockholders' deficit of $8,698,000. "We have incurred significant operating losses and negative cash flows from operating activities, which raise substantial doubt as to our ability to continue as a going concern," Mr. Landis says. For the nine months ended Sept. 30, 2008, the company posted a net loss of $4,831,000, compared with $2,722,000 for the same period a year earlier. During the nine months ended Sept. 30, 2008, net cash used in operations totaled $5.5 million, attributable primarily to payment of claims on the company's Indiana, Pennsylvania, and Maryland contracts, which have experienced high utilization of services by members. "Approximately $1.5 million of the total cash usage was due to a timing difference in the monthly capitation remittance from our Indiana client, which was received in October 2008. In addition, approximately $0.7 million in cash was used to pay accrued claims payable relating to three contracts that terminated during the quarter ended December 31, 2007, and a contractually required severance payment of $410,000 was made to our former Chief Executive Officer. Cash used in investing activities is comprised of $41,000 in additions to property and equipment offset by $20,000 in proceeds from payments received on notes receivable. In September 2008, we completed private placements of our common stock generating $125,000 in cash proceeds and issued a convertible promissory note in the amount of $200,000, providing additional funds for working capital purposes. Other cash flows from financing activities consist of repayment of debt of $41,000. At Sept. 30, 2008, cash and cash equivalents amounted to $1.1 million," Mr. Landis relates. "At Sept. 30, 2008, we had a working capital deficit of $5.2 million. During June and July of 2008, we reduced our usage of consultants and temporary employees as well as eliminated permanent staffing positions. In addition, we implemented a 10% salary reduction for employees at the vice president level and above and have reduced outside directors' fees by 10%. We have also requested rate increases from several of our existing clients." "The significant decrease in our cash position is primarily attributable to our major Indiana contract, which ends Dec. 31, 2008. To reduce the claim expenses of this contract, we have implemented additional utilization and case management procedures. We are also in the process of negotiating a rate increase. If the rate increase is realized, we would also receive a lump sum payment to offset past contract expenses. Management believes the combination of the rate increase and lump sum payment would provide sufficient cash to cover the claims run-out after the contract ends. We can provide no assurance that we will be successful in our negotiations with this client. If we are unsuccessful, we will need to raise additional equity capital or seek additional debt financing to fund the claims run-out from this contract." Hythiam, Inc., purchased a majority controlling interest in the company through its purchase of Woodcliff Healthcare Investment Partners LLC in January 2007. Mr. Landis says Hythiam is under no obligation to provide the company with any form of financing, and the company does not currently anticipate receiving a cash investment from Hythiam. "Failure to obtain sufficient debt or equity financing and, ultimately to achieve profitable operations and positive cash flows from operations during the remaining period in 2008 would adversely affect the Company's ability to achieve its business objectives and continue as a going concern. There can be no assurance as to the availability of any additional debt or equity financing and, if available, that the source of the financing would be available on terms and conditions acceptable to us, or that we will be able to achieve profitable operations and positive cash flows." A full-text copy of the company's latest Quarterly Report is available for free at http://researcharchives.com/t/s?352e About Comprehensive Care Comprehensive Care Corporation is a Delaware corporation organized in 1969. Primarily through its wholly owned operating subsidiary, Comprehensive Behavioral Care, Inc., and subsidiaries, the company provides managed care services in the behavioral health and psychiatric fields. Its customer base includes both private and governmental entities. The company provides services primarily by a contracted network of providers. CONCORD CAMERA: Posts $12.6 Million Net Loss in FY Ended June 28 ---------------------------------------------------------------- BDO Seidman, LLP, in Miami, Florida, disclosed to the Board of Directors and stockholders of Concord Camera Corp. on Nov. 6, 2008, that after auditing the company and its subsidiaries' financial statements for the fiscal year ended June 28, 2008, it has substantial doubt about the company's ability to continue as a going concern. The firm noted that on Oct. 29, 2008, the Board of Directors recommended the company's dissolution and the adoption of a plan of liquidation. The Liquidation Proposal is subject to approval by the company's shareholders. Pending the shareholders' vote on the Liquidation Proposal, the company has ceased manufacturing products, purchasing materials and products and undertaking commitments for sales of company's products except for products that the company has remaining in its inventory. The company's balance sheet as of June 28, 2008, showed total assets of $70,602,000, total liabilities of $36,700,000, and total stockholders' equity of $33,902,000. The company has posted recurring losses. For the fiscal year ended June 28, 2008, the company's net loss was $12,607,000. For the fiscal years ended June 30, 2007, and July 1, 2006, the company posted net losses of $11,726,000 and $19,611,000, respectively. A full-text copy of the company's Annual Report is available for free at http://researcharchives.com/t/s?3534 The Troubled Company Reporter reported on November 3, 2008, that the Plan of Liquidation contemplates an orderly wind down of the company's business and operations, the monetization of the company's non-cash assets, the satisfaction or settlement of its remaining liabilities and obligations and one or more distributions to its shareholders. In connection with the board's approval of the Plan of Liquidation, the company also said that it has ceased manufacturing and terminated certain of its employees and, if the company's shareholders approve the Plan of Liquidation, will terminate its remaining employees throughout the wind down period. The TCR added that if the company's shareholders approve the Plan of Liquidation, the company intends to file a certificate of dissolution, sell and monetize its non-cash assets, satisfy or settle its remaining liabilities and obligations, including contingent liabilities and claims, and make one or more distributions to its shareholders of cash available for distribution. In connection with the shareholder approval of the Plan of Liquidation, the company expects to delist its shares from NASDAQ. About Concord Camera Corp. Headquartered in Hollywood, Florida, Concord Camera Corp. (NASDAQ:LENS) -- http://www.concord-camera.com/-- through its subsidiaries, provides easy-to-use 35mm single-use and traditional film cameras. Concord markets and sells its cameras on a private- label basis and under the POLAROID and POLAROID FUNSHOOTER brands through in-house sales and marketing personnel and independent sales representatives. The POLAROID trademark is owned by Polaroid Corporation and is used by Concord under license from Polaroid. COPPERFORD LLC: Court Sets Hearing on January 14, 2009 ------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of California has scheduled a hearing on Copperford, LLC's Chapter 11 case on Jan. 14, 2009, Central Valley Business Times reports. According to Business Times, Copperford, which owns Vino Piazza in Lockeford, filed for protection from creditors under Chapter 11. Business Times relates that the eight boutique wineries that rent space at Vino Piazza will continue operating while Copperford goes through the bankruptcy process. Vino Piazza houses a restaurant and an art gallery, and Copperfords owner Don and Karyn Litchfield's collection of minerals and real and replica dinosaur fossils, Business Times states. Lockeford, California-based Copperford, LLC -- dba Olde Lockeford Winery; Vino Piazza; VIP Wine Group; Vino Piazza, the Winery Plaza; and Vina Piazza, the Winery Plaza -- offers renovation services. The company filed for Chapter 11 protection on Nov. 4, 2008 (Bankr. E. D. Calif. Case No. 08-36148). Carl W. Collins, Esq., at Carl W. Collins Attorney At Law represents the company in its restructuring effort. The company listed assets of $10 million to $50 million and debts of $1 million to $10 million. CPW ACQUISITION: Files For Chapter 11 w/ Related Firm ----------------------------------------------------- CPW Acquisition Corp., and Robert Lane Estates Inc., filed separate Chapter 11 petitions on Nov. 21, before the U.S. Bankruptcy Court for the Southern District of New York (Manhattan). According to Bill Rochelle of Bloomberg, the two firms are related companies owning a penthouse at Trump International Hotel and Tower on Central Park South in Manhattan and a singlefamily home in Beverly Hills, California. A third related company owns a penthouse at Fountain House on Park Street in London. According to the same report, the Central Park South property was appraised in June 2006 for $25 million while the Beverly Hills home had an $8 million appraisal done at the same time. The London property has a $14.7 million appraisal. Fortress Credit Corp., a secured creditor, foreclosed on the London property in July. Bloomberg says that court filings say New York-based Fortress is owed $32.8 million on its secured claim. The Chapter 11 filing was made to halt a Nov. 21 foreclosure on the California property. The New York penthouse is also under foreclosure. CPW Acquisition Corp. filed for Chapter 11 protection on November 20, 2008 (Bankr. S. D. N.Y. Case No. 08-14623). Its counsel is Kenneth M. Lewis, Esq., at Sanford P. Rosen & Associates, P.C., in New York. In its bankruptcy protection, it estimated assets and debts of $10 to $50 million. Robert Lane Estates Inc. filed for Chapter 11 protection on Nov. 21, 2008 (Bankr. S. D. N.Y. Case No. 08-14625). CREATIVE DESPERATION: Claims Judge Biased in Bankruptcy Case ------------------------------------------------------------ Mediabistro.com reports that Peter Letterese of Creative Desperation Inc. said in an appeal on Thursday that the Hon. John K. Olson of the U.S. Bankruptcy Court for the Southern District of Florida has defied statutes and almost a dozen precedents in federal bankruptcy decisions, which then helped the Church of Scientology International. Mediabistro.com relates that sources familiar with Judge Olson say that they have never seen either Judge Olson or any Bankruptcy Court judge to be "so consistently one-sidedly" in any Chapter 11 case, which resulted into a conversion of the case to Chapter 7 liquidation and the loss of the Debtor's counsel. According to Mediabistro.com, Mr. Letterese filed a lawsuit against Tom Cruise as one of the two top leaders of Scientology, which he calls as "The International Scientology Economic Hate Crime Syndicate." The report says that Mr. Letterese alleged that the church has been trying to destroy him and his company financially, to avoid paying tens of millions in unpaid royalties dating back to 1971, to an author's estate for whom he has been the exclusive worldwide agent since in 1994. Mediabistro.com states that Mr. Letterese claimed that Judge Olson's Bankruptcy Court has abused its discretion more than a dozen instances when it converted Creative Desperation's Chapter 11 bankruptcy to a Chapter 7 proceeding, before allowing the Debtor to present any reorganization plan. The Court didn't conduct a full evidentiary hearing, nor did it review the lone asset of Creative Desperation, Mediabistro.com says, citing Mr. Letterese. According to the report, Mr. Letterese said that the Court didn't give due consideration to Creative Desperation's overall position. The Court, according to Mediabistro.com, said that Mr. Letterese's appeal, having ignored fact after fact, has an incomplete picture of Creative Desperation's situation and "an even more skewed understanding" of the Debtor's actions and motives. Mediabistro.com relates that Creative Desperation claimed that Judge Olson is "running interference" for Scientology and against Mr. Letterese, crippling his ability to bring his lawsuit case before Judge William J. Zloch, the Federal District Court Judge to whom the case was assigned in July 2008. According to the report, Judge Olson froze that case until 2009 and targeted Mr. Letterese's counsel for sanctions without ever alleging either breaches in law or legal professional ethics. Weston, Florida-based Creative Desperation Inc., dba Galileo Systems International, was founded by Peter Letterese. Creative Desperation has changed its name six times. Its other names include Peter Letterese & Associates Inc., Safepoint Family Training, Buildstrong International and S.A.V.E. International. The Debtor filed its Chapter 11 petition on June 30, 2008 (Bankr. S.D. Fla. Case No. 08-19067). Judge John K. Olson presides over the case. Charles D. Franken, Esq., represents the Debtor in its restructuring efforts. The Debtor listed total assets of $501,000,050 and total liabilities of $2,552,400 when it filed for bankruptcy. CREDIT SUISSE: Fitch Downgrades Ratings on 4 Certificate Classes ---------------------------------------------------------------- Fitch Ratings has downgraded four classes of Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass- through certificates, series 2001-CK3, and assigned Rating Outlooks: -- $24.8 million class J to 'BB+' from 'BBB-'; Outlook Negative; -- $9 million class K to 'B+' from 'BB'; Outlook Negative; -- $12.7 million class L to 'CCC/DR2' from 'B'; -- $9.8 million class M to 'C/DR6' from 'CC/DR3'. Fitch has also affirmed and assigned Rating Outlooks to these classes: -- $24.1 million class A-3 at 'AAA'; Outlook Stable; -- $582.4 million class A-4 at 'AAA'; Outlook Stable; -- Interest-only class A-X at 'AAA'; Outlook Stable; -- $42.3 million class B at 'AAA'; Outlook Stable; -- $56.3 million class C at 'AAA'; Outlook Stable; -- $11.3 million class D at 'AAA'; Outlook Stable; -- $14.1 million class E at 'AAA'; Outlook Stable; -- $25.4 million class F at 'AA+'; Outlook Stable; -- $8 million class G-1 at 'A+'; Outlook Negative; -- $11.7 million class G-2 at 'A+'; Outlook Negative; -- $14.1 million class H at 'A-'; Outlook Negative. Classes A-1 and A-2 have paid in full. Classes N and O, which were not rated by Fitch, have been reduced to zero based on realized losses. The downgrades are due to Fitch projected losses on the specially serviced loans (2.3%). The Rating Outlooks reflect the Fitch Loans of Concern (10.8%), and indicate the likely direction of any rating changes over the next one to two years. As of the November 2008 distribution date, the transaction balance has been reduced by 24.9%, to $845.9 million, from $1.13 billion at issuance. To date, 36 loans (38.8%) have defeased. The largest specially serviced asset (1.1%) is secured by a 400- unit multifamily property located in Houston, Texas. The loan transferred June 20, 2008 due to payment default, following a steady decline in occupancy, from 87% at year-end 2006 to 55% as of March 2008. A foreclosure sale is scheduled for Dec. 2, 2008. Fitch expects the trust to incur losses on the loan. The second largest specially serviced asset (0.7%) is secured by a 208,000 square foot industrial property located in Waterbury, Connecticut. The property is 100% occupied and had a servicer- reported debt service coverage ratio of 1.72 times as of YE 2007. The loan went into payment default when the single tenant failed to remit rent payments in a timely manner; however, the loan has been brought current. Though the tenant filed for bankruptcy in October 2008, the lease guarantor continues to make payments. Fitch does not expect losses at this time. The third largest specially serviced asset (0.4%) is collateralized by a 128-unit multifamily property located in Houston, Texas. The asset has been real estate owned since April 1, 2008. The property is under contract for sale, with due diligence running through Nov. 17, 2008 and closing scheduled for one month later, subject to a 15-day extension period. The most recent appraised value indicates losses. The smallest specially serviced asset (0.1%) is secured by a 44- unit multifamily property located in Irving, Texas. The loan was transferred to special servicing May 14, 2008 due to non-payment. The property is currently 100% vacant, following revocation of the property's certificate of occupancy. The receiver has received an offer to purchase the property, which is currently being evaluated. Fitch expects losses on the asset. At issuance, two loans were considered to have investment-grade shadow ratings. The 888 Seventh Avenue loan has paid in full. The Atrium Mall (5.3%) is a 215,000 sf anchored retail center located in Chestnut Hill, Massachusetts. Reported occupancy as of year-end 2007 was 93%, compared to 92% at issuance. The loan maintains its investment-grade shadow rating. Fitch notes that with the exception of one loan (0.9%), which is performing matured and is in the process of refinancing, no additional non-defeased loans mature or are anticipated to repay until April 2010. DAYJET CORP: Files for Chapter 7 Bankruptcy in Delaware ------------------------------------------------------- Bloomberg News' Michael Bathon reports that DayJet Corp. filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. According to Mr. Bathon, the Chapter 7 filing came after the company disclosed on Sept. 19, 2008, that it is ceasing operations of its "on demand" airline service due to its inability to access additional financing. The company listed $17.2 million in assets and $23.1 million in debts in its filing, Bloomberg says. The company owes as much as $19.8 million to its unsecured creditors, the report adds. "It is unfortunate that these developments have come at the same time our nation has fallen into the most serious capital crisis of our lifetime," Bloomberg quoted company founder Ed Iacobucci as saying. Headquartered in Boca Raton, Florida, DayJet Corp. -- http://www.dayjet.com-- operates a nonscheduled chartered passenger air transportation company. The company served 45 cities across Alabama, Florida, Georgia, Mississippi and South Carolina. DBSI INC: Investors Want Examiner Appointed ------------------------------------------- Bloomberg News reports that a group of investors who purchased interests in certain projects of DBSI Inc., is asking the U.S. Bankruptcy Court for the District of Delaware to order the appointment of an examiner in DBSI's Chapter 11 cases. According to Bloomberg's Bill Rochelle, the investors point to a class-action suit filed before bankruptcy making allegations that the company committed bank and tax fraud while intentionally concealing the value of properties, failing to maintain required cash reserves, and inducing people to invest without performing due diligence. The automatic stay under the Bankruptcy Code has automatically suspended the suit against the Debtors. However, the suit is ongoing, as to the directors and officers, because they are not covered by the automatic stay. According to Bloomberg, the company is in the process of halting the suit from proceeding against its D&Os. The report adds that three different groups of investors filed identical motions on Nov. 20 seeking to conduct Bankruptcy Rule 2004 examinations of the company and its CEO and President Douglas Swenson. The investors want information related to motions DBSI is making to reject contracts regarding the projects where they have investments. The motion for an examiner is on the calendar for Dec. 10. About DBSI Inc. Headquartered in Meridian, Idaho, DBSI Inc. -- http://www.dbsi.com -- operates a real estate company. The company and 145 of its affiliates filed for Chapter 11 protection on Nov. 10, 2008 (Bankr. D. Del. Lead Case No. 08-12687). The Debtors proposed Young Conaway Stargatt & Taylor LLP as its counsel. Kurztman CarsonConsultants LLC represents as the Debtors' notice claims and balloting agent. No Official Committee of Unsecured Creditors has bee appointed in these cases to date. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. DEAN C. HENNING: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Dean C. Henning and Marie E. Henning 1824 Mt. Zion P.O. Box 2655 Janesville, WI 53545 Tel: (608) 756-1130 Bankruptcy Case No.: 08-16174 Chapter 11 Petition Date: November 20, 2008 Court: Western District of Wisconsin (Madison) Debtor's Counsel: Guy K. Fish, Esq. gfish@charterinternet.com Fish Law Offices 533 Vernal Avenue Milton, WI 53563 Tel: (608) 868-3200 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/wiwb08-16174.pdf The petition was signed by the debtor Dean C. Henning and the joint debtor Marie E. Henning. DEI HOLDINGS: S&P Withdraws 'B' Rating at Company's Request ----------------------------------------------------------- Standard & Poor's Ratings Services said that it withdrew the ratings on Vista, California-based DEI Holdings Inc. and subsidiary DEI Sales Inc., including the 'B' corporate credit rating, at the company's request. DOWNEY FINANCIAL: S&P's Counterparty Credit Rating Tumbles to 'D' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit rating on Downey Financial Corp. to 'D/D' from 'CCC-/Negative' in response to Downey Savings and Loan Association being placed in receivership by the Office of Thrift Supervision. At the same time, S&P revised the issuer credit rating on Downey to 'R' from 'CCC', signifying regulatory intervention. U.S. Bank N.A. (AA+/Stable/A-1+) has agreed to acquire all of Downey's deposits, so S&P raised the uninsured deposit rating on Downey to 'AA+/A-1+' from 'CCC/C'. On Nov. 21, 2008, the OTS closed Downey and named the Federal Deposit Insurance Corp. as receiver. The FDIC transferred all deposit accounts, substantially all the assets, and most of the liabilities of Downey to U.S. Bank N.A. (Cincinnati, Ohio). Any claims by equity holders were not acquired. With the holding company now cut off from the bank and with only limited financial resources of its own, S&P believes that the holding company's financial position is greatly impaired, even if not technically insolvent. The OTS took this action after determining that Downey's deteriorating financial profile left it in an "unsafe and unsound condition." Downey's mounting financial stress from growing asset-quality problems and eroding capitalization illustrate the impact of the housing market woes on the state of California. This, coupled with Downey's inability to meet its recently increased regulatory minimum capital requirements, led regulators to view the company as unable to continue as a going concern. "We believe that Downey's large amount of secured advances from the Federal Home Loan Bank, the regulatory depositor preference, and the prevailing poor market values for mortgage-related assets limit the likely recovery on Downey's rated holding company-issued senior debt," said Standard & Poor's credit analyst Sunsierre Newsome. U.S. Bank will receive around $12.8 billion of assets and assume about $11.3 billion of liabilities (including $9.7 billion in deposits) from Downey. All former Downey Savings and Loan Association bank branches will reopen for normal business hours as branches of U.S. Bank, and customers will have full access to all banking services. "Acquiring Downey bolsters U.S. Bank's growth strategy in key California markets. In addition, U.S. Bank will modify the terms of certain acquired loans in accordance with the FDIC's Mortgage Loan Modification Program, to improve affordability and allow borrowers to remain in their homes," Ms. Newsome added. DIOMED HOLDINGS: Plan Confirmation Hearing Continued to December 4 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Massachusetts has continued to Dec. 4, 2008, the confirmation hearing of the joint amended plan of liquidation proposed by the Diomed Holdings, Inc., Diomed, Inc., and the Official Committee of Unsecured Creditors dated Sept. 15, 2008. The Court first convened a confirmation hearing on the Joint Plan last Nov. 4, 2008. The Court stated that if no objections to (i) the Debtors' proposed settlement agreement with Dornier MedTech America, Inc., and (ii) the stipulation compromising claims of Endolaser Associates, L.L.C., are timely filed with the Court, the Joint Plan may be confirmed without a hearing. As reported in the Troubled Company Reporter on Sept 25, 2008, Diomed obtained permission from the Court in June 2008 to sell its assets for $8 million to AngioDynamics Inc. plus the assumption of specified liabilities. The Plan provides for a 20.6% recovery for unsecured creditors. About Diomed Holdings Based in Andover, Massachussetts, Diomed Holdings Inc. (AMEX: DIO) -- http://www.evlt.com/and http://www.diomedinc.com/-- develops and commercializes minimal and micro-invasive medical procedures that use its proprietary laser technologies and disposable products. Diomed's EVLT(R) laser vein ablation procedure is used in varicose vein treatments. Diomed also provides photodynamic therapy for use in cancer treatments, and dental and general surgical applications. Diomed Holdings has no assets other than its 100% ownership in Diomed Inc., its operating unit. Diomed Inc. owns 100% of Diomed Ltd. in the United Kingdom and Diolaser Mexico SA de CV in Mexico. The company also has an affiliate in Asia through Diomed Hong Kong. The company and its affiliate, Diomed Inc., filed for Chapter 11 protection on March 14, 2008 (Bankr. D. Mass. Case Nos. 08-40750 and 08-40749). Douglas R. Gooding, Esq., at Choate Hall & Stewart LLP, is the Debtors local counsel and McGuireWoods LLP is its general counsel. Goulston & Storrs P.C. is counsel to the Official Committee of Unsecured Creditors. The company's schedules show total assets of $19,936,479 and total liabilities of $14,743,485. In connection with the Chapter 11 filings, Diomed Ltd. filed for Administration under the laws of the United Kingdom in the Cambridge County Court. Steven Mark Law of Ensors was named as administrator. DOWNEY FINANCIAL: Moody's Downgrades Senior Unsecured Rating to C ----------------------------------------------------------------- Moody's Investors Service downgraded the senior unsecured and issuer ratings of Downey Financial Corp. to C from Ca. Moody's expects to subsequently withdraw Downey Financial Corp.'s ratings. Downey Savings and Loan Association's bank financial strength, long term deposit and issuer ratings were withdrawn. The rating actions follow the purchase of substantially all of the assets and the assumption of all the deposits and certain other liabilities of Downey Savings and Loan Association by U.S. Bank N.A. (USB, rated Aa1 for deposits) in a transaction facilitated by the Federal Deposit Insurance Corporation. Immediately prior to the purchase, the Office of Thrift Supervision closed Downey Savings and Loan and appointed the FDIC as the receiver. USB did not acquire any assets or assume any liabilities of Downey Financial Corp. including its $200 million senior note. Downey Financial Corp. announced that it intends to file for Chapter 7 bankruptcy no later than Nov. 26, 2008. Moody's expects that the loss on Downey Financial Corp.'s senior note will be significant. This is reflected in the assigned C rating. The withdrawal of all Downey Savings and Loan Association ratings reflects the closing of this institution and the assumption of its outstanding obligations by USB. Downgrades: Issuer: Downey Financial Corp. -- Issuer Rating, Downgraded to C from Ca -- Senior Unsecured Regular Bond/Debenture, Downgraded to C from Ca Outlook Actions: Issuer: Downey Financial Corp. -- Outlook, Changed To Stable From Rating Under Review Issuer: Downey Savings & Loan Association -- Outlook, Changed To Rating Withdrawn From Rating Under Review Withdrawals: Issuer: Downey Savings & Loan Association -- Bank Financial Strength Rating, Withdrawn, previously rated E -- Issuer Rating, Withdrawn, previously rated Ca -- OSO Rating, Withdrawn, previously rated NP -- Deposit Rating, Withdrawn, previously rated NP -- OSO Senior Unsecured OSO Rating, Withdrawn, previously rated Ca -- Senior Unsecured Deposit Rating, Withdrawn, previously rated B3 EARTHFIRST CANADA: Can't File 3rd Quarter Financial Report on Time ------------------------------------------------------------------ EarthFirst Canada Inc. disclosed that its financial statements for the third quarter ended Sept. 30, 2008, would not be filed by Nov. 14, 2008. On Nov. 13, EarthFirst provided corporate updates. On Aug. 21, 2008, the board of directors of EarthFirst had decided to commence a formal review of the company's strategic alternatives in order to maximize shareholder value. The board appointed a Special Committee of the board to oversee the strategic review process, and engaged Blair Franklin Capital Partners Inc. of Toronto, Ontario, together with GMP Securities Ltd., to provide independent strategic advice to the Special Committee. Independent legal counsel was also retained to provide independent legal advice to the Special Committee. The Special Committee and their advisors undertook a review of all the company's alternatives and on Sept. 22, 2008, the board decided to proceed with the sale of EarthFirst and actively solicit interest from third party purchasers. After this decision, the assets and liabilities of the company were classified as held for sale. The net assets of the company must also be written down to their net realizable value. On Nov. 4, 2008 the company made an application to the Court of Queen's Bench of Alberta, Judicial Centre of Calgary and obtained an Order for creditor protection under the Companies' Creditors Arrangement Act (Canada). EarthFirst's efforts to pursue strategic alternatives have been hindered by the crisis in the worldwide financial markets which has impacted EarthFirst's ability to raise financing or to complete a sale of the company. As a result of EarthFirst's current financial resources and the inability of the company to complete a fulsome sale process in sufficient time to address its financial condition, EarthFirst's board determined that seeking CCAA protection would be in the best interests of the company and its stakeholders. While under CCAA protection, the company will continue with its day-to-day operations and its efforts to pursue strategic alternatives. EarthFirst further expects CCAA protection will allow parties engaged in the sale process additional time for due diligence. EarthFirst has sought protection under the CCAA as its cash in hand would not allow it to meet its current obligations and its obligations with respect to the ongoing construction of its 144 MW Dokie I Project in British Columbia. CCAA protection stays creditors and others from enforcing rights against the company and affords it the opportunity to restructure its financial affairs. The Court has granted CCAA protection for an initial period of 30 days, expiring Dec. 4, 2008, to be extended thereafter as the Court deems appropriate. If by Dec. 4, 2008, the company has not filed a Plan of Arrangement, or obtained an extension of the CCAA protection, creditors and others will no longer be stayed from enforcing their rights. While under CCAA protection, the company's board maintains its usual role and its management remains responsible for the day-to-day operations of the company, under the supervision of Ernst & Young Inc., who is the Court-appointed Monitor, and who will be responsible for reviewing the company's ongoing operations, assisting with the development and filing of the Plan, liaising with creditors and other stakeholders and reporting to the Court. The board and management of the company will be primarily responsible for formulating the Plan for restructuring EarthFirst's affairs. The company will continue with its efforts to find a buyer for the company or its assets while under CCAA protection. Although CCAA protection enables EarthFirst to continue with its day-to-day operations until its CCAA status changes, the implications for EarthFirst's shareholders are less clear. EarthFirst continues to explore a number of alternatives, including a sale of EarthFirst and the repayment of all creditors in full. However, the Plan must be approved by the requisite number and value of the affected creditors, as required by law, as well as by the Court. At the end of the restructuring process, the value of what is left for shareholders will depend upon the terms of the Plan approved by the affected stakeholders. If the Plan is not so approved, it is possible that EarthFirst would be placed into receivership or bankruptcy. On Nov. 3, 2008, EarthFirst received a Notice of Intention to Enforce Security from WestLB AG, a secured creditor of EarthFirst, notifying the company that it intends to enforce its security over the project assets comprising the Dokie I Project pursuant to a Turbine Supply Loan Agreement dated May 14, 2008, between EarthFirst and WestLB. The total amount of indebtedness secured is $131 million. Pursuant to the notice, WestLB will not have the right to enforce its security until after the expiry of 10 days following the sending of the notice. Prior to receiving CCAA protection, EarthFirst and WestLB entered into a Forbearance Agreement in respect of the indebtedness owed to WestLB by EarthFirst agreeing, among other things, that WestLB would be exempted from the stay in the CCAA initial order but would forbear from enforcing it's claim under the negotiated terms of the agreement until Jan. 4, 2009, and to other matters relating to the conduct of EarthFirst during the period of CCAA protection. Liquidity In its second quarter report, the company reported that as a result of the second quarter capital cost increase, lower debt levels supported by the project, and additional financing related costs the company had a financing shortfall of approximately $50 million and that the company was actively working on financing this shortfall through a combination of subordinated debt and equity. In the third quarter, the company initiated the syndication of its previously planned senior project finance debt facility of approximately $200 million to fund the remaining cost to complete the Dokie I project. Due the unprecedented deterioration in worlwide credit markets experienced by the company over this period, the company has not been successful in completing any of these financing initiatives to date. As a result, the company's financing requirements now exceed its available cash by $250 million. The company is trying to complete its strategic review process. However, there can be no assurance that this will occur. The company also continues to try to raise the senior project finance debt in an effort to support the strategic review process. The ability of the company to continue as a going concern is dependent on obtaining additional financing to finance its Dokie I Project. A $135 million turbine financing facility was entered into in May 2008. This turbine financing facility is being provided by WestLB, and is providing interim financing that allowed EarthFirst to meet its May 15, 2008, requirement from Vestas to post a letter of credit for the unpaid portion of the turbines. This facility was intended to provide interim financing until a senior secured project finance credit facility could be completed. At Sept. 30, 2008, EarthFirst has drawn $13.2 million under the turbine financing facility and the rest of the facility is supporting the letter of credit with Vestas. Under the terms of this facility, EarthFirst was originally required to make a $22.5 million payment in October 2008. However, under the terms of a Forbearance Agreement dated Nov. 4, 2008, WestLB and EarthFirst have mutually agreed to delay this payment until Jan. 4, 2009. Furthermore, the $22.5 million payment has been reduced by $4.2 million to reflect September payments made to Vestas under the Turbine Supply Agreement, thereby reducing the related letter of credit held by WestLB. The balance of payments on the first eight turbines is anticipated to occur in late 2008. At Sept. 30, 2008, the company had cash and cash held in escrow of $41.06 million compared to $65.13 million at June 30, 2008, and $73.82 million at Dec. 31, 2007. The decrease in cash compared to both June 30, 2008, and Dec. 31, 2007, relates to the funds expended on construction and development activities during 2008. Cash was also used to fund the ongoing administrative costs of the company. Cash received during the first nine months of 2008 included the net proceeds of $3.76 million received from the IPO underwriters exercising their over-allotment option, interest on cash balances, and incidental logging sales. Under the terms of the Turbine Supply Agreement the company is anticipated to have additional interim payments of $4.2 million prior to the end of December 2008. On Nov. 4, 2008, immediately prior to the CCAA filing, EarthFirst had an available cash balance of $32.9 million and current liabilities totaling approximately $21 million which have now been stayed under the CCAA process. Management and Board of Directors Changes During the third quarter, Paul Bradley resigned as a director of EarthFirst due to changed employment. The company does not anticipate appointing a replacement for Mr. Bradley at this time. The board of EarthFirst wishes to thank Mr. Bradley for his contributions to the company. In June, EarthFirst appointed of Linda Chambers to the position of president and chief executive officer, effective July 2, 2008. Mrs. Chambers was appointed to the board at its Aug. 12, 2008, meeting. Ms. Chambers joined EarthFirst with the mandate to lead the company's growth plans as a leading independent developer of renewable energy projects in Canada. With the unexpected difficulties experienced by the company in raising the necessary financing to complete the Dokie I Project, due to the unprecedented deterioration in capital market conditions, the company's ability to pursue these growth plans is now limited. On Nov. 10, 2008, Ms. Chambers resigned her positions with EarthFirst. The board of EarthFirst wishes to thank Ms. Chambers for her contributions to the company. In Ms. Chambers' place, the board has appointed Brian Trypka as chief restructuring officer. About EarthFirst Canada Inc. Headquartered in Canada, EarthFirst Canada Inc. (TSX: EF, EF.WT) - - http://www.earthfirstcanada.com/-- fka Dokie Wind Energy Inc., is a developer of renewable wind energy. On Dec. 11, 2007, the company acquired Bonavista Wind Power Inc., Windrise Power Inc., Benchlands Wind Power Corp., Buffalo Atlee Wind Energy Inc., and Grand Valley Wind Farms Inc. ECLIPSE AVIATION: Files for Chapter 11 Protection in Delaware ------------------------------------------------------------- Eclipse Aviation Corp. filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware on Tuesday. The Associated Press relates that Eclipse Aviation failed to produce its light jet as fast as its business plan required, causing a loss on each plane the company built. According to The AP, Eclipse Aviation Chief Financial Officer J. Mark Borseth said that the company had early production delays due to the introduction of several new technologies to build the aircraft. Eclipse Aviation's business plan required aircraft to be produced at "unprecedented volumes" so that the company can price the jet lower than its competitors, the report says, citing Mr. Borseth. The report states that the cost per aircraft rose when Eclipse Aviation failed to meet production targets, and according to Mr. Borseth, "Eclipse continued to lose larger than expected sums of money on each aircraft manufactured." WSJ relates that some industry experts have speculated for months that Eclipse Aviation's production plans and delays had drained its cash reserves. Anthony Clark at The Gainsville Sun states the Eclipse Aviation laid off 650 about employees, or 38% of its workforce, in August 2008. Earlier in November it sent workers home for two days after it was late making payroll, according to The AP. Andy Pasztor at The Wall Street Journal relates that about 1,100 workers didn't receive their salary. Eclipse Aviation, as part of the restructuring, will be able to secure $20 million in loans from its board member Alfred E. Mann and European Technology and Investment Research Center Aviation -- its largest shareholder -- to be used to pay workers, court documents indicate. Eclipse Aviation also faced lawsuits from dissatisfied clients, The AP says. Eclipse Aviation's acting CEO Roel Pieper said in a statement, "In the face of unprecedented economic challenges, it is clear that the sale of the Eclipse business through the Chapter 11 process was the right course of action to maximize the value of the business, secure its future and protect the best interests of Eclipse's stake holders, including customers, suppliers, employees and creditors." The Gainsville Sun relates that the board of directors replaced Eclipse Aviation's founder and CEO Vern Raburn with Roel Pieper -- board chairperson and chairperson of European Technology -- in July. The change is part of an agreement on a new round of financing that will give the company a positive cash flow, Heather Clark at The AP reported in July. According to the AP, Eclipse Aviation was reportedly waiting on about $200 million in financing from a European company. Court documents say that Eclipse Aviation will sell almost all of its assets -- valued at between $100 million and $500 million -- at a public auction in January 2009. Brad Robins -- managing director of Greenhill & Co. Inc., which Eclipse Aviation hired as its financial adviser -- said that Eclipse Aviation would be sold to EclipseJet Aviation International Inc., an affiliate of European Technology, The AP relates. According to The AP, Eclipse Aviation's Eclipse 500 received certification from the European Aviation Safety Agency on Friday, which allows the company to sell its aircraft in 37 European countries. WSJ relates Eclipse Aviation said that it maintained a hefty order backlog of 2,000 planes and was pushing to ramp up sales in Europe. Eclipse Aviation has more than $1 billion in liabilities, says The AP. Eclipse Aviation also said that Peg Billson has resigned as president and general manager of the company's manufacturing division, WSJ reports. About Eclipse Aviation Albuquerque, New Mexico-based Eclipse Aviation Corp. -- http://www.eclipseaviation.com -- makes a six-passenger plane which is powered by two Pratt & Whitney turbofan engines. The company also has a facility in Albany, New York. ECLIPSE AVIATON: Case Summary & 56 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Eclipse Aviation Corporation aka Pronto Aircraft Corporation 2503 Clark Carr Loop, SE Albuquerque, NM 87106 Tel: (505) 245-7555 Fax: (505) 241-8800 Bankruptcy Case No.: 08-13031 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Eclipse IRB Sunport, LLC 08-13031 Type of Business: The Debtors make six-passenger planes powered by two Pratt & Whitney turbofan engines. See: http://www.eclipseaviation.com/ Chapter 11 Petition Date: November 25, 2008 Court: District of Delaware (Delaware) Judge: Mary F. Walrath Debtor's Counsel: Joseph M. Barry, Esq. bankfilings@ycst.com Young, Conaway, Stargatt & Taylor LLP The Brandywine Building, 17th Floor 1000 West Street Wilmington, DE 19801 Tel: (302) 571-6600 -- and -- Allen & Overy LLP Financial Advisor: Greenhill & Co., LLC Claims Agent: Kurtzman Carson Consultants LLC Estimated Assets: $100 million to $500 million Estimated Debts: More than $1 billion The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Kings Road Investments Ltd. bond $92,300,000 598 Madison Avenue, 14th floor New York, NY 10022 HBK Master Fund bond $84,900,000 300 Crescent Court, Suite 700 Dallas, TX 75201 Citadel Horizons bond $53,400,000 131 South Dearborn Chicago, IL 60603 Fuji Heavy Industries trade $31,800,000 1-1-11 Yonan Utsunomiya, Tochigi-ken 32085649 Hampson Aerospace trade $31,300,000 112th St., Suite 300 Grand Prairie, TX 75050 Pratt & Whitney Canada Corp. trade $30,100,000 Marie-Victorin (01B05) Longueuil, Quebec, Canada J4G 1A1 UBS Securities bond $26,100,000 299 Park, Avenue, 29th floor New York, NY 10171 Silver Oak Capital bond $25,600,000 245 Park Avenue, 26th floor New York, NY 10167 PAR Investment Partners LP bond $25,600,000 One International Place Suite 2401 Boston, MA 02110 Citadel Investment Group bond $25,200,000 131 South Dearborn Chicago, IL 60603 Morgan Stanley & Co., Inc. bond $24,100,000 750 Seventh Avenue, Floor 9 New York, NY 10019 Tempo Master Fund LP bond $21,200,000 2 Greenwich Plaza Greenwich, CT 06830 Sandelman Partners Multi- bond $16,200,000 Strategy Master Fund 500 Park Avenue New York, NY 10022 Senaca International Limited bond $14,700,000 590 Madison Avenue, Suite 2800 New York, NY 10022 UT Finance Corp. bond $13,500,000 Office Bldg. G, 400 Main St. Mail Stop 133-54 East Hartford, TC 06108 DKR Capital bond $11,200,000 1281 East Main Street Stamford, CT 06902 Investment Interlachen bond $11,200,000 800 Nicollet Mall, Suite 2500 Minneapolis, MN 55402 Sandelman Partners bond $8,400,000 500 Park Avenue New York, NY 10022 Senaca Capital LP bond $7,700,000 590 Madison Avenue, Suite 2800 New York, NY 10022 Albany Engineered Composites trade $6,900,000 Inc. 112 Airport Drive Silver Point Capital Offshore bond $6,600,000 Fund 2 Greenwich Plaza, Floor 1 Greenwich, CT 06830 Day Jet Corporation customer $6,200,000 3651 FAU Boulevard, Suite 200 Boca Raton, FL 33431 TW Metals trade $5,900,000 760 Constitution Drive Suite 204 Exton, PA 19341 JP Morgan Securities Limited bond $5,600,000 277 Park Avenue, Floor 16 New York, NY 10172 NMSIC Focused LLC bond $5,600,000 2005 South Pacheco Street Suite 100 Santa Fe, NM 87505 Swiss Re Financial Products bond $5,200,000 Corporation 55 East 52nd Street, 39th fl. New York, NY 10055 ATASAY - MyJET Aviation AS customer $5,000,000 Yenibosna Istanbul, Turkey 34917 Chelton Flight Systems contract $4,900,000 Enaer trade $4,800,000 Gran Avda, Jose M. Carrera Santiago, Chile Silver Point Capital Fund LP bond $4,600,000 2 Greenwich Plaza, Floor 1 Greenwich, CT 06830 Innovative Solutions & trade $4,300,000 Support Inc. Mecaer American Inc. trade $4,300,000 3205 Delaunay Laval, Quebec, Canada H7L5A4 Tiriac customer $4,300,000 Julie House 3, Th. Dervis Street Nicosia, Cyprus 01066 O-Connor Global Convertible bond $4,200,000 Arbitage Master 1266 East Main Street Stamford, CT 06902 LaBarge Inc. trade $4,200,000 9900 Clayton Road St. Louis, MO 63178 Basso Multi-Strategy Holding bond $4,000,000 Fund I Ltd. Basso Holding Ltd. bond $3,900,000 1266 East Main Street Stamford, CT 06902 Japan Radio Company Ltd. trade $3,800,000 1-1 Shimorenjaku 5-Chrome Mitaka-Shi, Tokyo, Japan 181510 Figeac Aero trade $3,800,000 Z1 de L'Aiguilla Figeac 46100 AR Airways customer $3,500,000 Presidential Estate, 29 Nizamuddin East New Delhi, India 1110013 Don Morris customer $3,500,000 120 Village Square $49 Orlinda, CA 94563 Argo-Tech trade $3,400,000 671 W. 17th Street Costa Mesa, CA 92627 C&D Zodiac Inc. trade $3,300,000 5701 Bolsa Avenue Huntington Beach, CA 92647 Tamagawa Seike Co., Ltd. trade $3,300,000 1879 Ohyasumi iida-City Iida, Nagano-gan 3958515 Irell & Manella LLP legal services $3,200,000 1800 Avenue of the Stars Los Angeles, CA 90067 Lanic Engineering Inc. trade $3,100,000 12144 6th Street Rancho Cucamonga, CA 91730 Tempo Masterfund bond $2,800,000 2 Greenwich Plaza Greenwich, CT 06839 Dubai Aerospace customer $2,800,000 Ras A1 Khaimah International Airport Ras A1 Khaimah, United Arab Emirates 10227 Alex Who customer $2,400,000 Unite 1108, 11/F Metro Loft Kowloon, HK International Business trade $2,400,000 Machine 1503 LBJ Freeway, 3rd Floor Dallas, TX 75234 Norcot Engineering Ltd. trade $2,400,000 Richmnd House Hill Street Ashton-uinder-Lyne, United Kingdom OL7 OPZ Precision Aerostructures Inc. trade $2,400,000 10291 Trademark Street Suite C Rancho Cucamonga, CA 91730 Rolf Illsley trade $2,300,000 100 Thorndal drive, #401 San Rafael, CA 94903 Guy Hingston trade $2,100,000 Lot 11, Abbott Close, Port Macq Airport Port Macquarie, NSW AU 2444 Airfleet Credit Corporation trade $2,000,000 Landstrasse 25 Vaudz, liechtenstein Germany 9490 Aerotek Aviation LLC customer $2,000,000 7301 Parkway Drive Hanover, MD 21076 Gopal Gadodia trade $2,000,000 129 Lansing Island Drive Indian Harbor Beach, FL 32937 The petition was signed by Chief Executive Officer and Board Chairman Roel Pieper. EMAN REALTY: Case Summary & 6 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Eman Realty Corp 85-94 66th Avenue, 2nd Floor Rego Park, NY 11374 Case No.:08-48010 Petition Date: November 24, 2008 Court: U.S. Bankruptcy Court Eastern District of New York (Brooklyn) Judge: Carla E. Craig Debtor's Counsel: Perry Ian Tischler, Esq. Law offices of Perry Ian Tischler 38-39 Bell Blvd - Ste 200 Bayside, NY 11361 (718) 229-5390 Total Assets: $3,009,000 Total Debts: $1,038,950 A list of the Debtor's 6 largest unsecured creditors is available for free at: http://bankrupt.com/misc/nyeb08-48010.pdf EQUA-CHLOR LLC: Files Plan to Repay Creditors in Turn for Debt -------------------------------------------------------------- Equa-Chlor LLC delivered to the United States Bankruptcy Court for the Western District of Washington a Chapter 11 plan, Eric Larson of Bloomberg News reports. The plan proposed to repay creditors with stock and eliminate about $45 million of debt, according to Mr. Larson. The plan will give 95.5% of the company's stock to Prudential Financial Inc. and other secured creditors; and $300,000 cash to unsecured creditors who asserted as much as $7 million against the company, Mr. Larson says. Prudential Financial asserted as much as $40.2 million in claims, Mr. Larson notes. According to Bill Rochelle of Bloomberg News, the company's proposed Chapter 11 plan and disclosure statement provides for these recoveries: -- the secured creditors can expect to recover 47%. -- unsecured creditors owed $7 million take home 4.3%. -- first-lien creditor owed $47.1 million is to receive 90.5% of the new stock. -- A contractor, Parsons RCI Inc., is expected to recover 87%. Under the plan, construction firm Parson RCI Inc. will receive 5% of the stock and about $3 million cash under a settlement agreement reached earlier in the case, Mr. Larson relates. Parson RCI sued the company seeking payment of service rendered, which lawsuit prompted the company to file for bankruptcy, Mr. Larson reports. According to Bill Rochelle of Bloomberg, the Plan carried out a settlement reached in April where Parsons was awarded an approved secured claim for $9 million. The settlement gave proceeds from collateral: -- the first $10 million to pay off Prudential Insurance Co. of America, as the lenders' agent, for the new $10 million being provided for the reorganization; -- the next $3 million to pay Parsons; -- the next $17 million will be split between the two, with $4 million for Parsons and $13 million for Prudential applied toward pre-bankruptcy loans; and -- the remainder was to be split with 95% for Prudential on account of the pre-bankruptcy loan and 5% for Parsons. The company seeks a January 29, 2009, confirmation hearing. About Equa-Chlor Equa-Chlor, L.L.C., dba Equa-Chlor Marketing, L.L.C., operates a chemical manufacturing plant in Longview, Washington. Equa-Chlor filed for chapter 11 bankruptcy protection February 15, 2008, before the U.S. Bankruptcy Court for the Western District of Washington in Tacoma (Case No. 08-40599). Bruce W. Leaverton, Esq., at Lane Powell PC, serves as the Debtor's bankruptcy counsel. The U.S. Trustee for Region 18 appointed six creditors to serve on an Official Committee of Unsecured Creditors. Its schedules showed assets of $82,984,283 and debt of $65,244,163. FALCON FINANCIAL: Moody's Reviews Ratings on 25 Classes ------------------------------------------------------- Moody's Investors Service places twenty-five classes from four Falcon Financial deals on review for possible downgrade. The securities are backed by automobile dealership franchise loans. The securities were placed on review for possible downgrade in light of the current financial stresses affecting General Motors, Ford, and Chrysler. A substantial portion of dealerships in each of these deals have exposure to the three major U.S. automakers. The complete rating actions are: Falcon Franchise Loan Trust 1999-1 * Class C; Placed on review for possible downgrade, currently A2, * Class D; Placed on review for possible downgrade, currently Baa2, Falcon Franchise Loan Trust 2000-1 * Class A-2; Placed on review for possible downgrade, currently Aa1, * Class B; Placed on review for possible downgrade, currently A1, * Class C; Placed on review for possible downgrade, currently A3, * Class D; Placed on review for possible downgrade, currently Ba1, * Class E; Placed on review for possible downgrade, currently B1, * Class F; Placed on review for possible downgrade, currently Caa1, * Class IO; Placed on review for possible downgrade, currently Aaa, Falcon Auto Dealership LLC, Series 2001-1 * Class A-1; Placed on review for possible downgrade, currently Aa2, * Class A-2; Placed on review for possible downgrade, currently Aa2, * Class B; Placed on review for possible downgrade, currently A3, * Class C; Placed on review for possible downgrade, currently Baa3, * Class D; Placed on review for possible downgrade, currently B2, * Class E; Placed on review for possible downgrade, currently Caa1, * Class F; Placed on review for possible downgrade, currently Caa3, * Class IO; Placed on review for possible downgrade, currently Aa2, Falcon Auto Dealership LLC, Series 2003-1 * Class A-1; Placed on review for possible downgrade, currently Aa2, * Class A-2; Placed on review for possible downgrade, currently Aa2, * Class B; Placed on review for possible downgrade, currently A1, * Class C; Placed on review for possible downgrade, currently Baa1, * Class D; Placed on review for possible downgrade, currently Ba1, * Class E; Placed on review for possible downgrade, currently B3, * Class F; Placed on review for possible downgrade, currently Caa3, * Class IO; Placed on review for possible downgrade, currently Aaa. Falcon Financial Investment Trust, the parent of the issuer, was a specialty finance company that lent to franchised vehicle dealerships. Falcon Financial II, LLC, the primary and special servicer for the Trust, is now owned by AutoStar Realty Operating Partnership, LP. Neither Falcon Financial II, LLC nor AutoStar Realty Operating Partnership, LP is rated by Moody's. FANNIE MAE: Appoints David M. Johnson as Chief Financial Officer ---------------------------------------------------------------- Jay Miller at The Wall Street Journal reports that Fannie Mae has appointed David M. Johnson as its new chief financial officer. Mr. Johnson, according to WSJ, was Hartford Financial Services Group Inc.'s financial chief. WSJ relates that Fannie Mae named David C. Hisey as its chief financial officer in August 2008, as part of an effort to get more experienced people in important posts. Federal regulators then appointed Herbert M. Allison Jr. as president and chief executive, says the report. Mr. Hisey will remain as deputy chief financial officer, according to the report. WSJ quoted Mr. Allison as saying, "David Hisey has done a terrific job leading our financial team through Fannie Mae's transition to conservatorship and during our most recent financial filing." About Fannie Mae The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) -- commonly known as Fannie Mae, is a shareholder-owned U.S. government-sponsored enterprise. Fannie Mae has a federal charter and operates in America's secondary mortgage market, providing mortgage bankers and other lenders funds to lend to home buyers at low rates. Fannie Mae was created in 1938, under President Franklin D. Roosevelt, at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America. The government established Fannie Mae to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home. In 1968, Fannie Mae was re-chartered by the U.S. Congress as a shareholder-owned company, funded solely with private capital raised from investors on Wall Street and around the world. Fannie Mae is the U.S. largest mortgage buyer, according to The New York Times. FGIC CORP: Fitch Withdraws Junk Ratings --------------------------------------- Fitch Ratings has withdrawn the ratings of FGIC Corporation and its financial guaranty subsidiaries Financial Guaranty Insurance Corporation and FGIC UK Ltd.: FGIC FGIC UK Ltd. -- Insurer financial strength (IFS) 'CCC'; Rating Watch Evolving. FGIC Corp -- Long-term issuer rating 'CCC-'; Rating Watch Negative -- $325 million of 6% senior notes due Jan 15, 2034, CCC-', Rating Watch Negative Fitch believes FGIC's financial guaranty franchise is effectively in run-off at the present time and, as a result, that there is limited investor interest in continued coverage of this rating. FGIC Corp. is a U.S. holding company whose primary operating subsidiaries are FGIC and FGIC UK. For June 30, 2008, the company reported consolidated GAAP assets of $6.3 billion and shareholders equity of $846.2 million. FINANCIAL GUARANTY: S&P Junks Financial Strength Rating From 'BB' ----------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its financial strength and financial enhancement ratings on Financial Guaranty Insurance Co. to 'CCC' from 'BB'. The ratings are removed from CreditWatch, where they had been placed with negative implications on June 6, 2008. The outlook is negative. In addition, Standard & Poor's lowered to 'CC' from 'CCC' the issuer credit rating on parent company FGIC Corp. The outlook is negative. "The current loss estimates for FGIC's exposure to 2005-2007 vintages of nonprime and second-lien mortgages and related collateralized debt obligations of asset-backed securities of almost $5 billion remain in excess of the company's claims paying resources of about $4.2 billion," said Standard & Poor's credit analyst Robert Green. In particular, the company's unearned premium reserve has declined by about $1 billion, mostly due to FGIC's reinsurance transaction with MBIA Insurance Corp. whereby FGIC ceded about $166 billion of well-performing municipal par exposure to MBIA. While loss estimates have also declined due to commutation success for several transactions, S&P believes the potential for regulatory intervention remains. The 'CCC' financial strength rating is, in S&P's view, more consistent with the current scenario of a financial guarantor very dependent upon commutations in order to meet its obligations. Also, continued adverse loss development remains a possibility, and additional stress could come in the near term from FGIC's $1.2 billion exposure to troubled Jefferson County, Alabama's sewer revenue bonds. In addition, FGIC's risk profile has shifted in S&P's opinion, and the company's insured portfolio has now become more concentrated and correlated, with structured finance insurance comprising a large majority of par in force. Remaining municipal exposure is of higher risk because the reinsurance agreement with MBIA did not accept non-investment-grade credits and some other higher-risk sectors. FIRSTLIGHT HYDRO: S&P Confirms 'BB-' Rating on $320 Mil. Bonds -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed the 'BB-' rating on FirstLight Hydro Generating Co.'s first mortgage bonds totaling $320 million ($311.25 million outstanding) maturing October 2026. At the same time, S&P removed the ratings from CreditWatch with developing implications. The recovery rating remains at '1', indicating expectations of very high recovery (90%-100%) in the event of a payment default. The outlook is stable. FL Hydro is owned by FirstLight Power Resources, Inc., which owns three other subsidiaries: FirstLight Power Resources Services LLC, FirstLight Power Resources Management LLC, and Mt. Tom Generating Co. The ratings action on FL Hydro's first mortgage bonds results from mildly improved market conditions and higher earnings through the first three quarters of 2008. EBITDA for the entire FirstLight portfolio (including Mt. Tom) was $125.5 million for the first three quarters of 2008, reflecting a positive budget variance of $17.2 million. Financial performance is attributed to improved hydro earnings and effective optimization around financial hedges at Northfield Mountain, in addition to earnings improvements in regulation and locational forward reserve markets in the New England ISO. When the stronger earnings are combined with the structural seniority of the FL Hydro first mortgage bonds (relative to other debt in the FirstLight structure), S&P views the credit quality of the bonds in current and expected market conditions as sufficiently improved to mitigate the concerns that resulted in the negative outlook in December 2007. Although key market conditions remain depressed relative to original management forecasts from the 2006 (fourth quarter) financing of the FirstLight portfolio, S&P believes the long-term credit quality of the first mortgage bonds has improved relative to the December 2007 outlook. S&P expects capacity values and energy margins to reach levels commensurate with the 'BB-' rating over the remaining life of the debt. Though capacity values, as determined by Forward Capacity Auctions in the ISO-NE Forward Capacity Market, are expected to remain low in the upcoming December auction (due to the quantity of new and existing generation, and demand-side bids) S&P believes the prices in this and the power market should recover at a rate that keeps pace with the escalating amortization profile of the bonds. FIRSTLIGHT POWER: S&P Cuts Rating on First-Lien Facilities to 'B+' ------------------------------------------------------------------ Standard & Poor's Ratings Services said it lowered its rating on FirstLight Power Resources Inc.'s first-lien facilities to 'B+' from 'BB-'. The facilities consist of a $550 million first-lien term loan ($504 million outstanding) and $65 million letter of credit facility, both maturing in 2013, along with a $70 million working capital facility maturing in 2011. S&P simultaneously revised the recovery ratings on all first-lien facilities to '2' from '1' indicating revised expectations of substantial recovery (70%-90%) in the event of a payment default. At the same time, S&P lowered the rating on FL Power's $170 million second-lien term loan to 'CCC+' from 'B-', while revising the recovery rating to '6' (0%-10%). S&P removed the debt ratings from CreditWatch with developing implications, where S&P placed them on Sept. 2, 2008. The outlook is stable. FL Power is a wholly owned subsidiary of FirstLight Power Resources Holdings, which is a wholly owned subsidiary of FirstLight Power Enterprises. Inc. Energy Capital Partners L.P. owns FPEI. FirstLight owns four subsidiaries (FirstLight Hydro Generating Co., FirstLight Power Resources Services LLC, FirstLight Power Resources Management LLC, and Mt. Tom Generating Co.). FirstLight Hydro and Mt. Tom own the generation assets. FirstLight Hydro's assets consist of two pumped storage facilities (1,109 megawatts), 11 conventional hydro stations (166 MW), and a gas turbine peaking unit (21 MW). Mt Tom owns a coal-fired steam electric facility (146 MW) in Western Massachusetts. The joint downgrades result from the current and anticipated delays in achieving the targeted level of debt amortization on the first-lien facilities. "As a result, we believe the FL Power debt facilities continue to face refinancing risk in 2013, and--in a simulated default scenario--more debt will be outstanding at default relative to S&P's previous analysis," said Standard & Poor's credit analyst Justin Martin. The outlook is stable. FL Power's rating has bidirectional potential given the% cash sweep (100% up to a targeted schedule, 75% thereafter) on the first lien. If capacity markets recover to $6 to $8/kW-month for at least two auctions or Northfield Mountain can capture $6 to $7/kW-month in gross energy margin for a comparable period, S&P may raise the ratings. Conversely, if peak/off-peak spreads narrow (or energy price volatility declines) at a rate that prevents deleveraging to at least $650/kW (consolidated) by 2010--and cash flows have not been stabilized in some fashion for the years leading up to maturity--S&P may alter the outlook or lower the rating. FRED LEIGHTON: Merrill Lynch Wants A Chapter 11 Trustee ------------------------------------------------------- David Moin at WWD.com reports that Merrill Lynch Mortgage Capital Inc. has filed a motion in the U.S. Bankruptcy Court for the Southern District of New York, seeking the appointment of a Chapter 11 trustee in Fred Leighton Holding, Inc.'s bankruptcy case. According to the report, Merrill Lynch Mortgage said Fred Leighton could run out of operating cash by year-end, and converting Fred Leighton Holding, Inc.'s Chapter 11 reorganization case to Chapter 7 liquidation could be a possibility. According to WWD.com, Merrill Lynch Mortgage called for the replacement of Ralph Esmerian, Fred Leighton's owner, with a "disinterested Chapter 11 trustee." WWD.com reports that Merrill Lynch Mortgage charged Mr. Esmerian with concealing inventory records. Merrill Lynch Mortgage claimed that Mr. Esmerian faild to take the necessary steps to improve Fred Leighton, the report says. As reported in the Troubled Company Reporter on Oct. 15, 2008, the Court ordered Fred Leighton, and its debtor-affiliates to produce documents relating to the collateral of secured creditor Merrill Lynch and to turn over an accounting showing the cost of each item, its currently appraised value, and the disposition of the sale price if it was sold. About Fred Leighton Fred Leighton Holding, Inc. -- http://www.fredleighton.com/-- is a New York-based jewelry retailer owned by Ralph O. Emerian. Fred Leighton has decked countless red-carpet-dwellers in diamonds, including Sarah Jessica Parker, Nicole Kidman, and Catherine Zeta- Jones. It specializes in vintage jewelry from the 18th and 20th centuries, including antique cushion-cut diamonds and antique and estate brooches. It also produces Fred Leighton signature collection that combines past aura and the present materials and craftmanship. The Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on April 15, 2008 (Bankr. S.D.N.Y., Case No. 08-11363). Joshua Joseph Angel, Esq., and Frederick E. Schmidt, Esq., at Herrick, Feinstein LLP, in New York, represent the Debtors. An Official Committee of Unsecured Creditors has been appointed in these cases. The Committee's counsels are Michael Z. Brownstein, Esq., and Rocco A. Cavaliere, Esq., at Blank Rome LLP. No trustee or examiner has been appointed in the cases. The Debtors listed total assets of $128,551,467 and total liabilities of $134,814,367 in their schedules. G SQUARED: Case Summary & 21 Largest Unsecured Creditors -------------------------------------------------------- Debtor: G Squared Fashions, Inc. 1710 Hooper Avenue Los Angeles, CA 90021 Bankruptcy Case No.: 08-30188 Type of Business: The Debtor makes and sells clothes. Chapter 11 Petition Date: November 24, 2008 Court: Central District Of California (Los Angeles) Judge: Barry Russell Debtor's Counsel: Joseph A. Eisenberg, Esq. jae@jmbm.com Jeffer Mangels Butler & Marmaro LLP 1900 Ave. Of The Stars, 7th floor Los Angeles, CA 90067 Tel: (310) 203-8080 Estimated Assets: $1 million to $10 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Reach Well Inc. trade debt $2,594,848 Attn: Grant Lin 122A E. Foothil Blvd. #115 Arcadia, CA 91006 Tel: (626) 675-5376 K. Kandle Inc./ S Line trade debt $1,337,289 Attn: Henry Kim 414-A Boyd Street Los Angeles, CA 90013 Tel: (213) 622-1540 Far East Industrial Co. Ltd. trade debt $1,142,298 Attn: Grant Lin Jingchuan South Road Quingtan Changzhou China Tel: (626) 675-5376 Pacesetter Fabrics LLC notes $922,440 Attn: Ramin 5500 Union Pacific City of Commerce, CA 90040 Tel: (213) 741-9999 Matrix International trade debt $725,765 Attn: Chris Neman 1383 S. Bonnie Beach Place Commerce, CA 90023 Tel: (323) 582-9100 x 120 Guerrero, Anthony & Katherine loan $503,450 Attn: Anthony Guerrero 3151 Francis Street Honolulu, HI 96815 Tel: (808) 927-0040 Grant Lin trade debt $363,525 Royal Inc. dba Solitaire trade debt $315,357 Fashions Levy & Boonshof notes payable $297,500 Pacific Garment USA trade debt $276,659 Changzhou Dongheng Dress trade debt $269,448 Co. Ltd. Sand K Inc. trade debt $236,715 Ningbo Huifu Import & Export trade debt $209,094 Co. Ltd. FTC Comm. Corp./Neman Brothers trade debt $193,660 New Commercial Capital/Total trade debt $191,880 Access The Gersh Law Firm fees $172,982 Ronald Goodlin notes payable $153,350 Red Dart trade debt $152,358 Wan, Robert and Chen, Mark notes payable $100,000 Transac Media notes payable $100,000 Zane, Brett architectural $100,000 The petition was signed by the company president Gregg Fiene. GE COMMERCIAL: S&P Affirms Low-B Ratings on 4 Classes of Certs. --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on eight classes of commercial mortgage pass-through certificates from GE Commercial Mortgage Corp. Series 2003-C1. Concurrently, S&P affirmed its ratings on the remaining 11 classes. The raised ratings reflect increased credit enhancement levels resulting from an 18% paydown of the pool balance since issuance as well as the defeasance of $247.2 million (30%) of the pool's collateral. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Nov. 10, 2008, remittance report, the trust collateral consisted of 116 loans with an aggregate principal balance of $980.8 million, compared with 134 loans totaling $1.189 billion at issuance. Excluding the defeased loans, the master servicer, Bank of America N.A., reported financial information for 100% of the loans in the pool; 97% of the servicer-reported information was year-end 2007 data. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 1.42x for the pool, down from 1.59x at issuance. All of the loans in the trust are current, and no loans are with the special servicer. The trust has incurred two losses totaling $3.0 million to date. The top 10 loans secured by real estate have an aggregate outstanding balance of $247.2 million (25%) and a weighted average DSC of 1.39x, down from 1.45x at issuance. One of the top 10 exposures is on the master servicer's watchlist and is discussed below. Bank of America provided property inspections for nine of the top 10 loan exposures. All nine were characterized as "good." Four loans had credit characteristics consistent with investment- grade rated obligations at issuance. Three of the four loans have defeased. The credit characteristics of the remaining loan, Landmark Atrium III, are no longer consistent with those of investment-grade rated obligations. The Landmark Atrium III loan is the second-largest loan in the pool ($40.0 million, 4.1%) and appears on the master servicer's watchlist. The loan is secured by a 445,060-sq.-ft. office building located in Secaucus, New Jersey, which was built in 1986. This loan is on the watchlist due to low DSC. As of Dec. 31, 2007, reported DSC was 0.45x and occupancy was 40%. Eight loans in the pool (totaling $95.5 million, 9.7%), including the Landmark Atrium III loan, have DSCs below 1.0x. These loans have an average balance of $11.9 million and have experienced a weighted average decline in DSC of 59.6% since issuance. The loans are secured by a variety of retail, office, and multifamily properties. Standard & Poor's has credit concerns with five of these eight loans, which S&P stressed in its analysis. The three loans that are not credit concerns have improving property occupancy and relatively low leverage. Bank of America reported a watchlist of 21 loans ($182.4 million, 18.6%). The largest loan on the watchlist is the Landmark Atrium III loan. The second-largest loan on the watchlist is the Charter Woods Apartments loan ($15.6 million, 1.6%), which is secured by a 24-building, 305-unit multifamily property in Fairborn, Ohio, which was built in 1998. The loan is on the watchlist due to a decline in DSC to 1.08x as of June 30, 2008, from 1.16x at issuance as a result of a decline in rental income. The remaining loans are on the watchlist due to declines in DSC since issuance, low occupancy, and/or upcoming lease rolls. Standard & Poor's stressed the loans on the master servicer's watchlist, along with other loans with credit issues, as part of its pool analysis. The resultant credit enhancement levels adequately support the affirmed ratings. Ratings Raised GE Commercial Mortgage Corp. Commercial mortgage pass-through certificates series 2003-C1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ C AAA AA+ 16.82% D AA+ AA 14.24% E AA AA- 12.57% F A+ A 11.51% G A A- 9.85% H BBB+ BBB 8.18% J BBB- BB+ 5.60% K BB+ BB 4.69% Ratings Affirmed GE Commercial Mortgage Corp. Commercial mortgage pass-through certificates series 2003-C1 Class Rating Credit enhancement ----- ------ ------------------ A-2 AAA 22.73 A-3 AAA 22.73 A-4 AAA 22.73 A-1A AAA 22.73 B AAA 18.48 L BB- 3.94 M B+ 3.63 N B 2.57 O B- 1.97 X-1 AAA N/A X-2 AAA N/A N/A -- Not applicable. GENERAL GROWTH: Fidelity Discloses 13.9% Equity Stake ----------------------------------------------------- Scott C. Goebel, senior V.P. and general counsel of Fidelity Management & Research Company, disclosed in a filing with the Securities and Exchange Commission that Fidelity and its affiliates may be deemed to beneficially own 37,170,421 shares, or 13.883%, of General Growth Properties, Inc., common stock as of Nov. 7, 2008. Fidelity, a wholly owned subsidiary of FMR LLC, is the beneficial owner of 35,690,352 shares or 13.331% of the Common Stock as a result of acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. Edward C. Johnson 3d and FMR LLC, through its control of Fidelity, and the funds each has sole power to dispose of the 35,690,352 shares owned by the Funds. The rest of the shares are held in FMR's other units, including Strategic Advisers, Inc., Pyramis Global Advisors, LLC, and Pyramis Global Advisors Trust Company, both of which are indirect wholly owned subsidiary of FMR, and FIL Limited. Fidelity is based at 82 Devonshire Street, in Boston, Massachusetts. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner with 200-plus shopping malls in 44 states. General Growth is a self-administered and self-managed real estate investment trust. General Growth owns, manages, leases and develops retail rental property, primarily shopping centers. Substantially all of its properties are located in the United States, but the company also has retail rental property operations and property management activities -- through unconsolidated joint ventures -- in Brazil and Turkey. Its Master Planned Communities segment includes the development and sale of residential and commercial land, primarily in large-scale projects in and around Columbia, Maryland; Houston, Texas; and Summerlin, Nevada, well as the development and sale of its one residential condominium project located in Natick (Boston), Massachusetts. General Growth said in a regulatory filing September 30 that its potential inability to address its 2008 or 2009 debt maturities in a satisfactory fashion raises substantial doubts as to its ability to continue as a going concern. General Growth had $29.6 billion in total assets and $27.3 billion in total liabilities as at September 30. As reported in the Troubled Company Reporter on Nov. 21, 2008, General Growth has hired Sidley Austin to assist it in debt restructuring negotiations. The TCR reported on Nov. 14 that General Growth acknowledged in a regulatory filing that it's working with lenders to gain more time to pay off debt, and is also considering asset sales and other ways to raise cash. General Growth has $1.13 billion in debt coming due by the end of the year, with more than $900 million due by Dec. 1, 2008 [Nov. 28]. General Growth said that even if it is successful in addressing these 2008 maturities, an additional $3.07 billion in debt is scheduled to mature in 2009. * * * As reported in the Troubled Company Reporter on Nov. 18, 2008, Moody's Investors Service has downgraded the ratings on General Growth Properties, Inc., certain of its subsidiaries and The Rouse Company LP (to Caa2 from B3 senior secured bank debt; to Caa2 from B3 senior unsecured debt). The ratings remain on review for further possible downgrade. The rating action reflects deepening concerns in the REIT's ability to meet its near term debt obligations and funding needs. GREATWIDE LOGISTICS: Gets Final Approval for $73.6MM Financing -------------------------------------------------------------- Greatwide Logistics Services obtained final approval of its $73.6 million financing facility. The company received interim approval on Oct. 22, 2008. The financing, coupled with the cash generated from Greatwide's daily operations, is more than adequate to meet the daily o perating needs of the business and provides additional operational and financial stability as Greatwide proceeds with its financial restructuring and proposed sale. Raymond B. Greer, president and chief executive officer of Greatwide, said, "Final Court approval of our financing agreement is another important step forward in our sale process. We have already made good progress, we have sufficient cash in place and we are confident that our financial restructuring and proposed sale is the best way to address our capital structure needs while avoiding disruptions to our operations and customer service." Mr. Greer continued, "We are fortunate that we have a solid and profitable business model and can continue to serve our customers and provide the same outstanding service that they have come to expect from Greatwide. We appreciate the strong support of our first lien lenders, customers, business partners and employees as we work through the final stages of our restructuring. We are on track to close by the end of January." Greatwide expects that the proposed sale, once approved by the Court, will help it to significantly reduce debt, enhance its competitiveness and financial strength, and position it for continued growth and profitability. The company anticipates completing its financial restructuring process and closing the transaction by the end of January, approximately 100 days from the date of filing. Greatwide will continue operating under the Greatwide name under new ownership. On Oct. 20, 2008, the company has entered into an agreement to be acquired by an investor group comprised of its first lien secured lenders, including affiliates of Centerbridge Capital Partners and the D. E. Shaw group. As the proposed transaction is being implemented under Section 363 of the United States Bankruptcy Code, other parties will have an opportunity to submit higher and better offers to purchase the company. About Greatwide Logistics Services, Inc. Headquartered in Irving, Texas, Greatwide Logistics Services Inc., is a non-asset based North American provider of "closed loop" transportation services to the grocery and consumer products sectors. The company also provides non-asset-based truckload management, truck brokerage and warehouse and distribution logistics services. Greatwide is a wholly-owned subsidiary of GWLS Holdings, Inc. GWLS Holdings, Inc. and its related debtors filed petitions under Chapter 11 the U.S. Bankruptcy Court for the District of Delaware on October 20. The debtors have requested that these cases be jointly administered under case number 08-12430. The Honorable Peter J. Walsh is presiding over these cases. HEARTLAND AUTOMOTIVE: Files Plan to Stay with Jiffy Lube -------------------------------------------------------- Heartland Automotive Holdings Inc., on Nov. 21, filed a reorganization plan calling for 100% payment to all creditors, and providing that the company will be keeping its 30-year relationship with Jiffy Lube International Inc. intact. In the disclosure statement explaining the terms of their Plan, the Debtors said that their emergence from Chapter 11 under the service mark Jiffy Lube based upon amended Franchise Agreements with JLI and a new oil supply agreement with SOPUS, an affiliate of JLI. As reported by the Troubled Company Reporter, Heartland and its affiliates in January 2008 filed for Chapter 11 after efforts to negotiate a resolution of the disputes involving advertising expenditures, store growth and re-imaging support between the Debtors and JLI failed. JLI had alleged, among other things, that the Debtors were in default of advertising requirements under the Franchise Agreements, and thus entitled it to terminate certain of the franchises. The Debtors commenced the Chapter 11 cases in an effort, among other things, to mitigate the risk of further franchise terminations by JLI. In September 2008, Heartland said it would terminate its franchise agreement with Jiffy Lube and file a Chapter 11 plan built around converting their stores to Castrol Premium Lube Express stores franchised by London-based BP Plc. As reported by the Troubled Company Reporter on Sept. 29, 2008, citing Bloomberg, Heartland sought approval to pay a breakup-fee ranging between $150,000 and $500,000 if the agreement with the BP subsidiary to finance the Debtors' Chapter 11 plan in exchange for dropping the Jiffy Lube brand and reflagging the locations as Castrol Premium Lube Express doesn't work out. The Official Committee of Unsecured Creditors, however, according to Bloomberg News, asked the company to delay its plans to pave way for months of negotiations between the Committee and Jiffy Lube, an operation of Royal Dutch Petroleum Co. The product of the discussions was a plan filed Nov. 21 incorporating a settlement with Jiffy Lube and an agreement to revise the existing franchise arrangement. The Plan intends to treat claims against, and interests in, the Debtors, on these terms: -- Administrative claimants owed $24 million will receive full payment; -- Secured creditors owed $214 million will receive full recovery in the form of new debt; -- Unsecured creditors with $12.3 million in claims can either accept a note for full payment or 70% in cash when the Plan is approved; -- Affiliates of Blackstone Group LP are to receive new common and preferred stock intended to give them a 100% return on their $67 million claim; and -- JLI and SOPUS will waive all claims against the Debtors in exchange for the assumption of their agreements. Existing stockholders, specifically Quad-C VI, QCMI, Quad-C VI Management Corp., HAS Funding LLC, Quad-C Advisors VI, LLC, Terrence Daniels, Stephen Burns, Matthew Engel, Gary Binning, Robert Haswell, will infuse $28 million to finance the Plan. These parties will retain equity interests in Heartland as the existing stock will be converted to 400,000,000 shares of new class B common stock after the Effective Date. The disclosure statement explaining the Plan also says BP will receive a fee of $150,000 in light of the Debtors' termination of the Castrol Agreement. The hearing to consider adequacy of the information in the Disclosure statement, which is required before the Debtors can begin soliciting votes on the Plan, is scheduled for Dec. 18. The Disclosure Statement warns that the Plan is based on "ongoing, but as yet incomplete, negotiations," Bloomberg notes. The secured lenders, the DS notes, have not conveyed support for the Plan. A full-text copy of Heartland's Chapter 11 Plan is available for free at: http://bankrupt.com/misc/Heartland_Plan_Nov21.pdf A full-text copy of Heartland's Disclosure Statement is available for free at: http://bankrupt.com/misc/Heartland_DS_Nov21.pdf About Heartland Automotive Based in Omaha, Nebraska, Heartland Automotive Holdings Inc. -- http://www.heartlandjiffylube.com/-- and its debtor-affiliates are franchisees of Jiffy Lube International Inc. since 1980. The Debtors operate 438 quick-oil-change stores in 20 states across the Eastern, Midwestern and Western U.S. They employed in excess of 4,000 employees. The company and its nine affiliates filed for Chapter 11 protection on Jan. 7, 2008 (Bank. N.D. Tex. Lead Case No. 08-40057). Thomas E. Lauria, Esq., Patrick Mohan, Esq., Gerard Uzzi, Esq., Lisa Thompson, Esq., at White & Case LLP, and Jeff P. Prostok, Esq., at Forshey & Prostok, LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims, noticing and balloting agent. The U.S. Trustee for Region 6 appointed seven creditors to serve on an Official Committee of Unsecured Creditors on these cases. The Committee selected Cadwalader, Wickersham & Taft LLP, and Munsch, Hardt, Kopf & Harr, PC as co-counsel. As of Nov. 29, 2007, the Debtors' financial statements reflected assets totaling about $334 million and liabilities totaling about $396 million. HEAVEN INVESTMENT: Files Amended Schedules of Assets and Debts -------------------------------------------------------------- Heaven Investment Holding Corp. filed with the U.S. Bankruptcy Court for the Eastiern District of California its amended schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $18,960,000 B. Personal Property C. Property Claimed as Exempt D. Creditors Holding $25,942,104 Secured Claims E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $6,066,453 Unsecured Non-priority Claims ----------- ----------- TOTAL $18,960,000 $32,008,557 About Heaven Investment Headquartered in Sacramento, California, Heaven Investment Holding Corp. is a real estate corporation. The company filed for Chapter 11 relief on Aug. 29, 2008 (Bankr. E.D. Calif. Case No. 08-32280). Judge Thomas Holman presides over the case. Yasha Rahimzadeh, Esq., represents the Debtor as counsel. HERNANDO OAKS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Hernando Oaks, LLC dba Hernando Oaks Golf & Country Club P.O. Box 940 Gulf Breeze, FL 32562 Case No.: 08-18669 Petition Date: November 24, 2008 Court: U.S. Bankruptcy Court Middle District of Florida (Tampa) Judge: Caryl E. Delano Debtors' Counsel: Scott A Stichter, Esq. Stichter, Riedel, Blain & Prosser 110 E. Madison Street, Suite 200 Tampa, FL 33602-4700 Tel: 813-229-0144 Fax: 813-229-1811 sstichter.ecf@srbp.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/flmb08-18669.pdf HOME INTERIORS: Reports $5.6M Net Loss in October ------------------------------------------------- Bloomberg News reports that Home Interiors & Gifts Inc., reported a $5.6 million net loss in October on $9.1 million in net revenue. The operating loss for the month was $850,000. The Hon. Barbara J. Houser of the United States Bankruptcy Court for the Northern District of Texas set Nov. 21, 2008, at 9:00 a.m., to consider motion to appoint Chapter 11 trustee filed by Home Interiors & Gifts Inc. and its debtor-affiliates on Oct. 31, 2008. As reported in the Troubled Company Reporter on Nov. 6, 2008, Home Interiors & Gifts Inc. and its debtor-affiliates are asking the U.S. Bankruptcy Court for the Northern District of Texas to appoint a Chapter 11 trustee. The Chapter 11 Trustee, according to the Debtors, is expected to enable the bankruptcy process to move forward and avoid any delays caused by the disputes between the Debtors and their creditors. The creditors oppose the proposal. Where the creditors are asking for authority to sue insiders, the company wants a procedure where insiders can buy the company's operations at a Dec. 15 auction, Bill Rochelle of Bloomberg said. About Home Interiors Headquartered in Carrollton, Texas, Home Interiors & Gifts, Inc. -- http://www.homeinteriors.com/-- manufactures, imports and distributes indoor and outdoor home decorative accessories. It was founded by Mary Crowley in 1957. Through its affiliates, the company has a significant presence in Mexico, Puerto Rico, and Canada. Annual revenue in 2007 reached $300 million. When Mary Crowley, died in 1986, her son, Don Carter continued the business operation nearly debt-free. In a leveraged transaction in 1998, private equity firm of Hicks, Muse, Tate, and Furst acquired 66% of the parent company, which resulted in the imposition of more than $500 million in debt on the Debtors. In the face of decreased sales and increased debt load, bondholders canceled their debts in February 2006 in exchange for receiving most of the outstanding equity of the Debtors. About 40% of the goods the Debtors sell are now acquired from manufacturers in China. In the last decade, sales volume in the U.S. has waned, but the Debtors reported that sales in Mexico and Puerto Rico significantly increased. The company and six of its affiliates filed for Chapter 11 protection on April 29, 2008 (Bankr. N.D. Tex. Lead Case No. 08-31961). Andrew Jillson, Esq., Cameron Kinvig, Esq., Robert McCormick, Esq., and Mike Massad, Esq., at Hunton & Williams, LLP, represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 6 has appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Richard A. Lindenmuth at Boulder International LLC, is designated as CRO. Munsch Hardt Kopf & Harr, PC represents 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 each. HRP MYRTLE: Court OKs. Dec. 15 Auction for Project -------------------------------------------------- Bloomberg News reports that HRP Myrtle Beach Holdings LLC obtained approval from the U.S. Bankruptcy Court for the District of Delaware to solicit bids and conduct an auction for its rock-and- roll theme park in Myrtle Beach, South Carolina at auction on Dec. 15. Bids are due Dec. 12, and the hearing for approval of the sale will be Dec. 18. According to Bloomberg News, the company has not signed any deals with any bidder and has not selected any stalking horse bidder. The minimum sale price is $35 million, unless the secured lenders agree to a lower price. The company gave up hope of arranging financing or reorganizing. The senior secured lenders owed $15 million previously said there was "no realistic prospect for a successful reorganization," according to the report. Costing $400 million to build, the park's sales were $19.7 million since it opened in April, Bloomberg says. About HRP Myrtle Based in Myrtle Beach, South Carolina, HRP Myrtle Beach Holdings, LLC -- owns and operates Hard Rock Park, a rock-n-roll theme park in Myrtle Beach, South Carolina, under a long-term license agreement with Hard Rock Cafe International (USA), Inc. The company and six of its affiliates filed for Chapter 11 protection on Sept. 24, 2008 (Bankr. D. Del. Lead Case No. 08-12193). Steven Goodwin will serve as the Debtors' chief executive officer. The U.S. Trustee for Region 3 has not appointed creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed assets and debts of between $100 million and $500 million each. INNOVATIVE STEEL: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Innovative Steel Technologies, Inc. 2900 E. 7th Avenue Tampa, FL 33605 Case No.: 08-18684 Petition Date: November 24, 2008 Court: U.S. Bankruptcy Court Middle District of Florida (Tampa) Judge: Caryl E. Delano Debtor's Counsel: David W Steen, Esq. David W Steen, PA 602 South Boulevard Tampa, FL 33606-2630 Tel: 813-251-3000 Fax: 813-251-3100 dwslaw@yahoo.com Total Assets: $773,286 Total Debts: $2,475,559 A list of the Debtor's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/flmb08-18684.pdf INVESTMENTS & STRATEGIES: Case Summary & 3 Largest Creditors ------------------------------------------------------------ Debtor: Investments & Strategies LLC 1246 Daniels Dr Los Angeles, CA 90035 Case No.: 08-30209 Petition Date: November 24, 2008 Court: U.S. Bankruptcy Court Central District Of California (Los Angeles) Judge: Victoria S. Kaufman Debtor's Counsel: David Burkenroad, Esq. Law Offices of David Burkenroad 155 W Washington Blvd #1005 Los Angeles, CA 90015 213-741-1790 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 3 largest unsecured creditors is available for free at: http://bankrupt.com/misc/cacb08-30209.pdf IOWA TELECOMMUNICATIONS: Moody's Ratings Unmoved by Sherburne Deal ------------------------------------------------------------------ In Moody's Investors Service's opinion, Iowa Telecommunications Services, Inc.'s announced acquisition of substantially all assets of Sherburne Tele Systems, for about $80.6 million, does not materially alter Iowa Telecom's credit profile, as the company's Ba3 corporate family rating can accommodate the temporary increase in leverage to close the acquisition. Iowa Telecom's rating outlook is stable. Sherburne's coverage area is relatively contiguous to Iowa Telecom's recently acquired Bishop Communications' territories, and provides the company with an opportunity to enhance its growing footprint in the communities situated northwest of Minneapolis. The full acquisition price is about 7.1x Sherburne's trailing EBITDA of over $11 million. Iowa Telecom expects to recognize operating synergies from the merger in line with similar ILEC acquisitions. The company will fund the purchase through an incremental $75 million term loan provided by the Rural Telephone Finance Cooperative and the rest by drawing on its revolver. Although Moody's projects the company's leverage to rise to about 4.4x at closing of Sherburne at 2Q '09, the company will have the capacity to delever to below 4.0x by 2010. Moody's believes that the company will apply free cash flow to reduce the revolver outstandings to get leverage below 4.0x. Iowa Telecom will acquire about 15,700 ILEC access lines, 10,000 CLEC access lines, 13,600 data customers and 3,600 video customers, in addition to 700MHz wireless spectrum Sherburne acquired in the recent auctions and will increase its ownership stake in a 2,500 mile fiber optic network in Minnesota to 66%. On Feb. 8, 2008, Moody's opined that Iowa Telecom's acquisition of Bishop Communications would not alter its Ba3 corporate family rating, which was assigned on Oct. 25, 2004. Iowa Telecommunications Services, Inc. is a rural local exchange carrier based in Newton, Iowa. IOWA TELECOMMUNICATIONS: Sherburne Merger Cues S&P's Rating Cuts ---------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its ratings on Newton, Iowa-based rural telecommunications services provider Iowa Telecommunications Services Inc., including the corporate credit rating, which S&P lowered to 'B+' from 'BB-'. At the same time, S&P is assigning a 'B+' issue-level rating and a '3' recovery rating to the company's proposed $75 million incremental senior secured term loan. The '3' recovery rating indicates expectations for meaningful (50%-70%) recovery in the event of a payment default. The ratings on the incremental term loan are based on preliminary terms and conditions and are subject to review of final documentation. The outlook is stable. This action follows the company's announcement that it has agreed to acquire substantially all of the assets of Sherburne Tele Systems Inc., a closely held telecommunications company serving 25,700 access lines in nine communities near Minneapolis/St. Paul, for $80.6 million in cash. S&P expects Iowa Telecom to fund the purchase through a proposed $75 million incremental loan and additional borrowings under its $100 million revolving credit facility. The incremental term loan is expected to be issued under the same credit agreement as the existing senior secured credit facility. Pro forma for the transaction, S&P estimates leverage will increase to about 4.4x debt to last-12-month EBITDA. "The downgrade reflects," said Standard & Poor's credit analyst Naveen Sarma, "our expectation that ongoing access-line losses, which reached 7.3% on the legacy properties in the third quarter of 2008, coupled with the current economic climate and increasing competition from cable telephony and wireless substitution, make it unlikely that Iowa Telecom will meaningfully de-lever below 4x over the intermediate term." Pro forma for the announced transaction, the company will have $608 million in outstanding debt. KATHY COX: Files for Chapter 7 Liquidation ------------------------------------------ State schools superintendent Kathy Cox and her husband John, a homebuilder, have filed for Chapter 7 bankruptcy, court documents say. Court documents indicate that Ms. Cox listed above $3.5 million in liabilities and less than $650,000 in assets. According to the documents, most of the debt comes from Mr. Cox's Pebble Hill Homes, a business he started in Fayetteville in 2001. Citing a spokesperson, Rhonda Cook at Ajc.com reports that Ms. Cox, who makes about $125,000 a year, has no role in Pebble Hill but is a co-signer on loans for it. Ajc.com relates that almost $2.9 million of the $3.5 million in debts are unsecured. The report says that the Coxes had 11 credit cards with balances from $400 to Shell, or as much as $19,500 on a VISA and more than $54,000 on an American Express Costco Business Card. According to Ajc.com, Ms. Cox won $1 million on the television game show "Are You Smarter Than a Fifth Grader?" almost two months ago, and said at that time that she would donate the winnings to the Atlanta Area School for the Deaf in Clarkston; the Georgia School for the Deaf in Cave Spring in northwest Georgia; and to the Georgia Academy for the Blind in Macon. Ms. Cox's spokesperson Dana Tofig confirmed that the plan will be honored and a "gift foundation" has already been created to handle the money, the report states. Ms. Tofig, says the report, admitted that she wasn't sure if the money had been sent to the schools yet, but said that it would be distributed no later than December 2008. Ajc.com relates that a $450,000 Peachtree City house is the Coxes' biggest listed asset, and is where they live with two teenage sons. According to the report, two mortgages on the house total $442,908. Court documents say that the Coxes will keep the home but give up Mr. Cox's Fayetteville office, which is security for an outstanding loan of $140,400. The Coxes' monthly income, after taxes and other withholdings, is $7,808, the court documents indicate. That amount, says Ajc.com, is Ms. Cox's salary, while Mr. Cox currently has no income. The report states that the couple listed $9,839 in monthly expenses. Court documents say that Mr. Cox drew salary of $12,000 last year, and $5,000 in 2008 so far. A few of Pebble Hill's creditors already started filing collection claims against the company and the Coxes in Fayette County courts, and among them was Neighborhood Community Bank of Newnan, the firm's biggest unsecured creditor with a $732,776 claim, according to court documents. Neighborhood Community, the documents state, filed a demand for payment in Fayette Superior Court in August 2008. Ajc.com relates that First Horizon Construction Lending and supplier Pro-Build South filed a demand in September 2008. The Coxes got credit counseling from Money Management Inc. before filing for bankruptcy. Court documents say that Pebble Hill Homes' five largest creditors -- a mix of lenders and suppliers -- include: -- Neighborhood Community Bank, with a $732,776 claim; -- First Horizon Construction Lending, with a $680,000 claim; -- Heritage Bank, with a $266,000 claim; -- Stock Building Supply, with a $227,000 claim; and -- Capital One Bank, with a $61,755 claim. Court documents indicate that about $2,357 of the unsecured claims was for 2008 Fayette County property taxes. Ajc.com relates that the Coxes closed an IRA account on Nov. 12, 2008. The documents say that the Coxes also owe more than $33,000 on two car loans for a 2008 Ford F-150 and a 2008 Ford Edge. The Coxes, according to the documents, have continued to donate $100 per month to Peachtree City United Methodist Church. About Kathy Cox Kathy Cox is a former Fayette County teacher and legislator now in her second term as schools chief. She oversees a state system of 1.7 million students and an education budget of $9.5 billion, most of which it passes to local systems. KNOBLAUCH BUILDERS: Judge Frank Approves Disclosure Statement ------------------------------------------------------------- Carolyn Okomo of the Deal reports that the Hon. Eric Frank of the United States Bankruptcy Court for the Eastern District of Pennsylvania approved a disclosure statement explaining a fifth amended Chapter 11 plan of reorganization filed by Knoblauch Builders Inc. A hearing is set for Jan. 21, 2009, to consider confirmation of the plan. Judge Frank will review on Dec. 10, 2008, a motion to convert or dismiss the company's case filed by the U.S. Trustee for Region 3, citing failure to file monthly operating reports and continued accrual of outstanding tax obligations, Ms. Okomo citing papers filed with the Court. According to Ms. Okomo, the Court held off ruling on the company's disclosure statement for months to allow it to resolve several objections filed against the plan. Pennsylvania Office of the Attorney General protested to the company's plan saying it failed to set a basis wherein the company could pay off its creditors, Ms. Okomo says. Under the plan, a $492,252 Bucks County Bank secured claim held by Bucks County Bank will be satisfied over the course of 10 years, Ms. Okomo says. The bank will also extend a credit line equal to the difference between 70% of the company's eligible accounts receivable and its claim, Ms. Okomo relates. Secured tax claims and priority nontax claims, the report says, would be paid in full over a period no longer than seven years while unsecured creditors a expected to receive a pro-rata portion of 50% of company's net cash flow over five years. Moreover, unsecured portions of the claims would be subordinated to those of unsecured creditors, the Deal says. Unsecured creditors would also receive annual payments of $65,000 for five years through a distribution trust, the report says. Security interests would be canceled under the plan, Ms. Okomo says. Headquartered in Bensalem, Pennsylvania, Knoblauch Builders, Inc. -- http://www.knoblauchbuilders.com/-- is a home builder and contractor. The company filed for Chapter 11 protection on Dec. 15, 2006 (Bankr. E.D. Penn. Case No. 06-15934). Albert A. Ciardi, III, Esq., at Ciardi & Ciardi, P.C., represents the Debtor. When the Debtor filed for protection from its creditors, it listed assets and debts between $1 million and $10 million each. KOSSIE R. POWEL: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Kossie R. Powell 117 Wilson Ave. Grove Hill, Al 36451 Bankruptcy Case No.: 08-14644 Chapter 11 Petition Date: November 20, 2008 Court: Southern District of Alabama (Mobile) Debtor's Counsel: Barry A. Friedman, Esq. bky@bafmobile.com Barry A. Friedman and Associates P.C. P. O. Box 2394 Mobile, AL 36652-2394 Tel: (251) 439-7400 Total Assets: $1,645,861 Total Debts: $3,613,843 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/alsb08-14644.pdf The petition was signed by Kossie R. Powell, the debtor. LAND O'LAKES: Material Weakness Won't Affect Moody's 'Ba1' Rating ----------------------------------------------------------------- Moody's Investors Service said that Land O'Lakes, Inc.'s identification of a material weakness in internal controls over financial reporting does not at this time affect the company's Ba1 corporate family rating, its speculative grade liquidity rating of SGL-3 or its stable rating outlook. Moody's will monitor the company's prospective ability to produce audited financial statements for fiscal year ended Dec. 31, 2008, by April 15, 2009, -- the due date for audited fiscal financial statements to be delivered under the most restrictive credit agreement. Moody's action is based on its expectation that this issue will be resolved by the end of January 2009. Moody's notes, however, that if Moody's expectations change regarding timely resolution of this accounting issue, or if Moody's believes that a waiver of the financial statement delivery covenant will be required, Moody's would likely place the company's long-term ratings under review for possible downgrade. On Nov. 10, Land O'Lakes reduced its year-to-date net earnings for the period ending Sept. 30, 2008, from $224 million to $212 million. The reason for the reduction was the discovery that cost of goods sold in its Agronomy segment was understated by $10.1 million as a result of errors in inventory costing. The amount of the earnings reduction is not significant, in Moody's view, given expected normalized EBITDA of $443 million in fiscal 2008. In addition to this accounting error, Land O'Lakes disclosed certain issues with its MoArk LLC subsidiary that are contributing factors in the company's identification of material weakness in internal controls over financial reporting. Land O'Lakes uncovered an error in the financial statements of its MoArk LLC subsidiary in August 2008, related to the choice of accounting treatment applied to a 2005 real estate transaction. (MoArk had reported a pre-tax gain of $7 million in 2005 when it sold a property and simultaneously entered into a lease that did not require rental payments.) In August 2008, Land O'Lakes asked KPMG LLP, the auditor for the consolidated company, to audit restated MoArk financial statements for fiscal 2005, 2006 and 2007 in which the gain is removed from 2005, among other matters. MoArk's management has discussed these matters with predecessor accounting firm Moore Stephens Frost. MSF provided the auditors' report on MoArk's 2005 audited financial statements referenced by KPMG in KPMG's auditors' report on the consolidated 2005 financial statements. MSF has not issued an auditors' report on MoArk's restated 2005 financial statements. Accordingly, KPMG has withdrawn its auditors' report on the consolidated financials from fiscal 2005 through 2007. As a result, Land O'Lakes and its board's Audit Committee have concluded that the 2007 10K may not be relied upon. On Nov. 10, 2008, KPMG informed Land O'Lakes that it could not complete its audit of MoArk due to inadequate books and records related to the formation of MoArk and for the acquisitions made by MoArk and its subsidiaries during the calendar years 2000 to 2002. Specifically, KPMG noted that records were incomplete primarily with respect to the original capital contributions and the subsequent purchase price allocations, impacting goodwill and working capital items, among other items. Land O'Lakes is exploring other options for completing an audit of MoArk's financial statements. MoArk accounted for only $34.7 million of the consolidated company's $236.7 million of pre-tax earnings for the nine months ended Sept. 30, 2008. However, any failure to resolve the issue of a MoArk audit could result in an inability to file unqualified fiscal 2008 financials by April 15, 2009, potentially necessitating a waiver or amendment under the company's bank agreement and receivables securitization facility. These are not the first accounting issues of late for Land O'Lakes. As noted in Moody's credit opinion of July 11, 2008, the company had become aware, in March 2008, of previously undetected misstatements in the financial statements of its Agriliance LLC joint venture, related to vendor rebates. Land O'Lakes accounts for its investment in Agriliance LLC on an equity basis. Land O'Lakes quarterly financial results for the quarters ending March 31, June 30, and Sept. 30, 2007 and 2006 were deemed to be materially misstated. The company believes that new policies and procedures have remedied this material weakness. While the amounts involved in the restatements of Agriliance and in the earnings reduction of September 2008 were not significant, these events raise questions regarding financial oversight at the company's subsidiaries and joint ventures, in Moody's view. Land O'Lakes, Inc. based in Arden Hills, Minnesota, is an agricultural cooperative focusing on dairy food, animal feed, and agricultural crop inputs. Revenues for the twelve months ended Sept. 30, 2008 were approximately $12 billion. Moody's most recent rating action was an upgrade in the company's corporate family rating and certain of its long term ratings, affirmation of its bank facility rating and its senior unsecured notes ratings, a downgrade in its speculative grade liquidity rating and the assignment of a stable outlook on July 9, 2008. LANDAMERICA FINANCIAL: Fitch Cuts Issuer Default Rating to 'B' -------------------------------------------------------------- Fitch Ratings has downgraded the Insurer Financial Strength ratings of LandAmerica Financial Group's insurance subsidiaries to 'BB' from 'BBB+'. Fitch has also downgraded the Issuer Default Rating of LFG to 'B' from 'BBB-'. Additionally, Fitch has placed LFG and subsidiaries on Rating Watch Negative. Fitch's rating action follows Fidelity National Financial's announcement that it will not acquire LFG as previously planned after finishing its due diligence. Further, Fitch's downgrade considers LFG's deteriorating financial condition, constrained liquidity and consequences from not meeting the renegotiated covenants of its credit agreements. LFG's stockholders' equity fell by more than one-half in the third quarter to $485 million at the close of the third quarter 2008. Consequently, financial leverage is high at greater than 50% as of Sept. 30, 2008. Significant contributors to LFG's year-to-date $674 million net loss include: a $225 million write-off of goodwill, a $90 million reserve strengthening and a $275 million provision taken against LFG's deferred income tax assets. The goodwill impairment applied to both title operations and lender services business segments following an annual testing of goodwill balances. The impairment testing is not complete and consequently, additional charges may be taken during the fourth quarter of 2008. As of Sept. 30, 2008, goodwill balances were $615 million, resulting in negative tangible equity of at least $130 million before considering other intangible assets. LFG faces serious liquidity constraints now that the acquisition plans have fallen through. Specifically, LFG has approximately $290 million invested in auction-rate securities as part of its 1031 exchange business that currently cannot be accessed. The illiquidity of LFG's ARS could result in losses as the company liquidates other investment securities to meet cash needs. It is unclear at this time if the State of Nebraska Department of Insurance will allow LFG to trade ARS for more liquid investments at the title underwriting subsidiaries. Following a renegotiation of covenants on $250 million of bank debt, LFG was not in compliance as of the end of third quarter- 2008. Consequently, in the absence of a new agreement, the borrowed money would be due immediately. Currently, LFG is unable to access the $50 million remaining under its bank line of credit. Lastly, Fitch estimates consolidated statutory surplus at the title underwriting subsidiaries to be $300 million as of Sept. 30, 2008, down from $426 million at year-end 2007. Surplus has been depleted by operating losses and dividends to the holding company and consequently, Fitch's estimate of LFG's risk-adjusted capital ratio is substantially below 100%. The new 'BB' insurer financial strength ratings reflect the potential vulnerability of the insurers' obligations. Fitch has downgraded these ratings and placed them on Rating Watch Negative: LandAmerica Financial Group, Inc. -- Long-term IDR to 'B' from 'BBB-'; -- Senior debt to 'B-/RR5' from 'BB+'. Commonwealth Land Title Insurance Company Commonwealth Land Title Insurance Company of New Jersey Land Title Insurance Company of Pasadena Lawyers Title Insurance Corporation Title Insurance Company of America Transnation Title Insurance Company -- IFS to 'BB' from 'BBB+'. LANDAMERICA FINANCIAL: S&P Cuts Counterparty Credit Rating to 'B-' ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it lowered its counterparty credit and financial strength ratings on LandAmerica Financial Group Inc.'s title insurance operations to 'BB-' from 'BBB+'. Standard & Poor's also said that it lowered its counterparty credit rating on LFG to 'B-' from 'BB+'. In addition, Standard & Poor's revised the CreditWatch status of all the ratings to negative from developing. "These rating actions follow Fidelity National Financial Inc.'s termination of its definitive merger agreement with LFG," noted Standard & Poor's credit analyst James Brender. "Our actions reflect strains on LFG's liquidity, including a breach of a covenant, and LandAmerica's deteriorating operating performance." In the third quarter of 2008, LFG reported a net loss of $600 million, primarily because of an impairment of goodwill and intangible assets, a decrease in revenues because of the significant drop in mortgage originations, and adverse loss reserve development for policy years 2005 through 2007. LFG has indicated it is not in compliance with certain covenants in its credit agreements for its $150 million revolving line of credit ($100 million outstanding) and its $150 million senior notes. Standard & Poor's does not believe LFG has the internal resources to repay these obligations if the creditors exercise their right to declare LFG to be in default, which would make principal and interest due immediately. A default under those obligations would trigger cross-default provisions and cause LFG's $224 million senior convertible notes to also become due immediately. There is tremendous uncertainty regarding the resolution of the CreditWatch status of the ratings. Standard & Poor's rating assumes LFG's creditors will waive the existing covenant violations. Key assumptions in S&P's opinion include LFG's sale of Centennial Bank and LandAmerica's payment of substantial dividends to LFG in 2009. S&P believes LandAmerica will have ordinary dividend capacity of at least $100 million for 2009. Failure of any of these things to occur would lead to us to lower the ratings on LFG again. Title industry fundamentals remain weak, and Standard & Poor's has effectively had a negative outlook on the title insurance sector since July 2007. "Our primary concern is the sharp decline in mortgage originations that began in the second half of 2007," Mr. Brender said. "We also note that title insurers have been recording larger provisions for claims, and this trend has hurt operating results. Mortgage originations are the life blood of the title insurance industry." Consequently, a decrease in originations usually translates into weaker profitability for the title insurance industry. According to the Mortgage Bankers Assoc., mortgage originations plummeted 18% in the first nine months of 2008. Furthermore, the MBA's most recent forecast predicts mortgage originations will decline another 10% in 2009. LB UBS: S&P Affirms Low-B Ratings on Three Classes of Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on four classes of commercial mortgage pass-through certificates from LB UBS Commercial Mortgage Trust 2003-C1. Concurrently, S&P affirmed its ratings on 14 other classes from this series. The upgrades are due to increased credit enhancement levels resulting from a 29% reduction in the mortgage pool balance since issuance, as well as the defeasance of the collateral securing 30% ($290.5 million) of the pool. The affirmations reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Nov. 18, 2008, remittance report, the trust collateral comprised 98 loans with an aggregate principal balance of $976.6 million, compared with 114 loans totaling $1.371 billion at issuance. The master servicer, Wachovia Bank N.A., reported financial information for 99% of the loans in the pool, excluding the defeased loans. Eighty percent of the servicer-reported information was partial-year 2008 data, and the remainder was year-end 2007 data. Based on this information, Standard & Poor's calculated a weighte d average debt service coverage of 1.67x, compared with 1.66x at issuance. With the exception of a $3.3 million loan that is 30-plus days delinquent, all of the loans in the trust are current, and no loans are with the special servicer. To date, the trust has incurred two losses totaling $4.2 million. The top 10 exposures secured by real estate have an aggregate principal balance of $409.4 million (42%) and a weighted average DSC of 1.80x, up from 1.74x at issuance. Standard & Poor's reviewed the property inspection reports provided by Wachovia for the assets underlying the top 10 exposures, which characterized the properties as "good." The credit characteristics for two loans were consistent with those of investment-grade rated obligations at issuance. These loans continue to retain their credit characteristics. Details are: -- The Stonebriar Centre loan, the largest exposure in the pool ($168.3 million, 17%), is secured by 694,300 sq. ft. of a 1.65 million-sq.-ft. super-regional mall in Frisco, Texas. Wachovia reported a 2.17x DSC and 98% occupancy for the six months ended June 30, 2008. Although the average in-line base rents at the property have risen 19% since issuance, percentage rent and other income have declined and operating expenses have increased. This caused net cash flow and S&P's resulting valuation to decline 17% since issuance. Despite the decline, the loan continues to exhibit credit characteristics consistent with those of investment-grade rated obligations. -- The Westmoreland Mall loan, the second-largest exposure in the pool ($73.9 million, 8%), is secured by 561,250 sq. ft. of a 1.28 million-sq.-ft. regional mall and shopping center in Greensburg, Pennsylvania. The master servicer reported a 1.69x DSC and 94% occupancy for the six months ended June 30, 2008. S&P's adjusted NCF declined 13% since issuance due to higher operating expenses. S&P has credit concerns with the five loans in the pool that reported DSCs of less than 1.0x. These loans ($13.9 million, 1%) are secured by industrial, retail, mobile home park, and multifamily properties. They have an average balance of $2.8 million and have experienced a weighted average decline in DSC of 58% since issuance. Most of the properties securing these five loans have experienced a decline in NCF due to low occupancies. All five of the loans appear on Wachovia's watchlist. Wachovia reported a watchlist of 13 loans totaling $35.1 million (4%). The largest loan on the watchlist is Springfield Industrial ($5.8 million, 1%), which is secured by a 552,500-sq.-ft. industrial warehouse property in West Springfield, Massachusetts. This loan is on the master servicer's watchlist because of a low DSC of 0.82x for the 12 months ended Dec. 31, 2007. The property was 84% occupied as of June 2008. The remaining loans are on the watchlist due to declines in DSC since issuance, low occupancy, and/or upcoming tenant lease rolls. Standard & Poor's stressed the loans on the watchlist and other loans with credit issues as part of its analysis. The resultant credit enhancement levels adequately support the raised and affirmed ratings. Ratings Raised LB UBS Commercial Mortgage Trust 2003-C1 Commercial mortgage pass-through certificates Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ E AA+ AA 14.31% F AA AA- 12.55% G A+ A 10.62% H A A- 8.69% Ratings Affirmed LB UBS Commercial Mortgage Trust 2003-C1 Commercial mortgage pass-through certificates Class Rating Credit enhancement ----- ------ ------------------ A-2 AAA 23.61% A-3 AAA 23.61% A-4 AAA 23.61% A-1b AAA 23.61% B AAA 20.98% C AAA 18.35% D AAA 16.24% J BBB+ 7.46% K BBB 6.41% L BB+ 4.48% M BB 3.78% N BB- 3.08% X-CL AAA N/A X-CP AAA N/A N/A - Not applicable. LEVEL 3: Moody's Cuts Probability of Default Rating to Ca --------------------------------------------------------- Moody's Investors Service downgraded Level 3 Communications, Inc.'s probability of default rating to Ca from Caa1 in response to the company's Nov. 17 announcement that it had reached an agreement to raise $400 million in new convertible subordinated debt, the proceeds of which, together with cash on hand, will be used to fund discounted tender offers for three existing convertible debt issues that mature in 2009 and 2010. Given that Level 3's near-term growth prospects and liquidity are likely to be adversely impacted by rapidly deteriorating general economic conditions, even if the proposed distressed exchange transactions are successfully completed, Moody's also placed the company's debt ratings on review for possible downgrade. The tender offers contemplate debt holders accepting an early and certain return of cash in exchange for that return being at a discount to the face value of their holdings (73% weighted average) as a means of the company addressing three near-term debt maturities that, in aggregate, may become a source of significant financial stress. These two key features, the discounted price and the targeting of near-term maturities so as to address potential financial stress, cause the transaction to be viewed as analogous to a partial restructuring; this is deemed to represent a default by Moody's. The company's PDR has therefore been revised to a level, Ca, which reflects the strong likelihood of the transaction closing and the subsequent deemed default occurring. The Ca PDR will prevail during the tender offer process. Upon the tender closing, the PDR will be repositioned to Ca/LD to reflect the limited default that will have then occurred. The "/LD" suffix will be removed after three business days, at which time it is also anticipated that Moody's ratings review will be concluded. The review will include Level 3's PDR and applicable expected loss rate being repositioned to levels appropriate for the company's circumstance, proforma for the definitive outcome following the exchange transactions. With the CFR being a function of the PDR and EL, movement in either could result in the CFR and ratings of individual debt instruments being subject to downward revision (note that in the event that some debt issues are retired in their entirety, the relevant ratings for the same would be withdrawn). Moody's previous rating action was on Nov. 7, 2007, at which time Level 3's speculative grade liquidity rating was downgraded to SGL-2 (good liquidity) from SGL-1 (very good liquidity) as a consequence of ongoing depletion of the company's cash position. It was also noted that, depending on cash generation, the SGL rating could continue to migrate downwards, particularly as proximity to the September 2009 debt maturity advanced. Together with a comprehensive assessment of the company's cash generation in the current business environment, and the resulting credit protection measures, liquidity will also be a focus of the pending ratings assessment. In the interim, the SGL-2 speculative grade liquidity rating was affirmed as part of the rating action given the company's ability to still finance itself through 2009 (albeit with more questionable liquidity heading into 2010). The rating action processes additional point estimate revisions caused by subsequent minor and opportunistic debt retirement activities reported in the company's September 10-Q. Downgrades: Issuer: Level 3 Communications, Inc. -- Probability of Default Rating, Downgraded to Ca from Caa1 Outlook Actions: Issuer: Level 3 Communications, Inc. -- Outlook, Changed To Rating Under Review From Stable Issuer: Level 3 Financing, Inc. -- Outlook, Changed To Rating Under Review From Stable On Review for Possible Downgrade: Issuer: Level 3 Communications, Inc. -- Corporate Family Rating, Placed on Review for Possible Downgrade, currently Caa1 -- Subordinate Conv./Exch. Bond/Debenture, Placed on Review for Possible Downgrade, currently Caa3 (LGD6, 94%) -- Senior Unsecured Conv./Exch. Bond/Debenture, Placed on Review for Possible Downgrade, currently Caa2, LGD assessment revised to (LGD5, 82%) from (LGD5, 81%) -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Caa2, LGD assessment revised to (LGD5, 82%) from (LGD5, 81%) Issuer: Level 3 Financing, Inc. -- Senior Secured Bank Credit Facility, Placed on Review for Possible Downgrade, currently B1 (LGD1, 07%) -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Caa1, LGD assessment revised to (LGD3, 49%) from (LGD3, 47%) Headquartered in Broomfield, Colorado, Level 3 Communications, Inc. is a publicly traded holding company that, through its operating subsidiaries, provides Internet protocol-based telecommunications services such as transport and interconnection to companies with high bandwidth needs. Annual revenue is approximately $4.4 billion dollars, of which more than 90% is derived within the United States. The company's approximately 27,000 route miles connect an aggregate of approximately 7,300 traffic aggregation points and buildings in approximately 125 markets in the United States and Europe. LEXINGTON PRECISION: Has Until Jan. 26 to File Chapter 11 Plan -------------------------------------------------------------- The Hon. Martin Glenn of the United States Bankruptcy Court for the Southern District of New York extended for a second time the exclusive periods of Lexington Precision Corp. and Lexington Rubber Group, Inc. to: a) file a Chapter 11 plan until Jan. 26, 2009, and b) solicit acceptances of that plan until Feb. 25, 2009. The Court finds that despite substantial differences with the Official Committee of Unsecured Creditors on the valuation of the Debtors, the Debtors have been negotiating in good faith with a view towards agreeing on a viable plan of reorganization. Therefore, the Court says, it would not be appropriate to terminate exclusivity now. The Debtors' exclusive period to file a Chapter 11 plan, as first extended, expired on Oct. 28, 2008. About Lexington Precision Headquartered in New York, Lexington Precision Corp. -- http://www.lexingtonprecision.com/-- manufactures tight- tolerance rubber and metal components for use in medical, automotive, and industrial applications. As of Feb. 29, 2008, the companies employed about 651 regular and 22 temporary personnel. The company and its affiliate, Lexington Rubber Group Inc., filed for Chapter 11 protection on April 1, 2008 (Bankr. S.D.N.Y. Lead Case No.08-11153). Christopher J. Marcus, Esq., and Victoria Vron, Esq., at Weil, Gotshal & Manges, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Systems - Bankruptcy Solutions LLC as claims agent. The U.S. Trustee for Region 2 appointed six creditors to serve on an Official Committee of Unsecured Creditors. Paul N. Silverstein, Esq., and Jonathan Levine, Esq., represents the Committee as counsel. When the Debtors filed for protection from their creditors, they listed total assets of $52,730,000 and total debts of $88,705,000. LEXINGTON PRECISION: US Trustee Objects to Amended Plan ------------------------------------------------------- Diana G. Adams, the U.S Trustee for Region 2 asks the U.S. Bankruptcy Court for the Southern District of New York to deny approval of Lexington Precision Corp., and its debtor-affiliates' Disclosure Statement, which was filed with the Court on Aug. 8, 2008. The U.S. Trustee contends that the Disclosure Statement does not explain why certain Non-Debtor Releases contained in the Amended Plan are justified. Specifically, under the Amended Plan, holders of claims and equity interests against the Debtors that are either (a) deemed to accept the Amended Plan, or (b) that do not vote to accept the Amended Plan, in consideration of the services provided to the Debtors, will release, unconditionally and forever, each present or former officer, director, employee, and other non-debtors, from all liabilities based, in whole or in part, on, among other things, all claims that relate to the operation of the Debtors' business, transactions giving rise to the claim against the Debtors, on any matter related to the Debtors' Chapter 11 cases, except for willful misconduct, gross negligence, fraud, or criminal conduct. The U.S. Trustee Court relates that non-debtor releases are appropriate only in rare situations, and should not be approved unless truly unusual circumstances render the release terms important to the success of the plan. The U.S. Trustee adds that, while the unsecured creditors will be paid in full under the Amended Plan, asbestos claimants are not provided a 100% recovery. In addition, the U.S. Trustee points out that the Non-Debtor Releases in the Amended Plan are much too broad, and does not provide any reason for them. Finally, the U.S. Trustee says the Amended Plan fails to include appropriate language carving out Government claims from the proposed releases. The Debtors and the U.S. Trustee are currently discussing revisions to the non-debtor release provision. The U.S. Trustee has filed this objection to preserve her rights in the event that such discussions are no resolved to her satisfaction. Distribution Under the Amended Plan Under the Amended Plan and Disclosure Statement, unsecured claims, other than senior subordinated note claims, junior subordinated note claims and asbestor-related claims, will receive an initial 25% distribution and, thereafter, three consecutive 26.5% distributions six, twelve and eighteen months after the initial distribution. Unsecured asbestos related claims, which are separately classified, will be paid out of the proceeds of the Debtors' insurance policies, and as a result, the U.S. Trustee says it is unclear what percentage recovery asbestos related claimants will receive. Holders of the Debtors' common stock will be unaltered, although subject to dilution because of the increase in the number of authorized shares of Lexington Precision Corp. common stock. About Lexington Precision Headquartered in New York, Lexington Precision Corp. -- http://www.lexingtonprecision.com/-- manufactures tight- tolerance rubber and metal components for use in medical, automotive, and industrial applications. As of Feb. 29, 2008, the companies employed about 651 regular and 22 temporary personnel. The company and its affiliate, Lexington Rubber Group Inc., filed for Chapter 11 protection on April 1, 2008 (Bankr. S.D.N.Y. Lead Case No.08-11153). Christopher J. Marcus, Esq., and Victoria Vron, Esq., at Weil, Gotshal & Manges, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Systems - Bankruptcy Solutions LLC as claims agent. The U.S. Trustee for Region 2 appointed six creditors to serve on an Official Committee of Unsecured Creditors. Paul N. Silverstein, Esq., and Jonathan Levine, Esq., reresents the Committee as counsel. When the Debtors filed for protection from their creditors, they listed total assets of $52,730,000 and total debts of $88,705,000. LIGHTPOINT CLO: Moody's Downgrades Ratings on Two Classes of Notes ------------------------------------------------------------------ Moody's Investors Service has downgraded these notes issued by LightPoint CLO 2004-1, Ltd.: Class Description: Class D Secured Notes -- Prior Rating: Baa2 -- Prior Rating Date: Feb. 26, 2004 -- Current Rating: Baa3 Class Description: Class E Subordinated Secured Notes -- Prior Rating: Ba3 -- Prior Rating Date: Aug. 8, 2008 -- Current Rating: B1 LightPoint CLO 2004-1, Ltd. is a collateralized loan obligation backed primarily by a portfolio of senior secured loans. Moody's notes that the transaction provides that the computation of Overcollateralization Ratios include a haircut to par value of any collateral obligation with a market value below 85% of its principal balance. (This haircut will continue until such obligation trades at a market value of at least 95% of its principal balance for 60 consecutive days). The Trustee reports that the haircut is being applied to a significant proportion of the underlying collateral. As reported by the Trustee, on Nov. 7, 2008, the deal failed all of its Overcollateralization Tests, as a result all interest proceeds and principal proceeds on the last payment date were used to pay principal on the Class A-1A notes after paying interest due to the Class A-1A, Class A-1B, and Class B Notes. The Class X, Class C, Class D, and Class E Notes are currently deferring interest. The rating actions taken with respect to the Class D and Class E Notes reflect the Overcollateralization Test failures as well as the continued decline in the average credit rating of the portfolio. LODGENET INTERACTIVE: Moody's Cuts Corporate Family Rating to 'B3' ------------------------------------------------------------------ Moody's Investors Service downgraded LodgeNet Interactive Corporation's corporate family rating to B3 from B1 and its probability of default rating to Caa1 from B2. The company's bank credit facility was downgraded to B3 from B1. LodgeNet was also assigned an SGL-4 speculative grade liquidity rating, indicating a "weak" liquidity profile over the forward 12- month rating horizon. LodgeNet's rating outlook remains negative. The rating actions were prompted by the liquidity implications of the very dramatic recent change in the macroeconomic environment, which serve to exacerbate the already scheduled tightening of maintenance financial covenants with the passage of time through next year. Given LodgeNet's dependence on discretionary consumer and business spending, material sequential declines in EBITDA are now a real possibility. In turn, this may compromise the company's ability to manage within the bounds of financial covenants specified in its bank credit facility. After year-end, the leverage covenant tightens to 4.25x and when the third quarter is tested, the covenant tightens again to 4.00x. Company disclosure indicates there is significant discretion over capital expenditures, however. That plus additional operating cost initiatives may allow the covenants to be respected without the need to request accommodation from bank lenders. Nonetheless, the outcome of the race to resize the debt burden (while maximizing the EBITDA stream) in advance of the two forthcoming step-downs next year is quite uncertain. Should lender accommodation be required, market precedent indicates that credit facility pricing would have to be marked-to-market. The resulting incremental interest expense could be material and may constrain the company's investment capacity (even if the business environment suddenly, albeit unexpectedly, improves). In turn, with service to hotel partners perhaps being impaired, the secondary and tertiary impact of the matter may be quite significant. This background underpins the rating actions, including the SGL-4 rating assignment. Issuer: LodgeNet Interactive Corporation Downgrades: -- Probability of Default Rating, Downgraded to Caa1 from B2 -- Corporate Family Rating, Downgraded to B3 from B1 -- Senior Secured Bank Credit Facility, Downgraded to B3 from B1 Assignments: -- Speculative Grade Liquidity Rating, Assigned SGL-4 Outlook Actions: -- Outlook, affirmed as negative LodgeNet Interactive Corporation, headquartered in Sioux Falls, South Dakota, provides cable, video-on-demand and video game entertainment services to the lodging industry. LOOK COMMUNICATIONS: August 31 Balance Sheet Upside-Down by C$6MM ----------------------------------------------------------------- Look Communications Inc.'s balance sheet at Aug. 31, 2008, showed total assets of C$14.7 million and total liabilities of C$20.4 million, resulting in a shareholders' deficit of C$5.7 million. Look Communications reported its financial and operating results for the fiscal year ended Aug. 31, 2008. Financial highlights for the year ended Aug. 31, 2008, included: -- Service and sales revenue for the year ended Aug. 31, 2008, was C$20.3 million compared to C$24.6 million for the year ended Aug. 31, 2007; -- Operating expenses decreased approximately C$7.5 million or 30.6% to C$16.8 million for the year ended Aug. 31, 2008, as compared to C$24.3 million for the period ended Aug. 31, 2007; -- The loss and comprehensive loss for the years ended Aug. 31, 2008, and 2007 was C$7.3 million and C$11.9 million About Look Communications Headquartered in Montreal, Quebec, Look Communications Inc. -- http://www.look.ca/-- is a wireless broadband carrier, delivering a spectrum of communications services, Including wireless digital television distribution, dial-up and internet access, and Web- related services, Including Web-hosting and domain name registration. The company's service and sales revenue consists of broadcast services, internet services, other services, and equipment sales and installation revenue. Broadcast services revenue is earned from the provision of services to residential and commercial customers. Internet services revenue is earned from monthly and annual subscriptions from individuals and businesses for access to the Internet. Other services revenues are earned from web-hosting, domain name registration, and web- server, co-location. Equipment sales revenues are earned from the sale of equipment to customers. MBD INC: Owner Andrew Meghdadi Blames Bankruptcy on Housing Slump ----------------------------------------------------------------- Jenn Klein at Chico Enterprise Record reports that MBD, Inc.'s owner Andrew Meghdadi blamed his company's bankruptcy on weakening housing market. According to Chico Enterprise, Mr. Meghdadi said that the housing market is the lowest he's seen in his 17 years of building in the Chico, but said that he is "confident that the market is going to change and we are confident that we are going to succeed, get out of bankruptcy and continue with our day-to-day business going forward." Chico Enterprise relates that the city of Chico granted Mr. Meghdadi a three-year extension of a development agreement for Belvedere Heights, his south Chico subdivision. According to the report, Mr. Meghdadi said that he expects the extension to give him enough time to complete the 191 homes planned. The report says that Mr. Meghdadi will continue work on Belvedere Heights on 20th Street east of Bruce Road. About 18 homes are completed and 173 are left to construct, the report states, citing Mr. Meghdadi. Mr. Meghdadi said that he woudn't build the remaining homes at Sierra Vista -- his second subdivision on Bruce Road -- ahead of time, but will start work on those houses as customer orders come in, Chico Enterprise relates. Mr. Meghdadi, according to Chico Enterprise, said that he also has 223 lots mapped and ready for a subdivision in Red Bluff, but will wait to start building the houses until the market rebounds. MBD's bankruptcy filing means that the city of Chico will become one of the unsecured creditors for the $126,000 the Mr. Meghdadi owes, Chico Enterprise reports, citing Assistant City Attorney Roger Wilson. According to the report, Mr. Wilson said that Mr. Meghdadi was supposed to pay the full amount to the city by July 2, 2008, but Mr. Meghdadi asked the city to defer the fees for two years. City Planning Director Steve Peterson said that the city didn't want to defer the fees because it anticipated the money as revenue to help balance its budget, the report states. Chico Enterprises relates that Mr. Meghdadi said that as long as he keeps building houses, the bankruptcy filing won't affect the his ability to pay back the city, and the fees paid for every building permit application will go toward the $126,000 owed. Most of MBD's small creditors have already been paid, Chico Enterprises says, citing Mr. Meghdadi. MBD, according to the report, is trying to get permission from the court to pay several remaining small creditors for money owed before the Chapter 11 filing. About MBD Chico, California-based MBD, Inc., a.k.a. Meghdadi Builder Developer, operates a construction company. It filed for Chapter 11 protection on Oct. 6, 2008 (Bankr. E. D. Calif. Case No. 08- 34347). William C. Lewis, Esq., who has an office in Palo Alto, California, represents the Debtor in its restructuring effort. The company listed assets of $10 million to $50 million and debts of $10 million to $50 million. MERCURY COMPANIES: Court Sets Jan. 30 Claims Bar Date ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Colorado has set a Jan. 30, 2009 bar date for filing proofs of claim in Mercury Companies, Inc., and its debtor-affiliates' jointly administered bankruptcy cases. Denver, Colorado-based Mercury Companies Inc. is a holding company primarily for subsidiaries that until recently were involved in the settlement services industry, including title services, escrow services, real estate services, mortgage services, mortgage document preparation, and settlement services software development. Mercury has since wound down or sold its operations. The company filed for Chapter 11 protection on Aug. 28, 2008. On Oct. 24, 2008, six direct and indirect subsidiaries of Mercury, Arizona Title Agency, Inc., Financial Title Company, Lenders Choice Title Company, Lenders First Choice Agency, Inc., Texas United Title, Inc., dba United Title of Texas and Title Guaranty Agency of Arizona, Inc., also filed voluntary Chapter 11 petitions, which cases are jointly administered with Mercury's (Bankr. D. Colo. Lead Case No. 08-23125). Daniel J. Garfield, Esq., Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck, LLP, and Kathleen A. Odle, at Sherman & Howard LLP, represent the Debtors as counsel. Lars H. Fuller, Esq., at Jessop and Company, PC represents the Official Committee of Unsecured Creditors as counsel. MERCURY COMPANIES: May Employ General Aviation as Aircraft Broker ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Colorado approvedd Mercury Companies, Inc.'s amended application to employ General Aviation Services, L.L.C., as its aircraft broker, effective as of Nov. 18, 2008, the date of the Application. GAS' listing is to expire on Dec. 31, 2008. This Amended Application was filed to update and revise the Original Application pursuant to an amended and restated Aircraft Sales Management Agreement. Mercury is the owner of an aircraft and related personal property housed in a hangar at Centennial, Colorado. As of Oct. 10, 2008, Mercury owed U.S. Bancorp Equipment Finance, Inc., which financed the purchase of the aircraft in 2003, $2,105,289.63, excluding attorney's fees and collection costs. Mercury told the Court that it intends to sell the aircraft, which has a book value of approximately $3,035,000, to pay its debt to U.S. Bancorp Equipment Finance and potentially, to generate excess sales proceeds for its bankruptcy estate. GAS will receive a flat-rate commission of $85,000 if the Aircraft is sold by Mercury. Greg Duckson, president of GAS, assured the Court that the firm does not represent any interest adverse to Mercury Companies, Inc., its estate, and creditors, and that the firm is a "disinterested person" as that term is defined in the Bankruptcy Code. Denver, Colorado-based Mercury Companies Inc. is a holding company primarily for subsidiaries that until recently were involved in the settlement services industry, including title services, escrow services, real estate services, mortgage services, mortgage document preparation, and settlement services software development. Mercury has since wound down or sold its operations. The company filed for Chapter 11 protection on Aug. 28, 2008. On Oct. 24, 2008, six direct and indirect subsidiaries of Mercury, Arizona Title Agency, Inc., Financial Title Company, Lenders Choice Title Company, Lenders First Choice Agency, Inc., Texas United Title, Inc., dba United Title of Texas and Title Guaranty Agency of Arizona, Inc., also filed voluntary Chapter 11 petitions, which cases are jointly administered with Mercury's (Bankr. D. Colo. Lead Case No. 08-23125). Daniel J. Garfield, Esq., Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck, LLP, and Kathleen A. Odle, at Sherman & Howard LLP, represent the Debtors as counsel. Lars H. Fuller, Esq., at Jessop and Company, PC represents the Official Committee of Unsecured Creditors as counsel. MERCURY COMPANIES: May Employ Garden City as Claims Agent --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Colorado has granted Mercury Companies, Inc., and its debtor-affiliates permission to employ The Garden City Group, Inc. as their Claims, Noticing, and Balloting Agent. The Garden City Group will receive, maintain, record and otherwise administer the proofs of claim filed in the Debtors' bankruptcy cases and such other necessary or appropriate administrative matters, including servicing at the Debtors' request, as balloting agent, nunc pro tunc to Nov. 10, 2008. The Garden City Group will be compensated on a monthly basis, in accordance with the Bankruptcy Administration Agreement, upon the receipt of reasonably detailed invoices, and will also be entitled to reimbursement of all reasonable and necessary expenses upon the presentation of appropriate documentation. Denver, Colorado-based Mercury Companies Inc. is a holding company primarily for subsidiaries that until recently were involved in the settlement services industry, including title services, escrow services, real estate services, mortgage services, mortgage document preparation, and settlement services software development. Mercury has since wound down or sold its operations. The company filed for Chapter 11 protection on Aug. 28, 2008. On Oct. 24, 2008, six direct and indirect subsidiaries of Mercury, Arizona Title Agency, Inc., Financial Title Company, Lenders Choice Title Company, Lenders First Choice Agency, Inc., Texas United Title, Inc., dba United Title of Texas and Title Guaranty Agency of Arizona, Inc., also filed voluntary Chapter 11 petitions, which cases are jointly administered with Mercury's (Bankr. D. Colo. Lead Case No. 08-23125). Daniel J. Garfield, Esq., Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck, LLP, and Kathleen A. Odle, at Sherman & Howard LLP, represent the Debtors as counsel. Lars H. Fuller, Esq., at Jessop and Company, PC represents the Official Committee of Unsecured Creditors as counsel. MERCURY COMPANIES: Committee Wants to Retain Jessop as Counsel -------------------------------------------------------------- The Official Unsecured Creditors' Committee appointed in Mercury Companies, Inc., and its debtor-affiliates' jointly administered bankruptcy cases asks the U.S. Bankruptcy Court for the District of Colorado for authority to retain Jessop & Company, P.C. as its bankruptcy counsel. As the Committee's counsel, Jessop & Company will: a) Advise the Committee regarding it rights, duties and responsibilities; b) Advise the Committee, prepare and file pleadings, and appear in Court; c) Conduct factual and legal inquiries into such matters as may be determined by the Committee including but not limited to Debtors' assets, liabilities and financial condition; d) Advise the Committee regarding any proposed sale of Debtors' assets including the proposed bidding procedures, if any, related thereto; e) Advise the Committee of any possible alternatives to the sale of Debtors' assets; f) Advise the Committee on any plan of reorganization proposed by Debtors, and possible alternatives to such a plan; and g) Advise the Committee generally on this bankruptcy case and to take any actions that the Committee may direct. As compensation for their services, Jessop & Company's professionals currently bill: Hourly Rate ----------- Douglas W. Jessop, Esq. $420 Lars H. Fuller, Esq. $260 Legal Assistants $70-$90 Douglas W. Jessop, Esq., the founder and head of Jesso & Company, assures the Court that the firm does not represent or hold any interest adverse to the Debtors or its estate, and that the firm is a "disinterested person" at the term is defined under Sec. 101(14) of the Bankruptcy Code. Denver, Colorado-based Mercury Companies Inc. is a holding company primarily for subsidiaries that until recently were involved in the settlement services industry, including title services, escrow services, real estate services, mortgage services, mortgage document preparation, and settlement services software development. Mercury has since wound down or sold its operations. The company filed for Chapter 11 protection on Aug. 28, 2008. On Oct. 24, 2008, six direct and indirect subsidiaries of Mercury, Arizona Title Agency, Inc., Financial Title Company, Lenders Choice Title Company, Lenders First Choice Agency, Inc., Texas United Title, Inc., dba United Title of Texas and Title Guaranty Agency of Arizona, Inc., also filed voluntary Chapter 11 petitions, which cases are jointly administered with Mercury's (Bankr. D. Colo. Lead Case No. 08-23125). Daniel J. Garfield, Esq., Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck, LLP, and Kathleen A. Odle, at Sherman & Howard LLP, represent the Debtors as counsel. MEZZ CAP: Fitch Cuts and Assigns Rating Outlooks to Six Classes --------------------------------------------------------------- Fitch Ratings has downgraded and assigned Rating Outlooks to six classes of Mezz Cap's commercial mortgage pass-through certificates, series 2005-C3,: -- $3.2 million class D to 'BB' from 'BBB'; Outlook Negative; -- $1.8 million class E to 'BB-' from 'BBB-'; Outlook Negative; -- $1.6 million class F to 'B+' from 'BB+'; Outlook Negative; -- $1.7 million class G to 'B' from 'B+'; Outlook Negative; -- $4.9 million class H to 'CC/DR2' from 'CCC/DR1'; -- $0.6 million class J to 'C/DR6' from 'CCC/DR5'. In addition, Fitch has affirmed and assigned Outlooks to these classes: -- $41.0 million class A at 'AAA'; Outlook Negative; -- Interest only class X at 'AAA'; Outlook Negative; -- $1.8 million class B at 'AA'; Outlook Negative; -- $1.9 million class C at 'A'; Outlook Negative. Fitch does not rate the $3.5 million class K certificates. The downgrades are the result of an increase in Fitch's expected losses due to the transfer of one additional specially serviced asset (0.6%) and an increase in loss expectations corresponding to two specially serviced assets (0.8%), as well as an additional eight loans of concern (5.9%) since Fitch's last rating action. The Rating Outlooks reflect the likely direction of any rating changes over the next one to two years. The Negative Rating Outlooks reflect the possibility for additional loans to default in the future and the likelihood for little to no recoveries. As of the November 2008 remittance, the pool's aggregate certificate balance has decreased 2.3% to $62.0 million from $63.4 million at issuance. Three loans (3.2%) have defeased. Each mortgage loan consists of two notes: the A note, or senior component, which is not included in this trust's mortgage assets, and the B note. The B notes in this pool consist of subordinate interests in the first mortgage loans. All loans are secured by traditional commercial real estate property types and are subject to standard intercreditor agreements that limit the rights and remedies of the B note holder in the event of default and upon refinancing. Due to their subordinate positions, B notes which default and incur a loss are typically 100% non-recoverable. Nine assets (6.4%) are currently in special servicing with losses expected. The largest specially serviced asset (1.2%) is collateralized by an industrial warehouse in Bend, OR, and is 90 days delinquent. The asset transferred to the special servicer in October 2007 due to payment default. The special servicer of the related A note is pursuing foreclosure. The second largest specially serviced asset (0.9%) is collateralized by a multifamily property in Tallahassee, Florida and is real estate owned. The asset transferred to the special servicer in February 2007 due to imminent default. The special servicer of the related A note is marketing the property. Fitch has identified an additional 19 loans of concern (15.9%). No loans are scheduled to mature throughout the remainder of 2008 or in 2009. The next scheduled maturities come in 2010, when six non-defeased loans (4.7%) mature. MILANO, CLAURE LLC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Milano, Claure LLC dba Claure Milano, LLC 808 West Diamond Avenue Gaithersburg, MD 20878 Bankruptcy Case No.: 08-25305 Chapter 11 Petition Date: November 19, 2008 Court: District of Maryland (Greenbelt) Judge: Thomas J. Catliota Debtor's Counsel: Gloria Lee, Esq. glorialee.law@gmail.com 302 Deep Trail Lane Rockville, MD 20850 Tel: (240) 575-0616 Estimated Assets: $1,000,000, to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/mdb08-25305.pdf The petition was signed by Grover Claure-Sandoval. MORGAN STANLEY: S&P Puts 'D' Ratings 1999-FNVI Classes L and K -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings to 'D' on classes L and K from Morgan Stanley Capital I Inc.'s series 1999- FNVI. The previous ratings on the classes were 'CCC' and 'B-', respectively. The downgrade of class L reflects a $1.3 million principal loss realized after the liquidation of one of two specially serviced assets that were recently resolved by the special servicer, CWCapital Asset Management LLC. The downgrade of class K reflects cumulative interest shortfalls related to the resolutions. At this time, S&P expects the cumulative interest shortfalls on class K to remain outstanding for an extended period. Details of the resolved assets ($13.8 million total exposure) are: -- Governors Crossing was an REO asset secured by a 135,000-sq.- ft. outlet shopping center in Sevierville, Tennesse., about 30 miles east of Knoxville. The loan was transferred to the special servicer on March 4, 2003, for monetary default and became REO on June 1, 2005. The asset had a $10.8 million exposure. The trust incurred a $3.3 million realized loss when the asset was liquidated on Oct. 20, 2008. -- The Suburban Lodge of Pineville loan had a total exposure of $3 million and was secured by a 137-room hotel built in 1997 in Pineville, North Carolina. The loan was transferred to the special servicer on Aug. 14, 2008, for imminent default. The loan paid off in full upon its maturity date on Nov. 1, 2008. Interest shortfalls totaling $539,922 from interest on advances and liquidation fees will affect the trust over the next several payment periods. According to the remittance report dated Nov. 17, 2008 (which was restated on Nov. 21, 2008), the shortfalls affected class G and all of the certificates subordinate to it. Classes G and H are expected to recover their shortfalls over the next four months from the cash flow of subordinate certificates. Standard & Poor's will continue to evaluate this transaction and will take any necessary CreditWatch or rating actions as S&P deems appropriate. Ratings Lowered Morgan Stanley Capital I Inc. Commercial mortgage pass-through certificates series 1999-FNV1 Rating ------ Class To From Credit Enhancement ----- -- ---- ------------------ K D B- 2.61% L D CCC N/A N/A - Not applicable. MTM REALTY TRUST: Case Summary & 10 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: MTM Realty Trust 10 Manchester Road Derry, NH 03038 Bankruptcy Case No.: 08-13428 Chapter 11 Petition Date: November 19, 2008 Court: District of New Hampshire Live Database (Manchester) Debtor's Counsel: Jennifer Rood, Esq. jrood@bernsteinshur.com Bernstein Shur 670 N. Commercial Street, Suite 108 P.O. Box 1120 Manchester, NH 03105-1120 Tel: (603) 623-8700 Fax: (603) 623-7775 Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,000 to $10,000,000 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/nhb08-13428.pdf The petition was signed by Leide Ailed Acevedo Velez, president of the company. NEBRASKA EDUCATIONAL: Fitch Cuts Rating on $19.5 Mil. Bonds to BB ----------------------------------------------------------------- Fitch Ratings has downgraded the rating on $19.5 million education facility revenue bonds issued by the Nebraska Educational Finance Authority on behalf of Midland Lutheran College (MLC, or the college) to 'BB' from 'BB+'. The bonds are a general obligation of the college. The Rating Outlook is Stable. The rating downgrade reflects MLC's significantly weakened credit profile, characterized by a continued decline in demand, sizeable operating deficits, significant endowment draws, and high debt burden. Fitch believes these challenges jeopardize the college's ability to maintain a reasonable level of liquidity to manage its financial obligations. While MLC is taking steps to address enrollment declines and strengthen its financial performance, its ability to achieve significant gains will be difficult in the current economic environment. The 'BB' rating indicates MLC retains a limited level of liquidity which it can rely upon as it seeks to address its financial and operational difficulties. Should the college fail to stimulate a reversal of current trends over the near term, additional downward rating action may be considered. MLC's full-time student enrollment trends have been negative since fall 2004, despite its high level of tuition discounting. Its traditional fall 2008 FTE enrollment of 743 is 9.2% below that of fall 2007; however, participation in the college's adult degree completion program program did increase to 40 students. MLC is dependent upon tuition and auxiliary revenue, however, its small size limits operating flexibility. The college has reorganized its student admissions department and new program initiatives are underway to rebuild enrollment. In an effort to reduce costs, the college has begun an academic collaborative effort with nearby Dana College and instituted back office efficiencies. The college's enrollment declines have negatively affected financial performance, contributing to structural deficits which MLC has attempted to bridge with increased support from its endowment and the use of short-term note obligations. In fiscal 2007, the college's board increased the endowment's spending rate from 6% to 8%. In addition, it authorized additional draws of unrestricted endowment earnings of $1.1 million in fiscal 2007 and $2.7 million in fiscal 2008. MLC's fiscal 2008 endowment payout represented a high 24.9% of total revenues. MLC achieved a positive operating margin of 2.9% in fiscal 2008 with the additional endowment draw. This draw, in combination with other factors, reduced the college's liquidity, or available funds (unrestricted and temporarily restricted cash and investments). MLC's fiscal 2008 available funds declined 15.5% from fiscal 2007, to $6.1 million, equivalent to 35.2% of unrestricted operating expenses and a meager 23.1% of the college's total outstanding debt for the same period. While the college continued to benefit from a $17.1 million endowment at fiscal year ended 2008, investment performance has not kept pace with the endowment's spending rate, and it is exposed to continuing equity market volatility. Increasingly negative cash flows from operating activities have engendered a dependence on working capital loans and short-term notes. Due to weak revenue trends, maximum annual debt service consumed a high 12.7% of MLC's fiscal 2008 revenues, which increased to a very high 24.5% when payments on the college's additional commitments were included. Fitch does not believe these types of provisional actions to be sustainable. MLC, founded in 1883, is a private, coeducational liberal arts college, primarily serving undergraduate students. The college is affiliated with the Evangelical Lutheran Church in America and located in Fremont, Nevada, about 30 miles from Omaha. NETVERSANT SOLUTIONS: Bankruptcy May Impact Anixter's Financials ---------------------------------------------------------------- Anixter International Inc. commented on the anticipated financial impact from the bankruptcy filing by NetVersant Solutions, Inc. On Nov. 19, 2008 NetVersant filed for protection under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the District of Delaware. In those filings, NetVersant showed Anixter and its subsidiaries to be unsecured creditors in the amount of $28.6 million. At this time Anixter is evaluating its position with respect to lien or other rights which it may have in connection with sales to NetVersant. Specific to this bankruptcy filing Anixter anticipates recording an expense of approximately $20 to $22 million in the fourth quarter of 2008 to Increase its reserve for doubtful accounts. Bob Eck, president and chief executive officer of Anixter said, "We are obviously disappointed with the bankruptcy of a customer with whom we have a long term working relationship. In this challenging economic environment we are continuing to work closely with all of our customers and suppliers to maintain constructive business relationships. A current assessment of our key customer relationships shows this situation to be unique in terms of the circumstances and relative size of the exposure." About NetVersant Solutions Headquartered in Houston, Texas, NetVersant Solutions, Inc. -- http://www.netversant.com/-- provides wireless network infrastructure services. The company also provides an array of voice, video and data communication services. The company and 20 of its affiliates filed for Chapter 11 protection on Nov. 19, 2008, (Bankr. D. Del. Lead Case No. 08-12973). Daniel B. Butz, Esq., and Gregory W. Werkheiser, Esq., at Morris, Nichols, Arsht & Tunnell, represents the Debtors in their restructuring efforts. The Debtor selected Porter & Hedges LLP as local counsel. When they filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. NETVERSANT SOLUTIONS: Anixter Int'l Mulls Lien & Other Rights ------------------------------------------------------------- Anixter International Inc. is evaluating its position with respect to lien or other rights which it may have in connection with sales to NetVersant Solutions, Inc. On Nov. 19, 2008, NetVersant Solutions filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. In those filings, NetVersant Solutions showed Anixter International and its subsidiaries to be unsecured creditors in the amount of $28.6 million. Anixter International anticipates recording an expense of approximately $20 to $22 million in the fourth quarter of 2008 to increase its reserve for doubtful accounts. Anixter International President and CEO Bob Eck said, "We are obviously disappointed with the bankruptcy of a customer with whom we have a long term working relationship. In this challenging economic environment we are continuing to work closely with all of our customers and suppliers to maintain constructive business relationships. A current assessment of our key customer relationships shows this situation to be unique in terms of the circumstances and relative size of the exposure." About Anixter Anixter International Inc. -- http://www.anixter.com/-- is the world's largest distributor of communication products and electrical and electronic wire and cable, and a leading distributor of fasteners and other small parts ("C" class inventory components) to original equipment manufacturers. The company has nearly US$725 million in inventory of more than 325,000 products, logistics network of 197 warehouses with more than 5 million square feet of space. It has operations in Latin American countries including Mexico, Costa Rica, Brazil and Chile. About NetVersant Solutions Headquartered in Houston, Texas, NetVersant Solutions, Inc. -- http://www.netversant.com/-- provides wireless network infrastructure services. The company also provides an array of voice, video and data communication services. The company and 20 of its affiliates filed for Chapter 11 protection on November 19, 2008 (Bankr. D. Del. Lead Case No. 08-12973). Daniel B. Butz, Esq., and Gregory W. Werkheiser, Esq., at Morris, Nichols, Arsht & Tunnell, represents the Debtors in their restructuring efforts. The Debtor selected Porter & Hedges LLP as local counsel. When they filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. OFFICEMAX INC: S&P Changes Outlook to Negative & Holds BB- Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on Itasca, Illinois-based OfficeMax Inc. to negative from stable. At the same time, S&P affirmed the ratings on the company, including the 'BB-' corporate credit rating. "The outlook revision," said Standard & Poor's credit analyst Mark Salierno, "reflects S&P's expectation that deteriorating macroeconomic conditions and the continued slowdown in consumer and corporate spending will pressure operating performance within the company's retail and contract segments through the fourth quarter of 2008 and into fiscal 2009." Lehman's default was not a significant factor in S&P's decision to revise the company's outlook. OPTI CANADA: Moody's Cuts Sr. Sec. Rating on $1.75BB Notes to B2 ---------------------------------------------------------------- Moody's Investors Service downgraded OPTI Canada Inc.'s Corporate Family Rating and second secured note rating but left OPTI's first secured bank revolver rating unchanged. These ratings were also placed under review for potential further downgrade. The Corporate Family Rating is downgraded to B1 from Ba3, the Ba3 senior first secured rating for OPTI's C$500 million bank revolver remains unchanged, and the senior second secured rating on US$1.750 billion of notes is downgraded to B2 from B1. Moody's does not rate OPTI's C$150 million first secured one year revolver. OPTI holds a 50% undivided interest (with Nexen, Baa2 senior unsecured, which holds the other 50%) in a six-phased greenfield integrated development of three oil sands leases in Alberta, Canada. OPTI's 50% share of proven developed, proven undeveloped, and probable bitumen reserves is approximately 803 million barrels (268 million barrels booked as proven) as of Dec. 31, 2007. The downgrade reflects i) the cumulative impact of project start- up delays and cost overruns on cash balances and back-up funding, ii) the likelihood that if Phase I can reach sustainable operations this quarter, as the Long Lake partners hope, the 2009 price, price differential, and cost environment appears likely to pull Phase I cash flow below expectations, and iii) OPTI's fund raising effort takes place under very challenging market conditions. The prior ratings factored the inherent risks of project delays and cost-overruns into the ratings but that leeway has been consumed and traditional start-up challenges for the upgrader remain ahead. In addition, a likely much weaker than expected market in 2009 would also provide lower than expected debt service coverage on debt levels augmented by the cost overruns. The review for further downgrade will assess: i) the odds of OPTI achieving start-up and reliable operations of the Long Lake Upgrader by early next year, ii) OPTI's ability to raise new equity or equivalent funding in the current market and while still working to bring the upgrader on line, and iii) liquidity remains of major concern until OPTI executes new funding resources and the upgrader is able to generate sustainable cash flow. It is also not certain that OPTI will cover its First Senior Secured Debt/EBITDA covenant for March 31, 2009. Nevertheless, OPTI owns a large base of long-lived bitumen reserves and downstream upgrader which is in the process of starting-up. This provides substantial asset coverage, several possible combinations of asset or ownership monetization, and a potential attraction to new investment capital. As of Nov. 11, 2008, OPTI had access to C$328 million cash including the undrawn portion of both $C500 million long term and $C150 million short term revolving credit facilities (excluding the company's interest reserve accounts). This may meet liquidity needs through second quarter 2009 by when it hopes to be in full operating mode. To both raise capital now and reduce future phase construction capital calls, OPTI is evaluating several alternatives to cover funding needs until it believes operations will provide sufficient cash flow to cover operating costs and debt service. Future capital spending will likely become a function of the degree to which it sells interests in future developments. The partners have postponed the sanctioning of Long Lake Phase II and reduced related preliminary capital spending, citing rising costs, weak commodity prices and tight credit markets as some of the reasons for postponement. Each Long Lake phase will consist of steam assisted gravity drainage production of bitumen and its subsequent conversion in the joint ventures upgrader into synthetic crude oil. OPTI and Nexen are in the process of starting-up Phase I. Phase I steam injection commenced in second quarter 2007. Bitumen production in the first half of October 2008 averaged 15,200 barrels per day. The partners hope the Long Lake upgrader will be fully on line shortly and fully operational during first quarter 2009. Reliable upgrader performance to design specifications is vital to Long Lake's margins. OPTI Canada Inc. is headquartered in Calgary, Alberta, Canada. OXIGENE INC: Posts $7.1 Million Net Loss in Qtr. Ended Sept. 30 --------------------------------------------------------------- OXiGENE, Inc., posted a net loss of $7,108,000 in the three months ended September 30, 2008, compared with a net loss of $5,275,000 in the same period a year earlier. In the nine months ended September 30, 2008, the company posted a net loss of $19,601,000, compared with a net loss of $14,592,000 in the in the same period a year earlier. The company's balance sheet as of September 30, 2008, showed total assets of 13,111,000, total liabilities of $6,095,000 and total stockholders' equity of $7,016,000. A full-text copy of the company's latest Quarterly Report is available for free at http://researcharchives.com/t/s?353a John A. Kollins, OXiGENE's chief executive officer, relates that the company has experienced net losses and negative cash flow from operations each year since its inception, except in fiscal 2000. "As of Sept. 30, 2008, OXiGENE had an accumulated deficit of approximately $157,401,000. The company expects to continue to incur expenses, resulting in operating losses, over the next several years due to, among other factors, our continuing clinical trials, planned future clinical trials, and other anticipated research and development activities. OXiGENE's cash, cash equivalents and available-for-sale securities balance was approximately $11,085,000 at September 30, 2008. Based on current plans, the company expects its current available cash and cash equivalents to meet its cash requirements into the first quarter of fiscal 2009. The company will require significant additional funding to remain a going concern and to fund operations until such time, if ever, it becomes profitable. The company intends to augment its cash, cash equivalents and marketable securities balances as of Sept. 30, 2008 with the utilization of its committed equity financing facility, if available by its terms, as well as through other forms of capital infusion, including strategic alliances with organizations that have capabilities and products that are complementary to the company's capabilities and products in order to continue the development of its potential product candidates. However, there can be no assurance that adequate additional financing under [these] arrangements will be available to the company on terms that it deems acceptable, if at all. Therefore, there exists substantial doubt about the company's ability to continue as a going concern." In February 2008, the company entered into a Committed Equity Financing Facility with Kingsbridge Capital Limited, pursuant to which Kingsbridge committed to purchase, subject to certain conditions, up to 5,708,035 shares of the company's common stock or up to an aggregate of $40,000,000 during the three years from the date of the agreement. The company received net proceeds of $900,000 from the sale of approximately 635,000 shares of common stock under the CEFF during the nine months ended Sept. 30, 2008. Special Meeting on December 9 A special meeting of stockholders of OXiGENE, Inc., will be held on Dec. 9, 2008, at 9:00 a.m., local time, at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., located at One Financial Center, Boston, Massachusetts, for these purposes: 1. To approve issuances of shares of the company's common stock to Symphony ViDA Holdings LLC pursuant to the Stock and Warrant Purchase Agreement by and between the company and Holdings, the Purchase Option Agreement by and among the company, Holdings and Symphony ViDA, Inc., the Additional Funding Agreement by and among the company, Holdings, Symphony ViDA Investors LLC and Symphony ViDA, and the Novated and Restated Technology License Agreement by and among the company, Symphony ViDA and Holdings, each dated as of Oct. 1, 2008; 2. To authorize an adjournment of the Special Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal 1; 3. To ratify the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for the fiscal year ending Dec. 31, 2008; and 4. To transact such other business as may be properly brought before the Special Meeting. The Board of Directors has fixed the close of business on Oct. 29, 2008, as the record date for the determination of stockholders entitled to notice of and to vote at the Special Meeting. A full-text copy of the Proxy Statement is available for free at: http://researcharchives.com/t/s?353c NASDAQ Notification On Nov. 14, 2008, OXiGENE reported that the NASDAQ Stock Market, Inc. has notified the company that it does not comply with the $10,000,000 minimum stockholders' equity requirement for continued listing on the NASDAQ Global Market set forth in NASDAQ Marketplace Rule 4450(a)(3). NASDAQ is reviewing OXiGENE's eligibility for continued listing on The NASDAQ Global Market and, to facilitate this review, has requested that the company provide NASDAQ with its plan to achieve and sustain compliance with all listing requirements by November 26, 2008. If, after the conclusion of its review, NASDAQ determines that the company has not presented a definitive plan to achieve and sustain compliance, the company anticipates that it would seek to transfer the listing of its common stock to the NASDAQ Capital Market, and would remain listed on the Stockholm Stock Exchange. OXiGENE anticipates that it will regain compliance with NASDAQ Marketplace Rule 4450(a)(3) upon the closing of its strategic collaboration with Symphony Capital Partners, L.P. At the closing of this transaction, Symphony will exercise the warrant it holds covering 11.3 million shares of the company's common stock and purchase all shares covered by the warrant at a price of $1.11 per share, resulting in an additional $12.5 million in equity to the company. OXiGENE anticipates that stockholder approval of this transaction will be forthcoming at a special meeting of stockholders on Dec. 9, 2008. Notwithstanding this planned infusion of additional equity, OXiGENE is evaluating all of its available options to regain compliance with the listing requirements of NASDAQ, and intends to submit a plan to achieve and sustain compliance. "OXiGENE is committed to taking all necessary steps to preserve and build stockholder value in our Company, and to working expeditiously to present NASDAQ with a plan for compliance," said Mr. Kollins. "Our efforts and energies remain focused on advancing our development pipeline programs and achieving our clinical, operational and financial management goals for 2008 and beyond. While the overall economic situation and biotechnology marketplace remain challenging, we believe that OXiGENE is on the right strategic course to build and realize value from its vascular disrupting agent (VDA) drug development programs." About OXiGENE OXiGENE is a clinical-stage biopharmaceutical company developing novel therapeutics to treat cancer and eye diseases. The company's major focus is developing VDAs that selectively disrupt abnormal blood vessels associated with solid tumor progression and visual impairment. OXiGENE is dedicated to leveraging its intellectual property and therapeutic development expertise to bring life- extending and life-enhancing medicines to patients. O'CHARLEY'S INC: S&P Keeps 'B+' Corp. Rating; Outlook Negative -------------------------------------------------------------- Standard & Poor's Ratings Services said it revised the outlook on O'Charley's Inc. to negative from stable. At the same time, S&P affirmed the other ratings on the company, including the 'B+' corporate credit rating. "The outlook revision indicates S&P's expectation that recent sales and profitability declines will continue," said Standard & Poor's credit analyst Charles Pinson-Rose, "which will pressure credit metrics despite the company's efforts to reduce debt by cutting capital spending, suspending its dividend, and managing other costs." Furthermore, the poor performance could lead to a breach of financial covenants of the company's senior secured revolving credit facility in the near future. PASADENA CDO: S&P Downgrades Ratings on Class B and C Notes ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class B and C notes issued by Pasadena CDO Ltd., a cash flow collateralized debt obligation of mezzanine structured finance loans managed by Western Asset Management Co. In addition, S&P removed the rating on class C from CreditWatch with negative implications, where it was placed on Nov. 19, 2008. S&P lowered the ratings on classes B and C primarily because of negative migration in the credit quality of the underlying collateral since the transaction closed in 2002. Based on the trustee report dated Sept. 9, 2008, a total of $111.31 million, or 39.57% of the total securities in the transaction's collateral portfolio, had speculative-grade ratings. This number is up from 21.61% ($106.65 million) in September 2003. The deterioration in credit quality of the underlying collateral has resulted in the erosion of support available to the classes such that it is insufficient for the previous ratings. Rating Lowered Pasadena CDO Ltd Rating ------ Class To From ----- -- ---- B A- AA Rating Lowered and Removed From CreditWatch Negative Pasadena CDO Ltd. Rating ------ Class To From ----- -- ---- C B BBB/Watch Neg Transaction Information ----------------------- Issuer: Pasadena CDO Ltd. Co-issuer: Pasadena CDO Corp. Current manager: Western Asset Management Co. Underwriter: Deutsche Banc Alex Brown Trustee: Wells Fargo Bank NA Transaction type: Cash flow mezzanine SF CDO PEOPLE'S CHOICE: Settles $2.6-Mil. Claim By WaMu Bank ----------------------------------------------------- Judge Robert N. Kwan of the United States Bankruptcy Court for the Central District of California, Santa Ana Division, approved a settlement agreement between Washington Mutual Bank and the Liquidating Trust of People's Choice Home Loan, Inc., settling WaMu Bank's Claim No. 406 for $2,600,000 plus security interests with respect to a certain Flexible Early Repurchase Facility and Security Agreement. Judge Kwan presides over the bankruptcy cases of People's Choice and its affiliates currently pending in the California Bankruptcy Court. In June 2006, People's Choice entered into the Flex Agreement with Concord Minutemen Capital Company, LLC, and the Security Agreement dated February 12, 2007, with People's Choice Funding Corporation. WaMu Bank, as Concord's successor-in-interest to the Flex Agreement and the Security Agreement, alleged that the Agreements created in favor of Concord a security interest in $13,000,000 of the $25,517,666 federal tax refund requested by People's Choice from the United States government. In February 2007, People's Choice received the Tax Refund proceeds, of which $5,000,000 was paid to WaMu before March 2007. As of March 20, 2007, People's Choice maintained these accounts for WaMu Bank, each of which the Bank asserts is subject to its right of set-off: Account No. Amount ----------- ------ 188-338055-2 Allegedly holding about $428,304, as WaMu Bank's operating account setoff amount 1883382318 Allegedly holding about $34,465, as WaMu Bank's cash collateral The WaMu Settlement Agreement In connection with its asserted security interest in a portion of the Tax Refund Proceeds, WaMu Bank claimed a security interest in certain cash proceeds of the Collateral that were held by People's Choice in certain of its Commingled Deposit Accounts. Pursuant to an Adequate Protection Stipulation, WaMu Bank was granted a replacement lien to adequately protect its alleged interests in the Commingled Accounts. WaMu Bank and People's Choice have subsequently entered into a Settlement Agreement in an effort to (i) resolve WaMu Bank's claims arising under the Commingled Accounts, (ii) determine and allow WaMu Bank's secured obligations, and (iii) provisionally resolve WaMu Bank's asserted right to offset the Set-off Amount. Pursuant to the parties' Settlement Agreement, WaMu Bank will be entitled to an Allowed $2,600,000 Secured Claim against People's Choice on account of the funds in the Commingled Accounts, plus (i) $170,350 of interest earned on the Claim through July 20, 2008, and (ii) interest at 4.5% per annum until the Funds are paid to WaMu Bank. People's Choice will satisfy the Allowed Claim without delay. In return, WaMu Bank agrees to assign to the People's Choice Trusts all of its rights, claims and interests with respect to the funds held in the Commingled Accounts. Upon full and final payment of the Claim, WaMu Bank will release any other claim against People's Choice. However, to the extent the funds held in the Commingled Accounts are used to pay dividends or distributions to the People's Choice's unsecured creditors, WaMu Bank does not assign or release its right to receive dividends or distributions from the Funds on account of any allowed remaining general unsecured obligations. WaMu Bank waives any and all rights with respect to the Release under Section 1542 of the California Civil Code. WaMu Bank may exercise, on a provisional basis and without prejudice, its alleged right to offset the WaMu Setoff Amounts under the Operating and Collateral Accounts, and may release to itself the balance of Funds, with notice duly provided to the Liquidating Trustee and the Post-Effective Date Committee under the People's Choice Plan of Liquidation. The Parties clarify that they are not determining the validity of the balance of general unsecured obligations owed to WaMu Bank by People's Choice, which will be calculated as the face amount of Claim No. 406 minus the amount of the Secured Obligations allowed. 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 Inc. Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) About People's Choice Headquartered in Irvine, California, People's Choice Financial Corp. -- http://www.pchl.com/-- is a residential mortgage banking company, through its subsidiaries, originates, sells, securitizes and services primarily single-family, non-prime, residential mortgage loans. The company and two of its affiliates, People's Choice Home Loan, Inc., and People's Choice Funding, Inc., filed for chapter 11 protection on March 20, 2007 (Bankr. C.D. Calif. Case No. 07-10772). J. Rudy Freeman, Esq., at Pachulski, Stang, Ziehl & Jones, L.L.P., represents the Debtors. Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. In its schedules filed with the Court, People's Choice disclosed total assets of $806,776,901 and total liabilities of $105,772,386. PIERRE FOODS: Seeks Court Nod to Obtain $95 Million Exit Facility ----------------------------------------------------------------- Pierre Foods, Inc., and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to obtain a $95 million Exit Facility from Wells Fargo Foothill, LLC, and Bank of America, N.A., to: a) refinance the Debtor's $35,000,000 superpriority priming debtor-in-possession credit facility and certain other senior secured indebtedness in connection with the consummation of its proposed Chapter 11 plan of reorganization; b) finance ongoing working capital needs; c) finance general corporate purposes; and d) pay fees and expenses associated with the Exit Facility and in connection with the Debtors' emergence from Chapter 11. Pursuant to the Commitment Letter dated Nov. 20, 2008, as collateral, WFF and BoA, are granted a first priority security interest (a) in substantially all of the Loan Parties' now owned or hereafter acquired property and asset and all proceeds and products thereof and (b) in all of the stock of each Loan Party and all proceeds and products thereof. Due to confidentiality concerns, the Debtors, upon the request of the Exit Lenders, also request that the Court allow the Fee Letter to be filed under seal. The Exit Lenders have consented to the Fee Letter being shared with the U.S. Trustee, counsel to the Debtors' prepetition secured lenders, counsel to the Debtors' pospetition secured lenders, counsel to the Committee and such other parties as may be agreed to by the Debtors and the Exit Lenders. The Debtors have also agreed to indemnify, defend, and hold harmless WFF and BoA and each of their respective affiliates, officers, directors, employees, agents, advisors, attorneys and representatives in accordance with the terms set forth in the Commitment Letter. Pursuant to the Commitment Letter, the princpal terms of the proposed Senior Senior Secured Credit Facility are: Amount: $95,000,000 Guarantors: A holding company that will own 100% of the capital stock of Pierre Foods, Inc. and all such holding company's present and future subsidiaries. Maximum Revolver $75,000,000 with a $20,000,000 su-limit for Amount: Letters of Credit. The Maximum Revolver Amount shall not, at any time, exceed the Borrowing Base. Term Loan Amount: $20,000,000 not to exceed the Fixed Asset Amount. The Term Loan would be repayable beginning Feb. 28, 2008, on a quarterly basis by 1/28th of the original principal amount of the Term Loan. Any amount remaining unpaid shall be due and payable in full on the Maturity Date. Fees and As set forth on Annex-1 and in the Fee Letter Interest Rates: among the parties to the Commitment Letter. The Debtors have requested the Court to file the Fee Letter under seal. Term: 4 years from the Closing Date. Closing Date: Jan. 31, 2009. The credit agreement governing the Exit Facility also permits management fees payable to Oaktree Capital Management L.P., or its affiliates, of up to $1,500,000 per annum under certain restricted conditions. The credit agreement likewise contains certain financial covenants, and both negative and affirmative covenants, and events of default. As reported in the Troubled Company Reporter on Oct. 30, 2008, the Court approved the Debtor's Disclosure Statement explaining their Second Amended Joint Plan of Reorganization and authorized the Debtors to begin soliciting votes on the Plan. The Debtors' confirmation hearing, at which the Bankruptcy Court will consider approval of the Plan, is scheduled on Dec. 10, 2008. Full-text copies of the Debtors' motion dated Nov. 21, 2008, containing copies of the Commitment Letter and Term Sheet, is available for free at http://researcharchives.com/t/s?352d About Pierre Foods Based in Cincinnati, Ohio, Pierre Foods, Inc. -- http://www.pierrefoods.com-- manufactures and sells ready-to-cook and pre-cook products. The company and and 13 of its affiliates filed for Chapter 11 protection on July 15, 2008 (Bankr. D. Del. Lead Case No. 08-11469). Jonathan S. Henes, Esq., and Lisa G. Laukitis, Esq., at Kirkland & Ellis; and Daniel J. DeFranceschi, Esq., and Paul N. Heath, Esq., at Richards, Layton & Finger P.A., represent the Debtors in their restructuring efforts. The Debtors selected Kurtzman Carson Consultants LLC as their claims agent. The United States Trustee for Region 3 appointed creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, and James R. Savin, Esq., at Akin Gump's Washington, D.C. office, as counsel. Oaktree Capital Management, the Debtors' DIP lender and which is serving as plan sponsor, is represented by Van C. Durrer, II, Esq., at Skadden Arps, Slate Meagher & Flom LLP, in Los Angeles, California. Wachovia Bank, N.A., the administrative agent under the Debtors' June 2004 credit agreement, is represented by Gregory Bray, Wsq., and Haig Mark Maghakian, Esq., at Milbank Tweed Hadley McCloy LLP. POLE & STEEL: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Pole & Steel Buildings, Inc. P.O. Box 1729 206 W. First Street, Suite E Deer Park, WA 99006 Bankruptcy Case No.: 08-04821 Chapter 11 Petition Date: November 19, 2008 Court: Eastern District of Washington (Spokane/Yakima) Debtor's Counsel: Dale L. Russell, Esq. ethelruss@aol.com Russell Law Firm P.O. Box 1225 Deer Park, WA 99006-1225 Tel: (509) 276-5014 Fax: (509) 276-7161 Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,000 to $10,000,000 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/waeb08-04821.pdf The petition was signed by Phillip M. Stephan, president of the company. PREMIUM LOAN: Moody's Junks Rating on $7 Million Class D Notes -------------------------------------------------------------- Moody's Investors Service has placed on review for downgrade the ratings of three classes of notes issued by Premium Loan Trust I, Ltd.: Class Description: $215,000,000 Class A Senior Secured Notes Due 2014 -- Prior Rating: Aaa -- Prior Rating Date: Nov. 30, 2004 -- Current Rating: Aaa, on review for possible downgrade Class Description: $16,000,000 Class X Deferrable Amortizing Senior Secured Notes Due 2014 -- Prior Rating: A1 -- Prior Rating Date: Nov. 30, 2004 -- Current Rating: A1, on review for possible downgrade Class Description: $10,000,000 Class B Deferrable Senior Secured Notes Due 2014 -- Prior Rating: A2 -- Prior Rating Date: Nov. 30, 2004 -- Current Rating: A2, on review for possible downgrade Additionally, Moody's has downgraded and left on review for possible downgrade the ratings of these notes: Class Description: $11,000,000 Class C Secured Notes Due 2014 -- Prior Rating: Baa2 -- Prior Rating Date: Nov. 30, 2004 -- Current Rating: Ba1, on review for possible downgrade Class Description: $7,000,000 Class D Subordinated Secured Notes Due 2014 -- Prior Rating: B2, on review for possible downgrade -- Prior Rating Date: Aug. 13, 2008 -- Current Rating: Caa2, on review for possible downgrade Premium Loan Trust I, Ltd. is a collateralized debt obligation backed primarily by a portfolio of senior secured loans. As reported by the Trustee, on Oct. 25, 2008 the transaction experienced an event of default caused by a failure of the Overcollateralization Ratio with respect to the Class A Notes to equal or exceed 103%, as required under Section 5.1(d) of the Indenture dated Nov. 18, 2004. This event of default is continuing. Moody's notes that the transaction provides that the computation of Overcollateralization Ratios include a haircut to par value of any collateral obligation with a market value below 85% of its principal balance. (This haircut will continue until such obligation trades at a market value of at least 95% of its principal balance for 60 consecutive days). The Trustee reports that the haircut is being applied to a significant proportion of the underlying collateral. 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. As reported by the Trustee, on Oct. 27, 2008, the deal failed all of its Overcollateralization Tests; as a result all interest proceeds and principal proceeds on the last payment date were used to pay interest and principal on the Class A Notes. The Class X, Class B, Class C, and Class D Notes are currently deferring interest. The rating actions taken with respect to the Class C and Class D notes reflect the occurrence of the Event of Default, the continued decline in the average credit rating of the portfolio, and the ongoing failure of the Minimum Spread Test. As provided in Article V of the Indenture during the occurrence and continuance of an event of default, certain holders of Notes may be entitled to direct the Trustee to take particular actions with respect to the collateral and the Notes. The severity of losses may depend on the timing and choice of remedy to be pursued following the default event. Because of this uncertainty, the ratings of Notes issued by Premium Loan Trust I, Ltd., are on review for possible downgrade. PRIMUS GUARANTY: NYSE Assigns a .BC Indicator on Trading Symbol --------------------------------------------------------------- Primus Guaranty, Ltd., was notified by NYSE Regulation, Inc., that it is not in compliance with one of the continued listing standards of the New York Stock Exchange. The company is considered below criteria established by the NYSE because the company's average closing price of its shares of common stock was less than $1.00 for 30 consecutive trading days. The NYSE makes available on its consolidated tape an indicator, ".BC," on the company's trading symbol indicating that the company is below the NYSE's quantitative continued listing standards. In accordance with NYSE procedures, the company must (i) acknowledge to the NYSE receipt of the notification within 10 business days of receipt; and (ii) bring its share price back above $1.00 within six months following receipt of the notification. The company intends to provide NYSE Regulation, Inc. with the requisite acknowledgement and to take such actions as may be necessary or appropriate in order to bring it into compliance with the continued listing standards. Should the company fail to meet this standard at the expiration of the six- month period, however, the NYSE will commence suspension and delisting procedures. The company's 7% senior notes due 2036, listed on the NYSE under symbol "PRD," are not affected by this event. About Primus Guaranty Primus Guaranty, Ltd. is a Bermuda company, with its principal operating subsidiaries, Primus Financial Products, LLC and Primus Asset Management, Inc. Primus Financial Products provides protection against the risk of default on corporate, sovereign and asset-backed security obligations through the sale of credit swaps to dealers and banks. Primus Asset Management provides credit portfolio management services to Primus Financial Products, and manages private investment vehicles, including two collateralized loan obligations and three synthetic collateralized swap obligations for third parties. * * * As reported in the Troubled Company Reporter on Oct. 21, 2008, Standard & Poor's Ratings Services lowered its counterparty credit rating on Primus Guaranty Ltd. to 'BB' from 'BBB+'. The firm remains on CreditWatch with negative implications. The downgrade reflects S&P's rising concern that Primus Financial Products Inc., its derivatives product company, may experience diminishing cash flows. PROPEX INC: Court OKs Renewal of National Union Insurance Program ----------------------------------------------------------------- Propex Inc. and its debtor affiliates obtained approval from the U.S. Bankruptcy Court for the Eastern District of Tennessee to renew their insurance policies with National Union Fire Insurance Company of Pittsburgh, PA, et al., and to assume existing insurance agreements. Edward L. Ripley, Esq., at King & Spalding, LLP, in Houston, Texas, relates that since 2000, the Debtors maintained insurance policies with National Union, which provide, among other things, general, automobile, employer liability and workers compensation. The Debtors' current Insurance Policies with National Union expires on December 1, 2008. The Debtors relate that they reviewed a variety of alternatives with their insurance broker and have determined that the renewal of the Insurance Policies with National Union provides them with best coverage at least cost. According to Mr. Ripley, as a condition of renewing the Insurance Policies for another year, National Union is requiring the Debtors to (i) pay premiums, (ii) post new collateral, and (iii) assume obligations under existing insurance policies and programs pursuant to the execution of an Assumption Agreement. Insurance Assumption Agreement Under the Assumption Agreement, the Debtors will have the continued responsibility to pay obligations sustained by Propex and its predecessors under prior and existing policies and programs with National Union, the amount of which will continue to roll forward. The Debtors aver that based on their calculation, their aggregate obligations to National Union as of November 4, 2008 is $1,390,000. The Assumption Agreement also recognizes the Debtors' obligations to provide National Union with substitute collateral for that which National Union currently holds, as well as additional collateral, according to Mr. Ripley. In this regard, the Assumption Agreement acknowledges the current collateral held by National Union, which includes: (i) a $1.125 million letter of credit and a $505,000 letter of credit; (ii) $76,000 in cash collateral, currently held in escrow; and (iii) $10,000 in non-depleting cash collateral. Under the Assumption Agreement, National Union is allowed to liquidate the collateral in satisfaction of the Debtors' obligations under the existing insurance policies and programs when and as they become due pursuant to the Insurance Policies. Mr. Ripley asserts the Assumption Agreement accomplishes two things -- (1) It adds Propex's name as the insured in place of the former SI Geosolutions Corporation and does not create any additional liability against Propex in favor of National Union; and (2) It provides that the Debtors' obligations will not be affected by the bankruptcy cases and the Debtors will satisfy their obligations to National Union the same as if Chapter 11 had not been filed. Along with the Assumption Agreement, the Debtors have received from National Union renewal quotes for the new policy period from December 1, 2008 through December 1, 2009. According to the Debtors, the renewal of the Insurance Policies requires the payment of premiums for $1,790,000 and additional collateral for $1,280,000. "These premiums and new collateral cover both Propex [Inc.] and [Propex] Concrete [Systems Corporation] for their primary and excess coverage," Mr. Ripley notes. The Insurance Policies allow the Debtors' business operations and reorganization process to continue without interruption, Mr. Ripley maintains. Judge Cook has also authorized the Debtors to enter into further renewals of the Insurance Program without further Court order. The Court ruled that in the event of default by the Debtors under the Insurance Program which remains uncured, National Union may exercise all contractual rights in accordance with the terms of the Insurance Program, including its rights to: -- cancel the Insurance Program; -- foreclose on any collateral, in part or in full, in which it has a security interest and which may be subject to the automatic stay; and -- receive and apply the unearned or returned premiums to the Debtors' outstanding obligations. About Propex Inc. 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. Propex Inc., and its affiliates delivered to the Court a Joint Plan of Reorganization and Disclosure Statement on October 29, 2008. Propex's exclusive period to solicit acceptances of the Plan expires Dec. 29, 2008. As of June 29, 2008, the Debtors' balance sheet showed total assets ofUS$562,700,000, and total debts ofUS$551,700,000. (Propex Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) PROPEX INC: Wants to Extend & Modify Insurance Policies ------------------------------------------------------- Propex Inc. and its debtor affiliates seek approval from the U.S. Bankruptcy Court for the Eastern District of Tennessee to execute extensions and modifications to certain insurance policies. The Debtors maintain insurance policies providing general liability coverage, marine and commercial cargo coverage, and coverage for their directors and officers. The Policies will which expire on their own terms on December 1, 2008. Edward L. Ripley, Esq., at King & Spalding, LLP, in Houston, Texas, relates the extensions and modifications will provide proper insurance coverage through the anticipated effective date of a Chapter 11 plan and provide proper insurance coverage for the Reorganized Debtors. Mr. Ripley relates the Debtors have requested and received insurance quotes from these Insurance Providers: 1. Chubb Specialty Insurance The Chubb Policy will provide a maximum of $10,000,000 in coverage for the period from December 1, 2008, through June 1, 2009, for an aggregate premium of $39,122. The Debtors also sought and received an insurance quote from Chubb regarding a six year runoff coverage for director and officer liability as well as fiduciary liability. The annual premium under the Chubb Runoff is $137,200. 2. National Union Fire Insurance Company of Pittsburgh, Pa., et al. The National Union Excess Policy will provide excess coverage for the period from December 1, 2008, through June 1, 2009, above the $10,000,000 maximum coverage for an aggregate premium of $22,370. The Debtors have also requested and received quote from National Union regarding a six year runoff coverage for excess coverage for director and officer and fiduciary liability. The annual premium under the National Runoff is $45,010. Furthermore, the Debtors currently have an Employment Practices Liability Policy with National Union, the term of which expires on December 1, 2008. The Debtors have also requested and received from National Union an insurance regarding a Blanket Crime Policy for the period beginning December 1, 2008, and ending December 1, 2009. The premium under the Blanket Crime Policy is $15,271. 3. AIG WorldSource The Debtors have requested from AIG WorldSource an extension of their International GL Policies for Propex Inc. and Propex Concrete Systems Corporation for the period from December 1, 2008, through December 1, 2009. The aggregate premium for Propex under the GL Policy is $41,750. The aggregate premium for Concrete under the International GL Policy is $2,500. 4. Indemnity Insurance Company of North America The Debtors sought insurance quotes from Indemnity Insurance Company of North America for coverage for Marine Cargo and Commercial Cargo for the period from December 1, 2008 through December 1, 2009. The premium for Propex under the Marine Cargo Policy is $18,000, and under the Commercial Cargo Policy is $1,500. The premium for Concrete under the Marine Cargo Policy is $5,000. Mr. Ripley contends the Insurance Policies allow the Debtors' business operations and reorganization process to continue without interruption. Mr. Ripley notes that the Debtors are entrusted with the responsibility of providing an efficient and orderly exit from Chapter 11 as quickly as possible, while concurrently providing for the interests of their estates and creditors. About Propex Inc. 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. Propex Inc., and its affiliates delivered to the Court a Joint Plan of Reorganization and Disclosure Statement on October 29, 2008. Propex's exclusive period to solicit acceptances of the Plan expires Dec. 29, 2008. As of June 29, 2008, the Debtors' balance sheet showed total assets ofUS$562,700,000, and total debts ofUS$551,700,000. (Propex Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) PROPEX INC: Seeks to Sign AFCO Premium Financing Pact ----------------------------------------------------- Propex Inc. and its debtor affiliates seek approval from the U.S. Bankruptcy Court for the Eastern District of Tennessee to enter into a Premium Financing Agreement with AFCO Premium Credit LLC. The Debtors want to renew their various insurance policies and programs, which expire by their own terms on December 1, 2008. To that end, the Debtors seek to finance payment of all their upcoming renewal premiums. By entering into the Premium Financing Agreement, the Debtors anticipate being able to preserve liquidity during the critical part of their bankruptcy cases. The Debtors contend that they need the Premium Financing Agreement to manage their working capital needs and maintain sufficient cash reserves. Edward L. Ripley, Esq., at King & Spalding, LLP, in Houston, Texas, notes that the Debtors were unable to obtain unsecured credit or debt allowable as an administrative expense under Section 503(b)(1) of the Bankruptcy Code in an amount sufficient to pay the premiums due under their Insurance Policies, nor have they been able to obtain postpetition financing from an alternative lender on more favorable terms and conditions than those contained in the Premium Financing Agreement. The salient terms of the AFCO Premium Financing Agreement are: Borrowers: Propex, Inc. and Propex Concrete Systems Corporation Lender: AFCO Premium Credit LLC Amount Financed: Net amount of $1,266,413 AFCO will finance $1,898,435 in insurance premiums, minus a $635,976 down payment required to be paid by the Debtors to AFCO, which equals to a net financed amount of $1,262,459. Payments: After the initial down payment, the Debtors will make eight monthly installments of $161,402. Interest Rate: 5.197% Finance Charge: $24,806 Purpose: To finance new premiums due under the renewal of the Debtors' Insurance Policies in an effort to maintain adequate cash reserves. Security Interest: AFCO will receive a security interest in any and all unearned premiums and dividends, which may become payable under the insurance policies. Cancellation: If the Debtors do not pay any installment pursuant to the terms of the Premium Financing Agreement, AFCO, after giving notice and providing the Debtors with time to cure, has the right to cancel the insurance policies. A full-text copy of the AFCO Premium Financing Agreement can be accessed for free at: http://bankrupt.com/misc/AFCO_PremiumFinancingAgreement.pdf In a supplemental Court filing dated November 21, 2008, the Debtors disclose that: -- they are paying $1,131,975 in premiums owed to National Union Fire Insurance Company of Pittsburgh, PA, et al; -- AFCO will pay to Marsh USA Inc. the net financed amount of $1,262,459 by November 26, 2008. Marsh, in turn, will pay the premium amounts owing to the other insurers, $766,460, and by November 26, Marsh will pay to the Debtors $495,999, representing the amount of the premium advanced by the Debtors to National Union less the down payment; -- pursuant to the Premium Finance Agreement, AFCO will, as of November 21, 2008, receive a first and only priority security interest in any and all unearned premiums and dividends which may become payable under the insurance policies. AFCO's security interest will not be subject to or subordinate to any of the DIP Lenders' lien or security interests. Accordingly, the Debtors further ask the Court to allow them to approve the November scheduled payments and grant AFCO a first and only priority security interest in all unearned premiums and dividends. About Propex Inc. 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. Propex Inc., and its affiliates delivered to the Court a Joint Plan of Reorganization and Disclosure Statement on October 29, 2008. Propex's exclusive period to solicit acceptances of the Plan expires Dec. 29, 2008. As of June 29, 2008, the Debtors' balance sheet showed total assets ofUS$562,700,000, and total debts ofUS$551,700,000. (Propex Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) PULMISERVE: Case Summary & Five Largest Unsecured Creditors ----------------------------------------------------------- Debtor: PULMISERV, P.S.C. PMB 2116, P.O. Box 6029 Carolina, PR 00984-6029 Bankruptcy Case No.: 08-07855 Chapter 11 Petition Date: November 19, 2008 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Enrique M. Almeida Bernal, Esq. ealmeida@almeidadavila.com Almeida & Davila PSC P.O. Box 191757 San Juan, PR 00919-1757 Tel: (787) 722-2500 Fax: (787) 722-2227 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1,000,000 to $10,000,000 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/prb08-07855.pdf The petition was signed by Leide Ailed Acevedo Velez, president of the company. QUIKSILVER INC: Weak Credit Measures Cue S&P to Cut Rating to 'B+' ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on global lifestyle apparel marketer and designer Quiksilver Inc., to 'B+' from 'BB-'. At the same time, Standard & Poor's lowered the rating on the company's $400 million senior unsecured notes due 2015, to 'B-' from 'B', while the recovery rating remains a '6', indicating that lenders can expect negligible (0%-10%) recovery in the event of a payment default. S&P removed all of the ratings from CreditWatch with negative implications, where S&P had placed them on April 1, 2008, as a result of weaker-than-expected operating results and financial metrics. The outlook is negative. As of July 31, 2008, Huntington Beach, California-based Quiksilver had about $1.054 billion of debt. "The ratings downgrade reflects Quiksilver's continued weak credit measures, and S&P's uncertainty regarding the company's ability to improve operating performance, given the current challenging economic and retail environment," said Standard & Poor's credit analyst Susan H. Ding. "While the company has sold its problematic Rossignol business, net proceeds from the sale (which the company expects to use for debt reduction) are about $38 million (before transaction fees), compared with $100 million initially anticipated," she continued. The outlook is negative. S&P expects Quiksilver's credit protection measures will remain weak in the short term as a result of the challenging retail conditions and high debt levels. If the company encounters difficulties in its core apparel business or if leverage increases from current levels to more than 6x, S&P will review the ratings for a downgrade. This could occur if revenues remain at about $2.1 billion and the EBITDA margin declines considerably by 250 basis points. If the company can reduce leverage and improve and sustain its operations and financial measures, as well as maintain adequate liquidity, S&P could revise the outlook to stable. REAL MEX: Moody's Lifts Corporate Family Rating to 'Caa2' --------------------------------------------------------- Moody's Investors Service raised Real Mex Restaurants, Inc.'s Probability of Default Rating and Corporate Family Rating to Caa2 from Caa3, while affirming its $105 million senior secured notes at B2. The rating outlook is negative. Concurrently, its Speculative Grade Liquidity rating was affirmed at SGL-4, indicating expected weak liquidity in the next twelve months. While recognizing the modest improvement in near term liquidity with the extension of the revolver maturity and the elimination of the PIK term loan at Real Mex's parent holding company, Moody's remains concerned that ongoing adverse trends and challenges in the casual dining industry could further contract EBITDA and erode cushion under covenants. The PDR and CFR to Caa2 reflect Real Mex's modestly improved probability of default after it completed a substantial balance sheet restructuring on Nov. 13, 2008. The restructuring has resulted in the elimination of a significant, non-rated PIK term loan debt obligation at Holdco through a common equity exchange, and a reshuffle of equity ownership as the largest holder of the Holdco debt became the largest equity holder of the Holdco which in turn owns 100% of Real Mex. In addition, the maturity of the revolver has been extended by one year to January 2010. While the restructuring has largely addressed Moody's concern on the sustainability of Real Mex's capital structure and imminent refunding risk as expressed in the recent downgrade rating action, other fundamental credit risks arising from the significantly negative industry pressure remain unchanged per Moody's assessment. Therefore, the default risk though abated somewhat, remains high in the next 12-18 months. "We believe the capital structure is more sustainable now after the restructuring. The company's effort to conserve cash by scaling back new store opening and to cut cost should also improve its free cash flow in the near to medium term," commented Moody's analyst John Zhao. "Yet the severe economic headwinds are prevalent and are accelerating, which could well offset or overshadow all the benefits from [these] factors." Moody's continues to be concerned about Real Mex's ability to maintain a stable revenue stream and healthy same store sales in order to sustain its cash flow generation in the next few quarters, as contemplated in the negative rating outlook. A precipitous drop in revenues could have material effect on its margin and cash flow given the company's considerable operating leverage. The outlook also reflects concern regarding the company's liquidity position as expressed in the SGL-4 rating, highlighted by Moody's anticipation of continued weak free cash flow, the looming maturity of its revolving credit facility as well as modest cushion under its financial covenants which could become constrained again if EBITDA drops sharply. Rating actions are: Real Mex Restaurants, Inc. * Corporate Family Rating revised to Caa2 from Caa3 * Probability of Default Rating revised to Caa2 from Caa3 * $105 million senior secured notes affirmed at B2 (LGD2 20%) * Speculative Grade Liquidity Rating affirmed at SGL-4 Moody's last rating action on Real Mex was on Sept. 8, 2008 when its CFR and PDR were downgraded to Caa3 with negative outlook. Real Mex Restaurants, Inc., headquartered in Cypress, California, is a leading Mexican-themed restaurant chain operator that owns, operates and franchises casual dining restaurants primarily under the El Torito, Chevys Fresh Mex and Acapulco Mexican Restaurant concepts. At Sept. 28, 2008, Real Mex operated 190 restaurants of which 156 were located in California and the remainder were located in 12 other states. Total revenues for twelve months ending Sept. 28, 2008, were approximately $562 million. SEA CONTAINERS: Wins Court Confirmation of 4th Amended Plan ------------------------------------------------------------ Sea Containers Ltd., Sea Containers Services Ltd., Sea Containers Caribbean Inc., and "Newco" stepped Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware, through the statutory requirements under Sections 1129(a) and (b) of the Bankruptcy Code necessary to confirm their Fourth Amended Joint Plan of Reorganization: A. The Plan complies with all applicable provisions of the Bankruptcy Code as required by Section 1129(a)(1), including, Sections 1122 and 1123 of the Bankruptcy Code. As required by Section 1122(a), each class of claims and interests contains only those that are substantially similar to the other claims or interests within that class. Valid reasons exist for separately classifying the various classes of claims and interests created under the Plan. The Plan specifies that Claims in Classes 1, 2, 4B, and 4C are unimpaired, as well as the administrative claims, DIP Facility claims, and priority tax claims, and also specifies the treatment of each impaired class consisting of Classes 2B, 2C, 3A, 3B, 4A, and 5. Therefore, the Plan satisfies Sections 1123(a)(2) and 1123(a)(3). The classification and treatment of Claims in the Plan is proper pursuant to Section 1122, and does not discriminate unfairly pursuant to Section 1129(b)(1). In addition, all Classes of Impaired Claims have voted to accept the Plan other than the Deemed to Reject Class, as contemplated under Section 1129(b)(1). There is no Class of creditors or interests junior to the holders of Claims in the Deemed to Reject Class that will receive or retain any property under the Plan on account of their claims. Accordingly the requirements of Sections 1129(b)(2) are satisfied with respect to the Deemed to Reject Class, and the Plan does not violate the absolute priority rule, does not discriminate unfairly, and is fair and equitable with respect to those Classes. B. The Debtors, as Plan proponents, have complied with all applicable provisions of the Bankruptcy Code. In addition, their solicitation of acceptances or rejections of the Plan (i) complied with the Court's solicitation procedures order, (ii) complied with all applicable laws, rules and regulations governing the adequacy of disclosure in connection with the solicitation, and (iii) occurred only after disclosing "adequate information" to holders of claims or interests. Accordingly, the Debtors, together with the Official Committee of Unsecured Creditors, have acted in "good faith" within the meaning of Section 1125(e) of the Bankruptcy Code. As a result, the requirements of Section 1129(a)(2) have been satisfied. C. The Debtors have proposed the Plan in good faith and not by any means forbidden by law, as required by Section 1129(a)(3). In so determining, the Court has examined the totality of the circumstances surrounding the filing of the Chapter 11 cases, the Plan itself, and the process leading to its formulation. The cases were filed and the Plan was proposed with the legitimate purpose of allowing the Debtors to reorganize and emerge from bankruptcy with a capital structure that will allow them to satisfy their obligations with sufficient liquidity and capital resources. Hence, Section 1129(a)(3) has been satisfied. D. Pursuant to Section 1129(a)(4), the payments to be made by the Debtors for services or for costs in connection with the Chapter 11 cases or the Plan have been approved by, or are subject to the approval of, the Court as reasonable. As a result, the requirements of Section 1129(a)(4) have been satisfied. E. As contemplated under Section 1129(a)(5), the Debtors provided requisite disclosures regarding proposed directors and officers of Newco following Confirmation, and have also disclosed the nature of compensation of insiders, who will be employed or retained by the Reorganized Debtors. Specifically, Newco's proposed directors and officers are: (a) Theodore Prince, president of Consolidated Chassis Management, LLC; (b) Anthony William Brierley, a partner at Kroll, Inc.; (c) Paul M. Leand, Jr., managing director and chief executive officer of AMA Capital Partners; (d) Mark Wilson, senior vice president of Sea Containers Ltd., and Newco's proposed chief executive officer; (e) Eugene I. Davis, chairman and chief executive officer of Pirinate Consulting Group, L.L.C.; (f) Andrew G. Evans, consultant of Singamas Group; and (g) Bradley Eric Scher, managing member of Ocean Ridge Capital Advisors, LLC. After the Amended Plan's confirmation, these individuals are proposed to serve as directors of the Reorganized Debtors: -- for Sea Containers Ltd.: * Robert M. Riggs, retired and without current affiliations; * John D. Campbell, non-executive director and member of Audit, Compensation and Nominating and Governance Committees of Orient-Express Hotels Ltd., non-executive director and Chairman of the Board of The Bank of Bermuda Ltd., and non-executive director and chairman of the Nominations and Governance Committee of Argus Group Holdings, Limited; * W. Murray Grindrod, former chairman of Grindrod Ltd.; * Charles N.C. Sherwood, partner of Permira Advisers Ltd.; and * Michael J.L. Stracey, retired and without current affiliations; -- for Sea Containers Services Ltd., Robert MacKenzie, president and the Debtors' CEO prior to Effective Date; and It is anticipated that Sea Containers Caribbean Inc. will be dissolved or merged shortly after the Effective Date, at which time its directors will cease to act. After Plan Confirmation, these individuals are proposed to serve as officers of the Reorganized Sea Containers Ltd.: (a) Laura Barlow as Joint Plan Administrator; (b) Meade Monger as Joint Plan Administrator; and (c) Edwin Hetherington as assistant secretary. The insiders that will be employed or retained by the Reorganized Debtors or Newco are: (a) Mark Wilson, who will have a contract for an initial fixed term of six months with a base salary of GBP300,000 and a bonus of up to GBP100,000; (b) Laura Barlow will receive payment of "Plan Administrator Costs" as set forth in the 4th Amended Plan and the Plan Administrator Agreement; (c) Robert MacKenzie will receive compensation of GBP5,000 per month from SCSL, and GBP5,000 per month in total from the other companies where he serves as a director until he ceases to serve; (d) Edwin Hetherington will continue to receive the same compensation that he received prior to the Effective Date; and The directors of the Reorganized Debtors, who served as directors prior to the Effective Date, will continue to receive the same compensation that they received prior to the Effective Date. F. The Plan does not contain any rate changes subject to the jurisdiction of any governmental regulatory commission, and will not require governmental regulatory approval. Therefore, Section 1129(a)(6) does not apply to the cases. G. The Plan satisfies Section 1129(a)(7) because the liquidation analysis presented in the Plan and the Disclosure Statement are persuasive and credible. Moreover, the methodology used and assumptions made in the analysis are reasonable. With respect to each Impaired Class, each holder of an Allowed Claim in an Impaired Class has accepted the Plan, or will receive under the Plan on account of its Claim, property of a value that is not less than the amount that each holder would have received if the Debtors were to have liquidated on the Plan's effective date under Chapter 7 of the Bankruptcy Code. H. The Plan satisfies Section 1129(a)(8) because, as previously reported, each Impaired Class that was entitled to vote has voted to accept the Plan. Unimpaired Classes are conclusively presumed to have accepted the Plan. I. The treatment of Administrative, DIP Facility, and Priority Tax Claims as set forth in the Plan satisfies the requirements of Section 1129(a)(9). J. As set forth in the voting results, each Impaired Class, other than the Deemed to Reject Class, has voted to accept the Plan. Accordingly, Section 1129(a)(10) is satisfied. K. Based upon the evidence proffered or adduced at or in affidavits filed in connection with the Confirmation Hearing, the Plan is feasible and Confirmation of the Plan is not likely to be followed by Newco liquidating or requiring further financial reorganization. Thus, the Plan satisfies Section 1129(a)(11). L. The Plan provides for the payment of all fees payable under Section 1930(a) of the Judiciary and Judicial Procedures Code, thereby satisfying Section 1129(a)(12). M. Section 1129(a)(13) requires a plan to provide for "retiree benefits" at levels established pursuant to Section 1114 of the Bankruptcy Code. The Debtors do not owe any retiree benefits, and therefore, Section 1129(a)(13) does not apply to the cases. N. The Debtors do not owe any domestic support obligations, are not individuals, and are not nonprofit corporations. Therefore, Sections 1129(a)(14), (15) and (16) do not apply to the Debtors' cases. Finding that the Fourth Amended Joint Plan complies with the statutory requirements, Judge Carey confirmed the Debtors' Plan on November 24, 2008. Judge Carey held that except as provided in the Confirmation Order, all objections and responses to the Plan, and all reservation of rights, to the extent not already withdrawn, waived, or settled, are overruled on the merits. Creditors will recover between 45 percent and 60 percent of what they are owed, says David L. Eaton, Esq., at Kirkland & Ellis LLP, the Debtors' special conflicts litigation counsel, reports Bloomberg News. Chief Restructuring Officer Laura Barlow said in an interview that Sea Containers was able to win approval for its plan by settling a dispute with two of its pension plans and a separate dispute over the control of some assets with General Electric Capital Corp., says the report. "It's been a long road," said Ms. Barlow, notes Bloomberg. Prior to the Confirmation Hearing, the Debtors delivered to the Court their Fourth Amended Plan containing modifications including: -- Post-emergence costs will cover costs, expenses and charges of the Reorganized SCSL related to equalization of the Pension Schemes; -- On or after the Effective Date, operation, management and control of the Reorganized SCL and the Reorganized SCSL will be the general responsibility of the Plan Administrator, which responsibilities will be implemented in accordance with applicable Bermuda or English law; and -- Minor changes with respect to the Plan's third party releases. Blacklined and final copies of the 4th Amended Plan are available for free at: http://bankrupt.com/misc/SeaCon_4thAmendedPlan.pdf http://bankrupt.com/misc/SeaCon_4thAmendedPlan-Blackline.pdf A full-text copy of the Confirmation Order is available for free at: http://bankrupt.com/misc/SeaCon_ConfirmationOrder.pdf Headquartered in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers disclosed total assets of $62,400,718 and total liabilities of $1,545,384,083. (Sea Containers Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEMGROUP ENERGY: NASDAQ Extends 10-Q Filing Deadline to Feb. 17 --------------------------------------------------------------- The NASDAQ Hearings Panel granted SemGroup Energy Partners, L.P.'s request for an extension of time to file its Form 10-Qs for the quarters ended June 30, 2008, and Sept. 30, 2008. Pursuant to the extension, SGLP's common units will continue to be listed on The NASDAQ Stock Market subject to the filing of the above referenced Form 10-Qs on or before Feb. 17, 2009. SGLP was unable to timely file its Form 10-Qs for the quarters ended June 30, 2008, and Sept. 30, 2008, due to uncertainties surrounding the filing of voluntary petitions by SemGroup, L.P. and certain of its subsidiaries for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on July 22, 2008. "We are very pleased with the Panel's decision to grant us additional time to file our Second and Third Quarter Form 10-Qs," Kevin Foxx, SGLP's president and chief executive officer, stated. "We continue to work with our board of directors in evaluating the impact of the Private Company's bankruptcy filings on our financial statements in an effort to file our Second and Third Quarter Form 10-Qs within the extension granted by the Panel." About SemGroup SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storing energy. SemGroup serves customers in the United States, Canada, Mexico, Wales, Switzerland and Vietnam. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08- 11525). These represent the Debtors' restructuring efforts: John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq. at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on Nov. 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. (SemGoup Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SEMGROUP LP: EBITDA is Negative $34.5 Million in September ---------------------------------------------------------- Bloomberg News reports that SemGroup LP filed an operating report for September showing a $34.5 million loss before interest, taxes, depreciation and amortization. About $209 million in revenues were exceeded by $220 million cost of sales. Including $139 million in reorganization costs, the net loss for the month was $182 million, Bloomberg said. Bill Rochelle of Bloomberg also notes that last week, the company filed a motion asking for authority to compel three close advisers to ousted Chief Executive Kivisto to provide information. The company wants information from Kevin Foxx, the former chief operating officer, and from Kivisto's assistant and accounting consultant. As reported by the Troubled Company Reporter, pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure, SemGroup earlier asked the Bankruptcy Court for the District of Delaware to require Brent C. Cooper, their former treasurer, and Thomas L. Kivisto, their former president and chief executive officer, to produce certain documents and to appear for examination. Mr. Kivisto was put on administrative leave in July and fired "for cause" in October, according to Bloomberg. Two official committees and an examiner have been appointed in SemGroup's cases. About SemGroup SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storing energy. SemGroup serves customers in the United States, Canada, Mexico, Wales, Switzerland and Vietnam. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08- 11525). These represent the Debtors' restructuring efforts: John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq. at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on Nov. 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. (SemGoup Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SOUTH DAKOTA: Owner Indicted on Bank, Wire & Mail Fraud ------------------------------------------------------- The Associated Press reports that Dan Nelson, who owns South Dakota Acceptance Corporation, and his partner Christian Tapaken were indicted on 28 counts of bank, wire and mail fraud charges. According to The AP, Messrs. Nelson and Tapaken were sued in the U.S. District Court in Des Moines for allegedly causing a coalition of banks to lose $21 million, by manipulating computer reports on information submitted to banks between 1997 and 2005. Messrs. Nelson and Tapaken, says The AP, are punishable by up to 30 years of imprisonment and could be fined by up to $1 million. Headquartered in Sioux Falls, South Dakota, South Dakota Acceptance Corporation dba CNAC, dba Mr. Payroll, dba First Midwest Fidelity, and Dan Nelson Automotive Group, Inc., filed for chapter 11 protection on June 20, 2005 (Bankr. D. S.D. Case No. 05-40866). When the Debtor filed for protection from its creditors, it listed $15,624,000 in assets and $28,028,058 in debts. STEVE & BARRY'S: New Owner Gets OK on Salaries; Loan Still Pending ------------------------------------------------------------------ BH S&B Holdings LLC, Steve & Barry's new owners, which filed for Chapter 11 in November, three months after buying the Steve & Barry's retail chain, failed to win temporary approval for $33 million in financing, although it did gain authority from the U.S. Bankruptcy Court for the Southern District of New York to pay $1.8 million in salaries, Bloomberg News reports. BH S&B bought the Steve & Barry's business in August -- after Steve & Barry's LLC, now known as Stone Barn Manhattan LLC, filed for bankruptcy protection in July 2008 and opted to sell its business and assets, including its corporate name to BH S&B, an entity formed by Bay Harbour Management and other parties. Bill Rochelle of Bloomberg also reported that Judge Martin Glenn, the bankruptcy judge assigned to the new case, held a joint hearing Nov. 24 with Allan Gropper, the bankruptcy judge handling the first Chapter 11 case, in light of the disputes between the two companies. The "old" company said last week that the "new" bankruptcy threatens to cut off its funding, Bloomberg said. Certain of the lenders to BH S&B's prepetition revolving credit facility are offering $60 million in secured financing for the liquidation to be conducted in the new case, according to Bloomberg. The Debtors are parties to a prepetition revolving credit agreement, dated October 14, 2008, with and Ableco Finance LLC, as collateral agent and as administrative agent. The Debtors owe approximately $90 million in principal under the credit facility. The loans were secured by liens on, and security interests in all of the Debtors' personal property assets of any kind or nature. About BH S&B BH S&B Holdings LLC filed for bankruptcy protection together with seven other affiliates on Nov. 19, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-14604). The seven debtor-affiliates are BH S&B Distribution LLC, BH S&B Lico LLC, BH S&B Retail LLC, BHY S&B Intermediate Holdco LLC, Cubicle Licensing LLC, Fashion Plate Licensing LLC, and Heritage Licensing LLC. BH S&B was formed by investment firms Bay Harbour Management and York Capital Management in August 2008 to acquire the business operations and assets of bankrupt retailer Steve & Barry's for $163 million in August 2008. Steve and Barry's, based in Port Washington, New York, was a specialty retailer of apparel and accessories, selling, among other things, university apparel and lifestyle brands, private-label casual clothing, and exclusive celebrity endorsed apparel. Steve & Barry's had 240 locations when it was bought and the new owners had planned to cut that down to 173 stores. BH S&B had intended to operate certain Steve & Barry's stores as going concerns and to liquidate inventory at other locations. Since the sale closing, however, for various reasons, including the general health of the American economy and the state of the retail market in particular, sales at all stores have been disappointing, and BH S&B's revenue has suffered. As a result, BH S&B was not in compliance with certain covenants under their senior secured credit facility and had no prospects for continued financing of their business as a going concern. In consultation with its lenders, BH S&B decided the appropriate course of action to maximize value for the benefit of all of its stakeholders was an orderly liquidation in Chapter 11. Bay Harbour Management is an SEC registered investment advisor with significant experience in purchasing distressed companies and effectuating their turnaround. The firm's holdings have included the retailer Barneys New York, the facilities based CLEC Telcove, and the former Aladdin Casino, now operating on the Las Vegas strip as the Planet Hollywood Resort and Casino following its rebranding and turnaround. York Capital Management is an SEC registered investment advisor with offices in New York, London, and Hong Kong with more than $15 billion in assets under management. York Capital was founded in 1991 and specializes in value oriented and event driven equity and credit investments. BH S&B is 100% owned by BHY S&B Intermediate Holdco LLC. BH S&B and its affiliates' chapter 11 cases are presided over by the Honorable Martin Glenn. Joel H. Levitin, Esq., and Richard A. Stieglitz, Jr., Esq., at Cahill Gordon & Reindel LLP, in New York, serve as bankruptcy counsel to BH S&B and its affiliates. RAS Management Advisors LLC acts as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and notice agent. About Steve & Barry's Steve & Barry's LLC, and 63 affiliates filed separate voluntary petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Pursuant to the Purchase Agreement, the Court authorized 51 entities to change their corporate names. Lead Debtor Steve & Barry's Manhattan LLC (Case No. 08-12579) was changed to Stone Barn Manhattan LLC. Parent company Steve & Barry's LLC (Case No. 08-12615) is now known as Steel Bolt LLC. When Steve & Barry's LLC and its affiliates filed for bankruptcy, they listed $693,492,000 in total assets and $638,086,000 in total debts. (Steve and Barry's Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SUNWEST MANAGEMENT: Wins Court Nod to Sell 7 Facilities ------------------------------------------------------- According to Bloomberg News, Sunwest Management Inc. was authorized by the U.S. Bankruptcy Court, Middle District of Tennessee (Nashville) on Nov. 20 to sell seven in North and South Carolina for $44 million to Five Star Quality Care Inc. As reported by the Troubled Company Reporter, citing various sources, Sunwest Management Inc. reached a deal with Boston- based senior housing company Five Star Quality Care, The Oregonian reports. The sale -- which includes Sunwest Management's seven retirement communities in North and South Carolina -- has a price that is short of the $56 million Sunwest Management owes to its largest lender, GE Business Financial Services Inc. Sunwest owes another $31.2 million to two other secured creditors. Bill Rochelle of Bloomberg News says that the Bankruptcy Court that an alternative reorganization plan proposed by investors in Sunwest wasn't feasible, even though the sale would have adverse tax consequences for them. The investors are asking the bankruptcy judge to prevent completion of the sale while they appeal. Salem, Oregon-based Sunwest Management Inc. -- http://www.sunwestmanagement.com/-- manages 275 assisted-living facilities in 36 states. Sunwest Management was founded in 1991 with a portfolio of three properties: two retirement communities and one skilled nursing community. It has a network of regional managers that handles various services from accounting to operations. Sunwest Management has put 10 assisted living centers -- two in Oregon -- into Chapter 11 bankruptcy. Briarwood Retirement and Assisted Living Community LLC, which owns a retirement center in Springfield, and Century Fields Retirement and Assisted Living Community LLC, which owns a center in Lebanon, filed for Chapter 11 on Aug. 19, 2008. On Aug. 17, 2008, eight Sunwest-affiliated LLCs filed for Chapter 11 bankruptcy protection from creditors in Tennessee. SUN-TIMES MEDIA: September 30 Balance Sheet Upside-Down by $321MM ----------------------------------------------------------------- Sun-Times Media Group, Inc.'s balance sheet at Sept. 30, 2008, showed total assets of $479.9 million, total liabilities of $801.7 million, resulting in a stockholders' deficit of roughly $321.8 million. Sun-Times Media reported a net loss in the third quarter ended Sept. 30, 2008, of $168.8 million compared with a loss of $192.4 million in the same period in 2007. The company reported an operating loss of $227.8 million in the third quarter of 2008 compared with an operating loss of $23.2 million for the third quarter of 2007. The third quarter 2008 results reflect a 18% decline in advertising revenue and a 2% decline in circulation revenue compared with the same period in 2007. The company's operating loss includes a non-cash charge of $209.3 million for the impairment of goodwill and other intangible assets. The company determined that the substantial acceleration in revenue declines in the three months ended Sept. 30, 2008, for both in the industry and for the company, in combination with the negative outlook for the U.S. economy and the continued decline in the company's market capitalization, were considered to be indicators of potential impairment of its goodwill and intangible assets. The consequent impairment test resulted in the non-cash impairment charge. Liquidity and Capital Resources As of Sept. 30, 2008, the company had cash and cash equivalents totaling $99.8 million. This amount does not include the company's investment in outstanding Canadian asset-backed commercial paper. The $99.8 million cash balance was down from the June 30, 2008, balance of $115.5 million due to the funding of the company's operations in the third quarter. The receipt of $11.2 million in recoverable income taxes in the quarter was largely offset by the funding of an escrow account related to support the company's potential indemnification obligation in connection with certain defamation cases. A full-text copy of the 10-Q filing is available for free at http://ResearchArchives.com/t/s?3529 About Sun-Times Media Headquartered in Chicago, Sun-Times Media Group Inc. (NYSE: SVN) - - http://www.thesuntimesgroup.com/-- is a newspaper publisher. Its media properties include the Chicago Sun-Times and Suntimes.com as well as newspapers and Web sites serving more than 200 communities throughout the Chicago area. The Troubled Company Reporter reported on Aug. 14, 2008, that at June 30, 2008, Sun-Times Media Group Inc.'s consolidated balance sheet showed $721.2 million in total assets and $870.8 million in total liabilities, resulting in a roughly $149.5 million stockholders' deficit. The company reported a net loss in the second quarter of 2008 of $37.8 million, versus net income of $528.0 million in the same period in 2007. On Aug. 1, 2007, Hollinger Inc. -- http://www.hollingerinc.com/-- which owns approximately 70.0% voting and 19.7% equity interest in Sun-Times Media Group Inc., along with two affiliates, 4322525 Canada Inc. and Sugra Limited, filed separate Chapter 15 petitions (Bankr. D. Del. Case Nos. 07-11029 through 07-11031). Hollinger also initiated Court-supervised restructuring under the Companies' Creditors Arrangement Act (Canada) on the same day. SUN-TIMES MEDIA: K Capital Considers Merger or Sale Transactions ---------------------------------------------------------------- K Capital Management, LLC, owner of 8,621,312 or 10.49% shares of Sun-Times Media Group Inc.'s common stock are considering various strategies to increase the value of its investment in the company, including proposals to effect certain corporate governance changes at the company, a merger or sale of the company or a going private transaction. On Nov. 10, 2008, Abner Kurtin, submitted a letter to Raymond G.H. Seitz, chairman of the company's board of directors. In the letter, Mr. Kurtin states that he supports the recommendation of Davidson Kempner Capital Management to elect new members to the board of directors of the company and offered to discuss such proposal with the company. A full-text copy if Mr. Kurtin's letter is available for free at http://ResearchArchives.com/t/s?352f K Capital and its group intend to review their investment in the company on a continuing basis including, without limitation, the company's financial position and strategic direction, the company's response to the actions suggested by Mr. Kurtin, price levels of the Common Stock, conditions in the securities market and general economic and industry conditions. The group may in the future take actions with respect to their investment in the company as they deem appropriate including, but not limited to, purchasing additional Common Stock or other securities of the company or selling some or all of their Common Stock, communicating with the company or other investors or conducting a proxy solicitation with respect to the election of directors of the company. About Sun-Times Media Group Inc. Headquartered in Chicago, Sun-Times Media Group Inc. (NYSE: SVN) - - http://www.thesuntimesgroup.com/-- is a newspaper publisher. Its media properties include the Chicago Sun-Times and Suntimes.com as well as newspapers and Web sites serving more than 200 communities throughout the Chicago area. The Troubled Company Reporter reported on Aug. 14, 2008, that at June 30, 2008, Sun-Times Media Group Inc.'s consolidated balance sheet showed $721.2 million in total assets and $870.8 million in total liabilities, resulting in a roughly $149.5 million stockholders' deficit. The company reported a net loss in the second quarter of 2008 of $37.8 million, versus net income of $528.0 million in the same period in 2007. On Aug. 1, 2007, Hollinger Inc. -- http://www.hollingerinc.com/-- which owns approximately 70.0% voting and 19.7% equity interest in Sun-Times Media Group Inc., along with two affiliates, 4322525 Canada Inc. and Sugra Limited, filed separate Chapter 15 petitions (Bankr. D. Del. Case Nos. 07-11029 through 07-11031). Hollinger also initiated Court-supervised restructuring under the Companies' Creditors Arrangement Act (Canada) on the same day. SUN-TIMES MEDIA: President, CEO Discloses Owning 307,916 Stake -------------------------------------------------------------- Cyrus F. Freidheim, Jr., president and CEO of Sun-Times Media Group Inc., disclosed in a Form 4 filing with the Securities and Exchange Commission that he owned 307,916 shares of the company's common stock after the November 15 sale of 50,000 shares of common stock. At Oct. 31, 2008, the company has outstanding 82,312,709 Class A common stock par value $.01 per share. Headquartered in Chicago, Sun-Times Media Group Inc. (NYSE: SVN) - - http://www.thesuntimesgroup.com/-- is a newspaper publisher. Its media properties include the Chicago Sun-Times and Suntimes.com as well as newspapers and Web sites serving more than 200 communities throughout the Chicago area. The Troubled Company Reporter reported on Aug. 14, 2008, that at June 30, 2008, Sun-Times Media Group Inc.'s consolidated balance sheet showed $721.2 million in total assets and $870.8 million in total liabilities, resulting in a roughly $149.5 million stockholders' deficit. The company reported a net loss in the second quarter of 2008 of $37.8 million, versus net income of $528.0 million in the same period in 2007. On Aug. 1, 2007, Hollinger Inc. -- http://www.hollingerinc.com/-- which owns approximately 70.0% voting and 19.7% equity interest in Sun-Times Media Group Inc., along with two affiliates, 4322525 Canada Inc. and Sugra Limited, filed separate Chapter 15 petitions (Bankr. D. Del. Case Nos. 07-11029 through 07-11031). Hollinger also initiated Court-supervised restructuring under the Companies' Creditors Arrangement Act (Canada) on the same day. SYNTAX-BRILLAN: Judge Orders Arrest of Recalcitrant Buyers ---------------------------------------------------------- Bloomberg News reports that Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court of the District of Delaware, the judge assigned to Syntax-Brillian Corp.'s bankruptcy cases, issued warrants for the arrest of John Wu and Michael Wu. Judge Shannon has ordered the Wus to answer the Court's prior order holding them in contempt for failing to complete the purchase of the business of Syntax-Brillian. As reported by the Troubled Company Reporter, the Bankruptcy Court on Oct. 10, 2008, entered an order directing Olevia International Group LLC, its officers and directors, Michael Wu and John Wu 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. Syntax won a lawsuit in October compelling the purchaser, an affiliate of TCV Industries Co., to complete an approved sale of assets. Judge Shannon held the Wus in contempt after they declined to close on the sale, according to Bloomberg. Bill Rochelle of Bloomberg adds that the contempt order forfeited the buyer's $5 million deposit made in connection with the sale. The contempt order also compelled the two individuals to pay $3 million a week until they paid off the $55 million remaining on the purchase contract. According to Bloomberg, Syntax said in a court filing this month it was considering whether to continue attempting to formulate a Chapter 11 plan or convert the case to a liquidation in Chapter 7 following the failure of the sale. 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. Syntax-Brillian cut a deal to sell its business assets to Olevia International Group LLC. On Sept. 10, 2008, OIG told the Bankruptcy Court that it won't pursue the deal, contending 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. On Oct. 10. the Bankruptcy Court denied OIG's emergency request to excuse it from its obligations. OIG has taken an appeal of that order. When the Debtors filed for protection from their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. T H AGRICULTURE: Files for Ch. 11 Bankruptcy and Prepackage Plan ---------------------------------------------------------------- T H Agriculture & Nutrition L.L.C. filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York in attempt to preserve its remaining assets and implement the negotiated settlement with the asbestos claimant group incorporated in the prepackaged Chapter 11 plan of reorganization. According to the company, majority of the asbestos claims accepted the plan on Oct. 11, 2008. The company is asking the Court to set Jan. 15, 2009, as hearing to consider confirmation of the plan. Although the company ceased distributing asbestos fiber in 1980 and terminated its chemical business four year later, a asbestos related personal injury and wrongful death were filed against the Debtor, says Bruce R. Zirinsky, Esq., at Cadwalader Wikcersham & Taft LLP. Several plaintiffs have also asserted derivative asbestos PI claims against to other parties to the company including its parent Philips Electronic North America Corporation and Elements Group B.V., Mr. Zirinsky relates. The company said Philips Electronics owns more than 10% of its membership interest while Elements Group acquired certain of the company's operating assets in 1981. Mr. Zirinsky relates about 4,272 asbestos-related personal injury and wrongful death cases -- representing 7,146 claims -- were resolved through settlements and dismissals as of Nov. 19, 2008. However, Mr. Ziringksy says no judgment has been entered against the company in connection with the asbestos PI claims. The company has 5,962 active cases representing 14,268 claims pending against the company, Philips Electronics and element in the tort system, he adds. The company listed assets between $50 million and $100 million, and debts between $500 million to $1 billion in its filing. Prepackaged Chapter 11 Plan The plan provides for the Asbestos PI Trust to make distributions on account of all valid Asbestos PI Claims asserted by current and future claimants, leaving all other creditors -- excluding holders of intercompany claims -- unimpaired. Under the plan, Asbestos PI Trust will be funded cash of at least $900 million from the company and contributions from Philips Electronics. In addition, the company and Philips Electronics will also contributed the cash the insurance settlement proceeds trust as of the plan's effective date to the asbestos PI trust. Excess amounts, if any, will be returned to Philips Electronics under the the plan. The company and the asbestos PI trust will complete the promissory note secured by all of the company's membership interests, which provides for the payment of $1,000,000 plus interest in equal quarterly installments. Furthermore, the parties will enter into a pledge agreement to memorialize the granting of the security interest in 100% of the outstanding membership interest of the company to the asbestos PI trust. The plan classifies interests against and liens in the company in six classes. The classification of treatment of interests and claims are: Treatment of Interests and Claims Type Estimated Estimated Class of Claims Treatment Amount Recovery ----- --------- --------- --------- --------- N/A administrative $0 100% N/A priority tax $0 100% N/A DIP claim unknown N/A 1 priority unimpaired $0 100% 2 secured unimpaired $0 100% 3 general unimpaired $70,148,832 100% unsecured 4 asbestos PI impaired unknown unknown 5 intercompany impaired $186,924 unknown 6 equity in THAN impaired N/A N/A Class 4 and 5 are entitled to vote to accept or reject the plan. Holders of Class 1 priority claims will be paid in full after the plan's effective date. Class 2 and 3 will be reinstated under Section 1124(2) of the Bankruptcy Code unless holders agrees to less favorable treatment. Class 4 asbestos PI claims will be channeled to the asbestos PI Trust, which will pay qualified asbestos PI claims on the plan's effective date. Class 5 and 6 will be canceled under the plan. A full-text copy of the company's Disclosure Statement is available for free at: http://ResearchArchives.com/t/s?352b A full-text copy of the company's Chapter 11 plan of reorganization is available for free at: http://ResearchArchives.com/t/s?352c Headquartered in New York, T H Agriculture & Nutrition L.L.C. manages the defense and resolution of the asbestos PI claims and certain commercial real estate. Prior to 1984, the Debtor made agricultural products and chemicals for various industrial and agricultural applications. Between 1960 and $1980, the company distributed asbestos fiber in certain parts of the UnitedStates. The company was originally incorporated as Thompson-Munro-Robbins Chemical Co. under Missouri law in January 1917. The company changed its name in 1923 to Thompson, Hayward & Schlueter, Inc., and again in 1925 to Thompson-Hayward Chemical Co. In addition, the company distributed Chrysotile asbestos fiber, majority of which was supplied by Carey Canadian Mines Ltd; and laundry products and vermiculite; and talc. T H AGRICULTURE: Case Summary & 30 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: T H Agriculture & Nutrition, L.L.C. 250 West 57th Street, Suite 901 New York, NY 10107 Bankruptcy Case No.: 08-14692 Type of Business: The Debtor manages the defense and resolution of the asbestos PI claims and certain commercial real estate. Prior to 1984, the Debtor made agricultural products and chemicals for various industrial and agricultural applications. Between 1960 and $1980, the company distributed asbestos fiber in certain parts of the United States. Chapter 11 Petition Date: November 24, 2008 Court: Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtor's Attorney: Bruce R. Zirinsky, Esq. bruce.zirinsky@cwt.com John H. Bae, Esq. john.bae@cwt.com Cadwalader, Wickersham & Taft LLP One World Financial Center New York, NY 10281 Tel: (212) 504-6404 Fax: (212) 504-6666 Debtor's Bankruptcy Counsel: Stutzman, Bromberg, Esserman & Plifka Debtor's Counsel: Brune & Richard LLP Financial Advisor: American Securities Advisors LLC Insurance Consultant: The Claro Group LLC Special Asbestos Counsel: Lewis & Bockius LLP Special Insurance Counsel: Dickstein Shapiro LLP Claims Agent: Kurtzman Caron Consultants LLC The Debtor's financial condition as of Aug. 31, 2008: Total Assets: $77,989,574 Total Debts: $576,762,896 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Jonathan David asbestos unknown The David Law Firm 10655 Six Pines Drive Suite 260 The Woodlands, TX 77380 Robert W. Phillips asbestos unknown Simmonscooper LLC 707 Berkshire Boulevard PO Box 521 East Alton, IL 62024 Steve Baron asbestos unknown Baron Budd 3102 Oak Lawn Avenue Suite 1100 Dallas, TX 75219 John Cooney asbestos unknown David Allen Dixon asbestos unknown Thomas W. Bevan asbestos unknown Lou Black asbestos unknown Jim Early asbestos unknown G. Patterson Keahey asbestos unknown Elizabeth V. Heller asbestos unknown Garret J. Bradley asbestos unknown Jim Ferraro asbestos unknown Peter Kraus asbestos unknown Deborah Schweizer asbestos unknown Donna Blevins asbestos unknown Joe Belluck asbestos unknown Patrick C. Malour asbestos unknown Kenneth J. Wilson asbestos unknown Christopher Madeksho asbestos unknown Bryan Blevins asbestos unknown Roger G. Worthington asbestos unknown John Arthur Eaves asbestos unknown Andrew O'Brien asbestos unknown James Bradley Smith asbestos unknown Michael B. Serling asbestos unknown Steven Kazan asbestos unknown Anthony Sakalarios asbestos unknown Larry O. Norris asbestos unknown Russel Cook asbestos unknown The petitions was signed by the company president Joseph L. Wolf, Jr. TOXIN ALERT: Fails to File FY Results, Gets Cease Trade Order ------------------------------------------------------------- Toxin Alert Inc. was unable to file its audited financial statements and other material for the fiscal year ended June 30, 2008, by the statutory deadline of Oct. 29, 2008, and a Management Cease Trade Order was issued by the relevant securities authorities on Oct. 29, 2008. This Default Status Report is issued pursuant to National Policy 12-203 Cease Trade Orders for Continuous Disclosure Defaults. The company continues in the process of preparing a private placement of its securities which it anticipates will raise sufficient funds to enable the audited financial statements to be prepared and filed within 60 days of the default. The company has experienced cash flow difficulties due to the non-payment of the company's invoice to a university in Mississippi for a contract that was fulfilled in March 2008. The company intends to continue to satisfy the provisions of the Alternative Information Guidelines by issuing bi-weekly Default Status Reports in the form of news releases, so long as it remains in default. The company is not in any insolvency proceedings at the present time and there is no other material information relating to the affairs of the company that has not been generally disclosed. There are no other changes otherwise required to be disclosed pursuant to Section 4.4 of NP 12-203. Headquartered in Toronto, Canada, Toxin Alert Inc. (TSX VENTURE:TOX) -- http://www.toxinalert.com-- develops diagnostic test for contaminated food. TRI-STATE FINANCIAL: South Dakota Ethanol Plant Files in Omaha -------------------------------------------------------------- Bloomberg News reports that Tri-State Financial LLC, owner of the North Country Ethanol plant near Rosholt, South Dakota, filed a Chapter 11 petition on Nov. 21 in Omaha, Nebraska. The company listed assets of $35 million and debt totaling $27 million. Centris Federal Credit Union holds a secured claim aggregating $19.6 million. According to Bloomberg's Bill Rochelle, the bankruptcy reorganization is the second for the plant. The prior owner filed under Chapter 11 in June 2003 following a fire and explosion the preceding New Year's Eve that shut the plant down. The current owners bought the plant in the 2003 bankruptcy. The case is In re Tri-State Financial LLC, 08-83016, U.S. Bankruptcy Court, District of Nebraska (Omaha). TROPICANA ENTERTAINMENT: Inks Deal w/ Casino Buyer; Sale Cancelled ------------------------------------------------------------------ According to Bloomberg's Bill Rochelle, Tropicana Entertainment LLC reached a settlement with Eldorado Resorts, LLC, which settlement provides for the cancellation of the sale of Tropicana's casino in Evansville, Indiana, to Eldorado. Tropicana, through Aztar Indiana Gaming Company, LLC, owns the Casino Aztar Evansville riverboat casino located in Evansville. In March 2008, Aztar and Eldorado inked a deal for the sale of the Debtors' membership interests in Casino Aztar for $190,000,000 in cash, $10,000,000 of that amount was deposited in an escrow account with Wells Fargo. Tropicana sought bankruptcy protection before the sale was closed. In their 6-month old Chapter 11 cases, the Debtors sought approval from the U.S. Bankruptcy Court for the District of Delaware to sell the assets to Eldorado, or to another party with a better offer through a Court-sanctioned auction. The Debtors, however, said that they have elected not to pursue the sale due to various reasons, including: -- key constituencies in the Chapter 11 cases object to the sale; -- Eldorado has not obtained gaming approvals in connection with the purchase of the casino. -- There is very high likelihood that Eldorado won't be able to close on the sale because of "onerous terms" provided by its lenders who are supposed to finance the purchase. -- The financial turmoil has caused a downturn to the gaming industry and access to credit by firms, including Eldorado difficult. Rather than pursue litigation against Eldorado, Tropicana decided to settle with Eldorado. Bloomberg News relates that pursuant to the settlement Tropicana will release Eldorado from all liability forfailing to complete the purchase, and the two sides will split the $10 million deposit. The Bankruptcy Court will consider approval of the Settlement on November 26. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada and Atlantic City, New Jersey. Tropicana Entertainment LLC filed for Chapter 11 protection on May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor- affiliates filed for separate Chapter 11 petitions but with no case numbers assigned yet. Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. The Court has extended the Debtors' exclusive period to file a plan through and including January 12, 2009, and to solicit votes on the plan through and including March 13, 2009. (Tropicana Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) USG CORP: Current Initiatives to Provide $125MM in Yearly Savings ----------------------------------------------------------------- USG Corporation, a leading building products company, said mid November that its current restructuring initiatives will result in more than $125 million in annualized cost savings. The company also plans to reduce capital expenditures by approximately $190 million in 2009 compared to 2008. The cost savings are before severance costs of approximately $35 million to $45 million associated with the 20 percent salaried workforce reduction announced by the company early November. The majority of the severance costs are expected to be accrued in the current quarter and paid in the first quarter of 2009. Cost Reductions USG said in late October that it would take additional actions to adjust operations, programs and staffing to adapt to current construction and financial market conditions. Those actions, the majority of which will be implemented in the current quarter, include significant reductions in marketing, research and other overhead expenses, including the elimination of about 900 salaried positions. "When the residential housing market first showed signs of weakening more than two years ago, we adopted a conservative, phased approach to stay ahead of the declining market," said William C. Foote, USG Chairman and CEO. "A problem that was originally confined to the residential housing market has grown into a much broader and deeper economic contraction that is affecting all of USG's businesses in all of our markets. We are moving aggressively to cut costs and properly align our businesses for these extremely challenging conditions." Capital Spending and Manufacturing In addition to the $125 million cost reduction program, the company also plans to reduce capital spending from approximately $240 million this year to approximately $50 million in 2009, reflecting the completion of several large capital projects. The company also expects to make an additional capacity reduction of approximately one billion square feet from its wallboard manufacturing network. Commenting on the company's capital expenditures, Foote said, "We have made substantial investments in recent years in our market-leading manufacturing network. The completion of those strategic investments will allow us to significantly reduce capital spending in 2009 while still providing outstanding service for our customers." Liquidity and Capital Resources The company had more than $700 million of cash and undrawn committed credit facilities as of October 31, 2008, comprised of $257 million in cash, availability of $170 million under its receivables-backed credit agreement and availability of approximately $254 million under its unsecured credit facility, and approximately $36 million under its recently finalized ship mortgage facility. The company is required under its credit agreement to have available cash and unused committed borrowing capacity of $300 million. The company has begun discussions with the lead banks under its unsecured credit agreement with respect to modifications of that agreement. Regarding the discussions with the company's lead banks, Foote said, "We are optimistic that the discussions with our banks will conclude promptly and satisfactorily." "Severe cyclical downturns are always challenging and the necessary staffing decisions are painful, but we are committed to take the actions necessary to weather this recession and position the company for the eventual market rebound," said Foote. USG to Cut 900 Jobs In a separate filing with the U.S. Securities and Exchange Commission dated November 7, 2008, USG Corp has noted that as a result of continued adverse market conditions, it has initiated additional programs to reduce costs that include a workforce reduction plan that is expected to reduce the Company's worldwide salaried positions by approximately 20%, or approximately 900 positions. According to USG Chief Financial Officer Richard Fleming, the workforce reduction plan is being communicated to salaried employees beginning on November 3, 2008. The first step in the plan is to offer voluntary severance benefits. After the number of participants in the voluntary separation program is determined, the Company expects to implement an involuntary separation program that will account for most of the position reductions. Employees who are separated, either voluntarily or involuntarily, will receive separation benefits that include a lump sum payment based on earnings and length of service, an allowance to continue medical, dental and vision coverage and outplacement services. It is expected that all affected employees will be informed, and that the separation plan will be substantially completed, by the end of January 2009. USG will record charges for termination benefits related to the workforce reduction plan in the current and future fiscal quarters in accordance with FASB Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities. The Company estimates that those charges will aggregate $35 million to $45 million and that cash expenditures will be incurred in the current and future fiscal quarters in the full amount of the charges. About USG Corporation Based in Chicago, Ill., USG Corporation -- http://www.usg.com/-- through its subsidiaries, manufactures and distributes building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. The Debtors emerged from bankruptcy protection on June 20, 2006. * * * As reported by the Troubled Company Reporter on Oct. 31, 2008, Standard & Poor's Ratings Services lowered its ratings on USG Corp., including its corporate credit rating to 'BB-' from 'BB+', and placed the ratings on CreditWatch with negative implications. The downgrade and CreditWatch listing follow weaker-than-expected third operating results resulting from the continued housing slump and recent weakness in commercial construction, a trend S&P expects to continue in the near term. In addition, the company disclosed that absent significant cost cuts, other financing arrangements or modifications to its credit agreement, the company will have difficulty meeting the minimum EBITDA covenant at the end of the first quarter of 2009 and possibly as early as the end of the fourth quarter of 2008. USG Corporation reported third quarter 2008 net sales of $1.2 billion and a net loss of $40 million. For the same period a year ago, the corporation reported net sales of $1.3 billion and net earnings of $7 million. For nine months of 2008, the corporation reported net sales of $3.6 billion and a net loss of $125 million. For the first nine months of 2007, net sales were $4.0 billion and net earnings were $104 million. (USG Bankruptcy News; Bankruptcy Creditors' Service Inc., Issue No. 149, http://bankrupt.com/newsstand/or 215/945-7000). USG CORP: To Close Wallboard Manufacturing Lines in Some States --------------------------------------------------------------- In a regulatory filing dated Nov. 21, 2008, with the U.S. Securities and Exchange Commission, USG Corporation discloses that it is making an additional capacity reduction of about one billion square feet from its wallboard manufacturing network and is closing two other plants. USG will either permanently or temporarily close wallboard manufacturing lines at the United States Gypsum Company's Plaster City, California; Jacksonville, Florida; Baltimore, Maryland; and Stony Point, New York plants, the cement board manufacturing line at its Santa Fe Springs, California plant and its Delavan, Wisconsin substrate plant. USG's subsidiary, L&W Supply Corporation, is also set to close 31 centers. USG Executive Vice-President and Chief Financial Officer Richard Fleming says the Company expects to complete the closures by the end of the current fiscal quarter. "[USG] will record charges of approximately $18 million in the current and future fiscal quarters related to these closures," Mr. Fleming relates. "These charges include approximately $11 million for termination benefits, $6 million for associated costs, principally equipment lease terminations and cleanup costs, and $1 million for inventory write-offs." USG estimates that it will incur cash expenditures of about $17 million in the current and future fiscal quarters in connection with the closures. The closures are part of USG's undertaking to adjust operations, programs and staffing to adapt to current construction and financial market conditions, according to Mr. Fleming. About USG Corporation Based in Chicago, Ill., USG Corporation -- http://www.usg.com/-- through its subsidiaries, manufactures and distributes building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. The Debtors emerged from bankruptcy protection on June 20, 2006. * * * As reported by the Troubled Company Reporter on Oct. 31, 2008, Standard & Poor's Ratings Services lowered its ratings on USG Corp., including its corporate credit rating to 'BB-' from 'BB+', and placed the ratings on CreditWatch with negative implications. The downgrade and CreditWatch listing follow weaker-than-expected third operating results resulting from the continued housing slump and recent weakness in commercial construction, a trend S&P expects to continue in the near term. In addition, the company disclosed that absent significant cost cuts, other financing arrangements or modifications to its credit agreement, the company will have difficulty meeting the minimum EBITDA covenant at the end of the first quarter of 2009 and possibly as early as the end of the fourth quarter of 2008. USG Corporation reported third quarter 2008 net sales of $1.2 billion and a net loss of $40 million. For the same period a year ago, the corporation reported net sales of $1.3 billion and net earnings of $7 million. For nine months of 2008, the corporation reported net sales of $3.6 billion and a net loss of $125 million. For the first nine months of 2007, net sales were $4.0 billion and net earnings were $104 million. (USG Bankruptcy News; Bankruptcy Creditors' Service Inc., Issue No. 149, http://bankrupt.com/newsstand/or 215/945-7000). USG CORP: To Sell $400M of Convert. Notes to W. Buffet and Fairfax ------------------------------------------------------------------ USG Corporation, reported Nov. 21 that it has entered into an agreement to sell a total of $400 million of 10 percent contingent convertible senior notes due 2018, $300 million to Warren Buffet's Berkshire Hathaway Inc. and $100 million to Fairfax Financial Holdings Limited. The notes will initially bear interest at a rate of 10 percent per annum. In accordance with New York Stock Exchange rules, USG will seek shareholder approval to allow conversion of the notes into shares of USG common stock. Assuming an affirmative vote of USG's shareholders, the notes will become convertible into shares of USG common stock at a conversion price of $11.40 per share. If shareholder approval is not obtained prior to the 135th day after closing of the sale of the notes, the notes will bear interest at 20 percent per annum until after shareholder approval is obtained. Berkshire Hathaway and Fairfax have agreed to vote all shares of the corporation's common stock controlled by their affiliates over which they have voting control in favor of the proposal to permit conversion of the notes. Completion of the sale of the notes is subject to customary closing conditions and is expected to occur within the next several business days. "We are gratified by the expression of confidence in USG Corporation by two premier financial institutions," said USG Corporation Chairman and CEO William C. Foote. "We consider these substantial investments by Berkshire Hathaway and Fairfax as validation of our business strategy and the company's long- term prospects. This transaction provides USG with long-term capital that significantly improves our financial flexibility as we manage through the steep recession in our primary markets." USG intends to use the proceeds from the sale of the notes for general corporate purposes, including a partial repayment of the amounts outstanding under its unsecured credit agreement. The company intends to hold a special shareholders meeting in the first quarter of 2009 to seek shareholder approval to allow conversion of the notes. "We have taken numerous actions over the last 2 1/2 years to stay ahead of a declining market and optimize both our operations and our finances," said Foote. "We know that one of the keys to future success is maintaining sufficient financial flexibility to manage through this downturn. The proceeds of the sale of the convertible notes significantly strengthen our capital position and greatly enhance our ability to navigate through this recession and position the company for an eventual market rebound." The notes will not be and have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state, and is issued pursuant to Rule 135c under the Securities Act of 1933. About USG Corporation Based in Chicago, Ill., USG Corporation -- http://www.usg.com/-- through its subsidiaries, manufactures and distributes building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. The Debtors emerged from bankruptcy protection on June 20, 2006. * * * As reported by the Troubled Company Reporter on Oct. 31, 2008, Standard & Poor's Ratings Services lowered its ratings on USG Corp., including its corporate credit rating to 'BB-' from 'BB+', and placed the ratings on CreditWatch with negative implications. The downgrade and CreditWatch listing follow weaker-than-expected third operating results resulting from the continued housing slump and recent weakness in commercial construction, a trend S&P expects to continue in the near term. In addition, the company disclosed that absent significant cost cuts, other financing arrangements or modifications to its credit agreement, the company will have difficulty meeting the minimum EBITDA covenant at the end of the first quarter of 2009 and possibly as early as the end of the fourth quarter of 2008. USG Corporation reported third quarter 2008 net sales of $1.2 billion and a net loss of $40 million. For the same period a year ago, the corporation reported net sales of $1.3 billion and net earnings of $7 million. For nine months of 2008, the corporation reported net sales of $3.6 billion and a net loss of $125 million. For the first nine months of 2007, net sales were $4.0 billion and net earnings were $104 million. (USG Bankruptcy News; Bankruptcy Creditors' Service Inc., Issue No. 149, http://bankrupt.com/newsstand/or 215/945-7000). USG CORP: Valerie Jarrett Steps Down as USG Director ---------------------------------------------------- In a regulatory filing with the U.S. Securities and Exchange Commission, USG Corporation reports that Valerie Jarrett has informed the USG Board that she is resigning from her post as one of the Company's directors as a result of her appointment as a senior White House adviser. Ms. Jarrett had been appointed as senior counselor and assistant to the president for intergovernmental relations and public liaison by U.S. President-elect Obama. Ms. Jarrett will leave USG by the end of the year, the Company's Executive Vice-President and General Counsel Stanley Ferguson said. Ms. Jarrett currently serves as co-chair of President Obama's transition team. She has served on the board of the Federal Reserve Bank of Chicago and has chaired the Chicago Transit board and the Chicago Stock Exchange. Ms. Jarrett earned an undergraduate degree from Stanford University and a law degree from the University of Michigan. About USG Corporation Based in Chicago, Ill., USG Corporation -- http://www.usg.com/-- through its subsidiaries, manufactures and distributes building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. The Debtors emerged from bankruptcy protection on June 20, 2006. * * * As reported by the Troubled Company Reporter on Oct. 31, 2008, Standard & Poor's Ratings Services lowered its ratings on USG Corp., including its corporate credit rating to 'BB-' from 'BB+', and placed the ratings on CreditWatch with negative implications. The downgrade and CreditWatch listing follow weaker-than-expected third operating results resulting from the continued housing slump and recent weakness in commercial construction, a trend S&P expects to continue in the near term. In addition, the company disclosed that absent significant cost cuts, other financing arrangements or modifications to its credit agreement, the company will have difficulty meeting the minimum EBITDA covenant at the end of the first quarter of 2009 and possibly as early as the end of the fourth quarter of 2008. USG Corporation reported third quarter 2008 net sales of $1.2 billion and a net loss of $40 million. For the same period a year ago, the corporation reported net sales of $1.3 billion and net earnings of $7 million. For nine months of 2008, the corporation reported net sales of $3.6 billion and a net loss of $125 million. For the first nine months of 2007, net sales were $4.0 billion and net earnings were $104 million. (USG Bankruptcy News; Bankruptcy Creditors' Service Inc., Issue No. 149, http://bankrupt.com/newsstand/or 215/945-7000). VERASUN ENERGY: Closes Dyersville & Woodbury Ethanol Plants ----------------------------------------------------------- The Associated Press reported that bankrupt ethanol producer, VeraSun Energy Corporation, will close its ethanol plants in Dyersville, Iowa, and Woodbury, Michigan, indefinitely. According to AP, VeraSun made the announcement through e-mails to producers and grain elevators. VeraSun said in the e-mail that the Dyersville and Woodbury plants are closed for both corn deliveries and corn purchasing "until further notice," AP related. The Dyersville plant began operations in September 2008 and has the capacity to produce 110,000,000 gallons of ethanol per year. The Woodbury plant began operations in February 2008 and has the capacity to produce 50,000,000 gallons of ethanol per year. Orders Cut At Certain Facilities In a press release dated November 21, 2008, VeraSun Energy Corporation states that it "values the relationships with our corn suppliers and recognizes their vital role to our business. We continue to work with suppliers while we pursue long-term financing." The Company says it has paid or will pay for substantially all prepetition corn delivered after October 11, 2008, and postpetition corn delivered after October 31, 2008. The U.S. Bankruptcy Code precludes payment for goods delivered before October 11, 2008. This has negatively impacted approximately 10 of VeraSun's corn producers with balances totaling approximately $360,000 for less than 100,000 bushels. VeraSun has paid more than $9 million in November for corn delivered prior to October 31, 2008. Unfortunately, the Company, according to the press release, will need to reject some corn contracts for delivery through Dec. 31, 2008, at its Janesville and Welcome, Minnesota, facilities due to the delayed startups. Other contracts may need to be rejected or renegotiated as the company continues to work through them on an individual basis. The Company says it has also temporarily ceased receiving corn and processing at certain facilities while we seek to secure additional financing. VeraSun appreciates the loyalty of our corn suppliers and their willingness to continue to work with us through the reorganization process. About VeraSun Energy Corporation Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. - - http://www.verasun.comor http://www.VE85.com/-- is a producer and marketer of ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, with 14 in operation. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 31, 2008, (Bankr. D. Del. Case No.: 08-12606) Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP represents the Debtors in their restructuring efforts. AlixPartners LLP serves as their restructuring advisor. Rothschild Inc. is their investment banker and Sitrick & Company is their communication agent. The Debtors' claims noticing and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' total assets as of June 30, 2008, was $3,452,985,000 and their total debts as of June 30, 2008, was $1,913,214,000. VeraSun Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) VERASUN ENERGY: Corn Farmers Object to Supply Contracts Rejection ----------------------------------------------------------------- Bloomberg News reports that VeraSun Energy Corp. is facing opposition from a group of farmers in connection with its plans to reject contracts supplying corn for two plants in Minnesota. The plants have just been completed and haven't begun production. Pursuant to Section 365(a) of the Bankruptcy Code and Rule 6006 of the Federal Rules of Bankruptcy Procedure, VeraSun and its affiliates have asked the U.S. Bankruptcy Court for the District of Delaware for authority to reject: (a) contracts for delivery of corn in October, November, and December 2008 to idle Janesville and Welcome, Minnesota production facilities; and (b) sales contracts for Lincoln Oil Company, Inc., Osage, Inc., and ProTec Fuel Management LLC. Before the Petition Date, the Debtors constructed two ethanol plants in Welcome and Janesville and entered into contracts for the delivery of corn in anticipation of commencing operations at the plants in the fall of 2008. However, the Debtors have not yet obtained financing to perform sustainable operations at the new plants, and expect the plants to be idle for the rest of 2008, said the Debtors' counsel, Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Wilmington, Delaware. In their proposal, the Debtors did not provide for an effective date of the rejection but set procedures that would allow them to reject any of the corn contracts effective after 10 days' notice of the Debtors. A schedule of the to be rejected contracts is available for free at: http://bankrupt.com/misc/VeraSunDeliverSalesContracts.pdf Bill Rochelle of Bloomberg says that a group of corn suppliers oppose the proposed rejection because it allows the company to wait and see which way the market moves before deciding whether to assume or reject the contracts. The corn suppliers say, "In the Midwest, this would be viewed as tantamount to playing a game of Texas hold 'em where the VeraSun corn suppliers are 'all in' and VeraSun gets to see the flop prior to deciding whether to assume the contracts." Bill Rochelle added that the agent for the secured lenders with liens on the Minnesota plants also opposes, saying contract rejection could harm relations with the farmers and adversely affect the value of the plants in the future. VeraSun issued a press release on Nov. 21 conveying other corn contracts may be terminated. VeraSun stated it has "temporarily ceased receiving corn and processing at certain facilities while we seek to secure additional financing." The statement said "other contracts may need to be rejected or renegotiated." Meanwhile, WestLB AG, New York Branch, the agent for the so-called lenders who provided the ASA Debtors, including ASA OpCo Holdings, LLC, funding for three projects, objected to how the professionals in the case will allocate their fees. Where the company proposed that the professionals' fees be allocated among the plants according to their production capacities, WestLB says the work should be attributed plant by plant. The bank added the ASA plants require little attention from lawyers while problems with the US BioEnergy and VeraSun plants consume most of the professionals' time. Accordingly, it objects to the proposed procedures for paying retained professionals in the case, including the payment terms of Skadden, Arps, Slate Meagher & Flom LLP, and Rotschild Inc. About VeraSun Energy Corporation Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. - - http://www.verasun.comor http://www.VE85.com/-- is a producer and marketer of ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, with 14 in operation. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 31, 2008, (Bankr. D. Del. Case No.: 08-12606) Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP represents the Debtors in their restructuring efforts. AlixPartners LLP serves as their restructuring advisor. Rothschild Inc. is their investment banker and Sitrick & Company is their communication agent. The Debtors' claims noticing and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' total assets as of June 30, 2008, was $3,452,985,000 and their total debts as of June 30, 2008, was $1,913,214,000. Verasun Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) VERASUN ENERGY: Farmers Form Ad Hoc Group in Chapter 11 Case ------------------------------------------------------------ According to a Court filing, more than 100 corn suppliers from Nebraska, Michigan, Iowa, Indiana, Minnesota, North Dakota and South Dakota under contract with VeraSun Energy Corp. or its affiliates, gathered to form an ad hoc committee. The ad hoc committee, a Delaware Bankruptcy Court filing says, was formed in an effort to: -- advocate for and protect the member corn suppliers common interests in the Debtors' Chapter 11 cases; -- present to the Court a uniform voice for the member corn suppliers and to negotiate and proactively pursue solutions with the Debtors on behalf of its members on issues impacting the continued supply of corn for the Debtors' ethanol plants; -- help ensure, under terms agreeable to the member corn suppliers, a continuous supply of corn to the Debtors to keep the Debtors' ethanol plants operating to help maximize value for the Debtors' estates for the benefit of all parties-in-interest; -- provide a means by which more corn suppliers that have forward supply contracts with the Debtors, or that have other contractual of financial relationships with the Debtors, may be better informed regarding the activities of the Debtors; and -- provide a means by which the Court will be made aware of the concerns of corn suppliers that have forward supply contracts with the Debtors, or that have other contractual or financial relationships with the Debtors. The Ad Hoc Committee is represented by David A. Lander, Esq., at Thompson Coburn, LLP, in St. Louis, Missouri; Donald L. Swanson, Esq., at Koley Jessen P.C., L.L.O., in Omaha, Nebraska; and William E. Chipman, Jr., Esq., Edwards Angell Palmer & Dodge LLP, in Wilmington, Delaware. The formation of the Committee comes after to VeraSun filed before the U.S. Bankruptcy Court for the District of Delaware a motion reject contracts for the delivery of corn for the Debtors' Janesville and Welcome Plants in Minnesota, effective after 10 days' notice. Seventy-eight farmers and other corn suppliers submitted objections to the proposal. About VeraSun Energy Corporation Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. - - http://www.verasun.comor http://www.VE85.com/-- is a producer and marketer of ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, with 14 in operation. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 31, 2008, (Bankr. D. Del. Case No.: 08-12606) Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP represents the Debtors in their restructuring efforts. AlixPartners LLP serves as their restructuring advisor. Rothschild Inc. is their investment banker and Sitrick & Company is their communication agent. The Debtors' claims noticing and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' total assets as of June 30, 2008, was $3,452,985,000 and their total debts as of June 30, 2008, was $1,913,214,000. VeraSun Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) VERASUN ENERGY: Receives Unsolicited Bid for All Assets ------------------------------------------------------- VeraSun Energy Corporation, in a press release dated Nov. 24, 2008, said it recently received a non-binding unsolicited indication of interest with respect to the purchase of substantially all of its assets. VeraSun, however, did not disclose the identity of the interested party "due to confidentiality considerations." VeraSun said it intends to pursue the indication of interest to its conclusion and evaluate other proposals it may receive in accordance with its obligations as a debtor-in-possession under Chapter 11 of the Bankruptcy Code. The indication of interest, according to VeraSun, is subject to significant conditions, and there can be no assurance that it will result in the consummation of a transaction, that the Company will receive any other offers or indications of interest, that the Company will be able to complete any alternative transaction or that any transaction or transactions would generate proceeds sufficient to satisfy the claims of all of the Company's stakeholders, VeraSun stated. An Associated Press report dated Nov. 24, related that Poet LLC chief executive officer Jeff Broin said the company is in buy-out talks with a number of ethanol companies. Poet, the largest U.S. ethanol producer, has a network of 26 plants in seven states producing over 1,000,000,000 gallons of ethanol annually. Mr. Broin did not offer any specific timetable and mentioned no company names, AP said. Poet is also based in Sioux Falls, South Dakota. Financial expert Neil Graff, KSFY.com related, said VeraSun is likely on the shortlist of companies Poet is considering. According to Mr. Graff, consolidation will help "the fragile ethanol industry." He continued, "[b]y merging together, the companies will become a powerful force. The price of ethanol will stabilize and the price of E85 would drop." However, Mr. Graff noted that job cuts will follow after consolidation. Bloomberg News reported on November 21, 2008, that corn futures for December 2008 delivery fell 25.25 cents, or 6.9%, to $3.385 a bushel on the Chicago Board of Trade. About VeraSun Energy Corporation Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. - - http://www.verasun.comor http://www.VE85.com/-- is a producer and marketer of ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, with 14 in operation. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 31, 2008, (Bankr. D. Del. Case No.: 08-12606) Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP represents the Debtors in their restructuring efforts. AlixPartners LLP serves as their restructuring advisor. Rothschild Inc. is their investment banker and Sitrick & Company is their communication agent. The Debtors' claims noticing and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' total assets as of June 30, 2008, was $3,452,985,000 and their total debts as of June 30, 2008, was $1,913,214,000. VeraSun Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) VERASUN ENERGY: South Dakota & Iowa Regulators to Probe Firm ------------------------------------------------------------ ArgusLeader.com reported on November 19, 2008, that VeraSun Energy Corporation will be scrutinized by the South Dakota Public Utilities Commission and several Iowa regulatory bodies. The report said the regulators will ask questions about the company's long-term prospects. The meeting will not be open to the public, the news agency said. "There will be a lot of targeted questions where VeraSun is concerned," PUC Chairman Gary Hanson told ArgusLeader.com. "Many of us are of the belief that is the only way we will get good grasp of the parameter with which we're dealing." "We have been monitoring VeraSun as well as the entire ethanol industry . . . The PUC considers this could potentially create a serious financial challenge for grain producers in South Dakota," Mr. Hanson continued. From the Iowa Grain Indemnity Fund Board, spokesperson, Tess Capps told ArgusLeader.com that the Board is "watching the whole situation carefully." According to the same report, VeraSun sent a letter to suppliers on November 4 saying that the company can't pay for goods or services provided or delivered before October 31, 2008. FarmFutures.com said VeraSun offered corn farmers the spot market price for corn. About VeraSun Energy Corporation Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. - - http://www.verasun.comor http://www.VE85.com/-- is a producer and marketer of ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, with 14 in operation. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 31, 2008, (Bankr. D. Del. Case No.: 08-12606) Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP represents the Debtors in their restructuring efforts. AlixPartners LLP serves as their restructuring advisor. Rothschild Inc. is their investment banker and Sitrick & Company is their communication agent. The Debtors' claims noticing and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' total assets as of June 30, 2008, was $3,452,985,000 and their total debts as of June 30, 2008, was $1,913,214,000. VeraSun Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) VINEYARDS PROPERTY: Files for Chapter 11 on Nov. 20 --------------------------------------------------- According to Bloomberg News, Vineyards Property LLC, the developer of a proposed 582-home development in the wine country around Ellensburg, Washington, filed a Chapter 11 petition on Nov. 20 in Spokane to stop foreclosure. The company estimated debts of up to $50 million. The case is In re Vineyards Property LLC, 08-04858, U.S. Bankruptcy Court, Eastern District of Washington (Spokane). WASHINGTON MUTUAL: Settles $2.6-Mil. Claim vs. People's Choice -------------------------------------------------------------- Judge Robert N. Kwan of the United States Bankruptcy Court for the Central District of California, Santa Ana Division, approved a settlement agreement between Washington Mutual Bank and the Liquidating Trust of People's Choice Home Loan, Inc., settling WaMu Bank's Claim No. 406 for $2,600,000 plus security interests with respect to a certain Flexible Early Repurchase Facility and Security Agreement. Judge Kwan presides over the bankruptcy cases of People's Choice and its affiliates currently pending in the California Bankruptcy Court. In June 2006, People's Choice entered into the Flex Agreement with Concord Minutemen Capital Company, LLC, and the Security Agreement dated February 12, 2007, with People's Choice Funding Corporation. WaMu Bank, as Concord's successor-in-interest to the Flex Agreement and the Security Agreement, alleged that the Agreements created in favor of Concord a security interest in $13,000,000 of the $25,517,666 federal tax refund requested by People's Choice from the United States government. In February 2007, People's Choice received the Tax Refund proceeds, of which $5,000,000 was paid to WaMu before March 2007. As of March 20, 2007, People's Choice maintained these accounts for WaMu Bank, each of which the Bank asserts is subject to its right of set-off: Account No. Amount ----------- ------ 188-338055-2 Allegedly holding about $428,304, as WaMu Bank's operating account setoff amount 1883382318 Allegedly holding about $34,465, as WaMu Bank's cash collateral The WaMu Settlement Agreement In connection with its asserted security interest in a portion of the Tax Refund Proceeds, WaMu Bank claimed a security interest in certain cash proceeds of the Collateral that were held by People's Choice in certain of its Commingled Deposit Accounts. Pursuant to an Adequate Protection Stipulation, WaMu Bank was granted a replacement lien to adequately protect its alleged interests in the Commingled Accounts. WaMu Bank and People's Choice have subsequently entered into a Settlement Agreement in an effort to (i) resolve WaMu Bank's claims arising under the Commingled Accounts, (ii) determine and allow WaMu Bank's secured obligations, and (iii) provisionally resolve WaMu Bank's asserted right to offset the Set-off Amount. Pursuant to the parties' Settlement Agreement, WaMu Bank will be entitled to an Allowed $2,600,000 Secured Claim against People's Choice on account of the funds in the Commingled Accounts, plus (i) $170,350 of interest earned on the Claim through July 20, 2008, and (ii) interest at 4.5% per annum until the Funds are paid to WaMu Bank. People's Choice will satisfy the Allowed Claim without delay. In return, WaMu Bank agrees to assign to the People's Choice Trusts all of its rights, claims and interests with respect to the funds held in the Commingled Accounts. Upon full and final payment of the Claim, WaMu Bank will release any other claim against People's Choice. However, to the extent the funds held in the Commingled Accounts are used to pay dividends or distributions to the People's Choice's unsecured creditors, WaMu Bank does not assign or release its right to receive dividends or distributions from the Funds on account of any allowed remaining general unsecured obligations. WaMu Bank waives any and all rights with respect to the Release under Section 1542 of the California Civil Code. WaMu Bank may exercise, on a provisional basis and without prejudice, its alleged right to offset the WaMu Setoff Amounts under the Operating and Collateral Accounts, and may release to itself the balance of Funds, with notice duly provided to the Liquidating Trustee and the Post-Effective Date Committee under the People's Choice Plan of Liquidation. The Parties clarify that they are not determining the validity of the balance of general unsecured obligations owed to WaMu Bank by People's Choice, which will be calculated as the face amount of Claim No. 406 minus the amount of the Secured Obligations allowed. About People's Choice Headquartered in Irvine, California, People's Choice Financial Corp. -- http://www.pchl.com/-- is a residential mortgage banking company, through its subsidiaries, originates, sells, securitizes and services primarily single-family, non-prime, residential mortgage loans. The company and two of its affiliates, People's Choice Home Loan, Inc., and People's Choice Funding, Inc., filed for chapter 11 protection on March 20, 2007 (Bankr. C.D. Calif. Case No. 07-10772). J. Rudy Freeman, Esq., at Pachulski, Stang, Ziehl & Jones, L.L.P., represents the Debtors. Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. In its schedules filed with the Court, People's Choice disclosed total assets of $806,776,901 and total liabilities of $105,772,386. 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 Inc. Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) WASHINGTON MUTUAL: U.S. Trustee Opposes Support to WM Mortgage -------------------------------------------------------------- Roberta A. DeAngelis, the Acting United States Trustee for Region 3, argues that Washington Mutual Inc. and its debtor affiliates should not be permitted to provide additional financial support totaling $11.9 million in Washington Mutual, Inc.'s funds to WM Mortgage Reinsurance Company, Inc., its wholly owned non-debtor subsidiary, to cure the capital deficiency on WMMRC's Reinsurance Agreement with Genworth Mortgage Insurance Corporation. The Debtors have admitted that their request for authority to make a capital contribution to WMMRC in the initial amount of $7.4 million is "a use outside of the ordinary course of the[ir] business," Ms. DeAngelis notes. If that is the case, Ms. DeAngelis points out, before the Debtors are authorized to infuse additional amounts into WMMRC, they must serve further "notice to all parties required to be served with the request and a hearing before [the] Court." Ms. DeAngelis reserves the right to be heard on the merits of the initial request for authority to use $7.4 million to cure WMMRC's Capital Deficiency in the Genworth Trust. The Debtors have asked the U.S. Bankruptcy Court for the District of Delaware for approval to inject to WM Mortgage Reinsurance Company, Inc., its wholly owned non-debtor subsidiary, $11.9 million in WaMu's funds to cure the capital deficiency on WMMRC's Reinsurance Agreement with Genworth Mortgage Insurance Corporation. The Debtors previously sought the Court's permission to invest $7.4 million in. Following the "recent increase of the Capital Deficiency in the Genworth Trust," the Debtors need to increase their proposed investment to WMMRC to $11.9 million, Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, says. According to Mr. Collins, the Genworth Trust has a net present value of $46 million to $65 million on a run-off basis. However, he says, the value of the Trust will be substantially diminished (i) if Genworth elects to terminate the Reinsurance Agreement on a cut-off basis, and (ii) if WMMRC fails to cure the Capital Deficiency by December 12, 2008, in the approximate amount of $11.9 million. Essentially, termination on a cut-off basis will eliminate WMMRC's ability to collect premiums or retain investment income to offset future losses, Mr. Collins points out. As WMMRC does not have sufficient capital to satisfy the Capital Deficiency on its own, WaMu's provision of the $11.9 million fund is necessary to preserve the value of the Genworth Trust, Mr. Collins avers. Mr. Collins tells the Court that authorizing the Debtors to provide financial support, as needed, will enable WMMRC to sustain its current run-off status for all of its Trusts, and anticipate an aggregate value of between $330 million and $395 million. Should WMMRC fail to cure future capital deficiencies, the existing Trust assets would likely be used to satisfy all existing and future liabilities, thereby eliminating substantially all value for WMMRC and ultimately, for WaMu's creditors, Mr. Collins avers. 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 Inc. Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) WASHINGTON MUTUAL: Wants Protocol for Sale of SCF Investments ------------------------------------------------------------- Washington Mutual, Inc., informs the U.S. Bankruptcy Court for the District of Delaware that it has ascertained to liquidate (i) certain investments held by its "Strategic Capital Fund," which comprised of certain equity interests and (ii) its interest, as a limited partner in 10 venture capital funds. The LP Investments WaMu is a limited partner in 10 venture capital funds, each of which is governed by a limited partnership agreement that required WaMu to contribute $36.5 million in the aggregate. As of November 21, 2008, WaMu has contributed approximately $27.8 million under the LP Agreements: Initial Amount Investment Amount Contributed LP Investment Date Committed To Date ------------- ---------- --------- ----------- ARCH Venture Fund V, L.P. 10/18/2000 $3,000,000 $2,865,000 Arrowpath eCommerce Fund II, L.P. 05/09/2000 5,000,000 4,250,000 Digital Partners III, L.P. 06/30/2000 880,000 809,056 Financial Technology Ventures (Q), L.P. 07/31/1998 5,000,000 5,000,000 Financial Technology Ventures II (Q), L.P. 12/13/2000 5,000,000 4,800,000 Financial Technology Ventures III 03/01/2007 10,000,000 3,300,000 Madrona Venture Fund 1-A, L.P. 11/16/1999 3,000,000 2,940,000 Madrone Venture Fund III, L.P. 07/21/2005 1,000,000 460,000 Maveron Equity Partners 2000, L.P. 12/17/1999 2,618,182 2,487,267 Northwest Venture Partners III, L.P. 01/07/2000 1,000,000 898,678 Preferred & Common Stock WaMu, through the Strategic Capital Fund, also holds these equity interests: (a) Series A and Series B preferred stock of WaveLink Corporation, in the face amount of $1 million and $4.35 million; (b) Series E preferred stock of Financial Engines, Inc., in the face amount of $5 million; and (c) Common Stock of Isilon Systems, Inc. The SCF is an asset of WaMu and is not a separate legal entity. Capital contributions by WaMu to investments held by the SCF are funded from WaMu's general operating accounts. Capital Contribution Process Each LP Investment activity is directed by Fund's general partner, which identifies and determines favorable investment opportunities. The General Partner will request that limited partners, including WaMu, to contribute capital to the partnership to finance the Investment. When a Capital Call is made, the Limited Partner is required to remit requested funds to the General Partner in an amount not to exceed their Capital Commitment. A limited partner's failure to satisfy a Capital Call may impact the value of the limited partner's investment. Sale Procedures Against this backdrop, WaMu seeks to liquidate the Investments. Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that WaMu has begun to solicit offers for the purchase of the Investments, in whole or in part, from other limited partners and other interested parties. To ensure maximum value for, and to allow the expeditious sale of, the Investments, WaMu proposes certain Sale Procedures: (1) WaMu will provide a Sale Notice of each proposed Investment Sale to the U.S. Trustee, counsel for the Official Committee of Unsecured Creditors, and counsel to the Noteholders Group. The Sale Notice will specify (i) the Investments to be sold, (ii) the identity of the purchaser and its relationship with the Debtors, and (iii) the major terms and conditions of the Proposed Sale. (2) In the event the Proposed Purchaser is an insider, the Sale Notice will identify the Insider and its relationship to the Debtors, as well as the measures taken to ensure the fairness of the Sale process and the Proposed Transaction. (3) Objections, if any, must be filed with the Court and served on the Notice Parties and the Debtors' counsel, specifying the grounds for the Objection, five days after the date of the delivery of the Sale Notice to the Notice Parties. (4) Absent any Objections, the Debtors may consummate the Proposed Sale. (5) If any material terms of a Proposed Sale is amended after the Sale Notice has been served, the Debtors will serve a revised Sale Notice describing the amendment, and the Notice Period will be extended for five days. (6) The Debtors may consummate a Proposed Sale prior to the expiration of the Notice Period, if the Debtors obtain written consent to the Proposed Sale from each Notice Party. (7) Any objection to the Proposed Sale will be deemed to be a request for a hearing, which will be set on the next scheduled omnibus hearing on the Debtors' cases. The Proposed Sale may not proceed absent written Objection withdrawal or Court order approving the Proposed Sale. (8) The Proposed Sale Procedures will not prevent the Debtors from seeking the Court's approval of any Proposed Sale at any time, upon notice and hearing. The Debtors note that the LP Agreements' imposition of default interest and provisions relating to the diminution of invested capital value upon failure to satisfy Capital Calls constitutes a violation of the automatic stay as imposed by Section 362 of the Bankruptcy Code. In this regard, the Debtors reserve all rights to take immediate action to preserve the Investment value either by satisfying the outstanding Capital Calls after providing the Creditors Committee with three business days written notice, or by sale of the Investments pursuant to the Proposed Sale Procedures. The Debtors do not believe that any liens, claims or encumbrances on the Investments exist. By this motion, the Debtors seek Judge Walrath's authority to sell the Investments, free and clear of all liens, if any, and in accordance with the Proposed Sale Procedures, without the need to obtain further Court approval. WELLS FARGO: Moody's Cuts Ratings on 77 Tranches From 15 Deals -------------------------------------------------------------- Moody's Investors Service has downgraded seventy-seven tranches and confirmed fifteen tranches from fifteen jumbo transactions issued by Wells Fargo Mortgage Backed Securities Trust in 2006 and 2007. The collateral backing these transactions consists primarily of first-lien, adjustable-rate, prime Jumbo mortgage loans. The actions are triggered by higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to currently available credit enhancement levels. The actions reflect Moody's revised expected losses on the Jumbo sector announced in a press release on Sept. 18, and are part of Moody's on-going review process. Moody's final rating actions are based on current ratings, level of credit enhancement, collateral performance and updated pool- level loss expectations. Moody's also took into account credit enhancement provided by seniority, cross-collateralization, time tranching, and other structural features within the Aaa waterfalls. Complete rating actions are: Issuer: Wells Fargo Mortgage Backed Securities 2006-AR1 Trust -- Cl. I-A-1, Downgraded to Baa1 from Aaa -- Cl. II-A-1, Downgraded to Aa3 from Aaa -- Cl. II-A-2, Downgraded to Aa2 from Aaa -- Cl. II-A-3, Downgraded to Aa3 from Aaa -- Cl. II-A-4, Downgraded to Aa3 from Aaa -- Cl. II-A-5, Downgraded to Aa3 from Aaa -- Cl. II-A-6, Downgraded to Baa2 from Aaa -- Cl. B-1, Downgraded to B3 from Aa2 -- Cl. B-2, Downgraded to Caa1 from A2 -- Cl. B-3, Downgraded to Caa2 from Baa1 -- Cl. B-4, Downgraded to Caa3 from Ba2 Issuer: Wells Fargo Mortgage Backed Securities 2006-AR5 Trust -- Cl. I-A-1, Downgraded to Baa3 from Aaa -- Cl. I-A-2, Downgraded to Caa1 from Aa1 -- Cl. II-A-1, Downgraded to Baa1 from Aaa -- Cl. II-A-2, Downgraded to Caa1 from Aa1 -- Cl. B-1, Downgraded to Caa3 from Aa2 -- Cl. B-2, Downgraded to Ca from A2 -- Cl. B-3, Downgraded to Ca from Baa2 Issuer: Wells Fargo Mortgage Backed Securities 2006-AR6 Trust -- Cl. I-A-1, Downgraded to Aa3 from Aaa -- Cl. II-A-1, Confirmed at Aaa -- Cl. II-A-2, Downgraded to A2 from Aaa -- Cl. III-A-1, Downgraded to Aa1 from Aaa -- Cl. III-A-2, Downgraded to A2 from Aaa -- Cl. IV-A-1, Confirmed at Aaa -- Cl. IV-A-2, Downgraded to A2 from Aaa -- Cl. V-A-1, Confirmed at Aaa -- Cl. V-A-2, Downgraded to A1 from Aaa -- Cl. VI-A-1, Confirmed at Aaa -- Cl. VI-A-2, Downgraded to A1 from Aaa -- Cl. VII-A-1, Confirmed at Aaa -- Cl. VII-A-2, Downgraded to A1 from Aaa Issuer: Wells Fargo Mortgage Backed Securities 2006-AR7 Trust -- Cl. I-A-1, Downgraded to A3 from Aaa -- Cl. I-A-2, Downgraded to Ba3 from Aa1 -- Cl. II-A-1, Downgraded to A1 from Aaa -- Cl. II-A-2, Downgraded to Aa2 from Aaa -- Cl. II-A-4, Downgraded to Aa3 from Aaa -- Cl. II-A-5, Downgraded to A1 from Aaa -- Cl. II-A-6, Downgraded to A1 from Aaa -- Cl. II-A-3, Downgraded to A1 from Aa1 -- Cl. II-A-7, Downgraded to Ba3 from Aa1 Issuer: Wells Fargo Mortgage Backed Securities 2006-AR8 Trust -- Cl. I-A-1, Downgraded to Aa1 from Aaa Issuer: Wells Fargo Mortgage Backed Securities 2006-AR12 Trust -- Cl. I-A-1, Downgraded to A3 from Aaa -- Cl. I-A-2, Downgraded to Ba3 from Aa1 -- Cl. II-A-1, Downgraded to Aa1 from Aaa -- Cl. II-A-2, Downgraded to A1 from Aa1 Issuer: Wells Fargo Mortgage Backed Securities 2006-AR14 Trust -- Cl. I-A-1, Downgraded to A1 from Aaa -- Cl. I-A-2, Downgraded to Aa2 from Aaa -- Cl. I-A-3, Downgraded to Aa1 from Aaa -- Cl. I-A-4, Downgraded to Aa3 from Aaa -- Cl. I-A-5, Downgraded to Aa1 from Aaa -- Cl. I-A-6, Downgraded to Aa1 from Aaa -- Cl. I-A-7, Downgraded to Aa2 from Aaa -- Cl. I-A-8, Downgraded to A2 from Aa1 -- Cl. I-A-9, Downgraded to Aa2 from Aaa -- Cl. I-A-10, Downgraded to Aa2 from Aaa -- Cl. II-A-1, Downgraded to A3 from Aaa -- Cl. II-A-2, Downgraded to A3 from Aaa -- Cl. II-A-3, Downgraded to A3 from Aaa -- Cl. II-A-4, Downgraded to Ba3 from Aa1 -- Cl. III-A-1, Downgraded to Aa1 from Aaa -- Cl. III-A-2, Downgraded to A2 from Aa1 -- Cl. III-A-3, Downgraded to Aa1 from Aaa Issuer: Wells Fargo Mortgage Backed Securities 2006-AR15 Trust -- Cl. A-1, Downgraded to Aa2 from Aaa -- Cl. A-3, Downgraded to Baa1 from Aaa Issuer: Wells Fargo Mortgage Backed Securities 2006-AR16 Trust -- Cl. A-1, Downgraded to Aa2 from Aaa -- Cl. A-IO, Downgraded to Aa2 from Aaa -- Cl. A-2, Downgraded to A2 from Aa1 Issuer: Wells Fargo Mortgage Backed Securities 2006-AR18 Trust -- Cl. I-A-1, Downgraded to Aa2 from Aaa -- Cl. I-A-IO, Downgraded to Aa2 from Aaa -- Cl. I-A-2, Downgraded to A2 from Aa1 -- Cl. II-A-1, Downgraded to A2 from Aaa -- Cl. II-A-IO, Downgraded to A2 from Aaa -- Cl. II-A-2, Downgraded to Ba3 from Aa1 Issuer: Wells Fargo Mortgage Backed Securities 2006-AR19 Trust -- Cl. A-1, Confirmed at Aaa -- Cl. A-2, Confirmed at Aaa -- Cl. A-3, Confirmed at Aaa -- Cl. A-4, Confirmed at Aaa -- Cl. A-5, Confirmed at Aaa -- Cl. A-6, Confirmed at Aaa -- Cl. A-7, Downgraded to Aa3 from Aaa -- Cl. A-8, Confirmed at Aaa -- Cl. A-IO, Confirmed at Aaa Issuer: Wells Fargo Mortgage Backed Securities 2007-AR3 Trust -- Cl. A-1, Downgraded to Baa2 from Aaa -- Cl. A-2, Downgraded to Baa3 from Aaa -- Cl. A-3, Downgraded to Baa3 from Aaa -- Cl. A-4, Downgraded to Baa3 from Aaa -- Cl. A-5, Downgraded to B3 from Aa1 Issuer: Wells Fargo Mortgage Backed Securities 2007-AR7 Trust -- Cl. A-1, Downgraded to Ba2 from Aaa Issuer: Wells Fargo Mortgage Backed Securities 2007-AR8 Trust -- Cl. A-1, Downgraded to Ba2 from Aaa Issuer: Wells Fargo Mortgage Backed Securities 2007-AR9 Trust -- Cl. A-1, Confirmed at Aaa -- Cl. A-2, Downgraded to A2 from Aaa -- Cl. A-IO, Confirmed at Aaa Moody's calculates estimated losses for Jumbo RMBS in a two-stage process. First, serious delinquencies are projected through late 2009, primarily based upon recent historical performance. These projected delinquencies are converted into projected losses using lifetime roll rates (the probability of transition to default) averaging 40% for 60-day delinquencies, 75% for delinquencies greater than 90 days, and 90-100% for foreclosure or REO, and severity assumptions averaging 35%. The second step is to determine losses for the remaining life of the deal, following the projection period. Depending on a deal's performance, including delinquency, default, and prepayment rates, as well as collateral characteristics, such as loan type (fixed or adjustable), or loan-to-value ratios and geographic concentrations of remaining current loans, Moody's assumes varying degrees of slowing in the loss rate (which is measured by loss-to- liquidation) for the remaining life of the deal. Typical degrees of slowing in loss rate after late 2009 range from no slowing at all to 40% slowing. To take an example, a deal with very poor early performance due to relatively high loan-to-value ratios and dropping regional home values would be expected to see markedly high delinquency and loss rates for the next year. But the high rate of losses may be expected to slow afterwards, as economic factors and real estate values begin to stabilize, and a slowing of 20-40% may be used in the projection. On the other hand, a deal with stronger early performance that is demonstrating relative resiliency in the current market environment may not be expected to have high losses in the near- term, but may be expected to sustain a similar level of losses for the life of the deal, as the pool continues to be subject to factors that have more historically driven prime performance such as borrower life events, unemployment, and so on. Loss estimates are subject to variability and, as a result, realized losses could ultimately turn out higher or lower than Moody's current expectations. Moody's will continue to evaluate performance data as it becomes available and will assess the pattern of potential future defaults and adjust loss expectations accordingly if necessary. * 76% of Supplier Execs. Back Gov't Bailout for GM, Says PPI ------------------------------------------------------------ In a spot survey last week of 270 supplier executives representing 185 companies, 76% said they support a federal government bailout of General Motors. Without it, they said they'd have to downsize or close, resulting in over 275,000 people losing jobs at their companies. While the survey focused on GM, 71% also favored government support for Ford Motor Company, but only 54% felt Chrysler deserved help. Overall, 41% of the suppliers indicated that GM troubles could be attributed to top management, 40% to the UAW, and 19% to the federal government itself. The Pulse Survey was undertaken by Planning Perspectives, a Birmingham Michigan consultancy that specializes in buyer-supplier relations in the automotive and other industries. It was conducted Nov. 20-21 and included suppliers headquartered in 12 Midwestern and Southern states. The top three reasons why suppliers favored a GM bailout were: -- 34% felt that the potential negative economic impact of a GM failure on the country is too great to allow to happen; -- 25% felt that the automotive industry deserves rescue just like the financial industry; -- Nearly 20% indicated that bankruptcy is not a viable option for GM. When the 24% of the suppliers who did not favor a GM federal government bailout were asked why they opposed the bailout, they gave these responses: -- 35% said that bankruptcy is a better option than a Government bailout, principally because GM could renegotiate labor contracts and rid itself of unnecessary dealerships without concern for state franchise laws; -- 35% felt that GM would get into financial trouble again and need more money; -- 12% felt that the government bailout will have too many strings attached to it. In response to what was most likely to happen to their company if GM declared bankruptcy: -- 68% indicated that their company would have to downsize; -- 9% said they would more than likely go out of business; -- 3% said they definitely would go out of business. These 185 suppliers indicated that a GM bankruptcy would result in over 275,000 people losing their jobs at their companies. Typical supplier comments about the various issues: On the roles of the GM management, the UAW, and the federal government in creating the conditions that have lead to the current crisis: "GM was clearly on the path to restructuring until the double whammy of a rapid rise in the price of oil followed by the financial/credit market meltdown. None of the automakers would be in the mess they are in today had the government acted on the need to reduce our dependence on foreign oil that was identified in the seventies after the Arab oil embargoes, the need for a national energy policy highlighted at the same time, and the need for a US manufacturing strategy to preserve the leading edge competence we once enjoyed." "The real cause of the OEMs' current situation is the economy and the credit crisis. People can't get credit and therefore aren't buying vehicles. It's as simple as that and who is responsible for that?" On the difference in attitude regarding a bailout of GM and Ford vs Chrysler: "It is clear to me that the Big 3 have not done a good job to explain the concessions that they have achieved with the UAW for the future, the improvements in quality and their tireless effort to improve fuel economy for the future. This is clearly not a management issue as Toyota is facing the same production cuts and losses in North America. It is my belief that GM and Ford have done a great job to turnaround the measurable objectives, the culture and future structural costs. Unfortunately, I don't see the same results from Chrysler and their quality, technology and fuel economy are the worst in the industry. Based on these parameters and the structural issues of the industry I believe that Chrysler should be left to Chapter 11." In support of GM: "Did we forget GM was responsible for getting the economy back after 9/11 or its importance during WW II? The ramifications of GM going out of business would be so dynamic it would trigger a depression. Washington, wake up! You are selling our manufacturing base down the drain. You are partly responsible for this event. You have supported foreign investors and turned your back on the Domestics. Your CAFE standards and other government mandates have helped put the Domestic auto makers where they are today." About PPI Since 1990, Birmingham, Michigan-based Planning Perspectives, Inc. has specialized in developing and implementing in-depth surveys of suppliers for the automotive OEMs and Tier 1 suppliers, and companies in numerous other service and manufacturing industries worldwide, including, aircraft engine, computer, construction tools, electronics, energy, and food industries. * Butler Rubin Launches Bankruptcy and Insolvency Practice ---------------------------------------------------------- Recognized bankruptcy lawyers Neal Wolf and Jerry Munitz have joined Butler Rubin Saltarelli & Boyd LLP and will launch a Business Reorganization, Bankruptcy and Insolvency practice at the firm. Earlier in their careers, Messrs. Wolf and Munitz worked together at Winston & Strawn and will reunite their practice at Butler Rubin. Mr. Wolf was a partner at Katten Muchin and Munitz was of counsel at Goldberg Kohn. "It is an honor to have attorneys of [Messrs. Wolf's and Munitz'] caliber join our team," said named-partner Jim Rubin. "Both are nationally recognized as leaders in the field. In addition to adding a practice that we expect to be in demand, the BRBI practice will provide opportunities to grow and enhance our existing practice areas." The move adds practice depth to Butler Rubin's boutique law firm approach, allowing the firm to offer clients five specific areas of legal practice -- reinsurance, antitrust, products liability/mass tort, bankruptcy and complex business litigation. Mr. Wolf will join Butler Rubin as a partner. He focuses his practice in the areas of bankruptcy, business reorganizations, workouts, and commercial litigation. His diverse insolvency and bankruptcy practice has involved the representation of secured and unsecured creditors, creditors' committees, debtors, trustees, lessors, and purchasers of stock or assets of insolvent entities. He has represented VMS Realty in its $9 billion out of court workout and HA-LO Industries, Inc. in its Chapter 11 case. His creditors committee representations have included UNR Industries, Inc., the first of the asbestos disease driven bankruptcy cases. He represented an unofficial committee of thousands of claimants in the Chapter 11 case involving pharmaceutical giant A.H. Robins, a case impelled by claims arising from the sale of the birth control device known as the Dalkon Shield. A graduate of Princeton University (1970), he received his law degree from the University of Chicago Law School in 1974. Mr. Munitz serves as of counsel to the firm. His practice is focused exclusively on commercial insolvency law. He has represented financial institutions holding fully secured, undersecured and unsecured claims in out-of-court restructurings and chapter 11 cases. In addition, he has represented lessors of real and personal property, defendants in voidable transfer actions, and parties desiring to acquire the assets of financially distressed businesses. He formerly had extensive experience as debtor's counsel in such major chapter 11 cases as North American Car Corporation, AM International Inc., Pettibone Corporation, Kroh Brothers Inc. and the Kassuba entities. He and Mr. Wolf teamed up in the VMS and UNR cases. He is a graduate of the University of Michigan (1955), and received his law degree from the University of Chicago Law School in 1960. About Butler Rubin Saltarelli & Boyd LLP Formed in 1980, Chicago-based Butler Rubin Saltarelli & Boyd LLP - - http://www.butlerrubin.com/-- has established itself as a known litigation boutique assisting clients nationally and internationally in the core practice areas of reinsurance and commercial litigation, including antitrust, competition law and opt-out antitrust litigation; business reorganization, bankruptcy and insolvency; and products liability and mass tort matters. * Ford's Rating Cut Cues S&P's Junk Ratings on Michigan Automakers ------------------------------------------------------------------ With Standard & Poor's Ratings Services' Nov. 20 downgrade of Ford Motor Co., all three Michigan-based automakers are now rated 'CCC+' and have negative outlooks. This rating indicates that S&P believes the possibility has increased that one or more of the U.S.-based automakers could eventually default, perhaps within the next 12 months. S&P lowered General Motors Corp. and Ford out of investment grade on May 5, 2005, and both companies had been in the 'B' rating category for more than two years, and in GM's case, nearly three years. S&P assigned Chrysler LLC a 'B' corporate credit rating and a negative outlook in July 2007, upon its sale by Daimler AG. According to a report just published on RatingsDirect, titled "Reflecting Default Risk, All U.S. Automaker Ratings Are Now CCC+/Negative/--, Despite Differences In Liquidity,"we believe the timeframe for determining the domestic automakers' survival has accelerated in the past 60 days amid the deepening financial market crisis and worsening consumer confidence, and S&P now thinks the next few quarters will be the most critical period. "We expect the ongoing capital market turmoil and depressed sales and production levels to be significant negatives for the domestic automakers for the foreseeable future," said Standard & Poor's credit analyst Robert Schulz. S&P now expects U.S. light-vehicle sales of 13.3 million units in 2008--the lowest level in 15 years- -and 12.3 million units in 2009, down from 16.1 million in 2007. S&P does not expect the more recent shift in demand away from large pickups and SUVs to reverse, despite the recent drop in gasoline prices. In addition, the outlook for other major auto markets, including Europe, has suddenly turned much bleaker in the past few months as economic woes have dampened automotive demand beyond the U.S. * Moody's Says Newspaper Industry Outlook Remains Negative ---------------------------------------------------------- Moody's Investors Service's outlook on the newspaper industry's credit fundamentals remains negative, based on the expectation that advertising revenue will continue to drop as the economy slows in the year ahead and online advertising continues to take share. "Advertising revenue trends and liquidity issues are likely to be the primary rating drivers for newspaper companies over the next 12-18 months," says Moody's VP-Senior Analyst John Puchalla. The downturn in the economy, combined with the long-term shift from away from print advertisements, could put some newspaper publishers in dire straits in 2009, says Moody's. Overall, falling advertising revenues both nationally and locally are putting increasing pressure on cash flow, says Mr. Puchalla. "Thus, companies' ability to maintain sufficient liquidity will by the key to sustaining existing capital structures through the current economic downturn." The negative outlook for newspaper-ad revenue has worsened in the past six months as bleak data on the economy mounts, says Moody's. Rising job losses, the weak housing market and tighter credit availability raise concerns that consumer spending will weaken further, extending and deepening the economic downturn. "In addition, default risk is high for highly leveraged newspaper companies," says Mr. Puchalla, "although we expect some newspaper publishers to default in 2009, the ones that do are most likely to restructure their debt, rather than close shop." However, a more enduring operational legacy of the current downturn could be the damage done to newspaper brands through newsroom cuts, says Moody's. Companies are trying to reduce costs without cutting back the staff that creates the core product, but a very weak revenue environment could make that difficult. Longer term, Moody's believes the industry will eventually deleverage, either by reducing debt with free cash flow or by way of bankruptcy filings. At that point, debt will likely stay at lower levels to make the industry a viable one. * Moody's Says Transit Systems to Get Less SILO/LILO Payments ------------------------------------------------------------- While many U.S. transit systems remain exposed to potentially sizeable termination payments related to the possible unwinding of sale-in, lease-out and lease-in, lease-out transactions, many large termination payments are likely to be deferred or renegotiated to lesser amounts, says Moody's Investors Service in a new report. A negotiated settlement is important because a number of US mass transit systems, in need of the cash payment and with assets of significant value and useful life left for depreciation, entered into SILO and LILO transactions with private firms or equity investors and secured the lease payments and future tax benefits due to the equity investors. They did so with some form of credit enhancement such as a letter of credit, a guaranty, or a guaranteed investment contract from a financial institution. Many of those institutions have since been downgraded below required minimum rating thresholds during the ongoing credit crisis. "Despite being a significant challenge for many transit issuers, it appears that most are successfully negotiating extensions for replacement of credit enhancement providers, negotiating alternative resolutions to avoid potentially sizeable termination payments, or some combination of both," said Moody's Assistant Vice President Shawn O'Leary, author of the report. "While transit issuers continue to lobby the U.S. Treasury for an industry-wide solution to address these exposures, this possibility seems uncertain at best." Given that continuing efforts by issuers are likely to substantially reduce termination payments over the coming weeks and months, Moody's has not yet taken any negative rating action based on the possible unwinding of SILO and LILO transactions. This is because all Moody's-rated bond obligations of transit systems have a senior claim on pledged revenues, and bond debt service should not be impaired by termination or settlement payments. Under the SILO and LILO agreements, the mass transit system leases or conveys assets such as rolling stock, buildings and other depreciable assets to an equity investor in exchange for up-front payments. The equity investor then leases the assets back to the transit system and reports the depreciation on the assets and interest on any loans used to acquire them as a means of reducing its federal tax liability. "If the ratings of the financial institution or insurer are lowered below certain rating thresholds, the counterparty financial institution has the option to accelerate future lease payments or tax benefits or both," explained Mr. O'Leary. "This can be avoided if the transit system secures an acceptable form of liquidity or a substitute credit guarantee provider." While SILO and LILO termination payments would be subordinate to bond payments, termination payments could still result in some decline in affected issuers' liquidity or increased indebtedness, said the analyst. "In a small number of cases where issuers might not be able to resolve their termination exposures on satisfactory terms a negative rating action might be warranted," said Mr. O'Leary. "In these cases, if an issuer's exposure far exceeds its financial resources, it may be necessary to make sizeable cuts in service, delay capital projects, or issue additional debt to pay large termination payments." He said the alternative solutions now under consideration are likely to come at some liquidity or indebtedness cost for many issuers, and, therefore, Moody's will continue to assess the impact any settlements might have on issuers' financial health, operations and debt profile. "The recent settlement involving the Washington Metropolitan Area Transit Authority -- WMATA -- and KBC bank was a favorable development for affected issuers in that it could encourage other equity investors to renegotiate termination payments to lower levels that do not materially harm the credit position of the municipal issuer," said Mr. O'Leary. He said it is unclear how effective a move by the Treasury would be in curing technical defaults. "If a federal solution is not forthcoming, Moody's expects that most issuers will continue to find ways to individually renegotiate or adjudicate their termination exposures to a reduced level that will result in little or no credit weakening," said Mr. O'Leary. * Seyfarth Shaw Adds 14 Lawyers to Business Services Department --------------------------------------------------------------- Seyfarth Shaw LLP's New York office has deepened its Business Services Department bench with the addition of a team consisting of nine corporate and finance lawyers, four trusts and estates lawyers and one real estate lawyer. Stanley E. Bloch, Lawrence B. Brownridge, E. Ann Gill, Joel M. Handel, Christopher J. Lagno, Andrew Lucano, William B. Norden and David M. Warburg join the firm as partners. Douglas F. Allen, Jr. and Eric D. Martins join the firm as Of Counsel. Yoni Frider, Ying Li, Lawrence D. Mandelker and Ani C. Manoukian will join the firm as associates. All were previously with Thelen LLP. "This talented group of transactional lawyers complements our existing business services capabilities in the New York market," said J. Stephen Poor, chair and managing partner of Seyfarth Shaw. "Filling out this part of our practice mix in New York has been part of the strategic vision for our firm and we've found a gifted group of lawyers to help us realize this goal." "Our new colleagues in New York join us just a month after we were able to welcome a strong team of both real estate and corporate and finance lawyers on the West Coast," said Edward J. Karlin, chair of the firm's Business Services Department. "With our existing corporate and real estate lawyers nationally and the newest members of the group on both coasts, Seyfarth Shaw is well positioned to help our clients seize opportunities emanating from the Emergency Economic Stabilization Act and related government actions during this turbulent economic cycle." "This team of adroit lawyers adds a vibrant transactional mix to our office that continues to thrive even in this tough economic environment," said John P. Napoli, co-managing partner of the firm's New York office and Chair of the firm's Tax Practice Group. "In addition to increasing our corporate and finance capacity in New York, we now offer a robust trusts and estates practice, which is a completely new offering for our office. Our new colleagues also share the premium we place on teamwork and they're a good fit with the culture of our firm." "My colleagues and I are delighted to join Seyfarth Shaw's team of talented business services lawyers both here in New York and across the country," said Bloch. "We look forward to a prodigious future at our new home and look forward to helping grow our firm's presence in the corporate arena in New York." Attorney Biographies Douglas F. Allen, Jr. (Of Counsel) practices sophisticated estate planning for high net-worth individuals and families. He also is actively engaged in the general representation of tax-exempt organizations, with a primary emphasis on tax-and contribution planning. Mr. Allen received his A.B. from Harvard University, his M.B.A. from Columbia Business School and his J.D. from Columbia Law School. Stanley E. Bloch (Partner) focuses on corporate transactions and is known for providing corporate legal services (including M&A transactional services) to the telecommunications industry. He has devoted a substantial portion of his career to serving the cable television, wireless telephone and paging industries. Mr. Bloch's practice includes mergers and acquisitions, sales, disposition and financing with an emphasis in intellectual property and information technology. He is an alumnus of Ohio University where he earned his B.B.A., and he earned his J.D. at Case Western Reserve University School of Law and his LL.M. (Taxation) at New York University School of Law. Lawrence B. Brownridge (Partner) has extensive experience in representing domestic and foreign developers and institutional lenders in the development, leasing and financing of office buildings, hotels, shopping centers, sports facilities, condominiums, cooperatives, apartment buildings, mixed use complexes, vacant land and warehouses. He earned his B.A. (with honors) from Tulane University and his J.D. from Tulane Law School. Yoni Frider (Associate) is a member of the Corporate & Finance Practice Group. Prior to practicing law in the United States, Frider was an associate at an Israeli firm where he represented private and public companies in corporate and real estate matters. He received his B.A. (cum laude) from Haifa University, an LL.B. from Tel-Aviv University School of Law and he earned his LL.M. from Fordham University School of Law. E. Ann Gill (Partner) has a broad background in corporate finance, including debt and equity private placements, private acquisitions and acquisition financing, public tax-exempt financing, off balance sheet leases and debt, equity and lease workouts, restructurings and recapitalizations. Her clients include private equity funds, pension funds and foundations and other taxable and tax-exempt investors and investment vehicles. She earned her B.A. from Barnard College, Columbia University and her J.D. from Columbia Law School where she was Harlan Fiske Stone Scholar. Joel M. Handel (Partner) practices corporate law, including mergers, acquisitions, dispositions and consolidations. He has a formal background and training in accounting and tax law and is uniquely qualified to structure, negotiate and conclude a variety of complex financial business transactions. Mr. Handel is routinely involved in corporate, finance and securities matters, including corporate reorganizations, restructurings and family businesses, including generation transfers. He has concentrated his law practice on advising consumer products companies, with a special emphasis on the toy industry. Mr. Handel is recognized for his role in legal representation of major toy manufacturers. Mr. Handel is an alumnus of the Wharton School of the University of Pennsylvania where he earned his B.S. and he earned his J.D. at Columbia Law School. Christopher J. Lagno (Partner) has thirty years of experience handling trusts and estates. He represents individuals in sophisticated estate and tax planning matters well as in the preparation of wills and all types of trust agreements. He serves as legal counsel to executors and trustees in all facets of the administration of simple and complicated estates and trusts. Mr. Lagno earned his B.A. (summa cum laude) from State University of New York at Albany, his J.D. from Albany Law School and his LL.M. from New York University School of Law. Ying Li (Associate) is a member of the firm's Corporate & Finance Practice Group. She received her LL.B. (International Financial Law) from Sun Yat-Sen University School of Law where she also earned her First Year Master of Private International Law. She earned her LL.M. from Indiana University School of Law and her J.D. from Cornell Law School. Andrew Lucano (Partner) concentrates his practice in representing clients in mergers and acquisitions, general corporate and securities matters. Mr. Lucano represents both sellers and buyers in a range of M&A transactions, with a particular focus in the communications industry representing cable operators and financial entities in the sale and purchase of cable systems located throughout the country. He also has experience in securities law compliance and corporate governance matters and advises public companies regarding periodic reporting obligations and other Securities and Exchange Commission related matters. Mr. Lucano received his B.S. (cum laude) from State University of New York at Albany and he earned his J.D. (cum laude) from St. John's University School of Law. Lawrence D. Mandelker (Associate) represents clients in estate planning matters, focusing on asset preservation and minimization of estate, gift and income taxes, and by preparing Wills and Trust Agreements. He also represents clients in individual as well as fiduciary capacities regarding probate matters, the administration of estates and trusts, and in estate and trust litigation. He received his B.A. from Columbia University, his J.D. from Benjamin N. Cardozo School of Law and his LL.M. (Taxation) from New York University School of Law. Ani C. Manoukian (Associate) concentrates her practice representing clients in mergers and acquisitions, general corporate, and securities matters. Ms. Manoukian has represented both sellers and buyers in a range of public and private transactions, including stock and asset transactions in the telecommunications industry, particularly in cable television. She received her B.A. at Tufts University and earned her J.D. at Fordham Law School. Eric D. Martins (Of Counsel) focuses his practice on corporate transactions and has extensive experience handling corporate, securities, business law and real estate matters. Mr. Martins is involved in public and private equity and debt financings on behalf of underwriters, placement agents and issuers. He also serves as legal counsel on a number of sophisticated mergers, acquisitions and dispositions, both negotiated and contested, and advises clients on commercial loan transactions, including asset- based financing and equipment leasing. Mr. Martins is an alumnus of New York University where he earned both his B.A. and his J.D. from the university's School of Law. William B. Norden (Partner) brings more than 39 years of trust and estate experience representing corporate executives, owners of closely held businesses, real estate operators, developers and other high net worth individuals. He is involved in all aspects of estate and trust and administration, litigation and planning. Mr. Norden earned his B.S. from Brooklyn College and his J.D. from New York University School of Law. David M. Warburg (Partner) concentrates his practice on corporate finance, securities , and real estate financing transactions, with emphasis on public offerings, mergers and acquisitions, venture capital, private equity funds, real estate investment funds and joint ventures, PIPEs, SPACs, corporate restructurings, and international transactions. He has over 25 years of experience representing both sources and users of capital in private placements and initial public offerings by U.S. and foreign companies of equity and debt securities, formation of U.S. domestic and offshore funds, and private equity technology and real estate-related investments. Mr. Warburg represents public and private U.S. and foreign companies in mergers and acquisitions, joint ventures, debt and equity restructurings, and general corporate, contract, and securities law matters. His practice includes an international component which focuses on Europe, Israel and China. Mr. Warburg received his B.A. from Yeshiva University and earned his J.D. from New York University School of Law. Seyfarth Shaw's New York Office Seyfarth Shaw first opened its New York office in 1979, the office has roughly 100 lawyers, many of whom are also admitted to practice in New Jersey and Connecticut. Practices represented in the New York office include: Bankruptcy, Workouts & Business Reorganization; Commercial Class Action Defense; Commercial Litigation; Corporate; Employee Benefits & Executive Compensation; Labor & Employment; Real Estate; Securities & Financial Litigation; Structured & Real Estate Finance; Tax; and Trade Secrets, Computer Fraud, & Non-Competes. About Seyfarth Shaw Headquartered in New York City, Seyfarth Shaw LLP -- http://www.seyfarth.com/-- is a full-service law firm with over 750 lawyers located in nine offices throughout the United States including Chicago, New York, Boston, Washington D.C., Atlanta, Houston, Los Angeles, San Francisco and Sacramento, as well as Brussels, Belgium. The firm provides a broad range of legal services in the areas of real estate, labor and employment, employee benefits, litigation and business services. Seyfarth Shaw's practice reflects virtually every industry and segment of the country's business and social fabric. Clients include over 200 of the Fortune 500 companies, financial institutions, newspapers and other media, hotels, health care organizations, airlines and railroads. The firm also represents a number of federal, state, and local governmental and educational entities. * S&P Cuts Ratings on 158 Classes From Seven Alt-A RMBS Deals ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 158 classes from seven U.S. Alternative-A residential mortgage-backed securities transactions. S&P removed 111 of the 158 lowered ratings from CreditWatch with negative implications. S&P placed two other ratings on CreditWatch with negative implications to reflect the CreditWatch status of Financial Security Assurance Inc. (AAA/Watch Neg/--), which acts as the insurer for those classes. Additionally, S&P affirmed its ratings on 36 classes and removed eight of the affirmed ratings from CreditWatch negative. The original balances and lifetime expected losses for the transactions (and structure groups) S&P reviewed are: Orig. bal. Lifetime Transaction (million) exp.loss ----------- ---------- -------- CSFB Mortgage-Backed Trust Series 2005-9 (2) $492 4.18% CWABS Asset Backed Certificates Trust 2005-IM3 $1,094 14.85% MASTR Adjustable Rate Mortgages Trust 2007-1 (1) $1,913 19.61% Bear Stearns ALT-A Trust 2006-6 (1) $723 16.07% Bear Stearns ALT-A Trust 2006-6 (2) $309 10.51% Bear Stearns ALT-A Trust 2006-6 (3) $869 14.41% Structured Adjustable Rate Mortgage Loan Trust Series 2006-11 (1) $361 11.41% Structured Adjustable Rate Mortgage Loan Trust Series 2006-11 (2) $53 6.70% RALI Series 2007-QS5 Trust $432 8.64% Wells Fargo Alternative Loan 2007-PA2 Trust $1,027 7.31% The downgrades, affirmations, and CreditWatch resolutions incorporate S&P's current and projected losses based on the dollar amounts of loans currently in the transactions' delinquency, foreclosure, and real estate owned pipelines, as well as S&P's projection of future defaults. S&P also incorporated cumulative losses to date in S&P's analysis when determining ratings outcomes. The lowered ratings reflect S&P's belief that the amount of credit enhancement available for the downgraded classes is not sufficient to cover losses at the previous rating levels. Although cumulative losses were generally low in comparison to S&P's projected lifetime losses for the transactions reviewed, S&P is projecting an increase in losses due to increases in delinquencies and the current condition of the housing market. The two ratings placed on CreditWatch with negative implications reflect the financial strength rating of Financial Security Assurance Inc., as the credit enhancement within the transaction is insufficient to maintain the rating without the benefit of the insurance policy. The affirmations reflect sufficient credit enhancement to support the ratings at their current levels. Certain senior classes also benefit from senior support classes that would provide support to a certain extent before any applicable losses could affect the super-senior certificates. The subordination of more-junior classes within each structure provides credit support for the affected transactions. Additionally, some of the structures use overcollateralization and excess interest to absorb losses and accelerate payments to certain securityholders. Certain classes also utilize a certificate insurer (Financial Security Assurance Inc.) as credit enhancement. The collateral backing the affected trusts originally consisted predominantly of Alt-A first-lien, fixed- rate, adjustable-rate, or negative-amortization residential mortgage loans secured by one- to four-family properties. S&P monitor these transactions over time to incorporate updated losses and delinquency pipeline performance to determine whether the applicable credit enhancement features are sufficient to support the current ratings. S&P will continue to monitor these transactions and take additional rating actions as appropriate. Additionally, going forward, Standard & Poor's is reviewing Alt-A transactions from the 2005 vintage that include fixed-rate and long-reset hybrid adjustable-rate mortgage (ARM), hybrid, and negative amortization loans. Rating Actions Bear Stearns ALT-A Trust 2006-6 Series 2006-6 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A-1 073868AA9 A AAA/Watch Neg I-A-2 073868AB7 B AAA/Watch Neg I-M-1 073868AC5 CCC B/Watch Neg I-M-2 073868AD3 CC CCC I-B-1 073868AE1 D CC I-B-2 073868AF8 D CC I-B-3 073868AG6 D CC II-A-1 073868AM3 BBB AAA/Watch Neg II-X-1 073868AP6 BBB AAA/Watch Neg II-B-1 073868AS0 CCC AA/Watch Neg II-BX-1 073868AQ4 CCC AA/Watch Neg II-B-2 073868AT8 CCC B/Watch Neg II-BX-2 073868AR2 CCC B/Watch Neg II-B-3 073868AU5 CC CCC II-B-5 073868BV2 D CC III-1A-2 073868AW1 B+ AAA/Watch Neg III-1A-3 073868AX9 B AAA/Watch Neg III-1X-1 073868AY7 AAA AAA/Watch Neg III-1X-2 073868AZ4 B+ AAA/Watch Neg III-IX-3 073868BA8 B+ AAA/Watch Neg III-1X-4 073868BB6 B+ AAA/Watch Neg III-1X-5 073868BC4 B+ AAA/Watch Neg III-1X-6 073868BD2 B+ AAA/Watch Neg I-AE-1 B+ AAA/Watch Neg I-AE-2 B+ AAA/Watch Neg I-AE-3 B+ AAA/Watch Neg I-AE-4 B+ AAA/Watch Neg I-AE-5 B+ AAA/Watch Neg I-AE-6 B+ AAA/Watch Neg I-AE-7 B+ AAA/Watch Neg I-AE-8 B+ AAA/Watch Neg I-AE-9 B+ AAA/Watch Neg I-AE-10 B+ AAA/Watch Neg I-AE-11 B+ AAA/Watch Neg I-AE-12 B+ AAA/Watch Neg I-AE-13 B+ AAA/Watch Neg I-AE-14 B+ AAA/Watch Neg I-AE-15 B+ AAA/Watch Neg I-AE-16 B+ AAA/Watch Neg I-AE-17 B+ AAA/Watch Neg I-AE-18 B+ AAA/Watch Neg I-AE-19 B+ AAA/Watch Neg I-AE-20 B+ AAA/Watch Neg I-AE-21 B+ AAA/Watch Neg I-AE-22 B+ AAA/Watch Neg I-AE-23 B+ AAA/Watch Neg I-AE-24 B+ AAA/Watch Neg I-AE-25 B+ AAA/Watch Neg I-AE-26 B+ AAA/Watch Neg I-AE-27 B+ AAA/Watch Neg I-AE-28 B+ AAA/Watch Neg I-AE-29 B+ AAA/Watch Neg I-AE-30 B+ AAA/Watch Neg III-2A-2 073868BF7 B+ AAA/Watch Neg III-2A-3 073868BG5 B AAA/Watch Neg III-2X-2 073868BJ9 B+ AAA/Watch Neg III-2X-3 073868BK6 B+ AAA/Watch Neg III-2X-5 073868BM2 B+ AAA/Watch Neg III-2X-6 073868BN0 B+ AAA/Watch Neg II-AE-1 B+ AAA/Watch Neg II-AE-2 B+ AAA/Watch Neg II-AE-3 B+ AAA/Watch Neg II-AE-4 B+ AAA/Watch Neg II-AE-5 B+ AAA/Watch Neg II-AE-6 B+ AAA/Watch Neg II-AE-7 B+ AAA/Watch Neg II-AE-8 B+ AAA/Watch Neg II-AE-9 B+ AAA/Watch Neg II-AE-10 B+ AAA/Watch Neg II-AE-11 B+ AAA/Watch Neg II-AE-12 B+ AAA/Watch Neg II-AE-13 B+ AAA/Watch Neg II-AE-14 B+ AAA/Watch Neg II-AE-15 B+ AAA/Watch Neg II-AE-16 B+ AAA/Watch Neg II-AE-17 B+ AAA/Watch Neg II-AE-18 B+ AAA/Watch Neg II-AE-19 B+ AAA/Watch Neg II-AE-20 B+ AAA/Watch Neg II-AE-21 B+ AAA/Watch Neg II-AE-22 B+ AAA/Watch Neg II-AE-23 B+ AAA/Watch Neg II-AE-24 B+ AAA/Watch Neg II-AE-25 B+ AAA/Watch Neg II-AE-26 B+ AAA/Watch Neg II-AE-27 B+ AAA/Watch Neg II-AE-28 B+ AAA/Watch Neg II-AE-29 B+ AAA/Watch Neg II-AE-30 B+ AAA/Watch Neg III-B-1 073868CB5 CCC B/Watch Neg III-BX-1 073868BR1 CCC B/Watch Neg III-B-5 073868BY6 D CC III-B-6 073868BZ3 D CC II-A-2 073868AN1 B AAA/Watch Neg CSFB Mortgage-Backed Trust Series 2005-9 Series 2005-9 Rating ------ Class CUSIP To From ----- ----- -- ---- III-A-1 2254585T1 AA AAA III-A-3 225470AC7 AA AAA IV-A-3 2254585W4 AA AAA A-P 2254586K9 AA AAA V-A-1 2254585Y0 AA AAA V-A-2 2254585Z7 AA AAA V-A-3 2254586A1 AA AAA V-A-6 2254586D5 AA AAA V-A-8 2254586F0 AA AAA V-A-10 225470AD5 AA AAA V-A-12 225470AF0 AA AAA D-B-1 2254586P8 CCC AA D-B-2 2254586Q6 CCC A D-B-3 2254586R4 CC BBB D-B-4 2254586X1 D BB CWABS Asset Backed Certificates Trust 2005-IM3 Series 2005-IM3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 126670JF6 B AA+/Watch Neg M-2 126670JG4 CCC AA/Watch Neg M-3 126670JH2 CCC AA-/Watch Neg M-4 126670JJ8 CC A+/Watch Neg M-5 126670JK5 CC BBB+/Watch Neg M-6 126670JL3 D BB/Watch Neg M-7 126670JM1 D BB/Watch Neg MASTR Adjustable Rate Mortgages Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- I-1A 576431AA8 B AAA I-2A2 576431AC4 AAA/Watch Neg AAA I-2A3 576431AD2 A AAA I-2A4 576431AE0 AAA/Watch Neg AAA I-X-1 576431AF7 AAA AAA/Watch Neg I-X-2 576431AG5 AAA AAA/Watch Neg I-X-3 576431AH3 AAA AAA/Watch Neg I-M1 576431BG4 CCC AA+ I-M2 576431BH2 CCC AA I-M3 576431BJ8 CCC A/Watch Neg I-M4 576431BK5 CCC BBB/Watch Neg I-M5 576431BL3 CC BB+/Watch Neg I-M6 576431BM1 CC B/Watch Neg RALI Series 2007-QS5 Trust Series 2007-QS5 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2 74923JAB3 B AAA/Watch Neg A-3 74923JAC1 B AAA/Watch Neg A-5 74923JAE7 B AAA/Watch Neg A-6 74923JAF4 B AAA/Watch Neg A-7 74923JAG2 B AAA/Watch Neg A-8 74923JAH0 B AAA/Watch Neg A-10 74923JAK3 AAA AAA/Watch Neg A-11 74923JAL1 B AAA/Watch Neg A-12 74923JAM9 B AAA/Watch Neg A-13 74923JAN7 B AAA/Watch Neg A-14 74923JAP2 AAA AAA/Watch Neg A-P 74923JAQ0 AAA AAA/Watch Neg A-V 74923JAR8 AAA AAA/Watch Neg Structured Adjustable Rate Mortgage Loan Trust, Series 2006-11 Series 2006-11 Rating ------ Class CUSIP To From ----- ----- -- ---- 1-A2 86362HAB9 BBB AAA M-1 86362HAG8 B A/Watch Neg M-2 86362HAH6 B- BBB/Watch Neg M-3 86362HAJ2 CCC B/Watch Neg M-5 86362HAL7 CC CCC M-7 86362HAN3 D CC 2-A2 86362HAD5 B AAA/Watch Neg 3-A2 86362HAF0 B AAA/Watch Neg B1-II 86362HAP8 CCC B/Watch Neg Wells Fargo Alternative Loan 2007-PA2 Trust Series 2007-PA2 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A-1 94985FAA6 BB- AAA I-A-2 94985FAB4 BB- AAA I-A-3 94985FAC2 BB- AAA I-A-4 94985FAD0 BB- AAA I-A-5 94985FAE8 B AAA I-A-IO 94985FAF5 BB- AAA II-A-1 94985FAG3 B AAA II-A-2 94985FAH1 B AAA II-A-IO 94985FAJ7 B AAA III-A-1 94985FAL2 B AAA III-A-2 94985FAM0 B AAA III-A-IO 94985FAN8 B AAA IV-A-1 94985FAP3 B AAA IV-A-IO 94985FAQ1 B AAA V-A-1 94985FAR9 B AAA V-A-IO 94985FAS7 B AAA A-PO 94985FAT5 B AAA Ratings Affirmed Bear Stearns ALT-A Trust 2006-6 Series 2006-6 Class CUSIP Rating ----- ----- ------ III-1A-1 073868AV3 AAA III-2A-1 073868BE0 AAA III-B-2 073868BP5 CCC III-BX-2 073868BS9 CCC III-B-3 073868BQ3 CCC III-BX-3 073868BT7 CCC CSFB Mortgage-Backed Trust Series 2005-9 Series 2005-9 Class CUSIP Rating ----- ----- ------ III-A-2 225470AB9 AAA IV-A-1 2254585U8 AAA IV-A-2 2254585V6 AAA IV-A-4 2254585X2 AAA IV-X 225470AG8 AAA V-A-4 2254586B9 AAA V-A-7 2254586E3 AAA V-A-9 2254586G8 AAA D-X 2254586J2 AAA CWABS Asset Backed Certificates Trust 2005-IM3 Series 2005-IM3 Class CUSIP Rating ----- ----- ------ A-3 126670JD1 AAA A-3M 126670NS3 AAA A-4 126670JE9 AAA MASTR Adjustable Rate Mortgages Trust 2007-1 Series 2007-1 Class CUSIP Rating ----- ----- ------ I-2A1 576431AB6 AAA RALI Series 2007-QS5 Trust Series 2007-QS5 Class CUSIP Rating ----- ----- ------ A-1 74923JAA5 AAA A-4 74923JAD9 AAA A-9 74923JAJ6 AAA P 74923JAX5 AAA Structured Adjustable Rate Mortgage Loan Trust, Series 2006-11 Series 2006-11 Class CUSIP Rating ----- ----- ------ 1-A1 86362HAA1 AAA M-4 86362HAK9 CCC 2-A1 86362HAC7 AAA 3-A1 86362HAE3 AAA B2-II 86362HAQ6 CCC * S&P Downgrades Ratings on 78 Tranches From 21 Hybrid CDO Deals ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 78 tranches from 21 U.S. cash flow and hybrid collateralized debt obligation transactions. S&P removed 37 of the lowered ratings from CreditWatch with negative implications. The ratings on 39 of the downgraded tranches are on CreditWatch with negative implications, indicating a significant likelihood of further downgrades. The CreditWatch placements primarily affect transactions for which a significant portion of the collateral assets currently have ratings on CreditWatch with negative implications or have significant exposure to assets rated in the 'CCC' category. The 78 downgraded U.S. cash flow and hybrid tranches have a total issuance amount of $10.190 billion. Eleven of the 21 affected transactions are mezzanine structured finance CDOs of asset-backed securities, which are collateralized in large part by mezzanine tranches of residential mortgage-backed securities and other SF securities. Eight of the 21 affected transactions are high-grade SF CDOs of ABS that were collateralized at origination primarily by 'AAA' through 'A' rated tranches of RMBS and other SF securities. The other two affected transactions are high-grade SF CDOs of ABS that were collateralized at origination primarily by 'AAA' through 'A' rated tranches of RMBS and other SF securities. ThisCDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on U.S. subprime RMBS. In addition, Standard & Poor's reviewed the ratings assigned to Fortress ABS Opportunities Ltd. and left the ratings on this transaction at their current rating levels based on the current credit support available to support the tranches. To date, including the CDO tranches listed below and including actions on both publicly and confidentially rated tranches, S&P has lowered S&P's ratings on 4,060 tranches from 908 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS. In addition, 1,011 ratings from 443 transactions are currently on CreditWatch with negative implications for the same reasons. In all, S&P has downgraded $480.848 billion of CDO issuance. Additionally, S&P's ratings on $11.631 billion of securities have not been lowered but are currently on CreditWatch with negative implications, indicating a high likelihood of future downgrades. Standard & Poor's will continue to monitor the CDO transactions it rates and take rating actions, including CreditWatch placements, when appropriate. Rating Actions Rating ------ Transaction Class To From ----------- ----- -- ---- Acacia CDO 8 Ltd. A-1 A+/Watch Neg AAA/Watch Neg Acacia CDO 8 Ltd. A-2 A/Watch Neg AAA/Watch Neg Acacia CDO 8 Ltd. B BBB+/Watch Neg AA/Watch Neg Acacia CDO 8 Ltd. C BB+/Watch Neg A/Watch Neg Acacia CDO 8 Ltd. D BB/Watch Neg A-/Watch Neg Acacia CDO 8 Ltd. E B+/Watch Neg BBB/Watch Neg Acacia CDO 9 Ltd. A BBB/Watch Neg AA-/Watch Neg Acacia CDO 9 Ltd. B BB-/Watch Neg BBB+/WatchNeg Acacia CDO 9 Ltd. C B/Watch Neg BBB/Watch Neg Acacia CDO 9 Ltd. D CCC+ BB+/Watch Neg Cascade Funding CDO I Ltd. A-1 AAA/Watch Neg AAA Cascade Funding CDO I Ltd. A-2 CCC- BBB-/WatchNeg C-Bass CBO IV Ltd. D-1 B/Watch Neg A C-Bass CBO IV Ltd. D-2 B/Watch Neg A C-Bass CBO IV Ltd. E CCC BBB- Citius II Funding Ltd. ST CC B+/Watch Neg Citius II Funding Ltd. A CC CCC/Watch Neg Duke Funding VIII Ltd. A-1S A+/Watch Neg AA/Watch Neg Duke Funding VIII Ltd. A-1J BBB-/Watch Neg BBB+/WatchNeg Duke Funding VIII Ltd. A-2 B+/Watch Neg BB+/Watch Neg Duke Funding VIII Ltd. A-3F CC CCC-/WatchNeg Duke Funding VIII Ltd. A-3V CC CCC-/WatchNeg Fort Point CDO I Ltd. A-1 AA/Watch Neg AAA/Watch Neg Fort Point CDO I Ltd. A-2a CCC AA-/Watch Neg Fort Point CDO I Ltd. A-2b CCC AA-/Watch Neg Fort Point CDO I Ltd. A-3a CC BB/Watch Neg Fort Point CDO I Ltd. A-3b CC BB/Watch Neg Fort Point CDO I Ltd. B CC CCC/Watch Neg Fort Point CDO I Ltd. C CC CCC-/WatchNeg Gloucester Street ABS CDO I A-1 BBB/Watch Neg AA/Watch Neg Gloucester Street ABS CDO I A-2 BB-/Watch Neg AA-/Watch Neg Gloucester Street ABS CDO I B CCC+ BBB/Watch Neg Gloucester Street ABS CDO I C CCC- BB-/Watch Neg Gloucester Street ABS CDO I D CC B-/Watch Neg Hereford Street ABS CDO I Ltd. A-1 A-/Watch Neg AAA/Watch Neg Hereford Street ABS CDO I Ltd. A-2 BB/Watch Neg AA/Watch Neg Hereford Street ABS CDO I Ltd. B CCC+/Watch Neg A+/Watch Neg Hereford Street ABS CDO I Ltd. C CC BBB-/WatchNeg Hereford Street ABS CDO I Ltd. D CC BB/Watch Neg Mercury CDO 2004-1 Ltd. A-2A AA+/Watch Neg AAA Mercury CDO 2004-1 Ltd. A-2B AA+/Watch Neg AAA Mercury CDO 2004-1 Ltd. B BB+/Watch Neg AA/Watch Neg Mercury CDO 2004-1 Ltd. C CCC- BBB/Watch Neg Millerton II High Grade ABS CDO A-1 CCC- A-/Watch Neg Millerton II High Grade ABS CDO A-2 CC BB-/Watch Neg Millerton II High Grade ABS CDO B CC CCC-/WatchNeg Nautilus RMBS CDO I Ltd. A-1S AA-/Watch Neg AAA Nautilus RMBS CDO I Ltd. A-1J A-/Watch Neg AAA Nautilus RMBS CDO I Ltd. A-2 BBB+/Watch Neg AA Nautilus RMBS CDO I Ltd. A-3 BBB-/Watch Neg A Nautilus RMBS CDO I Ltd. BF BB/Watch Neg BBB Nautilus RMBS CDO I Ltd. BV BB/Watch Neg BBB Nautilus RMBS CDO I Ltd. CF B/Watch Neg BB/Watch Neg Nautilus RMBS CDO I Ltd. CV B/Watch Neg BB/Watch Neg North Cove CDO Ltd. A B-/Watch Neg A/Watch Neg North Cove CDO Ltd. B CC BB+/Watch Neg North Cove CDO Ltd. C CC CCC-/WatchNeg Orchard Park Ltd. A-1 ser 1 A+/Watch Neg AAA Orchard Park Ltd. A-1 ser 2 A+/Watch Neg AAA Putnam Structured Product B A A+/Watch Neg Funding 2003-1 Ltd. Putnam Structured Product C BBB- BBB/Watch Neg Funding 2003-1 Ltd. Sheffield CDO II Ltd. A-1 AA AAA Sheffield CDO II Ltd. A-2 BBB+ AA/Watch Neg Sheffield CDO II Ltd. A-3 BB BBB+/WatchNeg Sheffield CDO II Ltd. B CCC BB+/Watch Neg Sheffield CDO II Ltd. C CC CCC+/WatchNeg Sherwood Funding CDO Ltd. A-1 CCC+ A/Watch Neg Sherwood Funding CDO Ltd. A-2 CC B-/Watch Neg South Coast Funding V Ltd. B A+ AA/Watch Neg South Coast Funding V Ltd. C-1 CCC+ B+/Watch Neg South Coast Funding V Ltd. C-2 CCC+ B+/Watch Neg Streeterville ABS CDO Ltd. A-2 AA+/Watch Neg AAA/Watch Neg Streeterville ABS CDO Ltd. B-1 B/Watch Neg BBB+/WatchNeg Streeterville ABS CDO Ltd. B-2 B/Watch Neg BBB+/WatchNeg Streeterville ABS CDO Ltd. C-1 CCC BB+/Watch Neg Streeterville ABS CDO Ltd. C-2 CCC BB+/Watch Neg Tremonia CDO 2005-1 PLC A-1 BBB/Watch Neg A+/Watch Neg Tremonia CDO 2005-1 PLC A-2 BB/Watch Neg A-/Watch Neg Tremonia CDO 2005-1 PLC B CCC BB-/Watch Neg Other Ratings Reviewed Entity Class Rating ------ ----- ------ C-Bass CBO IV Ltd. B-1 AAA C-Bass CBO IV Ltd. B-2 AAA C-Bass CBO IV Ltd. C AA Citius II Funding Ltd. B CC Citius II Funding Ltd. C CC Citius II Funding Ltd. D CC Duke Funding VIII Ltd. B CC Duke Funding VIII Ltd. Comb Sec 1 CC Duke Funding VIII Ltd. Comb Sec 2 CC Duke Funding VIII Ltd. Comb Sec 3 CC Duke Funding VIII Ltd. Sub nts CC Fortress ABS Opportunities Ltd. A AA+ Fortress ABS Opportunities Ltd. A-1a AA+ Fortress ABS Opportunities Ltd. A-2 AA+ Fortress ABS Opportunities Ltd. B BBB Fortress ABS Opportunities Ltd. Ba BBB Mercury CDO 2004-1 Ltd. A-1NV AAA Mercury CDO 2004-1 Ltd. A-1VA AAA Mercury CDO 2004-1 Ltd. A-1VB AAA Millerton II High Grade ABS CDO C CC Millerton II High Grade ABS CDO D CC North Cove CDO Ltd. D CC Putnam Structured Product Funding 2003-1 Ltd. A-1ST-a AAA/A-1+ Putnam Structured Product Funding 2003-1 Ltd. A-1ST-b AAA/A-1+ Putnam Structured Product Funding 2003-1 Ltd. A-1ST-c AAA/A-1+ Putnam Structured Product Funding 2003-1 Ltd. A-2 AAA Sheffield CDO II Ltd. S AAA Sheffield CDO II Ltd. D CC Sherwood Funding CDO Ltd. B-1 CC Sherwood Funding CDO Ltd. B-2 CC Sherwood Funding CDO Ltd. C CC Sherwood Funding CDO Ltd. D CC South Coast Funding V Ltd. A-1 AAA South Coast Funding V Ltd. A-2 AAA South Coast Funding V Ltd. A-3 AAA Streeterville ABS CDO Ltd A-1 AAA Trainer Wortham First Republic CBO IV Ltd. A AAA Trainer Wortham First Republic CBO IV Ltd. B AA+ Trainer Wortham First Republic CBO IV Ltd. C A+ * S&P Downgrades Ratings on 238 Classes of RMBS Securities ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 238 classes of residential mortgage-backed securities from 63 transactions backed by U.S. closed-end second-lien mortgage collateral. Of these downgrades, S&P lowered the ratings to 'D' on 86 classes from 63 transactions. Specifically, S&P lowered its ratings on 67 classes to 'D' from 'CC', 13 classes to 'D' from 'CCC', one class to 'D' from 'B-', and five classes to 'D' from 'B'. Additionally, S&P lowered its ratings on 152 classes from various rating levels based upon poor performance. At the same time, S&P affirmed its ratings on four classes at 'CCC', three classes at 'B', one class at 'BBB-', one class at 'BBB', and five classes at 'AAA'. Finally, S&P reviewed two transactions that benefit from bond insurance. First, Bear Stearns Second Lien Trust 2007-SV1 has bond insurance from Syncora Guarantee Inc., which currently has a 'B' rating. As a result, S&P lowered the ratings on the A-2 and A-3 classes to 'B' from 'BB', which places the ratings in line with the bond insurance rating. Second, ACE Securities Corp. Home Equity Loan Trust Series 2007-SL1 has bond insurance from Financial Security Assurance Inc., which currently has a 'AAA' rating on CreditWatch with negative implications. As a result, S&P kept S&P's rating on the A-2 class at 'AAA' on CreditWatch with negative implications, which places it in line with the bond insurance rating. The downgrades reflect the collateral pools' deteriorating performance as monthly net losses continue to significantly outpace monthly excess interest cash flows, resulting in the complete erosion of overcollateralization for these deals. Some of these transactions have already experienced a complete write- down to the principal balance of other subordinate classes over the past few months. The defaulted classes experienced principal write-downs during the October 2008 remittance period. Moreover, these nine transactions experienced a default of the remaining class(es) in their structures after the default of their subordinate classes, which resulted in a default of the entire transaction: -- Bear Stearns Mortgage Funding Trust 2006-SL1 -- Bear Stearns Mortgage Funding Trust 2006-SL2 -- Bear Stearns Mortgage Funding Trust 2006-SL3 -- Bear Stearns Mortgage Funding Trust 2006-SL4 -- Bear Stearns Mortgage Funding Trust 2006-SL5 -- Bear Stearns Mortgage Funding Trust 2006-SL6 -- Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2006-S5 -- SACO I Trust 2006-7 -- Structured Asset Securities Corp. Mortgage Loan Trust 2006-ARS1 S&P applied its U.S. closed-end second-lien RMBS default and loss methodology assumptions to derive the projected losses for the classes in the remaining 54 transactions that did not default. S&P factored this into S&P's analysis and the resulting rating levels. In sum, S&P applied a stressful cumulative loss curve from the high combined loan-to-value transactions issued in 1996 to project losses for the closed-end second-lien transactions covered in this review. A detailed discussion of the methodology and assumptions used in S&P's analysis. As of the October 2008 distribution period, cumulative realized losses for the closed-end second-lien classes ranged from 1.70% (American Home Mortgage Investment Trust 2006-3) to 48.60% (Structured Asset Securities Corp. Mortgage Loan Trust 2006-ARS1) of the original principal balances, and total delinquencies for these classes ranged from 16.00% (SACO I Trust 2005-9) to 39.15% (SACO I Trust, 2005-WM3) of the current principal balances. Seasoning for these transactions ranged from 13 months (Merrill Lynch First Franklin Mortgage Loan Trust, Series 2007-A) to 60 months (Terwin Mortgage Trust, Series TMTS 2003-5SL). These transactions have outstanding pool factors ranging from approximately 5.23% (Terwin Mortgage Trust Series TMTS 2003-5SL) to 86.12% (Merrill Lynch First Franklin Mortgage Loan Trust Series 2007-A). Based upon the application of the closed-end second-lien methodology and, in S&P's opinion, the adverse performance of the transactions encompassed in this review, S&P downgraded the aforementioned 152 classes. S&P will likely take further negative rating actions on the outstanding classes from these transactions if delinquencies continue to translate into realized losses. S&P believes that the current credit support levels for the 15 classes that were affirmed are adequate to maintain their ratings. Subordination, O/C, and excess interest cash flow provide credit support for these transactions. The collateral for the closed-end second-lien transactions originally consisted of 30-year, fixed- rate, closed-end second-lien mortgage loans secured by one- to four-family residential properties. Ratings Lowered Rating Actions Ace Securities Corp. Home Equity Loan Trust Series 2006-ASL1 Series 2006-ASL1 Rating ------ Class CUSIP To From ----- ----- -- ---- A 00442AAA1 B BBB M-1 00442AAB9 CCC BB M-2 00442AAC7 CCC B M-3 00442AAD5 CC CCC M-4 00442AAE3 CC CCC M-5 00442AAF0 D CC M-6 00442AAG8 D CC ACE Securities Corp. Home Equity Loan Trust Series 2006-SL1 Series 2006-SL1 Rating ------ Class CUSIP To From ----- ----- -- ---- A 004421VE0 B BBB M-1A 004421VF7 CCC BB M-1B 004421VG5 CCC B M-3 004421VJ9 D CC Ace Securities Corp. Home Equity Loan Trust Series 2006-SL2 Series 2006-SL2 Rating ------ Class CUSIP To From ----- ----- -- ---- A 004421YB3 D CC M-1 004421YC1 D CC ACE Securities Corp. Home Equity Loan Trust Series 2006-SL4 Series 2006-SL4 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 00441WAA4 CC B A-2 00441WAB2 CC B A-3 00441WAC0 CC B M-1 00441WAD8 CC CCC M-2 00441WAE6 D CC M-3 00441WAF3 D CC ACE Securities Corp. Home Equity Loan Trust Series 2007-ASL1 Series 2007-ASL1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 00443MAA4 CC CCC A-2 00443MAB2 CC CCC M-3 00443MAE6 D CC ACE Securities Corp. Home Equity Loan Trust Series 2007-SL1 Series 2007-SL1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 00442FAA0 CC CCC M-1 00442FAC6 D CC M-2 00442FAD4 D CC American Home Mortgage Investment Trust 2006-3 Series 2006-3 Rating ------ Class CUSIP To From ----- ----- -- ---- IV-A 026929AN9 CC B IV-M-1 026929BA6 CC CCC IV-M-2 026929BB4 CC CCC IV-M-3 026929BC2 D CC American Home Mortgage Investment Trust 2007-A Series 2007-A Rating ------ Class CUSIP To From ----- ----- -- ---- II-A 026931AE5 D CCC Bear Stearns Mortgage Funding Trust 2006-SL1 Series 2006-SL1 Rating ------ Class CUSIP To From ----- ----- -- ---- A 07400WAA8 D CC Bear Stearns Mortgage Funding Trust 2006-SL2 Series 2006-SL2 Rating ------ Class CUSIP To From ----- ----- -- ---- A 07400YAA4 D CC Bear Stearns Mortgage Funding Trust 2006-SL3 Series 2006-SL3 Rating ------ Class CUSIP To From ----- ----- -- ---- A 07400VAA0 D CC Bear Stearns Mortgage Funding Trust 2006-SL4 Series 2006-SL4 Rating ------ Class CUSIP To From ----- ----- -- ---- A 07401GAA2 D CC Bear Stearns Mortgage Funding Trust 2006-SL5 Series 2006-SL5 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A 07401HAA0 D CC II-A 07401HAB8 D CC Bear Stearns Mortgage Funding Trust 2006-SL6 Series 2006-SL6 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A 07400LAA2 D CC II-A 07400LAT1 D CC M-1 07400LAB0 D CC Bear Stearns Mortgage Funding Trust 2007-SL1 Series 2007-SL1 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A 07401PAA2 CC CCC II-A 07401PAB0 CC CCC M-1 07401PAC8 D CC Bear Stearns Mortgage Funding Trust 2007-SL2 Series 2007-SL2 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A 07401RAA8 CC CCC II-A 07401RAB6 CC CCC M-1 07401RAC4 D CC Bear Stearns Second Lien Trust 2007-SV1 Series 2007-SV1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 07401UAA1 B BB A-2 07401UAB9 B BB A-3 07401UAU7 B BB B-2 07401UAK9 D CC CWABS Asset Backed Certificates Trust 2006-SPS1 Series 2006-SPS1 Rating ------ Class CUSIP To From ----- ----- -- ---- A 12666MAA9 CC CCC M-1 12666MAB7 D CC CWABS Asset-Backed Certificates Trust 2006-SPS2 Series 2006-SPS2 Rating ------ Class CUSIP To From ----- ----- -- ---- A 12667BAA2 CC CCC M-1 12667BAB0 CC CCC M-2 12667BAC8 D CC M-3 12667BAD6 D CC First Franklin Mortgage Loan Trust 2006-FFA Series 2006-FFA Rating ------ Class CUSIP To From ----- ----- -- ---- A1 318340AA4 CC CCC A2 318340AB2 CC CCC A3 318340AC0 CC CCC A4 318340AD8 CC CCC M2 318340AG1 D CC M3 318340AH9 D CC M4 318340AJ5 D CC First Franklin Mortgage Loan Trust 2006-FFB Series 2006-FFB Rating ------ Class CUSIP To From ----- ----- -- ---- A1 32028JAA7 CC CCC A2 32028JAB5 CC CCC A3 32028JAC3 CC CCC A4 32028JAD1 CC CCC M1 32028JAF6 D CC First Franklin Mortgage Loan Trust Series 2007-FFA Series 2007-FFA Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 32027AAB5 D CC First Franklin Mortgage Loan Trust Series 2007-FFC Series 2007-FFC Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 32029HAD4 D CC M-2 32029HAE2 D CC GSAMP Trust 2006-S4 Series 2006-S4 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 36244MAA9 CCC B A-2 36244MAB7 CCC B A-3 36244MAC5 CCC B M-1 36244MAD3 CC CCC M-2 36244MAE1 D CC HarborView Mortgage Loan Trust 2007-A Series 2007-A Rating ------ Class CUSIP To From ----- ----- -- ---- B-1 41164TAB8 D CC MASTR Second Lien Trust 2005-1 Series 2005-1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 57644DAB9 BBB AA M-2 57644DAC7 CC B M-3 57644DAD5 D CC MASTR Second Lien Trust 2006-1 Series 2006-1 Rating ------ Class CUSIP To From ----- ----- -- ---- A 57644DAR4 CC B M-1 57644DAS2 D CC Merrill Lynch First Franklin Mortgage Loan Trust Series 2007-A Series 2007-A Rating ------ Class CUSIP To From ----- ----- -- ---- B-4 59025QAN9 D CC Merrill Lynch Mortgage Investors Trust Series 2006-SL2 Series 2006-SL2 Rating ------ Class CUSIP To From ----- ----- -- ---- A 59021BAA4 CC B G 59021BAN6 CC B M-1 59021BAB2 CC CCC M-2 59021BAC0 D CC M-3 59021BAD8 D CC M-4 59021BAE6 D CC Merrill Lynch Mortgage Investors Trust Series 2007-SL1 Series 2007-SL1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 59025AAA2 CC CCC A-2 59025AAQ7 CC CCC G 59025AAL8 CC CCC M-1 59025AAB0 D CC M-2 59025AAC8 D CC M-3 59025AAD6 D CC Morgan Stanley Mortgage Loan Trust 2005-8SL Series 2005-8SL Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 61748HQG9 BBB AAA A-2b 61748HQJ3 BBB AAA M-1 61748HQK0 BB A M-2 61748HQL8 CCC BB M-3 61748HQM6 CC B M-4 61748HQN4 CC CCC M-5 61748HQP9 D CCC Morgan Stanley Mortgage Loan Trust 2006-14SL Series 2006-14SL Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 61749SAC0 CCC B M-1 61749SAD8 CC CCC M-2 61749SAE6 CC CCC M-4 61749SAG1 D CC B-1 61749SAH9 D CC Morgan Stanley Mortgage Loan Trust 2006-4SL Series 2006-4SL Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 61748HYC9 BB BBB M-1 61748HYD7 CC B M-2 61748HYE5 D CC Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2005-S2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 65535VLU0 BB BBB- M-2 65535VLV8 CC CCC B-1 65535VLW6 D CCC Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2005-S3 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2 65535VNR5 BBB AAA A-3 65535VPQ5 BBB AAA M-1 65535VNS3 B BBB- M-2 65535VNT1 D CCC Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2005-S4 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 65535VQN1 A AAA A-2 65535VQP6 A AAA A-3 65535VQQ4 A AAA M-1 65535VQR2 BBB A+ M-2 65535VQS0 CCC BBB M-3 65535VQT8 CC BB M-4 65535VQU5 D B Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2006-S1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 65535VTN8 BB BBB A-2 65535VTP3 BB BBB A-3 65535VTQ1 BB BBB M-1 65535VTS7 B BB M-2 65535VTT5 CCC B M-3 65535VTU2 D CCC M-4 65535VTV0 D CC Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2006-S2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 65535YAA0 CCC B A-2 65535YAB8 CCC B A-3 65535YAC6 CCC B A-IO 65535YAD4 CCC B M-1 65535YAE2 CC CCC M-2 65535YAF9 D CC Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2006-S3 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 65536WAA3 CC CCC A-IO 65536WAD7 CC CCC M-1 65536WAE5 D CC Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2006-S4 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 65537DAA4 CCC B A-IO 65537DAB2 CCC B M-1 65537DAC0 CC CCC M-2 65537DAD8 D CC Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2006-S5 Rating ------ Class CUSIP To From ----- ----- -- ---- A 65538AAB7 D CC Ownit Mortgage Trust 2006-OT1 Series 2006-OT1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 88156AAB0 D CC SACO I Trust 2005-10 Series 2005-10 Rating ------ Class CUSIP To From ----- ----- -- ---- II-A-1 785778NE7 A AAA II-A-3 785778NG2 A AAA II-M-1 785778NJ6 BB AA II-M-2 785778NK3 CCC BBB II-M-3 785778NL1 CC BB II-M-4 785778NM9 D B SACO I Trust 2005-5 Series 2005-5 Rating ------ Class CUSIP To From ----- ----- -- ---- I-M-1 785778FZ9 BBB- AA I-M-2 785778GA3 CCC A I-M-3 785778GB1 CC BBB I-M-4 785778GC9 CC BB I-M-5 785778GD7 D B SACO I Trust 2005-8 Series 2005-8 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 785778LA7 AA AAA A-3 785778LC3 AA AAA M-1 785778LD1 BBB A M-2 785778LE9 BB BBB M-3 785778LF6 CCC BB M-4 785778LG4 CC B M-5 785778LH2 D CCC SACO I Trust 2005-9 Series 2005-9 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 785778MK4 A AAA A-3 785778MM0 A AAA M-1 785778MN8 BB AA+ M-2 785778MP3 CCC A M-3 785778MQ1 CC BBB M-4 785778MR9 CC BB M-5 785778MS7 D B SACO I Trust 2006-10 Series 2006-10 Rating ------ Class CUSIP To From ----- ----- -- ---- A 785812AA6 CC CCC M-1 785812AB4 D CC SACO I Trust 2006-3 Series 2006-3 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 785778QJ3 CCC BB A-3 785778QL8 CCC BB M-1 785778QM6 CC B M-2 785778QN4 D CCC SACO I Trust 2006-4 Series 2006-4 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 785778RD5 B BB A-3 785778RV5 B BB M-1 785778RE3 CC B M-2 785778RF0 D CCC SACO I Trust 2006-5 Series 2006-5 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A 785811AA8 B BB I-M-1 785811AE0 CC CCC I-M-2 785811AF7 D CC I-M-3 785811AG5 D CC II-A-1 785811AB6 CCC B II-A-2 785811AC4 B AA II-A-3 785811AD2 CCC B II-M-1 785811AL4 CC CCC SACO I Trust 2006-6 Series 2006-6 Rating ------ Class CUSIP To From ----- ----- -- ---- A 785779AA7 CC CCC M-1 785779AB5 D CC SACO I Trust 2006-7 Series 2006-7 Rating ------ Class CUSIP To From ----- ----- -- ---- A 78577PAA1 D CC SACO I Trust 2006-9 Series 2006-9 Rating ------ Class CUSIP To From ----- ----- -- ---- A 78577RAA7 CCC B M-1 78577RAB5 CC CCC M-2 78577RAC3 D CC M-3 78577RAD1 D CC SACO I Trust 2005-7 Series 2005-7 Rating ------ Class CUSIP To From ----- ----- -- ---- A 785778KL4 AA AAA M-1 785778KM2 BB AA M-2 785778KN0 B A M-3 785778KP5 CC BBB M-4 785778KQ3 CC BB M-5 785778KR1 D B SACO I Trust 2005-WM2 Series 2005-WM2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 785778JY8 B BB M-2 785778JZ5 CC B M-3 785778KA8 D CC SACO I Trust 2005-WM3 Series 2005-WM3 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 785778LS8 B A A-3 785778LU3 B A M-1 785778LV1 D CCC M-2 785778LW9 D CC Structured Asset Securities Corp. Mortgage Loan Trust 2005-S6 Series 2005-S6 Rating ------ Class CUSIP To From ----- ----- -- ---- A2 86359DTQ0 A AAA M1 86359DTR8 BB AA- M2 86359DTS6 B AA M3 86359DTT4 CCC BBB M4 86359DTU1 CC BB M5 86359DTV9 CC B M6 86359DTW7 D B- Structured Asset Securities Corp. Mortgage Loan Trust 2005-S7 Series 2005-S7 Rating ------ Class CUSIP To From ----- ----- -- ---- M1 863576DU5 AA AA+ M2 863576DV3 BBB AA M3 863576DW1 BB AA- M4 863576DX9 B A+ M5 863576DY7 CCC A M6 863576DZ4 CCC A- M7 863576EA8 CC BB+ M8 863576EB6 D CCC Structured Asset Securities Corp. Mortgage Loan Trust 2006-ARS1 Series 2006-ARS1 Rating ------ Class CUSIP To From ----- ----- -- ---- A 86358LAA8 D CC Structured Asset Securities Corp. Mortgage Loan Trust 2006-S2 Series 2006-S2 Rating ------ Class CUSIP To From ----- ----- -- ---- M1 86359FAD4 CCC BB M2 86359FAE2 CC CCC M3 86359FAF9 D CCC Structured Asset Securities Corp. Mortgage Loan Trust 2006-S3 Series 2006-S3 Rating ------ Class CUSIP To From ----- ----- -- ---- A 86359WAA3 BBB A A-IO 86359WAB1 BBB A M1 86359WAC9 CC CCC M2 86359WAD7 D CCC M3 86359WAE5 D CC Structured Asset Securities Corp. Mortgage Loan Trust 2006-S4 Series 2006-S4 Rating ------ Class CUSIP To From ----- ----- -- ---- A 86363AAA5 CCC B M1 86363AAB3 CC CCC M3 86363AAD9 D CC M4 86363AAE7 D CC M5 86363AAF4 D CC Terwin Mortgage Trust Series TMTS 2003-5SL Series 2003-5SL Rating ------ Class CUSIP To From ----- ----- -- ---- B-3 881561BQ6 D CCC Ratings Affirmed Bear Stearns Second Lien Trust 2007-SV1 Series 2007-SV1 Class CUSIP Rating ----- ----- ------ M-1 07401UAC7 CCC M-2 07401UAD5 CCC M-3 07401UAE3 CCC MASTR Second Lien Trust 2005-1 Series 2005-1 Class CUSIP Rating ----- ----- ------ A 57644DAA1 AAA Merrill Lynch First Franklin Mortgage Loan Trust Series 2007-A Series 2007-A Class CUSIP Rating ----- ----- ------ A-1 59025QAA7 B A-2 59025QAB5 B A-3 59025QAC3 B M-1 59025QAD1 CCC SACO I Trust 2005-5 Series 2005-5 Class CUSIP Rating ----- ----- ------ I-A 785778FY2 AAA Structured Asset Securities Corp. Mortgage Loan Trust 2005-S7 Series 2005-S7 Class CUSIP Rating ----- ----- ------ A2 863576DT8 AAA Structured Asset Securities Corp. Mortgage Loan Trust 2006-S2 Series 2006-S2 Class CUSIP Rating ----- ----- ------ A1 86359FAA0 AAA A2 86359FAB8 AAA Terwin Mortgage Trust Series TMTS 2003-5SL Series 2003-5SL Class CUSIP Rating ----- ----- ------ B-1 881561BM5 BBB B-2 881561BP8 BBB- Other Outstanding Rating ACE Securities Corp. Home Equity Loan Trust Series 2007-SL1 Series 2007-SL1 Class CUSIP Rating ----- ----- ------ A-2 00442FAB8 AAA/Watch Neg * S&P Report Says 868 Issuers Poised for Downgrades Globally ------------------------------------------------------------ Currently, 868 issuers are poised for downgrades, the highest level in three years and a surge of 82 issuers over the past month, said an article published by Standard & Poor's. By comparison, this month's count is more than double the number reported in November 2007 and nearly double the average for the past 39 months. Furthermore, the number of potential downgrades is more than double the count of those poised for upgrades, a trend that has progressed for roughly 15 months, according to the article, titled "Downgrade Potential Across Credit Grades And Sectors." Potential downgrades are defined as entities that have either a negative outlook or ratings on CreditWatch with negative implications across rating categories 'AAA' to 'B-'. Despite materialized downgrades, the housing and financial sectors continue to show the highest downgrade risk, indicative of further prevalent rating actions if credit conditions continue to deteriorate. Geographically, the U.S. continues to top the list of potential bond downgrades, with roughly one-quarter of current ratings showing downside risk. The onset of a recession corroborates an increasing propensity for downgrades, characterized by a gradual pickup in negative bias. "The increase in potential bond downgrades in the 2001 recession was accompanied by an expected decline in the number of those poised for upgrades," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "This trend is echoed today, but with a more prolonged, less steep curve, indicative of a slower progression into a new credit cycle." * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Nov. 27, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Arizona Chapter Meeting - Chris Kaup TBD, Phoenix, Arizona Contact: www.turnaround.org Dec. 3, 2008 TURNAROUND MANAGEMENT ASSOCIATION Holiday Party McCormick & Schmick's, Las Vegas, Nevada Contact: 702-952-2480 or www.turnaround.org Dec. 3, 2008 TURNAROUND MANAGEMENT ASSOCIATION Christmas Function Terminal City Club, Vancouver, British Columbia Contact: 503-768-4299 or www.turnaround.org Dec. 3-5, 2008 AMERICAN BANKRUPTCY INSTITUTE 20th Annual Winter Leadership Conference Westin La Paloma Resort & Spa Tucson, Arizona Contact: http://www.abiworld.org/ Dec. 8, 2008 TURNAROUND MANAGEMENT ASSOCIATION Holiday Gathering TBD, Long Island, New York Contact: 631-251-6296 or www.turnaround.org Dec. 9, 2008 TURNAROUND MANAGEMENT ASSOCIATION Holiday MIxer Washington Athletic Club, Seattle, Washington Contact: 503-768-4299 or www.turnaround.org Dec. 11, 2008 TURNAROUND MANAGEMENT ASSOCIATION Holiday MIxer University Club, Portland, Oregon Contact: 503-768-4299 or www.turnaround.org Dec. 18, 2008 TURNAROUND MANAGEMENT ASSOCIATION Holiday MIxer TBD, Phoenix, Arizona Contact: 623-581-3597 or www.turnaround.org Dec. 31, 2008 TURNAROUND MANAGEMENT ASSOCIATION Sponsorships - Annual Golf Outing, Various Events TBA, New Jersey Contact: 908-575-7333 or www.turnaround.org Jan. 21-22, 2009 TURNAROUND MANAGEMENT ASSOCIATION Corporate Governance Meetings Bellagio, Las Vegas, Nevada Contact: www.turnaround.org Jan. 22-23, 2009 TURNAROUND MANAGEMENT ASSOCIATION Distressed Investing Conference Bellagio, Las Vegas, Nevada Contact: www.turnaround.org Jan. 22-23, 2009 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, Colorado Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 5-7, 2009 AMERICAN BANKRUPTCY INSTITUTE Caribbean Insolvency Symposium Westin Casurina, Grand Cayman Island, AL Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 25-27, 2009 AMERICAN BANKRUPTCY INSTITUTE Valcon Four Seasons, Las Vegas, Nevada Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 13, 2009 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Beverly Wilshire, Beverly Hills, California Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 17-18, 2009 NATIONAL ASSOCIATION OFBANKRUPTCY TRUSTEES NABT Spring Seminar The Peabody, Orlando, Florida Contact: http://www.nabt.com/ Apr. 20, 2009 AMERICAN BANKRUPTCY INSTITUTE Consumer Bankruptcy Conference John Adams Courthouse, Boston, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 27-28, 2009 TURNAROUND MANAGEMENT ASSOCIATION Corporate Governance Meetings Intercontinental Hotel, Chicago, Illinois Contact: www.turnaround.org Apr. 28-30, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Intercontinental Hotel, Chicago, Illinois Contact: www.turnaround.org May 7-10, 2009 AMERICAN BANKRUPTCY INSTITUTE 27th Annual Spring Meeting Gaylord National Resort & Convention Center National Harbor, Maryland Contact: http://www.abiworld.org/ May 14-16, 2009 ALI-ABA Chapter 11 Business Reorganizations Langham Hotel, Boston, Massachusetts Contact: http://www.ali-aba.org June 11-13, 2009 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ June 21-24, 2009 INTERNATIONAL ASSOCIATION OF RESTRUCTURING, INSOLVENCY & BANKRUPTCY PROFESSIONALS 8th International World Congress TBA Contact: http://www.insol.org/ July 16-19, 2009 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Mt. Washington Inn Bretton Woods, New Hampshire Contact: http://www.abiworld.org/ Sept. 10-12, 2009 AMERICAN BANKRUPTCY INSTITUTE 17th Annual Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Oct. 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ Dec. 3-5, 2009 AMERICAN BANKRUPTCY INSTITUTE 21st Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 15-18, 2010 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 17-20, 2010 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 7-10, 2010 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 5-7, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ BEARD AUDIO CONFERENCES 2006 BACPA Library Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES BAPCPA One Year On: Lessons Learned and Outlook Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Calpine's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Carve-Out Agreements for Unsecured Creditors Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changes to Cross-Border Insolvencies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changing Roles & Responsibilities of Creditors' Committees Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES China\u2019s New Enterprise Bankruptcy Law Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Clash of the Titans -- Bankruptcy vs. IP Rights Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Coming Changes in Small Business Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Corporate Bankruptcy Bootcamp: A Nuts & Bolts Primer for Navigating the Restructuring Process Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Dana's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Deepening Insolvency \u2013 Widening Controversy: Current Risks, Latest Decisions Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Diagnosing Problems in Troubled Companies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Claims Trading Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Market Opportunities Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Real Estate under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Employee Benefits and Executive Compensation under the New Code Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Equitable Subordination and Recharacterization Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Examining the Examiners: Pros and Cons of Using Examiners in Chapter 11 Proceedings Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Fundamentals of Corporate Bankruptcy and Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Handling Complex Chapter 11 Restructuring Issues Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Healthcare Bankruptcy Reforms Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Homestead Exemptions under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Hospitals in Crisis: The Insolvency Crisis Plaguing Hospitals Across the U.S. Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES IP Rights In Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES KERPs and Bonuses under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES New 'Red Flag' Identity Theft Rules Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Non-Traditional Lenders and the Impact of Loan-to-Own Strategies on the Restructuring Process Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Partnerships in Bankruptcy: Unwinding The Deal Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Privacy Rights, Protections & Pitfalls in Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Real Estate Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Reverse Mergers\u2014the New IPO? Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Second Lien Financings and Intercreditor Agreements Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Surviving the Digital Deluge: Best Practices in E-Discovery and Records Management for Bankruptcy Practitioners and Litigators Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Technology as a Competitive Advantage For Today\u2019s Legal Processes Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES The Battle of Green & Red: Effect of Bankruptcy on Obligations to Clean Up Contaminated Property Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES The Subprime Sector Meltdown: Legal Developments and Latest Opportunities Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Twenty-Day Claims Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Using Virtual Data Rooms to Expedite Corporate Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Using Virtual Data Rooms to Expedite M&A and Insolvency Proceedings Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Validating Distressed Security Portfolios: Year-End Price Validation and Risk Assessment Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES When Tenants File -- A Landlord's BAPCPA Survival Guide Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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. Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Luke Caballos, Sheryl Joy P. Olano, Carlo Fernandez, 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 ***