/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090205.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, February 5, 2009, Vol. 13, No. 35 Headlines ADVANTAGE RENT: Ford & Chrysler Sue Owner for Non-Payment of Debt AMERICAN AXLE: Posts $1.2 Billion Net Loss in 2008 AMERICAN FIBERS: Court Extends Plan Filing Deadline to April 21 AMERICREDIT CORP: S&P Downgrades Counterparty Rating to 'B+' APPLETON PAPERS: Moody's Cuts Rating to 'B2' on Liquidity Concerns APPLETON PAPERS: S&P Downgrades Corporate Credit Rating to 'B' ARG ENTERPRISES: Gets Final OK to Use $71.5MM Pecus DIP Facility ARG ENTERPRISES: Wants to Hire Landis Rath as Counsel ASAT HOLDINGS: In Talks With Lenders to Restructure Obligations AUTOBACS STRAUSS: Files for Chapter 11 Bankruptcy in Delaware AUTOBACS STRAUSS: Case Summary & 30 Largest Unsecured Creditors AUTOBACS USA: Case Summary & 20 Largest Unsecured Creditors BERNARD L. MADOFF: Seeks to Hire Counsel for U.K. Proceedings BERNARD L. MADOFF: Investigator Says SEC Ignored Fraud Warnings BEXAR COUNTY: Moody's Affirms 'Caa1' Rating on 2001A Bonds BHASIN ARVIND: Involuntary Chapter 11 Case Summary BOWNETREE LLC: Files Amended Disclosure Statement; Plan to Follow BONTEN MEDIA: S&P Raises Corp. Credit Rating to 'B-' From 'SD' BRIGHTER MINDS: Unit Files for Chapter 11 Bankruptcy BROADSTRIPE LLC: Seeks to Hire Ashby & Geddes as Counsel BURGER PACIFIC: Voluntary Chapter 11 Case Summary CADENCE INNOVATION: Court Stretches Exclusive Periods to April 23 CADENCE INNOVATION: Pens Settlement with GM on Tooling Dispute CADENCE INNOVATION: Begins Review of Leases; Rejects 17 Deals CADENCE INNOVATION: TA Systems Files Lien Foreclosure Suit CANWEST GLOBAL: Gets $50.7MM in Hollinger Arbitration Decision CANWEST GLOBAL: Discloses Changes to Unit's Sr. Credit Facility CITGO PETROLEUM: S&P Puts 'BB' Rating on Negative Watch COFFEYVILLE RESOURCES: S&P Affirms 'B' Corporate Credit Rating CCM MERGER: S&P Affirms Corporate Credit Rating at 'B-' CHESAPEAKE CORP: Committee Taps Greenberg Traurig as Counsel CHESAPEAKE CORP: Committee Taps Gordian as Financial Advisor CHESAPEAKE CORP: Gets Final OK to Use $37.1MM Wachovia Facility CHRYSLER FINANCIAL: Sues Dennis Hecker for Non-Payment of $550MM COMFORT CO: Terminates Dan Marino Endorsement Agreement CONSTAR INTERNATIONAL: Seeks to Pay $25.5MM to 3 Suppliers CONTECH LLC: Wants to Hire Paul Hasting as Counsel CROSSROADS FORD: Shuts Down; Lays Off 55 Employees DECODE GENETICS: Sells Auction Rate Securities to NBI for $11MM DOLE FOOD: Discloses $130 Million Asset Sale Transactions EFFICIENT ENGINEERS: Case Summary & 20 Largest Unsec. Creditors ELECTROGLAS INC: Gets NASDAQ Delisting Notice; Hearing Requested EMERSON RE: S&P Withdraws 'BB' Rating on Series D Bank Loan ENNIS HOMES: Family Owned Homebuilder Files for Chapter 11 ENNIS HOMES: Case Summary & 20 Largest Unsecured Creditors EOS AIRLINES: Court Confirms Joint Plan of Liquidation ESCO CORPORATION: Moody's Affirms 'B1' Corporate Family Rating EZ LUBE: Committee Wants to Sue Secured Lenders for Huge Debt FAIRCHILD SEMICONDUCTOR: S&P Cuts Corp. Credit Rating to 'BB-' FERRO CORP: S&P Cuts Rating to 'B-' After Q4 Guidance FORD CREDIT: Fitch Affirms 'BB' Ratings on Class D Notes FINAL ANALYSIS: Wants to Sell Excess Furniture for $4,000 FLANNERY CONSTRUCTION: Files for Chapter 7 Liquidation FLYING J: Will Lay Off 200 Employees FRANKLIN PIERCE: Moody's Keeps 'Ba3'; Removes from Rating Review FREDDIE MAC: Prepares Fin. Statements for Periods ended Dec. 31 GENERAL MOTORS: Dragged in TA Systems' Suit Against Cadence GENERAL MOTORS: Pens Settlement with Cadence on Tooling Dispute GREYHAWK FUNDING: Moody's Reviews Rating on Asset-Backed Notes HAWAIIAN TELCOM: Gets Green Light to Tap Kirkland as Lead Counsel HAWAIIAN TELCOM: Gets Court Permission to Hire Cades Schutte HAWAIIAN TELCOM: Can Employ Ernst & Young As Tax Advisors HEARTLAND AUTOMOTIVE: Emerges from Chapter 11 Bankruptcy IDEARC INC: S&P Junks Corporate Credit Rating From 'B-' INCENTRA SOLUTIONS: Seeks Chapter 11 to Complete 363 Asset Sale INDALEX HOLDINGS: Misses Payment; Grace Period Expires March 4 INDALEX HOLDING: Nonpayment of Interest Cues S&P's 'D' Rating INTERTAPE POLYMER: Receives Listing Standard Notice From NYSE IPS CORP: S&P Raises Issue-Level Rating on 2014 Notes to 'B-' INCENTRA SOLUTIONS: Case Summary & 35 Largest Unsecured Creditors JOYSTAR/TRAVELSTAR: Chapter 7 Case May be Converted to Chapter 11 KING PHARMACEUTICALS: Will Lay Off 22% of Workforce LAKE AT LAS VEGAS: Court Extends Plan Filing Deadline to March 17 LANDAMERICA FINANCIAL: Will Close; No Severance Pay for Workers LANDRY'S RESTAURANTS: Moody's Reviews 'Caa1' Corporate Rating LEHMAN BROS: Will Bolster Select Real Estate Businesses LEHMAN BROTHERS: Examiner Wants to Issue Subpoenas to Execs. MAN GLENWOOD: Fitch Junks Rating on $43.750 Mil. Notes from 'BBB' MASHANTUCKET PEQUOT: Moody's Cuts Foxwoods Casino Rating to 'Ba3' MERCEDES HOMES: Seeks Squire Sanders as Attorney MERVYN'S LLC: Asks Court for June 24 Extension of Removal Period MERVYN'S LLC: Stakeholders Resolve Chapter 7 Conversion Dispute MERVYN'S LLC: Seeks to File Wind Down Budget Under Seal MGM MIRAGE: Moody's Matches S&P With Downgrade to 'B1' MIDWAY GAMES: Appoints Matthew Booty as Chairman MIRANT CORP: Appeals Court Affirms Payment to Shareholders' Lawyer MODERN METAL: To Sell Bronson Division to Rival, Absent Other Bids MOHEGAN TRIBAL: Moody's Downgrades Rating to B2; Matches S&P's MONTERRA ENTERPRISES: U.S. Trustee Moves Court to Dismiss Case MORRIS PUBLISHING: Forbearance & Grace Period Expire March 3 MORRIS PUBLISHING: Nonpayment of Interest Cues S&P's 'D' Rating MOTOROLA INC: Posts $3.6 Billion Fourth Quarter GAAP Net Loss MOTOROLA INC: Must Scale Back Cellphone Business, Investors Say MOVIE GALLERY: Hearing on Blackstone's $2.8MM Fees Postponed MOVIE GALLERY: Merges Oregon & Tennessee Distribution Centers MOVIE GALLERY: Gets Sept. 30 Extension to Review Claims NCI BUILDING: S&P Changes Outlook to Stable; Affirms 'BB' Rating NELSON EDUCATION: Moody's Affirms 'B2' Corporate Family Rating NEW ENGLAND: Moody's Affirms 'Ba2' Rating on $13.1 Mil. Bonds NON-INVASIVE MONITORING: Completes Sale of 1,400 Series D Shares NORTEL NETWORKS: Sun Micro & Polycom Seek Inventory of Goods NORTEL NETWORKS: Firms Received $1.6 Million Prior to Bankruptcy NORTHEAST BIOFUELS: Court Okays Sale of 846,000 Bushels of Corn NOVA CHEMICALS: Liquidity Issues Cue S&P's Junk Corporate Rating PALM INC: Donna Dubinsky Offers to Resign From Board PAUL REINHART: Seeks April 13 Plan Deadline; In Talks w/ Creditors PHENIX CFO: Fitch Downgrades Rating on EUR21 Mil. Notes to 'CC' RAILPOWER TECH: Files for Bankruptcy Under CCAA, U.S. Chapter 15 REFCO INC: Court Approves Deal Resolving Reuters' Claims REFCO INC: Q4 2008 Post-Confirmation Quarterly Report Filed RIGHT START: Case Summary & 30 Largest Unsecured Creditors RMF FOUR: Fitch Downgrades Rating on EUR16.450 Mil. Notes to 'CC' RT. 41: Files for Chapter 11 Bankruptcy Protection SEMGROUP LP: Gets Permission to Ink Transactions with CME Group SEMGROUP LP: Producers Wants to Recover Prepetition Deliveries SEMGROUP LP: Balks at Davis' Request for Contract Decision SEMGROUP LP: Semcrude Agrees to Reject W.H. Davis Swap Agreement SHORES OF PANAMA: Lender Forces Sale of Condominiums SMURFIT-STONE: Metso Sees EUR3 million in Receivables SOLAR COSMETIC: Liquidating Plan Goes to Creditors for Voting SOVEREIGN BANCORP: S&P Upgrades Preferred Stock Rating from 'Ba2' SPANSION INC: Names John Kispert as CEO & Director ST. LAWRENCE HOMES: Seeks Chapter 11 Protection from Creditors STATION CASINOS: Misses $14.6MM Bond Payment; Seeks Plan Support TD AMERITRADE: S&P Raises Counterparty Credit Rating From 'BB' TOUSA INC: Asks Court to Lifty Stay to Pursue LLV Action TOUSA INC: Gets Go-Signal to Enter Into Cambria Marketing Deal TRIBUNE CO: Court Approves Severance Arrangements TRIBUNE CO: Court OKs Non-Insider Incentive Programs TROPICANA ENTERTAINMENT: Conservator Delays Sale of Casino UNITED REFINING: S&P Puts Negative Outlook on 'B' Rating VERSANT PROPERTIES: Cary Harrison Accuses Robert Richey of Fraud VERSO TECHNOLOGIES: Plan Filing Period Extended to February 27 VERSO TECHNOLOGIES: Wants to Sell Certain Patents at Auction Sale VERSO TECHNOLOGIES: Wants to Sell Verso's US Patents for $90,000 WACHOVIA AUTO: Fitch Affirms 'BB-' Rating on Class E Notes WATERFORD GAMING: Moody's Reviews 'Caa1' Rating for Likely Cut WATERFORD GAMING: S&P Downgrades Issuer Credit Rating to 'B' WAVERLY GARDENS: Wants Plan Filing Period Extended to April 30 WESTERN REFINING: S&P Puts Negative Outlook on 'B+' Rating WHITEHALL JEWELERS: Plan Filing Period Extended to April 20 WHITEHALL JEWELERS: Wants to Sell Unclaimed Jewelry Repairs WORLDSPACE INC: Asks Court's Nod to Sell Substantially All Assets XENOMICS INC: Extends Maturity of Convertible Debentures YRC WORLDWIDE: Introduces YRC Brand Name for Integrated Network YRC WORLDWIDE: Posts $974,392,000 Net Loss for Year Ended Dec. 31 ZOO HF: Fitch Junks Rating on Three Classes of Notes * FDIC Eyes Over $40 Billion Losses to Deposit Insurance Fund * Consumer Spending and Personal Income Fall Again * Record Homes Vacant at End of 2008, Home Resales Rise in Dec. * Realtors Welcome Renewed Efforts Towards Housing Stabilization * Chapter 11 Cases With Assets and Liabilities Below $1,000,000 ********* ADVANTAGE RENT: Ford & Chrysler Sue Owner for Non-Payment of Debt ----------------------------------------------------------------- Doron Levin at Bloomberg News reports that Chrysler Financial has sued Advantage Rent-a-Car Inc. owner Dennis Hecker back for failing to repay $550 million in loans. As reported by the Troubled Company Reporter on Nov. 17, 2008, Denny Hecker filed a lawsuit against Chrysler Financial for freezing his credit, saying that the company "suddenly, without notice, arbitrarily, and in bad faith" froze his credit, and because of this, he and his companies were unable to purchase new cars, or to operate his rental car business. Bloomberg relates that Chrysler Financial then sued Mr. Hecker on January 23 in a District Court in Hennepin County, Minnesota, claiming that Mr. Hecker breached contracts to pay back the funding. According to Bloomberg, Mr. Hecker used loans from Chrysler Financial to purchase vehicles for his dealerships. When Chrysler Financial cancelled Mr. Hecker's credit line, Mr. Hecker wasn't able to pay Ford Motor Co. for Ford vehicles he had sold, Bloomberg states, citing Tim Thornton, an attorney of Briggs & Morgan who is representing Mr. Hecker. Ford, according to Bloomberg, filed a lawsuit against Mr. Hecker in January in the U.S. District Court in Minneapolis, claiming that his now closed Ford-Lincoln-Mercury dealership hasn't paid its $3.1 million debt to the automaker. "We were not paid for vehicles that were purchased from us. We do not feel that we are in a position to comment or speculate on the cause or reason that the payments were not made," Bloomberg quoted Ford spokesperson Marcey Evans as saying. About Advantage Rent Advantage Rent A Car -- http://www.advantage.com/-- is a car rental company with 50 locations in the U.S. and 130 international affiliate locations. As reported by the Troubled Company Reporter on Dec. 10, 2008, Advantage Rent A Car filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Minnesota. AMERICAN AXLE: Posts $1.2 Billion Net Loss in 2008 -------------------------------------------------- American Axle & Manufacturing Holdings, Inc., which is traded as AXL on the NYSE, reported on January 30, 2009, its financial results for the fourth quarter and full year 2008. Full Year 2008 Results * Full year sales of $2.1 billion * Net loss of $1.2 billion, or $23.73 per share * AAM's full year results reflect the adverse impact of approximately $1.0 billion of special charges, asset impairments and other non-recurring operating costs; approximately three-quarters of these charges and costs were non-cash in the period and relate to the implementation of new labor agreements, hourly and salaried attrition program activity, plant closures and other actions to rationalize capacity, redeploy underutilized assets and align AAM's business to current and projected market requirements * 43% year-over-year decline in total light truck production volumes as compared to the full year 2007 * Content-per-vehicle of $1,391, approximately 8% higher than the previous year * Non-GM sales of $544.6 million, or 26% of total net sales AAM's results in the fourth quarter of 2008 were a net loss of $112.1 million or $2.17 per share. This compares to a net loss of $26.8 million, or $0.52 per share, in the fourth quarter of 2007. AAM's results in the fourth quarter of 2008 includes a tax expense provision of $69.5 million, primary relating to non-cash charges to establish and adjust valuation allowances on AAM's U.S. and U.K. deferred tax assets. This compares to a tax benefit of $34.5 million in the fourth quarter of 2007. AAM's net loss for the full year 2008 was $1.2 billion, or $23.73 per share. This compares to net earnings of $37.0 million, or $0.70 per share, in 2007. "The year 2008 was a turbulent and transformational year for AAM," said AAM Co-Founder, Chairman of the Board & Chief Executive Officer Richard E. Dauch. "The U.S. automotive industry has been pushed to the verge of collapse due to numerous adverse market, economic and competitive forces. As a result, 2008 proved to be a brutally difficult and demanding year for the entire domestic automotive industry. AAM accepted these challenges head-on and is making the hard, necessary and structural changes to return to profitability. "In 2008, we achieved historic gains in the market cost competitiveness and operating flexibility of AAM's U.S. manufacturing base. We developed and implemented a comprehensive restructuring, resizing and profit recovery plan designed to increase capacity utilization and rebuild AAM's balance sheet strength. We continued to invest in AAM's advanced product, process and systems technology and expanded AAM's global manufacturing and sourcing footprint. We provided exceptional value to our customers through AAM's outstanding daily performance on product development, quality, reliability, warranty, delivery and launch support. We grew AAM's new business backlog to $1.4 billion by enhancing customer relationships around the world. These actions position AAM to successfully manage through this difficult period and emerge as stronger and more balanced company for the future." In 2008, AAM recorded approximately $1 billion of special charges, asset impairments and other non-recurring operating costs. Of this total, approximately three-quarters of these charges and costs were non-cash in the period. These charges and costs are: (in millions) EPS Impact ------------- ---------- Asset impairments, lease accruals and indirect inventory write-downs $603.7 $11.70 Attrition programs and benefit reductions for U.S. hourly and salary associates 206.9 4.01 Accelerated Buydown Program (BDP) expense 51.9 1.01 Lump-sum signing bonus paid to UAW and IAM associates at original U.S. locations 19.5 0.38 Accrual for Supplemental Unemployment Benefits (SUB) 18.0 0.35 Valuation allowance for deferred tax assets 62.7 1.21 Other (primarily plant closure accruals and asset redeployment costs) 22.7 0.44 Total special charges and non-recurring operating costs $985.4 $19.10 * Asset impairment charges, operating lease accruals and indirect inventory write-downs of $603.7 million. Approximately half of these charges relate to the closure of three of AAM's original U.S. locations (including the previously idled driveline assembly facility in Buffalo, New York and two forging facilities: one in Tonawanda, New York and the other in Detroit, Michigan) and the idling of portions of AAM's driveline assembly facility in Detroit, Michigan. The remaining portion of the asset impairment charges primarily results from the impact of structural changes in the level of market demand and accelerated reductions in customer production volumes anticipated for the major North American light truck and SUV product programs AAM currently supports for GM in the Detroit and Three Rivers, Michigan driveline assembly facilities. * Special charges of $206.9 million relating to U.S. hourly and salaried attrition programs and benefit reductions, including pension and other postretirement benefit curtailments and special and contractual termination benefits. Included in this activity are charges relating to plant closing agreements, voluntary elections under the Special Separation Program (SSP) offered to UAW-represented associates at AAM's original U.S. locations and salaried workforce reductions. * Special charge of $51.9 million relating to the total estimated Buydown Program (BDP) payments to those associates that are expected to be permanently idled throughout the new labor agreements. The BDP was applicable for associates that did not elect to participate in the SSP. Under the BDP, AAM will make three annual lump-sum payments to associates in exchange for, among other things, a base wage decrease. * Special charges of $19.5 million related to lump-sum signing bonuses paid to AAM's UAW and IAM -represented associates upon ratification of the new labor agreements at the original U.S. locations. * Special charge of $18.0 million for Supplemental Unemployment Benefits (SUB) estimated to be payable to UAW- represented associates during the term of the new labor agreements at AAM's original U.S. locations. * Special charges of $62.7 million to establish valuation allowances on AAM's U.S. and U.K. deferred tax assets as required under SFAS No. 109, Accounting for Income Taxes. * Other special charges and non-operating costs of $22.7 million, primarily relating to costs incurred in connection with plant closings, including costs to redeploy machinery and equipment to support the launch of AAM's $1.4 billion new business backlog and reduce future capital spending. In 2007, AAM recorded special charges and non-recurring operating costs related to a voluntary separation program at the Buffalo Gear, Axle & Linkage facility in Buffalo, New York. Production at this facility was idled in December 2007. Also in 2007, AAM incurred additional special charges and non-recurring operating costs relating to other hourly and salaried attrition programs, asset impairments, debt refinancing costs and the redeployment of machinery and equipment and other actions to rationalize underutilized capacity. In total, AAM's 2007 results reflect the impact of charges amounting to $93.9 million, or $1.18 per share, relating to these items, including pension and other postretirement benefit curtailments and special termination benefits. In the fourth quarter of 2007, AAM recorded $70.6 million, or $0.92 per share, of these total special charges and non-recurring operating costs. Net sales for the full year 2008 were $2.1 billion as compared to $3.2 billion in 2007. Customer production volumes for the full- size truck and SUV programs AAM currently supports for GM and Chrysler were down approximately 41% in 2008 as compared to the prior year. AAM estimates that customer production volumes for its mid-sized truck and SUV programs were down approximately 53% in 2008 on a year-over-year basis. Non-GM sales represented 26% of total sales in 2008. Net sales in the fourth quarter of 2008 were $503.0 million as compared to $755.2 million in the fourth quarter of 2007. Customer production volumes for the full-size truck and SUV programs AAM currently supports for GM and Chrysler were down approximately 37% in the fourth quarter of 2008 as compared to the prior year. AAM estimates that customer production volumes for its mid-sized truck and SUV programs were down approximately 71% in the fourth quarter of 2008 on a year-over-year basis. Non-GM sales represented 22% of total sales in the fourth quarter of 2008. AAM's content-per-vehicle is measured by the dollar value of its product sales supporting GM's North American truck and SUV platforms and Chrysler's heavy duty Dodge Ram pickup trucks. For the full year 2008, AAM's content-per-vehicle increased approximately 8% to $1,391 as compared to $1,293 in 2007. AAM's SG&A spending for the full year 2008 was $185.4 million as compared to $202.8 million in 2007. AAM's R&D spending for the full year 2008 was approximately $85.0 million as compared to $80.4 million in 2007. AAM defines free cash flow to be net cash provided by (or used in) operating activities less capital expenditures net of proceeds from the sales of equipment and dividends paid. Net cash used by operating activities for the full year 2008 was $163.1 million as compared to net cash provided by operating activities of $367.9 in 2007. Capital spending and deposits for acquisition of property and equipment, net of proceeds from the sales of equipment for the full year 2008 was $143.9 million as compared to $186.5 million in 2007. Reflecting the impact of this activity and dividend payments of $18.3 million, AAM's free cash flow use of $325.3 million in 2008 compared to an inflow of $149.6 million in 2007. As of December 31, 2008, the company's balance sheet showed total assets of $2 billion and total liabilities of $2.4 billion, resulting in total stockholders' deficit of $432.1 million. A full-text copy of the company's press release and selected financial data is available for free at: http://researcharchives.com/t/s?391a About American Axle Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE: AXL) -- http://www.aam.com/ -- is a world leader in the manufacture, engineering, design and validation of driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for trucks, sport utility vehicles, passenger cars and crossover utility vehicles. In addition to locations in the United States (Michigan, New York, Ohio and Indiana), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea, Thailand and the United Kingdom. * * * The Troubled Company Reporter reported on Jan. 29, 2009, that American Bankruptcy Institute reported that Bankruptcy Research firm KDP Investment Advisors said American Axle Manufacturing Holdings Inc. is at high risk of filing for bankruptcy in the next 12 months as declining auto production further pressures the supplier's earnings. The TCR, on Jan. 14, 2009, also reported that Standard & Poor's Ratings Services has lowered its corporate credit rating on Detroit-based American Axle Manufacturing & Holdings Inc. to 'CCC+' from 'B' and removed all the ratings from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. The outlook is negative. At the same time, S&P also lowered its issue-level ratings on the company's debt. AMERICAN FIBERS: Court Extends Plan Filing Deadline to April 21 --------------------------------------------------------------- AFY Holding Company and its wholly owned subsidiary, American Fibers and Yarns Company, won approval from the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive period to file a Chapter 11 plan through and including April 21, 2009, and their exclusive period to solicit acceptances of that plan to June 18, 2009. The Debtors told the Court that they have yet to complete discussions with the Official Committee of Unsecured Creditors regarding the terms of a consensual Chapter 11 plan and still have a variety of other tasks to complete before it can propose a meaningful plan. These tasks include the sale of their Afton, Virginia facility and certain finished goods and raw materials inventory, the resolution of certain adversary proceeds to collect outstanding accounts receivables, and the review and evaluation of claims which must be considered before any plan or plans can be formulated. The Debtors relate that the requested extension will not prejudice the legitimate interests of creditors, as the Debtors continue to pay their debts as they fall due. About American Fibers Headquartered in Chapel Hill, North Carolina, American Fibers and Yarns Company -- http://www.afyarns.com/-- manufactures solution- dyed Polypropylene yarns in its Bainbridge, Georgia and Afton, Virginia production facilities for distribution throughout the United States. American Fibers is 100% owned by AFY Holding Company. On Sept. 22, 2008, AFY Holding and American Fibers and Yarns filed voluntary petitions seeking Chapter 11 relief (Bankr. D. Del. Lead Case No. 08-12175). Edward J. Kosmowski, Esq., Michael R. Nestor, Esq., Robert F. Poppiti, Jr., Esq., and Nathan D. Grow, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represent the Debtors as counsel. RAS Management Advisors, LLC serves as the Debtors' restructuring advisors. Epiq Bankruptcy Solutions, LLC serves as the Debtors' claims, noticing and balloting agent. The U.S. Trustee for Region 3 appointed creditors to serve on an Official Committee of Unsecured Creditors. Kenneth A. Rosen, Esq., Sharon L. Levine, Esq., Eric H. Horn, Esq., and Sean E. Quigley, Esq., at Lowenstein Sandler PC, represents the Debtors as counsel. William P. Bowden, Esq., Don A. Beskrone, Esq, and Amanda M. Winfree, Esq., at Ashby & Geddes, P.A., represent the Committee as Delaware counsel. When the Debtors sought bankruptcy protection from their creditors, they listed assets of between $10 million and $50 million and debts of between $10 million and $50 million. AMERICREDIT CORP: S&P Downgrades Counterparty Rating to 'B+' ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its long-term counterparty credit rating on AmeriCredit Corp. to 'B+' from 'BB-' and its unsecured credit rating to 'B' from 'B+'. The ratings remain on CreditWatch negative, where they were placed on Oct. 29, 2008. Resolution of the CreditWatch listing will be partially dependent on AmeriCredit's success in obtaining a waiver and an amendment from its warehouse lenders to address its expected covenant violation. S&P will also continue to evaluate AmeriCredit's asset quality, financial flexibility, and liquidity position in light of current economic and credit market conditions. This CreditWatch listing will be resolved within 90 days. "The ratings downgrade reflects AmeriCredit's weakening asset quality, as evidenced by its net losses in both the three- and six-month periods ended Dec. 31, 2008. Another concern is AmeriCredit's liquidity position, given numerous possible cash calls that S&P expects to affect liquidity over the 2009 calendar year," said Standard & Poor's credit analyst Rian Pressman. AmeriCredit's reliance on the asset-backed securities markets for long-term funding is also a limiting ratings factor, given continued difficult credit market conditions and the limitations this is placing on AmeriCredit's financial flexibility. For the three- and six-month periods ended Dec. 31, 2008, AmeriCredit reported net losses of $25.6 million and $27.2 million, respectively, exceeding S&P's expectations. The losses were primarily driven by increased credit costs, as net charge-offs increased to 9.5% (annualized) of finance receivables for AmeriCredit's second fiscal quarter of 2009--260 basis points (bps) worse than the comparable period in fiscal 2008. (The company's shrinking receivables portfolio drove about 100 bps of the increase.) Recovery rates, which dropped to a historically low 37% of repossessed charge-offs, were also a significant aggravating factor. S&P expects losses will continue to accelerate given rising unemployment, which has reached more than 10% in certain states. Loans delinquent 31 days or more (12% of ending finance receivables) are indicative of this higher loss potential. S&P also notes that delinquencies would be higher if not for AmeriCredit's intensified use of loan payment deferrals, which were granted to borrowers representing more than 8% of average finance receivables. While S&P acknowledges that the use of loan payment deferrals is economically advantageous to AmeriCredit (incremental payments collected more than offset the additional depreciation taken on the vehicles), it also delays the recognition of eventual losses. AmeriCredit was able to execute new transactions through 2008, unlike most financial companies that are reliant on the ABS markets for long-term funding. This was partly accomplished through the use of a forward ABS sales agreement with Deutsche Bank, which was terminated in December 2008. S&P views maintenance of ABS market access to be a critical ratings factor; however, actions taken by the company have mitigated S&P's near- term concerns. Because the company financed about $1.3 billion in receivables via ABS transactions in its second fiscal quarter, it has significantly reduced the balance outstanding on its master warehouse facility, which is subject to a 364-day aging provision, among other covenants. In addition, AmeriCredit has been originating only about $100 million of incremental receivables per month. Therefore, management believes it will not need to execute another ABS transaction until late in calendar year 2009. S&P is also cautiously optimistic that AmeriCredit may be able to take advantage of the Term ABS Loan Facility established by the Federal Reserve. S&P does note, however, that because of the senior/subordinated structure of AmeriCredit's ABS transactions, only the 'AAA' rated piece would be eligible for the program as currently stipulated. Lastly, management announced that it expects to be in violation of the net loss covenant attached to its warehouse lines at the end of January 2009. "Although management expects to obtain a temporary waiver for January and an amendment to adjust the covenant by the end of February, in a worse case scenario, the lenders could declare AmeriCredit in default, therefore accelerating the debt and foreclosing on the collateral. This would also trigger a cross-default in AmeriCredit's unsecured and convertible debt, as well as certain securitization transactions. While S&P doesn't see this outcome as likely, the resolution of this CreditWatch listing will be dependent in part on management's ability to successfully remedy the situation," added Mr. Pressman. APPLETON PAPERS: Moody's Cuts Rating to 'B2' on Liquidity Concerns ------------------------------------------------------------------ Moody's Investors Service downgraded Appleton Papers Inc.'s corporate family rating to B2 from B1 and its speculative grade liquidity rating to SGL-4 from SGL-3. The company's other existing debt ratings were also downgraded -- refer to the list below. All long-term ratings were placed on review for possible further downgrade. The downgrade was prompted by Moody's expectation of weak operating performance due to difficult market conditions, lower volumes and prices, and margin erosion, all potentially leading to modest cash flow and heightened leverage. The review is focused on Appleton's liquidity as 1) revolving credit facility availability is limited and may diminish and 2) credit facility financial covenants may be pressured. In 2008, the company increased revolver outstandings to cover higher capital expenditures, environmental payments, pension contributions, and employee stock ownership requirements. The review will further examine whether the company's credit profile going forward will remain supportive of its current B2 corporate family rating. In order to fully consider these matters, Moody's will look to clarify and review 1) the fourth quarter 2008 operating results, 2) the 2009 business outlook, 3) the likelihood of covenant compliance over the near term and the company's ability to potentially re-negotiate its bank credit agreement and/or financial covenants with its lenders, and 4) the company's financial strategy. Moody's intends to complete this review within the next 45 days. The SGL-4 rating indicates weak liquidity. The company may be required to obtain waivers or amendments to its financial covenants under its credit facility in order to maintain access to its revolver. Moody's expects the company to generate negative free cash flow over the near term and heavily rely on its committed facilities. Ratings Downgraded and On Review For Further Downgrade: -- Corporate family rating downgraded to B2 from B1; -- Senior secured revolving credit facility downgraded to Ba3 (LGD2, 25%) from Ba2 (LGD2, 22%); -- Senior secured term loan B downgraded to Ba3 (LGD2, 25%) from Ba2 (LGD2, 22%); -- Senior unsecured notes downgraded to B3 (LGD4, 68%) from B2 (LGD4, 62%); -- Senior subordinated notes downgraded to Caa1 (LGD5, 90%) from B3 (LGD5, 89%); -- Speculative grade liquidity rating downgraded to SGL-4 from SGL-3 Moody's last rating action was on May 9, 2007 when Appleton's senior secured credit facilities were assigned Ba2 ratings and the corporate family rating was affirmed at B1. Appleton Papers Inc., headquartered in Appleton, Wisconsin, develops and manufactures specialty coated paper products, including carbonless paper, thermal paper, and other niche coated paper products. * * * The Appleton downgrade matches the demotion issued the day before by Standard & Poor's. APPLETON PAPERS: S&P Downgrades Corporate Credit Rating to 'B' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on Appleton Papers Inc., including its corporate credit rating lowered to 'B' from 'BB-'. All ratings, including the issue-level ratings, remain on CreditWatch with negative implications, where they were initially placed on Dec. 5, 2008. "The downgrade stems from our concerns about Appleton's weakening credit measures during a difficult operating environment, its likely tightened liquidity position, and its ability to remain in compliance with its financial covenants over the next several quarters," said Standard & Poor's credit analyst Andy Sookram. "We expect the operating environment will remain challenging through 2009 as consumers continue to rein in discretionary spending in the face of an economic recession. As a result, S&P believes the demand for the company's paper products could decline meaningfully." Currently, the 'B' anticipates that Appleton could experience weaker operating performance in 2009, with the operating margins declining from an average of 14%-16% in the last few years to about 11%-12%. Under this scenario, leverage, as measured by total adjusted debt to EBITDA, could rise to the 6.5x area in 2009. In resolving the CreditWatch listing, S&P will assess management's plans for addressing its financial covenant, in addition to a remedy if applicable, as well as closely monitor operating trends in the next several quarters. ARG ENTERPRISES: Gets Final OK to Use $71.5MM Pecus DIP Facility ---------------------------------------------------------------- The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware authorized ARG Enterprises Inc. and its affiliates to obtain, on a final basis, up to $71.5 million in debtor- in-possession financing under the postpetition financing senior secured superpriority credit agreement dated Jan. 16, 2009, with Pecus ARG Parallel LLC, as administrative and collateral agent. Judge Carey has overruled all unresolved objections to the Debtors' request. Troubled Company Reporter said on Feb. 2, 2009, the Court authorized the Debtors to access $12 million in postpetition financing on the interim basis on Jan. 16, 2009. The Court also authorized the Debtors to use cash collateral to secure repayment of secured loans to the lenders. Summary of certain significant terms and condition of the DIP credit agreement: Maximum Credit: $71.5 million total commitment: approximately $4.836 million to fund Agreed Budget expenses in excess of cash flow; approximately $2.125 million to fund DIP facility expenses and prepetition term and revolver interest; approximately $13.245 million to fund letter of credit obligations; approximately $41.696 million in rolled-up prepetition obligations; and the remainder for future borrowings as a reserve. Interim Credit: $12.0 million maximum credit to be extended to the debtors from the Court's entry of the interim order through entry of the final order. Interest Rate: 10% Default Rate: 12% Fees: closing fee of $100,000; termination fee of $100,000; commitment fee, due on the first day of each month during the term of the DIP credit agreement, of 0.5% per annum on the average daily unused amount of the commitment availability. Maturity Date: The earliest of (a) March 17, 2009, (b) 30 days after the entry of the interim order if the final order has not been entered prior to the expiration of 30 day period, (c) the date on which the Court enters an order authorizing an alternative transaction, (d) the date on which all obligations become due as the result of an acceleration pursuant to Section 11.04, and (e) the substantial consummation of a plan of reorganization that is confirmed pursuant to an order entered by the Court in any of the Chapter 11 Cases. Use of Proceeds: Proceeds of the DIP loans will be used to pay for the operating expenses of the Debtors and other costs and expenses of administration of the Chapter 11 Cases in accordance with the agreed budget. Superpriority Claims: The DIP Lenders are granted allowed super- priority administrative claims, which claims will have priority in right of payment over any and all other obligations, liabilities and indebtedness of the Debtors. Carve-Out: $600,000 for Debtors' Professionals; $150,000 for committee professionals, reduced dollar- for-dollar by any payments actually made to the professionals. The DIP agreement contains customary and appropriate events of defaults. Failure to achieve any of these sale milestones constitutes an event of default: a) an order of the Bankruptcy Court in form and substance acceptable to Lenders (the "Bid Procedures Order") establishing the Bid Procedures entered on or before February 2,2009; b) (i) the holding of a hearing by the Court regarding the sale of all or substantially all of the assets of the Debtors in accordance with the bid procedures order and the asset purchase agreement by March 4, 2009 and (ii) an order of the Court, in form and substance acceptable to DIP lenders, evidencing the approval described in the foregoing clause entered before March 4, 2009; or c) the closing of the asset sale before March 17, 2009. Prepeptition Secured Debt The Debtors are obligated to Pecus ARG Main LLC and Pecus ARG Parallel LLC, as assignees of the lender parties to that certain credit agreement dated July 11, 2005, between Wells Fargo Foothill Inc., as arranger and administrative agent, and American Restaurant Group Inc. As of their bankruptcy filing, about $53.1 million was outstanding under the prepetition credit agreement composed of: i) a $17.9 million in advances under a revolving credit facility; ii) a $20.0 million under a term B loan, approximately $10.5 million of overadvances; and iii) a $4.7 million of accrued, unpaid and capitalized interest and fees. In addition, approximately $13.2 million has been reserved for outstanding letters of credit issued under the revolver. Under the agreement, the prepetition obligations are secured by substantially all of the Debtors' assets. A full-text copy of the senior secured superpriority credit agreement dated Jan. 16, 2009, is available for free at: http://ResearchArchives.com/t/s?38f3 A full-text copy of the DIP budget is available for free at: http://ResearchArchives.com/t/s?38f3 About ARG Enterprises Headquartered in Philadelphia, Pennsylvania, ARG Enterprises Inc. -- http://www.argenterprises.com-- owns and operates the Black Angus Steakhouse chain of casual steakhouse restaurants, which specialize in 100% all-natural Black Angus steak and prime rib. The Debtors have 69 restaurants located in seven western states: Alaska, Arizona, California, Hawaii, New Mexico, Nevada and Washington. The Company and two of its affiliates filed for Chapter 11 petition on Jan. 15, 2009 (Bankr. D. Del. Lead Case No. 09-10171). Adam G. Landis, Esq., Kerri K. Mumford, Esq., and Landon Ellis, Esq., at Landis Rath & Cobb LLP, represent the Debtors in their restructuring efforts. The Debtors proposed CRG Partners Group LLC as their restructuring advisor; KPMG Corporate Finance LLC and KPMG CF Realty LLC as special real estate advisors; and Kurtzman Carson Consultants LLC as claims and noticing agent. The U.S. Trustee for Region 3 has not appointed creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. ARG ENTERPRISES: Wants to Hire Landis Rath as Counsel ----------------------------------------------------- ARG Enterprises Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for authority to employ Landis Rath & Cobb LLP as their counsel. The firm is expected to: a) advise and assisting the Debtors with respect to their rights, powers and duties as debtors in possession, and taking all necessary action to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defending any actions commenced against the Debtors, negotiating all disputes involving the Debtors, and preparing objections to claims filed against the Debtors' estates; b) prepare necessary pleadings, motions, applications, draft orders, notices, schedules and other documents, and reviewing all financial and other reports to be filed in these cases, and advising the Debtors concerning, and preparing responses to, applications, motions, other pleadings, notices and other papers that may be filed and served in this case; c) appear in the Court to represent and protect the interests of the Debtors and their estates; d) advise and assist the Debtors in connection with the formulation, negotiation and promulgation of a plan or plans of reorganization or liquidation and related documents, and taking all further actions as may be required in connection with the Plan during this case; e) advise and assist the Debtors in connection with any potential asset dispositions; and f) perform all other necessary legal services in connection with this case. The firm's professionals and their compensation rates are: Designation Hourly Rate ----------- ----------- Partners range $525-$595 Associates $275-$375 Paralegals $180-$200 Legal Assistants $95-$125 Amanda G. Landis, Esq., a partner of the firm, assures the Court that the firm does not hold any interest adverse to the Debtors' estates and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About ARG Enterprises Headquartered in Philadelphia, Pennsylvania, ARG Enterprises Inc. -- http://www.argenterprises.com-- owns and operates the Black Angus Steakhouse chain of casual steakhouse restaurants, which specialize in 100% all-natural Black Angus steak and prime rib. The Debtors have 69 restaurants located in seven western states: Alaska, Arizona, California, Hawaii, New Mexico, Nevada and Washington. The Company and two of its affiliates filed for Chapter 11 petition on Jan. 15, 2009 (Bankr. D. Del. Lead Case No. 09-10171). Adam G. Landis, Esq., Kerri K. Mumford, Esq., and Landon Ellis, Esq., at Landis Rath & Cobb LLP, represent the Debtors in their restructuring efforts. The Debtors proposed CRG Partners Group LLC as their restructuring advisor; KPMG Corporate Finance LLC and KPMG CF Realty LLC as special real estate advisors; and Kurtzman Carson Consultants LLC as claims and noticing agent. The U.S. Trustee for Region 3 has not appointed creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. ASAT HOLDINGS: In Talks With Lenders to Restructure Obligations --------------------------------------------------------------- ASAT Holdings Limited (ASTTY.OB) disclosed that it has initiated discussions with certain holders of the Company's 9.25% Senior Notes due 2011 to restructure its existing Senior Notes obligations. These Noteholders have preliminarily indicated to ASAT management that they are supportive in principle of facilitating a restructuring. "ASAT remains a primary source of packaging and assembly services in the semiconductor industry. We have a history of product innovation and we will continue to strive to stay at the leading edge of packaging technology," said Tung Lok Li, acting chief executive officer of ASAT Holdings Limited. "A number of our major shareholders and Noteholders are in discussions seeking a timely restructuring, and we anticipate that there will be no change in our day-to-day operations during this process. We remain committed to continuing to offer our customers reliable service, enhanced product offerings and quality, and expect that our actions will strengthen our position within the industry." "We have been engaged in an ongoing and productive dialogue with certain of our major Noteholders to develop a solution that is expected to result in an improved capital structure and enhanced financial flexibility for the Company," said Kei Hong Chua, chief financial officer of ASAT Holdings Limited. "Since 2006 we have made significant progress in improving our operational performance, and we hope to deliver similar progress with regard to our capital structure." "We are pleased that ASAT's management has reached out proactively to its Noteholders," said Robert Petty, Managing Partner of Clearwater Capital Partners, one of ASAT's leading Noteholders. "These discussions are an important first step in the process toward developing and implementing a mutually beneficial debt restructuring plan. We look forward to taking an active part in discussions and believe they can result in a better balance sheet for the Company, allowing it to continue to deliver quality product to its customers." Interest Payment The Company said it will delay making its next semi-annual interest payment on its 9.25% Senior Notes. ASAT has 30 days from the February 1, 2009 due date to meet its interest payment obligation under the indenture for those notes. "We believe it is in the Company's best interest to utilize the 30-day grace period while we attempt to complete an agreement with our major Noteholders," said Mr. Chua. About ASAT Holdings Limited ASAT Holdings Limited -- http://www.asat.com/-- is a global provider of semiconductor package design, assembly and test services. With 20 years of experience, the Company offers a definitive selection of semiconductor packages and world-class manufacturing lines. ASAT's advanced package portfolio includes standard and high thermal performance ball grid arrays, leadless plastic chip carriers, thin array plastic packages, system-in- package and flip chip. ASAT was the first company to develop moisture sensitive level one capability on standard leaded products. Today, the Company has operations in the United States, Asia and Europe. The Troubled Company Reporter reported on Feb. 4, 2009, that Moody's Investors Service downgraded the corporate family rating of ASAT Holdings Ltd to Ca from Caa1. At the same time, Moody's also downgraded to Ca from Caa1 the senior unsecured rating for New ASAT (Finance) Limited's US$150 million senior notes, maturing in 2011, which are guaranteed by ASAT. The outlook for both ratings is negative. The TCR also reported on Feb. 4, that Standard & Poor's Ratings Services lowered its long-term corporate credit rating on ASAT Holdings Ltd. to 'D' from 'CC'. At the same time, it lowered the issue rating on US$150 million 9.25% senior notes due 2011 to 'D' from 'CC'. The notes were issued by New ASAT (Finance) Ltd. and guaranteed by ASAT. AUTOBACS STRAUSS: Files for Chapter 11 Bankruptcy in Delaware ------------------------------------------------------------- Autobacs Strauss Inc. made a voluntary filing under Chapter 11 of United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware citing Japanese auto-parts retailer Autobacs Seven Co. Ltd.'s refusal to provide more additional working capital to the company. Autobacs Seven through its direct subsidiary, Autobacs USA Inc., formed Autobacs Strauss to purchase substantially all assets of R&S Parts and Service Inc. and 1945 Route 23 Associates Inc -- including obligations to make certain installment payments due under R&S Parts and 1945 Route's plan of reorganization to their holders of general unsecured claims. Autobacs Strauss made additional deferred payments of $5.2 million and $2.9 million due in May 2009 and May 2010 respectively. R&S Parts and 1945 Route filed for bankruptcy in 2006 (Bankr. D. N.J. Case No. 06-17474). Autobacs USA commenced a Chapter 11 proceeding in the United States Bankruptcy Court for the Central District of California (Case No. 09-10898). Consequently, Autobacs Strauss entered into a series of unsecured loan agreements with Autobacs Seven to infuse working capital into Autobacs Strauss and to enable it to satisfy its obligations arising under the asset sale transaction. However, Autobacs Seven advised Autobacs Straus that it no longer willing to provide more working capital in December 2008. Autobacs Seven notified Autobacs Strauss that the loan agreements were in default and declared all sums under the agreements immediately due and payable on Feb. 2, 2009. Autobacs Strauss owes $42.4 million under the agreements as of its bankruptcy filing. Glenn R. Langberg, president of the company, said Autobas Strauss does not have sufficient fund to repay the loan agreements or to pay the $5.2 million deferred payment due May 2009. Mr. Langberg said, "[the company] intends to promptly and efficiently close certain of its underperforming stores and to shift the operating focus of other locations towards a higher-margin and more profitable services-based model, retaining certain larger stores as inventory hubs that will support the smaller service only locations." In its filing, Autobacs Strauss listed assets and debts between $50 million and $100 million. The company's books and records showed $75 million in assets and $72 million in liabilities, court documents confirmed. The company generated about $150 million but incurred $11 million in losses for the fiscal year ended Jan. 3, 2009. Autobacs Strauss owes $8,200,000 to Class 4 Plan Administrator, $1,021,719 to Cooper Tire & Rubber Company, and $572,439 to Exide Technologies Reg. Autobacs Strauss tapped Young Conaway Stargatt & Taylor LLP as its counsel and Epiq Bankruptcy Solutions LLC as its claims agent. About Autobacs Strauss Headquartered in South River, New Jersey, Autobacs Strauss Inc. -- http://www.straussauto.com-- sell after-market automotive parts and accessories, and operate automotive service centers located in New York, New Jersey, Philadelphia, Bethlehem and Pennsylvania. The Debtor operate 86 retail store locations and has about 1,450 employees. AUTOBACS STRAUSS: Case Summary & 30 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Autobacs Strauss Inc. 9A Brick Plant Road South River, NJ 08882 Bankruptcy Case No.: 09-10358 Type of Business: The Debtor sells after-market automotive parts and accessories, and operate automotive service centers located in New York, New Jersey, Philadelphia, Bethlehem and Pennsylvania. The Debtor operate 86 retail store locations and has about 1,450 employees In March 2007, Autobacs Seven Co. Ltd., auto- parts retailer in Japan, through its direct subsidiary Autobacs USA Inc., formed the Debtor to purchase substantially all of the assets of R&S Parts and Service Inc. and 1945 Route 23 Associates Inc., which filed for bankruptcy in 2006 in the United States Bankruptcy Court for the District of New Jersey (Case No. 06-17474). Autobacs USA commenced a Chapter 11 proceeding in the United States Bankruptcy Court for the Central District of California. See: http://www.straussauto.com Chapter 11 Petition Date: February 4, 2009 Court: District of Delaware (Delaware) Judge: Christopher S. Sontchi Debtor's Counsel: Edward J. Kosmowski, Esq. Young Conaway Stargatt & Taylor, LLP The Brandywine Building 1000 West Street, 17th Floor Wilmington, DE 19801 Tel: (302) 571-6600 Fax: (302) 571-1253 http://www.ycst.com Claims Agent: Epiq Bankruptcy Solutions, LLC 757 Third Avenue, 3rd Floor New York, NY 10017 Total Assets: $75,000,000 as of January 3, 2009 Total Debts: $72,000,000 as of January 3, 2009 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Class 4 Plan Administrator contract $8,200,000 Attn: Neil Gilmour, III Executive Sounding Board Associates Inc. 1300 N. Market Street Suite 506 Wilmington, DE 19801 Fax: (302) 573-6812 Cooper Tire & Rubber Company trade $1,021,719 P.O. Box 640007 Pittsburg, PA 15264 Fax: (800) 759-5789 Exide Technologies Reg. trade $572,439 P.O. Box 933479 Atlanta, GA 31193-3479 Fax: (678) 566-9018 Robert Bosch Corp. trade $483,777 Kumho Tire USA Inc. trade $426,781 Honeywell International Inc. trade $409,209 Qualis Automotive LLC trade $358,192 Factory MTR. PRTS. Co. A/C trade $301,048 Delco Philips Automotive Lighting trade $219,855 Recochem Inc. trade $189,566 Dorman Products Inc. trade $189,180 BP Lubricants USA Inc. trade $178,876 Sopus Products trade $165,173 Wagan Corporation trade $152,030 Pylon Manufacturing Corp. trade $111,429 Ashland Inc. trade $99,631 Exxon Mobil Oil trade $77,462 Clorox Sales Company trade $76,397 Black & Decker (US) Inc. trade $70,741 Federal-Mogul Corp. trade $70,739 Local 108 Health Fund contract $68,160 Reliance Automotive Inc. trade $67,193 Hopkins MFG. Corp. trade $66,473 Dayco Products Company trade $60,199 Custom Accessories Inc. trade $59,583 Super Clean BRD. Inc. Wash trade $54,377 FLD. Republic Bank lease $49,979 Shinn Fu Company trade $48,352 Winner International trade $48,335 Midtronics Inc. trade $47,627 The petition was signed by Akihiro Yamada, chief executive officer. AUTOBACS USA: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Autobacs U.S.A., Inc., Debtor 12645 Beach Blvd. Stanton, CA 90680 Bankruptcy Case No.: 09-10898 Type of Business: The Debtor sells auto-part accessories. The Debtor is a subsidiary of Autobacs Seven Co. Ltd., auto-parts retailer of Japan. Chapter 11 Petition Date: February 4,2009 Court: Central District Of California (Santa Ana) Judge: Erithe A. Smith Debtor's Counsel: Marc J. Winthrop, Esq. pj@winthropcouchot.com Winthrop Couchot Pofressional Corporation 660 Newport Center Dr., Ste. 400 Newport Beach, CA 92660 Tel: (949) 720-4100 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Toyo Tire (USA) Corp $54,818 PO Box 515319 Los Angeles, CA 90051-6598 Tel: (800) 678-3250 Shapell Industries $38,906 27150K Alicia Parkway Laguna Niguel, CA 92677 Tel: (949) 448-0061 KIR Covina LP 3333 New Hyde Park Ro., #100 Hyde Park, NY 11042 Los Angeles Times-3 $29,771 Levin's Auto Supply LLC $21,948 Keystone Automotive Operations $21,223 TWD $18,943 Fulmer Helmets Inc. $17,993 Fujitsu Ten Corp. of America $14,493 Pro-Motion Distributing $13,605 Turbo Wholesale Tires Inc. $10,048 American Tire Distributors $8,193 Cooper Tire & Rubber Co. $7,259 Healthnet $6,778 Options Auto Salon $6,617 Minds Corp. $6,349 KHL Trading Corp. $4,543 Rockford Corporation $4,343 Interstate Tire-Commerce $4,003 Principal Financial Group $3,941 The petition was signed by Toshio Kitamura, president. BERNARD L. MADOFF: Seeks to Hire Counsel for U.K. Proceedings ------------------------------------------------------------- Irving H. Picard, the trustee for the liquidation of Bernard L. Madoff Investment Securities Inc., seeks permission from the U.S. Bankruptcy Court for the Southern District of New York to hire U.K.-based law firm Lovells LLP to give advice and recover assets in Europe. Mr. Picard says it will be necessary to engage counsel to represent him in the foreign proceedings of MSIL. He says he seeks to retain Lovells as special counsel because of its knowledge, expertise and experience in liquidation proceedings in the United Kingdom and other European foreign jurisdictions, including France, Germany, Italy, and Spain. "Lovells' employment and retention is necessary and in the best interests of the Debtor's estate and its customers and creditors," he said. Foreign Proceedings The directors of Madoff's London entity, Madoff Securities International Ltd., filed an application with the High Court of Justice, Chancery Division, Companies Court, for the appointment of joint provisional liquidators. After a hearing on December 19, 2008 at which counsel for the Receiver, counsel for the MSIL Directors, counsel for the Financial Services Authority, and counsel for the Joint Provisional Liquidators were heard, the High Court ordered, among other things, that: (1) MSIL be placed into a provisional liquidation, (2) Mark Richard Byers, Andrew Laurence Hosking, and Stephen John Akers of Grant Thornton be appointed joint provisional liquidators, (3) the affairs, business, and property of MSIL will be managed by the joint provisional liquidators, (4) the joint provisional liquidators will cooperate with the Receiver, the Trustee, and the Financial Services Authority, and (5) to use their best efforts to provide to the United States Department of Justice and SEC the same information provided to the Receiver, Trustee, and FSA. According to Mr. Picard, issues have arisen in other foreign jurisdictions in Europe such that there may be a need for representation by counsel in other foreign proceedings in Europe as he pursues the recovery of customer property. Lovells' Fees Lovells will be compensated at its normal hourly rates, less a 10% discount. Lovells normal hourly rates are: Hourly Rates ---------------------------------- Level of Experience London (GBP) Cont. European (EUR) ------------------ ------------ ------------------- Partner 610 520 Consultants and Senior Lawyers 560 435 Assistant 6-8 years 525 415 Assistant 5-6 years 490 370 Assistant 4-5 years 450 335 Assistant 3-4 years 415 335 Assistant 2-3 years 380 315 Assistant 1-2 years 340 295 Assistant 0-1 years 300 275 Trainee 230 235 The Securities Investor Protection Corporation, the entity that applied for the liquidation of BLMIS under the Securities Investor Protection Act, has no objections to the retention of the firm. Lovells' Disinterestedness Mr. Picard says that he believes members, counsel and associates of Lovells are disinterested pursuant to section 78eee(b)(3) of SIPA and do not hold or represent any interest adverse to the Debtor's estate in respect of the matter for which Lovells is to be retained. Christopher Kennet Grierson, a member of the firm, disclosed that Lovells represents many customers or creditors of Madoff. However, he said the firm will not represent those persons or entities adverse to the interest of the Debtor. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in US stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were at least $50 billion Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. BERNARD L. MADOFF: Investigator Says SEC Ignored Fraud Warnings --------------------------------------------------------------- Michael R. Crittenden at The Wall Street Journal reports that independent fraud investigator Harry Markopolos said that the U.S. Securities and Exchange Commission ignored for years his repeated warnings of Bernard Madoff's alleged Ponzi scheme. WSJ relates that Mr. Markopolos submitted to a House committee documents describing his efforts, which started in 1999. According to WSJ, Mr. Markopolos said that he and his team of investigators collected "intelligence reports from field" operatives and developed networks of contacts to provide information on Mr. Madoff's operation and the feeder funds that allegedly contributed to the scheme. Mr. Markopolos, WSJ states, had repeated meetings with the SEC officials, who he claims asked few questions and made little effort to understand the complicated derivatives instruments allegedly Mr. Madoff used to defraud investors. "I was dismissed and ignored, making any further attempts to explain on my part impossible," the report quoted Mr. Markopolos as saying. According to WSJ, Mr. Markopolos said that he and his team, worried of their safety, anonymously submitted some documents to the SEC and had not always identified themselves to the officials. "My team and I surmised that if Mr. Madoff gained knowledge of our activities, he may feel threatened enough to seek to stifle us," WSJ quoted Mr. Markopolos as saying. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in US stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were at least $50 billion Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. BEXAR COUNTY: Moody's Affirms 'Caa1' Rating on 2001A Bonds ---------------------------------------------------------- Moody's Investors Services has affirmed the Caa1 rating on Bexar County Housing Finance Corporation Housing Revenue Bonds (Nob Hill Apartments Project) Senior Series 2001A and the C rating on the Subordinate Series 2001B. The outlook remains negative. The Junior Subordinate Series C bonds are not rated. The ratings and outlook reflect the payment default on the subordinate Series 2001B as well as the potential for a future default of the senior Series 2001 A due to the project's ongoing financial and occupancy problems. Nob Hill Apartments Project is a 368 unit multi-family rental property. Legal Security: The bonds are secured by a lien on and pledge and assignment of a security interest in the Trust Estate. Interest Rate Derivatives: none Recent Developments On December 1, 2007 no interest payments were made on the Subordinate Series B and Series C (unrated) bonds due to the failure of the borrower to provide the trustee the funds to cover the full interest payments on these bonds. Per the discretion of the trustee, the Series B and C debt service reserves were not tapped. On June 1, 2008, no interest payments were made on the Subordinate Series B and Series C (unrated) bonds. On December 12, 2008 the issuer entered into the First Supplemental Trust Indenture and the First Amendment to the Loan Agreement. These documents direct the trustee to transfer $750,000 from the debt service reserve funds and bond funds to the repair and replacement fund in order to make physical repairs to the project. Events of default under the new loan agreement include failure to meet certain debt service coverage tests. Both financial performance and occupancy continue to be poor. As of December 31, 2007 audited numbers, debt service coverage on the senior and subordinate bonds fell to 0.79x and 0.71x respectively. However, unaudited financial statements as of October 2008 suggest that the financial condition of the project has improved slightly driven by an increase in both rental and other income and a decrease in expenses. Low occupancy continues to be a key concern. Physical occupancy for the project was 82% in December of 2008 and economic occupancy was 68% as of October 2008. Outlook The outlook for the rating remains negative. The negative outlook reflects the negative trend in debt service coverage over time and the potential for non-payment of principal and interest for the senior bonds in the future. What could change the rating- UP * Significant improvement in performance and demonstrated ability to pay all interest and principal payments on the senior and subordinate bonds. What could change the rating- DOWN * Further deterioration in debt service coverage or failure to pay principal and/or interest payments for the senior bonds. The last rating action with respect to the Bexar County Housing Finance Corporation Housing Revenue Bonds was on October 27, 2008 when its Senior Series 2001A ratings were downgraded to Caa1 from Ba3 and its Subordinate Series 2001B were downgraded to C from B1. BHASIN ARVIND: Involuntary Chapter 11 Case Summary -------------------------------------------------- Alleged Debtor: Bhasin Arvind Kaur aka Sethi Arvind Kaur aka Sethi Arvind aka Behl Arvind Kaur aka Singh Arvind Kaur aka Mediwell, Inc. aka Singh Arvind aka Arvind K. Sethi MD, Inc. 2701 Marina Point Ln Elk Grove, CA 95758 Type of Business: The Alleged Debtor runs a private medical office. The Alleged Debtor is the wife of the petitioner. The Alleged Debtor filed a dissolution of marriage on petitioner. Mediwell, Inc., is a family business. Bankruptcy Case No.: 09-21224 Chapter 11 Petition Date: January 26, 2009 Court: United States Bankruptcy Court Eastern District of California (Sacramento) Judge: Christopher M. Klein Debtor's Counsel: Pro Se Petitioner's Counsel: In Pro Per Petitioning Creditor Nature of Claim Amount -------------------- --------------- ------ Ravdeep Singh Bhasin Community Property $908,150 P.O. Box 582542 Elk Grove, CA 95758 BOWNETREE LLC: Files Amended Disclosure Statement; Plan to Follow ----------------------------------------------------------------- Bownetree, LLC, delivered to the U.S. Bankruptcy Court for the Eastern District of New York on Jan. 27, 2009, its first amended disclosure statement in connection with its Plan of Reorganization. The Plan of Reorganization will be submitted after approval of the disclosure statement. Plan Overview The Plan contemplates the sale of the Debtor's real estate to 36- 20 Bowne, LLC, which holds the 2nd mortgage on the property, for an amount needed to satisfy the Class 1 claim of Kennedy Funding, Ltd., which holds the first mortgage on the property, and the NYS and IRS Secured Claims in Class 3 in full. The property is comprised of partly completed walk up apartment buildings and vacant land located at Flushing, New York. Pursuant to the Plan, General Unsecured Claims will not receive any payments of their claims since the Debtor will be liquidating following confirmation pursuant to a liquidating plan. For the same reasons, Equity interests in the Debtor will also receive nothing under the Plan. Suzuki Capital Funding through its memebers and president, Sam Suzuki, holds 93% of the equity. A. Unclassified Claims Administration expense claims include all costs incurred in the operation of the Debtor's businesses after the Petition Date, the fees and expenses of professionals retained by the Debtor, and any statutory committee appointed to serve in the Chapter 11 case. Under the Plan, all administration expense claims will be paid in full, in Cash. United States Trustee statutory fees arising under Sec. 930 of Title 28 of the U.S. Code will be paid in full, in Cash. Priority Claims will be paid in full plus the applicable Federal, NYS or other statutory rate of interest in monthly payments as permitted by Sec. 1129(a)(9) of the Bankruptcy Code. B. Classified Claims The Plan divides Claims Against and Equity Interests in the Debtors into five classes: Treatment --------- Class 1 -- Kennedy Funding, Ltd. Impaired; Entitled to Vote Secured 1st Mortgage Claim Class 2 -- 36-29 Bowne, LLC Impaired; Entitled to Vote Secured 2nd Mortgage Claim Class 3 -- NYS and IRS Secured Claims Unimpaired; Vote not Solicited Class 4 -- General Unsecured Claims Impaired; Entitled to Vote Class 5 -- Equity Interests Impaired; Entitled to Vote Classes 1, 2, 4, and 5 are impaired under the Plan, and thus, are entitled to vote to accept or reject the Plan. Only Class 3 is unimpaired under the Plan. The Secured Claim of Kennedy Funding, Ltd., under Class 1 will be paid in full from the proceeds of the sale of certain Debtor's real estate properties, plus postpetition interest as well as legal costs. The Debtor will sell to 36-20 Bowne LLC all of the Debtor's Real Estate including the vacant land and townhouse property in full satisfaction of the Class 2 claim of 36-20 Bowne LLC. Proceeds will be used to pay off Class 1 and Class 3 claims as well as administrative claimants. NYS and IRS Secured Claims under Class 3 are potential claims, which might arise from the personal liability of Sam Suzuki, member and owner of Susuki Capital Funding, Ltd., which owns Bownetree LLC. Both taxing authorities will be paid 100% upon the consummation of the sale of the Debtor's Real Estate Properties. Equity Interests under Class 5 will not receive any payments under the Plan. The company will liquidate after confirmation and the equity will be worthless. Notwithstaning the rejection of the Plan by one or more impaired classes, the Debtor may, in its discretion, nevertheless seek confirmation of the Plan pursuant to the "cramdown" provisions of the Bankruptcy Code under Sec. 1129(b) of the Bankruptcy Code. A full-text copy of Bownetree LLC's 1st Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/Bownetree1stAmendedDS.pdf Headquartered in New York City, Bownetree LLC is engaged in the business of real estate development, sales, and construction. The company filed for Chapter 11 protection on Sept. 4, 2008 (Bankr. E.D. N.Y. 08-45854). The Debtor's schedules showed assets of $17,301,277 and liabilities of $10,940,615. Alina N. Solodchikova, Esq. and Stphen B. Kass, Esq., at the Law Offices of Stehen B. Kass, in New York City, represent the Debtor as counsel. BONTEN MEDIA: S&P Raises Corp. Credit Rating to 'B-' From 'SD' -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on New York City-based Bonten Media Group Inc. to 'B-' from 'SD'. The rating outlook is stable. At the same time, S&P raised the issue-level rating on Bonten's senior subordinated toggle notes to 'CCC' (two notches lower than the 'B-' corporate credit rating on the company) from 'D'. The recovery rating on this debt remains at '6', indicating S&P's expectation of negligible (0% to 10%) recovery for noteholders in the event of a payment default. S&P also lowered the issue-level rating on Bonten's senior secured bank debt to 'B-' (at the same level as the 'B-' corporate credit rating) from 'B+' and removed it from CreditWatch, where it was placed with negative implications Nov. 24, 2008. S&P revised the recovery rating on this debt to '3', indicating S&P's expectation of meaningful (50% to 70%) recovery in the event of a payment default, from '2'. "The rating actions reflect our assessment of Bonten Media's financial condition and business outlook over the intermediate term following its subpar repurchase of $27.6 million of its subordinated toggle notes in a private transaction," noted Standard & Poor's credit analyst Deborah Kinzer. "We expect that the company's revenue will decline significantly in 2009 because of the recession and the lack of significant political ad revenue in a non-election year, causing EBITDA to fall even more sharply. S&P believes that the company's recent decision to pay interest on its toggle notes in kind instead of in cash, along with the subpar note repurchase, will only slightly alleviate pressure on the company's cash flow generation and leverage metrics as EBITDA drops over the coming quarters." The 'B-' rating reflects the TV broadcaster's high debt leverage, relatively narrow revenue and cash flow diversification, weak conversion of EBITDA into discretionary cash flow because of high interest expense, and TV broadcasting's mature revenue growth prospects. The good positions of Bonten's predominantly major network affiliated TV stations in several small and midsize markets, broadcasting's good EBITDA margins, and the company's discretionary cash flow potential minimally offset these factors. BRIGHTER MINDS: Unit Files for Chapter 11 Bankruptcy ---------------------------------------------------- Brighter Minds Media, Inc. (TSX VENTURE:BRI) said Feb. 2 that a subsidiary, Brighter Minds Media, LLC, has filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court, Southern District of Ohio. The Subsidiary is pursuing all options including a possible sale of the Subsidiary. Brighter Minds Media LLC filed for Chapter 11 before the U.S. Bankruptcy Court for the Southern District of Ohio (Case No. 09- 50749) on February 2. Based in Worthington, Ohio, the Debtor had $4.6 million revenue over the first nine months of 2008 that translated into a net loss of $445,000, according to Bill Rochelle of Bloomberg News. The Debtor, according to the report, said it owes $3.9 million to the secured lender Laurus Master Fund Ltd. About Brighter Minds Media, Inc. Brighter Minds is a publisher of online and multimedia materials for the whole family with a focus on creating a wholesome online environment for children and the family. Brighter Minds is also proud to offer a fun and educational line of retail products including software and books. Brighter Minds' products are available online and at major retailers across the United States and Canada. Brighter Minds Media, Inc. is publicly traded on the TSX Venture Exchange (TSX VENTURE:BRI) and is a Hargan Ventures (www.harganvc.com) investee company. More information about Brighter Minds can be found at www.brightermindsmedia.com. BROADSTRIPE LLC: Seeks to Hire Ashby & Geddes as Counsel -------------------------------------------------------- Broadstripe LLC and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for permission to employ Ashby & Geddes PA as their attorney. The firm will: a) perform all necessary services as the Debtors' Delaware counsel, including, without limitation, preparing, or assisting in preparation of, all necessary documents on behalf of the Debtors; b) advise the Debtors of their powers and duties as debtors- in-possession in the continued operation of their business and management of their properties; c) appear at hearings before the Court on behalf of the Debtors; d) take all necessary actions to protect and preserve the Debtors' estates during the pendency of these Chapter 11 cases, including prosecution of actions by the Debtors, the defense of any action commenced against the Debtors, and negotiations concerning all litigation in which the Debtors are involved; e) prepare on behalf of the Debtors, as debtors-in-possession, all necessary motions, applications, answers, orders, reports, and papers in connection with administration of these Chapter 11 cases; and f) perform such other legal services that are desirable and necessary for the efficient and economic administration of these Chapter 11 cases. The firm's professionals and their compensation rates are: Professional Position Hourly Rate ------------ -------- ----------- Don A. Beskrone, Esq. Member $480 Ricardo Palacio, Esq. Member $435 Amanda M. Winfree, Esq. Associate $295 Cathie Boyer Paralegal $180 Don A. Beskrone, Esq., a member of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Broadstripe LLC Headquartered in Chesterfield, Missouri, Broadstripe LLC -- http://www.broadstripe.com-- provide videos and telephone services to consumers and business in Maryland, Michigan, Washington and Oregon. The company and fives of its affiliates filed for Chapter 11 protection on January 2, 2009 (Bankr. D. Del. Lead Case No. 09-10006). Ashby & Geddes, and Gardere Wynne Sewell LLP represent the Debtors in their restructuring efforts. The Debtors proposed FTI Consulting Inc. as their restructuring consultant, and Epiq Bankruptcy Consultants LLC as their claims agent. obert A. DeAngelis, the United States Trustee for Region 3, appointed six creditors to serve on an official committee of unsecured creditors. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million and $500 million in their filing. BURGER PACIFIC: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Burger Pacific, LLC 10 Faraday Irvine, CA 92618 Bankruptcy Case No.: 09- 10845 Debtor-affiliates filing separate Chapter 11 petitions on Nov. 25, 2008: Entity Case No. ------ -------- RSM BFS Partners 08-1771 Chapter 11 Petition Date: February 3, 2009 Court: Central District Of California (Santa Ana) Judge: Erithe A. Smith Debtor's Counsel: David W. Meadows, Esq. 1801 Century Park East, Suite 1250 Los Angeles, CA 90067 Tel: (310) 557-8490 david@davidwmeadowslaw.com Estimated Assets: $1 million to $10 million Estimated Debts: $10 million to $50 million The Debtor did not file a list of 20 largest unsecured creditors. The petition was signed by John D. Gantes, managing member of the company. CADENCE INNOVATION: Court Stretches Exclusive Periods to April 23 ----------------------------------------------------------------- Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware extended Cadence Innovation LLC and its affiliates' Exclusive Plan Filing Period, through and including April 23, 2009; and the Debtors' Exclusive Solicitation Period, through and including June 22, 2009. The Debtors had told the Court that they are pursuing an extremely aggressive timeline for the liquidation of their assets and have been spending considerable time pursuing potential purchasers and attempting to reach acceptable sale arrangements. The Debtors maintained that given these circumstances, it would be premature for them to file a plan of reorganization at this time. The Debtors also obtained approval of Amendment No. 2 of its $50,000,000 DIP Credit Agreement with Bank of America, N.A., and certain other lenders. The Amendment provides for an extension of the maturity date of the DIP Facility through January 9, 2009. The Lenders are entitled to further extend the Maturity Date without further Court approval, provided that the extension will not go beyond February 28, 2009. In the event of an extension, the Debtors are directed to promptly notify the U.S. Trustee, General Motors Corporation and Chrysler LLC. A full-text copy of Amendment No. 2 to BofA Facility is available for free at http://bankrupt.com/misc/Cadence_DIPAmendmentNo2.pdf Before the Court entered its ruling, the maturity date of the DIP Facility with respect to the Revolving Loans was December 31, 2008. The Debtors' ability to obtain further Revolving Loans also expired on December 31. The Debtors are liquidating their assets in an orderly manner and expect to be able to pay the DIP Lenders in full within the next month or so, as they aim to collect amounts owed to them by GM and Chrysler. Patrick J. Reilley, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., in Wilmington, Delaware, said the Debtors will need to be able to seek advances from the DIP Lenders under the DIP Loans. Accordingly, the Debtors and BofA, as administrative agent to the DIP Lenders, entered into Amendment No.2 of the DIP Credit Agreement, under which the maturity date of the Loan Documents is extended to January 9. The Amendment also calls for a modification of the Maximum Revolver Amount to $15,000,000. The Debtors are further required to deliver a winddown budget to the DIP Lenders. The Debtors' failure to deliver the wind down budget will constitute an immediate Event of Default. Mr. Reilley said the extension of the DIP Maturity Date will not adversely affect the rights of any other party. Instead, the extension will provide the Debtors with the cash availability required to maintain the orderly administration of the estates, including their continuing efforts to complete the orderly liquidation of their assets for the benefits of creditors, he averred. About Cadence Innovation Headquartered in Troy, Michigan, Cadence Innovation LLC -- http://www.cadenceinnovation.com/-- manufactures and sells auto parts to its customers GM and Chrysler. The company has at least 4,200 employees in the United States and Europe, including Hungary and Czech Republic. The company and its debtor-affiliate, New Venture Real Estate Holdings, LLC, filed for Chapter 11 reorganization on Aug. 26, 2008 (Bankr. D. Del. Lead Case No. 08- 11973). Norman L. Pernick, Esq. and Patrick J. Reilley, Esq., at Cole, Schotz, Meisel, Forman & Leonard, represent the Debtors as counsel. When the Debtors filed for protection from their creditors, they listed assets of between $10 million and $50 million, and debts of between $100 million and $500 million. (Cadence Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) CADENCE INNOVATION: Pens Settlement with GM on Tooling Dispute -------------------------------------------------------------- General Motors Corporation and Cadence Innovation LLC reached an agreement, resolving certain issues raised in GM's motion to compel the Debtors' performance in certain Accommodation Agreements. The U.S. Bankruptcy Court for the District of Delaware approved the parties' Stipulation. The parties stipulate that: (1) GM acknowledges that the Debtors have released to GM all Tooling prior to entry of the Stipulation in accordance with the parties' agreed schedule; provided, however, that the Debtors will immediately release any Tooling that has not been previously released to GM. (2) The Debtors will have begun releasing to GM all Designated Equipment, wherever located, as of December 29, 2008, and GM will pay to the Debtors for the Designated Equipment: * In the case of Designated Equipment for which Hilco Industrial appraised value exists, GM will make the wire transfer to the Debtors simultaneous with the Debtors' release of the Designated Equipment to GM; and * GM will pay the Equipment Escrow Funds into escrow with Bank of America, N.A., as administrative agent for the Debtors' DIP Lenders immediately. All proceeds of the sale of the Designated Equipment will be subject to BofA's liens. Upon payment of the Designated Equipment, GM will be entitled to its immediate possession and will own all Designated Equipment without further obligations. (3) GM will make these payments for the Designated Equipment: * $355,000 in cash or cash equivalents to be paid to the Debtors for the Designated Equipment, wherever located; * $444,000 in cash or cash equivalents to be paid to the Debtors for the Designated Equipment located at Debtors' Hillsdale, Groesbeck, and Malyn facilities; * $1,700,000 to be paid in cash or cash equivalents to the Debtors in exchange for the Designated Equipment related to the Camaro Program; * $1,000,000 to be paid by GM into escrow with Lender, for certain of the Designated Equipment upon which GM believes certain vendors to the Debtors may have valid existing liens or security interests senior in priority to the Lender's liens; and * $1,000,000 to be paid by GM into escrow with Lender for the Designated Equipment located in Chesterfield facility and other than the Camaro Designated Equipment and the Vendor Designated Equipment, which has not been appraised by Hilco. (4) All payments to be made by GM to the Debtors will be made directly to Bank of America, N.A., at its discretion. (5) GM notes that certain vendors to the Debtors may have valid existing liens or security interests on the Vendor Designated Equipment; however, the Debtors may wish to challenge the validity of those liens. In the event the Debtors determine that a vendor has a valid lien or security interest superior in priority to the DIP Lenders' liens, payment will be remitted to the vendor from the Vendor Escrow Fund. In the event the aggregate amount of valid existing liens in Vendor Designated Equipment which are superior in priority to the Lender's liens is less than the total amount of Vendor Escrow Funds, any remaining funds will be remitted to the Debtors, subject to the DIP Lenders' liens. In the event the aggregate amount of valid existing liens in Vendor Designated Equipment exceeds the Vendor Escrow Funds, GM will be responsible for the excess lien claims. (6) The Debtors have asked Hilco to appraise the Unappraised Designated Equipment immediately. If the Unappraised Designated Equipment is moved to GM's successor suppliers' facilities prior to Hilco's appraisal, Hilco will conduct the appraisal at the successor suppliers' facilities. Upon the completion of the appraisal, Hilco will provide the Debtors, the DIP Lenders and GM the appraised values for the Unappraised Designated Equipment. (7) In the event Hilco's appraisal of the Unappraised Designated Equipment is less than $1,000,000, the excess amount will be immediately released to GM and GM will have no further obligation with respect to any Unappraised Designated Equipment. The balance remaining after payment to GM will be remitted to the Debtors. (8) In the event Hilco's appraisal of the Unappraised Designated Equipment is greater than $1,000,000, the full amount of the Equipment Escrow Funds will be immediately released to the Debtors and the amount remaining of $1,000,000 will be paid by GM to Debtors without delay after Hilco's completion of the appraisal. (9) With respect to the inventory constituting resins that are utilized in the production of GM's Component Parts in the Chesterfield, Groesbeck and Hillsdale facilities, GM's successor suppliers will purchase the Resin from the Debtors. Assuming the Resins are available for delivery, the Debtors will realize $350,000 for the Resins regardless of whether GM's successor suppliers purchase the Resins from the Debtors. The Debtors are expected to provided confirmation to GM regarding the amount of the Resins purchased by the successor sources. To the extent the amount is less than $350,000, GM will wire the deficiency payment to the Debtors without delay, subject to the DIP Lenders' liens. (10) In connection with GM's resourcing of the Component Parts, GM continues to require that certain labor, equipment and other transition services be provided by the Debtors pursuant to a letter dated December 19, 2008. The letter continues to govern a pending agreement setting forth description of the Services and the maximum amount GM agreed to pay. On Friday of each week when Services are performed, the Debtors will issue an invoice to GM payable via wire transfer. As of December 28, 2008, GM has sought services for which it has agreed to pay the Debtors $1,075,554. GM will make payment for the Services without setoff or recoupment. (11) GM's obligations with respect to labor and other transition assistance is limited to the Services and the amounts set forth. The Debtors remain liable for all liabilities involving their employees, including wages and compensation. (12) GM will purchase from the Debtors the work-in-progress inventory immediately using purchase prices the parties have previously agreed on, plus packaging costs, prior to GM's possession of the WIP Inventory unless the Debtors agree to release the WIP Inventory to GM in advance of payment. (13) All payments to be made by GM to the Debtors or Bank of America will be without setoff or recoupment, except for payments due for shipment of Component Parts to GM. (14) The Access and Security Agreements dated August 25, 2008 will terminate upon the Debtors' release of all Tooling and Designated Equipment to GM. About Cadence Innovation Headquartered in Troy, Michigan, Cadence Innovation LLC -- http://www.cadenceinnovation.com/-- manufactures and sells auto parts to its customers GM and Chrysler. The company has at least 4,200 employees in the United States and Europe, including Hungary and Czech Republic. The company and its debtor-affiliate, New Venture Real Estate Holdings, LLC, filed for Chapter 11 reorganization on Aug. 26, 2008 (Bankr. D. Del. Lead Case No. 08- 11973). Norman L. Pernick, Esq. and Patrick J. Reilley, Esq., at Cole, Schotz, Meisel, Forman & Leonard, represent the Debtors as counsel. When the Debtors filed for protection from their creditors, they listed assets of between $10 million and $50 million, and debts of between $100 million and $500 million. (Cadence Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) CADENCE INNOVATION: Begins Review of Leases; Rejects 17 Deals ------------------------------------------------------------- Upon review, Cadence Innovation LLC and its affiliates identified 17 unexpired leases that they determined should be rejected pursuant to Section 365(a) of the Bankruptcy Code. A list of the Leases to be rejected is available for free at: http://bankrupt.com/misc/Cadence_RejectedContracts.pdf The Debtors tell Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware that they no longer need the continuing benefits, if any, from the Leases. The Debtors insist that the Leases are of little benefit to their estates in contrast to the significant administrative costs incurred in keeping the Leases. The Debtors further point out that maximization of the value of their estates depends largely on their ability to relieve themselves from burdensome contracts and leases. Accordingly, the Debtors seek the Court's authority to reject the 17 Leases effective as of January 26, 2009. The Debtors stress that given their financial condition and the necessity to reduce administrative claims against the estates, the circumstances weigh in favor of the retroactive rejection of the Leases. The Debtors assure the contract parties that they have vacated the leased premises. Moreover, the Debtors have surrendered certain of the goods to the real property lessors or have notified the lessors that the goods are available for retrieval. To the extent that certain of the Debtors' leases are on a month- to-month basis, the Debtors also seek from the Court an order authorizing rejection of those leases and a determination that their Rejection Motion constitutes a notice of rejection. Headquartered in Troy, Michigan, Cadence Innovation LLC -- http://www.cadenceinnovation.com/-- manufactures and sells auto parts to its customers GM and Chrysler. The company has at least 4,200 employees in the United States and Europe, including Hungary and Czech Republic. The company and its debtor-affiliate, New Venture Real Estate Holdings, LLC, filed for Chapter 11 reorganization on Aug. 26, 2008 (Bankr. D. Del. Lead Case No. 08- 11973). Norman L. Pernick, Esq. and Patrick J. Reilley, Esq., at Cole, Schotz, Meisel, Forman & Leonard, represent the Debtors as counsel. When the Debtors filed for protection from their creditors, they listed assets of between $10 million and $50 million, and debts of between $100 million and $500 million. (Cadence Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) CADENCE INNOVATION: TA Systems Files Lien Foreclosure Suit ---------------------------------------------------------- T.A. Systems, Inc., filed a complaint against Cadence Innovation LLC and General Motors Corporation, seeking a lien foreclosure against the Debtor. Before the Petition Date, pursuant to certain sale agreements, the Debtor purchased certain mold building equipment from TA Systems, committing to pay for the equipment in installments. The Equipment sold to the Debtor was a die, mold, or form for use in the manufacture, assembly, or fabrication of plastic parts. TA Systems asserts that it has a valid, perfected, mold builder's lien on the Equipment and its lien is superior to any and all other liens claimed on the Equipment. Bruce W. McCullough, Esq., at Bodell, Bove, Grace & Van Horn, P.C., in Wilmington, Delaware, informs Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware that the Debtor did not make all of the payments due and owing on the Sale Agreements on the Equipment. The Debtor owed TA Systems $245,042. Mr. McCullough also points out that pursuant to an Accommodation Agreement between the Debtor and GM, GM had the right to take immediate possession of certain tooling and equipment of the Debtors. GM previously filed an adversary complaint against the Debtors, alleging that the Debtor violated the Accommodation Agreement. The parties subsequently stipulated to resolve the Complaint. Under the GM Stipulation, GM may take possession and control of certain equipment, which includes the TA Systems Equipment. Mr. McCullough notes that GM has taken possession of certain of TA Systems' Equipment. Thus, he contends, TA Systems is entitled to payment from GM and the Debtors for the possessed Equipment. Even if TA Systems is not entitled to payment under the GM Stipulation, TA Systems is entitled to payment based on its agreements with the Debtor, he argues. Moreover, as TA Systems has not been paid in full for the Equipment it sold to the Debtor, the Debtor is in default under the Sale Agreements, Mr. McCullough maintains. While the GM Stipulation is entirely uncertain what precise equipment will be paid by GM, Mr. McCullough reiterates that the TA Systems Equipment is covered by the stipulation and TA Systems should thus be paid from the escrow fund established under the stipulation. Mr. McCullough also asserts that TA Systems has conferred a benefit on the Debtor through the Equipment, but the Debtor did not reciprocate the value conferred by TA Systems. "It would thus be inequitable for the Debtor to retain the benefit conferred by TA Systems without reciprocating," he says. "Moreover, the Debtor transferred some or all of the benefit provided by TA Systems to GM when the Debtor released the TA Systems Equipment to GM to be resourced to another supplier," Mr. McCullough adds. "Thus, GM has received a benefit from the inequitably uncompensated benefit conferred by TA Systems," he states. Accordingly, TA Systems asks the Court to: (a) enter a judgment declaring that TA Systems is entitled to payment (x) of funds from the escrow account for the purchase of the Equipment, and (y) from the Debtor in priority over all other creditors; (b) award it damages in an amount equal to the benefit it conferred to the Debtor; and (c) allow it to take possession of the TA Systems Equipment. Headquartered in Troy, Michigan, Cadence Innovation LLC -- http://www.cadenceinnovation.com/-- manufactures and sells auto parts to its customers GM and Chrysler. The company has at least 4,200 employees in the United States and Europe, including Hungary and Czech Republic. The company and its debtor-affiliate, New Venture Real Estate Holdings, LLC, filed for Chapter 11 reorganization on Aug. 26, 2008 (Bankr. D. Del. Lead Case No. 08- 11973). Norman L. Pernick, Esq. and Patrick J. Reilley, Esq., at Cole, Schotz, Meisel, Forman & Leonard, represent the Debtors as counsel. When the Debtors filed for protection from their creditors, they listed assets of between $10 million and $50 million, and debts of between $100 million and $500 million. (Cadence Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) CANWEST GLOBAL: Gets $50.7MM in Hollinger Arbitration Decision -------------------------------------------------------------- An arbitrator has awarded Canwest Global Communications Corp. $50,747,092 in a dispute with Hollinger International Inc. -- now Sun-Times Media Group, Inc. -- and related parties. The decision by the arbitrator concerns a dispute between the two companies relating to unresolved adjustments and claims associated to Canwest's November 15, 2000 acquisition of certain newspaper assets from Hollinger. "While the proceedings have been protracted over several years, we obviously feel justified that the time and effort it took to pursue the claim has been worth it," Canwest President and CEO Leonard Asper said. "The results demonstrate the value of our resolve in dealing with this issue." The award is exclusive of interest and legal costs. Now that the substance of the claims has been determined, Canwest and Hollinger will appear before the arbitrator at a later date to argue the issues of interest and costs. Canwest intends to assert that in accordance with the transaction agreement, interest at various rates, including its cost of borrowed funds, is to be accrued on the net amount owing it from as early as August 31, 2000. The arbitrator's final decision is subject to a limited right of appeal to the Ontario Superior Court, with leave, within 30 days of the final decision. Canwest had originally claimed it was owed $84 million by Hollinger. This claim was disputed by Hollinger and certain of its affiliates who asserted they were owed $116 million by Canwest. After a 16 month arbitration process -- that commenced in February 2007 and concluded in June 2008 -- the arbitrator found Canwest is due a net amount of just under $51 million, exclusive of interest and costs. The substantial portion of the award will be for the benefit of Canwest Media Inc., with the balance being for the benefit of Canwest Publications Inc. About Canwest Global Communications Corp. Canwest Global Communications Corp. -- http://www.canwest.com/-- (TSX: CGS and CGS.A,) an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates and/or holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and the United States. * * * As reported in the Troubled Company Reporter on Jan. 16, 2009, Canwest Global Communications Corp. warned that based on current revenue and expense projections, it may not be able to comply with its existing quarterly total financial leverage ratio covenants in fiscal 2009. Continuation of negative conditions may affect the Company's ability to meet certain financial covenants in its credit facilities. The company is reviewing and implementing strategies to ensure compliance with its covenants, including strategies intended to improve profitability and reduce debt. CANWEST GLOBAL: Discloses Changes to Unit's Sr. Credit Facility --------------------------------------------------------------- Canwest Global Communications Corp. disclosed changes to Canwest Media Inc.'s $300 million senior credit facility. Canwest and its subsidiary, CMI, have reached agreement with the senior lenders to waive certain borrowing conditions and to limit borrowing until February 27, 2009, to $20 million in excess of the approximately $92 million that has already been advanced. Based upon current cash flow projections, the company believes that access to the reduced facility will enable it to continue to operate normally through this period. The waivers follow the company's first quarter announcement, that CMI may not be able to comply with its existing quarterly total financial leverage ratio covenants in fiscal 2009. Since that announcement, there has been a further deterioration in the Canadian economy including in the retail sector which has negatively affected some of the company's business units beyond what was originally forecast, such that CMI may not be able to comply with its quarterly financial leverage covenants for the second quarter. The parties will continue to discuss further amendments which, if successful, would reinstate CMI's access to the full amount of its credit facility following February 27, 2009 and enable CMI to comply with its financial leverage covenants going forward. Canwest continues to take proactive steps to reduce its operating and capital costs, restructure its operations and improve efficiencies. It is also reviewing its strategic alternatives and continues to actively pursue opportunities to divest of non-core operations and assets, and collect other amounts that it is owed. About Canwest Global Communications Corp. Canwest Global Communications Corp. -- http://www.canwest.com/-- (TSX: CGS and CGS.A,) an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates and/or holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and the United States. * * * As reported in the Troubled Company Reporter on Jan. 16, 2009, Canwest Global Communications Corp. warned that based on current revenue and expense projections, it may not be able to comply with its existing quarterly total financial leverage ratio covenants in fiscal 2009. Continuation of negative conditions may affect the Company's ability to meet certain financial covenants in its credit facilities. The company is reviewing and implementing strategies to ensure compliance with its covenants, including strategies intended to improve profitability and reduce debt. The TCR reported on Jan. 19, 2009, that Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Winnipeg, Manitoba-based Canwest Media Inc. to 'CCC+' from 'B'. At the same time, S&P lowered the senior secured debt rating on wholly owned subsidiary Canwest Limited Partnership to 'B-' from 'BB-'. In addition, S&P lowered the senior subordinated debt ratings on Canwest Media and Canwest LP to 'CCC-' from 'CCC+'. S&P removed all ratings from CreditWatch with negative implications, where they were placed Oct. 31, 2008. The outlook is negative. CITGO PETROLEUM: S&P Puts 'BB' Rating on Negative Watch ------------------------------------------------------- Standard & Poor's Ratings Services said that it took several rating actions on companies in the refining industry following the completion of a sector review. Liquidity concerns and S&P's expectations that industry conditions could remain weak for 2009 and possibly beyond were key factors behind the rating actions. S&P expect margins to remain thin and product demand weak. Rating Actions Sunoco Inc. To BBB/Negative/A-3 From BBB/Stable/A-2 The negative outlook reflects S&P's concerns that refining margins will remain weak in 2009 and possibly well beyond. Furthermore, Sunoco's limited ability to process disadvantaged crudes, its geographic concentration in the highly competitive PADD I region, and its significant near-term regulatory and required capital expenditures place the company at a relative disadvantage. Only partially offsetting these concerns are the company's growing and more stable coke and logistics business units, as well as its moderate debt. Despite the negative outlook on Sunoco, S&P affirmed the 'BBB' rating and kept the stable outlook on the company's partially owned subsidiary, Sunoco Logistics Partners L.P. CITGO Petroleum Corp. To BB/Watch Neg/-- From BB/Negative/-- The CreditWatch placement reflects S&P's concerns about CITGO's tight liquidity. Certain technical restrictions in the company's $450 million account receivable securitization program have significantly restricted availability and usage. The company is seeking approval to amend the facility, which would allow CITGO to considerably enhance its liquidity position. S&P expects the amendment to go through but, given the thin liquidity levels currently, any delay or outcomes contrary to S&P's expectations could leave the company vulnerable to unexpected calls on liquidity. S&P could lower the rating by more than one notch if the amendment is unsuccessful or delayed further than expected. However, if the amendment is approved as proposed, S&P could affirm CITGO's current ratings and outlook. United Refining Co. To B/Negative/-- From B/Stable/-- The outlook revision reflects S&P's expectation of weak financial performance and credit metrics for 2009 and possibly beyond. Interest expense coverage is likely to remain weak at 2x or lower, and adjusted debt leverage could continue to exceed 7x. Adequate liquidity provided primarily by its $130 million credit facility, which was near full availability as of Jan. 12, 2009, supports the ratings. Western Refining Inc. To B+/Negative/-- From B+/Watch Neg/-- The rating action reflects strong results in the second half of 2008 and S&P's expectations for improved first-quarter results versus year-ago levels. Hence, Western should have an adequate covenant cushion as it continues to pursue debt reduction through asset sales. In particular, near-term compliance with its debt leverage covenant, 5x as of March 31 and 4.75x as of June 30, should be achievable. Nevertheless, the negative outlook reflects the potential for a downgrade if Western fails to deleverage, or if the cushion to its Sept. 30 debt leverage covenant of 4.5x becomes thin. Ratings List Outlook Action/Downgraded Sunoco Inc. To From -- ---- Corporate credit rating BBB/Negative/A-3 BBB/Stable/A-2 Outlook Action United Refining Co. To From -- ---- Corporate credit rating B/Negative/-- B/Stable/-- CreditWatch Action CITGO Petroleum Corp. To From -- ---- Corporate credit rating BB/Watch Neg/-- BB/Negative/-- Western Refining Inc. To From -- ---- Corporate credit rating B+/Negative/-- B+/Watch Neg/-- N.B. -- This does not include all ratings affected. COFFEYVILLE RESOURCES: S&P Affirms 'B' Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said it revised the outlook on Kansas-based petroleum refiner Coffeyville Resources LLC to negative from stable. At the same time, S&P affirmed its ratings on the company, including the 'B' corporate credit rating and the 'BB-' issue-level rating on its senior secured credit facilities. S&P also left unchanged the '1' recovery rating on the senior secured facilities, indicating S&P's expectation for a very high (90%-100%) recovery of principal in a payment default. "The outlook revision reflects Standard & Poor's concerns regarding near-term cash flow stability, and the potential for lower debt amortization on the outstanding term loan that may result from demand and margin contraction on refined products," said Standard & Poor's credit analyst Mark Habib. Although Coffeyville management expects debt service coverage to remain between 3.5x and 5.5x under current pricing scenarios, S&P believes this level of financial performance relies on diesel premiums remaining at current levels over gasoline, stable throughput volumes, and sustained fertilizer prices. If market conditions for either diesel or fertilizer weaken without a corresponding improvement in gasoline margins, it could put pressure on the company's financial covenants, and further reduce cash sweeps. Although Coffeyville's management does not currently expect $4 to $5 per barrel margins that were last seen in 2002, Standard & Poor's believes that a continuing softening of refined products demand due to a deep and prolonged economic recession could pressure the company's headroom under debt covenants through the end of 2010. Coffeyville is a 115,000 barrel per day, independent refiner and marketer of high value transportation fuels, and a low cost producer of ammonia and UAN fertilizers, located in Coffeyville, Kan. The company's petroleum complex is a full coking sour crude refinery. The refinery has undergone numerous expansions and upgrades since 1995, with aggregate capital expenditures of about $673 million. The adjacent fertilizer plant has an average daily production rate of 1,250 tons of ammonia and 2,020 tons of urea ammonium nitrate, and enjoys cost advantages over natural gas- based fertilizer plants due to its use of coke produced at the refinery rather than natural gas. Supporting businesses constitute less than 5% of EBITDA projections and include a crude oil gathering system, an asphalt and refined fuels terminal facility, and a crude oil pipeline system. S&P does not view these businesses as being significant credit drivers for Coffeyville. The negative outlook reflects lower-than-expected debt amortization since the 2007 IPO, due partly to high capital expenditures that have reduced the free cash flow available to sweep, and S&P's expectation that softening market conditions over the next 18 months could compress margins and further limit cash sweeps for the next several years, increasing refinancing risk at maturity. The company may also face the possibility of covenant violations if margins continue to deteriorate. Furthermore, the expiration of crack spread hedges in 2010 will result in increased commodity sensitivity over the next several years. S&P could lower the rating if crack spreads, fertilizer pricing, and throughput volumes deteriorate to 2002 levels, and lead to financial covenant violations or reduced cash sweeps such that the remaining debt at maturity is not reduced significantly below $400 million. Increased margins that improve the project's prospects of avoiding covenant trips over the next 18 months could lead us to stabilize the rating, and an amortization profile in line with the company's base case projections for debt at term loan maturity could lead us to raise the rating. CCM MERGER: S&P Affirms Corporate Credit Rating at 'B-' ------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'B-' corporate credit rating on Detroit-based CCM Merger Inc. and removed it from CreditWatch, where it was placed with negative implications on Dec. 5, 2008. The rating outlook is negative. The issue-level rating on the company's senior secured credit facility remains unchanged at 'B+' (two notches higher than the corporate credit rating) with a recovery rating of '1', indicating S&P's expectation for very high (90%-100%) recovery for lenders in the event of payment default. In addition, the issue-level rating on the company's $300 million senior unsecured notes remains unchanged at 'CCC' (two notches lower than the corporate credit rating) with a recovery rating of '6', indicating S&P's expectation for negligible (0%-10%) recovery in the event of a payment default. S&P also removed the issue-level ratings on the credit facility and senior notes from CreditWatch, in conjunction with the removal of the corporate credit rating. "The affirmation of the 'B-' corporate credit rating recognizes the successful execution of an amendment to the company's senior secured credit facility," said Standard & Poor's credit analyst Michael Listner, "and the deleveraging brought about from additional equity contributed by the owner of the company." At Dec. 31, 2008, CCM Merger was in violation of its first-lien leverage covenant and its total leverage covenant. Terms of the amendment provide for a $2.5 million increase in quarterly amortization of the term loan, the implementation of a 3.00% LIBOR floor, repricing of the facility to LIBOR plus 5.50%, a $20 million equity contribution to repay the term loan, and changes to the financial covenants of the credit agreement. In addition, the amendment requires a further $25 million equity contribution, to be funded within the next six months, with the proceeds to be used to either repay a portion of the $49.4 million Economic Development Corp. bonds, maturing in May 2009, or to purchase senior notes. "The execution of the amendment cures the violation and provides the company with needed covenant relief," added Mr. Listner, "as S&P believes that the current operating environment will remain challenging." CHESAPEAKE CORP: Committee Taps Greenberg Traurig as Counsel ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Chesapeake Corporation and its debtor-affiliates asks the the Hon. Frank J. Santoro of the United States Bankruptcy Court for the Eastern District of Virginia for permission to employ Greenberg Traurig LLP as its counsel. The firm is expected to: a) consult with the Debtors' professionals or representatives concerning the administration of these Cases; b) prepare and review pleadings, motions and correspondence; c) appear at and being involved in proceedings before this Court; d) provide legal counsel to the Committee in its investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' businesses, and any other matters relevant to these cases; e) analyze the Debtors' proposed use of cash collateral and debtor-inpossession financing; f) advise the Committee with respect to its rights, duties and powers in these cases; g) assist the Committee in analyzing the claims of the Debtors' creditors and in negotiating with such creditors; h) assist the Committee in its analysis of and negotiations with the Debtors or any third party concerning matters related to, among other things, the terms of a sale, plan of reorganization or other conclusion of these cases; i) assist and advise the Committee as to its communications to the general creditor body regarding significant matters in these cases; j) assist the Committee in determining a course of action that best serves the interests of the unsecured creditors; and k) perform such other legal services as may be required under the circumstances of these cases and are deemed to be in the interests of the Committee in accordance with the Committee's powers and duties as set forth in the Bankruptcy Code. The firm's professionals and their compensation rates are: Professional Hourly Rate ------------ ----------- Nancy A. Peterman, Esq. $710 Joseph P. Davis, Esq. $700 Howard J. Berman, Esq. $730 Alan J. Brody, Esq. $625 James P. Ponsetto, Esq. $530 Jason L. Weidberg, Esq. $380 Virginia E. Robinson, Esq. $310 Valentina Minak, Esq. $275 Kerry E. Carlson, Paralegal $225 Designation Hourly Rate ----------- ----------- Shareholders $335-$900 Counsel $350-$900 Associates $175-$565 Legal Assistants/Paralegals $65-$310 Nancy A. Peterman, Esq., shareholder at the firm, assures the Court that the firm does not hold any interest adverse to the Debtors' estate and their creditors, and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Chesapeake Corporation Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE: CSK) -- http://www.cskcorp.com-- supplies specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. The Debtors have 44 locations in Europe, North America, Africa and Asia and employs approximately 5,400 people worldwide. The company directly owns 100% of each of the other Debtors. The company owns, directly or indirectly, 100% of each of the non- debtor subsidiaries except: (i) Chesapeake Plastics Kft, a Hungarian joint venture which is 49% owned by Chemark Kft; and (ii) Rotam Boxmore Packaging Co. Ltd., a British Virgin Islands company which is 50% owned by Canada Rotam International Co. Ltd. The company's certificate of authorization authorizes the issuance of 60,000,000 shares of common stock. About 20,559,115 shares of common stock are issued and outstanding with par value of $1.00 per share as of Dec. 26, 2008. Moreover, the company's certificate allows the issuance of 500,000 shares of preferred stock, and no shares are outstanding. As of Dec. 31, 2007, Dimensional Fund Advisors LLP owns 7.98% of the company; T. Rowe Price Associates Inc., 8.4%; and Wells Fargo & Company, 14.71%. Edelmann GmbH & Co. KG and Joachim W. Dziallas owns 13.5% of the company as of Sept. 19, 2008. New York Stock Exchange suspended the listing of the company's common stock effective Oct. 8, 2008, due to its inability to meet the global market capitalization requirements for continued listing on the exchange. Subsequently, the company's stock began to be quoted on the over-the-counter bulletin board under the trading symbol "CSKE.PK." Chesapeake Corporation, and 18 affiliates filed Chapter 11 petitions (Bankr. E.D. Virginia, Lead Case No. 08-336642) on Dec. 29, 2008. Benjamin C. Ackerly, Esq., Jason W. Harbour, Esq., Peter S. Partee, Esq., at Hunton & Williams LLP, are the proposed bankruptcy counsel. Chesapeake has also tapped Alvarez and Marsal North America LLC, and Goldman Sachs & Co. as financial advisors. It also brought along Tavenner & Beran PLC as conflicts counsel and Hammonds LLP as special counsel. Its claims agent is Kurtzman Carson Consultants LLC. The United States Trustee for Region 4 appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. As of September 30, 2008, Chesapeake's consolidated balance sheets showed $936.4 million in total assets, including $340.7 million in current assets; and $937.1 million in total liabilities, including $469.2 million in current liabilities, resulting in $500,000 in stockholders' deficit. CHESAPEAKE CORP: Committee Taps Gordian as Financial Advisor ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Chesapeake Corporation and its debtor-affiliates asks the United States Bankruptcy Court for the Eastern District of Virginia for permission to employ Gordian Group LLC as its financial advisor. The firm is expected to: a) review and provide guidance and views to their proposed counsel, Greenberg Traurig LLP, with respect to the marketing and sales process, including the undertaking thus far that resulted in the stalking horse bid, as well as any subsequent or alternative sale of the Debtors' assets; b) assist with the development, negotiation and implementation of alternative restructurings, which may include identifying and working with alternative buyers of the Debtors' assets in addition to the Stalking Horse Bidders; c) assist in negotiations with the Stalking Horse Bidders, other interested acquirers, current lenders, creditors, shareholders and other interested parties regarding the restructuring; c) review and analyze the Debtors' business, operations and financial condition and advise Greenberg Traurig on the firm's findings; d) assist Greenberg Traurig in assessing the fairness of any Restructuring; e) provide court testimony, as appropriate and mutually agreed upon by the firm and Greenberg Traurig; and f) render other financial advisory and investment banking services as may be customary for an engagement of the type contemplated herein and mutually agreed upon by the parties hereto. The firm will be paid, upon approval by the Court, in nonrefundable fees in cash as follows: a) monthly fees of $100,000 per month commencing as of Jan. 9, 2009, payable in advance on the first day of each month of this engagement or portion thereof; plus b) fees payable upon consummation of a restructuring confirmed by the Court, equal to 3.00% of excess aggregate consideration that is paid or payable in connection with the restructuring. In addition, the firm will be be reimbursed for all of its reasonable out-of-pocket expenses including legal, travel, telephone and facsimile. Peter S. Kaufman, president and head of restructuring and distressed M&A at the firm, assures the Court that the firm does not hold any interest adverse to the Debtors' estate and their creditors, and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Chesapeake Corporation Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE: CSK) -- http://www.cskcorp.com-- supplies specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. The Debtors have 44 locations in Europe, North America, Africa and Asia and employs approximately 5,400 people worldwide. The company directly owns 100% of each of the other Debtors. The company owns, directly or indirectly, 100% of each of the non- debtor subsidiaries except: (i) Chesapeake Plastics Kft, a Hungarian joint venture which is 49% owned by Chemark Kft; and (ii) Rotam Boxmore Packaging Co. Ltd., a British Virgin Islands company which is 50% owned by Canada Rotam International Co. Ltd. The company's certificate of authorization authorizes the issuance of 60,000,000 shares of common stock. About 20,559,115 shares of common stock are issued and outstanding with par value of $1.00 per share as of Dec. 26, 2008. Moreover, the company's certificate allows the issuance of 500,000 shares of preferred stock, and no shares are outstanding. As of Dec. 31, 2007, Dimensional Fund Advisors LLP owns 7.98% of the company; T. Rowe Price Associates Inc., 8.4%; and Wells Fargo & Company, 14.71%. Edelmann GmbH & Co. KG and Joachim W. Dziallas owns 13.5% of the company as of Sept. 19, 2008. New York Stock Exchange suspended the listing of the company's common stock effective Oct. 8, 2008, due to its inability to meet the global market capitalization requirements for continued listing on the exchange. Subsequently, the company's stock began to be quoted on the over-the-counter bulletin board under the trading symbol "CSKE.PK." Chesapeake Corporation, and 18 affiliates filed Chapter 11 petitions (Bankr. E.D. Virginia, Lead Case No. 08-336642) on Dec. 29, 2008. Benjamin C. Ackerly, Esq., Jason W. Harbour, Esq., Peter S. Partee, Esq., at Hunton & Williams LLP, are the proposed bankruptcy counsel. Chesapeake has also tapped Alvarez and Marsal North America LLC, and Goldman Sachs & Co. as financial advisors. It also brought along Tavenner & Beran PLC as conflicts counsel and Hammonds LLP as special counsel. Its claims agent is Kurtzman Carson Consultants LLC. The United States Trustee for Region 4 appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. As of September 30, 2008, Chesapeake's consolidated balance sheets showed $936.4 million in total assets, including $340.7 million in current assets; and $937.1 million in total liabilities, including $469.2 million in current liabilities, resulting in $500,000 in stockholders' deficit. CHESAPEAKE CORP: Gets Final OK to Use $37.1MM Wachovia Facility --------------------------------------------------------------- The Hon. Frank J. Santoro of the United States Bankruptcy Court for the Eastern District of Virginia authorized Chesapeake Corporation and its debtor-affiliates to obtain, on a final basis, $37,100,000 in postpetition financing under a third amended and restated credit agreement dated Dec. 30, 2008, with Wachovia Bank, National Association, as administrative agent, and Wachovia Capital Markets LLC, as sole lead arranger and book runner. According to the Troubled Company Reporter on Jan. 2, 2009, the Debtors were authorized by the Court to access $18,550,000 in financing on the interim. The Court also authorized the Debtors to access cash collateral securing repayment of secured loan to the lenders. The proceeds of the facility will be used for general corporate and working capital purposes including repayment of intercompany loans owed to the Debtors; Provided that: a) no proceeds of any borrowing under the credit agreement will be received by any subsidiary of the Debtors other than in the form of either a secured intercompany loan or an unsecured loan subject to an aggregate cap of $5,000,000 for all such unsecured loans; and b) each Debtor will borrow directly under the DIP facility and will not receive proceeds on lent from other Debtors. The credit agreement provides as much as $37,100,000 revolving credit facility -- with availability in British pounds sterling subject to weekly true-ups. Furthermore, the credit agreement will expire on the earliest to occur of: a) May 31, 2009; b) 40 days after the Debtor's bankruptcy filing, if a final DIP order has not been entered by such date; c) the substantial consummation of a plan of reorganization that is confirmed pursuant to an order entered by the Court; d) the consummation of the 363 sale; or e) the acceleration of the loans and the termination of the commitment with respect to the credit agreement in accordance with the terms of that agreement. The lenders will be granted first lien on unencumbered property of the Debtors and superpriority administrative claims with priority in payment over any and all administrative expenses. The facility is subject to carve-outs for payment of (i) all fees to the clerk of the Court and the Office of the United States Trustee; and (ii) all allowed fees and expenses incurred by professionals retained by the Debtors and any statutory committee. The DIP agreement contains customary and appropriate events of defaults. Prepetition Indebtedness The Debtors entered into second amended and restated credit agreement dated Feb. 23, 2004, with Wachovia Bank, as administrative agent, together with Citicorp North America, Inc., as syndication agents; HSBC Bank plc, as documentation agent; Wachovia Capital Markets LLC, as a co-lead arranger and sole book runner; Banc of America Securities LLC and Citicorp North America Inc., as co-lead arrangers. The facility will mature by February 2009. The Debtors owe $245,984,567 plus accrued and unpaid interest including attorneys' fees and disbursements under the agreement. A full-text copy of the Third Amended and Restated Credit Agreement dated Dec. 30, 2008, is available for free at: http://ResearchArchives.com/t/s?370f Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE: CSK) -- http://www.cskcorp.com-- supplies specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. The Debtors have 44 locations in Europe, North America, Africa and Asia and employs approximately 5,400 people worldwide. The company directly owns 100% of each of the other Debtors. The company owns, directly or indirectly, 100% of each of the non- debtor subsidiaries except: (i) Chesapeake Plastics Kft, a Hungarian joint venture which is 49% owned by Chemark Kft; and (ii) Rotam Boxmore Packaging Co. Ltd., a British Virgin Islands company which is 50% owned by Canada Rotam International Co. Ltd. The company's certificate of authorization authorizes the issuance of 60,000,000 shares of common stock. About 20,559,115 shares of common stock are issued and outstanding with par value of $1.00 per share as of Dec. 26, 2008. Moreover, the company's certificate allows the issuance of 500,000 shares of preferred stock, and no shares are outstanding. As of Dec. 31, 2007, Dimensional Fund Advisors LLP owns 7.98% of the company; T. Rowe Price Associates Inc., 8.4%; and Wells Fargo & Company, 14.71%. Edelmann GmbH & Co. KG and Joachim W. Dziallas owns 13.5% of the company as of Sept. 19, 2008. New York Stock Exchange suspended the listing of the company's common stock effective Oct. 8, 2008, due to its inability to meet the global market capitalization requirements for continued listing on the exchange. Subsequently, the company's stock began to be quoted on the over-the-counter bulletin board under the trading symbol "CSKE.PK." Chesapeake Corporation, and 18 affiliates filed Chapter 11 petitions (Bankr. E.D. Virginia, Lead Case No. 08-336642) on Dec. 29, 2008. Benjamin C. Ackerly, Esq., Jason W. Harbour, Esq., Peter S. Partee, Esq., at Hunton & Williams LLP, are the proposed bankruptcy counsel. Chesapeake has also tapped Alvarez and Marsal North America LLC, and Goldman Sachs & Co. as financial advisors. It also brought along Tavenner & Beran PLC as conflicts counsel and Hammonds LLP as special counsel. Its claims agent is Kurtzman Carson Consultants LLC. The United States Trustee for Region 4 appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. As of September 30, 2008, Chesapeake's consolidated balance sheets showed $936.4 million in total assets, including $340.7 million in current assets; and $937.1 million in total liabilities, including $469.2 million in current liabilities, resulting in $500,000 in stockholders' deficit. CHRYSLER FINANCIAL: Sues Dennis Hecker for Non-Payment of $550MM ---------------------------------------------------------------- Doron Levin at Bloomberg News reports that Chrysler Financial has sued Advantage Rent-a-Car Inc. owner Dennis Hecker back for failing to repay $550 million in loans. As reported by the Troubled Company Reporter on Nov. 17, 2008, Denny Hecker filed a lawsuit against Chrysler Financial for freezing his credit, saying that the company "suddenly, without notice, arbitrarily, and in bad faith" froze his credit, and because of this, he and his companies were unable to purchase new cars, or to operate his rental car business. Bloomberg relates that Chrysler Financial then sued Mr. Hecker on January 23 in a District Court in Hennepin County, Minnesota, claiming that Mr. Hecker breached contracts to pay back the funding. According to Bloomberg, Mr. Hecker used loans from Chrysler Financial to purchase vehicles for his dealerships. When Chrysler Financial cancelled Mr. Hecker's credit line, Mr. Hecker wasn't able to pay Ford Motor Co. for Ford vehicles he had sold, Bloomberg states, citing Tim Thornton, an attorney of Briggs & Morgan who is representing Mr. Hecker. Ford, according to Bloomberg, filed a lawsuit against Mr. Hecker in January in the U.S. District Court in Minneapolis, claiming that his now closed Ford-Lincoln-Mercury dealership hasn't paid its $3.1 million debt to the automaker. "We were not paid for vehicles that were purchased from us. We do not feel that we are in a position to comment or speculate on the cause or reason that the payments were not made," Bloomberg quoted Ford spokesperson Marcey Evans as saying. About Chrysler Financial Chrysler Financial -- http://corp.chryslerfinancial.com-- offers automotive financial products and services to both dealers and consumers of Chrysler, Jeep(R) and Dodge vehicles in the U.S., Canada, Mexico and Venezuela. In addition it offers vehicle wholesale and retail financing to more than 3,600 Chrysler, Jeep and Dodge dealers. Currently, nearly three million drivers in the United States enjoy the benefits of financing with Chrysler Financial. Chrysler Financial has an employee base of 4,000 and supports a global portfolio of $60 billion. 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 Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. 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. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. COMFORT CO: Terminates Dan Marino Endorsement Agreement ------------------------------------------------------- Comfort Co., Inc., obtained authority from the U.S. Bankruptcy Court for the District of Delaware (Wilmington) to terminate an endorsement agreement with sports announcer Dan Marino. According to Bloomberg's Bill Rochelle, the settlement with the professional football Hall of Fame quarterback calls for paying him $25,000 and giving back all rights to the use of his name and image. Comfort Co. is expected to obtain confirmation of its plan of reorganization after the Plan met overwhelming support from creditors entitled to vote on it. Mr. Rochelle relates that the Plan offers to (i) pay unsecured creditors $325,000 cash plus a share in lawsuit recoveries, (ii) grant a new $100 million secured note and 75% of the new stock of reorganized Comfort to holders of first lien debtholders, on account of the $125 million secured portion of their claim, and additional $6.8% of the new stock plus 68% of the lawsuit, on account of their deficiency claim, and (iii) award 2.3% of the new stock and 23% of lawsuit recoveries to second lien lenders owed $52.2 million. About Comfort Co. Headquartered in West Long Branch, New Jersey, Comfort Co., Inc. -- http://www.sleepinnovations.com/-- is a holding company that owns 100% of the common stock of Sleep Innovations, Inc., which, in turn, is the direct parent of Advanced Innovations East, LLC, Advanced Innovations West, LLC, Advanced Innovations Central, LLC and Advanced Urethane Technologies, Inc. Advanced Urethane is the direct parent of AUT Brehnam, Inc. AUT Dallas, Inc., AUT Lebanon, Inc., AUT Newburyport, Inc. and AUT West Chicago, Inc. The Debtors develop, manufacture, market and distribute foam comfort sleep products, which include pillows, mattresses and mattress toppers, for sale to major retailers in the United States, Canada, Mexico and other countries. The Debtors also manufacture and sell standard and specialty polyurethane foam products to end market users, such as manufacturers in the bedding, furniture, automotive, packaging, medical and consumer products industries. The Debtors filed for Chapter 11 relief on Oct. 3, 2008 (Bankr. D. Del. Lead Case No. 08-12305). Michael R. Lastowski, Esq., and Richard W. Riley, Esq., at Duane Morris LLP, in Wilmington, Delaware, Sommer Leigh Ross, Esq., at Duane Morris LLP, in Philadelphia, and Sheryl L. Toby, Esq., at Dykema Gossett, PLLC, represents the Debtors as counsel. In its bankruptcy petition, Comfort Co. estimated both assets and debts to be between $100 million and $500 million. CONSTAR INTERNATIONAL: Seeks to Pay $25.5MM to 3 Suppliers ---------------------------------------------------------- Constar International Inc., asks the Hon. Peter J. Walsh of the United States Bankruptcy Court for the District of Delaware to allow it to pay $25.5 million owed to three major resin suppliers pre-bankruptcy. Constar said that payment to these "critical vendors" are necessary to maintain business with these parties. Headquartered in Philadelphia, Pennsylvania, Constar International Inc. (NASDAQ: CNST) -- http://www.constar.net-- produces polyethylene terephthalate plastic containers for food, soft drinks and water. The company provides full-service packaging services. The company and five of its affiliates filed for Chapter 11 protection on Dec. 30, 2008 (Bankr. D. Del. Lead Case No. 08-13432). Wilmer Cutler Pickering Hale and Dorr LLP represents the Debtors as their bankruptcy counsel. The Debtors proposed Bayard, P.A., as local counsel; Pricewaterhouse Coopers as auditors and accountants; Greenhill & Co. LLC as financial advisor; and Epiq Systems Inc. Claims and Balloting Agent. CONTECH LLC: Wants to Hire Paul Hasting as Counsel -------------------------------------------------- Contech LLC and its debtor-affiliates ask the United States Bankruptcy Court for the Eastern District of Michigan for permission to employ Paul, Hastings, Janofsky & Walker, LLP, as their counsel. The firm will a) advise the Debtors of their rights, powers; duties as debtors and debtors in possession while operating and managing their respective businesses and properties under Chapter 11 of the Bankruptcy Code; b) prepare on behalf of the Debtors all necessary and appropriate applications, motions, proposed orders, other pleadings, notices, schedules and other documents, and reviewing all financial and other reports to be filed in these chapter 11 cases; c) advise the Debtors concerning, and preparing responses to, applications, motions, other pleadings, notices and other papers that may be filed by other parties in these chapter 11 cases; d) advise the Debtors with respect to, and assisting in the negotiation and documentation of, financing agreements and related transactions; e) review the nature and validity of any liens asserted against the Debtors' property and advising the Debtors concerning the enforceability of such liens; f) advise the Debtors regarding their ability to initiate actions to collect and recover property for the benefit of their estates; g) advise and assisting the Debtors in connection with any potential property dispositions; h) advise the Debtors concerning executory contract and unexpired lease assumptions, assignments and rejections as well as lease restructurings and recharacterizations; i) advise the Debtors in connection with the formulation, negotiation and promulgation of a plan or plans of reorganization, and related transactional documents; j) assist the Debtors in reviewing, estimating and resolving claims asserted against the Debtors' estates; k) commence and conduct litigation necessary and appropriate to assert rights held by the Debtors, protect assets of the Debtors' chapter 11 estates or otherwise further the goal of completing the Debtors' successful reorganization; and 1) provide non-bankptcy services for the Debtors to the extent requested by the Debtors. The firm's professionals and their compensation rates are: Professional Designation Hourly Rate ------------ ----------- ----------- Richard Chesley, Esq. Partner $895 Shannon C. Baxter, Esq. Associate $655 Kimberly D. Newmarch, Esq. Associate $635 Susan M. Brake, Esq. Associate $580 Chrstian M. Auty, Esq. Associate $515 Mary T. Weber, Esq. Associate $475 Stephenie S. Park, Esq. Associate $360 Ruth P. Rosen Paralegal $320 Richard A. Chesley, Esq., an attorney of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Portage, Michigan, Contech LLC -- http://www.contech-global.com-- sells and supplies light-weight cast component for automotive OEM's and Tier I suppliers. The Debtors also manufacture safety steel forged automotive components and tube fabrications through its Steel Products Group primarily for commercial truck OEM's. The The Debtors have approximately 1,000 employees. The company and two of its affiliates filed for Chapter 11 protection on Jan. 30, 2009 (Bankr. E.D. Mich. Lead Case No. 09-42392). Robert A. Weisberg, Esq., and Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., serve as the Debtors' local counsel. The Debtors proposed Kurtzman Carson Consultants LLC as their claims agent. When the Debtors filed for Chapter 11 protection from their creditors, they listed assets and debts between $100 million to $500 million each. CROSSROADS FORD: Shuts Down; Lays Off 55 Employees -------------------------------------------------- Omari Fleming at Wreg.com reports that Crossroads Ford has closed, laying off about 55 workers. Crossroads Ford continued selling cars until Tuesday, Memphis Business Journal says, citing a company sales associate. Wreg.com relates that the showroom floor at Crossroads Ford has been emptied, and company owner Jimmy Walker already informed employees last week. Mr. Walker, according to the report, said that workers will receive two weeks severance pay, paid vacation, benefits, and holidays. Citing Mr. Walker, Wreg.com states the Crossroads Ford used to have sales at an average of more than 175 car sales per month. Wreg.com says that the sales dropped to about fifty a month. Mr. Walker said that he lost $150,000 per month over the past year, according to the report. Credit markets are frozen and it's causing problem to the auto industry, Wreg.com relates, citing Mr. Walker. Crossroads Ford -- http://www.crossroadsford.com/-- is a Ford dealership located just off of I-40 at 5299 Summer. It had been operating for five years. DECODE GENETICS: Sells Auction Rate Securities to NBI for $11MM --------------------------------------------------------------- deCODE genetics, Inc., entered into an agreement with NBI hf., an Icelandic financial institution, pursuant to which NBI has purchased all auction rate securities owned by deCODE for an aggregate price of ISK1,375,000,000, which represents approximately $11,000,000 at current exchange rates. ISK750,000,000 of the Purchase Price was paid on Jan. 16, 2009, and the remainder of the Purchase Price is payable in installments on Jan. 27, 2009, and Feb. 13, 2009. Pursuant to the agreement, NBI has the put option to require deCODE to repurchase the ARS upon the earlier of (a) the sale of all or a majority of the stock of deCODE genetics ehf, deCODE's Icelandic subsidiary, or a specified part of the operations of IE or (b) Dec. 31, 2009, and deCODE has the call option to require NBI to sell the ARS to it at any time prior to Dec. 31, 2009. The repurchase price on exercise of the put or call option will be equal to the Purchase Price plus interest from Janu. 16, 2009, at a rate 5% above the Reykjavik Interbank Offered Rate in effect on the date payment is made less the aggregate amount of interest and principal theretofore received by NBI on the ARS. In addition, if the aggregate amount of interest and principal received by NBI with respect to the ARS is higher than the Repurchase Price, upon deCODE's repurchase of the ARS pursuant to the exercise of the put or call option, NBI will be required to deliver to deCODE, in addition to the ARS, an amount equal to (A) the aggregate amount of principal and interest that it received less (B) the sum of (i) the Repurchase Price and (ii) ISK375,000,000 or approximately $3,000,000 at current exchange rates. On Jan. 21, 2009, Birgit Stattin Norinder and Linda Buck resigned as directors of deCODE genetics, Inc. deCODE is not aware of any disagreement between it and either of the directors relating to deCODE's operations, policies or practices. About deCODE genetics deCODE genetics Inc. (Nasdaq: DCGN) -- http://www.decode.com/-- operates as a biopharmaceutical company that applies discoveries in human genetics to develop drugs and diagnostics for common diseases. The company serves pharmaceutical companies, biotechnology firms, pharmacogenomics companies, government institutions, universities, and other research institutions primarily in the United States, Europe, and internationally. The company was founded in 1996 and is headquartered in Reykjavik, Iceland. deCODE genetics Inc.'s balance sheet at Sept. 30, 2008, showed total assets of $100.2 million and total liabilities of $304.0 million, resulting in a shareholders' deficit of roughly $203.8 million. Net loss for the quarter ending Sept. 30, 2008, was $17.9 million, compared to $24.2 million for the third quarter 2007. Net loss for the first nine months of 2008 was $62.9 million, compared to $63.1 million for the first nine months of last year. In addition to operating loss, net loss figures for the periods presented include interest expense and, in the 2008 periods, unrealized loss resulting from the revaluation of the company's auction rate securities investments. The nine-month figure for 2007 also includes a one-time payment deCODE received related to the settlement of an intellectual property suit. At Sept. 30, 2008, the company had liquid funds available for operating activities of $11.8 million, as compared to $23.7 million at June 30, 2008, and $64.2 million at Dec. 31, 2007. The net utilization of liquid funds in the three and nine- month periods ended Sept. 30, 2008, was $12.0 million and $52.4 million. At Sept. 30, 2008, the company had $35.5 million in cash, cash equivalents and investments, comprised of the $11.8 million in cash and cash equivalents, well as $5.5 million in restricted investments in U.S. Treasury Bills and $18.2 million in illiquid, non-current investments in auction rate securities. The company is undertaking a review of its long-term business strategy with the goal of sharpening the focus of its business, selling assets, securing partnerships, and utilizing the resources generated to support product development and marketing efforts in its core business. The company has utilized a 30-day grace period for the scheduled October 15 interest payment on its 3.5% Senior Convertible Notes due 2011 and is reviewing methods for making this payment. Given its current liquid assets, and without paying the interest on its Notes from its present funds, the company must obtain further financial resources through either the implementation of strategic alternatives, corporate partnerships, or the sale of or loans secured by its auction rate securities in order to continue operations beyond the end of this year. The company is focused on reducing expenses and speeding the evaluation of its strategic options in order to obtain the resources to do so. DOLE FOOD: Discloses $130 Million Asset Sale Transactions --------------------------------------------------------- Dole Food Company, Inc., on January 29, 2009, related the progress of its asset sale transactions. First, Dole has closed the first phase of the previously announced sale of its flowers division. With the closing of the first phase, Dole has now completed the sale of its flowers business and retains only certain real estate of the former flowers division to be sold in the subsequent phases of the transaction. Second, Dole has closed on the sale of certain banana properties in Latin America. Third, Dole has signed a definitive purchase and sale agreement to sell certain property in North America. When the North American property sale closes, towards the end of the first quarter of 2009, Dole will have received net cash proceeds of approximately $84 million from these three transactions. When all phases of the transactions are complete, net proceeds to Dole will be approximately $130 million. The cash proceeds will be used to pay down Dole's debt under its senior secured credit facilities and/or to reinvest in the business. Pending reinvestment, cash proceeds will be used to pay down Dole's revolving credit facility. "Dole is pleased to be moving forward with these asset sale transactions, continuing to execute on our previously announced plan to sell assets to reduce our debt," said David A. DeLorenzo, President and CEO of Dole. Based in Westlake Village, California, Dole Food Company Inc. -- http://www.dole.com/-- is the world's largest producer and marketer of high-quality fresh fruit, fresh vegetables and fresh- cut flowers. Dole markets a growing line of packaged and frozen foods and is a produce industry leader in nutrition education and research. Dole Food's balance sheet at Oct. 4, 2008, showed total assets of $4.4 billion, total liabilities of $4.0 billion and stockholders' equity of $429.3 million For quarter ended Oct. 4, 2008, the company posted net loss of $21.3 million compared with net loss of $63.3 million for the same period in the previous year. As reported Troubled Company Reporter on Jan. 23, 2009, Participations in a syndicated loan under which Dole Food is a borrower traded in the secondary market at 75.69 cents-on-the- dollar during the week ended Jan. 16, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.97 percentage points from the previous week, the Journal relates. Dole Food pays interest at 175 points above LIBOR. The loan matures April 5, 2013. The bank loan carries Moody's Ba3 rating and Standard & Poor's B+ rating. The TCR reported on Nov. 17, 2008, that Moody's Investors Service changed the rating outlook of Dole Food Company, Inc. to negative from stable, reflecting the concern that the refinancing of the May 1, 2009, $350 million bond maturity may not be done on attractive terms given the sluggish high yield capital markets. Dole's corporate family rating of B3 and its senior secured debt ratings Ba3 were affirmed. Moody's lowered the probability of default rating to Caa1 given the short time until the bond maturity. The ratings of the company's unsecured debt were also lowered. While Moody' expects that recovery value in any default would be better than average for Dole given the richness of its assets, the higher expected recovery expectation was not sufficient to offset the ratings' impact of lowering the PDR. Ratings affirmed, with LGD percentages adjusted: Dole Food Company, Inc.: -- Corporate family rating at B3 -- Senior secured term loan B at Ba3 (LGD2); LGD% to 16% from 23% -- Senior secured prefunded letter of credit facility, also available to Solvest, at Ba3 (LGD2); LGD% to 16% from 23% EFFICIENT ENGINEERS: Case Summary & 20 Largest Unsec. Creditors --------------------------------------------------------------- Debtor: Efficient Engineers, Inc. 3835 McCoy Road Orlando, FL 32812 Tel: (407) 859-2711 Bankruptcy Case No.: 09-01207 Chapter 11 Petition Date: February 3, 2009 Court: Middle District of Florida (Orlando) Debtor's Counsel: Edward R. Gay, Esq. lawfirmofedgay@bellsouth.net Law Firm of Edward R. Gay, PA 1516 East Concord Street Orlando, FL 32803 Tel: (407) 898-1871 Fax: (407) 897-7042 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Uda Pamar $960,000 c/o Richard Lee Barrett Barrett, Chapman & Ruda 18 Wall St. Orlando, FL 32801 Progress Energy $8,222 5225 Tech Data Drive CleanraterF, FL 33760 World Cinema $7,468 9801 Westheimer Suite 409 Houston, TX77042 WasteS erviceso f Central $3,336 Florida Inc. Maintenance USA $3,199 Dex $3,010 Teco $3,005 Simplex Grinnell $2,557 Perfect Wedding Guide $2,273 Rapco Supply $1,557 A1 Electric $1,243 Aisco $1,238 Laser Works $780 CDS Spa and Pool $550 A1 Elevator Inspection Inc. $540 Goliath Pest Control $475 Minuteman Press $316 Hydro Services $103 Scott Caldwell $90 Venere Vidella Camillucci $64 The petition was signed by Gary F. Labrozzi, chief financial officer. ELECTROGLAS INC: Gets NASDAQ Delisting Notice; Hearing Requested ---------------------------------------------------------------- Electroglas Inc. received a letter from the Listing Qualifications Staff of The NASDAQ Stock Market indicating that, based upon the Company's non-compliance with the $2.5 million stockholders' equity requirement for continued listing on The NASDAQ Capital Market or its alternatives, as set forth in NASDAQ Marketplace Rule 4310(c)(3), the Company's securities were subject to delisting from NASDAQ unless the Company requested a hearing before a NASDAQ Listing Qualifications Panel. The Staff Determination follows earlier correspondence from NASDAQ, which was announced by the Company on October 15, 2008. The Company has requested a hearing before the Panel, which will stay any action with respect to the Staff Determination until the Panel renders a decision subsequent to the hearing. There can be no assurance that following the hearing the Panel will grant the Company's request for continued listing. About Electroglas San Jose, California-based Electroglas, Inc. -- http://www.electroglas.com/-- supplies innovative wafer probers and software solutions for the semiconductor industry. For more than 40 years, Electroglas has helped integrated device manufacturers (IDMs), wafer foundries and outsourced assembly and test (OSAT) suppliers improve the overall effectiveness of semiconductor manufacturers' wafer testing. Headquartered in San Jose, California, the company has shipped more than 16,500 systems worldwide. Electroglas' stock trades on the NASDAQ Capital Market under the symbol "EGLS." EMERSON RE: S&P Withdraws 'BB' Rating on Series D Bank Loan ----------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on Emerson Re Ltd.'s three bank loans are unaffected by CIG Reinsurance Ltd. and New Castle Re Ltd.'s decision to cease the underwriting of new or renewal business. The companies have provided notice to Emerson Re that a termination event has occurred pursuant to Section 17.2(a) of their reinsurance agreement with Emerson Re. At the same time, Standard & Poor's withdrew its 'BB' bank loan rating on Emerson Re's series D bank loan. This obligation was repaid in full on Jan. 22, 2009. Emerson is a limited-life, special-purpose Class B reinsurance company domiciled in the Cayman Islands, established specifically to provide aggregate excess-of-loss reinsurance protection to CIG Re and New Castle Re Ltd. "Such a termination event under the reinsurance agreement with Emerson Re would constitute a default under the terms of the credit agreement," said Standard & Poor's credit analyst James Brender. "Now, the lenders must decide whether to declare Emerson Re in default of the credit agreements or to pursue a different course of action." Each bank loan has a separate credit agreement and trust account. Therefore, the lenders funding each bank loan will separately decide whether to declare the loan in default. ENNIS HOMES: Family Owned Homebuilder Files for Chapter 11 ---------------------------------------------------------- Ennis Homes, Inc., filed a Chapter 11 petition Feb. 3 before the U.S. Bankruptcy Court for the Eastern District of California. In its bare-bones petition, Ennis Homes estimated assets and debts both exceeding $100 million. "The petition was accompanied by none of the papers and motions ordinarily filed at the outset of a reorganization," Bloomberg's Bill Rochelle noted. According to its Web Site, Ennis Homes was founded in 1979 by Ben Ennis and has become one of the largest family owned homebuilders in the Central Valley. Son Brian Ennis serves as President and daughter Pam Ennis acts as Vice President- Marketing of the Company. ENNIS HOMES: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------- Debtor: Ennis Homes, Inc. dba Parkside Village dba Amber Meadows dba Arbor Park dba Rosewood dba Eagle Ranch Sierra dba Pheasant Ridge dba New Expressions dba Solana North dba Silver Springs 643 N Westwood Porterville, CA 93257 Bankruptcy Case No.: 09-10848 Type of Business: The Debtor operates a homebuilding company. See: http://www.ennishomes.com/ Chapter 11 Petition Date: February 2, 2009 Court: Eastern District of California (Fresno) Judge: Whitney Rimel Debtor's Counsel: Hagop T. Bedoyan, Esq. Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball LLP 5260 N. Palm Avenue #217 Fresno, CA 93704 Tel: (559) 438-4374 Fax: (559) 432-1847 Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bacchus Vineyards Inc. lawsuits on appeal $1,890,244 c/o James M. Jimenez, Esq. 6320 Canoga Ave., Ste. 1500 Woodland Hills, CA 91367 Xavier Sahagun Construction cement contractor $222,808 PO Box 485 Woodlake, CA 93286 Ortega Concrete $206,103 Construction 41481 Road 120 Orosi, CA 93647 Blank's Custom Drywall Inc. $192,448 Nelson Roofing Inc. $186,662 The Gas Company $182,158 Emet Construction Inc. $149,626 Star Electric Inc. $142,909 Keith Brown Building $134,584 Materials Sacramento Bld. Cabinets $131,217 Gang Nail Truss Co. Inc. $128,557 McIntosh & Associates lawsuit $128,548 Pavletich Electric Inc. $112,403 Windows Plus LLC $105,211 J. Westcott Plumbing Inc. lawsuit pending $104,807 in Tulare County Kenyon Plastering Inc. $102,349 R&B Construction Cleanup $99,440 Kings Drywall Inc. $96,146 Morton & Brown Plumbing Inc. $91,410 Tri Valley Plastering Inc. $82,689 The petition was signed by Brian Ennis, president. EOS AIRLINES: Court Confirms Joint Plan of Liquidation ------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York confirmed on Jan. 28, 2009, the Joint Plan of Liquidation of Eos Airlines, Inc., under Chapter 11 of the Bankruptcy Code submitted by the Debtor and the Official Committee of Unsecured Creditors. Thus, without further application to the Court, the Debtor, the Committee and the Liquidating Trustee are authorized to enter into, implement and effect all transactions contemplated under the Joint Plan. Pursuant to the terms of the Joint Plan, on the Effective Date of the Plan, a liquidating trustee will be appointed to liquidate all of the Debtor's remaining non-cash assets, if any, and to distribute the Debtor's cash assets, net of the costs of administration, to the Debtor's creditors in accordance with the Bankruptcy Code and the Plan. Under the Plan, all equity interests in the Debtor will be cancelled, terminated, extinguished and void. Secured Claims will receive (i) the collateral securing the claim; (ii) if the collateral is sold for cash, proceeds in the amount of the allowed claim; or (iii) other consideration as is necessary to render the allowed secured claim as unimpaired. Allowed priority non-tax claims will be paid by the Liquidating Trustee from cash held by the Trust within 10 days after the allowance date. Allowed unsecured Warn Act claims will be treated in accordance with the terms of the settlement agreement reached by the parties. Each holder of an allowed general unsecured claim will receive its pro rata share of the available cash on each distribution date until the Trust has been fully administered, all Estate Property completely liquidated and all resulting Trust Cash distributed. A full-text copy of the Disclosure Statement in support of EOS Airlines, Inc. and the Official Committee of Unsecured Creditors' Joint Plan of Liquidation is available for free at: http://bankrupt.com/misc/EOSAirlines_DS.pdf About EOS Airlines Based in Purchase, New York, EOS Airlines, Inc. -- http://www.eosairlines.com/-- is a transatlantic airline. The company filed for Chapter 11 relief on April 26, 2008 (Bankr. S.D.N.Y. Case No.08-22581). Tim J. Robinson, Esq., and Nicholas J. Brannick, Esq., at Squire, Sanders & Dempsey L.L.P., in Columbus, Ohio; and Christine M. Pierpont, Esq., at Squire, Sanders & Dempsey L.L.P, in Cleveland, Ohio, represent the Debtor as counsel. Kurztman Carson Consultants LLC acts as the Official Claims Agent for the maintenance and recordation of claims. The U.S. Trustee for Region 2 appointed creditors to serve on an Official Committee of Unsecured Creditors. Joseph M. Vann, Esq., and Robert A. Boghosian, Esq., at Cohen Tauber Spievack & Wagner P.C., in New York, represent the Creditors Committee as counsel. Alvarez & Marsal in New York is the Financial Advisor for the Debtor. Menzies Corporate Restructuring has been appointed as joint administrators in the U.K. In its schedules, EOS Airlines, Inc. listed total assets of $57,707,999 and total debts of $16,409,993. ESCO CORPORATION: Moody's Affirms 'B1' Corporate Family Rating -------------------------------------------------------------- Moody's Investors Service affirmed ESCO Corporation's ratings (including the B1 corporate family rating, B2 senior unsecured note rating, and SGL-2 speculative grade liquidity rating). The rating outlook has been revised to negative from stable. The affirmation reflects the company's performance to date and relatively healthy liquidity profile. Although Moody's anticipates a period of weakness in the primary construction and mining end markets, ESCO's position as a leading provider of consumable wear parts should ensure ongoing demand during a downturn. Moreover, ESCO's robust liquidity position remains a critical supporting factor as it provides operating flexibility in a challenging macroeconomic environment. The change in outlook reflects Moody's concerns about the potential for significant deterioration in the end markets, and possible ramifications on the company's credit metrics. Given ESCO's relatively small size and exposure to volatile, cyclical end markets, Moody's believes that credit metrics could be pressured beyond expectations for a B1 rating in the event that the downturn is severe and protracted. The outlook could be stabilized if ESCO is able to demonstrate healthy margins and interest coverage ratios while maintaining consistent positive free cash flow over the coming quarters. The SGL-2 speculative grade liquidity rating reflects good liquidity to support operations over the next twelve months. Internal liquidity is provided by $85 million of cash at September 30, 2008, EBITDA which Moody's expects should be sufficient to cover capital expenditures and interest payments over the next twelve months, and cash from working capital which ESCO should source due to declining revenue in its challenged end markets. External liquidity is provided by a $110 million asset-based revolving credit facility though availability under the facility is reduced by a decreasing borrowing base. Moody's does not expect the company to need to borrow under the facility over the next 12 months, nor liquidity to be constrained by the revolving credit facility's minimum availability covenant. These ratings were impacted by this action: -- Corporate Family Rating of B1 Affirmed -- Probability of Default Rating of B1 Affirmed -- Senior Unsecured Note Rating of B2 affirmed (point estimate changed from LGD 4; 66% to LGD 4; 65%) -- SGL Rating affirmed at SGL-2 -- Outlook revised to negative from stable The prior rating action for ESCO Corporation was on December 7, 2006, when Moody's assigned a B1 corporate family rating. ESCO Corporation's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of ESCO Corporation's core industry and ESCO Corporation's ratings are believed to be comparable to those of other issuers of similar credit risk. Headquartered in Portland, Oregon, ESCO Corporation is a global manufacturer of engineered ground-engaging metal wear parts for mining and construction applications, and castings for gas turbines. Revenues for the twelve month period ending September 30, 2008 were approximately $910 million. EZ LUBE: Committee Wants to Sue Secured Lenders for Huge Debt ------------------------------------------------------------- The official committee of unsecured creditors of EZ Lube LLC and its affiliates seeks authorization from the U.S. Bankruptcy Court for the District of Delaware to pursue causes of auction against EZS Lube's secured lenders. James C. Carignan, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, recounts that in December 2005, new investors acquired 75% of the equity interests of the Debtors. To finance the purchase, the new investors paid cash of about $32 million, and the Debtors borrowed $91.6 million, in a package that included a first-lien term loan, a revolver, a second-lien term loan and unsecured notes. To secure the first-lien term loan and revolver, the Debtors purported to grant a blanket lien on all their assets to the First Lien Lenders. To secure the second-lien term loan, the Debtors purported to grant a blanket lien on all their assets to the Second Lien Lenders. The Committee, in its redacted Motion submitted to the Court, said that available evidence suggests that the Buy-Out "rendered the Debtors insolvent and/or with unreasonably small assets for the business in which they were engaged." In addition, as a result of the new higher debt load, it does not appear that the Debtors could have reasonably believed that they would generate sufficient cash flow following the Buy-Out to pay their debts as they became due. As a result, the Debtors' estates, according to Mr. Carignan, possess colorable and potentially valuable causes of action and/or objections against the Debtors' pre-petition lenders under Sections 502(d), 544(b) and 550(a) of the Bankrupcy Code and the California Uniform Fraudulent Transfer Act, Cal Civ Code Section 3439 et seq. (2008), for the avoidance or disallowance of the lenders' claims, the avoidance of their liens, and the recovery for the benefit of the estate of all transfers made by the Debtors in connection with such claims and liens. The Debtors, however, waived and released the Actions as a condition precedent to obtaining their post-petition financing. The Debtors have irrevocably released their secured lenders from any and all claims or causes of action: (i) In exchange for additional financing, under a debtor-in- possession financing agreement, the Debtors stipulated and admitted (a) that they are indebted to Goldman Sachs Specialty Lending Group, L.P as administrative agent, collateral agent, lead arranger, syndication agent and document agent for itself and certain other lenders in the aggregate amount of approximately $53.5 million without defense, counterclaim or offset; and (b) that the liens granted to the First Lien Lenders to secure the First Lien Debt are legal, valid, enforceable, non-avoidable, and granted for fair consideration and reasonably equivalent value. (ii) In exchange for access to their lenders' cash collateral, the Debtors stipulated and admitted (a) that they are indebted to GSO Capital Partners LP, as administrative agent, collateral agent, lead arranger, syndication agent, and documentation agent, and certain other lenders in the aggregate amount of approximately $27.8 million (the "Second Lien Debt") without defense, counterclaim or offset; and (b) that the liens granted to the Second Lien Lenders to secure the Second Lien Debt are legal, valid, enforceable and not subject to avoidance. "As a result, the Debtors cannot and will not prosecute the Actions, and if the Committee is not authorized to bring them, the value of those Actions will be forever lost to the estates," the Committee points out. Accordingly, the Committee seeks a grant of derivative standing to commence and prosecute the Actions on behalf of the Debtors' estates. The Committee also wants the deadline to pursue the causes of action extended by 60 days beyond the current Feb. 20 cutoff so it can conduct more discovery and investigation. The Court will convene a hearing to consider the request Feb. 17. Objections are due Feb. 10. The Creditors Committee had opposed the fast-tracked sale of the Debtor's business to an affiliate of GSO Capital Partners LP. According to Bloomberg's Bill Rochelle, existing shareholders and secured creditors of EZ Lube are affiliated with GSO, and GSO has submitted a credit bid -- using the secured creditors claims -- for the assets. The Creditors Committee, according to the report, argued that GSO shouldn't be allowed to pay part of the purchase price with secured claims until the validity of the claims is established. The members of the Committee are: (i) Camden Holdings, LLC; (ii) ExxonMobil Oil Corporation; (iii) Filpac, Inc.; (iv) A&S Engineering; (v) ADX, Inc.; (vi) Miller & Co, Inc.; and (vii) Mailmark Direct About EZ Lube Headquartered in Santa Ana, California, EZ Lube LLC -- http://www.ezlube.com/provides oil change and related services for automobiles including: oil filter replacement, lubricating chassis, and gearbox and brake fluid level maintenance. On Dec. 9, 2008, EZ Lube together with Xpress Lube-Tech, Inc., filed for Chapter 11 (Bankr. D. Del., Lead Case No. 08-13256). The company's attorneys are Curtis A. Hehn, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP. Broadway Advisors LLC has been tapped as financial advisor, and Coffey Management Company as chief restructuring advisor. In its petition EZ Lube estimated assets and debts of $100 million to $500 million each. As reported by the Dec. 10 issue of the Troubled Company Reporter, EZ Lube along with its affiliate, Xpress Lube-Tech Inc., filed for bankruptcy to facilitate a sale transaction with EZ Lube Acquisition Company LLC, an affiliate of its existing lenders, funds managed by GSO Capital Partners LP. FAIRCHILD SEMICONDUCTOR: S&P Cuts Corp. Credit Rating to 'BB-' -------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered both its corporate credit rating on Fairchild Semiconductor International Inc. and its senior secured rating on subsidiary Fairchild Semiconductor Corp. to 'BB-' from 'BB'. The recovery rating on the senior secured issues remains at '3', indicating the expectation for meaningful (50% to 70%) recovery in the event of a payment default. The outlook is negative. "The rating action reflects the company's challenging operating environment," said Standard & Poor's credit analyst Lucy Patricola, "and the prospect for sharply weaker credit protection measures over the near term." Headroom under the performance covenants in the company's bank agreement, including a minimum debt to EBITDA test (as defined), is likely to diminish significantly, although S&P currently do not anticipate that the threshold will be breached. FERRO CORP: S&P Cuts Rating to 'B-' After Q4 Guidance ----------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on Ferro Corp., including its corporate credit rating to 'B-' from 'B+', and placed the ratings on CreditWatch with negative implications. The recovery rating on the company's convertible senior unsecured notes remains at '5', indicating expectations of modest (10%-30%) recovery in the event of a payment default. "The ratings action and CreditWatch listing reflects our concerns about Ferro's liquidity position following the company's weaker earnings guidance for the fourth quarter of 2008 caused primarily by steep declines in sales volumes in the performance coatings, color and glass performance materials, polymer additives and specialty plastics segments," said Standard & Poor's credit analyst Liley Mehta. "The operating weakness is widespread across the industry but the downgrade reflects our concern over the possibility of a near-term violation of the company's total leverage covenant under its credit agreement given the ongoing difficult credit market conditions." The ratings on Ferro, a producer of ceramic glaze, porcelain enamel coatings, electronic materials, and inorganic pigments and colorants, reflect vulnerability to raw material costs, challenging conditions in certain U.S. markets, and aggressive debt leverage. Partly offsetting these negatives are a meaningful, diverse chemicals portfolio (generating revenues of about $2.4 billion), good geographic and customer diversification, and ongoing initiatives to lower the cost structure and improve the product mix. In resolving the CreditWatch listing, Standard & Poor's will reassess the prospects for operating performance in 2009 and monitor the progress in potentially attaining a waiver or amendment (if necessary) to the senior credit facility. S&P will also assess the terms of any amendment and how it affects credit measures and the company's liquidity position for the foreseeable future. FORD CREDIT: Fitch Affirms 'BB' Ratings on Class D Notes -------------------------------------------------------- Fitch Ratings affirms Ford Credit Auto Owner Trust 2008-A as part of its on going surveillance process. The rating actions are: 2008-A -- Class A-2 notes affirmed at 'AAA', Outlook Stable; -- Class A-3a notes affirmed at 'AAA', Outlook Stable; -- Class A-3b notes affirmed at 'AAA', Outlook Stable; -- Class A-4 notes affirmed at 'AAA', Outlook Stable; -- Class B notes affirmed at 'A', Outlook Positive; -- Class C notes affirmed at 'BBB', Outlook Positive; -- Class D notes affirmed at 'BB', Outlook Positive. The collateral continues to perform within Fitch's base case expectations. Currently, under the credit enhancement structure, the securities can withstand stress scenarios consistent with the rating categories and still make full payments of interest and principal in accordance with the terms of the documents. As before, the ratings reflect the quality of Ford Motor Credit Co.'s retail auto loan originations, the sound financial and legal structure of the transactions, and servicing provided by FMCC. FINAL ANALYSIS: Wants to Sell Excess Furniture for $4,000 --------------------------------------------------------- Final Analysis Communication Services, Inc., asks the U.S. Bankruptcy Court for the District of Maryland for authority to sell excess office furniture and some equipment placed in storage units in Gaithersburg, Maryland and Lanham, Maryland that the Debtor is not using and has no prospects of using. Debtor is selling the assets to Vantage Systems, Inc. for $4,000, free and clear of all liens and encumbrances. Some of the assets are covered by the International Traffic in Arms Regulations. The ITAR regulations,, which are issued by the U.S. Trade Department, place restrictions on the export of certain materials. The Debtor tells the Court that Vantage is eligible and qualified to acquire the property. On Jan. 4, 2007, some of the former officers of the Debtor (the "Modanio Parties") filed a motion to dismiss the bankruptcy case, asserting that the filing was not authorized. On or about June 21, 2007, the Modanio Parties filed a supplemental motion to dismiss the bankruptcy case. On Dec. 16, 2008, the Court denied the supplemental motion to dismiss the case. The sale will be on a "as is, where is" basis, without warranty, and will be subject to higher and better offers to be submitted at the hearing to consider the motion. The sotrage facilities have agreed to waive their claims against the Debtor for accrued storage costs. Lanham, Md.-based Final Analysis Communication Services Inc. filed a voluntary Chapter 11 petition on Dec. 29, 2006 (Bankr. D. Md. Case No. 06-18520). Edward J. Tolchin, Esq., at Fettmann, Tolchin & Majors PC; J. Daniel Vorsteg, Esq., Martin T. Fletcher, Esq., Cameron J. Macdonald, Esq., Chengzhi Yu, Esq., and Stephen B. Gerald, Esq., at Whiteford, Taylor & Preston, LLP, represent the Debtor as counsel. No official committee of unsecured creditors has been appointed in the case. When it filed for bankruptcy, the Debtor estimated its assets at more than $100 million and debts at $1 million to $100 million. FLANNERY CONSTRUCTION: Files for Chapter 7 Liquidation ------------------------------------------------------ Boston Business Journal reports that Flannery Construction Corp. filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the District of Massachusetts on Tuesday. According to Boston Business, Flannery Construction listed $16,106 in liabilities and $500 in assets. Flannery Construction said that it generated almost $200,000 in revenue during 2006, Boston Business relates. The report states that no figures were given for 2007 and 2008. Court documents say that Jason P. Flannery is listed as Flannery Construction's president. Flannery Construction Corp. -- http://www.flanneryconstruction.com/about_us/index.html-- is a Brighton-based construction company. FLYING J: Will Lay Off 200 Employees ------------------------------------ Sarah Dallof and Tom Callan at KSL.com reports that Flying J Inc. will lay off about 200 workers, including 80 employees in Utah. ABC4 News states that Flying J said they will provide counseling services and severance packages for the unemployed. Flying J said in a statement that it has filed a motion with the U.S. Bankruptcy Court for the District of Delaware to approve severance packages. KSL.com relates that the hearing on that request will be on February 18. About Flying J Headquartered in Ogden, Utah, Flying J Inc. -- http://www.flyingj.com-- operate an oil company with operations in the filed of exploration and refining of petroleum products. The Debtors engage in online banking, card processing truck and trailer leasing, and payroll services. The Debtors also operate about 200 travel plazas in 41 states and six Canadian provinces. The company and six of its affiliates filed for Chapter 11 protection on Dec. 22, 2008 (Bankr. D. Del. Lead Case No. 08-13384). Kirkland & Ellis LLP represents the Debtors' in their restructuring efforts and Young, Conaway, Stargatt & Taylor LLP as their Delaware Counsel. The Debtors proposed The Blackstone Group LP as financial advisor and Epiq Bankruptcy Solutions LLC as claims agent. When the Debtors filed for protection from its creditors, they listed assets more than $1 billion and debts between $100 million to $500 million. FRANKLIN PIERCE: Moody's Keeps 'Ba3'; Removes from Rating Review ---------------------------------------------------------------- Moody's Investors Service has affirmed the Ba3 rating of Franklin Pierce University (formerly Franklin Pierce College) and removed the rating from watchlist for possible downgrade. The outlook is negative reflecting the University's challenging student market position, reliance on an operating line of credit for seasonal cash flow, thin unrestricted liquidity leaving little margin for error, and uncertain longer-term market and financial impact of expansion into Goodyear, Arizona. The affirmation affects the University's Series 1994, 1998, and 2004 bonds issued through the New Hampshire Higher Education and Health Facilities Authority. The Series 1998 and 2004 bonds are insured by ACA Financial Guaranty Corporation, which Moody's does not rate. Legal Security: Payment of the Series 1994 bonds is a general obligation of the College, further secured by a first security interest in Gross Receipts, a security interest in all Equipment, and a mortgage lien on the Facility (land, buildings, and equipment). Payment of the Series 1998 and Series 2004 bonds is a general obligation of the College, further secured by a first security interest in Gross Receipts, a security interest in all Equipment, a mortgage lien on the Facility (land, buildings, and equipment), as well as debt service reserve funds. Debt-Related Rate Derivatives: none Challenges * Very thin levels of liquid financial reserves and heavy dependence on $5 million Wachovia line of credit (which expires in March 2009) for cyclical cash flow needs. In FY 2008, the University had $1.2 million of unrestricted financial resources, with the $5 million line of credit fully drawn at 6/30/2008. As of end of January 2009, the line of credit has been fully repaid with receipt of spring tuition payments. However, Moody's anticipate that the University will need to depend on a bank line of credit in late spring. If the University is unable to renegotiate or obtain a replacement line, Moody's would expect the rating to be downgraded. * High debt levels ($55.2 million of direct debt outstanding as of 6/30/08, including capital leases and line of credit fully drawn), with expendable resources covering debt less than 0.1 times and debt service representing 6.2% of operating expenses in FY 2008. Principal payment on the Series 1998 bonds begins this year, and debt service is projected to increase to roughly 7.9% of operating expenses. * Line of credit agreement grants the bank a security interest in accounts receivable and gross receipts of the University. In conjunction with a past extension of the line of credit, the College entered into an intercreditor agreement which establishes the liens of the bank and bondholders as being on parity. If the bank decides not to renew or extend the line of credit, all principal and accrued interest outstanding at that point in time will be due and payable in March 2009. * Highly competitive market for traditional-age students at the main campus located in Rindge, New Hampshire, coupled with challenging demographic projections in the northeast. In fall 2008, full-time equivalent enrollment at the main Rindge campus declined 5% from fall 2007 levels, and weak freshmen selectivity of 77% and matriculation of 15% highlight the highly competitive environment in which Franklin Pierce operates. The fall 2008 Rindge actual full-time equivalent enrollment was off from the originally budgeted number by 78 students and required management to make budgetary adjustments in order to balance operations. Management attributes the decline to students and families' concerns about student loan availability. * Uncertain credit impact of University's geographic expansion. In partnership with a health care organization, Franklin Pierce will begin offering courses in nursing and physical therapy degree programs at a leased space located in Goodyear, Arizona near Phoenix. Classes are projected to begin in June 2009. The programs are projected to generate a roughly $600,000 operating deficit in FY 2009, but expected to be profitable in FY 2010 as a result of enrollment growth. The city of Goodyear has offered the University 30 acres of downtown land at $1 per year for the establishment of a new campus. Franklin Pierce is evaluating possible project partners and funding mechanisms for constructing a campus in Arizona. * In FY 2007 and 2008, the University breached an unrestricted financial resources to debt financial covenant in its bond documents (actual calculation of 11.6% in FY 2008 by management's calculation, compared to 25% required ratio). The University has hired a financial consultant. Strengths * Growth of net tuition revenue and net tuition per student ($15,676 in FY 2008), a critical credit factor as the University relies on student charges for close to 95% of operating revenue base. Despite multi-year declines in full- time equivalent enrollment, the University has successfully grown this revenue stream due to increased enrollment in more profitable programs including graduate programs, and reduced size of less profitable programs such as degree completion programs located at sites outside of the main Rindge campus. * The University's operating performance, by Moody's calculation, has improved in each of the past three years, with a 0.7% surplus in FY 2008 and 2.1 times annual debt service coverage. Cash flow in FY 2008 would cover maximum annual debt service 1.6 times. * Diligent management and budgeting. Despite the smaller than budgeted entering freshmen class on the Rindge campus, management has adjusted its FY 2009 budget and initially built in enough contingencies so that the University anticipates positive operations in FY 2009 on a level comparable to FY 2008 results. * Although the expansion into Arizona carries some risks and up- front costs, if successful, the efforts could lead to stronger revenue growth and diversification of the University's student market over time. * No additional borrowing plans and all of the College's rated debt was issued in a fixed rate mode. Outlook The University's outlook is negative reflecting very thin levels of liquidity, reliance on operating line of credit, weak economic environment which may further challenge enrollment trends and uncertainty about the operating impact and longer-term funding sources for the Goodyear, Arizona expansion. What could change the rating-UP Currently unlikely; longer term the rating could improve if the University is able to grow its unrestricted financial resource base, reduce its dependence on bank line of credit, and maintain positive operating performance. What could change the rating-DOWN Deterioration of operating cash flow and debt service coverage; further declines in unrestricted cash and investments; inability to extend the line of credit beyond the March 2009 expiration date or secure alternate bank line of credit. Key Indicators (FY 2008 financial data unless otherwise stated and fall 2008 enrollment data) * Total Full-Time Equivalent Enrollment: 2,119 FTE enrollment * Fall 2008 Freshmen Selectivity at Rindge Campus: 77.3% * Fall 2008 Freshmen Matriculation at Rindge Campus: 15.0% * Total Financial Resources: $5.7 million ($4 million assuming 30% investment loss since close of FY 2008) * Direct Debt: $55.2 million in FY 2008, although $5 million operating line of credit was fully repaid as of 1/23/2009 * Expendable Financial Resources-to-Debt: 0.05 times (0.03 times assuming 30% reduction of financial resources due to investment losses) * Expendable Financial Resources-to-Operations: 0.05 times * Three Year Average Operating Margin (average of FY 2006- 2008): -0.07 % * Average Debt Service Coverage: 1.8 times * Reliance on Student Charges: 95% Rated Debt: * Series 1994, 198, 2004 bonds: Ba3 FREDDIE MAC: Prepares Fin. Statements for Periods ended Dec. 31 ---------------------------------------------------------------- Freddie Mac, formally known as the Federal Home Loan Mortgage Corporation, is in the process of preparing its financial statements for the fourth quarter of 2008 and the year ended Dec. 31, 2008. Based on preliminary unaudited information concerning its results for these periods, management estimates that the Federal Housing Finance Agency, in its capacity as conservator of Freddie Mac, will submit a request to the U.S. Department of the Treasury to draw an additional amount of approximately $30 billion to $35 billion under the $100 billion Senior Preferred Stock Purchase Agreement between Freddie Mac and Treasury. The actual amount of the draw may differ materially from this estimate as Freddie Mac goes through its internal and external process for preparing and finalizing its financial statements. The Purchase Agreement requires Treasury, upon the request of the Conservator, to provide funds to the company after any quarter in which the company reports a negative net worth. The amount of the estimated additional draw reflects management's estimate of the impact of operating losses well as other items that have a direct impact on the company's net worth in the fourth quarter. The company drew $13.8 billion under the Purchase Agreement in November 2008, after its release of results for the third quarter of 2008. Settlement Agreement Freddie Mac and JPMorgan Chase have entered into a settlement agreement under which Freddie Mac has agreed to consent to JPMorgan Chase becoming the servicer of mortgages serviced by Washington Mutual Bank. Under the terms of the agreement, JPMorgan Chase will assume Washington Mutual's recourse obligations to repurchase any of such mortgages that were sold to Freddie Mac with recourse. With respect to mortgages that Washington Mutual sold to Freddie Mac without recourse, JPMorgan Chase has agreed to make a one-time payment to Freddie Mac with respect to obligations of Washington Mutual to repurchase any of such mortgages that are inconsistent with certain representations and warranties made at the time of sale. Additionally, Freddie Mac, issued its December 2008 Monthly Volume Summary. A full-text copy of it is available for free at: http://ResearchArchives.com/t/s?38e7 About Freddie Mac The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE -- commonly known as Freddie Mac, is a stockholder-owned government- sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. At Sept. 30, 2008, the company's balance sheet showed total assets of $804,390 billion and total liabilities of $818,185 billion, resulting in a stockholders' deficit of $13,795 billion. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. GENERAL MOTORS: Dragged in TA Systems' Suit Against Cadence ----------------------------------------------------------- T.A. Systems, Inc., filed a complaint against Cadence Innovation LLC and General Motors Corporation, seeking a lien foreclosure against the Debtor. Before Cadence's bankruptcy filing, pursuant to certain sale agreements, the Debtor purchased certain mold building equipment from TA Systems, committing to pay for the equipment in installments. The Equipment sold to the Debtor was a die, mold, or form for use in the manufacture, assembly, or fabrication of plastic parts. TA Systems asserts that it has a valid, perfected, mold builder's lien on the Equipment and its lien is superior to any and all other liens claimed on the Equipment. Bruce W. McCullough, Esq., at Bodell, Bove, Grace & Van Horn, P.C., in Wilmington, Delaware, informs Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware that the Debtor did not make all of the payments due and owing on the Sale Agreements on the Equipment. The Debtor owed TA Systems $245,042. Mr. McCullough also points out that pursuant to an Accommodation Agreement between the Debtor and GM, GM had the right to take immediate possession of certain tooling and equipment of the Debtors. GM previously filed an adversary complaint against the Debtors, alleging that the Debtor violated the Accommodation Agreement. The parties subsequently stipulated to resolve the Complaint. Under the GM Stipulation, GM may take possession and control of certain equipment, which includes the TA Systems Equipment. Mr. McCullough notes that GM has taken possession of certain of TA Systems' Equipment. Thus, he contends, TA Systems is entitled to payment from GM and the Debtors for the possessed Equipment. Even if TA Systems is not entitled to payment under the GM Stipulation, TA Systems is entitled to payment based on its agreements with the Debtor, he argues. Moreover, as TA Systems has not been paid in full for the Equipment it sold to the Debtor, the Debtor is in default under the Sale Agreements, Mr. McCullough maintains. While the GM Stipulation is entirely uncertain what precise equipment will be paid by GM, Mr. McCullough reiterates that the TA Systems Equipment is covered by the stipulation and TA Systems should thus be paid from the escrow fund established under the stipulation. Mr. McCullough also asserts that TA Systems has conferred a benefit on the Debtor through the Equipment, but the Debtor did not reciprocate the value conferred by TA Systems. "It would thus be inequitable for the Debtor to retain the benefit conferred by TA Systems without reciprocating," he says. "Moreover, the Debtor transferred some or all of the benefit provided by TA Systems to GM when the Debtor released the TA Systems Equipment to GM to be resourced to another supplier," Mr. McCullough adds. "Thus, GM has received a benefit from the inequitably uncompensated benefit conferred by TA Systems," he states. Accordingly, TA Systems asks the Court to: (a) enter a judgment declaring that TA Systems is entitled to payment (x) of funds from the escrow account for the purchase of the Equipment, and (y) from the Debtor in priority over all other creditors; (b) award it damages in an amount equal to the benefit it conferred to the Debtor; and (c) allow it to take possession of the TA Systems Equipment. Headquartered in Troy, Michigan, Cadence Innovation LLC -- http://www.cadenceinnovation.com/-- manufactures and sells auto parts to its customers GM and Chrysler. The company has at least 4,200 employees in the United States and Europe, including Hungary and Czech Republic. The company and its debtor-affiliate, New Venture Real Estate Holdings, LLC, filed for Chapter 11 reorganization on Aug. 26, 2008 (Bankr. D. Del. Lead Case No. 08- 11973). Norman L. Pernick, Esq. and Patrick J. Reilley, Esq., at Cole, Schotz, Meisel, Forman & Leonard, represent the Debtors as counsel. When the Debtors filed for protection from their creditors, they listed assets of between $10 million and $50 million, and debts of between $100 million and $500 million. (Cadence Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Pens Settlement with Cadence on Tooling Dispute --------------------------------------------------------------- General Motors Corporation and Cadence Innovation LLC reached an agreement, resolving certain issues raised in GM's motion to compel the Debtors' performance in certain Accommodation Agreements. The U.S. Bankruptcy Court for the District of Delaware approved the parties' Stipulation. The parties stipulate that: (1) GM acknowledges that the Debtors have released to GM all Tooling prior to entry of the Stipulation in accordance with the parties' agreed schedule; provided, however, that the Debtors will immediately release any Tooling that has not been previously released to GM. (2) The Debtors will have begun releasing to GM all Designated Equipment, wherever located, as of December 29, 2008, and GM will pay to the Debtors for the Designated Equipment: * In the case of Designated Equipment for which Hilco Industrial appraised value exists, GM will make the wire transfer to the Debtors simultaneous with the Debtors' release of the Designated Equipment to GM; and * GM will pay the Equipment Escrow Funds into escrow with Bank of America, N.A., as administrative agent for the Debtors' DIP Lenders immediately. All proceeds of the sale of the Designated Equipment will be subject to BofA's liens. Upon payment of the Designated Equipment, GM will be entitled to its immediate possession and will own all Designated Equipment without further obligations. (3) GM will make these payments for the Designated Equipment: * $355,000 in cash or cash equivalents to be paid to the Debtors for the Designated Equipment, wherever located; * $444,000 in cash or cash equivalents to be paid to the Debtors for the Designated Equipment located at Debtors' Hillsdale, Groesbeck, and Malyn facilities; * $1,700,000 to be paid in cash or cash equivalents to the Debtors in exchange for the Designated Equipment related to the Camaro Program; * $1,000,000 to be paid by GM into escrow with Lender, for certain of the Designated Equipment upon which GM believes certain vendors to the Debtors may have valid existing liens or security interests senior in priority to the Lender's liens; and * $1,000,000 to be paid by GM into escrow with Lender for the Designated Equipment located in Chesterfield facility and other than the Camaro Designated Equipment and the Vendor Designated Equipment, which has not been appraised by Hilco. (4) All payments to be made by GM to the Debtors will be made directly to Bank of America, N.A., at its discretion. (5) GM notes that certain vendors to the Debtors may have valid existing liens or security interests on the Vendor Designated Equipment; however, the Debtors may wish to challenge the validity of those liens. In the event the Debtors determine that a vendor has a valid lien or security interest superior in priority to the DIP Lenders' liens, payment will be remitted to the vendor from the Vendor Escrow Fund. In the event the aggregate amount of valid existing liens in Vendor Designated Equipment which are superior in priority to the Lender's liens is less than the total amount of Vendor Escrow Funds, any remaining funds will be remitted to the Debtors, subject to the DIP Lenders' liens. In the event the aggregate amount of valid existing liens in Vendor Designated Equipment exceeds the Vendor Escrow Funds, GM will be responsible for the excess lien claims. (6) The Debtors have asked Hilco to appraise the Unappraised Designated Equipment immediately. If the Unappraised Designated Equipment is moved to GM's successor suppliers' facilities prior to Hilco's appraisal, Hilco will conduct the appraisal at the successor suppliers' facilities. Upon the completion of the appraisal, Hilco will provide the Debtors, the DIP Lenders and GM the appraised values for the Unappraised Designated Equipment. (7) In the event Hilco's appraisal of the Unappraised Designated Equipment is less than $1,000,000, the excess amount will be immediately released to GM and GM will have no further obligation with respect to any Unappraised Designated Equipment. The balance remaining after payment to GM will be remitted to the Debtors. (8) In the event Hilco's appraisal of the Unappraised Designated Equipment is greater than $1,000,000, the full amount of the Equipment Escrow Funds will be immediately released to the Debtors and the amount remaining of $1,000,000 will be paid by GM to Debtors without delay after Hilco's completion of the appraisal. (9) With respect to the inventory constituting resins that are utilized in the production of GM's Component Parts in the Chesterfield, Groesbeck and Hillsdale facilities, GM's successor suppliers will purchase the Resin from the Debtors. Assuming the Resins are available for delivery, the Debtors will realize $350,000 for the Resins regardless of whether GM's successor suppliers purchase the Resins from the Debtors. The Debtors are expected to provided confirmation to GM regarding the amount of the Resins purchased by the successor sources. To the extent the amount is less than $350,000, GM will wire the deficiency payment to the Debtors without delay, subject to the DIP Lenders' liens. (10) In connection with GM's resourcing of the Component Parts, GM continues to require that certain labor, equipment and other transition services be provided by the Debtors pursuant to a letter dated December 19, 2008. The letter continues to govern a pending agreement setting forth description of the Services and the maximum amount GM agreed to pay. On Friday of each week when Services are performed, the Debtors will issue an invoice to GM payable via wire transfer. As of December 28, 2008, GM has sought services for which it has agreed to pay the Debtors $1,075,554. GM will make payment for the Services without setoff or recoupment. (11) GM's obligations with respect to labor and other transition assistance is limited to the Services and the amounts set forth. The Debtors remain liable for all liabilities involving their employees, including wages and compensation. (12) GM will purchase from the Debtors the work-in-progress inventory immediately using purchase prices the parties have previously agreed on, plus packaging costs, prior to GM's possession of the WIP Inventory unless the Debtors agree to release the WIP Inventory to GM in advance of payment. (13) All payments to be made by GM to the Debtors or Bank of America will be without setoff or recoupment, except for payments due for shipment of Component Parts to GM. (14) The Access and Security Agreements dated August 25, 2008 will terminate upon the Debtors' release of all Tooling and Designated Equipment to GM. About Cadence Innovation Headquartered in Troy, Michigan, Cadence Innovation LLC -- http://www.cadenceinnovation.com/-- manufactures and sells auto parts to its customers GM and Chrysler. The company has at least 4,200 employees in the United States and Europe, including Hungary and Czech Republic. The company and its debtor-affiliate, New Venture Real Estate Holdings, LLC, filed for Chapter 11 reorganization on Aug. 26, 2008 (Bankr. D. Del. Lead Case No. 08- 11973). Norman L. Pernick, Esq. and Patrick J. Reilley, Esq., at Cole, Schotz, Meisel, Forman & Leonard, represent the Debtors as counsel. When the Debtors filed for protection from their creditors, they listed assets of between $10 million and $50 million, and debts of between $100 million and $500 million. (Cadence Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) GREYHAWK FUNDING: Moody's Reviews Rating on Asset-Backed Notes -------------------------------------------------------------- Moody's has placed the Prime-1 rating of the asset-backed Commercial Paper Notes issued by Greyhawk Funding LLC on review for possible downgrade. Greyhawk, a multiseller program administered by WestLB, New York Branch (A2/P-1/E+), is a special purpose company established in June 1998. Moody's is placing Greyhawk's Prime-1 rating on review for downgrade due to its exposure to Alt-A residential mortgage backed securities and commercial real estate collateralized debt obligations, which total $125 million and $611 million respectively. The program wide credit enhancement in Greyhawk, which is available to cover defaulted securities, is only $100 million. While the ratings of these securities currently range from Aaa to Baa2, Moody's anticipate further downward credit migration as outlined in recent Moody's publications. Moody's has recently raised its Alt-A RMBS loss projections for U.S. deals issued in 2006 and 2007. Moody's has revised its projected cumulative losses on 2006 vintage Alt-A RMBS pools to an average of about 20%, up from Moody's May projection of 4-6%. Moody's has projected average cumulative losses of about 24% for 2007 securitizations, up from Moody's May projection of 4-8%. Given these updated loss projections, super-senior support tranches are likely to be downgraded to Caa or Ca for the 2006 and 2007 vintages. For the 2004 and 2005 vintages, credit migration is also expected as current cumulative losses and delinquencies are already higher than expected. Moody's has also announced a negative outlook on CRE-CDOs. CRE- CDOs are typically backed by commercial mortgage backed securities or commercial real estate loans. Moody's expect downward credit migration due to systematic increases in real estate risk, relatively thin tranche thickness of the underlying CMBS, and revised modeling parameters. Commercial property values, which have declined about 10% from the peak reached in October 2007, are expected to decline an additional 10 to 20% over the next 18 to 24 months. Moody's has also revised three key parameters in Moody's model for rating and monitoring CRE-CDOs -- asset correlation, default probability, and recovery rate. Previously, the average asset correlations used for CMBS within CRE CDO deals ranged between 15% and 35%, depending on vintage and issuer diversity. In light of the systematic seizure of the credit markets, as well as higher intra industry and inter industry asset correlations, the updated correlation parameters for CRE CDOs will imply an average range of asset correlations of between 30% and 60% for CMBS collateral. Moody's is also building in additional stresses on default probability for late vintage CMBS, and is also simulating recoveries on CMBS to capture more of the tail risk. Hence Moody's is placing Greyhawk's Prime-1 rating on review due to the uncertainty surrounding its Alt-A RMBS and CRE-CDO collateral, whose total balances exceed Greyhawk's PWCE. In addition, the availability of liquidity in Greyhawk is tied to the payment default of each security. Greyhawk's documents, however, stipulate that securities with ratings lower than Aa3 have to be removed within 10 days, if the total balance of the affected securities exceeds the PWCE. Moody's expects to conclude its review of Greyhawk's rating in conjunction with the review on the ratings of its Alt-A and CRE-CDO collateral. Moody's will also examine moves that WestLB may take to mitigate the exposure. As of December 31, 2008, Greyhawk had $7.1 billion in ABCP outstanding. Complete rating action: -- Greyhawk Funding LLC, asset-backed commercial paper notes, Prime-1 under review for possible downgrade; previous rating action in June 2005, Prime-1 rating affirmed HAWAIIAN TELCOM: Gets Green Light to Tap Kirkland as Lead Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Hawaii authorized Hawaiian Telcom Communications and its affiliates to employ Kirkland & Ellis as their lead bankruptcy counsel. As reported by the Troubled Company Reporter on January 2, 2009, as the Debtors' counsel, Kirkland & Ellis will: (1) advise the Debtors with respect to their powers and duties as debtors in possession in the continued management and operation of their business and properties; (2) advise the Debtors on the conduct of these Chapter 11 cases, including all of the legal and administrative requirements of operating in Chapter 11; (3) attend meetings and negotiate with creditors and other parties-in-interest; (4) prosecute actions on the Debtors' behalf, defend actions commenced against the Debtors and represent the Debtors' interest in negotiations concerning litigation in which the Debtors are involved including objections to claims filed against the estates; (5) prepare pleadings related to these bankruptcy proceedings, including motions, and papers beneficial to the administration of the Debtors' estates; (6) advise the Debtors in connection with any potential sale of assets; (7) appear before the courts on the Debtors' behalf; (8) advise the Debtors regarding tax matters; (9) assist the Debtors in obtaining approval of a disclosure statement and confirmation of a Chapter 11 plan and all documents related to it; and (10) perform all other necessary or appropriate legal services for the Debtors in connection with the prosecution of these Chapter 11 cases, including (x) analyzing the Debtors' leases and contracts and whether to assume and assign or reject hereof, (y) analyzing validity of liens against the Debtors, and (z) advising the Debtors on transactional and litigation matters. The Debtors will pay for Kirkland & Ellis' contemplated services according to the firm's current hourly rates: Title Hourly Rate ----- ----------- Partners $590 to $975 Counsel $490 Associates $275 to $800 Paraprofessionals $125 to $270 K&E professionals expected to have primary responsibility for providing services to the Debtors are: Professional Hourly Rate ------------ ------------- Richard M. Cieri $925 Paul M. Basta $845 Christopher J. Marcus $675 The Firm will also be reimbursed for its actual and necessary expenses. The Debtors advanced $200,000 in August 2008 to K&E as an advance payment retainer. In October 2008, the Debtors increased K&E's retainer to $750,000, and in November 2008, to $1.25 million. As of the Petition Date, about $250,000 of the Retainer remain in K&E's general cash account. The Debtors disclosed that they have paid K&E an aggregate of $2,251,691 as payment for the Firm's prepetition professional services and reimbursement of reasonable and necessary expenses. As of the Petition Date, the Debtors did not owe K&E any amounts for legal services rendered prepetition. Paul M. Basta, Esq., partner at K&E, ascertained that based on the conflicts search conducted by his firm, K&E does not hold or represent an interest adverse to the Debtors' estates. He said that K&E has no connection to the Debtors, their creditors or related parties and is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. Based in Honolulu, Hawaii, Hawaiian Telecom Communications, Inc. -- http://www.hawaiiantel.com/-- operates a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high-speed Internet, wireless services, and print directory and Internet directory services. The company and seven of its affiliates filed for Chapter 11 protection on Dec. 1, 2008 (Bankr. D. Del. Lead Case No. 08- 13086). As reported by the Troubled Company Reporter on December 30, 2008, Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the transfer of the Chapter 11 cases to the U.S. Bankruptcy Court for the District of Hawaii before Judge Lloyd King (Bankr. D. Hawaii Lead Case No. 08-02005). Richard M. Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard Freres & Co. LLC as investment banker; Zolfo Cooper Management LLC as business advisor; Deloitte & Touche LLP as independent auditors; and Kurztman Carson Consultants LLC as notice and claims agent. An official committee of unsecured creditors has been appointed in the case. The committee is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC, in Honolulu, Hawaii. When the Debtors filed for protection from their creditors, they listed total assets of $1,352,000,000 and total debts of $1,269,000,000 as of Sept. 30, 2008. Bankruptcy Creditors' Service, Inc., publishes Hawaiian Telcom Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Hawaiian Telcom Communications, Inc. and seven of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HAWAIIAN TELCOM: Gets Court Permission to Hire Cades Schutte ------------------------------------------------------------ Hawaiian Telcom Communications, Inc. and its affiliates may employ Cades Schutte LLP as co-bankruptcy counsel, the U.S. Bankruptcy Court for the District of Hawaii ruled. As the Debtors' counsel, Cades Schutte will: (a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and properties; (b) advise the Debtors on the conduct of these Chapter 11 cases, including all of the legal and administrative requirements of operating in Chapter 11; (c) attend meetings and negotiate with creditors and other parties-in-interest; (d) prosecute actions on the Debtors' behalf, defend actions commenced against the Debtors, and represent the Debtors' interest in negotiations concerning litigation in which the Debtors are involved including objections to claims filed against the estates; (e) prepare pleadings related to these bankruptcy proceedings, including motions, and papers beneficial to the administration of the Debtors' estates; (f) advise the Debtors in connection with any potential sale of assets; (g) appear before the courts on the Debtors' behalf; (h) advise the Debtors regarding tax matters; (i) assist the Debtors in obtaining approval of a disclosure statement and confirmation of a Chapter 11 plan and all plan-related documents; and (j) perform all other necessary or appropriate legal services for the Debtors in connection with the prosecution of these Chapter 11 cases, including (i) analyzing the Debtors' leases and contracts and whether to assume and assign or reject them, (ii) analyzing validity of liens against the Debtors, and (z) advising the Debtors on transactional and litigation matters. The Debtors will pay for the contemplated services of the firm's professionals, according to standard hourly rates: Title Hourly Rate ----- ----------- Nicholas C. Dreher, Partner $400 Theodore D.C. Young, Partner $350 Teri-Anne E.S. Nagata, Partner $250 Paralegals $140 The firm will also be reimbursed for actual and necessary expenses it incurs or has incurred for the Debtors' benefit. Nicholas C. Dreher, Esq., a partner at Cades Schutte, disclosed that within a year before the Petition Date, his Firm received $33,093 in legal fees from the Debtors for services rendered prepetition, including work in anticipation of the bankruptcy filing. He noted that Cades Schutte represents certain individuals or entities on general legal matters unrelated to the Debtors' cases. Mr. Dreher attested that his firm does not hold or represent an interest adverse to the Debtors' estates, and is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. Based in Honolulu, Hawaii, Hawaiian Telecom Communications, Inc. -- http://www.hawaiiantel.com/-- operates a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high-speed Internet, wireless services, and print directory and Internet directory services. The company and seven of its affiliates filed for Chapter 11 protection on Dec. 1, 2008 (Bankr. D. Del. Lead Case No. 08- 13086). As reported by the Troubled Company Reporter on December 30, 2008, Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the transfer of the Chapter 11 cases to the U.S. Bankruptcy Court for the District of Hawaii before Judge Lloyd King (Bankr. D. Hawaii Lead Case No. 08-02005). Richard M. Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard Freres & Co. LLC as investment banker; Zolfo Cooper Management LLC as business advisor; Deloitte & Touche LLP as independent auditors; and Kurztman Carson Consultants LLC as notice and claims agent. An official committee of unsecured creditors has been appointed in the case. The committee is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC, in Honolulu, Hawaii. When the Debtors filed for protection from their creditors, they listed total assets of $1,352,000,000 and total debts of $1,269,000,000 as of Sept. 30, 2008. Bankruptcy Creditors' Service, Inc., publishes Hawaiian Telcom Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Hawaiian Telcom Communications, Inc. and seven of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HAWAIIAN TELCOM: Can Employ Ernst & Young As Tax Advisors --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Hawaii authorized Hawaiian Telcom Communications and its affiliates to employ Ernst & Young LLP as their tax advisors in connection with their Chapter 11 cases. The Debtors have previously retained Ernst & Young for certain tax services, allowing the firm to gain considerable knowledge and familiarity in their business affairs. Ernst & Young has agreed to provide tax advisory services to the Debtors, including: (a) advising and assisting on federal, state, and local income tax consequences of proposed plans of reorganization; (b) preparing calculations pursuant to Section 382 of the Bankruptcy Code and applying the appropriate federal, state and tax law to historic information regarding changes in ownership of the Debtors' stocks; (c) analyzing information relevant contained in historic tax returns and applying relevant tax return rules, applying the appropriate federal, state and tax law to determine tax asset and stock basis and deferred intercompany transactions for each legal entity in the Debtors' tax group, and identifying significant deferred intercompany transactions, excess loss accounts, and other similar items; (d) preparing calculations and applying appropriate laws to determine the amount of tax attributable deduction related to debt cancellation income; (e) analyzing federal, state, and local tax treatment governing the timing of deductions of severance and other costs incurred as the Debtors rationalize their operations; (f) analyzing federal, state, and local tax treatment of the costs and fees incurred by the Debtors, including tax return disclosure and presentation; (g) analyzing federal, state, and local tax treatment of interest and financing costs related to debt subject to an automatic stay and a new debt incurred as the Debtors emerge from bankruptcy; (h) analyzing federal, state, and local tax consequences of restructuring and rationalization of intercompany accounts; (i) analyzing federal, state, and local tax consequences of proposed dispositions of assets during bankruptcy; (j) analyzing federal, state, and local tax consequences of restructuring the United States corporate groups during bankruptcy; (k) analyzing federal, state, and local tax consequences of potential bad debt and worthless stock deductions; (l) analyzing federal, state, and local tax consequences of employee benefit plans; and (m) providing consulting services and preparation of any tax analyses required with regard to any court order restricting trading in equity or claims, and any other tax-related matter before the Court. In exchange for tax advisory services, the Debtors will pay Ernst & Young these fees: Professional Hourly Rate ------------ ----------- National Executive/ $900 Director/Principal/Partner Executive Director/ $690 Principal/Partner Manager/Senior Manager $580 Staff/Senior $300 Ernst & Young held a $143,455 retainer to secure payment of the Debtors' obligations during these Chapter 11 cases, subject to the Court's approval. Kent Gerety, a partner at Ernst & Young, ascertained that his firm is a "disinterested person," as the term is defined under Section 101(14) of the Bankruptcy Code. Based in Honolulu, Hawaii, Hawaiian Telecom Communications, Inc. -- http://www.hawaiiantel.com/-- operates a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high-speed Internet, wireless services, and print directory and Internet directory services. The company and seven of its affiliates filed for Chapter 11 protection on Dec. 1, 2008 (Bankr. D. Del. Lead Case No. 08- 13086). As reported by the Troubled Company Reporter on December 30, 2008, Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the transfer of the Chapter 11 cases to the U.S. Bankruptcy Court for the District of Hawaii before Judge Lloyd King (Bankr. D. Hawaii Lead Case No. 08-02005). Richard M. Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard Freres & Co. LLC as investment banker; Zolfo Cooper Management LLC as business advisor; Deloitte & Touche LLP as independent auditors; and Kurztman Carson Consultants LLC as notice and claims agent. An official committee of unsecured creditors has been appointed in the case. The committee is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC, in Honolulu, Hawaii. When the Debtors filed for protection from their creditors, they listed total assets of $1,352,000,000 and total debts of $1,269,000,000 as of Sept. 30, 2008. Bankruptcy Creditors' Service, Inc., publishes Hawaiian Telcom Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Hawaiian Telcom Communications, Inc. and seven of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HEARTLAND AUTOMOTIVE: Emerges from Chapter 11 Bankruptcy -------------------------------------------------------- Heartland Automotive Holdings, Inc., and its affiliated debtors has exited from Chapter 11 a year after it filed for bankruptcy. The U.S. Bankruptcy Court for the Northern District of Texas confirmed on Jan. 16, 2009, Heartland and its affiliated debtors' Amended Joint Chapter 11 Plan of Reorganization. The amended plan was filed Dec. 23, 2008. A full-text copy of the disclosure statement, which explains, in detail, the terms of the Plan, is available for free at: http://bankrupt.com/misc/HeartlandAutomotive_AmendedDS.pdf Heartland's plan calls for 100% payment to all creditors, and provides for the continuation of the company's 30-year relationship with Jiffy Lube International Inc. Holders of Heartland Common Stock Interest will receive one share of new class B company stock on account of each 1,000 shares of Allowed Heartland Common Stock Interests. Allowed Subsidiary Equity Interest will be fully reinstated and retained. Other Equity Interest will get nothing. The company has signed amended franchise agreements with Jiffy Lube and a new oil supply agreement with SOPUS, an affiliate of Jiffy Lube. 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., and 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. Cadwalader, Wickersham & Taft LLP, and Munsch, Hardt, Kopf & Harr, PC represent the Commitee as co-counsel. The Court confirmed Heartland's Plan of Reorganization on Jan. 16. IDEARC INC: S&P Junks Corporate Credit Rating From 'B-' ------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Idearc Inc.; the corporate credit rating was lowered to 'CCC' from 'B-'. At the same time, S&P removed these ratings from CreditWatch, where they were placed with negative implications Oct. 31, 2008. The rating outlook is negative. "The downgrade reflects our expectation that Idearc's review of strategic alternatives related to the company's capital structure, which the company announced on Oct. 31, 2008, is likely to result in a recapitalization of some form over the near term," said Standard & Poor's credit analyst Emile Courtney. "We believe the company is currently in discussion with its lenders to restructure its bank debt." The downgrade also reflects S&P's expectation that EBITDA is likely to decline by about 25% in 2009, and this follows an EBITDA decline in 2008 that S&P expects (and previously stated in October 2008) will have been near 20%. S&P anticipates that the decline in 2009 EBITDA would result in free cash flow generation that would be in the $200 million area (down from more than $400 million expected in 2008), reducing Idearc's ability to reduce debt over the intermediate term. S&P estimates leverage net of cash balances was near 7x at December 2008, and expect this metric to rise to near 9x by the end of 2009. S&P also believes that Idearc will violate its 7.25x net leverage covenant during 2009, given S&P's current expected pace of EBITDA decline. EBITDA coverage of interest was just under 2.0x at December 2008 by S&P's estimation, and S&P expects this measure would deteriorate to less than 1.5x under existing bank facilities pricing by the end of 2009. Interest coverage would decline to a level potentially meaningfully lower than 1.5x in the event of a covenant violation- related re-pricing of the facilities (assuming Idearc were to maintain its current debt structure -- which S&P does not believe it will). The U.S. economic recession will likely continue to negatively affect customer spending on directories advertising over the intermediate term, with customer cancellations due to credit deterioration and lower customer renewal rates. This has led to print ad sales for Idearc that S&P believes declined more than 10% in 2008, overwhelming a somewhat respectable estimated mid-single-digit pace of digital revenue growth. However, print ads were just under 90% of total ad sales, and digital ads were just more than 10% during the period. As a result, total multi- product ad sales likely fell about 10% or more. Ad sales figures reflect directory campaigns completed during the period, and are a forward indicator of the decline in amortized sales levels that will be recognized over the subsequent year. S&P expects that the decline in ad sales will likely worsen further in the first half of 2009. Idearc has announced cost- cutting actions, although they have not been, and are not expected to be, sufficient to stem an accelerating decline in EBITDA this year. Longer term, Idearc's management team plans a number of remedial initiatives that leverage the company's core asset: its sales relationships with over 800,000 customers (reported in 2007, although S&P expects the company's customer count decreased in 2008) -- most of which are small and medium-size businesses. INCENTRA SOLUTIONS: Seeks Chapter 11 to Complete 363 Asset Sale --------------------------------------------------------------- Incentra Solutions, Inc., filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware. As part of the process, the Company and its senior lenders, a group of investment funds managed by Valens Capital Management, LLC and Laurus Capital Management, LLC, have entered into an Asset Purchase Agreement, that is proposed to be consummated using a Section 363 sales process. The Company and the Lenders have agreed to a debtor in possession financing facility to ensure uninterrupted operations of the business during the bankruptcy. This process will significantly improve the Company's balance sheet and liquidity. The Company has secured the continued availability of its revolving credit facility as a source of DIP financing. These additional funds along with the Company's continuing cash collections should provide sufficient resources to meet the Company's ongoing obligations. The Company plans to continue operations as is with no interruption in the delivery of services and technologies to its customers throughout the United States and Western Europe. "In today's economic conditions, we are pleased to have achieved such strong support for a sale of the business that is beneficial to our employees, customers, and partners by dramatically improving our balance sheet, eliminating some debt service obligations, and enabling continued investment in our services and future growth. This process will give Incentra a strong balance sheet, and allow us to take advantage of opportunities in the current economic environment while continuing to provide exceptional products and services to our customers. We look forward to the continued support of our senior lenders and their long-term commitment to the business," stated Chairman and CEO Thomas P. Sweeney. The Company plans to complete the sale and have the assets emerge from bankruptcy as quickly as possible, as the Asset Purchase Agreement with the senior lenders has already been approved by the Company's Board of Directors and will be filed with the Court in connection with the Company's motion to set a hearing date to approve the sale. Customers will not see any deterioration in the level of service or support they receive from Incentra and partners will be able to continue to count on the Company to deliver the consulting, technology and outsourcing services that the market requires. The Company continued its record growth in 2008 with revenues up 46 percent to $212 million over 2007. The Company continued to experience strong growth in its services portfolio with revenues up 26 percent for consulting and outsourcing services. About Incentra Based in Boulder, Colorado, Incentra Solutions, Inc. (ICNS) -- http://www.Incentra.com-- provides complete IT services and solutions to enterprise companies and managed service providers throughout North America and Europe. For over eight years, Incentra has delivered professional services, hardware and software solutions, and outsourcing services -- all customized to help individual clients realize the full impact of their IT investments. INDALEX HOLDINGS: Misses Payment; Grace Period Expires March 4 -------------------------------------------------------------- Indalex Holdings Finance, Inc. has forgone making the interest payment to holders of its 11.5% Second-Priority Senior Secured Notes due 2014, which was due February 2, 2009, initiating the first step in pursuing a restructuring of the 11.5% Notes. The Company said it will avail itself of the 30-day grace period with respect to the semi-annual interest payment as provided in the indenture governing the 11.5% Notes to evaluate alternatives to reduce the overall debt level of the Company. The Company has retained Jefferies & Company, Inc. as an advisor for the debt restructuring. The extrusion industry has experienced a deep and unprecedented downturn, and it is unclear when the downturn will end. The Company has been making and will continue to make changes as necessary to survive and prosper in these difficult conditions. Indalex has determined that the next necessary course of action is to restructure the Company's debt in the hopes of reducing its debt and corresponding interest burden. Timothy R.J. Stubbs, President and Chief Executive Officer, said: "I know many of our stakeholders have been concerned for some time over the amount of debt in these uncertain times - this move will address these concerns. As a result of this debt restructuring, we believe that Indalex will be stronger and healthier than ever before. We believe that we have the best people and the best plants in the industry and that our rapid actions over the last two years as part of our overall manufacturing strategy has put us in a position to continue to grow following a debt restructuring." About Indalex Holdings Indalex Holding Corp., a wholly owned subsidiary of Indalex Holdings Finance Inc., through its operating subsidiaries Indalex Inc. and Indalex Ltd., with headquarters in Lincolnshire, Illinois, is the second largest producer of soft alloy aluminum extrusion products in North America. The company's aluminum extrusion products are widely used throughout industrial, commercial, and residential applications and are customized to meet specific end-user requirements. The company's North American network includes 11 extrusion facilities, 31 extrusion presses with circle sizes up to 14 inches, a variety of fabrication and close tolerance capabilities, two anodizing operations, two billet casting facilities, and six electrostatic paint lines, including powder coat capability. For additional information, please visit http://www.indalex.com/ INDALEX HOLDING: Nonpayment of Interest Cues S&P's 'D' Rating ------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Lincolnshire, Illinois-based Indalex Holding Corp. to 'D' from 'CCC'. In addition, S&P lowered the issue-level rating on the company's $270 million senior secured notes due 2014 to 'D' from 'CCC-' and kept the '5' recovery rating on this debt. The downgrade stems from the company's failure to make the interest payment (around $12 million) on its senior secured notes, which was due on Feb. 2, 2009. A payment default has not occurred relative to the legal provisions of the notes since there is a 30- day grace period to make the payments. The company has announced that it will avail itself of the 30-day grace period to evaluate alternatives to reduce its overall debt. However, S&P considers a default to have occurred, even if the grace period exists, when the nonpayment is a function of the borrower being under financial stress -- unless S&P is confident that the payment will be made in full during the grace period. INTERTAPE POLYMER: Receives Listing Standard Notice From NYSE ------------------------------------------------------------- Intertape Polymer Group Inc. received a notice from the New York Stock Exchange that it is not in compliance with the Exchange's listing standards because the 30-trading-day average closing price of Intertape's stock dropped below $1.00. Intertape now has six months to cure this deficiency before the NYSE initiates suspension and delisting procedures. During the six month cure period, Intertape's stock will continue to be listed on the NYSE, however the stock symbol will be assigned a ".BC" indicator to reflect that the Company is not in compliance with the Exchange's listing standard. The Company intends to cure the deficiency and will consider all alternatives available to it. Eric E. Baker, Chairman of the Board of Directors, stated "Clearly our stock price has been impacted significantly by the current economic conditions and volatile financial markets. We continue to implement operational changes to mitigate these factors." Mr. Baker added, "It should be noted that in the event the Company's stock is not listed on the NYSE, it would not constitute a default under the Company's credit facility or Indenture. Further, delisting would not affect Intertape's operations or change its reporting requirements with the Securities and Exchange Commission." About Intertape Polymer Group Intertape Polymer Group develops and manufactures specialized polyolefin plastic and paper based packaging products and complementary packaging systems for industrial and retail use. Headquartered in Montreal, Quebec and Sarasota/Bradenton, Florida, the Company employs approximately 1,950 employees with operations in 17 locations, including 13 manufacturing facilities in North America and one in Europe. IPS CORP: S&P Raises Issue-Level Rating on 2014 Notes to 'B-' ------------------------------------------------------------- Standard & Poor's Ratings Services said that it raised its issue- level rating on IPS Corp.'s senior subordinated notes due 2014 to 'B-' (one notch lower than the corporate credit rating) from 'CCC+' and revised the recovery rating on these notes to '5' from '6'. These actions follow IPS' (B/Negative/--) repayment of $50 million of its senior subordinated notes and a $10 million prepayment on the senior secured term loan with a combination of cash and preferred equity. The revised ratings indicate S&P's expectation of modest (10% to 30%) recovery in the event of a payment default. The senior secured bank facilities are rated 'BB-' (two notches above the corporate credit rating) with a recovery rating of '1', which indicates S&P's expectation of very high (90% to 100%) recovery in the event of a payment default. Ratings List IPS Corp. Corporate credit rating B/Negative/-- Revised Ratings To From --------------- -- ---- Senior subordinated notes due 2014 B- CCC+ Recovery rating 5 6 INCENTRA SOLUTIONS: Case Summary & 35 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Incentra Solutions, Inc. 1140 Pearl Street Boulder, CO 80302 Bankruptcy Case No.: 09-10370 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- ManagedStorage International, Inc. 09-10368 Incentra Solutions of California, Inc. 09-10371 Network System Technologies, Inc. 09-10372 Incentra Solutions of the Northeast, Inc. 09-10373 Incentra Solutions of the Northwest, Inc. 09-10374 Sales Strategies, Inc. 09-10375 Incentra Solutions International, Inc. 09-10376 Type of Business: The Debtor provide information technology services. See: http://www.incentra.com/ Chapter 11 Petition Date: February 4, 2009 Court: District of Delaware (Delaware) Debtor's Counsel: Bruce Grohsgal, Esq. bgrohsgal@pszyj.com Pachulski, Stang, Ziehl Young & Jones 919 N. Market Street, 16th Floor Wilmington, DE 19899-8705 Tel: (302) 778-6403 Fax: (302) 652-4400 Estimated Assets: $92,494,615 Estimated Debts: $80,301,104 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ ComStor trade debt $2,503,118 520 White Plains Rd. Tarrytown, NY 10591 Contact: Chuck Thropp Tel: (703) 345-5141 Fax: (303) 566-2615 Synnex trade debt $1,477,187 44201 Nobel Dr. Fremont, CA 94538 Contact: Dennis Polk Tel: (800) 756-9888 Fax: (510) 360-6677 Data Domain, Inc. trade debt $1,248,047 2421 Mission College Blvd. Santa Clara, CA 95054 Contact: Michael Scarpelli Tel: (408) 980-4803 Fax: (408) 980-8620 Westcon Group North trade debt $748,894 America, Inc 520 White Plains Rd. Tarrytown, NY 10591 Contact: Chuck Thropp Tel: (703) 345-5141 Fax: (303) 566-2615 Dave Condensa earnout $744,768 5676 Scenic Meadow San Jose,CA 95135 Tel: (408) 464-1799 Fax: (408) 904-7475 Symantec trade debt $695,678 20330 Stevens Creek Blvd. Cupertino, CA 95014 Contact: James Beer Tel: (408) 517-8000 Fax: (650) 527-1845 Paul Chopra unsecured note $479,713 Ingram Micro trade debt $448,690 Oracle USA Inc. trade debt $419,837 Dell Marketing LP trade debt $398,618 Riverbed Technology Inc. trade debt $348,958 Avnet trade debt $317,517 Promark Technology Inc. trade debt $257,578 The Ritz-Carlton St. Thomas trade debt $225,530 Robert Condensa earnout $216,448 Kevin Hawkins trade debt $216,448 NetScout Systems Inc. trade debt $212,309 Infoblox Inc. trade debt $201,500 Bell Microproducts trade debt $182,913 Tom Kunigonis unsecured note $151,969 AUL Retirement Services trade debt $151,829 Fountry Networks Inc. trade debt $129,654 Island Meetings trade debt $119,486 Ironport System trade debt $115,653 Hire Performance trade debt $89,000 CommVault Systems Inc. trade debt $85,038 David Aurweck earnout $82,752 Emerald Technology trade debt $78,935 Blank & Associates trade debt $78,000 Multimedia Audio Visual $65,618 Hubspan trade debt $62,006 Xiotech Corp. trade debt $60,506 Spectra Logic Corporation trade debt $59,232 Farnam Street Financial Inc. trade debt $58,691 The petition was signed by Thomas Sweeney, III, chief executive officer. JOYSTAR/TRAVELSTAR: Chapter 7 Case May be Converted to Chapter 11 ----------------------------------------------------------------- Travelpulse.com reports that the Hon. Raymond Ray of the U.S. Bankruptcy Court for the Southern District of Florida has set a 10-minute hearing on JoyStar/TravelStar's request to convert its Chapter 7 involuntary liquidation case to Chapter 11 reorganization on February 24. As reported by the Troubled Company Reporter on Jan. 9, 2009, Drew Axelrod, a veteran agent and successful meeting planner, filed an involuntary Chapter 7 petition against JoyStar/TravelStar. Mr. Axelrod, owed $35,491, urged other JoyStar agents to join in the action. Mr. Axelrod said that JoyStar owes 15 agents an estimated $150,000 in unpaid commissions from the company. According to Mr. Axelrod, up to 50 agents may be owned as much as $250,000 in unpaid commissions. Travelpulse.com relates that Judge Ray gave Joystar last month a three-day extension to prepare its response to the involuntary bankruptcy filing, instead of the 20-day extension the company had asked. According to Travelpulse.com, calls by a group of agent to cruise lines and other suppliers to transfer pending bookings and commission payments from Joystar to agents who made the actual bookings made Carnival Cruise Lines, Princess Cruises and Holland America Line ask the Court to lift a stay on transferring those bookings. The Court, says the report, granted relief from the stay, on an interim basis, to the three cruise lines. JoyStar/TravelStar is based in Aliso Viejo, California. KING PHARMACEUTICALS: Will Lay Off 22% of Workforce --------------------------------------------------- King Pharmaceuticals, Inc., disclosed restructuring and workforce reduction initiatives it is taking to decrease the company's operating expenses. These actions, when combined with the reduction in headcount arising from King's recent acquisition of Alpharma Inc., result in a total workforce reduction of approximately 22% or approximately 760 positions. Approximately 240 of these reductions are corporate positions associated with synergies from the Alpharma acquisition. Approximately 520 of these reductions are associated with the restructuring announced today, of which approximately 380 are field sales positions and approximately 140 are corporate positions. Following the restructuring, the Company's sales force promoting its branded prescription products will total approximately 720. Brian A. Markison, King Chairperson, President and Chief Executive Officer, stated, "Following the recent court decision relating to our SKELAXIN(R) (metaxalone) patents and the uncertainty that it creates with respect to the continued exclusivity of the product, we thoroughly assessed our cost structure. We concluded the restructuring measures announced today will better position us to support the near-term priorities of our strategic plan." In connection with its restructuring initiatives, the company estimates that it will incur costs resulting in a special charge of between $50 million and $55 million, all of which it expects to incur in the first half of 2009. These costs are exclusive of any special charges associated with the company's activities related to the integration of Alpharma. The company plans to provide more details on the planned layoffs during its conference call on February 26, 2009, the date it intends to announce its financial results for the fourth quarter and year ended December 31, 2008. Recently, the U.S. District Court for the Eastern District of New York issued an Order invalidating United States Patent Nos. 6,407,128 and 6 683,102, two patents relating to SKELAXIN(R). The company plans to appeal upon entry of an appropriate judgment and vigorously enforce its intellectual property rights. About King Pharmaceuticals King, headquartered in Bristol, Tennessee, is a vertically integrated branded pharmaceutical company. King, an S&P 500 Index company, seeks to capitalize on opportunities in the pharmaceutical industry through the development, including through in-licensing arrangements and acquisitions, of novel branded prescription pharmaceutical products and technologies that complement the Company's focus in specialty-driven markets, particularly neuroscience and hospital. King is also a leader in the development, registration, manufacture and marketing of pharmaceutical products for food producing animals. As reported by the Troubled Company Reporter on Jan. 9, 2009, Moody's Investors Service affirmed King Pharmaceuticals' Ba3 Corporate Family Rating and stable outlook, and upgraded King's amended and restated $475 million senior secured first lien revolving credit facility to Ba2 from Ba3. LAKE AT LAS VEGAS: Court Extends Plan Filing Deadline to March 17 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada extended Lake at Las Vegas Joint Venture, LLC and its debtor-affiliates' exclusive periods to file a Chapter 11 plan through March 17. The requested extension of exclusivity was supported by the Official Committee of Unsecured Creditors and the lenders under the Debtors' two postpetition financing facilities. The Debtor is currently negotiating terms of a reorganization plan with its key constituents, Bloomberg's Bill Rochelle reported. About Lake at Las Vegas Headquartered in Henderson, Nevada, Lake at Las Vegas Joint Venture, LLC and 14 of its debtor-affiliates -- http://www.lakelasvegas.com/-- are owners and developers of 3,592-acre residential and resort destination Lake Las Vegas Resort in Las Vegas, Nevada. Centered around a 320-acre man-made lake, Lake Las Vegas contains more than 9,000 residential units, and also includes two luxury resort hotels (a Loews and a Ritz- Carlton), a casino, a specialty retail village shopping area, marinas, three signature golf courses and related clubhouses, and other real property. The Debtors filed separate petitions for Chapter 11 relief on July 17, 2008 (Bankr. D. Nev. Lead Case No. 08-17814). When Lake at Las Vegas Joint Venture, LLC filed for protection from its creditors, it listed assets of $100 million to $500 million, and debts of $500 million to $1.0 billion. Courtney E. Pozmantier, Esq., Martin R. Barash, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP, Jason D. Smith, Esq., at Santoro, Driggs, Walch, Kearney, Holley & Thompson, Jeanette E. McPherson, Esq., Lenard E. Schwartzer, Esq., at Schwartzer & McPherson Law Firm, represent the Debtors as counsel. Kaaran E. Thomas, Esq., Ryan J. Works, Esq., at McDonald Carano Wilson LLP, represents the Official Committee of Unsecured Creditors as counsel. LANDAMERICA FINANCIAL: Will Close; No Severance Pay for Workers --------------------------------------------------------------- Emily C. Dooley at Richmond Times-Dispatch reports that LandAmerica Financial Group Inc. will close. According to Times-Dispatch, LandAmerica Financial has filed notice with the state that workers at headquarters would be laid off by December 31. Workers won't get any severance pay because LandAmerica Financial is in bankruptcy, the report says, citing company spokesperson Carol Gentry. Times-Dispatch relates that 42 employees will be laid off on April 1, while 139 workers -- including accountants to technical support specialists -- will be laid off on April 15. About 291 workers, including the chief financial officer and chief legal officer, will be laid off by year-end, Times-Dispatch states. Times-Dispatch quoted LandAmerica Financial Chief Restructuring Officer Jonathan Mitchell as saying, "The board [of directors] has been very focused on the impact this situation has on employees, but unfortunately we're faced with the realities of the current economy and the realities of Chapter 11." Citing Mr. Mitchell and Ms. Gentry, Times-Dispatch relates that LandAmerica Financial hopes to sell off its remaining businesses. "I think it's likely many of the subsidiary companies will be sold. There's never no buyer. It's all just a question of price," the report quoted Mr. Mitchell as saying. About LandAmerica Financial LandAmerica Financial Group, Inc. is a leading provider of real estate transaction services with offices nationwide and a vast network of active agents. LandAmerica serves its agent, residential, commercial and lender customers throughout the United States, Mexico, Canada, the Caribbean, Latin America, Europe and Asia. LandAmerica Financial Group and its affiliate LandAmerica 1031 Exchange Services, Inc. filed for Chapter 11 protection Nov. 26, 2008 (Bankr. E. D. Virginia, Lead Case No. 08-35994). Dion W. Hayes, Esq., and John H. Maddock III, Esq., at McGuireWoods LLP, are the Debtors' bankruptcy counsel. In its bankruptcy petition, LFG listed total assets of $3,325,100,000, and total debts of $2,839,800,000 as of Sept. 30, 2008. Bankruptcy Creditors' Service, Inc., publishes LandAmerica Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by LandAmerica Financial and its affiliate LandAmerica 1031 Exchange Services, Inc. (http://bankrupt.com/newsstand/or 215/945-7000) LANDRY'S RESTAURANTS: Moody's Reviews 'Caa1' Corporate Rating ------------------------------------------------------------- Moody's Investors Service changed its review on ratings for Landry's Restaurants Inc. to review -- direction uncertain from review for possible downgrade. Moody's also affirmed the company's SGL-4 speculative grade liquidity rating. Ratings on review -- direction uncertain are; -- Corporate family rating at Caa1 -- Probability of default rating at Caa1 -- Senior secured bank loan rating at B1 -- Senior unsecured notes rating at Caa2 Rating affirmed; -- SGL-4 Speculative grade liquidity rating The review -- direction uncertain reflects the possibility that Landry's successfully completes the re-financing of its capital structure and strengthens its liquidity over the near term. However, the review also incorporates the possibility that the transaction is not completed or the terms and conditions are changed. In the event Landry's successfully completes the re-financing as proposed and operations perform as expected, the ratings would likely improve with the CFR and PDR raised to B2 from Caa1, the senior secured bank ratings raised to Ba2 from B1, and the new senior secured notes being rated at B3. However, in the event the re-financing is not successful, the company would be unable to repay its $400 million of 9.5% bonds, which can be put back to the company in late February, 2009. This would be a material liquidity event and would likely result in a downgrade of the current ratings. The ratings could also be impacted if the terms or conditions of the re-financing were to change or if operating performance were to deteriorate more than anticipated. The affirmation of the SGL-4 speculative grade liquidity rating reflects Landry's continued weak liquidity until such time that the outstanding $400 million of 9.5% senior unsecured notes are successfully re-financed. The ratings for the Golden Nugget Inc., a wholly-owned unrestricted subsidiary of Landry's, are unaffected by this rating action. The Golden Nugget's corporate family rating is currently rated B3 and all of its ratings are under review for possible down. Moody's last rating action for Landry's occurred on October 13, 2008, when the company's ratings were downgraded -- CFR to Caa1 from B2. The downgrade was due to continued weak operating performance and an increase in the company's probability of default. Moody's last rating action for Golden Nugget occurred on October 13, 2008, when the company's ratings were downgraded -- CFR to B3 from B2. The downgrade was due to continued weak operating performance and an increase in the probability of default of the company's parent company -- Landry's. Landry's Restaurants, Inc., with headquarters in Houston, Texas, owns and operates mostly casual dining restaurants under the trade names Landry's Seafood House, Chart House, The Crab House, Saltgrass Steak House, and Rainforest Cafe. Landry's also owns and operates the Golden Nugget hotel and casino in Las Vegas, Nevada. LEHMAN BROS: Will Bolster Select Real Estate Businesses ------------------------------------------------------- Alex Frangos at The Wall Street Journal reports that Lehman Brothers Holdings Inc. plans to use some of its $6 billion cash hoard to bolster selected real estate businesses. WSJ relates that Lehman received the court's approval to allot about $230 million to keep Archstone, an apartment company, afloat. Archstone, says WSJ, has struggled to sell assets to pay down the debt used to make the purchase. WSJ states that Lehman, along with Tishman Speyer Properties, Barclays PLC and Bank of America Corp., privatized Archstone in 2007 for about $22 billion. As reported by the Troubled Company Reporter on Feb. 4, 2009, Lehman CEO Bryan Marsal said that Lehman is evaluating a plan to create a separate company for Lehman's real estate assets -- one the properties that are difficult to sell -- and another company for the bank's illiquid assets, including private equity investments. According to Mr. Marsal, Lehman's illiquid real estate and private equity are expected to be sold in the next two to three years. Mr. Marsal said that Lehman may pay its creditors partly in cash and partly in stock. The company created for the illiquid assets would distribute stock to creditors. Mr. Marsal said that there are 500 people working the assets. Based on Lehman's bond prices of 15 cents on the dollar or less, investors anticipate recoveries of no more than $30 billion, or 15% of liabilities. Lehman isn't rushing to sell assets and prefers to observe the economy for a couple of years, WSJ says, citing Mr. Marsal. "We do not need to conduct fire sales, and we will continue to fund assets where we believe we can create more value by deferring sales to a better day," the report quoted him a saying. WSJ relates that since its bankruptcy filing, Lehman's real-estate group has brought in $191 million from loan collections, while using $78 million in funding continuing projects like construction loans. Partners, Creditors, Vendors Fighting for Remains WSJ that Lehman's partners, creditors, and vendors in hundreds of property deals have been fighting for what is left of the company's real estates. WSJ relates that SunCal Cos. and Swig Equities LLC have battled with Lehman to fund their projects. The report says that Lehman moved to foreclose on Swig's 25 Broad Street and 45 Broad Street projects, a move that a Swig spokesperson described as "a retaliation measure" for motions that Swig made on behalf of the projects in the bankruptcy proceeding. Lehman, according to WSJ, chipped in a $192 million loan and $150 million of equity in the $1.15 billion deal with Thomas Properties Group Inc., wherein Thomas Properties would acquire office buildings in Austin, Texas. The agreement was signed in 2007, WSJ states. Lehman promised to lend an additional $100 million for future needs like upgrades, but refused Thomas Properties' request for additional money to pay taxes, the report says. According to the report, Lehman and Thomas Properties continue to negotiate a settlement. State Street Corp., which has battled Lehman in bankruptcy court, claims that it inherited over 37 loans due to collateral postings, WSJ states. Citing people familiar with the matter, WSJ relates that State Street also inherited portions of loan positions tied to Boston's John Hancock Tower, owned by real-estate fund manager Broadway Partners. According to WSJ, Broadway Partners is in default on that loan. WSJ reports that sources said that Danske Bank Group holds Lehman collateral on a separate piece of Broadway Partners debt. WSJ says that Danske Bank disclosed its exposure to Lehman in September 2008, claiming that it had about $1.1 billion of repo loans secured by property assets. WSJ says that Lehman has to sort out the assets that it had pledged as collateral for short-term loans that kept its balance sheet liquid. J.P. Morgan Chase & Co. has $8.3 billion in pledged real-estate assets, WSJ states, citing Alvarez & Marsal, Lehman's restructuring manager. According to WSJ, the value of the pledged is in dispute and could end up being lower. WSJ, citing a person familiar with the matter, relates that the assets are hard-to- value "structured vehicles" tied to the real estate, and not whole loans or equity stakes in projects. If successfully seized by J.P. Morgan and others, those assets would diminish what Lehman can get out of the real estate, WSJ reports. Swedbank AB has 70 pledged loans related to a $1.35 billion repo loan it made to Lehman, WSJ relates. The report says that Swedbank sent representatives to the U.S. to work on the loans, some of which are partially funded construction projects. Alvarez & Marsal, according to the report, has decided to let some pledged real-estate assets. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers led in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offered a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on Sept. 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on Sept. 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion ($33 billion) in liabilities in its petition. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Examiner Wants to Issue Subpoenas to Execs. ------------------------------------------------------------ Anton Valukas, the court-appointed Chapter 11 examiner, seeks permission from Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York to issue subpoenas to former and incumbent officers of Lehman Brothers Holdings, Inc., and its debtor affiliates and other officials involved in the Debtors' transactions. The move is part of the Examiner's investigation into what caused the collapse of the Debtors. The officials would be investigated about the inter-company transfers among LBHI and its subsidiaries a month before the bankruptcy filing; and the transfer of the capital stock of Lehman Brothers Inc.'s subsidiaries to Lehman ALI Inc. on or about September 19, 2008. The officials would also be investigated if any of LBHI's affiliates has a colorable claim against any entity for "potentially voidable transfers" or incurrence of debt. Attorney for Mr. Valukas, Robert Byman, Esq., at Jenner & Block LLP, in New York, says that while some of the officials may be willing to serve as witnesses, the issuance of the subpoenas is necessary to complete the investigation. "Absent the issuance of a subpoena, the examiner will be unable to compel witnesses to produce documents and testify regarding the various matters included in the scope of the investigation," Mr. Byman says. In connection with the issuance of subpoenas, the Examiner also asks permission to implement these procedures: (1) except as otherwise agreed by the Examiner, witnesses will be directed to produce, on a rolling basis, all documents responsive to the Examiner's subpoena except those withheld under a claim of privilege within 10 days after service of the subpoena, or to file all objections and responses to the subpoena with the Court within 10 days after its issuance, with a hearing promptly scheduled; (2) if a witness withholds a document based on a claim of privilege, the witness must provide the Examiner with a privilege log containing the information required under Rule 7026 of the Federal Rules of Bankruptcy Procedure within 10 days after issuance of the subpoena; (3) the witness is directed to submit to oral examination upon notice and not later than 15 days from the issuance of the deposition subpoena; and (4) in accordance with Rules 2004 and 9016, the Clerk of the Court will issue subpoenas, signed but otherwise in blank, as requested by the Examiner. Parties Agree on Info Sharing Protocol In connection to the investigation, the Examiner, on the one hand, and each of the Official Committee of Unsecured Creditors and the Debtors, on the other hand, enters into stipulations setting out guidelines for the sharing of information: (1) Documents and information that the Examiner may request from the Debtors and the Creditors' Committee may be subject to a privilege or other protection from discovery, including the attorney-client privilege, the work-product doctrine or any other privilege, right or immunity they may be entitled to claim or invoke. The stipulations do not create any obligation or duty on behalf of the Debtors and the Creditors Committee to provide any shared information to the examiner and the provision of any information is voluntary. The Examiner may use the shared information in connection with the investigation. (2) The Examiner, the Debtors, the Creditors' Committee and their professionals do not intend to or waive the attorney-client privilege, the work-product doctrine or any other privilege, right or immunity they may be entitled to claim or invoke with respect to any shared information or otherwise. (3) The Examiner will hold all shared information in strict confidence. The Examiner will not provide or discuss any shared information with other person or entity including governmental units, except as required by law, regulation or legal process and only after compliance with the terms of the stipulation, provided that shared information may be provided to accountants, attorneys, experts, staff, consultants and agents of the Examiner, and any person or entity authorized by the Debtors and the Creditors in writing to receive shared Information. The stipulation does not prohibit the examiner or his professionals from using or disclosing in any manner the non-privileged, non- documentary factual information contained within the shared information provided that it does not reflect legal analysis or attorney work product. (4) In the event that the Examiner receives a request or is required to provide any shared information, he should provide notice to the Debtors' and the Creditors Committee's counsel within three days after receiving the request and they, in turn, should indicate in writing to the Examiner whether they have an objection to the production or provision of any shared information within five days. The Examiner should not produce or provide any shared information until the Debtors' and the Creditors Committee's objection to the production or provision of any shared information, if any, is finally resolved by the Court. If no timely objection is asserted by the Debtors and the Creditors Committee, the Examiner may, in his sole discretion, produce or provide the shared information in accordance with the request. (5) If the examiner desires to share shared information with any persons or entities not authorized to receive shared information, the examiner must either (i) obtain the advanced, written consent of the Debtors and the Creditors Committee or their counsel, or (ii) file an application with the Court, in camera, to request authorization to produce, share or otherwise provide any of the shared information with a party not covered by the stipulation. The Debtors and the Creditors Committee have 10 days to either consent to the disclosure of shared information or oppose the examiner's application. (6) If the Examiner wishes to disclose shared information that he contends is available publicly, available through discovery or that has been disclosed publicly, but not in violation of the stipulation, the examiner will provide written notice to the Debtors and the Creditors Committee that (i) identifies the shared information the examiner contends is public information, and (ii) describes how the shared information is public information. If the Debtors and the Creditors Committee object to the Examiner's contention, they have 10 days to seek relief from the Court. The examiner should not disclose the shared information that he contends is public information with any persons or entities until the Court resolves the objections. (7) The disclosure by the Examiner of any shared information, whether by consent of the Debtors and the Creditors Committee, by Court order, or by the examiner in violation of the stipulation will not affect the privileged protection of the disclosed information with respect to any person or entity, and will not affect the privileged protection of any other shared information. (8) Any violation of the terms of the stipulation by the examiner constitutes sufficient cause for the Debtors and the Creditors Committee to cease providing the examiner any shared information and demand the return of all shared information within five days. Any third-party who has received shared information from the examiner other than in compliance with the stipulation, whether inadvertent or not, should return all shared information to the Debtors and the Creditors Committee no later than two days after receiving request for the return of the shared information by the Debtors and the Creditors Committee or the examiner. ACERA, et al., Object The Alameda County Employees' Retirement Association; Government of Guam Retirement Fund; Northern Ireland Local Government Officers' Superannuation Committee; City of Edinburgh Council as Administering Authority of the Lothian Pension Fund; and Operating Engineers Local 3 Trust Fund; express disapproval of the stipulation between the Examiner, and each of the Debtors and the Creditors' Committee. The groups say they do not oppose the Debtors' and the Committee's efforts to step up precautions to safeguard the information they will provide to the Examiner. However, the groups assert that the Debtors' and the Committee's interests in protecting the information must be balanced with the rights of the creditors or other concerned parties. "The stipulation and proposed order approving the stipulation should not be deemed a determination as to the propriety and validity of the Debtors' asserted privileges and protections," the groups say. "Parties-in-interest should retain the right to object to the assertion of such privileges and protections and should not be prohibited from access to the shared information at an appropriate time solely because of the Debtors' unilateral designation of shared information as privileged or otherwise not subject to disclosure in the context of the stipulation," the groups further say. The groups are lead plaintiffs in the consolidated securities class action filed against some of LBHI's officers before the U.S. District Court for the Southern District of New York. The complaint stemmed from LBHI's alleged undisclosed exposure to losses from distressed mortgage and asset-backed securities. LBHI allegedly failed to disclose the true risk of losses associated from its mortgage-related assets and did not properly write-down the assets to reflect their true value. * * * A hearing to consider approval of the examiner's request is scheduled for February 11, 2009. Creditors and other concerned parties have until February 6 to file their objections. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers led in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offered a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on Sept. 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on Sept. 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion ($33 billion) in liabilities in its petition. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MAN GLENWOOD: Fitch Junks Rating on $43.750 Mil. Notes from 'BBB' ----------------------------------------------------------------- Fitch Ratings has downgraded and removed from Rating Watch Negative four classes from Man Glenwood Alternative Strategies II Ltd. Fitch has also assigned Rating Outlooks to three of the classes. Fitch has taken these rating actions: -- $250,000,000 class A to 'BBB' from 'AA'; Outlook Stable; -- $40,000,000 class B to 'BB' from 'AA'; Outlook Stable; -- $15,000,000 class C to 'B' from 'A'; Outlook Stable; -- $43,750,000 class D to 'CCC' from 'BBB'. The severity of losses and marked reduction in underlying fund liquidity for hedge fund collateralized fund obligations in 2008 exceeded Fitch's original expectations. As a result, on Feb. 2, 2009, Fitch published the press release 'Fitch Updates Analysis for Rating Hedge Fund CFOs' which outlines the causes and major revisions to the agency's analysis. These rating actions are based on actual losses in Man Glenwood's portfolio during 2008, its reduced liquidity profile, and the application of Fitch's updated analysis. Portfolio losses have resulted in reduced relative levels of overcollateralization for each of the rated classes. Fitch notes that Man Glenwood is currently passing all of its overcollateralisation tests as per the Nov. 30, 2008 trustee report. However, the transaction has a stated maturity date of May 15, 2010. Fitch's analysis takes into account the lack of de- leveraging to date and an uncertain refinancing environment for the notes at maturity. The Stable Outlook on classes A, B and C reflect these notes' ability to withstand sequential market value stresses and reductions in liquidity over the next year under Fitch's updated analysis. Fitch introduced Rating Outlooks for U.S. structured finance in September 2008 to provide investors with forward-looking analysis for a structured finance tranche's credit performance. Fitch's Rating Outlook indicates the likely direction of any rating change over a one- to two-year period and may be Positive, Negative, Stable or, occasionally, Evolving. MASHANTUCKET PEQUOT: Moody's Cuts Foxwoods Casino Rating to 'Ba3' ----------------------------------------------------------------- Moody's Investors Service downgraded the ratings of the Mashantucket Pequot Tribal Nation and placed its ratings on review for further possible downgrade. The downgrade is in response to what Moody's believes will be an increasingly difficult operating environment for the Tribe in 2009 which will negatively impact earnings, cash flow, and credit metrics. The Tribe owns and operates the Foxwood's Resort Casino in Connecticut. These ratings were lowered and placed on review for further possible downgrade: -- Corporate family rating to Ba3 from Ba2 -- Probability of default rating to Ba3 from Ba2 -- Special Revenue Obligations to Ba2 from Ba1 -- Subordinated Special Revenue Obligations to B1 from Ba3 -- 2007 Series A Notes to B2 from B1 A continued decline in the Tribe's monthly gross slot win trend suggests that as the economy weakens, earnings pressure -- already considered severe -- will become more intense. "Moody's expects that this heightened earnings pressure will offset the benefit to free cash flow in 2009 from the incremental earnings generated by the new MGM property, substantially lower capital spending, and aggressive cost cutting programs at both the gaming enterprise and Tribe level" stated Keith Foley, Moody's Senior Vice President. "As a consequence, free cash flow is expected to be negative in 2009 and debt/EBITDA -- at about 7 times -- could increase." These unfavorable trends also make it unlikely that the Tribe can achieve debt/EBITDA below 4.5 times by the end of fiscal 2010 -- a key target level needed to maintain a Ba2 corporate family rating. The review for further possible downgrade considers that along with increased pressure on earnings, the gaming operation is still burdened by large expected distributions to the Tribe and could face increasing leverage and covenant compliance issues if consolidated EBITDA experiences a decline during fiscal 2009. Moody's review will focus on the Tribe's cost cutting program and other initiatives it is pursuing in an effort to: (1) maintain its adequate liquidity profile, (2) offset additional competitive and economic pressure, (3) remain in compliance with covenants, and (4) reduce leverage over the longer-term to a level more acceptable for the current rating. Moody's latest rating action was on November 19, 2008, when the Tribe's Special Revenue Obligation bonds were lowered to Ba1 from Baa3. At the same time, a Ba2 corporate family rating and Ba2 probability of default rating was assigned. Foxwoods Resort Casino is owned by the Mashantucket (Western) Pequot Tribal Nation. The Mashantucket Pequot Gaming Enterprise, a wholly-owned, unincorporated division of the Tribe, conducts Foxwoods' gaming and resort operations. * * * Bloomberg's Bill Rochelle notes that Moody's ratings cut matches the action taken Jan. 30 by Standard & Poor's. S&P placed the 'BB- ' issuer credit rating of Mashantucket on CreditWatch with negative implications. The CreditWatch placement stems from recent slot revenue data reported to the State of Connecticut, which shows ongoing weakness in the market," noted Standard & Poor's credit analyst Melissa Long. MERCEDES HOMES: Seeks Squire Sanders as Attorney ------------------------------------------------ Mercedes Homes Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of Florida for permission to employ Squire, Sanders & Dempsey LLP as their attorneys. The firm is expected to: a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and property; b) attend meetings and negotiate with representatives of creditors and other parties in interest and advising and consulting on the conduct of these Chapter 11 Cases, including all of the legal and administrative requirements of operating in Chapter 11; c) assist the Debtors with the preparation of their Schedules of Assets and Liabilities and Statements of Financial Affairs; d) advise the Debtors in connection with any contemplated sales of assets or business combinations, including the negotiation of asset, stock, purchase, merger or joint venture agreements, formulate and implement appropriate procedures with respect to the closing of any such transactions, and counseling the Debtors in connection with such transactions; e) advise the Debtors in connection with any post-petition financing and cash collateral arrangements and negotiating and drafting documents relating thereto, providing advice and counsel with respect to pre-petition financing arrangements, and negotiating and drafting documents relating thereto; f) advise the Debtors on matters relating to the evaluation of the assumption, rejection or assignment of unexpired leases and executory contracts; g) advise the Debtors with respect to legal issues arising in or relating to the Debtors' ordinary course of business including attendance at senior management meetings, meetings with the Debtors' financial and turnaround advisors and meetings of the board of directors; h) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on their behalf, the defense of any actions commenced against them, negotiations concerning all litigation in which the Debtors are involved and objecting to claims filed against the Debtors' estates; i) prepare, on the Debtors' behalf, all motions, applications, answers, orders, reports and papers necessary to the administration of the estates; j) negotiate and prepare, on the Debtors' behalf, a plan of reorganization, disclosure statement and all related agreements and documents and taking any necessary action on behalf of the Debtors to obtain confirmation of such plan; k) attend meetings with third parties and participate in negotiations with respect to the above matters; 1) appear before this Court, any appellate courts and the United States Trustee and protecting the interests of the Debtors' estates before such courts and the United States Trustee; and m) perform all other necessary legal services and providing all other necessary legal advice to the Debtors in connection with these Chapter 11 Cases. The firm's professionals and their compensation rates are: Designation Hourly Rate ----------- ----------- Partners $950-$350 Associates $475-$190 Legal Assistants $300-$95 Craig D. Hansen, Esq., a partner in the firm, assures the Court that the fir does not hold any interest adverse to the Debtors' estates and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Melbourne, Florida, Mercedes Homes Inc. -- http://www.mercedeshomes.com-- operates a homebuilding company that was established in 1983 by Howard Buescher, a 23-year veteran of the homebuilding business and his daughter Susan Girard. The company employs approximately 400 people who sell, and construct, homes of distinctive quality in over 80 communities in Florida, Texas and North and South Carolina. The company and 10 of its affiliates filed for Chapter 11 protection on Jan. 26, 2009 (Bankr. S.D. Fla. Lead Case No. 09-11191). Tina M. Talarchyk, Esq., at Squire, Sanders & Dempsey, LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Richard M. Williamson and Alvarez & Marsal North American LLC as their chief restructuring officer, Odyssey Capital Group LLC as valuation expert, Michael P. Kahn & Associates LLC as financial advisor and Kurtzman Carson Consultants LLC as claims and noticing agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $1 million to $10 million each. MERVYN'S LLC: Asks Court for June 24 Extension of Removal Period ---------------------------------------------------------------- Mervyn's LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend through June 24, 2009, the period under which they may file notices of removal of actions and proceedings to which they are parties to, in accordance with Rule 9027(a) of the Federal Rules of Bankruptcy Procedure. Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates the Debtors are parties to numerous lawsuits and are continuing to review these lawsuits to determine whether they should remove any claims or civil causes of action that may be pending in state or federal court to which they might be a party. Mr. Samis asserts the Debtors employ a small core group of employees as a result of several reductions in work force. In light of the Debtors' decision to liquidate, the attention of their remaining personnel conducting the review of their lawsuits have been focused primarily on the winding-down of their business, Mr. Samis tells the Court. Thus, the Debtors believe the proposed extension will provide sufficient time to allow them to consider, and make decisions concerning, the removal of the Civil Actions, although they reserve their right to request additional extension if appropriate. Headquartered in the San Francisco Bay Area, Mervyn's LLC -- http://www.mervyns.com/-- provides a mix of top national brands and exclusive private labels. Mervyn's has 176 locations in seven states. Mervyn's stores have an average of 80,000 retail square feet, smaller than most other mid-tier retailers and easier to shop, and are located primarily in regional malls, community shopping centers, and freestanding sites. The company and its affiliates filed for Chapter 11 protection on July 29, 2008, (Bankr. D. Del. Lead Case No.: 08-11586). Howard S. Beltzer, Esq., and Wendy S. Walker, Esq., at Morgan Lewis & Bockius LLP, and Mark D. Collins, Esq., Daniel J. DeFranceschi, Esq., Christopher M. Samis, Esq. and L. Katherine Good, Esq., at Richards Layton & Finger P.A., represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants LLC is the Debtors' claims agent. The Debtors' financial advisor is Miller Buckfire & Co. LLC. Mervyn's LLC's balance sheet at Aug. 30, 2008, showed $665,493,000 in total assets and $717,160,000 in total liabilities resulting in a $51,667,000 total stockholders' deficit. (Mervyn's Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) MERVYN'S LLC: Stakeholders Resolve Chapter 7 Conversion Dispute --------------------------------------------------------------- Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, disclosed in a certification of counsel filed with the U.S. Bankruptcy Court for the District of Delaware, that Mervyn's LLC and its affiliates; Wachovia Capital Finance Corporation, in its capacity as lender agent, and the Official Committee of Unsecured Creditors, SCSF Mervyn's, Inc. and SCSF Mervyn's LLC, in their capacities as Investor and Subordinated Note Agent, have agreed to resolve and settle all of the Committee's objections. The Debtors previously sought the Court's authority to close all their remaining stores, conduct store closing sales, and enter into an agency agreement providing for the liquidation of merchandise inventory and other assets with the successful bidder at auction. The Creditors Committee objected and asked the Court convert the Debtors' Chapter 11 cases to Chapter 7 instead. Wachovia Capital subsequently opposed the Conversion Motion. To settle the objections, the parties have agreed to grant the Committee standing, authority, control, and the exclusive right and sole discretion to investigate, prosecute or seek authorization to compromise on behalf of the Debtors' estates, the 2004 transaction litigation, causes of action under Chapter 5 of the Bankruptcy Code and any other claims or causes of action concerning the SCSF Entities. The 2004 transaction litigation refers to Mervyn's LLC third- party complaint against its former owner, The Target Corporation, among others, for allegedly engaging in a fraudulent act which resulted into Mervyn's Bankruptcy filing. The parties have agreed for the Debtor-in-possession Lenders to make a $3,000,000 loan, the proceeds of which will be deposited into an escrow account maintained at Cooley Godward Kronish LLP to be used for payment of the fees and expenses incurred in pursuit of the Causes of Action which are not otherwise paid for by the Debtors. No professional or any other party entitled to be paid from the proceeds of the Professional Fee Carve Out will have any claim, recourse, or right to pursue Wachovia, the DIP Lenders or the Prepetition First Lien Lenders in respect of any payments. Wachovia, the DIP Lenders and the Prepetition First Lien Lenders are forever released and discharged from any obligation, responsibility or liability in connection with the Professional Fee Carve Out or other expenses. The parties further stipulated: (i) to modify the definition of "Maximum Credit" in the DIP Loan Agreement to mean $85,000,000, provided that Wachovia may unilaterally reduce the Maximum Credit without requiring the Debtors' consent with respect to any reduction; (ii) to delete Section 2.5 of the Ratification Agreement; (iii) that the unused line fee in Section 3.2(a) of the Loan Agreement be amended to "zero". The Debtors will be authorized to use the cash collateral of Wachovia, the Prepetition First Lien Lenders and the SCSF entities in accordance with the Wind Down Budget, which the Debtors filed under seal. As part of the consideration for Wachovia's consent for the use of Cash Collateral, it will hold as collateral security for the prompt performance, observance and indefeasible payment in full of all obligations, cash collateral in an amount equal to $81,703,600, which amount includes, among other things, 105% of the Outstanding Wachovia Letters of Credit. Upon the establishment of the Litigation Fund, the DIP Lenders will be deemed granted a perfected first-priority lien on the proceeds of the Causes of Action in an amount not to exceed $1,800,000. In the event that the DIP Lenders fail to receive indefeasible payment in full in respect of all obligations in accordance with the DIP Loan Agreement and the Final DIP Order, the first proceeds recovered from the Causes of Action will be paid and turned over to Wachovia for application against the obligations owing to the DIP Lenders. Judge Kevin Gross approved the parties' stipulation. Headquartered in the San Francisco Bay Area, Mervyn's LLC -- http://www.mervyns.com/-- provides a mix of top national brands and exclusive private labels. Mervyn's has 176 locations in seven states. Mervyn's stores have an average of 80,000 retail square feet, smaller than most other mid-tier retailers and easier to shop, and are located primarily in regional malls, community shopping centers, and freestanding sites. The company and its affiliates filed for Chapter 11 protection on July 29, 2008, (Bankr. D. Del. Lead Case No.: 08-11586). Howard S. Beltzer, Esq., and Wendy S. Walker, Esq., at Morgan Lewis & Bockius LLP, and Mark D. Collins, Esq., Daniel J. DeFranceschi, Esq., Christopher M. Samis, Esq. and L. Katherine Good, Esq., at Richards Layton & Finger P.A., represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants LLC is the Debtors' claims agent. The Debtors' financial advisor is Miller Buckfire & Co. LLC. Mervyn's LLC's balance sheet at Aug. 30, 2008, showed $665,493,000 in total assets and $717,160,000 in total liabilities resulting in a $51,667,000 total stockholders' deficit. (Mervyn's Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) MERVYN'S LLC: Seeks to File Wind Down Budget Under Seal ------------------------------------------------------- Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware authorized Mervyn's LLC and its debtor-affiliates to file their wind down budget, professional fee budget and the corporate overhead budget. However, the Debtors are directed to redact certain portion of the budget. In their request, the Debtors explained they are not public companies, thus all of their financial information are confidential. In addition, the Debtors note, they are in the midst of running store closing sales, marketing their leases and intellectual property and winding-down their business. Only after that process is completed will they have an accurate picture of their financial situation and be able to formulate a liquidation plan, the Debtors tell the Court. The Budget will be made available only to the: (a) Court; (b) Office of the United States Trustee for the District of Delaware; (c) Official Committee of Unsecured Creditors; and (d) prepetition junior secured lenders. Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, submitted with the Court a certification of counsel disclosing redacted portions of the Wind-Down budget, a full-text copy of which can be accessed for free at: http://bankrupt.com/misc/Mervyns_RedactedBudget.pdf Headquartered in the San Francisco Bay Area, Mervyn's LLC -- http://www.mervyns.com/-- provides a mix of top national brands and exclusive private labels. Mervyn's has 176 locations in seven states. Mervyn's stores have an average of 80,000 retail square feet, smaller than most other mid-tier retailers and easier to shop, and are located primarily in regional malls, community shopping centers, and freestanding sites. The company and its affiliates filed for Chapter 11 protection on July 29, 2008, (Bankr. D. Del. Lead Case No.: 08-11586). Howard S. Beltzer, Esq., and Wendy S. Walker, Esq., at Morgan Lewis & Bockius LLP, and Mark D. Collins, Esq., Daniel J. DeFranceschi, Esq., Christopher M. Samis, Esq. and L. Katherine Good, Esq., at Richards Layton & Finger P.A., represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants LLC is the Debtors' claims agent. The Debtors' financial advisor is Miller Buckfire & Co. LLC. Mervyn's LLC's balance sheet at Aug. 30, 2008, showed $665,493,000 in total assets and $717,160,000 in total liabilities resulting in a $51,667,000 total stockholders' deficit. (Mervyn's Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) MGM MIRAGE: Moody's Matches S&P With Downgrade to 'B1' ------------------------------------------------------ Moody's Investors Service downgraded MGM MIRAGE'S Corporate Family Rating to B1 from Ba3 reflecting the probability that earnings in 2009 will fall more than previously expected as recessionary forces continue to cause consumers to reduce discretionary spending. "Additionally, the company has been unable to raise the targeted $3.0 billion in capital for its CityCenter development, and so its cash needs have increased", stated Peggy Holloway, Senior Credit Officer at Moody's. "As a result of this lower EBITDA and higher debt levels, Moody's estimate that MGM's debt/EBITDA will exceed 8.0 times by year-end 2009 -- a level inconsistent with its prior rating". Moody's debt/EBITDA estimate is based upon Moody's standard analytic adjustments. MGM's SGL-4 Speculative Grade Liquidity rating was affirmed. Although recent debt issuance ($750 million) and the expected net proceeds from the sale of Treasure Island in the second quarter should enable MGM to meet its capital spending needs and bond maturities ($1.050 billion) in 2009, MGM's liquidity remains weak. Moody's estimate that availability under the company's $4.5 billion revolving credit facility could drop below $300 million by year-end and would be insufficient to cover maturing bond debt of $1.1 billion in 2010. Ratings remain on review for further possible downgrade reflecting the weak demand environment which could cause operating performance to deteriorate further, as well as the need for MGM to improve its liquidity profile. The review will focus on MGM's plans to shore-up its liquidity position and its ability to maintain a credit profile and financial flexibility appropriate for a B1 rating within the depressed Las Vegas lodging and gaming environment. This is particularly key given the need to complete and ramp up the massive City Center project in the midst of an unfavorable macro-economic environment. Ratings downgraded and placed on review for further possible downgrade: MGM MIRAGE -- Corporate Family Rating to B1 from Ba3 -- Probability of default rating to B1 from Ba3 -- Senior unsecured notes to B1 from Ba3 -- Senior subordinated notes to B3 from B2 Ratings that remain on review for further possible downgrade: -- Senior secured notes at Ba1 Rating Affirmed: -- Speculative Grade Liquidity Rating at SGL-4 Ratings downgraded and placed on review for further possible downgrade: Mirage Resorts -- Senior unsecured notes to B1 from Ba3 Mandalay Resort Group -- Senior unsecured notes to B1 from Ba3 -- Senior subordinated notes to B3 from B2 Moody's latest rating action was on October 29, 2008, when the MGM MIRAGE's corporate family rating and probability of default rating were downgraded to Ba3 from Ba2. All ratings remained on review for further possible downgrade. Headquartered in Las Vegas, Nevada, MGM MIRAGE owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. MGM MIRAGE has a 50% interest in CityCenter Holdings, Inc., a mixed-use project on the Las Vegas Strip and a 50% interest in MGM Grand Macau, a hotel-casino resort in Macau S.A.R. * * * Bloomberg's Bill Rochelle points out that Las Vegas, Nevada-based MGM Mirage received a downgrade Jan. 3 from Moody's Investors Service to match the ding issued Jan. 30 by Standard & Poor's. Standard & Poor's Ratings Services said Jan. 30 that it lowered its corporate credit rating on MGM MIRAGE to 'B+' from 'BB-'. It noted that its previous projected was total operating lease- adjusted debt to EBITDA, excluding income from unconsolidated affiliates, to peak in the low-7x area. However, "it has become apparent that the currently weakened state of the economy is having a more pronounced impact on consumer discretionary spending than previously anticipated, and that credit measures will likely deteriorate meaningfully beyond S&P's previous expectations." S&P also said that difficult conditions in the credit markets have thus far prevented the company from securing funding beyond the initial $1.8 billion financing the company secured in October 2008 for its CityCenter development project. MIDWAY GAMES: Appoints Matthew Booty as Chairman ------------------------------------------------ Midway Games Inc. (NYSE:MWY) disclosed that its Board of Directors has appointed Matthew V. Booty as the new Chairman of the Board in addition to his current roles as President and Chief Executive Officer. The company also announced that Peter C. Brown has resigned as a Director and Chairman of the Board for personal reasons. Mr. Brown joined Midway's board in 2005 and currently serves as Chairman of the Board, Chief Executive Officer and President of AMC Entertainment Inc. Mr. Booty has been President and CEO of Midway since his appointment in October 2008, and served as Interim President and CEO for the preceding seven months. Mr. Booty joined Midway in 1991 as an engineer and programmer, and after serving in progressively more responsible roles, he eventually was promoted to Vice President of Product Development in 2002. Prior to being named President and CEO of the company, he served as Senior Vice President, Worldwide Studios. Midway Games Inc. (MWY) -- http://www.midway.com/-- headquartered in Chicago, Illinois, with offices throughout the world, is a leading developer and publisher of interactive entertainment software for major videogame systems and personal computers. * * * The Troubled Company Reporter reported on Jan. 19, 2009, that Midway Games Inc. reached a waiver and forbearance agreements with the holders of $150 million principal amount of its convertible senior notes. With the agreements, Midway now has negotiated with holders of the $75 million principal amount of 6% Convertible Senior Notes due 2025 and $75 million principal amount of 7.125% Convertible Senior Notes due 2026 to extend the date upon which the holders have the right to exercise their option to require Midway to repurchase the notes to February 12, 2009. The accelerated repurchase date was triggered by a change of control that occurred on November 28, 2008. As of September 30, 2008, the company's balance sheet showed total assets of $167,523,000 and total stockholders' deficit of $113,510,000. MIRANT CORP: Appeals Court Affirms Payment to Shareholders' Lawyer ------------------------------------------------------------------ According to Bloomberg's Bill Rochelle, the 5th U.S. Circuit Court of Appeals upheld U.S. Bankruptcy Court for the Northern district of Texas Judge D. Michael Lynn's ruling that ordered reorganized Mirant to pay a shareholders' lawyer, even though the fee arrangement didn't require shareholders to pay the lawyer. The lawyer sought $645,000 in reimbursement from Mirant for counsel fees to shareholders, which services were a "substantial contribution in" a Chapter 11 case. Judge Lynn, however, only awarded him $15,000. About Mirant Mirant Corporation -- http://www.mirant.com/-- produces and sells electricity in the United States. Mirant owns or leases approximately 10,097 megawatts of electric generating capacity. The company operates an asset management and energy marketing organization from its headquarters in Atlanta, Georgia. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtor in its restructuring. When the Debtor filed for protection from its creditors, it listed $20,574,000,000 in assets and $11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. On March 7, 2007, the Court entered a final decree closing 46 Mirant cases. Mirant NY-Gen LLC, Mirant Bowline LLC, Mirant Lovett LLC, Mirant New York Inc., and Hudson Valley Gas Corporation, were not included. On Feb. 15, 2007, Mirant NY-Gen filed its Chapter 11 Plan of Reorganization and on Feb. 22 filed a Disclosure Statement explaining that Plan. The Court approved the adequacy of Mirant NY-Gen's Disclosure Statement on March 22, 2007, and confirmed the Amended Plan on May 7, 2007. Mirant NY-Gen emerged from Chapter 11 on May 7, 2007. On July 13, 2007, Mirant Lovett filed its Chapter 11 Plan of Reorganization. The Court confirmed Mirant Lovett's Plan on Sept. 19, 2007. Mirant Lovett emerged from bankruptcy on Oct. 2, 2007. Bankruptcy Creditors' Service, Inc., publishes Mirant Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Mirant Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MODERN METAL: To Sell Bronson Division to Rival, Absent Other Bids ------------------------------------------------------------------ Modern Metal Products Co. asks the U.S. Bankruptcy Court for the Northern District of Illinois to approve the sale of one of its key divisions to Gill Industries Inc. for at least $4.5 million. According to Bloomberg, Modern Metal has signed a contract with Gill, a competitor, regarding the sale of its Homer D. Bronson Co. division. The Debtor, however, will still entertain bids for the division. Competing offers are due Feb. 16. Modern Metal Products Co. was an Illinois-based auto-parts maker. It makes seats and assemblies for trucks and sport-utility vehicles. Modern Metal merged with Winsted, Connecticut-based Homer D. Bronson in February 2006. Modern Metal filed for Chapter 11 protection on Dec. 1, and has opted to liquidate its assets. It disclosed $34.6 million in assets and debt of $43.6 million as of its bankruptcy filing. MOHEGAN TRIBAL: Moody's Downgrades Rating to B2; Matches S&P's -------------------------------------------------------------- Moody's Investors Service placed the corporate family rating, probability of default rating and senior unsecured notes rating of Waterford Gaming LLC and its wholly-owned subsidiary and co- issuer, Waterford Gaming Finance Corp., under review for possible downgrade. The action follows the downgrade and placement on review for possible further downgrade of Mohegan Tribal Gaming Authority's ratings. The downgrade and review of MTGA's ratings were in response to the substantial drop in MTGA's fiscal 2009 first quarter EBITDA and renewed leverage, liquidity and covenant concerns. Waterford's only material source of cash flows to service its debt obligations consists of the cash distributions made by Trading Cove Associates, a 50%-owned general partnership, which earns a 5% relinquishment fee based on certain gross revenues of MTGA's Mohegan Sun casino. Beyond the Mohegan Sun casino's revenue generation, Moody's further considers MTGA's overall credit profile in the assessment of Waterford's ratings. MTGA has the ability to block all or part of the relinquishment payments to TCA in the event of a payment or non-payment default on MTGA's senior secured or senior unsecured debt. During Moody's review process and in parallel with the analysis conducted for MTGA, Moody's will assess the risk that the amount or the timing of the relinquishment payments can be negatively affected in the near to intermediate term by MTGA's weakening credit profile. These ratings were placed under review for possible downgrade: -- Corporate family rating at Caa1 -- Probability of default rating at B3 -- Senior unsecured notes rating at Caa1 The last rating action was on November 19, 2008, when Moody's lowered Waterford's CFR to Caa1 from B1. Waterford is a special purpose company formed solely for the purpose of holding its 50% partnership interest, as a general partner, in TCA, a Connecticut general partnership and the manager (until January 1, 2000) and developer of the Mohegan Sun casino located in Uncasville, Connecticut. The Mohegan Sun casino is owned and operated by the Mohegan Tribal Gaming Authority. * * * Bloomberg's Bill Rochelle points out that the Moody's downgrade matches the demotion issued Jan. 30 by Standard & Poor's. Standard & Poor's Ratings Services lowered its ratings on Mohegan Tribal to 'B' from 'BB-'. At the same time, the ratings were placed on CreditWatch with negative implications. "The downgrade and CreditWatch placement stem from our concerns about MTGA's weakening credit measures during a difficult operating environment, its constrained liquidity position, and its ability to remain in compliance with its financial covenants over the next several quarters," said Standard & Poor's credit analyst Melissa Long. MONTERRA ENTERPRISES: U.S. Trustee Moves Court to Dismiss Case -------------------------------------------------------------- Charles F. McVay, the U.S. Trustee for Region, 19, asks the U.S. Bankruptcy Court for the District of Utah to dismiss or convert Monterra Enterprises, LLC's case to one under Chapter 7 of the Bankruptcy Code. The U.S. Trustee says that relief from the automatic stay has been granted as to each of the real property interests of the Debtor in Pheasant Hollow, Fox Hollow, and Heatherwood Subdivision Phases 1 & 2. Absent substantial business or reliable stream of income, the Debtor has no current prospects for reorganization, and has no further need for bankruptcy protection. In addition, the U.S. Trustee relates, the Debtor has not filed monthly financial reports for the period September through December 2008. The Debtor has also failed to pay the quarterly fees owing the Office of the U.S. Trustee for the last two quarters of 2008. For the above stated reasons, the U.S. Trustee tells the Court, sufficient cause exists under Sections 1112(b)(1) and 1112(b)(4)(a) for the dismissal or conversion of the Debtor's case to a case under Chapter 7 of the Bankruptcy Code. Based in St. George, Utah, Monterra Enterprises, LLC filed for Chapter 11 bankruptcy protection on June 6, 2008 (D. Utah Case No. 08-23641). Anna W. Drake, Esq., at Anna W. Drake, P.C., represents the Debtor as counsel. When the Debtor filed its schedules, it disclosed total assets of $31,855,727 and total liabilities of $36,367,256. MORRIS PUBLISHING: Forbearance & Grace Period Expire March 3 ------------------------------------------------------------ Morris Publishing Group LLC didn't make an interest payment due Feb. 1 on subordinated notes. Morris Publishing was required to pay $9.7 million interest under its $278.5 million of 7% Senior Subordinated Notes due 2013. It has a 30-day grace period, which expires March 3, before a default can be declared. Morris Gets Forbearance Until March 3 On January 28, 2009, Morris Publishing, entered into Amendment No. 4 and Waiver No. 2, under the Credit Agreement dated as of December 14, 2005 between Morris Publishing, Morris Communications Company, LLC, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. Prior to the Amendment, the Credit Agreement provided for revolving credit commitments of $100 million, in addition to the $83.25 million outstanding on the term loan. On January 28, 2009, there was $50 million outstanding on the revolving credit facility. The Credit Agreement includes an event of default if Morris Publishing defaults in the payment when due of any principal or interest due on any other indebtedness having an aggregate principal amount of $5 million or more (such as Morris Publishing's $278.5 million of 7% Senior Subordinated Notes due 2013). The Amendment waives until March 3, 2009 any default that may arise from a failure to pay the $9.7 million interest payment due February 1, 2009 on these subordinated notes. The Amendment reduces the limit on loans available under the revolving facility from $100 million to $70 million, but further limits the amount available to $60 million without the consent of lenders holding a majority of the commitments under the Credit Agreement. The Amendment provides for an immediate increase of the variable interest rate under the Credit Agreement (previously scheduled for April 1, 2009) of 0.500%. The Amendment waives until April 11, 2009 any default that may exist from Morris Publishing's failure to cause to be filed continuation statements as may be necessary to maintain perfection of security interests in assets of some of the Subsidiary Guarantors. The Amendment requires Morris Publishing Group and its subsidiaries to enter into control agreements in favor of the lenders to perfect the security interest of the lenders in all deposit accounts, except for deposit accounts aggregating less than $500,000 for Morris Publishing, Morris Communications and their subsidiaries. The Amendment contains provisions permitting Morris Communications, its beneficial owners, and its subsidiaries (other than Morris Publishing) to consummate a reorganization of their company structure, without causing a default under the Credit Agreement. In the reorganization, Morris Communications distributed ownership of all membership interests in Morris Publishing to MPG Newspaper Holding, LLC, subject to the existing pledge of the membership interests to the administrative agent for the lenders under the Credit Agreement. At the time of the distribution, MPG Holdings and Morris Communications were both beneficially owned by Shivers, and the transfer was completed without consideration, other than as distributions or capital contributions among related companies. Morris Communications and all of its remaining subsidiaries remain as guarantors of Morris Publishing's obligations under the Credit Agreement. After the reorganization, the lenders under the Credit Agreement maintain all of their existing security interests in the assets of Morris Publishing, Morris Communications and the Subsidiary Guarantors. Various covenants, restrictions and other provisions of the Credit Agreement were modified to reflect the reorganized corporate structure, without materially changing the substantive effect of the provisions on either Morris Publishing, Morris Communications or the Subsidiary Guarantors. Morris Publishing did not transfer or receive any assets or liabilities in the reorganization. Additional parties to the Amendment include the subsidiary guarantors of Morris Publishing and Morris Communications; MPG Newspaper Holding, LLC, the parent of Morris Publishing, Shivers Trading & Operating Company; and Morris Communications Holding Company, LLC, the parent of Morris Communications. The lenders party to the Credit Agreement are JPMorgan Chase Bank, N.A., The Bank of New York, SunTrust Bank, Wachovia Bank, N.A., Bank of America, N.A., General Electric Capital Corporation, Allied Irish Banks, P.L.C., RBS Citizens, N.A., Comerica Bank, US Bank, National Association, First Tennessee Bank, National Association, Webster Bank, National Association, Keybank National Association, Sumitomo Mitsui Banking Corporation, and Mizuho Corporate Bank, Ltd. About Morris Publishing Morris Publishing Group, LLC -- http://morriscomm.com/divisions/morris_publishing_group/index.shtm l -- was formed in 2001 and assumed the operations of the newspaper business segment of its parent, Morris Communications Co., LLC, a privately held media company based in Augusta, Georgia. The company has a concentrated presence in the Southeast, with four signature holdings: The Florida Times-Union (Jacksonville), The Augusta Chronicle, Savannah (Georgia) Morning News and Athens (Georgia) Banner-Herald. Morris Publishing owns and operates 13 daily newspapers as well as nondaily newspapers, city magazines and free community publications in the Southeast, Midwest, Southwest and Alaska. As reported by the Troubled Company Reporter on Nov. 18, 2008, Standard & Poor's Ratings Services lowered its corporate credit rating on Morris Publishing Group LLC to 'CCC' from 'CCC+'. S&P said that the rating outlook is negative. S&P's credit analyst Liz Fairbanks said that the rating downgrade reflects S&P's concern that, even with the covenant relief provided in the most recent executed amendment, the company would be unable to sustain its current capital structure over the next several quarters. The amendment stipulates that the company's parent, Morris Communications, must sign a letter of intent to consummate a transaction that would generate sufficient funds to prepay all loans under the credit agreement or refinance the facility. S&P is concerned that the company may file for bankruptcy protection to reduce its debt outstanding. According to the TCR on Oct. 21, 2008, Moody's Investors Service downgraded Morris Publishing's corporate family rating to Caa3 from B3, probability of default rating to Caa3 from Caa1, senior secured credit facility to B3 from Ba3 and senior subordinated notes to Ca from Caa1. The downgrades reflect Moody's belief that newspaper advertising revenue pressure and the recent amendment to the senior secured credit facility requiring the company to consummate a transaction in order to generate sufficient proceeds to prepay in full or repurchase at par outstanding loans under the credit facility by May 30, 2009, have heightened the risk of default. MORRIS PUBLISHING: Nonpayment of Interest Cues S&P's 'D' Rating --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Augusta, Georgia-based Morris Publishing Group LLC to 'D' from 'CCC'. In addition, the issue-level rating on the company's $300 million senior subordinated notes was lowered to 'D' from 'CC', and the issue-level rating on its senior secured credit facility was lowered to 'CC' from 'CCC+'. The rating actions stem from the company's failure to make the $9.7 million interest payment on the subordinated notes, which was due on Feb. 1, 2009. A payment default has not occurred relative to the legal provisions of the notes since there is a 30-day grace period to make the payments. However, S&P considers a default to have occurred, even if a grace period exists, when the nonpayment is a function of the borrower being under financial stress -- unless S&P is confident that the payment will be made in full during the grace period. S&P believes the company remains current on interest and principal payments due on the senior secured credit facility. The lenders approved a fourth amendment and second waiver to the senior secured credit agreement, which waived any default that may arise from a failure to pay interest on the subordinated notes until March 3, 2009. MOTOROLA INC: Posts $3.6 Billion Fourth Quarter GAAP Net Loss ------------------------------------------------------------- Motorola, Inc., reported sales of $7.1 billion in the fourth quarter of 2008. The GAAP net loss in the fourth quarter of 2008 was $3.6 billion, or $1.57 per share. This includes net charges of $1.56 per share from highlighted items, which are outlined in the table at the end of this press release. Substantially all of the charges for the highlighted items are non-cash and primarily relate to the impairment of goodwill and an increase in deferred tax asset valuation reserves. For the full year 2008, sales were $30.1 billion. The GAAP net loss was $1.84 per share, which includes net charges of $1.86 per share from items highlighted in the company's quarterly earnings releases. During the quarter, the company generated positive operating cash flow of $201 million. For the full year, the company generated positive operating cash flow of $242 million and ended the year with a total cash* position of $7.4 billion. The company also announced today that its Board of Directors voted to suspend the declaration of quarterly cash dividends on the company's common stock, effective immediately. The Board believes suspending the dividend will further strengthen the company's balance sheet and enhance its financial flexibility. Greg Brown, Motorola's president & co-chief executive officer and CEO of Broadband Mobility Solutions, and Sanjay Jha, co-chief executive officer and CEO of Mobile Devices, said, "In the fourth quarter, we generated positive operating cash flow of $201 million and ended the year with total cash of $7.4 billion." "In light of the economic climate and challenges we face, we have implemented aggressive measures to reduce costs and improve financial flexibility, particularly in Mobile Devices. The cost- reduction actions underway are expected to generate aggregate savings of approximately $1.5 billion in 2009," added Messrs. Brown and Jha. Operating Results Mobile Devices segment sales were $2.35 billion, down 51 percent compared with the year-ago quarter. The operating loss was $595 million, including $119 million of highlighted items, compared to an operating loss of $388 million in the year-ago quarter. For the full year 2008, sales were $12.1 billion, a 36 percent decrease compared to 2007, and the segment incurred an operating loss of $2.2 billion, compared to an operating loss of $1.2 billion in 2007. During the quarter, the company shipped 19.2 million handsets and estimates its share of the global handset market was 6.5 percent. Mr. Jha said, "We continue to take appropriate action to address the downturn in the global economy as well as the challenges related to our current Mobile Devices portfolio. We are aggressively developing innovative new products, and we are encouraged by the positive customer feedback on our smartphone roadmap." Home and Networks Mobility segment sales were $2.6 billion, down 5 percent compared with the year-ago quarter. Operating earnings increased to $257 million, compared with operating earnings of $192 million in the year-ago quarter. For the full year 2008, sales were $10.1 billion, a 1 percent increase compared to 2007, and the segment generated operating earnings of $918 million, compared to $709 million in 2007. Evolution (LTE) data sessions in the 700MHz spectrum Enterprise Mobility Solutions segment sales were $2.2 billion, up 4 percent compared with the year-ago quarter. Operating earnings increased to $466 million, compared with operating earnings of $451 million in the year-ago quarter. For the full year 2008, sales were $8.1 billion, a 5 percent increase compared to 2007, and the segment generated operating earnings of $1.5 billion, compared to $1.2 billion in 2007. Gartner's Leaders Quadrant for Wireless LAN Infrastructure Mr. Brown added, "Despite the challenging economic environment, our Broadband Mobility Solutions businesses performed very well in the fourth quarter and throughout the year. Throughout 2009, aggressive cost management and prioritizing our investments will be a top priority. These actions, as well as our strong portfolio of outstanding products and solutions, will help us build on our leadership positions in the broadband, video, public safety and enterprise mobility solutions markets." First-Quarter 2009 Outlook The company's outlook for the first quarter is a loss of $0.10 to $0.12 per share. This outlook excludes charges associated with the company's operating expense reduction initiatives, as well as any other items of the variety typically highlighted by the company in its quarterly earnings releases. Motorola Appoints Edward J. Fitzpatrick Acting CFO Motorola reported that Edward J. Fitzpatrick, senior vice president and corporate controller, has been named to the additional role of acting chief financial officer, effective immediately, replacing Paul J. Liska, former chief financial officer. The company has initiated a search to identify a replacement. "We appreciate the contributions Paul made toward the company's planned separation and in managing our cost-reduction activities," said Messrs. Brown and Jha. Mr. Fitzpatrick is senior vice president and corporate controller, responsible for accounting, financial reporting, budgeting, financial controls, compliance with Sarbanes-Oxley and Securities and Exchange Commission (SEC) rules, and financial operations. Previously, Mr. Fitzpatrick was corporate vice president of finance for the Home & Networks Mobility business. Prior to that position, he served as vice president and controller for the Networks & Enterprise and the Government & Enterprise Mobility Solutions businesses. Prior to joining Motorola, he was a senior manager at Price Waterhouse. Mr. Fitzpatrick received a master's degree in business administration from Wharton School of Business and holds a bachelor's degree in accounting from Pennsylvania State University. He also became a Certified Public Accountant in 1990. About Motorola Based in Schaumburg, Illinois, Motorola Inc. (MOT) -- http://www.motorola.com/-- develops communications infrastructure, enterprise mobility solutions, digital set-tops, cable modems, mobile devices and Bluetooth accessories. A Fortune 100 company with global presence and impact, Motorola had sales of $36.6 billion in 2007. In December 2008, Standard & Poor's Ratings Services lowered its ratings on three Motorola Inc.-related transactions to "BB+" and removed them from CreditWatch, where they were placed with negative implications on Jan. 28, 2008. MOTOROLA INC: Must Scale Back Cellphone Business, Investors Say --------------------------------------------------------------- Sara Silver at The Wall Street Journal reports that some investors said that Motorola Inc. should scale back the cellphone business. Motorola, according to WSJ, is struggling to stem losses in the cellphone division after canceling plans to spin off the unit. WSJ says that Motorola's cellphone sales dropped 51% in the fourth quarter 2008. While Motorola's other divisions were profitable, the cellphone division posted an operating loss of $595 million, WSJ states. WSJ relates that Citigroup analyst Jim Suva asked during a conference call on Tuesday why they Motorola doesn't shut down the cellphone division. "The market is implying that, to be blunt, you can't fix the handset business," WSJ quoted Mr. Suva as saying. Motorola, says WSJ, has been shutting down design centers and has laid off about 25% of its cellphone staff. WSJ states that some analysts questioned how Motorola could expand again. According to WSJ, Motorola Co-Chief Executive Sanjay Jha said that the firm is committed to reviving the business. Mr. Jha, WSJ states, expects Motorola's cellphone sales to fall faster than the market as it narrows its portfolio to concentrate on mid- and high-end phones. Motorola is still committed to a spin-off of the cellphone business at the "appropriate" time, but the scale of the unit's losses and the global recession will postpone any moves, WSJ relates, citing company Co-CEO Greg Brown. Motorola Appoints Edward J. Fitzpatrick Acting CFO Motorola said has appointed Edward J. Fitzpatrick, senior vice president and corporate controller, to the additional role of acting chief financial officer, effective immediately, replacing Paul J. Liska, former chief financial officer. The company has initiated a search to identify a replacement. Citing Mr. Brown, WSJ states that Mr. Liska was brought in to prepare for the spinoff and was leaving because it was on hold. Mr. Brown said that Mr. Liska's exit has no "financial controls issues," WSJ reports. "We appreciate the contributions Paul made toward the company's planned separation and in managing our cost- reduction activities," said Messrs. Brown and Jha. Mr. Fitzpatrick is senior vice president and corporate controller, responsible for accounting, financial reporting, budgeting, financial controls, compliance with Sarbanes-Oxley and Securities and Exchange Commission (SEC) rules, and financial operations. Previously, Mr. Fitzpatrick was corporate vice president of finance for the Home & Networks Mobility business. Prior to that position, he served as vice president and controller for the Networks & Enterprise and the Government & Enterprise Mobility Solutions businesses. Prior to joining Motorola, he was a senior manager at Price Waterhouse. Dividend Payment Cancellation Motorola, according to WSJ, has cancelled dividend payments, signaling concerns over conserving cash. Motorola had $7.4 billion in cash and $4.2 billion in liabilities at the end of 2008, WSJ states. WSJ relates that the cancellation of the dividend payments would save Motorola about $350 million this year. About Motorola Based in Schaumburg, Illinois, Motorola Inc. (MOT) -- http://www.motorola.com/-- develops communications infrastructure, enterprise mobility solutions, digital set-tops, cable modems, mobile devices and Bluetooth accessories. A Fortune 100 company with global presence and impact, Motorola had sales of $36.6 billion in 2007. In December 2008, Standard & Poor's Ratings Services lowered its ratings on three Motorola Inc.-related transactions to "BB+" and removed them from CreditWatch, where they were placed with negative implications on Jan. 28, 2008. MOVIE GALLERY: Hearing on Blackstone's $2.8MM Fees Postponed ------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Virginia has continued the hearing on Blackstone Advisory Services LP's request for payment of fees to February 27, 2009, at 10:00 a.m. Reorganized Movie Gallery Inc. and Blackstone Advisory Services LP have conducted discovery and continue to work toward an agreed resolution of Blackstone's motion to compel the Debtors to pay fees and expenses for $2,894,958, which Blackstone incurred as financial advisor to Wells Fargo Bank, N.A., in connection with the Debtors' reorganization. Both Parties consent to the continuance of the hearing to allow them to conclude a settlement. About Movie Gallery Headquartered in Dothan, Alabama, Movie Gallery Inc. -- http://www.moviegallery.com/-- is the second largest North American video rental company with approximately 3,300 stores located in all 50 U.S. states and Canada operating under the brands Movie Gallery, Hollywood Video and Game Crazy. Since MGI's initial public offering in August 1994, the Company has grown from 97 stores to its present size through acquisitions and new store openings. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represented the Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak Rock LLP, were the Debtors' local counsel. The Debtors' claims & balloting agent was Kurtzman Carson Consultants LLC. When the Debtors' filed for protection from their creditors, they listed total assets of US$891,993,000 and total liabilities of US$1,419,215,000. The Official Committee of Unsecured Creditors has selected Robert J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq., and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as its lead counsel, and Brian F. Kenney, Esq., at Miles & Stockbridge PC, as its local counsel. The U.S. Bankruptcy Court for the Eastern District of Virginia confirmed the Debtors' Second Amended Chapter 11 Plan of Reorganization on April 9, 2008. The Debtors emerged from bankruptcy on May 20, 2008. (Movie Gallery Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000) MOVIE GALLERY: Merges Oregon & Tennessee Distribution Centers ------------------------------------------------------------- Movie Gallery, Inc. is consolidating its existing Wilsonville, Ore., and Nashville, Tenn., distribution centers into a single location as part of the company's efforts to streamline operations. Therefore, operations at the Wilsonville center will be phased out over the next two months. Movie Gallery currently has 238 full-time employees at the Wilsonville distribution center and 185 at Nashville. Out of the Wilsonville group, 25 will be transferred to other parts of the company. Employees at both facilities have been notified of the plan and Movie Gallery is working with those impacted, specifically in Wilsonville. "The decision to transfer distribution center operations from Wilsonville to Nashville was difficult," said Sherif Mityas, Chief Operating Officer and President of Retail Operations for Movie Gallery, "but we are confident that we are taking the right steps towards creating a stronger company, better positioned for long- term success. I would like to thank our many associates for their dedication to the company and outstanding customer service over the years." Movie Gallery's presence in Oregon will remain strong, as Wilsonville continues to serve as the company's headquarters, with 389 full-time employees in that office. About Movie Gallery Headquartered in Dothan, Alabama, Movie Gallery Inc. -- http://www.moviegallery.com/-- is the second largest North American video rental company with approximately 3,300 stores located in all 50 U.S. states and Canada operating under the brands Movie Gallery, Hollywood Video and Game Crazy. Since MGI's initial public offering in August 1994, the Company has grown from 97 stores to its present size through acquisitions and new store openings. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represented the Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak Rock LLP, were the Debtors' local counsel. The Debtors' claims & balloting agent was Kurtzman Carson Consultants LLC. When the Debtors' filed for protection from their creditors, they listed total assets of US$891,993,000 and total liabilities of US$1,419,215,000. The Official Committee of Unsecured Creditors has selected Robert J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq., and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as its lead counsel, and Brian F. Kenney, Esq., at Miles & Stockbridge PC, as its local counsel. The U.S. Bankruptcy Court for the Eastern District of Virginia confirmed the Debtors' Second Amended Chapter 11 Plan of Reorganization on April 9, 2008. The Debtors emerged from bankruptcy on May 20, 2008. (Movie Gallery Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000) MOVIE GALLERY: Gets Sept. 30 Extension to Review Claims ------------------------------------------------------- At the behest of Movie Gallery Inc. and its reorganized debtor- affiliates, the U.S. Bankruptcy Court for the Eastern District of Virigina extended until September 30, 2009, the deadlines set forth in the Plan, the Confirmation Order, and the Extension Order for filing objections to Secured Claims, Priority Claims, Administrative Claims and Cure Claims. Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York, relates that with the assistance of Kurtzman Carson Consultants LLC, the Reorganized Debtors' voting and claims agent, the Reorganized Debtors have been reviewing, analyzing and reconciling the Claims filed against them. Specifically, the Reorganized Debtors are reviewing and reconciling in excess of 11,000 claims, including more than 2,100 SPAC Claims. According to Mr. Cieri, the Reorganized Debtors have already filed objections to more than 1,700 SPAC Claims, and have resolved more than 1,300 of those SPAC Claims. Moreover, within a month or so, the Reorganized Debtors expect to file objections to the vast majority of the remaining unresolved and unobjected to SPAC Claims. Analyzing, reconciling and preparing the objections to SPAC Claims continues to be time consuming, Mr. Cieri says. Because of this and the other time?consuming activities that have occupied the Reorganized Debtors, the Reorganized Debtors may not be able to analyze, reconcile and object to all of the remaining SPAC Claims prior to the February 16, 2009 and March 13, 2009 deadlines. Moreover, Mr. Cieri adds, even where objections are filed prior to those deadlines, certain holders of SPAC Claims that are the subject of objections may submit responses, which will take additional time to resolve. Claimants Object Hollywood-Anniston, LLC, Sunflower Clovis Investors LLC doing business as Sunflower, Foundation Retail Cleveland, LLC, Foundation Retail Fulton, LLC, Foundation Retail West Point, LLC, Edward-Peters LLC, Sanford Properties, LLC, Tabor City, Starbright, Inc., The Square at Lillington, LLC, WS/AC, LLC, Whiteville Properties, BBS Associates, Bladenboro Properties, Realty Income Corporation, Realty Income Texas Properties, LP, and Parkland Hills, Inc., relate that the Reorganized Debtors seek to delay resolution of the SPAC Claims until the fall of 2009 in spite of their duty under Section 365(a)(1) of the Bankruptcy Code with respect to defaulted leases being assumed to provide adequate assurance of prompt payment of amounts owing. Hollywood-Anniston, et al., says that the effect of the substantial delay permitted has been to deny to them payments that the Bankruptcy Code dictates they receive. According to Augustus C. Epps, Jr. Esq., at Christian & Barton, L.L.P., in Richmond, Virginia, it is clear that one of the reasons why the Debtors are delaying payments is that they do not intend to pay the reasonable fees and expenses of landlords' counsel, including those of Hollywood-Anniston, et al. Furthermore, Mr. Epps asserts that given the current state of the economy, the mere continued existence of the Reorganized Debtors does not provide adequate assurance that there will be funds to pay the valid claims of Hollywood-Anniston, et al., by next fall, thus adding pressure on Hollywood-Anniston, et al., to "give up" their attorneys' fee claims in order not to jeopardize their ability to receive payment in the near future on the other components of their Cure Claims. For this reason, Hollywood-Anniston, et al., ask the Court to deny approval of the Extension Request. Madison Lake Forest, LLC, Lynnwood Tower LLC, Applewood, LLC, Swansea Realty Investments, LLC, and Yorkshire Village Properties, LLC support the objection raised by Hollywood- Anniston, et al. Ozarks Coca-Cola/Dr Pepper Bottling Company objects to the disallowance of its Claim Nos. 5627 or 6039, saying its claims are administrative claims, not general unsecured claims. Harley W. Smith III says that more than enough time as been allowed for the Reorganized Debtors to object to the claims. According to Mr. Smith, there is still approximately 60 days left for the Reorganized Debtors to conclude objections. Ross and Nancy Leazenby do not object to the Reorganized Debtors' Request. However, the Leazenbys assert that their claim should be included on the Administrative Claims List. In the Court order granting the Reorganized Debtors' Request, creditors Hollywood-Anniston, et al., Applewood, LLC, Swansea Realty Investments, LLC, and Yorkshire Village Properties, LLC, "will be carved out of order and the extension of time will not apply". About Movie Gallery Headquartered in Dothan, Alabama, Movie Gallery Inc. -- http://www.moviegallery.com/-- is the second largest North American video rental company with approximately 3,300 stores located in all 50 U.S. states and Canada operating under the brands Movie Gallery, Hollywood Video and Game Crazy. Since MGI's initial public offering in August 1994, the Company has grown from 97 stores to its present size through acquisitions and new store openings. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represented the Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak Rock LLP, were the Debtors' local counsel. The Debtors' claims & balloting agent was Kurtzman Carson Consultants LLC. When the Debtors' filed for protection from their creditors, they listed total assets of US$891,993,000 and total liabilities of US$1,419,215,000. The Official Committee of Unsecured Creditors has selected Robert J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq., and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as its lead counsel, and Brian F. Kenney, Esq., at Miles & Stockbridge PC, as its local counsel. The U.S. Bankruptcy Court for the Eastern District of Virginia confirmed the Debtors' Second Amended Chapter 11 Plan of Reorganization on April 9, 2008. The Debtors emerged from bankruptcy on May 20, 2008. (Movie Gallery Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000) NCI BUILDING: S&P Changes Outlook to Stable; Affirms 'BB' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook on Houston, Texas-based NCI Building Systems Inc. to stable from positive. At the same time, Standard & Poor's affirmed all its ratings on the company, including the 'BB' corporate credit rating. "The outlook revision reflects our expectation that because of the ongoing construction downturn, weak U.S. economy, and low steel prices, trends which S&P expects will continue in the near term, NCI's earnings, and resulting credit measures are likely to weaken during this period to levels more appropriate for the current rating," noted Standard & Poor's credit analyst Thomas Nadramia. "Specifically, S&P expects debt to EBITDA leverage to exceed 3x during 2009 and operating margins to deteriorate to less than 10% in the first half of the year. Still, S&P expects the company to maintain adequate liquidity for the rating through the combination of cash flow generation and debt repayment." The ratings on NCI reflect the highly cyclical end-market demand for its products, volatile raw material costs (particularly steel), and intense competition. These factors are partially mitigated by the company's national scale of operations and distribution, favorable long-term trends for metal buildings, competitive cost position, and a consolidated financial profile that is expected to remain in-line with the rating. NCI is one of North America's largest integrated manufacturers and marketers of metal products for the nonresidential construction industry. It operates 39 manufacturing facilities in 18 states and Mexico. The company's products include engineered building systems (60% of sales for the fiscal year ended Nov. 2, 2008), metal components (34%), and metal coil coating services (6%). The outlook is stable. A leading industry position, competitive cost structure, and expected strong cash generation provide some cushion within the current rating in light of expected operating deterioration in 2009. Currently, S&P expects leverage to rise from the current 2.5x and exceed 3.0x in 2009. A negative rating action is possible if credit measures deteriorate faster or more- than-expected due to a sharp and prolonged drop in demand from the company's end-markets; specifically, if leverage were to exceed 3.5x, which could be caused by a more than 35% decline in EBITDA from its cyclical highs. In addition, a negative rating action could occur if the company has not made significant progress in outlining a plan to be in a position to fund its 2009 maturities by early in the second calendar quarter of 2009. Given the current challenging operating environment, an outlook revision back to positive seems unlikely in the near term. NELSON EDUCATION: Moody's Affirms 'B2' Corporate Family Rating -------------------------------------------------------------- Moody's Investors Service affirmed Nelson Education Ltd.'s B2 corporate family rating, Ba3 senior secured debt rating, Caa1 second lien senior secured rating and B2 probability of default rating. The rating outlook is stable. The affirmations reflect Moody's view that Nelson continues to display elevated financial leverage, and that although the company should be able to show modest cash flow growth and generate modest amounts of free cash flow over the forward rating horizon, significant financial leverage is expected to prevail for a prolonged period. Given the company's relatively strong market position as one of three leading educational publishers operating in Canada, however, the substantial number of publications Nelson may be distributing at any point in time, and the inherent reliability of its end markets, the cash flow stream is expected to be quite stable and sustainable. This allows the elevated leverage and modest de- leveraging capability to be accommodated at the B2 corporate family rating level. These observations are consistent with those underpinning the existing ratings, and, accordingly, the rating have been affirmed and the rating outlook remains stable. Affirmations: Issuer: Nelson Education Ltd. -- Corporate family rating unchanged at B2 -- Probability of default rating unchanged at B2 -- Senior Secured Bank Credit Facility, unchanged at Ba3, with the LGD Assessment revised to (LGD3, 31%) from (LGD3, 32%) -- Second Lien Secured Bank Credit Facility, unchanged at Caa1, with the LGD Assessment revised to (LGD5, 83%) from (LGD5, 84%) -- Outlook unchanged at stable Moody's most recent rating action related to Nelson was taken on 14 June, 2007, at which time Nelson's ratings (including the B2 CFR and PDR) were assigned. Nelson's ratings have been assigned and are maintained by evaluating factors that Moody's believes are relevant to the credit profile of the issuer, including but not limited to i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) evaluation of management performance and tolerance for risk. These attributes are compared against other issuers both within and outside of Nelson's core industry and Nelson's ratings are believed to be comparable to those of other issuers of similar credit risk. Headquartered in Toronto, Ontario, Canada, Nelson Education is a privately owned leading provider of publishing services for the Canadian educational market. The company is a joint venture owned by OMERS Capital Partners and Apax Partners. NEW ENGLAND: Moody's Affirms 'Ba2' Rating on $13.1 Mil. Bonds ------------------------------------------------------------- Moody's Investors Service has affirmed New England Center for Children's Ba2 bond rating. The rating applies to $13.1 million of outstanding Series 1998 bonds issued through the Massachusetts Development Finance Agency. The outlook is positive. Legal Security: The Series 1998 bonds are secured by a gross revenue pledge and secured by a mortgage on the institution's facilities. Interest Rate Derivatives: None Strengths * A niche human service provider located west of Boston in Southborough, Massachusetts with a strong reputation for serving children with autism; provides a comprehensive array of essential services including residential, staff intensive, day school, adult and transition services, consulting and outreach programs, and growth in international services since signing a long-term agreement with the Health Authority of Abu Dhabi to establish an educational program and provide services for children and families affected by autism. * A demonstrated track record of generating positive, albeit fluctuating, operating margins and absolute cash flow (an unusual accomplishment for the human service provider sector) despite a challenging payer environment, enabling NECC to improve and maintain liquidity measures and deleverage its balance sheet. * Diverse revenue stream from various agencies of the Commonwealth of Massachusetts, municipalities, out-of-state agencies, as well as consulting and private funding sources which mitigates vulnerability to reductions to any one area of government funding. The recent expansion of operations internationally adds another significant source of funding which further diversifies NECC's revenue base and enhances the size and scope of the organization. Challenges * Limited opportunity for large operating surpluses given restrictive payor environment and high dependence on government funding of programs and services (primarily from the Commonwealth and municipalities) which leaves NECC vulnerable to state budget cuts. * Weak liquidity position despite improvement over the last several years. Unrestricted liquidity improved to $3.5 million at fiscal year end 2008 resulting in still modest 29 days cash on hand at FYE 2008. * Debt position is moderate relative to revenue base; debt coverage levels weakened slightly in FY 2008 with debt-to-cash flow measuring a high 6.1 times and maximum annual debt service coverage a modest 1.9 times in FY 2008. Recent Developments/Results NECC is a niche human service provider with very limited competition and international draw located twenty miles west of Boston in Southborough, Massachusetts. NECC provides essential educational and treatment services to children with autism and other related disabilities in various settings. NECC services include residential, staff intensive, day school, adult and transition services, consulting and outreach programs, and the expansion of international services through a long-term exclusive contract that began in June 2007 with the government of Abu Dhabi to operate a comprehensive educational program for children and families affected by autism. As a result of the growth of international services, intermediate residential, and intensive day programs, NECC's total census has increased to 259 students from 241 students in 2006. NECC has demonstrated the ability to generate operating surpluses and positive cash flow despite operating in a restrictive payor environment which Moody's views as favorable credit strength. In FY 2008, NECC generated an operating income (excluding unrestricted contributions) of $0.1 million (0.3% operating margin) down from $0.8 million (2.0% operating margin) in FY 2007 which was primarily due to expense growth of 15% directly tied to a mandated 10% increase in salaries by the Commonwealth. Operating cash flow declined slightly to $2.7 million (5.9% operating cash flow margin) from $3.2 million (8.0% operating cash flow margin) in FY 2007. Moody's do note that absolute operating cash flow growth has remained relatively stable over the last ten years ranging between $2.4 million and $3.5 million. As a result of the modest decline in operating cash flow in FY 2008, debt-to- cashflow increased to 6.1 times in FY 2008 from 5.5 times in FY 2008, and MADS coverage remained relatively unchanged at 1.9 times in FY 2008 from 2.0 times in FY 2007. Revenue growth increased by a strong 13% in FY 2008 which is attributed to a combination of rate increases from the Commonwealth, increase in census, and the growth in profitable international services. NECC's contract with the Health Authority of Abu Dhabi will establish a comprehensive education program in eight classrooms and serve a total of 48 students. Currently four classrooms have been opened and another two classrooms will be opened later this year. NECC also benefits from a diverse revenue base derived from state and federally mandated services (comprise of 79% of revenues), other non-mandated services including partner classroom and consulting services, international services, and private funding sources. Despite the improvement in unrestricted liquidity balance to $3.5 million at fiscal year end 2008 from $3.0 million at FYE 2007, days cash on hand remains modest at 29 days, up only slightly from 28 days at FYE 2007. Cash-to-debt measure is still weak at 21%, but improved from 17% in FY 2007. Moody's believe the low liquidity position limits operating flexibility and provides an inadequate cushion if significant operating challenges need to be addressed and limit the potential for a rating upgrade in the intermediate term. Outlook The positive outlook reflects Moody's belief NECC will continue to benefit from its strong market position as a niche provider of essential services and continue to improve operating performance and generate operating cash flow that could bolster liquidity balance. What could change the rating--UP Continued growth in census; sustained improvement in core operating performance, growth in liquidity. What could change the rating--DOWN Deterioration of operating performance; significant decline in liquidity balance, material increase in debt without commensurate increases in cash and operating cash flow generation. Key Indicators Assumptions & Adjustments: * Based on financial statements for The New England Center for Children, Inc. * First number reflects audit year ended June 30, 2007 * Second number reflects audit year ended June 30, 2008 * Investment returns normalized at 6% unless otherwise noted * Total operating revenues: $40.0 million; $44.6 million * Moody's-adjusted net revenue available for debt service: $4.2 million; $3.9 million * Total debt outstanding: $17.0 million; $17.0 million * Maximum annual debt service: $2.0 million; $2.0 million * MADS Coverage with reported investment income: 2.1 times; 1.8 times * Moody's-adjusted MADS Coverage with normalized investment income: 2.0 times; 1.9 times * Debt-to-cash flow: 5.5 times; 6.1 times * Days cash on hand: 28 days; 29 days * Cash-to-debt: 17%; 21% * Operating margin: 2.0%; 0.3% * Operating cash flow margin: 8.0%; 5.9% Rated Debt (debt outstanding as of June 30, 2008) * Series 1998 Fixed Rate Revenue Bonds ($13.1 million outstanding); rated Ba2 The last rating action was on November 8, 2007 when the rating of the New England Center for Children was affirmed at Ba2 and the outlook was changed to positive from stable. New England Center for Children's ratings were assigned by evaluating factors believed to be relevant to the credit profile of New England Center for Children such as i) the business risk and competitive position of the issuer versus others within its industry or sector, ii) the capital structure and financial risk of the obligor, iii) the projected performance of the issuer over the near to intermediate term, iv) the obligor's history of achieving consistent operating performance and meeting budget or financial plan goals, v) the debt service coverage provided by such revenue stream, vii) the legal structure that documents the revenue stream and the source of payment, and viii) the obligor's management and governance structure related to payment. These attributes were compared against other obligor's both within and outside of New England Center for Children's core peer group and New England Center for Children's ratings are believed to be comparable to ratings assigned to other obligors of similar credit risk. NON-INVASIVE MONITORING: Completes Sale of 1,400 Series D Shares ---------------------------------------------------------------- Non-Invasive Monitoring Systems Inc. completed on January 28, 2009, the sale of an aggregate of 1,400 shares of its Series D Preferred Stock at a price of $1,500 per share, to certain private investors for aggregate proceeds of $2,100,000 pursuant to Stock Subscription Agreements accepted by the company on that date. There were no underwriting discounts or commissions paid in respect of the Offering. The company had previously issued Series D Preferred Stock in offerings in April and December 2008. Frost Gamma Investments Trust, beneficial owner of approximately 20% of the company's common stock invested $1,050,000 in the Offering and acquired 700 shares of Series D Preferred Stock. Frost Gamma Investments Trust paid for its investment from available funds. Hsu Gamma Investment L.P., an entity of which the company's Chairman Jane Hsiao, PhD, is general partner, invested $1,050,000 in the Offering and acquired 700 shares of Series D Preferred Stock. Prior to the Offering, Dr. Hsiao was a beneficial owner of more than 6% of the company's common stock. Hsu Gamma Investment L.P. paid for its investment from available funds. Each holder of a share of the Series D Preferred Stock has the right, at any time, to convert such share of Series D Preferred Stock into shares of the company's common stock at an initial rate of 5,000 shares of common stock per share of Series D Preferred Stock. The company issued the Series D Preferred Stock in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended and/or Regulation D promulgated under the Securities Act of 1933. The Investors have each represented to the Registrant that the person was an accredited investor as defined in Rule 501(a) of the Securities Act of 1933 and that the Series D Preferred Stock was being acquired for investment purposes. About Non-Invasive Monitoring Based in Miami, Florida, Non-Invasive Monitoring Systems Inc. (OTC BB: NIMU) -- http://www.nims-inc.com/-- is engaged in the development of innovative medical products utilizing new and unique technologies to address a wide variety of medical conditions. The company specializes in products that use a natural approach to assist subjects without the use of drugs or any invasive procedures. The company's flagship product is the Acceleration Therapeutics AT-101. Going Concern Doubt As reported in the Troubled Company Reporter on Nov. 7, 2008, Eisner LLP, in New York, expressed substantial doubt about Non- Invasive Monitoring Systems Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended July 31, 2008, and 2007. The auditing firm pointed to the company's recurring net losses, cash outflows from operating activities and accumulated deficit and substantial purchase commitments. The company had net losses in the amount of $498,000 and $330,000 for the three months ended October 31, 2008 and 2007, respectively, and has experienced cash outflows from operating activities. The company also has an accumulated deficit of $18.5 million as of October 31, 2008, and has substantial purchase commitments at October 31, 2008. These matters raise substantial doubt about the Company's ability to continue as a going concern. As of October 31, 2008, the company's balance sheet showed total assets of $1,530,000, total liabilities of $999,000, and total stockholders' equity of $531,000. NORTEL NETWORKS: Sun Micro & Polycom Seek Inventory of Goods ------------------------------------------------------------ Pursuant to Section 2-702 of the Uniform Commercial Code and Section 546(c) of the Bankruptcy Code, Sun Microsystems Inc. and Polycom Inc. informed the U.S. Bankruptcy Court for the District of Delaware in separate notices that they have delivered or supplied Nortel Networks Inc. and its debtor-affiliates with certain goods under a Reseller Agreement and a OEM Purchase and Sale Agreement. The Creditors demand that the Debtors immediately make an inventory of the goods and keep them segregated from all other inventory, machinery and equipment. The Creditors maintain that the Debtors are not authorized to use, sell, encumber or transfer the goods to any other party. Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc. and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL NETWORKS: Firms Received $1.6 Million Prior to Bankruptcy ---------------------------------------------------------------- Nortel Networks Inc. and its debtor affiliates disclosed that it roughly $1.6 million in the aggregate as retainer to these professionals: Professionals Retainer ------------- ---------- Cleary Gottlieb Steen & Hamilton LLP $1,250,000 Morris Nichols Arsht & Tunnell LLP 300,000 Epiq Bankruptcy Solutions LLC 50,000 Nortel filed with the Bankruptcy Court in Wilmington, Delaware, an initial monthly operating report on January 29, 2009. The Initial Report incorporated a cash flow projection for the 12-week period from January 11 through March 31, 2009. For the 12-week period ending March 2009, the Debtors estimate: -- receipts to total $962.5 million, -- disbursements to aggregate $833.8 million, -- a net cash flow of $128.7 million, -- ending cash balance to total $702 million, and -- ending cash balance and available facility to total $502 million. A full-text copy of the 12-week cash flow projection is available for free at: http://bankrupt.com/misc/NortelCashFlowForecast.pdf The Initial Report also disclosed general operating accounts the Debtors maintained at Banc of America Securities LLC, Bank of America, Citibank, Deutsche Bank and Morgan Stanley. Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc. and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTHEAST BIOFUELS: Court Okays Sale of 846,000 Bushels of Corn --------------------------------------------------------------- Court documents say that the U.S. Bankruptcy Court for the Northern District of New York has allowed Northeast Biodfuels LP to sell about 846,000 bushels of corn that it purchased from September through November to make ethanol. According to court documents, the sale of the bushels of corn are expected to bring $2.6 million to Northeast Biofuels. Tim Knauss at The Post-Standard reports that corn stored in silos at Northeast Biofuels' ethanol plant near Fulton were loaded onto railcars and shipped to a buyer to prevent it from spoiling. The Post-Standard relates that Northeast Biofuels closed in December 2008 due to design and operating problems and sought Chapter 11 bankruptcy protection in January 2009 without ever having reached full production. According to the report, Northeast Biofuels is negotiating design improvements with its contractor, Lurgi Inc., as it tries to raise new financing to pay for them. Citing Northeast Biofuels President and CEO Douglas MacKenzie, The Post-Standard states that the company continues to produce and sell ethanol from corn that had already begun the fermentation process when the company filed for bankruptcy. The Court has allowed Northeast Biofuels to continue paying its 57 workers, The Post-Standard says. About Northeast Biofuels Headquartered in Fulton, New York, Northeast Biofuels LP aka Northeast Biofuels LLC -- http://www.northeastbiofuels.com-- Operate as ethanol plants. The company and two of its affiliates filed for Chapter 11 protection on January 14, 2009 (Bankr. N.D. N.Y. Lead Case No. 09-30057). Jeffrey A. Dove, Esq., at Menter, Rudin & Trivelpiece, P.C., represents the Debtors in their restructuring efforts. Blank Rome LLP will serve as the Debtors' counsel. The Debtors proposed FTI Consulting Inc. as their financial advisor. When the Debtors filed for protection from their creditors, they listed assets and debt between $100 million to $500 million each. NOVA CHEMICALS: Liquidity Issues Cue S&P's Junk Corporate Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered the long-term corporate credit and senior unsecured debt ratings on NOVA Chemicals Corp. to 'CCC+' from 'B+'. The recovery rating on the unsecured debt is unchanged at '4', indicating an expectation of average (30%-50%) recovery in the event of default. The ratings on the company remain on CreditWatch with negative implications, where they were placed on Jan. 22, 2009. The CreditWatch reflects S&P's concerns about the company having to raise US$100 million by Feb. 28 to retain access to its credit facilities. "The three-notch downgrade reflects what S&P view as NOVA Chemicals' liquidity issues in light of the large debt maturities it faces in the next 18 months, heightened risk of covenant violation in the second half of 2009, and expectations of weak cash flow generation because of what S&P see as a severe cyclical downturn in the industry," said Standard & Poor's credit analyst Jatinder Mall. NOVA Chemicals produces commodity chemicals and plastics used in consumer, industrial, and packaging products. The company has an annual production capacity of 6,650 million pounds of ethylene and 3,575 million pounds of polyethylene. It also produces a small amount of performance styrenics, which includes expandable polystyrene and styrenic polymer performance products. In addition, NOVA Chemicals' Ineos NOVA joint venture produces styrene monomer and solid polystyrene in North America and Europe. "We believe the key to NOVA Chemicals' survival in the next 18 months will be for it to shore-up sufficient liquidity through its banks and other financing alternatives to meet several large debt maturities and amend its covenants," Mr. Mall added. However, this would be a daunting task in normal market conditions, let alone the current credit environment. Standard & Poor's will likely resolve the CreditWatch when NOVA Chemicals confirms that it has been able to raise US$100 million by Feb. 28, 2009, as per negotiated amendments with the banks, and that it has full access to its credit lines to pay upcoming debt maturities. PALM INC: Donna Dubinsky Offers to Resign From Board ---------------------------------------------------- Palm, Inc. entered into an Amended and Restated Stockholders' Agreement on January 9, 2009 with Elevation Partners, L.P. and Elevation Employee Side Fund, LLC. The Agreement was entered into in connection with the company's sale to certain Elevation entities of an aggregate of 100,000 detachable units for an aggregate purchase price of $100 million, with each Unit consisting of (i) one share of the Company's Series C Convertible Preferred Stock, par value $0.001 per share and (ii) warrants exercisable for the purchase of 70 shares of the Company's Common Stock, par value $0.001 per share. Under the Agreement, Elevation has the right to designate an additional director for election to the Company's Board of Directors. On January 26, 2009, and in light of the Board's desire to maintain its current size, Donna Dubinsky offered to resign from the Board immediately in advance of the election to the Board of a director designated by Elevation. Ms. Dubinsky's offer to resign as a director was not the result of any disagreement with the Company. On January 30, 2009, Elevation designated Rajiv Dutta for election to the Board. Mr. Dutta retired as the President of eBay Marketplaces and Executive Vice President of eBay Inc. in October 2008 and as a member of eBay's board of directors in July 2008. The Board is expected to meet shortly to consider Ms. Dubinsky's offer to resign from the Board and Mr. Dutta's election to the Board. Headquartered in Sunnyvale, California, Palm Inc. (Nasdaq:PALM) -- http://www.palm.com/-- provides mobile computing solutions worldwide. The company offers Palm Treo smartphones, Palm LifeDrive mobile managers, and Palm handheld computers, as well as software, services, and accessories. * * * The Troubled Company Reporter reported on Aug. 18, 2008, that Moody's Investors Service downgraded Palm Inc.'s corporate family rating and probability of default rating to B3 from B2 with a negative ratings outlook. Simultaneously, Moody's affirmed Palm's speculative-grade liquidity rating of SGL-2. This concludes the review for possible downgrade that was initiated in March 2008 following the company's weaker than expected third quarter fiscal 2008 results. The rating downgrade to B3 reflects Moody's expectation of continued weakness in Palm's operating performance and negative cash flow generation over the near term. Moody's notes that Palm's CFR could have been downgraded further absent the company's high levels of domestically-held cash balance, which could support the company's expected negative free cash flow. The TCR reported on July 28, 2008, that Standard & Poor's Ratings Services lowered its corporate credit rating on Palm Inc. to 'B-' from 'B' and removed all the ratings from CreditWatch, where they had been placed with negative implications on March 21, 2008. The outlook is negative. As of November 30, 2008, the company's balance sheet showed total assets of $660,926,000, total liabilities of $811,503,000, Series B redeemable convertible preferred stock of $260,496,000, resulting in total stockholders' deficit of $411,073,000. PAUL REINHART: Seeks April 13 Plan Deadline; In Talks w/ Creditors ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Texas received a motion by Paul Reinhart, Inc. for an extension of its exclusive period to file its plan of reorganization through April 13, 2009. According to Bloomberg's Bill Rochelle, although Paul Reinhart has not yet reached a deal with cotton farmers, negotiations are continuing. Cotton farmers have sued the company's bank lenders shortly after the bankruptcy filing. The Debtor, according to the report, said that sales of cotton inventory have reduced secured bank debt by $58 million since its bankruptcy filing in October. At the outset, bank debt was $147 million. About Paul Reinhart Based in Richardson, Texas, Paul Reinhart Inc. is a cotton merchant serving organic and traditional growers and textile mills. The company, which filed for Chapter 11 bankruptcy on Oct. 15, 2008 (Bankr. N.D. Tex. Case No. 08-35283), blamed futures losses and its inability to attain adequate financing for the bankruptcy filing. Deborah M. Perry, Esq., and E. Lee Morris, Esq., at Munsch Hardt Kopf & Harr, P.C.; and Joseph M. Coleman, Esq., at Kane, Russell, Coleman & Logan, represent the Debtor as counsel. The U.S. Trustee for Region 6 appointed creditors to serve on an Official Committee of Unsecured Creditors in this case. Michael R. Rochelle, Esq., and Sean Joseph McCaffity, Esq., at Rochelle McCullough L.L.P., represent the Committee as counsel. In its schedules, the Debtor listed total assets of $143,943,710 and total debts of $247,421,595. PHENIX CFO: Fitch Downgrades Rating on EUR21 Mil. Notes to 'CC' --------------------------------------------------------------- Fitch Ratings downgrades four classes from Phenix CFO Ltd. Fitch has also removed four classes from Rating Watch Negative, placed one class on Rating Watch Evolving, and assigned Outlooks to two of the classes. These rating actions are effective immediately: -- EUR 60,000,000 class S downgraded to 'BBB' from 'AA'; Rating Watch Evolving; -- EUR 24,000,000 class M1 downgraded to 'BB from 'A'; Outlook Stable; -- EUR 15,000,000 class M2 downgraded to 'B from 'BBB'; Outlook Negative; -- EUR 21,000,000 class M3 downgraded to 'CC' from 'BB'. The severity of losses and marked reduction in underlying fund liquidity for hedge fund collateralized fund obligations in 2008 exceeded Fitch's original expectations. As a result, Fitch published a press release which outlines the causes and major revisions to the agency's analysis. These rating actions are based upon actual losses in Phenix CFO Ltd's portfolio during 2008, the reduced liquidity profile of Phenix Alternative Holdings' portfolio investments, and the application of Fitch's updated analysis. Phenix is failing its overcollateralization tests as per the Nov. 17, 2008 trustee report. However, there have been redemptions resulting in a large cash position. In addition, there is a significant amount of outstanding redemption requests, for which the timing remains uncertain. The ability to convert these redemptions to cash collection will have a large impact on the degree of further deleveraging for this transaction. As such, the class S notes are placed on Rating Watch Evolving. The Stable Outlook on class M1 reflects the note's ability to withstand sequential market value stresses and reductions in liquidity over the next year under Fitch's updated analysis. The Negative Outlook on class M2 is due to volatility in the note's ability to withstand different liquidity scenarios under Fitch's updated analysis. The transaction is a hedge fund CFO that is managed by AGF Alternative Asset Management, an affiliate of AGF Asset Management. Phenix CFO Ltd primarily invests in the Phenix Alternative Holdings Fund. Fitch introduced Rating Outlooks for U.S. structured finance in September 2008 to provide investors with forward-looking analysis for a structured finance tranche's credit performance. Fitch's Rating Outlook indicates the likely direction of any rating change over a one- to two-year period and may be Positive, Negative, Stable or, occasionally, Evolving. RAILPOWER TECH: Files for Bankruptcy Under CCAA, U.S. Chapter 15 ---------------------------------------------------------------- Railpower Technologies Corp. and its U.S. subsidiary, Railpower Hybrid Technologies Corp., have obtained court protection under the Companies' Creditors Arrangement Act (Canada) in Canada pursuant to the initial order granted by the Quebec Superior Court. The Court has granted CCAA protection for an initial period of 30 days expiring March 6, 2009, to be extended thereafter as the Court deems appropriate. "The Initial Order provides a framework for us to restructure our business," said Richard Laliberte, Chief Restructuring Officer of Railpower. "Our goal is to allow Railpower to be in a position to continue to assess all available alternatives under a restructuring process and, as such, Railpower's board authorized Railpower to take this action in the best interests of Railpower, its employees, customers, suppliers, creditors and other stakeholders." While under CCAA protection, Railpower's board of directors maintains its usual role and its management remains responsible for the day-to-day operations of Railpower. Railpower has retained Ernst & Young Inc. to act as its financial advisor and it will also serve as court-appointed monitor during the CCAA process in order to assist Railpower throughout the restructuring. McCarthy Tetrault LLP is acting as legal counsel for Railpower. Chapter 15 Filing Moreover, Ernst & Young filed on behalf of Railpower a petition under Chapter 15 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Western District of Pennsylvania. The purpose of such filing is to have the U.S. Court recognize and enforce the CCAA proceedings and, in particular, the order which will be sought before the Quebec Superior Court. Railpower's normal day-to-day operations are expected to continue without interruption. Railpower remains focused on serving and supporting its customers during the restructuring process. Railpower sought bankruptcy protection with the authorization of its board after thorough consultation with its advisors and extensive consideration of all other alternatives. Railpower has sought protection under the CCAA as its current cash in hand would not allow it to meet its current obligations. The CCAA filing is also a necessary step in the context of the board's ongoing review of Railpower's strategic alternatives. Railpower is in discussion with third parties and Ontario Teachers' Pension Plan Board, its main creditor, in connection with the restructuring process assessing all available alternatives. Possible Delisting from TSX Railpower has been advised by the Toronto Stock Exchange that it is reviewing the eligibility for continued listing on the TSX of Railpower's securities pursuant to an expedited review process. Such review process may lead to the delisting of Railpower's securities on the TSX. However, the CCAA protection currently stays creditors, suppliers, stock exchange and others from enforcing any rights against Railpower thereby affording Railpower the opportunity to restructure its affairs. Management Changes The Company's board has announced the departure of Mr. Jose Mathieu, Railpower's President and Chief Executive Officer. The board wishes to thank Mr. Mathieu for his contributions to Railpower. Mr. Mathieu is also no longer a member of the board of directors of Railpower. This decision was followed by the appointment of Mr. Richard Laliberte as Chief Restructuring Officer. Mr. Laliberte has been with Railpower since 2006, as Vice President, Engineering, Quality Assurance and Product Service. The board believes that Mr. Laliberte's background, leadership skills and experience will play an important role in Railpower's restructuring plans. The board has also announced the departure of Mr. Hilaire Boudreau, Railpower's Vice President, Human Resources, Project Management and Information Technologies. About Railpower Technologies Brossard, Quebec-based Railpower Technologies Corp. (CA:P) - http://www.railpower.com-- is engaged in the development, construction, marketing and sales of high performance, clean locomotives and power plants for the transportation and related industries. Railpower has designed and is marketing a range of locomotives for the North American low and medium horsepower locomotive market. It has also designed and is marketing hybrid power plants for rubber tyred gantry cranes (Eco-Cranes(R)). Its technologies have broader potential and applications in other markets and industries. REFCO INC: Court Approves Deal Resolving Reuters' Claims -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved a stipulation between RJM, LLC, plan administrator to reorganized Refco, Inc., and Reuters SA, and Reuters America, LLC, resolving all claims asserted by the Reuters Entities. On May 17, 2006, Reuters SA filed Claim No. 666 against Refco Capital, LLC, asserting a $14,615 prepetition claim. On July 14, 2006, Reuters America, LLC, filed Claim No. 10498 against Refco, Inc., asserting a $236,011 prepetition claim, and Claim No. 10499 against Refco Group Ltd., LLC, asserting a $236,011 prepetition claim. It also filed Claim No. 298 against Refco LLC, asserting a $236,011 prepetition claim. Reuters America subsequently amended Claim No. 10499 as Claim No. 14456 for $261,971, as well as Claim No. 10498 as Claim No. 14457 for $261,971. It also filed Claim No. 298 against Refco LLC for $261,971. RJM objected to the claim of Reuters SA and Reuters America. The Reuters Entities subsequently filed a response to the Plan Administrator's claim objections. To avoid the expense, delay, uncertainty, and risk inherent in litigation, the parties have decided to resolve all claims asserted by the Reuters Entities. They have negotiated a consensual resolution of the claims and stipulated that: 1. Claim No. 14457 is allowed in the Chapter 11 cases as a Class 5(a) Contributing Debtors General Unsecured Claim, in the reduced aggregate amount of $124,259; 2. Claim No. 575 is allowed in the Chapter 7 Case as a general unsecured claim in the reduced aggregate amount of $152,327; 3. Claim Nos. 666, 14456, 10498, and 10499 are disallowed and will be expunged from the official claims register; 4. Claim No. 298 is disallowed and will be expunged from the official claims register; 5. The Refco Plan Administrator is authorized to distribute to the Reuters Entities the aggregate distributions made to holders of Allowed Class 5(a) Contributing Debtors General Unsecured Claims on account of Claim No. 14457; 6. The Chapter 7 Trustee is authorized to pay Reuters America $152,327 on account of Claim No. 575; 7. Distributions made in accordance with the Stipulation on account of the Reuters Entities' Claims will be made to "Reuters America LLC" and sent to Reuters America LLC, at 3 Times Square, 20th Floor, New York, New York 10036, Attention: Shmuel Bulka, Esq., vice president and principal legal counsel; and 5. The parties will exchange mutual releases from all claims and causes of action relating to the Reuters Entities Claims. Headquartered in New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The company has operations in Bermuda. The company and 23 of its affiliates filed for Chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. Pursuant to the plan, RJM, LLC, was named plan administrator to reorganized Refco, Inc. and its affiliates, and Marc S. Kirschner as plan administrator to Refco Capital Markets, Ltd. (Refco Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) REFCO INC: Q4 2008 Post-Confirmation Quarterly Report Filed ----------------------------------------------------------- Refco, Inc., and its affiliates, including Refco Capital Markets, Ltd., delivered to the U.S. Bankruptcy Court for the Southern District of New York a copy of their post-confirmation quarterly report for the period from October 1 to December 31, 2008. Valerie E. DePiro, chief financial officer of Refco Inc. and Refco Capital Markets, Ltd., reports that cash balance of $146,403,000 at the start of October 2008 decreased to $81,414,000 at the end of the reporting period. The Reorganized Debtors received $4,232,000 in total cash and disbursed $69,221,000 for the fourth quarter of 2008. Unaudited Schedule of Cash Receipts and Disbursements (in thousands) Inter- Beginning Company Ending Debtor Balance Receipts Transfrs Disbursements Balance ------ --------- -------- -------- ------------- -- ----- Refco Capital Markets $82,979 $2,182 $7,500 ($67,585) $25,076 Refco Capital LLC 6,941 1,868 5,748 (1,317) 13,240 Refco Commodity Mgt. 4,410 12 (4,357) (62) 3 Refco F/X Assoc. 6,884 15 - (146) 6,753 Refco Global Holdings 45,073 155 (9,000) (2) 36,226 Refco Inc. 116 - 109 (109) 116 Other Debtors - - - - - --------- -------- ------- ------------- --- ---- Total $146,403 $4,232 $0 ($69,221) $81,414 ========= ======== ======= ============= ======= The Reorganized Debtors served as paying agent for certain non- Debtors and Refco, LLC. Ms. DePiro states that the $2,200,000 in receipts for RCM includes $1,800,000 in proceeds from miscellaneous asset recoveries and $232,000 in interest income. In accordance with the Plan, during December 2008, the Debtors made an interim distribution of $7,500,000 to RCM. As of January 15, 2009, the Debtors have distributed $520,300,000 to RCM, net of the $15,000,000 RCM Wind-Down Reserve and RCM's share of the Refco Litigation Trust funding. Ms. DePiro reports that RCM's $67,600,000 in disbursements includes distributions to creditors for $66,700,000, as well as payment of operating expenses and professional fees. During the fourth quarter of 2008, RCM sold one security for approximately $277,000, and its proceeds were received subsequent to Dec. 31, 2008. RCM's cash balance at the end of the reporting period includes Capped Claims Special Reserve of $4,000,000, a 502(h) Special Reserve of $3,000,000, and the Disputed Claim Reserves of approximately $6,600,000. Mr. James discloses RCMI received $12,000 as interest income and paid $62,000 for its direct expenses. During the fourth quarter, RCMI was merged into Refco, Inc. Accordingly, RCMI's excess cash was transferred to Refco Capital. Due to the payment of December 2008 interest, about $3,000 remained in RCMI's bank account at December 31, 2008, and will be transferred to the Contributing Debtors upon the closure of the RCMI account in January 2009. Furthermore, Ms. DePiro reports that $1,900,000 in receipts for Refco Capital LLC includes a $1,000,000 received on account of its Subordinated Note Receivable from non-debtor Refco Securities, LLC. Intercompany transfers include: * $9,000,000 from Refco Global Holdings to Refco Capital; * $7,500,000 for the RCM Cash Distribution; * $109,000 funding of Refco, Inc., by Refco Capital; and * excess cash from RCMI to Refco Capital. Ms. DePiro states that the cash balance at December 2008, includes reserves, totaling $12,000,000, for disputed claims and wind-down costs. Refco F/X Associates also earned interest income, totaling $15,000, and disbursed $146,000 for operating expenses and professional fees. According to Ms. DePiro, Refco Global Holding, LLC, received $155,000 as interest income. It disbursed $9,000 for its direct expenses. Its intercompany payments include the $9,000,000 transfer to Refco Capital LLC for investment in treasury and other government securities. Ms. DePiro notes that the Reorganized Debtors' cash balance at December 31, 2008, includes $36,200,000 for reserves for disputed claims against the Contributing Debtors and for wind-down costs. The Debtors' cash at December 31, 2008, and at September 30, 2008, included $116,000 for outstanding checks from the first through the sixth interim distributions to allowed class 5a unsecured claims. Ms. DePiro reports that all insurance policies of the Reorganized Debtors are fully paid for the current period, including amounts owed for workers' compensation and disability insurance. Schedule of Cash Distributions to Creditors (in thousands) Quarter Ended Emergence Dec. 31, 2008 to Date -------------- --------- Administrative and Operating Expenses $1,970 $89,929 TREATMENT OF CONTRIBUTING DEBTORS' CREDITORS AND INTEREST HOLDERS Priority Tax Claims - 1,557 Class 1 - Non Tax Priority Claims - - Class 2 - Other Secured Claims - - Class 3 - Secured Lender Claims - 703,967 Class 4 - Senior Subordinated Note Claims - 335,985 Class 5(a) - Contributing Debtors General Unsecured Claims 109 137,280 Class 5(b) - Related Claims - - Class 6 - RCM Intercompany Claims - - Class 7 - Subordinated Claims - - Class 8 - Old Equity Interests - - TREATMENT OF FXA CREDITORS Priority Tax Claims - 90 Class 1 - FXA Non-Tax Priority Claims - - Class 2 - FXA Other Secured Claims - - Class 3 - FXA Secured Lender Claims - - Class 4 - FXA Sr. Subordinated Note Claims - - Class 5(a) - FXA General Unsecured Claims - 19,453 Class 5(b) - Related Claims - - Class 6 - FXA Convenience Claims - 4,827 Class 7 - FXA Subordinated Claims - - TREATMENT OF RCM CREDITORS Priority Tax Claims - - Class 1 - RCM Non-Tax Priority Claims - - Class 2 - RCM Other Secured Claims - - Class 3 - RCM FX/Unsecured Claims 57,451 381,916 Class 4 - RCM Securities Customer Claims 8,776 2,594,170 Class 5 - RCM Leuthold Metals Claims - 19,364 Class 6 - Related Claims - - Class 7 - RCM Subordinated Claims - - A full-text copy of the Reorganized Debtors' Post-Confirmation Quarterly Report for the Fourth Quarter 2008 is available at no charge at: http://bankrupt.com/misc/Refco4thQ2008PostConReport.pdf Headquartered in New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The company has operations in Bermuda. The company and 23 of its affiliates filed for Chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. Pursuant to the plan, RJM, LLC, was named plan administrator to reorganized Refco, Inc. and its affiliates, and Marc S. Kirschner as plan administrator to Refco Capital Markets, Ltd. (Refco Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) RIGHT START: Case Summary & 30 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Right Start Acquisition Company aka Right Start aka TinyRide aka The Right Start aka Blue Lava aka Right Start III aka Navigate, LLC aka Blue Lava Group, Inc. 26635 Agoura Road, Suite 201 Calabasas, CA 91302 Bankruptcy Case No.: 09-11132 Type of Business: The Debtor sells infant and baby products. See: http://www.rightstart.com/ Chapter 11 Petition Date: February 3, 2009 Court: Central District Of California (San Fernando Valley) Judge: Maureen Tighe Debtor's Counsel: Hamid R. Rafatjoo, Esq. Pachulski Stang Ziehl & Jones LLP 10100 Santa Monica Blvd., Ste. 1100 Los Angeles, CA 90067 Tel: (310) 277-6910 hrafatjoo@pszjlaw.com Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Google Inc. trade debt $520,484 Dept. 33654 P.O. Box 39000 San Francisco, CA 94139 Tel: 650-253-000 Fax: 650-253-0001 Britax Child Safety trade debt $278,768 P.O. Box 79678 City Of Industries, CA 91716-9678 Tel: 707-409-1700 Fax: 707-409-1665 UPS trade debt $258,989 PO Box 894820 Los Angeles, CA 90189- 4820 Tel: 800-742-5877 MacLaren USA Inc. trade debt $188,851 Stokke LLC trade debt $178,930 Bugaboo trade debt $173,640 Bob Trailers Inc. trade debt $157,068 Arnold Logistics LLC trade debt $152,983 Schottenstein Zox & Dunn trade debt $147,110 Graco/Newell Rubbermaid trade debt $136,687 Int'l Playthings Inc. trade debt $111,667 BabySwede LLC trade debt $111,526 Sunshine Kids trade debt $107,790 RP Digital Services Inc. trade debt $107,086 Summer Infant Inc. trade debt $94,799 Combi USA Inc. trade debt $93,192 Halo Innovations trade debt $91,744 Fisher-Price Inc. trade debt $87,886 Orbit Baby trade debt $86,619 Peg Perego USA Inc. trade debt $86,075 Robeez Footwear USA trade debt $76,693 Regal Lager Inc. trade debt $70,511 Recaro North America trade debt $70,364 ABF Freight System, Inc. trade debt $67,500 Windes & McClaughry trade debt $63,650 Sigg USA Inc. trade debt $63,012 Gund Inc. trade debt $62,332 Kidco Inc. trade debt $58,831 Alex - Panline USA Inc. trade debt $57,461 The petition was signed by Kenton Van Harten, chief executive officer. RMF FOUR: Fitch Downgrades Rating on EUR16.450 Mil. Notes to 'CC' ----------------------------------------------------------------- Fitch Ratings downgrades and removes from Rating Watch Negative four classes from RMF Four Seasons CFO Ltd. Fitch has assigned Stable Rating Outlooks to three of the classes. These rating actions are effective immediately: -- EUR23,500,000 class S downgraded to 'A' from 'AA'; Outlook Stable; -- EUR18,800,000 class M1 downgraded to 'BB' from 'A'; Outlook Stable; -- EUR11,750,000 class M2 downgraded to 'B' from 'BBB', Outlook Stable; -- EUR16,450,000 class M3 downgraded to 'CC' from 'B'. The severity of losses and marked reduction in underlying fund liquidity for hedge fund collateralized fund obligations in 2008 exceeded Fitch's original expectations. As a result, Fitch yesterday published a press release entitled 'Fitch Updates Analysis for Rating Hedge Fund CFOs' which outlines the causes and major revisions to the agency's analysis. These rating actions are based upon actual losses in RMF Four Seasons CFO Ltd's portfolio during 2008, the reduced liquidity profile of RMF Four Seasons' portfolio investments, and the application of Fitch's updated analysis. Fitch notes that the RMF Four Seasons fund has not gated to date. The class S notes have benefited from paydowns on the senior credit facility. As well, the CFO's investment in the RMF Four Seasons fund represents a small portion of that fund's total size. Fitch incorporates this into its scenario analysis of the transaction's liquidity profile. The Stable Outlook on classes S, M1, and M2 reflect these notes' ability to withstand sequential market value stresses and reductions in liquidity over the next year under Fitch's updated analysis. The transaction is a hedge fund CFO that is managed by RMF Investment Management - Nassau branch, a company that provides investment management services to funds organized and sponsored by Man Investments. RMF Four Seasons CFO Ltd. primarily invests in RMF fund shares through the segregated RMF platform. Fitch introduced Rating Outlooks for U.S. structured finance in September 2008 to provide investors with forward-looking analysis for a structured finance tranche's credit performance. Fitch's Rating Outlook indicates the likely direction of any rating change over a one- to two-year period and may be Positive, Negative, Stable or, occasionally, Evolving. RT. 41: Files for Chapter 11 Bankruptcy Protection -------------------------------------------------- Tampa Bay Business Journal reports that Rt. 41 Manufacturing Inc. filed for Chapter 11 bankruptcy protection on February 2. Court documents say that Rt. 41 listed $1 million to $10 million in assets and $1 million to $10 million in liabilities. Tampa Bay Business relates that Daniel Fogarty, Esq., of Stichter Riedel Blain & Prosser assists Rt. 41 in its restructuring effort. Truss manufacturer Rt. 41 Manufacturing Inc. operates 41 Truss in Spring Hill. It builds roof trusses and floor trusses for use in residential and commercial construction. The company was founded by Terry Bucaw in 1983 and was purchased by David Wood in 2005. SEMGROUP LP: Gets Permission to Ink Transactions with CME Group --------------------------------------------------------------- SemGroup L.P. and its affiliates sought and obtained authority from the U.S. Bankruptcy Court for the District of Delaware to enter into a shares transaction and a membership transaction with CME Group, Inc. CME Group is a subsidiary of the New York Mercantile Exchange, Inc., of which SemGroup, L.P., holds two seats. NYMEX Holdings merged into CMEG NY, Inc., a CME Group subsidiary. Pursuant to the Merger Agreement, CMEG NY continues as the surviving company and a wholly-owned subsidiary of CME Group. According to Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, ownership of a seat represents Class A Membership Interest in NYMEX Holdings, Inc. As of July 18, 2008, SemGroup owns 150,000 shares of NYMEX Holdings common stock. NYMEX Holdings stockholders were entitled to receive consideration in the form of CME Group Class A common stock or cash, and those stockholders, including SemGroup, who did not exercise their shares election on August 20, 2008 -- the shares transaction deadline -- were deemed to have elected cash consideration. On September 8, 2008, CME Group converted SemGroup's 150,000 shares to cash, and paid $12,000,000. Under the Merger Agreement, each owner of a Class A Membership Interest in NYMEX Holdings was entitled to receive $750,000. SemGroup was eligible for two memberships, aggregating $1,500,000, which CME Group paid on October 22, 2008. The Debtors and CME Group recognize that the Shares and Membership Transaction are outside of the ordinary course of business, and thus ask for the Court's permission. No objection to the request was filed. 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. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SEMGROUP LP: Producers Wants to Recover Prepetition Deliveries -------------------------------------------------------------- In separate filings, 24 oil and gas producers ask the U.S. Bankruptcy Court for the District of Delaware to lift the automatic stay to allow them to recover the products they delivered to SemGroup L.P. and its affiliates days before the Debtors' Petition Date: * Red Oak Energy, Inc. * Wheeler Oil Company * Molitor Oil, Inc. * White Exploration, Inc. * Calvin Noah * Dunne Equities, Inc. * Thoroughbred Associates * White Pine Petroleum Corporation * Pickrell Drilling Company, Inc. * Tempest Energy Resources LP * Ritchie Exploration, Inc. * Mid-Continent Energy Corp. * Landmark Resources, Inc. * McCoy Petroleum Corporation * V.J.I. Natural Resources * Vincent Oil Corporation * Viking Oil Corporation * Viking Resources, Inc. * Platte Valley Oil Co., Inc. * Osborn Heirs Co. * CMX, Inc. * F.G. Holl Co., LLC * Lario Oil & Gas Co. * Daystar Petroleum, Inc. The Producers assert that pursuant to state laws, based on the prepetition sale agreements they entered into with the Debtors and the interests filed of record on the Producers' behalf and their royalty and working interest owners, the Producers have perfected purchase money security interest in the Debtors' oil and gas inventory. In the event the oil or gas has been sold to a second purchaser, the Producers still assert that they have a continuing purchase money security interest in the proceeds of the oil and gas. The purchase money security interest is a super-priority lien with priority over all other secured parties, including financial lenders, the Producers contend. The Producers also want to initiate and conclude state or federal court proceedings to enforce a constructive trust on the oil and gas product and execute their lien and exercise their reclamation rights. In the alternative, the Producers ask the Court to compel the Debtors to provide adequate protection to protect the Producers' interests in the oil and gas products. About SemGroup L.P. 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. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SEMGROUP LP: Balks at Davis' Request for Contract Decision ---------------------------------------------------------- SemGas, L.P., disputes Davis Operating Company's request for the Debtor to make a decision on the parties' executory contracts, arguing that Davis OP has not demonstrated pressing circumstances that justifies immediate determination whether to assume or reject the Contracts, nor has Davis OP suffered actual harm. SemGas tells the U.S. Bankruptcy Court for the District of Delaware it needs time to adequately evaluate the merits of its numerous executory contracts. Further, SemGas asserts that it will not be equitable to force the Debtors to assume or reject the Contracts before they have evaluated the value of the Contracts to the estate of SemGas. Accordingly, SemGas argues that Davis OP's requests should be denied. Davis OP asked the Court to (i) compel the SemGas to assume or reject the executory contracts they entered into before the Petition Date or, in the alternative, (ii) lift the automatic stay to allow it to terminate the contracts. The Contracts consist of: * a purchase and sale agreement, * a gas gathering agreement, and * a gathering system construction, ownership, and operating agreement. Under the contracts, SemGas pays $1,500,000 for natural gas to Davis OP. SemGas also agreed to construct gathering systems to accept gas at certain points in Oklahoma and redeliver them from Lakeview East, the Hyde-Creager, and the Pine Hollow for Davis OP. SemGas and Davis OP agreed to pay their proportionate share of all costs and expenditures of the Systems, and to receive revenues in proportion to their ownership interest. On behalf of Davis OP, Bradford J. Sandler, Esq., at Benesch, Friedlander, Coplan & Aronoff, LLP, in Wilmington, Delaware, relates that the Pine Hollow System did not have any assets. However, under the Construction Agreement, SemGas agreed to construct a facility for $7,300,000, and Davis OP agreed to dedicate gas into the Pine Hollow System. Davis OP also has 11 wells connected to the Hyde-Creager System, and nine wells for the Lakeview System. Pursuant to the Construction Agreement, in July 2008 SemGas sent Davis OP a proposal expanding the Lakeview System for $1,234,158, and two expansion proposals to the Pine Hollow System for $3,968,960 and $3,490,407. On August 15, 2008, SemGas informed Davis OP that it will not pay its pro rata portion of costs to the Expansions. To prevent the Pine Hollow's wells from being stranded, Davis OP commenced the construction of the Pine Hollow System. Mr. Sandler asserts that Davis OP is entitled to have the Pine Hollow Wells released from the Gas Gathering Agreement, and to pursue its right against the assets, as set forth in the Construction Agreement. He alleges that Davis OP has a lien on all amounts due, as well as rights of operator in connection with the Contracts. Mr. Sandler insists that SemGas should assume or reject the Contracts, otherwise Davis OP will be severely prejudiced. Davis OP is in the process of completing numerous wells, and SemGas' failure to begin its pipelines leaves the wells stranded and unable to transfer gas products. In the alternative, Davis OP asks the Court to lift the automatic stay to terminate the Contracts with SemGas. Davis OP has a clear and unambiguous contractual right to build the pipelines if SemGas fails to perform, Mr. Sandler maintains. SemGas, however, argues that Davis OP has not demonstrated pressing circumstances that justifies immediate determination whether to assume or reject the Contracts, nor has Davis OP suffered actual harm. SemGas says it needs time to adequately evaluate the merits of its numerous executory contracts. Further, SemGas asserts that it will not be equitable to force the Debtors to assume or reject the Contracts before they have evaluated the value of the Contracts to the estate of SemGas. SemGas says it continues its efforts to stabilize its businesses and will determine the assumption or rejection of contracts at the appropriate time. SemGas maintains that the automatic stay allows the Debtors "critical breathing space" to restructure their finances, amidst the volatility in the financial and energy markets. The Official Committee of Unsecured Creditors, as well as Bank of America, as administrative agent for the prepetition secured parties, support SemGas' objection. BofA asserted that the Davis OP's motion seeks to improperly elevate its rights over that of the Agent, the prepetition and postpetition secured parties. About SemGroup L.P. 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. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SEMGROUP LP: Semcrude Agrees to Reject W.H. Davis Swap Agreement ---------------------------------------------------------------- Semgroup L.P. and its debtor-affiliates consent to the request of W.H. Davis Family Limited Partnership, agreeing to reject the parties' swap agreements, effective October 27, 2008. Bank of America, N.A., says it does not object to the Debtors' rejection of the swap agreements. W.H. Davis asked the Court to compel SemCrude, L.P., to assume or reject the prepetition agreements. In the alternative, W.H. Davis asked the Court to lift the automatic stay to it to terminate the agreements. Bradford J. Sandler, Esq., at Benesch, Friedlander, Coplan & Aronoff, LLP, in Wilmington, Delaware, on behalf of W.H. Davis , said the Swap Agreements are evidenced only confirmations, and no documents, including a master swap agreement, exist between SemCrude and W.H. Davis. According to Mr. Sandler, on October 27, 2008, the price for crude was at $66 per barrel, which was under the strike price established by the Swap Agreements. Since the price of the crude was trading below the strike price, SemCrude owes W.H. Davis approximately $750,000 under the Swap Agreements. The Debtors and BofA separately reserve their rights to object to rejection damages claims that may be asserted by W.H. Davis and reserves all rights regarding the calculation of rejection damages, if any, and do not concede that any amounts asserted by W.H. Davis is correct. 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. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SHORES OF PANAMA: Lender Forces Sale of Condominiums ---------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Florida has approved auction procedures for the assets of Shores of Panama Inc. According to Bloomberg's Bill Rochelle, the protocol provides for these terms: -- Silverton Bank NA, the holder of more than $73 million in first and second mortgages, has the right to bid for the project using its debt -- Competing bids are due March 4. -- An auction will be held on March 5. -- A hearing to approve the sale will take place March 6. In September 2008, Shores of Panama filed its Chapter 11 reorganization plan with the U.S. Bankruptcy Court for the Northern District of Florida that would pay creditors owed $113.3 million from the sales of its condominium units. The Debtor would seek to sell 357 condominium units during the next six years to generate about $120 million in revenue. Silverton Bank, however, had the right to force a sale if a default occurs under the Court-approved debtor-in-possession financing for Shores of Panama. About Shores of Panama Based in Spanish Fort, Alabama, Shores of Panama, Inc. owns and manages condominiums. The Company filed for Chapter 11 protection on Feb. 26, 2008 (Bankr. N.D. Fla. Case No. 08-50066). John E. Venn, Jr., P.A., represents the Debtor in its restructuring efforts. The Debtor disclosed $173,568,452 in total assets and $113,255,773 in total debts. SMURFIT-STONE: Metso Sees EUR3 million in Receivables ----------------------------------------------------- Helsinki, Finland-based Metso Corporation estimates that maximum credit risk related to receivables from Smurfit-Stone Container Corp. is about EUR3 million. Smurfit-Stone is one of Metso's Paper and Fiber Technology's customers in North America. Metso says it expects the demand for paper, pulp and fiber lines to be weak in 2009. The delivery schedules of some large paper and board machine and fiber line projects in the order backlog have been prolonged. In the pulp and paper industry, low capacity utilization rates are expected to weaken the demand for Metso's services business, particularly in North America and Europe. Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. According to Bloomberg News, Smurfit-Stone joins other pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corp. Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC, acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SOLAR COSMETIC: Liquidating Plan Goes to Creditors for Voting ------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of Florida has approved the disclosure statement explaining the terms of the Chapter 11 liquidation plan of Solar Cosmetic Labs Inc. and its debtor-affiliate, Solar Packaging Corp. Following the Court's approval of the Disclosure Statement, the Debtors may now begin soliciting votes and support to the Plan. According to Bloomberg's Bill Rochelle arranged a March 23 confirmation hearing on the Plan. The terms of the Plan is built upon a settlement which provides that secured lender and unsecured creditors are in line to split up $580,000. The Debtors sold their intellectual property -- including trademarked logos, patents and copyrights -- to Sun & Skin Care Research Inc. for $8,500,000. At a July 24 auction, Sun & Skin dwarfed The Village Suncare LLC's $4 million offer for the Debtors' assets, Bloomberg says. The Village Suncare was the designated stalking-horse bidder. Secured creditor KeyBank N.A. got most of the proceeds, while $425,000 was allocated for unsecured creditors. About Solar Cosmetic Miami Gardens, Florida-based Solar Cosmetic Labs Inc. -- http://www.solarcosmetics.com/-- and -- http://www.bodyandearth.com/-- manufacture, markets and sells perfumes, cosmetics, and other toilet preparations. Solar Packaging Corp. is the holder of certain operating licenses and is a guarantor of certain of Solar Cosmetic's obligations. The company and Solar Packaging Corp. filed chapter 11 petition on May 6, 2008 (Bankr. S.D. Fla. Case Nos. 08-15793 and 08-15796). Judge Laurel Isicoff presides the case. Peter E. Shapiro, Esq., at Shutts & Bowen, LLP represents the Debtors in their restructuring efforts. The U.S. Trustee for Region 21 appointed creditors to serve on an Official Committee of Unsecured Creditors. The Committee is represented by Jeffrey P. Bast, Esq. The Debtors' schedule showed total assets of $13,925,425 and total liabilities of $50,928,780. SOVEREIGN BANCORP: S&P Upgrades Preferred Stock Rating from 'Ba2' ----------------------------------------------------------------- Moody's Investors Service upgraded the debt and deposit ratings of Sovereign Bancorp, Inc., (senior to Baa1 from Baa2) and its subsidiaries, including its lead thrift, Sovereign Bank (long term deposits to A3 from Baa1). In the same action, Moody's confirmed Sovereign Bank's financial strength rating of C-. Following the ratings action, the outlook is negative. This rating action concludes the review that began in October 2008. Moody's rating action follows Banco Santander Central Hispano's (senior Aa1) purchase of the remaining 75.66% of Sovereign that it did not previously own, and its planned infusion of $1.8 billion, which is expected to be Tier 1 qualifying. Moody's expects this capital will augment both Tier 1 and tangible common equity. In upgrading the debt and deposit ratings, Moody's said creditors and depositors will benefit from Sovereign's becoming a wholly-owned subsidiary of Santander (financial strength rating B), which is a larger, more broadly diversified, international banking entity. Moody's increased its support assumption from Santander to Sovereign, which explains why the deposit and debt ratings were raised. Moody's noted the expectation of parent support from Santander results in a two-notch lift in Sovereign Bank's long term deposit rating. Moody's notes that Santander's commitment to inject $1.8 billion of capital into Sovereign would bring its capital ratios in line with peers. While heightened credit costs are expected in Sovereign's portfolio concentrations, notably, commercial real estate, home equity and indirect auto, the rating agency expects the company's capital base to be sufficient to absorb these costs while maintaining ratios commensurate with its current rating level. The negative outlook reflects the possibility that the challenging economic environment weakens beyond Moody's current expectations, resulting in deterioration in Sovereign's asset quality and associated credit costs. Moody's rating assumes that Sovereign's capital injection will result in improvement in both Sovereign's Tier 1 Risk Based and TCE ratios. If this assumption is wrong, and there is not benefit to both ratios, then negative ratings pressure would quickly emerge. Moody's last rating action Sovereign was on October 14, 2008, when the debt and deposit ratings of Sovereign Bancorp and its subsidiaries, including its lead thrift, Sovereign Bank, were placed under review for possible upgrade. Moody's also changed the direction of its review of Sovereign Bank's C- bank financial strength to direction uncertain. Upgrades: Issuer: Independence Community Bank -- Subordinate Regular Bond/Debenture, Upgraded to Baa1 from Baa2 Issuer: Independence Community Bank Corp. -- Senior Unsecured Regular Bond/Debenture, Upgraded to Baa1 from Baa2 Issuer: Sovereign Bancorp, Inc. -- Multiple Seniority Shelf, Upgraded to a range of (P)Baa3 to (P)Baa1 from a range of (P)Ba2 to (P)Baa2 -- Preferred Stock Preferred Stock, Upgraded to Baa3 from Ba2 -- Senior Unsecured Regular Bond/Debenture, Upgraded to Baa1 from Baa2 Issuer: Sovereign Bank -- Issuer Rating, Upgraded to A3 from Baa1 -- OSO Senior Unsecured OSO Rating, Upgraded to A3 from Baa1 -- Subordinate Regular Bond/Debenture, Upgraded to Baa1 from Baa2 -- Senior Unsecured Deposit Note/Takedown, Upgraded to A3 from Baa1 -- Senior Unsecured Deposit Rating, Upgraded to A3 from Baa1 Issuer: Sovereign Capital Trust I -- Preferred Stock Preferred Stock, Upgraded to Baa2 from Baa3 Issuer: Sovereign Capital Trust II -- Preferred Stock Preferred Stock, Upgraded to Baa2 from Baa3 Issuer: Sovereign Capital Trust III -- Preferred Stock Preferred Stock, Upgraded to Baa2 from Baa3 -- Preferred Stock Shelf, Upgraded to (P)Baa2 from (P)Baa3 Issuer: Sovereign Capital Trust IV -- Preferred Stock Preferred Stock, Upgraded to Baa2 from Baa3 -- Preferred Stock Shelf, Upgraded to (P)Baa2 from (P)Baa3 Issuer: Sovereign Capital Trust V -- Preferred Stock Preferred Stock, Upgraded to Baa2 from Baa3 -- Preferred Stock Shelf, Upgraded to (P)Baa2 from (P)Baa3 Issuer: Sovereign Capital Trust VI -- Preferred Stock Preferred Stock, Upgraded to Baa2 from Baa3 -- Preferred Stock Shelf, Upgraded to (P)Baa2 from (P)Baa3 Issuer: Sovereign Real Estate Investment Trust -- Preferred Stock Preferred Stock, Upgraded to Baa2 from Baa3 Outlook Actions: Issuer: Independence Community Bank -- Outlook, Changed To Negative From Rating Under Review Issuer: Independence Community Bank Corp. -- Outlook, Changed To Negative From Rating Under Review Issuer: Sovereign Bancorp, Inc. -- Outlook, Changed To Negative From Rating Under Review Issuer: Sovereign Bank -- Outlook, Changed To Negative From Rating Under Review Issuer: Sovereign Capital Trust I -- Outlook, Changed To Negative From Rating Under Review Issuer: Sovereign Capital Trust II -- Outlook, Changed To Negative From Rating Under Review Issuer: Sovereign Capital Trust III -- Outlook, Changed To Negative From Rating Under Review Issuer: Sovereign Capital Trust IV -- Outlook, Changed To Negative From Rating Under Review Issuer: Sovereign Capital Trust V -- Outlook, Changed To Negative From Rating Under Review Issuer: Sovereign Capital Trust VI -- Outlook, Changed To Negative From Rating Under Review Issuer: Sovereign Real Estate Investment Trust -- Outlook, Changed To Negative From Rating Under Review Confirmations: Issuer: Sovereign Bank -- Bank Financial Strength Rating, Confirmed at C- -- OSO Rating, Confirmed at P-2 -- Deposit Rating, Confirmed at P-2 SPANSION INC: Names John Kispert as CEO & Director -------------------------------------------------- Spansion Inc. has appointed John Kispert as CEO and member of the board of directors, effective February 4. Mr. Kispert, former president and COO of KLA-Tencor, brings significant operational and financial experience to Spansion. As CEO, Mr. Kispert expects to intensify Spansion's strategic and restructuring initiatives to build value for the company's stakeholders, leveraging the company's leadership in the Flash memory industry. "As the new CEO, in addition to the strategic and restructuring initiatives, I plan to create a winning strategy for the company that leverages Spansion's market leadership, rich intellectual property portfolio, and strong customer relationships," said Mr. Kispert. "My first priority is to ensure that Spansion capitalizes on the company's tremendous strengths to bring value to our stakeholders." On January 15, 2009, Spansion said it was exploring strategic alternatives for a sale or merger. The company also said that it plans to restructure its balance sheet. The objective of the potential strategic alternatives is to build on Spansion's position as a leading supplier of NOR Flash memory by creating significantly greater scale, and to provide Spansion's customers with a broader range of more cost-effective memory solutions. Mr. Kispert's appointment at Spansion follows the resignation of president and CEO Bertrand Cambou. "We are delighted that John has joined Spansion and we are particularly pleased that the board of directors was able to make this appointment so swiftly following Bertrand's resignation," said Boaz Eitan, Spansion interim President. "John is renowned in the semiconductor industry as an experienced, strategic leader with significant financial and operational acumen. I look forward to working closely with him during the transition to accelerate Spansion's strategic and restructuring initiatives." Prior to joining Spansion, Mr. Kispert served as the president and COO of KLA-Tencor Corp., a leading semiconductor equipment company. During his 13 years with KLA-Tencor, Mr. Kispert held a variety of operations- and finance-related positions, including Chief Financial Officer. At KLA-Tencor, Mr. Kispert played an instrumental role in several of the company's most critical initiatives, including operational and organizational restructuring following the 1997 merger between KLA Instruments and Tencor Instruments. Before joining KLA-Tencor in 1995, Mr. Kispert held several senior management positions with IBM. He received his bachelor's degree in Political Science from Grinnell College and his MBA from the University of California, Los Angeles. About Spansion Spansion (NASDAQ: SPSN) -- http://www.spansion.com-- is a leading Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. As reported by the Troubled Company Reporter on Jan. 19, 2009, Fitch Ratings downgraded these ratings for Spansion Inc.: -- Issuer Default Rating to 'C' from 'CCC'; -- $175 million senior secured revolving credit facility (RCF) due 2010 to 'CC/RR3' from 'CCC+/RR3'; -- $625 million senior secured floating rating notes due 2013 to 'CC/RR3' from 'CCC+/RR3'; -- $225 million of 11.25% senior unsecured notes due 2016 to 'C/RR6' from 'CC/RR6'; -- $207 million of 2.25% convertible senior subordinated debentures due 2016 to 'C/RR6' from 'CC/RR6'. According to the TCR on Jan. 19, 2009, Moody's Investors Service downgraded Spansion's corporate family rating and probability of default rating to Ca from Caa2, senior secured floating rate notes to Caa2 from B3 and senior unsecured notes to Ca from Caa3. The TCR reported on Jan. 19, 2009, that Standard & Poor's Ratings Services lowered its corporate credit rating on Spansion Inc. to 'D' from 'CCC', and the issue-level rating on Spansion LLC's 11.25% senior unsecured notes due 2016 to 'D' from 'CC'. ST. LAWRENCE HOMES: Seeks Chapter 11 Protection from Creditors -------------------------------------------------------------- St. Lawrence Homes, Inc., which claims to be one of the nation's most successful homebuilders, has filed a Chapter 11 petition in the United States Bankruptcy Court in Raleigh, North Carolina, citing the national weakness of the residential construction and real estate markets. "Additionally, the company has been challenged by the tightening of borrowing requirements placed upon it sources of operating credit," the company said in a Feb. 2 statement posted in its Web site. St. Lawrence Homes said it intends to continue its operations through this financial restructuring. St. Lawrence Homes expects to move quickly through the reorganization process and to emerge from its reorganization proceedings better capitalized and financially stronger. St. Lawrence Homes, Inc. -- http://www.stlh.com/-- is a North Carolina based homebuilder with additional operations in Ohio. Founded in 1987 St. Lawrence Homes has received accolades for quality, design and has been recognized as one of the largest privately held builders in the country. For more information please contact 919-676-8980, ext. 114. It filed for Chapter 11 on Feb. 2 (Bankr. E.D. N.C., Case No. 09- 00775). According to Bloomberg's Bill Rochelle, the company, in its bankruptcy petition, listed assets of $158.2 million against debt totaling $116.4 million as of Oct. 31. STATION CASINOS: Misses $14.6MM Bond Payment; Seeks Plan Support ---------------------------------------------------------------- Station Casinos, Inc., has elected not to make a scheduled $14.6 million interest payment on Feb. 2, 2009. The Company is soliciting votes from its bondholders in favor of a restructuring plan that the Company's equity sponsors and lead senior secured lenders have already agreed to support. As part of the restructuring plan, the Company and certain affiliates are offering the bondholders a combination of secured notes and cash in exchange for their outstanding bonds. The purpose of the restructuring plan is to significantly reduce the outstanding principal amount of indebtedness and cash interest expense of the Company. Under the plan, senior bondholders would get 50 cents on the dollar while subordinate bondholders would receive 7 cents on the dollar in new notes and 3 cents on the dollar in cash, Las Vegas Review states. $244 Million Contribution from Fertitta & Colony Capital $350 million Cash on Hand as of January 31, 2009 The Company said that affiliates of the Fertitta family and Colony Capital have committed, as part of the restructuring plan, to contribute in the aggregate up to $244 million in cash if an acceptable agreement is reached with all of the Company's lending constituents. Members of the Fertitta family that would be participating in this contribution of additional capital include Frank J. Fertitta III, Chairman and Chief Executive Officer of the Company, and Lorenzo J. Fertitta, Vice Chairman of the Company. The Company noted that as of January 31, 2009, it had roughly $350 million of cash on hand to pay expenses, fund operations and maintain its business interests and properties. The Company also said that preliminary expectations of its financial results for the quarter ended December 31, 2008, showed a 19% decrease in revenues to $290 million from $358 million for the same period in 2007 and operating losses of approximately $2 million (excluding anticipated impairments), compared to operating losses of $377 million for the same period in 2007 (including one-time charges). Adjusted EBITDA for the quarter is expected to be in the range of $97 million to $101 million, which is a decrease in the range of 23% to 26% compared to $132 million for the same period in 2007. Frank J. Fertitta III, Chairman and Chief Executive Officer of Station, said, "We believe the proposed restructuring plan is in the best interest of all of our constituents. We have an outstanding company, a loyal customer base and we believe the best team members in the industry. It is no secret that current economic conditions in our country have had an adverse effect on Las Vegas in general and the casino business in particular. However, we believe that the steps we have taken and those we are proposing to take will result in our company being well positioned for the future." Solicitation of Plan Acceptances; Plan Votes Due March 2 The Company said it is soliciting from eligible institutional holders of its outstanding: -- 6% Senior Notes due 2012, -- 7-3/4% Senior Notes due 2016, -- 6-1/2% Senior Subordinated Notes due 2014, -- 6-7/8% Senior Subordinated Notes due 2016, and -- 6-5/8% Senior Subordinated Notes due 2018, ballots for a vote in favor of a plan of reorganization for the resolution of outstanding claims against the Company. If the Company obtains sufficient Acceptances of the Plan, the Company may determine to implement the Plan by commencing a voluntary case under chapter 11 of the U.S. Bankruptcy Code. Pursuant to the Plan, the Holders of Old Senior Notes will receive $400 in aggregate principal amount of 10% Second Lien Notes due 2014 issued by the Company and $100 in cash for each $1,000 in principal amount of Old Senior Notes and Holders of Old Subordinated Notes will receive $70 in aggregate principal amount of 10% Third Lien Notes due 2014 issued by the Company and $30 in cash for each $1,000 in principal amount of Old Subordinated Notes. The cash consideration will be funded with cash on hand and proceeds from the sale of capital stock to, or capital contributions made by, affiliates of certain indirect equityholders of the Company. Holders that submit Ballots will also agree to support the Plan. The New Notes will be senior obligations of the Company that are guaranteed by the restricted subsidiaries of the Company and, subject to required third party consents and to the extent permitted by gaming and other applicable laws, secured by second and third priority liens, as applicable, on all of the Company's assets that will secure its obligations under the amended and restated credit facility that will be put in place upon consummation of the restructuring. The lead lenders for the CMBS financing, the $250 million land loan financing and the existing senior secured credit facility have entered into plan support agreements where they have agreed, subject to certain conditions, to support the contemplated restructuring of debt held by the Company and its affiliates in accordance with agreed upon terms and conditions. Ballots for the plan of reorganization must be received by 12:00 midnight, New York City Time on March 2, 2009. Station Casinos outlines the various series of Old Notes with respect to which Ballots are being solicited and the consideration that will be paid on the effective date of the Plan: Per $1,000 in principal amount of Old Notes --------- ----------- Principal Principal amount of Amount New Notes Outstanding issued for Cash as of Old Notes Consider- December 31, in the ation for Title of Old Notes CUSIP/ISIN 2008 Plan Old Notes ------------------- ------------- ------------ --------- --------- 6% Senior Notes due 857689AV5 / 2012 US857689AV53 $450,000,000 $400 $100 7-3/4% Senior Notes due 857689BA0 / 2016 US857689BA08 $400,000,000 $400 $100 6-1/2% Senior 857689AR4 / Subordinated Notes US857689AR42 due 2014 $450,000,000 $70 $30 6-7/8% Senior 857689AT0 / Subordinated Notes US857689AT08 due 2016 $700,000,000 $70 $30 6-5/8% Senior 857689AZ6 / Subordinated Notes US857689AZ67 due 2018 $300,000,000 $70 $30 The Plan Consideration includes payment of all accrued and unpaid interest with respect of the Old Notes to and including the date of payment pursuant to the Plan. No additional payment in respect of accrued interest will be made pursuant to the Plan. The New Notes have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Acceptance Solicitation is being made only to "qualified institutional buyers" and to certain non-U.S. investors located outside the United States. The Acceptance Solicitation is made only by, and pursuant to, the terms set forth in the confidential solicitation statement, and the information in this press release is qualified by reference to the confidential solicitation statement and the accompanying Ballots. Subject to applicable law, the Company may amend, extend or terminate the Acceptance Solicitation. Documents relating to the Acceptance Solicitation will only be distributed to Holders who complete and return a letter of eligibility confirming that they are within the category of eligible investors for this private offer. Holders who desire a copy of the eligibility letter or solicitation materials relating to the Acceptance Solicitation should contact D.F. King & Co., Inc., the voting agent and information agent for the Acceptance Solicitation, at (800) 628-8532 (Toll-Free) or (212) 269-5550 (Collect). Bond Payment on Subordinated Notes; 30-Day Grace Period Ends March 3 The Company elected not to make a scheduled $14.6 million interest payment that was due to holders of the Company's $450 million 6-1/2% Senior Subordinated Notes due February 1, 2014, as it launched the proposed restructuring plan to its bondholders. The Old 2014 Subordinated Notes provide for a 30-day grace period which ends March 3, 2009. While the Company is hopeful that it will achieve a restructuring plan with its lenders and sponsors in the near term, it can offer no assurances. If the interest payment is not paid or waived by the end of the grace period, an event of default would occur which could result in an acceleration of the Old 2014 Subordinated Notes and a consequent cross-acceleration of virtually all of the Company's debt. Results of Operations The Company's net revenues for the fourth quarter ended December 31, 2008 are expected to approximate $290 million, which is a 19% decrease compared to $358 million for the same period in 2007. Operating loss, before any recognized impairment loss is expected to be approximately $2 million, compared to an operating loss of $377 million for the same period in 2007 (including one- time charges). The Company said it is still in the process of evaluating certain assets for impairment. Adjusted EBITDA(1) for the quarter is expected to be in the range of $97 million to $101 million, which is a decrease in the range of 23% to 26% compared to $132 million for the same period in 2007. Gun Lake Project On January 30, 2009, the United States Department of Interior accepted approximately 147 acres of real property into trust in Allegan County, Michigan, for the benefit of the Match-E-Be-Nash- She-Wish Band of Pottawatomi Indians, a federally recognized Native American tribe commonly referred to as the Gun Lake Tribe. MPM Enterprises, LLC, which is 50% owned by a subsidiary of the Company, has entered into amended and restated development and management agreements with Gun Lake pursuant to which MPM will assist Gun Lake in developing and operating a gaming and entertainment facility on such property. The timing and feasibility of the project are dependent upon the receipt of all necessary governmental and regulatory approvals. About Station Casinos Station Casinos, Inc. is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada. Station's properties are regional entertainment destinations and include various amenities, including numerous restaurants, entertainment venues, movie theaters, bowling and convention/banquet space, as well as traditional casino gaming offerings such as video poker, slot machines, table games, bingo and race and sports wagering. Station owns and operates Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Texas Station Gambling Hall & Hotel, Sunset Station Hotel & Casino, Santa Fe Station Hotel & Casino, Red Rock Casino Resort Spa, Fiesta Rancho Casino Hotel, Fiesta Henderson Casino Hotel, Wild Wild West Gambling Hall & Hotel, Wildfire Casino Rancho, Wildfire Casino Boulder, formerly known as Magic Star Casino, Gold Rush Casino and Lake Mead Casino. Station also owns a 50% interest in Green Valley Ranch Station Casino, Aliante Station Casino & Hotel, Barley's Casino & Brewing Company, The Greens and Renata's Casino in Henderson, Nevada and a 6.7% interest in the joint venture that owns the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages Thunder Valley Casino near Sacramento, California on behalf of the United Auburn Indian Community. TD AMERITRADE: S&P Raises Counterparty Credit Rating From 'BB' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it raised its long- term counterparty credit rating on TD AMERITRADE Holding Corp. to 'BBB+' from 'BB'. The outlook is revised to stable from positive. The rating action follows an annual review of TDA's overall financial profile and operating performance that included an extensive review of the company's relationship with its shareholder, The Toronto-Dominion Bank (TD Bank; AA-/Stable/A-1+). "Subsequent to this review, and under S&P's group methodology criteria, S&P considers TDA a strategically important investment for TD Bank, and this allows for uplift to the stand-alone rating on TDA," said Standard & Poor's credit analyst Diane Hinton. The rating on TDA also reflects its strong franchise and brand name and strong cash-flow generation that have helped strengthen the balance sheet. These attributes temper the company's high operating leverage owing to its relatively high yet diminishing dependence on transaction-based revenues, which are vulnerable to capital market conditions. The ratings are enhanced by TD Bank's shareholding of TDA, which the banking group considers strategically important to its U.S. strategy. Sound organic growth and a successful acquisition strategy have resulted in TDA's position as the largest retail broker in the U.S. by trades per day. The scalability of the company's trading platform, which permits high-volume trades at low costs, has contributed to consistently strong operating margins during the past three years. Although revenues are currently under pressure as a result of the low interest and market-challenged operating environment, TDA continues to generate strong cash flow, which has helped improve the strength of its balance sheet. In response to a market-induced slowdown in revenues, TDA is taking measures to ensure its operating performance remains consistent through this market cycle. In S&P's opinion, the successful integration of TD Waterhouse has enhanced TDA's franchise value while providing the firm with a strong shareholder with whom it can generate additional sources of revenue. Although TD Bank does not provide specific financial support to TDA, S&P believes that the company's strategic importance to the banking group means that support would be forthcoming if this became necessary. The stable outlook reflects S&P's opinion that TDA will weather the current challenging environment without undue detriment to its operating performance. Although S&P expects some compression in operating margins in the near term, S&P believes the company has sufficient flexibility to withstand this without a negative effect on the rating. TDA's ability to sustain operating performance throughout this market cycle could cause us to consider raising the ratings. Conversely, the ratings could be pressured if a weaker market or prolonged low interest rate environment contributes to substantially reduced earnings, or if TDA's appetite for financial leverage increases significantly. S&P could also lower the ratings if TD Bank reduces its ownership in TDA to the extent that TDA is no longer considered strategically important. TOUSA INC: Asks Court to Lifty Stay to Pursue LLV Action -------------------------------------------------------- TOUSA Inc. and its affiliates ask the U.S. Bankruptcy Court for the Southern District of Florida to lift the automatic stay to allow a state court action to proceed to judgment by permitting removal, mediation, or litigation of the Court Action. Before the Petition Date, LLV-1, LLC, and TOUSA Homes, Inc., entered into a Purchase Agreement and Escrow Instructions for the sale and purchase of a real property in Henderson, Nevada, at the Lake Las Vegas Resort. Under the Agreement, TOUSA Homes agreed to purchase the Lake Las Vegas Resort for $81 million. The Property was divided into two batches for sale, each of which had a total purchase price allocation of $40.5 million. The Agreement required TOUSA Homes to deposit $4,050,000 into an escrow account. Half of the Deposit would apply to the purchase of the Phase One Property and the other half would apply to the purchase of the Phase Two Property. TOUSA Homes placed the Deposit into an escrow account with First American and closed the purchase on the Phase One Property in September 2005. TOUSA Homes then began construction on the Lake Las Vegas project and subcontracted Las Vegas Paving Corporation to provide certain materials, labor and equipment associated with the construction at the Lake Las Vegas project. LLV and TOUSA Homes, however, never closed on the Phase Two Property purchase. Construction on the Property has been halted. Moreover, two litigation cases have been initiated based on the failure to close Phase Two Property Sale and the halt of the Phase Two construction: 1. The LLV Action LLV sued TOUSA Homes due to TOUSA Homes' failure to close the purchase of the Phase Two Property. Under the LLV Action, LLV asserts claims for money damages against TOUSA Homes for breach of contract, breach of the covenant of good faith and fair dealing, specific performance, and declaratory damages. In turn, TOUSA Homes filed a response in the LLV Action, alleging claims against LLV for breach of contract, breach of good faith and fair dealing and specific performance. TOUSA Homes also seeks payment of the Phase Two Deposit for $2,025,000. The LLV Action was originally filed in the U.S. District Court for the District of Nevada. TOUSA Homes has sought and obtained an order from the Bankruptcy Court lifting the automatic stay, to allow it to enter into a stipulation for the removal of the state court litigation and mediation. LLV has filed an amended complaint with the United States Bankruptcy Court for the District of Nevada. 2. The Las Vegas Paving Corp. Action Las Vegas Paving Corp. also commenced an action against TOUSA Homes, non-debtors Woodside Provence, LLC, CW Capital Fund One, LLC, on January 16, 2008, in the U.S. District Court for Clark County, Nevada. In the State Court Action, Las Vegas Paving seeks payment of $1,283,773 under the Construction Agreement, asserting claims against the TOUSA Defendants for breach of contract and unjust enrichment, and seeks to foreclose on an asserted mechanic's lien. In turn, TOUSA Homes filed a cross-complaint alleging claims against LLV, including a claim for $7,558,603 owed to TOUSA Homes for the construction work. TOUSA Homes asserts that an expeditious resolution of the State Court Actions is in its best interest as a prompt resolution of the Action will afford all parties clarity and will ultimately provide a direct benefit to its estate. TOUSA Homes notes that once the automatic stay is lifted with respect to the State Court Actions, the Actions can proceed as either: (i) LLV may seek authority to remove the State Court Action to the Nevada Bankruptcy Court; (ii) parties to the State Court Action may decide to enter into mediation in order to resolve the State Court Action; or (iii) LLV may seek to lift the automatic stay so that the parties may litigate the State Court Action and proceed to judgment. The Debtors maintain that the swift resolution of the State Court Actions is the most efficient means by which to liquidate a potential asset of TOUSA Homes' estate and obtain a potentially favorable judgment with respect to TOUSA Homes' third-party complaint against LLV. About TOUSA Inc. Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and markets high-quality detached single-family residences, town homes, and condominiums to a diverse group of homebuyers, such as "first-time" homebuyers, "move-up" homebuyers, homebuyers who are relocating to a new city or state, buyers of second or vacation homes, active-adult homebuyers, and homebuyers with grown children who want a smaller home. It also provides financial services to its homebuyers and to others through its subsidiaries, Preferred Home Mortgage Company and Universal Land Title Inc. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No. 08-10928). The Debtors have selected M. Natasha Labovitz, Esq., Brian S. Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta, Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger Singerman, to represent them in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst & Young LLP is the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba Eagle Homes, filed for Chapter 11 Protection on July 30, 2008, (Bankr. S.D. Fla. Case No.: 08-20746). It listed assets between $1 million and $10 million, and debts between $1 million and $10 million. The Official Committee of Unsecured Creditors hired Patricia A. Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets of $1,734,422,756 and total liabilities of $2,300,053,979. Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) TOUSA INC: Gets Go-Signal to Enter Into Cambria Marketing Deal -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida permitted TOUSA Homes, Inc., to enter into a Cambria Marketing Agreement with Everest Lot Opportunity Fund - Savannah, L.L.C. TOUSA Homes and Everest entered into a prepetition option agreement in which Everest granted to TOUSA Homes the option to purchase lots in connection with the development of Everest's property in North Las Vegas, Nevada. The Nevada Property was to be divided into 85 separate lots. TOUSA Homes and Everest also entered into a Construction Agreement, wherein TOUSA Homes would construct specified improvements and perform specified work on the Nevada Property. Under the Construction Agreement, Everest is required to reimburse TOUSA Homes for construction costs according to a specified schedule. TOUSA Homes acquired 57 of the 85 total lots. After TOUSA Homes' failure to acquire the remaining 28 lots under the Option Agreement, Everest terminated the Option Agreement. TOUSA Homes subsequently acquired three model home lots on the Nevada Property owned by GMAC Model Home Finance, bringing the lots it owned to 60 lots. TOUSA Homes has sold 51 of the TOUSA Lots to third party purchasers. Nine lots remain with TOUSA Homes. Only 25 other lots owned by Everest remain unsold on the Nevada Property. TOUSA Homes has completed certain construction work and as of January 13, 2009, has submitted invoices, totaling $338,488, to Everest for payment under the Construction Agreement. To resolve payment of the Unfunded Construction Payments and to potentially facilitate the sale of all remaining lots on the Nevada Property, including the TOUSA Lots, TOUSA Homes and Everest entered into the Marketing Agreement. The Marketing Agreement contemplates that TOUSA Homes will market and ultimately construct and sell homes to third parties on the Everest Lots. In connection with third-party purchases, Everest will convey the Everest Lots to TOUSA Homes in exchange for a share of the sale price. Everest has acknowledged and agreed that Unfunded Construction Payments are due and owing, and will be paid over time pursuant to the Marketing Agreement. The salient terms of the Marketing Agreement are: (a) TOUSA Homes will market homes to be constructed on the Everest Lots, at its own expense, until all of the Everest Lots have been conveyed to TOUSA Homes for sale to third parties. The marketing and sale will occur before the marketing and selling of the remaining TOUSA Lots. (b) TOUSA Homes, upon receipt of an offer from a third party, will deliver to Everest (i) a copy of the offer or proposed purchase agreement; and (ii) a preliminary revenue analysis based on the plan of the home to be built, the estimated net revenue from the sale and the estimated lot value on the estimated net revenue. In the event Everest fails to approve or disapprove the Offer within three days, Everest will be deemed to have disapproved the Offer and TOUSA Homes will reject the Offer. If the preliminary revenue analysis reflects estimated net revenue at or above the minimum net revenue for the particular plan of the home to be constructed, then Everest will not be allowed to disapprove the Offer and will be deemed approved pursuant to the Marketing Agreement. (c) In the event Everest approves or is deemed to have approved an Offer, TOUSA Homes will accept the Offer within three days so that the Offer becomes a binding agreement between TOUSA Homes and third-party purchaser for the purchase and sale of a home by TOUSA Homes on a particular Everest Lot. TOUSA Homes, however, will first acquire the applicable lot from Everest or else the third party will have no rights or claims with respect to Everest or the applicable Everest Lot. (d) In the event Everest disapproves an Offer, TOUSA Homes will be entitled to sell a home on any remaining TOUSA Lot to a third-party purchaser without any obligation whatsoever to offer a home to a third-party purchaser on another Everest Lot. TOUSA Homes, in its discretion, may sell a home to a third-party purchaser on another Everest Lot. (e) With the conveyance to TOUSA Homes, TOUSA Homes will (i) deliver to an escrow company for recordation immediately after a deed against Everest, a deed securing TOUSA Homes' obligations with respect to payment of certain amounts payable, and (ii) cause a title insurance company to issue to Everest a CLTA standard coverage lender's policy of title insurance insuring the first priority lien position of the deed of trust on the Everest Lot. (f) From each third-party closing for a home on a Everest Lot, Everest will receive: (i) the actual lot value for the particular lot sold less a pro-rata share of the Unfunded Construction Payments; and (ii) an amount equal to 25% of the excess of actual net revenue over a minimum net revenue, if any, for the applicable home purchased. In no event will Everest have any obligation to pay any portion of the Pro-Rata Share to the extent exceeding the Lot Value. For each Everest Lot, the Pro-Rata Share is $14,539 based on the entire amount of the Unfunded Construction Payments divided by the 25 total Everest Lots. From each third-party closing for a home on an Everest Lot, TOUSA Homes will receive: (i) the Pro-Rata Share; (ii) an amount equal to 75% of the excess of actual net revenue over the specified minimum net revenue, if any, for the particular home purchased; and (iii) all other sales proceeds from the third-party closing not distributable to Everest. The Debtors point out that under the Marketing Agreement, TOUSA Homes will be able to market and sell the Everest Lots on a deeply discounted basis and collect the Unfunded Construction Payment over time, as well as potentially receive excess profits in connection with the sale and finished construction of homes on the Everest Lots. TOUSA Homes' ability to market and sell the Everest Lots will also better enable TOUSA Homes to sell the remaining TOUSA Lots and complete construction on the Nevada Property, the Debtors add. With TOUSA Homes' being solely responsible for marketing efforts of the remaining lots on the Nevada Property, TOUSA Homes will have sufficient control to complete the project and recognize revenues, the Debtors aver. About TOUSA Inc. Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and markets high-quality detached single-family residences, town homes, and condominiums to a diverse group of homebuyers, such as "first-time" homebuyers, "move-up" homebuyers, homebuyers who are relocating to a new city or state, buyers of second or vacation homes, active-adult homebuyers, and homebuyers with grown children who want a smaller home. It also provides financial services to its homebuyers and to others through its subsidiaries, Preferred Home Mortgage Company and Universal Land Title Inc. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No. 08-10928). The Debtors have selected M. Natasha Labovitz, Esq., Brian S. Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta, Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger Singerman, to represent them in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst & Young LLP is the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba Eagle Homes, filed for Chapter 11 Protection on July 30, 2008, (Bankr. S.D. Fla. Case No.: 08-20746). It listed assets between $1 million and $10 million, and debts between $1 million and $10 million. The Official Committee of Unsecured Creditors hired Patricia A. Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets of $1,734,422,756 and total liabilities of $2,300,053,979. Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) TRIBUNE CO: Court Approves Severance Arrangements ------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Tribune Co. and its debtor-affiliates to implement a non-union severance policy and comply with the union severance arrangements. Pre-bankruptcy, the Debtors performed an in-depth analysis of their financial performance to identify areas of improvement. The Debtors have implemented and continue to implement aggressive strategic initiatives to enhance operating cash flow and mitigate the impact of the severe economic downturn. The Debtors have made substantial reductions in their workforce in the past 18 months and believe to consider further workforce reductions if current economic conditions persist. Under the present circumstances, the Debtors believe it would be beneficial to establish a single non-union severance policy for all non- union employees. The Debtors also sought the Court's authority to continue their performance of the Union Severance Arrangements to the extent that some of the performance may constitute payment of prepetition claims because some of the prepetition Collective Bargaining Agreements quantify the amount of severance pay based on the Union Employee's years of services. Under the non-union severance policy, a Non-Union Employee, whose employment is terminated by the Debtors without cause, is eligible to receive a minimum of two weeks base pay for the first year of service and a maximum of additional week of base pay for every completed 12 months of service thereafter. Severance Pay may be paid in the form of salary continuation or a lump sum payment. If Severance Pay is made in the form of salary continuation, certain benefits will continue at active employee rates for the length of the severance period at the discretion of the Debtors' applicable business unit. However, if the Severance Pay is in the form of a lump sum payment, benefits will not continue -- other than health benefits in connection with COBRA at the former Employee's expense. Subject to the terms of applicable sales, commission or incentive plans, Severance Pay provided to certain Non-Union Employees who are terminated may include monthly or quarterly sales bonuses or commissions if viewed as part of the Union Employee's salary. As a condition of receiving any payments, an employee must execute an agreement containing a waiver and general release of claims against the Debtors, their affiliates, and employees. The Non-Union Severance Policy is within the range of severance benefits provided by comparable companies in the applicable industries and believe that providing those benefits is an important means of decreasing employee attribution and increasing employee morale, the Debtors' proposed counsel, Kate J. Stickles, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., in Wilmington, Delaware, tells the Court. Severance under CBAs The Debtors' Union Employees are represented by 26 local union bargaining units. Prior to the Petition Date, the Debtors made payments in accordance with certain collective bargaining agreements. Union Employees are generally eligible to receive approximately one week of Union Severance Pay per year of service under a majority of the applicable CBAs, though a few of the CBAs provide for more Union Severance Pay and some CBAs have no provisions for Union Severance Pay at all. The Debtors seek to make severance payments to Union Employees in compliance with the CBAs that contain express provision providing payments. With regard to those CBAs that are silent, the Debtors will comply with the bargaining obligations under the National Labor Relations Act, over the effects of a layoff or a reduction in force, which may include the negotiation of severance pay, Ms. Stickles states. The Debtors believe that failure to perform the terms of the CBAs pertaining to Union Severance Pay would cause unrest and strain relationships with Union Employees. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Company -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08-13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Court OKs Non-Insider Incentive Programs ---------------------------------------------------- According to Bloomberg's Bill Rochelle, the U.S. Bankruptcy Court for the District of Delaware has approve Tribune Co.'s request to honor prepetition obligations to non-insider employee participants under the Debtors' local and departmental incentive bonus programs. Mr. Rochelle said that Tribune won the right to pay as much as $8.8 million in performance bonuses covering work before filing for reorganization on Dec. 8. Tribune and its affiliates currently employ 13,940 full-time and 2,450 part-time employees. In addition to wage and commission- based compensation, consistent with their historical practices, the Debtors offer a substantial percentage of their employees the opportunity to earn additional compensation through various incentive bonus programs that are designed and administered through the local business units and individual administrative departments. The Debtors said that the incentive bonus programs are designed to reward employees for outstanding achievements based upon specific metrics that are relevant to their employees' local or department line of work. The Debtors proposed to pay $2,551 per participating employee. The Incentive Programs provide incentive bonuses to about 3,000 participating employees. The Debtors note that the Incentive Programs are generally divisible into three categories based on operating segment -- publishing, broadcast and entertainment, and administration. In the aggregate, there are 63 business units participating in the Incentive Programs, which generally correspond to the Debtors' eight newspapers, 24 television and radio broadcast stations, and various administrative departments. To continue to incentivize the participating employees, the Debtors believe it is essential that they be permitted to honor prepetition amounts due to the Participating Employees under the Incentive Programs. The Debtors currently estimate that about $7,600,000 in unpaid incentive bonuses was accrued and owing under the Incentive Programs. However, the Debtors seek to pay up to $8,800,000 due to the fact that the payouts under most of the Incentive Programs are based on year-end, quarter-end or month-end performance. The Debtors' Incentive Programs are: A. Publishing Segment Incentive Programs * Advertising Sales Incentive Programs * Circulation Sales Incentive Programs * Operation Department Incentive Programs * Other Miscellaneous Incentive Programs B. Broadcasting and Entertainment Segment Incentive Programs * Advertising Sales Incentive Programs * Ratings-Related Incentive Programs * Operational and Other Incentive Programs C. Administration Incentive Programs * Corporate Relations * Finance Service Center * Human Resources * Technology * Tax and Audit * Other Departments About Tribune Co. Headquartered in Chicago, Illinois, Tribune Company -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08-13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENTERTAINMENT: Conservator Delays Sale of Casino ---------------------------------------------------------- The state court conservator operating the Atlantic City, New Jersey, casino owned by Tropicana Entertainment LLC asked state regulators for a three-month extension of the deadline for selling the casino. According to a report by The Associated Press, The New Jersey Casino Control Commission earlier granted Tropicana Atlantic City's conservator, retired New Jersey Supreme Court Justice Gary S. Stein's request for an extension of his deadline to sell the casino to February 4, 2009. That was the fifth time the commission has granted an extension. However, Cordish Company, the designated leading bidder for Tropicana Atlantic City, missed the deadline to reach an agreement to purchase the casino, pressofAtlanticCity.com reported. Justice Stein, thus, is seeking another extension of the sale of at least three months. He is also seeking permission to sell Tropicana Atlantic City in a bankruptcy auction without a minimum bid from a stalking horse if no agreement is in place with Cordish by February 20, 2009, PAC said. Justice Stein indicated in his petition that "Tropicana's creditors objected to Cordish's proposed purchase price and likely would have tried to block the sale if Cordish continued as the leading bidder." Meanwhile, Justice Stein said that Cordish is "still actively engaged in the talks," according to PAC. "We continue to be very interested and are continuing to work with Justice Stein and the creditors," Cordish Chairman David S. Cordish confirmed in an e-mail, PAC reported. The NJ Commission will decide on the issue during its meeting on February 18, 2009. Justice Stein also stated that he "would file for bankruptcy 'as soon as practical' following that meeting," PAC said. Justice Stein previously disclosed that Cordish has lowered its initial offer of $700,000,000 in cash and notes or $575,000,000 in cash because Tropicana Atlantic City's 2008 cash flow fell below the projections. "It's lower than the public numbers," Associated Press quoted Justice Stein as saying. Gil Brooks, representing Tropicana creditors holding a $1,300,000,000 mortgage on the property, said that Cordish's new offer "has come down too far," stating that "[i]t has become unacceptable for my clients," Associated Press reported. Kris Hansen, counsel for Tropicana unsecured creditors, said that "accepting the reduced offer would be worse than just letting the former owners, Tropicana Entertainment LLC, regain control of the casino," according to Associated Press. The AP also reported that, as the sale draws near, Tropicana is taking steps to "freeze" the pay for employees making $50,000 and above, capping annual wage increases at 2%, and considering laying off more than 100 employees. "We're working our way through a very difficult economic situation and attempting to try to avoid layoffs. . . We're trying to do other things like reduced work weeks and altering schedules to keep people employed so that when the economy does improve, we'll still have them around," Associated Press quoted casino president Mark Giannantonio as saying. 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. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). UNITED REFINING: S&P Puts Negative Outlook on 'B' Rating -------------------------------------------------------- Standard & Poor's Ratings Services said that it took several rating actions on companies in the refining industry following the completion of a sector review. Liquidity concerns and S&P's expectations that industry conditions could remain weak for 2009 and possibly beyond were key factors behind the rating actions. S&P expect margins to remain thin and product demand weak. Rating Actions Sunoco Inc. To BBB/Negative/A-3 From BBB/Stable/A-2 The negative outlook reflects S&P's concerns that refining margins will remain weak in 2009 and possibly well beyond. Furthermore, Sunoco's limited ability to process disadvantaged crudes, its geographic concentration in the highly competitive PADD I region, and its significant near-term regulatory and required capital expenditures place the company at a relative disadvantage. Only partially offsetting these concerns are the company's growing and more stable coke and logistics business units, as well as its moderate debt. Despite the negative outlook on Sunoco, S&P affirmed the 'BBB' rating and kept the stable outlook on the company's partially owned subsidiary, Sunoco Logistics Partners L.P. CITGO Petroleum Corp. To BB/Watch Neg/-- From BB/Negative/-- The CreditWatch placement reflects S&P's concerns about CITGO's tight liquidity. Certain technical restrictions in the company's $450 million account receivable securitization program have significantly restricted availability and usage. The company is seeking approval to amend the facility, which would allow CITGO to considerably enhance its liquidity position. S&P expects the amendment to go through but, given the thin liquidity levels currently, any delay or outcomes contrary to S&P's expectations could leave the company vulnerable to unexpected calls on liquidity. S&P could lower the rating by more than one notch if the amendment is unsuccessful or delayed further than expected. However, if the amendment is approved as proposed, S&P could affirm CITGO's current ratings and outlook. United Refining Co. To B/Negative/-- From B/Stable/-- The outlook revision reflects S&P's expectation of weak financial performance and credit metrics for 2009 and possibly beyond. Interest expense coverage is likely to remain weak at 2x or lower, and adjusted debt leverage could continue to exceed 7x. Adequate liquidity provided primarily by its $130 million credit facility, which was near full availability as of Jan. 12, 2009, supports the ratings. Western Refining Inc. To B+/Negative/-- From B+/Watch Neg/-- The rating action reflects strong results in the second half of 2008 and S&P's expectations for improved first-quarter results versus year-ago levels. Hence, Western should have an adequate covenant cushion as it continues to pursue debt reduction through asset sales. In particular, near-term compliance with its debt leverage covenant, 5x as of March 31 and 4.75x as of June 30, should be achievable. Nevertheless, the negative outlook reflects the potential for a downgrade if Western fails to deleverage, or if the cushion to its Sept. 30 debt leverage covenant of 4.5x becomes thin. Ratings List Outlook Action/Downgraded Sunoco Inc. To From -- ---- Corporate credit rating BBB/Negative/A-3 BBB/Stable/A-2 Outlook Action United Refining Co. To From -- ---- Corporate credit rating B/Negative/-- B/Stable/-- CreditWatch Action CITGO Petroleum Corp. To From -- ---- Corporate credit rating BB/Watch Neg/-- BB/Negative/-- Western Refining Inc. To From -- ---- Corporate credit rating B+/Negative/-- B+/Watch Neg/-- N.B. -- This does not include all ratings affected. VERSANT PROPERTIES: Cary Harrison Accuses Robert Richey of Fraud ---------------------------------------------------------------- Mark Barrett at Citizen-Times.com reports that Cary Harrison, a minority partner in Versant Properties, LLC, has accused majority partner Robert Richey of embezzlement. Citizen-Times.com relates that Versant Properties has been forced into Chapter 11 bankruptcy by its creditors. According to Citizen-Times.com, property and legal records show that millions of dollars have been spent on roads and other infrastructure in Versant Properties, but only three lots have been sold in the development, which covers almost 400 acres at the eastern end of Baird Cove Road. Citing the property and legal records, Citizen-Times.com relates that the developers' unpaid bills totaled $3.8 million. Citizen-Times.com states that the Baird Cove development had been planned to include 168 single-family home sites priced from $200,000 to $1.2 million, and 200 condominiums that would cost $450,000 to $2 million. Travis Moon, an attorney for Mr. Harrison, told the U.S. Bankruptcy Court for the Hon. George R. Hodges of the Western District of North Carolina that Mr. Richey agreed to withdraw from the project and that a Raleigh real estate consultant will be hired to take over, Citizen-Times.com says. Citing Mr. Moon, Citizen-Times.com reports that it hasn't been determined whether attempts to sell lots individually will continue or if the remaining property will be sold as one piece. The way Mr. Richey ran Versant Properties created more problems, Citizen-Times states, citing Mr. Harrison. Charlotte, North Carolina-based Versant Properties, LLC's filed a Chapter 11 bankruptcy petition against the company on Nov. 14, 2008 (Bankr. W.D. N.C. Case No. 08-10930). VERSO TECHNOLOGIES: Plan Filing Period Extended to February 27 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia approved on Feb. 2, 2009, subject to objection by any party in interest filed within 20 days after entry of the order, the extension of Verso Technologies and its affiliated debtors' exclusive periods to: a) file a plan through and including Feb. 27, 2009; and b) solicit acceptances of said plan through and including April 28, 2009. This is the third extension granted to the Debtors. The Debtors told the Court that they have concluded the sales of the various business units and resolved the "call center" adversary proceeding against two former employees, but dueto the complexity of their cases, they require more time to formulate their plan. About Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. (OTC:VRSOQ) -- http://www.verso.com/-- provides telecommunications service in the United States. The company and its affiliates manufacture, deliver, and provide support for hardware, software and service solutions primarily to large wireline, cellular, wireless and satellite carriers. The company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga. Lead Case No. 08-67659). J. Robert Williamson, Esq., at Scroggins and Williamson, James R. Sacca, Esq., and John D. Elrod, Esq., at Greenberg Traurig, LLP represent the Debtors as counsel. The Debtors selected Logan and Company Inc. as their claims agent. Darryl S. Laddin, Esq., and Stephen M. Dorvee, Esq., at Arnall Golden Gregory LLP represent the Official Committee of Unsecured Creditors as counsel. When the Debtors filed for protection from their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. VERSO TECHNOLOGIES: Wants to Sell Certain Patents at Auction Sale ----------------------------------------------------------------- Verso Technologies, Inc., and its debtor-affiliates asks the U.S. Bankruptcy Court for the Northern District of Georgia for authority to sell certain Intellectual Property, free and clear of liens, claims, and encumbrances, to the highest and best bidder at the conclusion of a duly noticed auction sale. The Debtors propose to sell certain United States Patents and Patent Applications, including their foreign counterparts, currently held by Verso Verilink, LLC, all causes of action and enforcement rights related to the patents, and all files, invention disclosrures and original documents related to the Specified Patents and Patent Claims. The Debtors have negotiated and entered into an Asset Purchase Agreement with an initial "stalking horse" bidder for the Intellectual Property, Advent IP LLC. Advent IP has offered to pay $50,000 for the purchase of the Debtors' Intellectual Property, subject to higher and better offers at the Auction Sale. The Debtors have proposed that the auction sale be held on Feb. 13, 2009, at 10:00 a.m. Eastern Time, at the offices of Scroggins & Williamson, 1500 Candler Building, 127 Peachtree Street, N.E. in Atlanta, Georgia. Persons intending to make a competing bid for the Intellectual Property must submit bids in the form of a written asset purchase agreement to the Debtors through: Kelakos Advisors LLC Attn: George Kelakosm Managing Director Two Sound View Drive, Suite 100 Greenwich, CT 06830 Bids must be accompanied by an earnest money deposit in an amount of no less than $5,000, and must also provide proof of financial ability to close on the transaction. Any competitive bid must also conform to the following requirements: (1) provide for a closing date on the sale which is no later than March 2, 2009; (2) contain substantially the same (or more favorable) terms and conditions as those contained in the APA; (3) not contain any due diligence conditions or a financing contingency; (4) proffer a competing bid which is greater than the purchase price contained in the APA by at least $5,000.00; and (5) by its terms, remain open for acceptance through the earlier of the closing of any transaction with a winning bidder or March 9, 2009; About Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. (OTC:VRSOQ) -- http://www.verso.com/-- provides telecommunications service in the United States. The company and its affiliates manufacture, deliver, and provide support for hardware, software and service solutions primarily to large wireline, cellular, wireless and satellite carriers. The company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga. Lead Case No. 08-67659). J. Robert Williamson, Esq., at Scroggins and Williamson, James R. Sacca, Esq., and John D. Elrod, Esq., at Greenberg Traurig, LLP represent the Debtors as counsel. The Debtors selected Logan and Company Inc. as their claims agent. Darryl S. Laddin, Esq., and Stephen M. Dorvee, Esq., at Arnall Golden Gregory LLP represent the Official Committee of Unsecured Creditors as counsel. When the Debtors filed for protection from their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. VERSO TECHNOLOGIES: Wants to Sell Verso's US Patents for $90,000 ---------------------------------------------------------------- Verso Technologies, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Georgia for authority to sell certain Intellectual Property, free and clear of liens, claims, and encumbrances, to the highest and best bidder at the conclusion of a duly noticed auction sale. The Debtors propose to sell certain United States Patents and Patent Applications, including their foreign counterparts, currently held by Verso Technologies, Inc., all causes of action and enforcement rights related to the patents, and all files, invention disclosures and original documents related to the Specified Patents and Patent Claims. The Debtors have negotiated and entered into an Asset Purchase Agreement with an initial "stalking horse" bidder for the Intellectual Property, Advent IP LLC. Advent IP has offered to pay $90,000 for the purchase of the Debtors' Intellectual Property, subject to higher and better offers at the Auction Sale. The Debtors have proposed that the auction sale be held on Feb. 13, 2009, at 10:00 a.m. Eastern Time, at the offices of Scroggins & Williamson, 1500 Candler Building, 127 Peachtree Street, N.E. in Atlanta, Georgia. Persons or entities intending to make a competing bid for the Intellectual Property must submit bids in the form of a written asset purchase agreement to the Debtors through: Kelakos Advisors LLC Attn: George Kelakos, Managing Director Two Sound View Drive, Suite 100 Greenwich, CT 06830 Bids must be received no later than 4:00 p.m. Eastern time on Feb. 11, 2009, together with an earnest money deposit in an amount of no less than $9,000, and must also provide proof of financial ability to close on the transaction. Any competitive bid must also conform to the following requirements: (1) provide for a closing date on the sale which is no later than March 2, 2009; (2) contain substantially the same (or more favorable) terms and conditions as those contained in the APA; (3) not contain any due diligence conditions or a financing contingency; (4) proffer a competing bid which is greater than the purchase price contained in the APA by at least $5,000.00; and (5) by its terms, remain open for acceptance through the earlier of the closing of any transaction with a winning bidder or March 9, 2009. About Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. (OTC:VRSOQ) -- http://www.verso.com/-- provides telecommunications service in the United States. The company and its affiliates manufacture, deliver, and provide support for hardware, software and service solutions primarily to large wireline, cellular, wireless and satellite carriers. The company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga. Lead Case No. 08-67659). J. Robert Williamson, Esq., at Scroggins and Williamson, James R. Sacca, Esq., and John D. Elrod, Esq., at Greenberg Traurig, LLP represent the Debtors as counsel. The Debtors selected Logan and Company Inc. as their claims agent. Darryl S. Laddin, Esq., and Stephen M. Dorvee, Esq., at Arnall Golden Gregory LLP represent the Official Committee of Unsecured Creditors as counsel. When the Debtors filed for protection from their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. WACHOVIA AUTO: Fitch Affirms 'BB-' Rating on Class E Notes ---------------------------------------------------------- Fitch Ratings has affirmed Wachovia Auto Loan Owner Trust 2008-1 asset-backed notes: -- Class A-2a at 'AAA'; Outlook Stable; -- Class A-2b at 'AAA'; Outlook Stable; -- Class A-3 at 'AAA'; Outlook Stable; -- Class A-4 at 'AAA'; Outlook Negative; -- Class B at 'AA'; Outlook Negative; -- Class C at 'A'; Outlook Negative; -- Class D at 'BBB-'; Outlook Negative; -- Class E at 'BB-'; Outlook Negative. Current loss performance is worse than originally expected and the future, projected performance for the transactions has been revised accordingly. Through month 11 (the December collection period for both transactions), 2008-1 had total delinquencies of 4.45% and cumulative net losses were at 2.44%. Fitch has noted that the delinquency and CNL performance of both transactions have continued to exhibit weaker trends in recent months. Despite higher than expected CNL and delinquencies, the cash flows available to service the outstanding debt in the transactions currently continues to allow credit enhancement to build on a nominal basis for both transactions. Fitch analyzed the transactions incorporating stresses of the revised base case CNL assumptions, the timing of the remaining losses and various prepayment assumptions. Based on the analysis, Fitch concluded that CE is currently adequate to support the existing ratings under Fitch's revised assumptions and therefore affirms all classes outstanding notes. WATERFORD GAMING: Moody's Reviews 'Caa1' Rating for Likely Cut -------------------------------------------------------------- Moody's Investors Service placed the corporate family rating, probability of default rating and senior unsecured notes rating of Waterford Gaming LLC and its wholly-owned subsidiary and co- issuer, Waterford Gaming Finance Corp., under review for possible downgrade. The action follows the downgrade and placement on review for possible further downgrade of Mohegan Tribal Gaming Authority's ratings. The downgrade and review of MTGA's ratings were in response to the substantial drop in MTGA's fiscal 2009 first quarter EBITDA and renewed leverage, liquidity and covenant concerns. Waterford's only material source of cash flows to service its debt obligations consists of the cash distributions made by Trading Cove Associates, a 50%-owned general partnership, which earns a 5% relinquishment fee based on certain gross revenues of MTGA's Mohegan Sun casino. Beyond the Mohegan Sun casino's revenue generation, Moody's further considers MTGA's overall credit profile in the assessment of Waterford's ratings. MTGA has the ability to block all or part of the relinquishment payments to TCA in the event of a payment or non-payment default on MTGA's senior secured or senior unsecured debt. During Moody's review process and in parallel with the analysis conducted for MTGA, Moody's will assess the risk that the amount or the timing of the relinquishment payments can be negatively affected in the near to intermediate term by MTGA's weakening credit profile. These ratings were placed under review for possible downgrade: -- Corporate family rating at Caa1 -- Probability of default rating at B3 -- Senior unsecured notes rating at Caa1 The last rating action was on November 19, 2008, when Moody's lowered Waterford's CFR to Caa1 from B1. Waterford is a special purpose company formed solely for the purpose of holding its 50% partnership interest, as a general partner, in TCA, a Connecticut general partnership and the manager (until January 1, 2000) and developer of the Mohegan Sun casino located in Uncasville, Connecticut. The Mohegan Sun casino is owned and operated by the Mohegan Tribal Gaming Authority. WATERFORD GAMING: S&P Downgrades Issuer Credit Rating to 'B' ------------------------------------------------------------ Standard & Poor's Ratings Services said that it lowered its ratings on Waterford Gaming LLC. S&P lowered the issuer credit rating to 'B' from 'BB-', and also placed the ratings on CreditWatch with negative implications. The downgrade and CreditWatch placement stem from a similar action on Jan. 30, 2009 on Mohegan Tribal Gaming Authority (MTGA; B/Watch Neg/--). Waterford relies solely on distributions from MTGA, which are linked to certain gross revenues at Mohegan Sun (excluding those from Casino of the Wind) to service its debt obligation. As a result, its default risk and therefore, the issuer credit rating, are directly linked to the default risk and issuer rating of MTGA. The issuer rating on Waterford would never be higher than that on MTGA. "The CreditWatch listing reflects the link between Waterford and MTGA," said Standard & Poor's credit analyst Melissa Long. "We will resolve the CreditWatch listing on Waterford at the same time S&P resolve the CreditWatch listing on MTGA," she continued. WAVERLY GARDENS: Wants Plan Filing Period Extended to April 30 -------------------------------------------------------------- Waverly Gardens of Memphis, LLC and Kirby Oaks Integra, LLC, dba Waverly Glen, asks the U.S. Bankruptcy Court for the Western District of Tennessee to extend their exclusive period to file a plan through and including April 30, 2009, and their exclusive period to solicit acceptances of said plan through and including June 29, 2009. The current exclusivity period for filing a plan expired on Jan. 30, 2009. The Debtors say that they need additional time to formulate their disclosure statement and plan of reorganization. A consensual resolution of its motion involving the valuation of the collateral of First Tennessee Bank which is important in determining its plan treatment under any plan still has not yet been attained. In addition, the Debtors have not yet decided on whether to seek substantive consolidation of their two cases for purposes of filing and voting on a plan. About Waverly Garden Memphis, Tennessee-based Waverly Gardens of Memphis, LLC -- http://www.waverlygardens.com/-- owns and operates an independent living facility comprised of 19 interconnected single story modular structures on an 11.5 acre site. Kirby Oaks Integra, LLC, dba. Waverly Glen, owns and operates a 52 unit assisted living facility, with Alzeheimer's unit. The Debtors filed separate petitions for Chapter 11 relief on Oct. 2, 2008 (Bankr. W.D. Tenn. Lead Case No. 08-30218). Michael P. Coury, Esq., at Farris Bobango Branan PLC, represents the Debtors as counsel. When Waverly Gardens filed for protection from its creditors, it listed assets of between $10 million to $50 million, and debts of $1 million to $10 million. When Waverly Glen filed for protection from its creditors, it listed assets and debts of between $1 million and $10 million each. WESTERN REFINING: S&P Puts Negative Outlook on 'B+' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it took several rating actions on companies in the refining industry following the completion of a sector review. Liquidity concerns and S&P's expectations that industry conditions could remain weak for 2009 and possibly beyond were key factors behind the rating actions. S&P expect margins to remain thin and product demand weak. Rating Actions Sunoco Inc. To BBB/Negative/A-3 From BBB/Stable/A-2 The negative outlook reflects S&P's concerns that refining margins will remain weak in 2009 and possibly well beyond. Furthermore, Sunoco's limited ability to process disadvantaged crudes, its geographic concentration in the highly competitive PADD I region, and its significant near-term regulatory and required capital expenditures place the company at a relative disadvantage. Only partially offsetting these concerns are the company's growing and more stable coke and logistics business units, as well as its moderate debt. Despite the negative outlook on Sunoco, S&P affirmed the 'BBB' rating and kept the stable outlook on the company's partially owned subsidiary, Sunoco Logistics Partners L.P. CITGO Petroleum Corp. To BB/Watch Neg/-- From BB/Negative/-- The CreditWatch placement reflects S&P's concerns about CITGO's tight liquidity. Certain technical restrictions in the company's $450 million account receivable securitization program have significantly restricted availability and usage. The company is seeking approval to amend the facility, which would allow CITGO to considerably enhance its liquidity position. S&P expects the amendment to go through but, given the thin liquidity levels currently, any delay or outcomes contrary to S&P's expectations could leave the company vulnerable to unexpected calls on liquidity. S&P could lower the rating by more than one notch if the amendment is unsuccessful or delayed further than expected. However, if the amendment is approved as proposed, S&P could affirm CITGO's current ratings and outlook. United Refining Co. To B/Negative/-- From B/Stable/-- The outlook revision reflects S&P's expectation of weak financial performance and credit metrics for 2009 and possibly beyond. Interest expense coverage is likely to remain weak at 2x or lower, and adjusted debt leverage could continue to exceed 7x. Adequate liquidity provided primarily by its $130 million credit facility, which was near full availability as of Jan. 12, 2009, supports the ratings. Western Refining Inc. To B+/Negative/-- From B+/Watch Neg/-- The rating action reflects strong results in the second half of 2008 and S&P's expectations for improved first-quarter results versus year-ago levels. Hence, Western should have an adequate covenant cushion as it continues to pursue debt reduction through asset sales. In particular, near-term compliance with its debt leverage covenant, 5x as of March 31 and 4.75x as of June 30, should be achievable. Nevertheless, the negative outlook reflects the potential for a downgrade if Western fails to deleverage, or if the cushion to its Sept. 30 debt leverage covenant of 4.5x becomes thin. Ratings List Outlook Action/Downgraded Sunoco Inc. To From -- ---- Corporate credit rating BBB/Negative/A-3 BBB/Stable/A-2 Outlook Action United Refining Co. To From -- ---- Corporate credit rating B/Negative/-- B/Stable/-- CreditWatch Action CITGO Petroleum Corp. To From -- ---- Corporate credit rating BB/Watch Neg/-- BB/Negative/-- Western Refining Inc. To From -- ---- Corporate credit rating B+/Negative/-- B+/Watch Neg/-- N.B. -- This does not include all ratings affected. WHITEHALL JEWELERS: Plan Filing Period Extended to April 20 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended on Jan. 14, 2009, Whitehall Jewelers Holdings, Inc., and Whitehall Jewelers, Inc.'s exclusive periods to: a) file a plan through and including April 20, 2009; and b) solicit acceptances with respect to plan, through and including June 22, 2009. This is the Debtors' second extension of their exclusive periods to file and solicit votes on a Chapter 11 plan. In its motion, the Debtors told the court that they will use the requested extension to complete the wind down of their estates in an orderly and efficient manner without the distraction, delay and costs associated with competing plans. Headquartered in Chicago, Illinois, Whitehall Jewelers Holdings, Inc. -- http://www.whitehalljewellers.com/-- through its subsidiary, Whitehall Jewelers, Inc., operates as a specialty retailer of fine jewelry in the United States. It offers a selection of merchandise, including diamonds, gold, precious and semi-precious jewelry, and watches. As of June 23, 2008, it operated 373 stores in regional and super-regional shopping malls under the names Whitehall and Lundstrom. The company and Whitehall Jewelers, Inc., filed for Chapter 11 relief on June 23, 2008 (Bankr. D. Del. Lead Case No. 08-11261). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang Ziehl & Jones, LLP; Scott Rutsky, Esq., Peter Antoszyk, Esq., Adam T. Berkowitz, Esq., and Jesse I. Redlener, Esq., at Proskauer Rose LLP, represent the Debtors in their restructuring efforts. Epiq Bankruptcy Solutions LLC is their claims, noticing and balloting agent. In its schedules, Whitehall Jewelers, Inc. listed total assets of $246,571,775 and total debts of $173,694,918. WHITEHALL JEWELERS: Wants to Sell Unclaimed Jewelry Repairs ----------------------------------------------------------- Whitehall Jewelers Holdings, Inc., and Whitehall Jewelers, Inc., ask the U.S. Bankruptcy Court for the District of Delaware for authority to sell almost 10,963 pieces of unclaimed jewelry submitted for repair at the Debtor's various retail locations by liquidation, melt, auction or any other appropriate means. In some cases, the jewelry repairs have been unclaimed for more than ten (10) years. The unclaimed jewelry consist of rings, bracelets, watches, necklaces and other assorted jewelry items. The Debtors estimate that the average value per piece of jewelry at cost is approximately $100, and thus the total estimated value of the unclaimed repairs is approximately $1.1 million at cost. The Debtors tell the Court that the request to liquidate the unclaimed repairs reduces the Debtors' costs and provides another source of recovery for creditors. The Debtors further ask the Court that, to the extent restrictions on selling unclaimed jewelry exist under applicable state escheat or abandoned property law, to permit the Debtors to proceed under Sections 105(a) and 363(b) of the Bankruptcy Code to liquidate the unclaimed repairs and distribute the proceeds to creditors pursuant to a plan of liquidation or further order of the Court without any interference from the States. Headquartered in Chicago, Illinois, Whitehall Jewelers Holdings, Inc. -- http://www.whitehalljewellers.com/-- through its subsidiary, Whitehall Jewelers, Inc., operates as a specialty retailer of fine jewelry in the United States. It offers a selection of merchandise, including diamonds, gold, precious and semi-precious jewelry, and watches. As of June 23, 2008, it operated 373 stores in regional and super-regional shopping malls under the names Whitehall and Lundstrom. The company and Whitehall Jewelers, Inc., filed for Chapter 11 relief on June 23, 2008 (Bankr. D. Del. Lead Case No. 08-11261). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang Ziehl & Jones, LLP; Scott Rutsky, Esq., Peter Antoszyk, Esq., Adam T. Berkowitz, Esq., and Jesse I. Redlener, Esq., at Proskauer Rose LLP, represent the Debtors in their restructuring efforts. Epiq Bankruptcy Solutions LLC is their claims, noticing and balloting agent. In its schedules, Whitehall Jewelers, Inc. listed total assets of $246,571,775 and total debts of $173,694,918. WORLDSPACE INC: Asks Court's Nod to Sell Substantially All Assets ----------------------------------------------------------------- WorldSpace, Inc., and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of Delaware to approve (i) the sale of all or substantially of the assets of WorldSpace, Inc., and and its debtor and non-debtor affiliates related to their satellite radio business to the highest and best bidder at an open auction on Jan. 26, 2009, as rescheduled, and (ii) the assumption and assignment of certain executory contracts and unexpired leases in connection with the sale. There is no stalking horse bidder for the Acquired Assets. The sale of the Acquired Assets must be completed with one or more successful bidders to avoid a default under the DIP Credit Agreement. As reported in the Troubled Company Reporter on Nov. 17, 2008, the Court authorized the Debtors to obtain up to $13 million in postpetition financing from a syndicate of financial institutions including Citadel Energy Holdings LLC, Highbridge International LLC, OZ Master Fund Ltd., and AG Offshore Convertibles Ltd. under a secured superpriority priming debtor-in-possession facility agreement dated Nov. 5, 2008, as amended. The DIP Credit Agreement provides for an amended maturity date of Jan. 29, 2009. The sale hearing was supposed to take place on Jan. 29, 2009. There is no report if tbids were actually submitted during the auction. About WorldSpace WorldSpace, Inc. (WSI) -- http://www.1worldspace.com/-- and its debtor- and non-debtor affiliates provide satellite-based radio and data broadcasting services to paying subscribers in ten countries throughout Europe, India, the Middle East, and Africa. The Debtors and their affiliates operate two geostationary satellites, AfriStar and Asia Star, which are in orbit over Africa and Asia. The Debtor and two of its affiliates filed for Chapter 11 bankruptcy protection on Oct. 17, 2008 (Bankr. D. Del., Case No. 08-12412 - 08-12414). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors as counsel. The U.S. Trustee for Region 3 appointed creditors to serve on an Official Committee of Unsecured Creditors. Neil Raymond Lapinski, Esq., and Rafael Xavier Zahralddin-Aravena, Esq., at Elliot Greenleaf represent the Committee as counsel. When the Debtors filed for bankruptcy, they listed total assets of $307,382,000 and total debts of $2,122,904,000. XENOMICS INC: Extends Maturity of Convertible Debentures -------------------------------------------------------- Xenomics, Inc., said it is re-structuring its 6% Convertible Debentures issued in November 2006. The Company has been seeking to restructure the debt owed to holders of the Debentures, amounting to $2,170,500 in principal originally due in November 2008, plus interest and penalties, following various events of default and covenant breaches. Effective January 30, 2009, the Company entered into a Forbearance Agreement with its Debenture holders which provides for a waiver of existing defaults and an extension of the Debenture's maturity date to December 31, 2010. The Company agreed to pay all accrued interest and potential default penalties and late fees in shares of common stock of the Company, aggregating 5,337,474 shares, and to increase the interest rate on the Debentures from 6% to 11%, which will also be payable in common stock. In addition, the Company agreed to add to its Board of Directors two new qualified board members to be proposed by certain holders of a majority of the Debentures. The Company looks forward to proceeding with development of its molecular diagnostic technology and working toward becoming current with its SEC filings. Despite a very challenging economic environment, the Company strongly believes that there is a need for its products and that the molecular diagnostic sector will continue to grow rapidly. About Xenomics Xenomics, Inc. (Pink Sheets: XNOM) -- http://www.xenomics.com/-- is a molecular diagnostics company developing tests based on Transrenal nucleic acids (Tr-DNA and Tr-RNA including miRNA) and safe, simple urine collection techniques. The Company believes its proprietary technology has a broad range of detection/monitoring/screening applications, including prenatal conditions, infectious diseases, tissue transplantation, neurodegenerative disorders, various tumors, and can open significant new markets in the molecular diagnostics field. Currently, Xenomics is focusing on implementation of its urinary DNA-based test for high-risk Human Papilloma Virus (HPV) and development of other tests based on Tr-DNA and Tr-miRNA. Xenomics has a strong and broad IP portfolio of issued and pending patents covering different applications of the technology for molecular diagnostics. YRC WORLDWIDE: Introduces YRC Brand Name for Integrated Network --------------------------------------------------------------- YRC Worldwide Inc. disclosed on January 23, that YRC is the new brand name for the combined Yellow Transportation and Roadway network. The company also confirmed that YRC is ahead of schedule to successfully integrate its national networks by early spring. "With more than 160 combined years of moving big shipments and 38,000 transportation professionals, YRC represents the most collective expertise in the industry," said Bill Zollars, chairman, president and CEO of YRC Worldwide. "More customers rely on YRC for large shipments than any other provider, and one integrated network allows for even greater coverage and shipment density. By integrating Roadway and Yellow, we gain efficiencies and capabilities that position us to support our customers now and as the economy improves." New Brand Name and Visual Identity for Yellow and Roadway "Back in the 1920s and '30s, Yellow and Roadway established themselves as innovators, the companies that led the developing transportation industry," said Greg Reid, executive vice president and chief marketing officer for YRC Worldwide. "Today, that reputation for innovative excellence and heavyweight expertise carries forward with the new brand name. YRC expresses the combined strength of Yellow and Roadway, and represents our integration of networks, services and capabilities." "The visual identity for YRC features the highly recognized and trusted orange of Yellow and blue of Roadway," said Mr. Reid. "Customers will still see the familiar Roadway and Yellow marks as we transition branding elements, but they'll soon be able to identify with YRC through customer service, sales and other interactions." Mr. Reid says a new customer Web site will debut soon. Roadway.com and My.Roadway.com customers will automatically be directed to yrc.com in early February, and MyYellow customers will be directed to the site beginning in March. The YRC logo can be downloaded at: http://www.yrcw.com/about/gallery/logos.html. Integration Progress Since October 2008, around 80 shared service centers have been opened to manage the combined YRC network; these serve as a single interface for Roadway and Yellow customers. Upon completion, the combined network will boast around 450 YRC service centers -- nearly 100 more service centers than the individual Roadway and Yellow networks. In major metropolitan areas around the country, the nearest YRC facility will be 20 percent closer to customers, enabling quicker pick-ups and deliveries, increased flexibility and reduced emissions. As a part of the integration process, YRC also has added more than 21,000 new direct service points. The result is the ability to serve more communities and provide customers with improved transit times and additional access to services. "Our customers are reacting very positively to the integration," said Mr. Zollars. "We're delivering and will continue to deliver on our promise to provide them with simple, flexible shipping solutions, prompt pick-ups and greater service quality." About YRC Worldwide Inc. Headquartered in Overland Park, Kansas, YRC Worldwide Inc. -- http://www.yrcw.com/-- a Fortune 500 company and one of the largest transportation service providers in the world, is the holding company for a portfolio of brands including Yellow Transportation, Roadway, Reimer Express, YRC Logistics, New Penn, USF Holland, USF Reddaway, and USF Glen Moore. The enterprise provides global transportation services, transportation management solutions and logistics management. The portfolio of brands represents a comprehensive array of services for the shipment of industrial, commercial and retail goods domestically and internationally. YRC Worldwide employs approximately 58,000 people. * * * As reported in the Troubled Company Reporter on Jan. 9, 2009, Standard & Poor's Ratings Services revised the implications of its CreditWatch review of YRC Worldwide Inc. (CC/Watch Dev/--) to developing from negative. The revision follows news of the Overland Park, Kansas-based trucking company's terminated debt tender offer and negotiations with its bank group to modify terms on its revolving credit and asset backed securitization facilities. On January 13, the TCR said Fitch Ratings downgraded the Issuer Default Ratings and debt ratings of YRC (IDR to 'CCC' from 'B'; Secured credit facilities to 'B/RR1' from 'BB/RR1'; and Senior unsecured to 'C/RR6' from 'CCC+/RR6') and its subsidiary, YRC Regional Transportation, Inc. (IDR to 'CCC' from 'B'; and Senior secured notes to 'C/RR6' from 'CCC+/RR6'.) On February 2, the TCR reported that YRC Worldwide Inc. closed the first part of the sale and financing leaseback transaction from a contract with NATMI Truck Terminals, LLC entered on December 19, 2008. The company received approximately $101 million of proceeds and expects to receive approximately $50 million more in the second closing. In the company's waivers filed with the SEC on January 22, 2009, it stated that it now has the ability to use the proceeds from this transaction for operating purposes, which is the company's current intention. The company will account for the proceeds as a financing transaction, therefore, the assets remain on the books and a lease obligation will be recorded as long-term debt. The company will recognize the lease payments through interest expense with no impact to depreciation expense. As reported by the TCR on January 19, 2009, YRC obtained waivers under its credit facilities. The company previously announced discussions with its banking group to modify certain terms of its credit facilities, including changes to its leverage ratio, in addition to early renewal of its asset-backed securitization facility. The company's banking group provided waivers for the credit facilities until mid-February 2009 to allow sufficient time to amend the facilities and renew the ABS without a delay in reporting the company's 2008 results scheduled for after market on January 29, 2009. Given that YRC canceled its tender offer in late December and retained the $250 million of cash drawn on the revolver in October 2008, the company expects its total debt to exceed 3.5 times (a limit established in its credit facilities) its trailing 12 months earnings before interest, taxes, depreciation and amortization as of December 31, 2008. YRC WORLDWIDE: Posts $974,392,000 Net Loss for Year Ended Dec. 31 ----------------------------------------------------------------- YRC Worldwide Inc. reported a loss per share for the fourth quarter 2008 of $1.63, excluding impairment charges of $2.51 per share, and for the full year 2008 a loss per share of $1.22, excluding impairment charges of $15.70 per share. When including impairment, the fourth quarter loss was $4.14 per share compared to a loss of $12.99 per share in the fourth quarter of last year and a full year loss of $16.92 per share compared to a full year loss of $11.17 per share in 2007. The fourth quarter impairment charge consisted of $141 million related to the Roadway trade name as the company introduced a new YRC brand for the integrated network of Yellow Transportation and Roadway. The impairment charge also included goodwill of $59 million at YRC Logistics. "Our results reflect the significance of the economic recession that has been longer and deeper than anyone anticipated," stated Bill Zollars, Chairman, President and CEO of YRC Worldwide. "Although we were not pleased with this level of performance, it was consistent with our internal expectations and those of our banking group. The discussions with the banks are progressing well, and we are on track to finalize an amendment by mid- February," Mr. Zollars added. YRC Worldwide generated $220 million of cash from operating activities during 2008, and after accounting for net capital expenditures of $35 million, 2008 free cash flow was $185 million. Total debt at December 31, 2008 increased by $127 million compared to the prior year. However, when taking into account cash and cash equivalents of $325 million at December 31, 2008, the company's debt, net of cash, decreased by $140 million compared to 2007. "Even in this economic environment, we generated a significant amount of cash and we have multiple initiatives in place that can further improve liquidity," stated Mr. Zollars. "We recognized $128 million of asset proceeds in 2008 and we expect to generate more than $250 million in 2009 from a combination of sale and financing leaseback transactions and sales of excess facilities." Segment Information Key segment information for the fourth quarter 2008 compared to the fourth quarter 2007 included: * YRC National Transportation total tonnage per day down 14.6% and total revenue per hundredweight, including fuel surcharge, down 3.6%. * YRC Regional Transportation total tonnage per day down about 14%, when adjusting for the network changes in the first quarter 2008, and down 23.6% without adjusting for the network changes. Total revenue per hundredweight, including fuel surcharge, down 3.5%. Additional statistical information is available on the company's Web site at http://www.yrcw.com/under Investors, Earnings Releases & Operating Statistics. Outlook "Although we cannot control or even predict the economy, we have considerable opportunities to improve our financial position while enhancing service to our customers," stated Mr. Zollars. "The network integration at YRC is now on track to deliver a run-rate of $200 million of operating income improvement by early in the fourth quarter of 2009. Combining this with the employee wage reductions of around $300 million, we expect to improve our results by more than half a billion dollars going into 2010." Management Reporting As a result of the integration efforts at YRC, the company has made some changes in the management reporting structure. Effectively immediately, Keith Lovetro, President of YRC Regional Transportation, reports directly to Bill Zollars. Mike Smid, President of YRC National Transportation, continues to lead the integration of Yellow Transportation and Roadway and remains responsible for all functions of YRC Inc. Mr. Smid continues to report to Mr. Zollars. The company posted a net loss of $974,392,000 for the year ended December 31, 2008, compared with a net loss of $638,381,000 for the same period a year earlier. A full-text copy of the company's press release and selected financial data is available for free at: http://researcharchives.com/t/s?391b About YRC Worldwide Inc. Headquartered in Overland Park, Kansas, YRC Worldwide Inc. -- http://www.yrcw.com/-- a Fortune 500 company and one of the largest transportation service providers in the world, is the holding company for a portfolio of brands including Yellow Transportation, Roadway, Reimer Express, YRC Logistics, New Penn, USF Holland, USF Reddaway, and USF Glen Moore. The enterprise provides global transportation services, transportation management solutions and logistics management. The portfolio of brands represents a comprehensive array of services for the shipment of industrial, commercial and retail goods domestically and internationally. YRC Worldwide employs approximately 58,000 people. * * * As reported in the Troubled Company Reporter on Jan. 9, 2009, Standard & Poor's Ratings Services revised the implications of its CreditWatch review of YRC Worldwide Inc. (CC/Watch Dev/--) to developing from negative. The revision follows news of the Overland Park, Kansas-based trucking company's terminated debt tender offer and negotiations with its bank group to modify terms on its revolving credit and asset backed securitization facilities. On January 13, the TCR said Fitch Ratings downgraded the Issuer Default Ratings and debt ratings of YRC (IDR to 'CCC' from 'B'; Secured credit facilities to 'B/RR1' from 'BB/RR1'; and Senior unsecured to 'C/RR6' from 'CCC+/RR6') and its subsidiary, YRC Regional Transportation, Inc. (IDR to 'CCC' from 'B'; and Senior secured notes to 'C/RR6' from 'CCC+/RR6'.) On February 2, the TCR reported that YRC Worldwide Inc. closed the first part of the sale and financing leaseback transaction from a contract with NATMI Truck Terminals, LLC entered on December 19, 2008. The company received approximately $101 million of proceeds and expects to receive approximately $50 million more in the second closing. In the company's waivers filed with the SEC on January 22, 2009, it stated that it now has the ability to use the proceeds from this transaction for operating purposes, which is the company's current intention. The company will account for the proceeds as a financing transaction, therefore, the assets remain on the books and a lease obligation will be recorded as long-term debt. The company will recognize the lease payments through interest expense with no impact to depreciation expense. As reported by the TCR on January 19, 2009, YRC obtained waivers under its credit facilities. The company previously announced discussions with its banking group to modify certain terms of its credit facilities, including changes to its leverage ratio, in addition to early renewal of its asset-backed securitization facility. The company's banking group provided waivers for the credit facilities until mid-February 2009 to allow sufficient time to amend the facilities and renew the ABS without a delay in reporting the company's 2008 results scheduled for after market on January 29, 2009. Given that YRC canceled its tender offer in late December and retained the $250 million of cash drawn on the revolver in October 2008, the company expects its total debt to exceed 3.5 times (a limit established in its credit facilities) its trailing 12 months earnings before interest, taxes, depreciation and amortization as of December 31, 2008. ZOO HF: Fitch Junks Rating on Three Classes of Notes ---------------------------------------------------- Fitch Ratings downgrades and removes from Rating Watch Negative five classes from Zoo HF 3 plc. Fitch has also assigned Rating Outlooks to two of the classes. These rating actions are effective immediately: -- EUR94,500,000 class A downgraded to 'BBB' from 'A'; Outlook Stable; -- EUR8,000,000 class B downgraded to 'BB' from 'BBB'; Outlook Stable; -- EUR6,500,000 class C downgraded to 'CCC' from 'BB'; -- EUR12,500,000 class D downgraded to 'CC' from 'CCC'; -- EUR5,500,000 class E downgraded to 'C' from 'CCC'. The severity of losses and marked reduction in underlying fund liquidity for hedge fund collateralized fund obligations in 2008 exceeded Fitch's original expectations. As a result, Fitch published a press release yesterday entitled 'Fitch Updates Analysis for Rating Hedge Fund CFOs' which outlines the causes and major revisions to the agency's analysis. These rating actions are based upon actual losses in Zoo's portfolio during 2008, its reduced liquidity profile, and the application of Fitch's updated analysis. Portfolio losses have resulted in reduced relative levels of overcollateralization for each of the rated classes. Zoo's losses in 2008 were less than several multi-strategy indices. However, due to the narrow cushion between its actual and test overcollateralization levels, it triggered a mandatory redemption event as of the Oct. 28, 2008 measurement date. As such, Zoo has been redeeming its portfolio. Fitch's analysis will also incorporate the potential for increases in strategy and fund concentration levels as the transaction unwinds. The Stable Outlook on classes A and B reflect these notes' ability to withstand sequential market value stresses and reductions in liquidity over the next year under Fitch's updated analysis. Fitch introduced Rating Outlooks for U.S. structured finance in September 2008 to provide investors with forward-looking analysis for a structured finance tranche's credit performance. Fitch's Rating Outlook indicates the likely direction of any rating change over a one- to two-year period and may be Positive, Negative, Stable or, occasionally, Evolving. * FDIC Eyes Over $40 Billion Losses to Deposit Insurance Fund ------------------------------------------------------------- Michael R. Crittenden and Jessica Holzer at The Wall Street Journal report that the Federal Deposit Insurance Corp. has increased its estimate for the cost of U.S. bank failures, expecting losses to its deposit insurance fund to surpass $40 billion over the next few years. WSJ states that bank failures this year has eroded the FDIC's deposit insurance fund, which declined by more than $10 billion to $35 billion during the third quarter. The FDIC had said that $40 billion would be the most likely cost to the fund from 2008 through 2013. According to WSJ, FDIC is asking the Congress to increase its credit line with the Treasury to $100 billion from $30 billion and allow the FDIC to borrow even more in emergency situations. WSJ states that the Congress last increased the line of credit with the Treasury in 1991, from $5 billion to $30 billion. The report says that the Financial Services Committee is discussing a legislation that would increase FDIC's borrowing authority. WSJ reports that the House legislation sponsored by Financial Services Committee Chairperson Barney Frank would also make permanent a temporary increase in the FDIC's deposit insurance limit to $250,000, from $100,000. FDIC is also seeking authority to impose special assessments on bank-holding companies, WSJ relates. Citing Mr. Bovenzi, WSJ states that the FDIC should have authority to assess not just insured depository institutions. WSJ quoted FDIC Chief Operating Officer John F. Bovenzi as saying, "The uncertain and changing outlook for bank failures and the events of the past year have demonstrated the importance of contingency planning to cover unexpected developments in the financial-services industry." * Consumer Spending and Personal Income Fall Again -------------------------------------------------- Personal income decreased $25.3 billion, or 0.2%, and disposable personal income (DPI) decreased $25.1 billion, or 0.2%, in December, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $102.4 billion, or 1.0%. In November, personal income decreased $44.0 billion, or 0.4%, DPI decreased $33.9 billion, or 0.3%, and PCE decreased $77.8 billion, or 0.8%, based on revised estimates. Private wage and salary disbursements decreased $23.5 billion in December, compared with a decrease of $12.1 billion in November. Goods-producing industries' payrolls decreased $15.7 billion, compared with a decrease of $4.4 billion; manufacturing payrolls decreased $9.6 billion, compared with a decrease of $3.1 billion. Services-producing industries' payrolls decreased $7.8 billion, compared with a decrease $7.7 billion. Government wage and salary disbursements increased $2.3 billion, compared with an increase of $1.7 billion. * Record Homes Vacant at End of 2008, Home Resales Rise in Dec. --------------------------------------------------------------- Propelled by foreclosures, a record 19 million homes were vacant at the end of 2008, the U.S. Census Bureau said, according to Bloomberg's Bill Rochelle. Sales of new one-family houses in December 2008 were at a seasonally adjusted annual rate of 331,000, according to estimates by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 14.7% (plus/minus 13.9%) below the revised November of 388,000 and is 44.8% (plus/minus 10.8%) below the December 2007 estimate of 600,000. An estimated 482,000 new homes were sold in 2008. This is 37.8% (�2.7%) below the 2007 figure of 776,000. Mr. Rochelle added, citing Zillow.com, that the U.S. housing market lost $3.3 trillion in value during 2008. The decline, according to him, left one in six homeowners with property worth less than the mortgage debt. The index of pending home resales rose 6.3% in December, the first increase since August, according to a report from the National Association of Realtors. But NAR Chief Economist Lawrence Yun says it is by no means to celebrate. "Recall the November reading was the lowest reading ever of the series since its creation in 2001. Pending home sales is a leading indicator for home sales closings by a month or two, but the January closing sales, which will be released later in the month, are hard to predict given the very weak November pending sales and some partial rebound in December." * Realtors Welcome Renewed Efforts Towards Housing Stabilization ---------------------------------------------------------------- the National Association of Realtors(R) said that Congress and the U.S. Department of the Treasury must enact legislative and regulatory priorities to stabilize the housing market and help stop the U.S. financial market's rapid deterioration, and on Friday, five freshman U.S. senators took decisive action toward this goal. "For months the National Association of Realtors(R) has urged the importance of stabilizing the housing market to help the nation's economic future," said NAR President Charles McMillan. "Although steps have been taken, the focus has not been on housing in the way it needs to be. We thank and congratulate five of our country's newest senators for their leadership in pushing for decisive action to, in their words, 'restore vigor to our nation's slumping housing industry.'" Last November, NAR presented a four-point plan developed to spur home sales and stem the rapid rise in foreclosures by lowering mortgage interest rates and unclogging the credit market, extending the home buyer tax credit, making the increased loan limits permanent, and increasing liquidity in the both the commercial and residential real estate market. On Friday, Sens. Jeanne Shaheen, N.H., Kay Hagan, N.C., Mark Udall, Colo., Tom Udall, N.M., and Mark Begich, Ark., called for their Senate colleagues to focus on housing in the American Recovery and Reinvestment Tax Act of 2009, S. 1, and to expand the home buyer tax credit through the end of 2009. In a letter to their colleagues, the senators noted that the housing industry has long been the engine that drives our economy and recommended extending the tax credit until the end of 2009 to encourage aspiring and qualified home buyers to come off the sidelines and significantly reduce the nation's high housing inventory. NAR agrees with and supports the senators' actions and vows to work with Congress and the administration to establish strong housing legislation that will help bring stability to home values, prevent foreclosures and put the U.S. economy on the road to recover * Chapter 11 Cases With Assets and Liabilities Below $1,000,000 --------------------------------------------------------------- In Re Peta Veronica Shaw Bankr. N.D. Ga. Case No. 09-61493 Chapter 11 Petition filed January 21, 2009 Filed as Pro Se In Re SGBD Restaurant 1 LLC dba Cafe Z Epicerie dba Cafe Z Restaurant Bankr. N.D. Calif. Case No. 09-10161 Chapter 11 Petition filed January 27, 2009 See http://bankrupt.com/misc/canb09-10161p.pdf See http://bankrupt.com/misc/canb09-10161c.pdf In Re Senor Bagel, Inc. Bankr. S.D. N.Y. Case No. 09-22115 Chapter 11 Petition filed January 27, 2009 See http://bankrupt.com/misc/nysb09-22115.pdf In Re RS SONGBIRD LLC Bankr. D. Ariz. Case No. 09-01432 Chapter 11 Petition filed January 28, 2009 Filed as Pro Se In Re Markopulos, Samuel J. aka Markopulos, Sam J. Karen K. Markopulos Bankr. M.D. Fla. Case No. 09-01383 Chapter 11 Petition filed January 28, 2009 See http://bankrupt.com/misc/flmb09-01383.pdf In Re Parmesh N. Dixit PC Bankr. N.D. Ga. Case No. 09-62064 Chapter 11 Petition filed January 28, 2009 See http://bankrupt.com/misc/ganb09-62064.pdf In Re Borton, Lindie Kaye Bankr. D. Idaho Case No. 09-00196 Chapter 11 Petition filed January 28, 2009 See http://bankrupt.com/misc/idb09-00196.pdf In Re Burnett, James D. aka Jim Burnett dba Burnett Farms Christine K. Burnett aka Christine Nehring-Burnett dba Burnett Farms Bankr. N.D. Ill. Case No. 09-70217 Chapter 11 Petition filed January 28, 2009 See http://bankrupt.com/misc/ilnb09-70217.pdf In Re Dalton's Auto Body, Inc. Bankr. S.D. Ind. Case No. 09-00807 Chapter 11 Petition filed January 28, 2009 See http://bankrupt.com/misc/insb09-00807.pdf In Re Machinery Maintenance Specialists, Inc. Bankr. E.D. Mich. Case No. 09-42060 Chapter 11 Petition filed January 28, 2009 See http://bankrupt.com/misc/mieb09-42060.pdf In Re Cedar Canyon Lodge, Inc. Bankr. D. Nev. Case No. 09-11125 Chapter 11 Petition filed January 28, 2009 Filed as Pro Se In Re Moore, Samuel A. Moore, Laurie A. Bankr. W.D. Pa. Case No. 09-20512 Chapter 11 Petition filed January 28, 2009 See http://bankrupt.com/misc/pawb09-20512.pdf In Re N-Touch Wireless, Inc. aka Downtown Title Loan, Inc. Bankr. W.D. Tenn. Case No. 09-20934 Chapter 11 Petition filed January 27, 2009 See http://bankrupt.com/misc/tnwb09-20934.pdf In Re Suncrest Growers, Inc. Bankr. E.D. Tex. Case No. 09-40221 Chapter 11 Petition filed January 28, 2009 See http://bankrupt.com/misc/txeb09-40221.pdf In Re Mark Higley Construction, L.C. Bankr. D. Utah Case No. 09-20659 Chapter 11 Petition filed January 28, 2009 See http://bankrupt.com/misc/utb09-20659.pdf In Re Oceanside Executive Transportation, LTD Bankr. E.D. Va. Case No. 09-70327 Chapter 11 Petition filed January 28, 2009 Filed as Pro Se In Re Boulevard Enterprises, LLC Bankr. W.D. Wash. Case No. 09-10627 Chapter 11 Petition filed January 28, 2009 See http://bankrupt.com/misc/wawb09-10627.pdf In Re Contemporary Imports LLC Bankr. D. Ariz. Case No. 09-01507 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/azb09-01507.pdf In Re Menold, Herbert Roscoe Bankr. C.D. Calif. Case No. 09-10690 Chapter 11 Petition filed January 29, 2009 Filed as Pro Se In Re Luna, Raul Bankr. E.D. Calif. Case No. 09-90222 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/caeb09-90222.pdf In Re Rubio, Robert Tutaan Rubio, Lucila Alcid Bankr. S.D. Calif. Case No. 09-00915 Chapter 11 Petition filed January 29, 2009 Filed as Pro Se In Re The Picture Factory of Boynton Beach, Inc. Bankr. M.D. Fla. Case No. 09-01482 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/flmb09-01482.pdf In Re The Picture Factory of Ft. Myers, Inc. Bankr. M.D. Fla. Case No. 09-01483 Chapter 11 Petition filed January 29, 2009 In Re Stanton Chruch Furniture Company, Inc. Bankr. N.D. Fla. Case No. 09-50044 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/flnb09-50044.pdf In Re Camelot Club Condominium Association, Inc. Bankr. N.D. Ga. Case No. 09-62256 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/ganb09-62256.pdf In Re Lake Fork Lodge, LLC Bankr. D. Idaho Case No. 09-00219 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/idb09-00219.pdf In Re Speedy B's, Inc. Bankr. C.D. Ill. Case No. 09-90133 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/ilcb09-90133.pdf In Re Huckleberry I, Ltd. Bankr. E.D. Mich. Case No. 09-42091 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/mieb09-42091.pdf In Re Atlas, Inc. Bankr. W.D. Mo. Case No. 09-40371 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/mowb09-40371.pdf In Re Talon Electric LLC Bankr. D. Nev. Case No. 09-11186 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/nvb09-11186.pdf In Re LLKM, Inc. Bankr. E.D. N.Y. Case No. 09-40652 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/nyeb09-40652.pdf In Re NHLA Bankr. E.D. N.Y. Case No. 09-40653 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/nyeb09-40653.pdf In Re Conroy, Timothy W. aka Shareholder, Direct. and Officer of TW Conroy & Associates, Inc. dba House Of Conroy, Inc. dba My Sister The Lister, Inc. aka Member Of TW Conroy & Associates, LLC fka Partner of Dean Conroy Bankr. N.D. N.Y. Case No. 09-30198 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/nynb09-30198.pdf In Re Seaway Island Rental Inc. Bankr. N.D. N.Y. Case No. 09-30196 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/nynb09-30196.pdf In Re Gibson Pest Control, Inc. Bankr. W.D. N.C. Case No. 09-10086 Chapter 11 Petition filed January 29, 2009 See http://bankrupt.com/misc/ncwb09-10086.pdf In Re Volo, Richard A. Bankr. D. Conn. Case No. 09-30203 Chapter 11 Petition filed January 30, 2009 See http://bankrupt.com/misc/ctb09-30203.pdf In Re Home Sweet Home U.S.A. Inc. Bankr. N.D. Ga. Case No. 09-62375 Chapter 11 Petition filed January 30, 2009 Filed as Pro Se In Re Cason, John Bankr. W.D. La. Case No. 09-50096 Chapter 11 Petition filed January 30, 2009 See http://bankrupt.com/misc/lawb09-50096.pdf In Re Roberts, Scott G. Bankr. D. Mass. Case No. 09-10702 Chapter 11 Petition filed January 30, 2009 See http://bankrupt.com/misc/mab09-10702.pdf In Re Malinowski, John Malinowski, Marcella A. Bankr. D. Md. Case No. 09-11465 Chapter 11 Petition filed January 30, 2009 See http://bankrupt.com/misc/mdb09-11465.pdf In Re McKittrick, Leon Bankr. D. Nev. Case No. 09-11241 Chapter 11 Petition filed January 30, 2009 See http://bankrupt.com/misc/nvb09-11241.pdf In Re Kings Mill Grading, LLC Bankr. E.D. N.C. Case No. 09-00700 Chapter 11 Petition filed January 30, 2009 See http://bankrupt.com/misc/nceb09-00700.pdf In Re All American Karate Academy, Inc. Bankr. D. N.J. Case No. 09-12120 Chapter 11 Petition filed January 30, 2009 See http://bankrupt.com/misc/njb09-12120.pdf In Re Platinum Steaks, Inc. dba Prime & Beyond Bankr. D. N.J. Case No. 09-12103 Chapter 11 Petition filed January 30, 2009 See http://bankrupt.com/misc/njb09-12103.pdf In Re Pianombrosa LLC Bankr. S.D. N.Y. Case No. 09-22138 Chapter 11 Petition filed January 30, 2009 Filed as Pro Se In Re PEDRO RAFAEL ASENCIO VARGAS aka PEDRO R. ASENCIO aka PDERO ASENCIO VARGAS MARIA ROSA SANTIAGO GALARZA aka MARIA R. SANTIAGO Bankr. D. P.R. Case No. 09-00557 Chapter 11 Petition filed January 30, 2009 See http://bankrupt.com/misc/prb09-00557.pdf In Re Valdez, Lawrence Joseph aka Valdez, Joe Bankr. M.D. Tenn. Case No. 09-00974 Chapter 11 Petition filed January 30, 2009 See http://bankrupt.com/misc/tnmb09-00974.pdf In Re 501 Maple Ridge, Ltd. Bankr. S.D. Tex. Case No. 09-30569 Chapter 11 Petition filed January 30, 2009 See http://bankrupt.com/misc/txsb09-30569.pdf In Re Texas Modular Homes, Inc. dba Eagle Creek Homes Bankr. W.D. Tex. Case No. 09-10203 Chapter 11 Petition filed January 30, 2009 Filed as Pro Se In Re Roballo, Martha Lucia Bankr. E.D. Va. Case No. 09-10691 Chapter 11 Petition filed January 30, 2009 Filed as Pro Se In Re Avalon CMG, LLC Bankr. D. Ariz. Case No. 09-01739 Chapter 11 Petition filed February 2, 2009 See http://bankrupt.com/misc/azb09-01739.pdf In Re TRADERS CLUB dba ANGELS HEAVEN RELAXATION SPA dba JIFFY PAY JOHN LAVOIE Bankr. D. Ariz. Case No. 09-01758 Chapter 11 Petition filed February 2, 2009 Filed as Pro Se In Re Passive Components, Inc. Bankr. C.D. Calif. Case No. 09-10822 Chapter 11 Petition filed February 2, 2009 See http://bankrupt.com/misc/cacb09-10822.pdf In Re Sarvak, Brian Bankr. C.D. Calif. Case No. 09-10833 Chapter 11 Petition filed February 3, 2009 Filed as Pro Se In Re Kim, Savinh Bankr. N.D. Calif. Case No. 09-50676 Chapter 11 Petition filed February 2, 2009 See http://bankrupt.com/misc/canb09-50676p.pdf See http://bankrupt.com/misc/canb09-50676c.pdf In Re Eisler, Fred J. dba Land O'Lakes Sand & Gavel dba F.J. Eisler Tractor Service Bankr. M.D. Fla. Case No. 09-01933 Chapter 11 Petition filed February 2, 2009 See http://bankrupt.com/misc/flmb09-01933.pdf In Re Island Jewel Travel Tours & Services Inc. Bankr. M.D. Fla. Case No. 09-01168 Chapter 11 Petition filed February 2, 2009 See http://bankrupt.com/misc/flmb09-01168.pdf In Re Rolling in Dough Cookie Company dba Great American Cookies fka Great American Cookie Company fka Pretzel Time fka Great American Chocolate Cookie Company fka The Original Great American Chocolate Chip Cookie Company Bankr. M.D. Fla. Case No. 09-01974 Chapter 11 Petition filed February 3, 2009 See http://bankrupt.com/misc/flmb09-01974p.pdf See http://bankrupt.com/misc/flmb09-01974c.pdf In Re Kriscor Corporation Bankr. N.D. Ill. Case No. 09-03299 Chapter 11 Petition filed February 2, 2009 See http://bankrupt.com/misc/ilnb09-03299.pdf In Re Dupan Bakery, Inc. Bankr. D. N.J. Case No. 09-12596 Chapter 11 Petition filed February 3, 2009 See http://bankrupt.com/misc/njb09-12596.pdf In Re Booth, Phillip Barkley aka Phil Booth Bankr. E.D. N.Y. Case No. 09-11884 Chapter 11 Petition filed February 3, 2009 Filed as Pro Se In Re Fulton Street Holding Corp. Bankr. E.D. N.Y. Case No. 09-40777 Chapter 11 Petition filed February 3, 2009 See http://bankrupt.com/misc/nyeb09-40777.pdf In Re Yair Israel Babayoff aka Yaher Israel Babayoff Bankr. E.D. N.Y. Case No. 09-40780 Chapter 11 Petition filed February 3, 2009 Filed as Pro se In Re Feheley, David R. Bankr. N.D. N.Y. Case No. 09-10296 Chapter 11 Petition filed February 2, 2009 See http://bankrupt.com/misc/nynb09-10296.pdf In Re 15 E. 204 Street Realty Corp. Bankr. S.D. N.Y. Case No. 09-22147 Chapter 11 Petition filed February 2, 2009 Filed as Pro Se In Re Fil Franck Tours, Inc. Bankr. S.D. N.Y. Case No. 09-10484 Chapter 11 Petition filed February 3, 2009 See http://bankrupt.com/misc/nysb09-10484.pdf In Re BMGHall, LLC Bankr. N.D. Tex. Case No. 09-30763 Chapter 11 Petition filed February 3, 2009 See http://bankrupt.com/misc/txnb09-30763.pdf In Re BMGI LV Properties, Ltd. Bankr. N.D. Tex. Case No. 09-30766 Chapter 11 Petition filed February 3, 2009 See http://bankrupt.com/misc/txnb09-30766.pdf In Re Curtis & Trocard, P.C. dba Allcare Injury Clinic Bankr. N.D. Tex. Case No. 09-30732 Chapter 11 Petition filed February 2, 2009 See http://bankrupt.com/misc/txnb09-30732.pdf ********* 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. The Sunday TCR delivers securitization rating news from the week then-ending. 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, Sheryl Joy P. Olano, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2009. 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 ***