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/raid1/www/Hosts/bankrupt/TCR_Public/050928.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, September 28, 2005, Vol. 9, No. 230 Headlines 360NETWORKS: Settles Dispute Over AboveNet Communications' Claims ACTIVANT SOLUTIONS: Plans $140-Mil. Private Senior Debt Placement ACTIVANT SOLUTIONS: S&P Affirms B+ Sr. Secured Debt Rating ADELPHIA COMMS: MacKay Shields Resigns from Creditors Committee ADELPHIA COMMS: Stipulation on Transfer Accounting Dispute Okayed ADELPHIA COMMS: Sells Three Real Estate Parcels for $721,000 ALLIED HOLDINGS: Equity Deficit Triples to $127.4MM in Six Months AMERICAN EASTERN: Case Summary & 20 Largest Unsecured Creditors ANCHOR GLASS: Panel Opposes Glenshaw's Bid to Recover Glass Molds APARTMENTS AT TIMBER: Pleiss Okayed as Ch. 11 Trustee's Accountant AQUILA INC: Selling Selected Utility Assets for $896.7 Million ASARCO LLC: Wants Lehman as Financial Advisor & Investment Banker ASARCO LLC: Wants HR&A as Tort Claims Consultant ASARCO LLC: Govt. Wants CERLA Trial Upheld in Idaho District Court ATA AIRLINES: Wants Court Nod on Goodrich Corp. Settlement BEAZER HOMES: Registers $3M+ Convertible Senior Notes for Resale BELDEN & BLAKE: Extends Tender Offer for Sr. Sec. Notes to Oct. 12 BUDGET GROUP: Administrator Asks for Decree Closing Ch. 11 Case CAPELLA HEALTHCARE: Moody's Junks $58 Million Sr. Sec. Term Loan CAPELLA HEALTHCARE: S&P Junks $58 Mil. Proposed Sr. Secured Debt CATHOLIC CHURCH: Court Sets Status Conference Schedule in Portland CENTURY/ML: Century & ML Media Inks Estate Administration Accord CENTURY/ML: Court OKs Stipulation on Transfer Accounting Dispute CERVANTES ORCHARDS: Deere Credit Won't Allow Cash Collateral Use CHOICE FINANCIAL: Case Summary & 13 Largest Unsecured Creditors COIN BUILDERS: Case Summary & 20 Largest Unsecured Creditors COLLINS & AIKMAN: GM Wants to Recover Tooling Equipment COMPOSITE TECH: Selling $6 Million Notes Via Private Placement CORNERSTONE PRODUCTS: Panel Taps FTI as Financial Advisor CUMMINS INC: Plans to Repay $250 Million 9-1/2% Notes in Dec. 2006 DAP HOLDING: Section 304 Petition Summary DRUGMAX INC: Wells Fargo Commits $65 Million in New Financing DRUGMAX INC: Has Until Oct. 24 to Comply with Nasdaq Requirements DURANGO GEORGIA: Paper Mill & Timberland to be Auctioned on Dec. 6 DURA OPERATING: Moody's Junks $856 Million Senior Notes' Ratings ELITE GAMING: Case Summary & 8 Largest Unsecured Creditors ENRON CORP: Agrees to Allow ECP Claims for $12 Million ENRON CORP: Wants Court Nod on Potomac Settlement Agreement ENTERGY NEW ORLEANS: Court Approves Interim DIP Facility ESCHELON TELECOM: Registers 1.6-Mil Common Shares for Distribution FEDERAL-MOGUL: Inks Pact Resolving Dispute with UK Administrators FEDERAL-MOGUL: Alan Haughie Appointed as Chief Accounting Officer FIBERMARK INC: Files Revised Plan to Reflect New Bondholders Pact FIDELITY NATIONAL: Schedules Equity Distribution on Oct. 17 FLYI INC: Cuts Service & Scours for Financing to Avert Bankruptcy FOAMEX INT'L: Final DIP Financing Hearing Set for October 17 FOAMEX INT'L: Court Allows Continued Use of Existing Bank Accounts FOAMEX INT'L: Court Okays Continued Use of Cash Management System GENERAL MOTORS: Fitch Lowers Rating One Notch to BB From BB+ GMAC: Fitch Downgrades Senior Unsecured Rating to BB HEILIG-MEYERS: Wachovia Bank Says Plan Shouldn't Be Confirmed HILLMAN COS: AMEX Accepts Plan for Continued Listing Compliance HOME PRODUCTS: McGladrey & Pullen Replaces KPMG as Auditors HORNBECK OFFSHORE: Selling Debt & Equity in Private & Public Deals INSEQ CORP: Acquires Separation and Recovery in All-Stock Deal INTERNATIONAL PAPER: Sells Carter Holt Equity Stake for $1.14B INTERSTATE BAKERIES: Asks Court to Okay Nestle Purina Agreement JACOBS INDUSTRIES: Case Summary & 80 Largest Unsecured Creditors JERNBERG INDUSTRIES: Retiree Panel Taps Fagelhaber LLC as Counsel KAIRE HOLDINGS: Registers 84 Million Common Shares for Resale KAISER ALUMINUM: Asks Court to Extend Deadline to Remove Actions KEY3MEDIA GROUP: Wants Until Dec. 31 to Object to Claims LEINER HEALTH: Completes Credit Agreement Amendment with Lenders LIN TV: Subsidiary Selling $190 Mil. Notes Via Private Placement MD BEAUTY: S&P Revises Outlook to Negative from Stable MEDICALCV INC: Files Supplemental Prospectus on 63 Million Shares MELLON RESIDENTIAL: Fitch Junks Rating on Class B-5 Certificates METALFORMING TECHNOLOGIES: Court Approves $25 Mil. Sale to Zohar METALFORMING TECH: Creditors Must File Proofs of Claim By Oct. 20 METROPOLITAN MORTGAGE: Court Approves Amended Disclosure Statement METROPOLITAN MORTGAGE: SEC Sues Four Former Executives for Fraud METROPOLITAN MORTGAGE: Sues PwC for Negligence in Audit Work MIRANT CORP: Selling Washington Power Unit to Longview for $17.2M MIRANT CORP: Bowline Gets Court OK to Recover $4.9M from Insurer MOLECULAR DIAGNOSTICS: CFO Dennis L. Bergquist Resigns NATIONAL BENEVOLENT: Sues Weil Gotshal to Reduce Bankruptcy Costs NAVIGATORS GROUP: S&P Assigns Preliminary BB+ Pref. Stock Rating NEIMAN MARCUS: Fitch Places Issuer Default Rating at B- NORTH AMERICAN: Files Amended Plan & Disclosure Statement NORTHWEST AIRLINES: Common Stock Stops Trading on NASDAQ NORTHWEST AIRLINES: UST Meeting to Form Committees Friday Morning NORTHWEST AIRLINES: Adjusts CEO Steenland Employment Agreement NRG ENERGY: Continues Stock Repurchase Program ON TOP: Gets Court Nod to Employ Thomas Lackey as Local Counsel PIPE CREEK: Case Summary & 34 Largest Unsecured Creditors PROTOCOL SERVICES: Unsecured Creditors May Recover 7.5% of Claims PROTOCOL SERVICES: Gets Court Nod to Use $3.3 Mil. Cash Collateral PROTOCOL SERVICES: Wants Until Nov. 30 to Assume or Reject Leases RAVEN MOON: Registers 3.7 Billion Common Shares for Resale RELIANCE GROUP: Court OKs Gage Spencer as Panel's Special Counsel RIVER CITY: Case Summary & 20 Largest Unsecured Creditors RUSSELL CORP: Moody's Downgrades Sr. Unsecured Debt Rating to B2 SAINT VINCENTS: Has Full Access to $100 Million HFG DIP Facility SANDERS FARMS: Case Summary & 10 Largest Unsecured Creditors SILICON GRAPHICS: Wants to Save $100 Million Through Restructuring SILICON GRAPHICS: Balance Sheet Upside-Down by $191MM by June 24 TECHNEGLAS INC: Ohio EPA Wants Chapter 11 Plan Rejected TOWER AUTOMOTIVE: Inks Settlement Agreement With UNOVA Industrial TOWER AUTOMOTIVE: Two Utility Companies Press for Deposits TRAINER WORTHAM: Fitch Affirms BB Rating on $16 Mil. Pref. Shares UAL CORP: Contrarian Funds Buys Air Serv's $450,000 Claim USA MOTOR: Case Summary & 20 Largest Unsecured Creditors US AIRWAYS: Completes Merger With America West Airlines WESTPOINT STEVENS: Motion to Dismiss Chapter 11 Cases Draws Fire WILLIAMS COS: Inks $700-Mil Credit Pacts with Citicorp & Citibank WORLDCOM INC: Asks Court to Reject William Brown's Class Claim WORLD HEALTH: Warns of Possible Bankruptcy Due to Financial Woes * Juan Manuel Trujillo Joins Sheppard Mullin as NY Finance Partner * Upcoming Meetings, Conferences and Seminars ********* 360NETWORKS: Settles Dispute Over AboveNet Communications' Claims ----------------------------------------------------------------- Before the Petition Date, AboveNet Communications, Inc., formerly known as Metromedia Fiber Network Services, Inc., and 360networks (USA), Inc., entered into two agreements: 1. Collocation Agreement, dated July 6, 1998, as amended; and 2. Joint Build Agreement, dated May 1, 2000, together with any and all ancillary or related agreements executed by the parties. Pursuant to the Agreements, the Debtors were obligated to pay AboveNet for, among others things, the licensing of dedicated fiber optic strands upon AboveNet's fiber optic communications network, and work related to the construction of portions of a fiber optic network. On May 1, 2002, AboveNet filed Claim No. 1037. Pursuant to a previous Court order, Claim No. 1037 was allowed in a reduced amount equal to $499,173. AboveNet disputed the reduction. On October 2, 2002, the Debtors rejected the Agreements with AboveNet pursuant to a Court order. In accordance with the Debtors' Plan of Reorganization, AboveNet received 1,688 shares of the common stock of 360networks (Holdings) Ltd., on account of Claim No. 1037. AboveNet then filed two unsecured non-priority claims aggregating over $7.62 million. However, the Debtors point out that AboveNet's Additional Claims include duplicative amounts. Furthermore, the Debtors note that AboveNet's remaining claims in their Chapter 11 cases do not exceed $7.62 million. The Debtors also believe that they have other defenses to the Additional Claims. To fully resolve the disputes, the parties agree, with the Court's consent, that: (a) The Additional Claims -- Claim Nos. 1846 and Claim No. 1850 -- will be combined and will be known as Claim No. 1846; (b) Claim No. 1846 will be reduced and allowed as a General Unsecured Claim for $4,000,000; and (c) All other claims that have been or may have been asserted in the Debtors' Chapter 11 cases by AboveNet, excluding Claim No. 1037, are disallowed. Headquartered in Vancouver, British Columbia, 360networks, Inc. -- http://www.360.net/-- is a leading independent provider of fiber optic communications network products and services worldwide. The Company and its 22 debtor-affiliates filed for chapter 11 protection on June 28, 2001 (Bankr. S.D.N.Y. Case No. 01-13721), obtained confirmation of a plan on October 1, 2002, and emerged from chapter 11 on November 12, 2002. Alan J. Lipkin, Esq., and Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, represent the Company before the Bankruptcy Court. When the Debtors filed for protection from its creditors, they listed $6,326,000,000 in assets and $3,597,000,000 in liabilities. (360 Bankruptcy News, Issue No. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000) ACTIVANT SOLUTIONS: Plans $140-Mil. Private Senior Debt Placement ----------------------------------------------------------------- Activant Solutions Inc. intends to privately place $140 million principal amount of floating rate senior notes due 2010, and that its parent holding company, Activant Solutions Holdings Inc., intends to privately place $40 million principal amount of senior floating rate pay-in-kind notes due 2011, in each case subject to market and other conditions and pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The proceeds of the private offerings are expected to be used to repay bridge loans incurred in connection with Activant's acquisition of Prophet 21, Inc., on Sept. 13, 2005. As reported in the Troubled Company Reporter on Sept. 22, 2005, the Company obtained the necessary funds to finance the acquisition by P21 Merger Corporation of Prophet 21 through cash on hand, a capital contribution from Activant Solutions Holdings and $140 million through borrowings under a senior unsecured bridge loan. P21 Merger is the Company's wholly owned subsidiary. The total consideration paid pursuant to the Agreement and Plan of Merger was approximately $215 million. The notes have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States, absent registration or an applicable exemption from such registration requirements. Activant Solutions Inc. -- http://www.activant.com/-- is a technology provider of vertical ERP solutions servicing the automotive aftermarket, hardware and home center, wholesale trade, and lumber and building materials industry segments. Over 20,000 wholesale, retail and manufacturing customer locations use Activant to help drive new levels of business performance. With proven experience and success, Activant is fast becoming an industry standard for companies seeking competitive advantage through stronger customer integration. * * * As reported in the Troubled Company Reporter on Aug. 22, 2005, Moody's Investors Service has placed these ratings of the Activant Solutions Inc. under review for possible downgrade. * B2 rating on $120 million senior unsecured notes, due 2010 * B2 rating on $157 million (face value) senior unsecured notes due 2011; and * B1 Corporate Family Rating As reported in the Troubled Company Reporter on Mar. 2, 2005, Standard & Poor's Ratings Services assigned its 'B+' debt rating to Austin, Texas-based Activant Solutions Inc.'s proposed $120 million senior unsecured floating rate notes. At the same time, Standard & Poor's affirmed its 'B+' corporate credit and senior unsecured debt ratings. The proposed floating rate notes are rated the same as the corporate credit rating, because of the minimal amount of secured debt, a $15 million revolving credit facility, in the capital structure. Proceeds from the proposed floating rate notes will primarily be used to fund the acquisition of Speedware Corporation, which was announced in January 2005. S&P says the outlook is stable. ACTIVANT SOLUTIONS: S&P Affirms B+ Sr. Secured Debt Rating ---------------------------------------------------------- Standard & Poor's Ratings Services announced that it affirmed its 'B+' corporate credit and senior unsecured debt ratings on Austin, Texas-based Activant Solutions Inc. The ratings were removed from CreditWatch, where they were placed with negative implications on Aug. 17, 2005, following the announcement that Activant would acquire Prophet 21, a leading technology solutions provider to the wholesale distribution market, for approximately $215 million. At the same time, Standard & Poor's assigned its 'B+' debt rating to the proposed $140 million senior unsecured floating rate notes, which will have essentially the same terms as the existing floating rate notes, and its 'B-' debt rating to the proposed $40 million senior PIK notes, which will be an obligation of Activant Solutions Holdings Inc., and will be structurally subordinated to all indebtedness of Activant Solutions Inc. The outlook is now negative. "The ratings affirmation reflects Standard & Poor's expectation that Activant's highly visible and recurring revenue base, combined with consistent EBITDA margins in the mid-20% area, will lead to continued modest free operating cash flow generation and an improved financial profile over the intermediate term," said Standard & Poor's credit analyst Ben Bubeck. The negative outlook, however, reflects the increased pace of acquisition activity and inherent integration risks, combined with debt leverage that is high for the current rating level. The ratings on Activant reflect its narrow business profile, acquisitive growth strategy and limited liquidity. These are only offset partly by a leading position in its addressed vertical markets, a significant amount of recurring revenue, and consistent profitability. Activant is a leading provider of business management software and solutions to the retail hardware and home centers, lumber and building materials, and wholesale trade markets, along with the automotive aftermarket. Following the Prophet 21 acquisition (and the Speedware acquisition earlier this year) the company has established a solid presence in the wholesale trade vertical. Pro forma for the proposed floating rate notes and senior subordinated PIK notes, the company had approximately $473 million of operating lease- adjusted total debt as of June 2005. ADELPHIA COMMS: MacKay Shields Resigns from Creditors Committee --------------------------------------------------------------- Deirdre A. Martini, the United States Trustee for Region 2, advises the U.S. Bankruptcy Court for the Southern District of New York that MacKay Shields, LLC, is no longer a member of the Official Committee of Unsecured Creditors of Adelphia Communications Corp., et al. The Creditors Committee is now composed of eight members: 1. Appaloosa Management, LP 26 Main Street Chatham, NJ 07928 Attn: James Bolin Phone: (973) 701-7000 Fax: (973) 701-7309 2. W. R. Huff Asset Management Co., LLC 67 Park Place Morristown, NJ 07960 Attn: Edwin M. Banks, Senior Portfolio Manager Phone: (973) 984-1233 Fax: (973) 984-5818 3. Law Debenture Trust Company of New York 767 Third Avenue, 31st Floor New York, New York 10017 Attn: Daniel R. Fisher, Senior Vice President Phone: (212) 750-6474 Fax: (212) 750-1361 4. U.S. Bank National Association, as Indenture Trustee One Federal Street Boston, Massachusetts 02110 Attn: Laura L. Moran Phone: (617) 603-6429 Fax: (617) 603-6640 - and - U.S. Bank National Association, as Indenture Trustee 60 Livingstone Avenue St. Paul, Minnesota 55107 Attn: Timothy J. Sandell Phone: (651) 495-3959 Fax: (651) 495-8100 5. Sierra Liquidity Fund, LLC 2699 White Road, Suite 255 Irvine, CA 92614 Attn: Jim Riley, Esq. Phone: (949) 660-1144 Fax: (949) 660-0632 6. Wilmington Trust Company, as Indenture Trustee 1100 North Market Street Wilmington, Delaware 19890 Attn: Suzanne J. MacDonald Phone: (302) 636-6000 Fax: (302) 636-4143 7. Tudor Investment Corporation 15303 Ventura Boulevard, Suite 900 Sherman Oaks, CA 91403 Attn: Mr. Darryl A. Schall Phone: (818) 380-3065 Fax: (203) 552-6248 8. Highfields Capital Management 200 Clarendon Street, 51st Floor Boston, MA 02116 Attn: Mr. Richard Grubman Phone: (617) 850-7500 Fax: (617) 850-7610 Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 107; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMS: Stipulation on Transfer Accounting Dispute Okayed ----------------------------------------------------------------- Adelphia Communications Corp., its wholly owned, indirect subsidiary Debtor Century Communications Corp., Debtor Century/ML Cable Venture, Century/ML Cable Corporation and ML Media Partners, L.P., want to complete the consolidated audited financial statements of Century/ML, which include the accounts of Cable Corp. On March 28, 2002, approximately $25 million was transferred from the bank accounts of Cable Corp. to the bank accounts of Century and ACOM. At the time of the Transfer, Century/ML and Cable Corp. had consolidated liabilities to Century and ACOM of at least $25 million. Disputes have arisen between Century and ACOM, on one side, and ML Media, on the other, regarding: -- how to account for the Transfer, -- the effect of the Transfer on the Financial Statements, and -- other matters accounted for in the Financial Statements. Century and ML Media, as owners of Century/ML, agreed to adopt certain proposed accounting treatments in the Financial Statements for the Transfer Accounting Dispute and the Other Disputed Matters, subject to, among others, the preparation of language to be included in the notes to the Financial Statements reasonably acceptable to Adelphia and to ML Media. In a stipulation Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York approved, the parties agree that: 1. The Financial Statements, and the representation letters to be delivered by Century, ACOM and ML Media to Century/ML auditors in connection with the Financial Statements, are not intended to and will not preclude any of the parties from maintaining or asserting any claim, defense, or liability against each other; and 2. ML Media, Century and ACOM agree to the Proposed Accounting Treatment for the Transfer Accounting Dispute and waive all claims against each other, Cable Venture or Cable Corp. arising out of the adoption of the Proposed Accounting Treatment for the Transfer Accounting Dispute. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMS: Sells Three Real Estate Parcels for $721,000 ------------------------------------------------------------ Pursuant to the Court-approved Excess Assets Sale Procedures, Adelphia Communications Corporation and its debtor-affiliates inform Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York that they will sell these real estate parcels for $721,000: 1. Property: Lot 376 in the Long Cove development at Hilton Head in South Carolina 29928 Purchaser: Sean Lewis Agent: Charter One Realty Company Amount: $340,000 Deposit: $2,000 Appraised Value: $290,000 2. Property: Lot 461, in the Long cove development at Hilton Head in South Carolina 29928 Purchaser: Robert Blumber Agent: Charter One Realty Company Amount: $340,000 Deposit: $5,000 Appraised Value: $270,000 3. Property: Real Property at 746 North Main St., Coudersport, Pennsylvania 16915 Purchaser: Gary and Jennifer Grupp Agent: Field and Stream Real Estate Amount: $41,000 Deposit: $1,000 Appraised Value: $41,000 Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 105; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Equity Deficit Triples to $127.4MM in Six Months ----------------------------------------------------------------- Allied Holdings, Inc., delivered its quarterly report on Form 10-Q for the quarter ending June 30, 2005, to the Securities and Exchange Commission on Sept. 22, 2005. For the second quarter of 2005, the Company recorded a $75.1 million net loss compared to a net loss of $3.8 million in the second quarter of 2004. Revenues were $232.6 million in the second quarter of 2005 versus revenues of $236.6 million in the second quarter of 2004, a decrease of 1.7% or $4.1 million. This decrease was due primarily to a 9.5% reduction in the number of vehicles delivered in the second quarter of 2005 versus the second quarter of 2004. Salaries, wages and fringe benefits decreased from 54.1% of revenues in the second quarter of 2004 to 50.8% of revenues in the second quarter of 2005 due primarily to a reduction in workers' compensation costs. In the second quarter of 2005, workers' compensation costs were 4% of revenues whereas in the second quarter of 2004, workers' compensation costs were 6.4% of revenues. Operating supplies and expenses increased from 17.5% of revenues in the second quarter of 2004 to 19.0% of revenues in the second quarter of 2005. The increase is due primarily to an increase in fuel expense, which increased from 5.8% of revenues in the second quarter of 2004 to 7.7% of revenues in the second quarter of 2005. At June 30, 2005, the Company's balance sheet shows $352,931,000 in total assets. Stockholders' deficit tripled to $127,443,000 at June 30, 2005, from a $41,549,000 deficit at Dec. 31, 2004. DIP Pays Defaulted Facility As of June 30, 2005, based on the financial reports delivered on July 29, 2005, to the Company's lenders under its Prepetition Facility, the Company was in default of its Prepetition Facility due to a violation of the financial covenant in its Prepetition Facility related to the minimum consolidated earnings before interest, taxes, depreciation, and amortization, as defined in the Pre-petition Facility. Because the violation of the financial covenant as of June 30, 2005, made the Prepetition Facility callable, the Prepetition Facility is considered a short-term obligation and is classified as current portion of long-term debt as of June 30, 2005. On Aug. 1, 2005, the Company obtained DIP Facilities to provide debtor-in-possession financing in connection with its Chapter 11 filing. On Aug. 2, 2005, using funds received from its DIP Facilities, the Company repaid all obligations outstanding under the Prepetition Facility, including the $1.9 million premium due for prepayment of the facility prior to maturity. Going Concern Allied's management said the Company's ability to continue as a going concern is predicated on, among other things: (1) the confirmation of a plan of reorganization; (2) compliance with the provisions of the DIP Facilities; (3) its ability to generate cash flows from operations; and (4) its ability to obtain financing sufficient to satisfy its future obligations. A full-text copy of Allied's latest quarterly report is available at no charge at http://ResearchArchives.com/t/s?1db Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. AMERICAN EASTERN: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: American Eastern Builders, Inc. 3820 Miriam Drive Charlotte, North Carolina 28205 Bankruptcy Case No.: 05-34053 Type of Business: The Debtor is a general building contractor. See http://www.americaneastern.net/ Chapter 11 Petition Date: September 26, 2005 Court: Western District of North Carolina (Charlotte) Judge: George R. Hodges Debtor's Counsel: James H. Henderson, Esq. James H. Henderson, P.C. 1201 Harding Place Charlotte, North Carolina 28204-2248 Tel: (704) 333-3444 Fax: (704) 333-5003 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Edward Calkins Shareholders loans, $1,692,204 7129 Elkston Drive rent, salary, & Charlotte, NC 28210 indemnity claims BB&T of NC Business Loan Business loan $237,982 Center P.O. Box 580003 Charlotte, NC 282580003 Ford Motor Credit Company Lease of two 2003 $60,879 Commercial Lending Services Ford F350 4X2 trucks P.O. Box 472687 Charlotte, NC 282472684 Port City Electric Company Electrical supplies $59,982 Southeastern Plumbing & Plumbing heating $33,426 Heating service/supplies Binswanger Glass Inc. Supplies $19,265 Carolina Sheet Metal Supplies $17,153 Century Contracting Inc. Supplies $15,900 Besco Electric Corporation Electrical services $11,579 Charlotte Glass Cont Supplies $10,695 Southern Mechanical Supplies $9,951 CM Steel Inc. Supplies $9,074 Selective Insurance Insurance $8,968 Joe H. Ervin Grading Grading $7,492 Johnston Allison & Hord Legal services $7,730 Lowes Credit card $6,893 Propst Construction Open account $6,669 Empire Concrete Construction Conrete supplies $5,790 Hartsell Bros Fence Co. Supplies $5,596 Weathergard Inc. Open account $5,350 ANCHOR GLASS: Panel Opposes Glenshaw's Bid to Recover Glass Molds ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Anchor Glass Container Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida to deny GGC LLC's, fka as Glenshaw Glass Company, request to compel the Debtor to return some molds that it allegedly owns. The Committee asserts that GGC, LLC, has not shown that cause exists to lift the stay in the Debtor's bankruptcy case. Apparently, says Marcy E. Kurtz, Esq., at Bracewell & Guiliani LLP, in Dallas, Texas, no cause exists. GGC has asserted that the lack of adequate protection of its interests is a cause to modify the automatic stay. Subsequently, in response to the Court's Order requiring it to identify what it believes to be adequate protection of interest, GGC stated that it is not seeking adequate protection with respect to the molds. Ms. Kurtz contends that by GGC's own admission, no amounts are due on any of the property it identified as being subject to the Motion. GGC has no use for the property or the glass molds it seeks to recover as its production aspect has been discontinued, and it continues now solely for the purpose of liquidating its bankruptcy estate. Furthermore, Ms. Kurtz adds that GGC remains in possession of similar property belonging to the Debtor. The glass molds are essential to the effective reorganization of the Debtor, Ms. Kurtz argues. Unlike GGC, the Debtor's manufacturing operations continue and the molds are still used in those operations. Lifting the stay at this time to allow GGC to recover and sell property on which no debt is owed and that is currently used by the Debtor in its operations is not appropriate. Ms. Kurtz believes that the GGC Motion is an attempt to collect on prepetition debt against the Debtor. GGC does not demonstrate through its Motion that cause exists to allow it to circumvent the Bankruptcy Code and the priority scheme set out. According to Ms. Kurtz, requiring the Debtor to relinquish possession of property of a third party to GGC would expose the Debtor to unnecessary litigation. Furthermore, the Debtor cannot turn over property that is not in its possession. Allowing GGC to seek sanctions in the Court for the Debtor's failure to turn over a property that is not in the Debtor's possession is not appropriate and will certainly result in unnecessary expense to the Debtor should the Court require it to defend against the sanctions by lifting the stay. Judge Paskay will convene a hearing on October 12, 2005, at 11:00 a.m., to consider the Committee's response. Anchor Glass Continues to Defend Right Monica Marselli, the Debtor's Associate General Counsel, discloses that in a telephone conversation on July 13, 2005, GGC's counsel, Ronald Roteman, agreed to extend the time for the Debtor to respond to GGC's Turnover Complaint. Pursuant to an order entered by the Pennsylvania Bankruptcy Court, Anchor was to file an answer to the Turnover Complaint by July 15, 2005. Ms. Marselli says that Mr. Roteman granted the extension so that the Debtor and GGC could negotiate a resolution to the matter and save the Debtor the expense of engaging counsel in Pennsylvania. Ms. Marselli, however, says that she did not understand the extension of time to have a finite deadline. During the conversation, she proposed to resolve the dispute and maintained correspondence with Mr. Roteman. Ms. Marselli has continued to believe that the Debtor is not required to file a response to the Turnover Complaint because of the extension and because of the fact that settlement discussions were still ongoing. Ms. Marselli asserts that the Debtor would have vigorously contested GGC's Turnover Action if the parties did not reach an agreement through negotiation. Moreover, the molds are integral to the Debtor's recovery from the Chapter 11 case. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) APARTMENTS AT TIMBER: Pleiss Okayed as Ch. 11 Trustee's Accountant ------------------------------------------------------------------ The Honorable Timothy J. Mahoney gave Thomas D. Stalnaker, the Chapter 11 Trustee appointed in Apartments at Timber Ridge, LP's chapter 11 case, permission to employ Daniel T. Pleiss as his accountant. Mr. Pleiss will prepare all necessary tax returns and reports. He will also provide other services that may be proper and necessary for Mr. Stalnaker's duties as Trustee. Judge Mahoney approved Mr. Stalnaker's request but points out that: (a) this order is not a determination that the services are necessary; (b) no determination is made that Mr. Pleiss represents no adverse interest; and (c) no fee agreement between Mr. Stalnaker and Mr. Pleiss is binding on the Court. Mr. Stalnaker is responsible for giving notice to parties-in- interest as required by rule or statute. Headquartered in Dallas, Texas, Apartments at Timber Ridge, LP, aka Timber Ridge Apartments, operates a residential apartment building in Omaha, Nebraska. The Company filed for chapter 11 protection on June 3, 2005 (Bankr. D. Nebr. Case No. 05-82135). Howard T. Duncan, Esq., at Duncan Law Office, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts between $10 million to $50 million. AQUILA INC: Selling Selected Utility Assets for $896.7 Million -------------------------------------------------------------- Aquila Inc. (NYSE:ILA) signed definitive agreements to sell four utility businesses identified for potential sale on March 14, 2005, for a total of $896.7 million. Proceeds from the transactions will be used to reduce debt and other liabilities. The sale agreements mark a significant advance in Aquila's previously announced repositioning plan. The plan seeks to strengthen Aquila's balance sheet, improve its credit profile, and position the company to invest in utility infrastructure to provide safe and reliable service to customers as an integrated natural gas and electric utility. The transactions include: -- WPS Resources Corporation, a publicly-traded holding company for a number of energy-related subsidiaries based in Green Bay, Wisconsin, will purchase the assets and liabilities of Aquila's natural gas operations in Michigan and Minnesota for a base purchase price of $269.5 million and $288 million, respectively, plus working capital and subject to net plant adjustments. -- The Empire District Electric Company, a publicly-traded electric utility based in Joplin, Missouri, will purchase the assets and liabilities of Aquila's natural gas operations in Missouri for a base purchase price of $84 million, plus working capital and subject to net plant adjustments. -- Mid-Kansas Electric Company (MKEC), a coalition of six consumer-owned cooperatives that also own Sunflower Electric Power Corporation, a regional generation and transmission service provider, will purchase the assets and liabilities of Aquila's electric operations in Kansas for a base purchase price of $255.2 million, plus working capital and subject to net plant adjustments. Following the completion of these sales, Aquila will operate in five states, with natural gas operations in Kansas, Colorado, Nebraska and Iowa and electric operations in Missouri and Colorado. Of the utilities identified for potential sale on March 14, Aquila will retain ownership of its St. Joseph Light & Power electric operations in Missouri as well as its electric operations in Colorado as part of its ongoing business. Aquila continues to consider the sale of its three merchant peaking plants and Everest Connections, as well as a settlement of its Elwood toll contracts. "The execution of these agreements marks a major milestone in our program to reposition Aquila, strengthen the company's financial condition and improve the financial performance of our regulated utility business," said Richard C. Green, Aquila chairman and chief executive officer. "Upon completion of these sales, Aquila should be stronger financially than it has been in recent years. The proceeds are expected to allow us to significantly reduce our debt, improve our credit profile and put Aquila on a path to reaching an annual EBIT growth rate of 3 percent to 5 percent on our post-divestiture rate base." Mr. Green said the key elements of Aquila's strategy remain to: -- Maintain its focus on operating an integrated, multi-state utility. -- Significantly reduce Aquila's debt levels and strengthen its credit profile. -- Gain access to the capital markets on improved terms, allowing the company to cost-effectively fund investments in its rate base to meet customer needs. -- Continue to improve operational efficiency and lower earnings variability. -- Actively work with regulators and legislators to address rate and fuel cost issues. HSR Waiting Period Completion of each of these transactions is subject to certain closing conditions, including the non-occurrence of a material adverse event, the approval of relevant state utility commissions, the expiration or early termination of any waiting period under the Hart-Scott-Rodino Antitrust Act, and other closing conditions set forth in each asset purchase agreement. The closing of the Kansas electric operations transaction is also subject to the approval of the Federal Energy Regulatory Commission and the receipt of third-party financing by the acquirer. Aquila anticipates receiving timely regulatory approvals for these transactions within approximately 12 months. Mr. Green added: "We maintained a disciplined strategic sales approach that resulted in strong interest from a wide range of potential buyers. This allowed us to select offers from financially sound buyers with strong utility experience and a commitment to customer service and reliability. We are confident that the quality and commitment of these buyers will set the stage for a timely and orderly regulatory review and approval process." The Blackstone Group and Lehman Brothers Inc. served as advisors to Aquila. About the Buyers Based in Joplin, Missouri, The Empire District Electric Company (NYSE:EDE) is an investor-owned utility providing electric service to approximately 157,000 customers in southwest Missouri, southeast Kansas, northeast Oklahoma, and northwest Arkansas. The company also provides optic and Internet services, customer information software services, and has an investment in close- tolerance, customer manufacturing. Empire provides water service in three incorporated Missouri communities. Mid-Kansas Electric Company, LLC, is a coalition of six rural electric cooperatives serving in 34 western Kansas counties who organized themselves for the purpose of acquiring the assets of Aquila's Kansas electric network. The cooperatives also own Sunflower Electric Power Corporation, a generation and transmission service provider, as well as other businesses that provide a wide range of services including water supplies, satellite TV and Internet access, wireless broadband Internet access, cellular telephone service, commercial electrical services and propane delivery services. WPS Resources Corporation (NYSE:WPS), based in Green Bay, Wisconsin, is a holding company with four major subsidiaries providing electric and natural gas energy and related services in both regulated and nonregulated energy markets. Its principal subsidiary is Wisconsin Public Service Corporation, a regulated electric and natural gas utility serving northeastern Wisconsin and a portion of Michigan's Upper Peninsula. Wisconsin Public Service serves more than 421,000 electric customers and 305,000 natural gas customers. Another subsidiary, Upper Peninsula Power Company, is a regulated electric utility serving Michigan's Upper Peninsula. Upper Peninsula Power serves approximately 52,000 electric customers. WPS Resources' major non-regulated subsidiaries consist of WPS Energy Services, Inc. and WPS Power Development, LLC. WPS Energy Services is a diversified non-regulated energy supply and services company serving commercial, industrial and wholesale customers and aggregated groups of residential customers. Its principal market is the northeast quadrant of the United States and adjacent portions of Canada. Its principal operations in the United States are in Illinois, Maine, Michigan, Ohio, Virginia and Wisconsin. Its principal operations in Canada are in Alberta, Ontario, and Quebec. WPS Power Development owns and/or operates non-regulated electric generation facilities in Wisconsin, Maine, Pennsylvania, New York and New Brunswick, Canada; steam production facilities in Arkansas and Oregon; a partial interest in a synthetic fuel processing facility in Kentucky; and steam production facilities located in Arkansas and Oregon. Headquartered in Kansas City, Mo., Aquila Inc. (NYSE:ILA) - http://www.aquila.com/-- provides electricity and natural gas service to 1.3 million customers in Colorado, Iowa, Kansas, Michigan, Minnesota, Missouri and Nebraska. * * * As reported in the Troubled Company Reporter on Sept. 26, 2005, Standard & Poor's Ratings Services placed its ratings on Aquila Inc. on CreditWatch with positive implications. As of June 2005, the Kansas City, Missouri-based energy provider had about $2.35 billion in total debt. "The placement follows the company's announcement that it has signed definitive agreements to sell four utility businesses, for a total of $897 million, plus working capital and subject to net plant adjustments," said Standard & Poor's credit analyst Jeanny Silva. ASARCO LLC: Wants Lehman as Financial Advisor & Investment Banker ----------------------------------------------------------------- By this application, ASARCO LLC, asks the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ Lehman Brothers Inc. as its financial advisor and investment banker under the terms of an engagement letter entered into between the parties. Pursuant to the Engagement Letter, dated as of Aug. 30, 2005, ASARCO employed Lehman Brothers to provide financial advisory and investment banking services in connection with the assessment of the Debtor's financial restructuring or other strategic alternatives, and ASARCO's financial restructuring, which includes the plan of reorganization process and a possible sale, merger, consolidation or other transaction involving the transfer of ASARCO's business, assets or equity interests. Specifically, Lehman Brothers has agreed to: (a) advise and assist ASARCO in formulating a Plan, and analyzing any proposed Plan, including assisting in the Plan negotiation and confirmation process of a restructuring transaction under Chapter 11; (b) provide financial advice and assistance to ASARCO in structuring any new securities to be issued in a restructuring transaction; (c) participate in negotiations among ASARCO and its creditors, unions, suppliers, lessors and other interested parties relating to the reorganization cases; (d) participate in hearings before the Bankruptcy Court with respect to the matters upon which Lehman Brothers has provided advice, including, as relevant, coordinating with ASARCO's counsel with respect to testimonies; (e) provide expert witness testimony concerning any of the subjects encompassed by the other financial advisory services; (f) upon request, review and analyze any proposals ASARCO receives from third parties in connection with a transaction, including any proposals for debtor-in- possession financing and exit financing; (g) assist ASARCO in connection with its liquidity analysis; (h) review and analyze ASARCO's business, operations, properties, financial condition and prospects and financial projections; (i) evaluate ASARCO's debt capacity in light of its projected cash flows and assist in the determination of an appropriate capital structure; (j) analyze various restructuring scenarios and the potential impact of these scenarios on the recoveries of those stakeholders impacted by any transaction; (k) provide strategic advice with regard to restructuring or refinancing ASARCO's financial obligations; (l) assist in the drafting, preparation and distribution of selected information and other related documentation describing ASARCO and the terms of a potential transaction; (m) assist ASARCO in identifying, contacting and evaluating potential purchasers for any sale transaction; and (n) provide other advisory services as are customarily provided in connection with the analysis and negotiation of a restructuring or sale transaction, as will be requested. ASARCO relates that Lehman Brothers has significant experience and extensive knowledge in the fields of bankruptcy and mining. ASARCO selected Lehman Brothers after interviewing a number of investment banking firms. Mark Shapiro and Gil Sanborn, the managing directors of Lehman Brothers who are part of the Global Restructuring Group, and who will manage the ASARCO assignment, each have over 15 years of experience in assisting companies, creditors and others in bankruptcy cases. Moreover, Richard Tory, an executive director in the firm's Natural Resources Group, has extensive knowledge of the global metals and mining business. ASARCO will pay Lehman Brothers in accordance with these terms: (1) Commencing as of Aug. 30, 2005, and ending as of the termination of the firm's engagement, Lehman Brothers will be entitled to receive a monthly cash fee. The Advisory Fee is equal to $100,000 per month, payable in advance upon execution of the Engagement Letter and on the first day of each succeeding month for 24 months. Thereafter, the Advisory Fee will be reduced to $75,000 per month. If Lehman Brothers' engagement is terminated, the firm will be entitled to any Advisory Fees that are due and owing as of the effective date of the termination. However, in the event Lehman Brothers will terminate the Engagement Letter, the Advisory Fee will be pro-rated for any incomplete monthly period of service, in which case the firm agrees to promptly reimburse ASARCO for any portion of an Advisory Fee paid to Lehman Brothers that is in excess of the pro-rated amount of the Advisory Fee to which Lehman would be entitled for an incomplete monthly period of service. (2) If (i) a Sale Transaction occurs pursuant to which less than all of ASARCO's assets are sold or transferred, or (ii) an agreement is entered into that subsequently results in a Partial Assets Sale Transaction either during the term of Lehman Brothers' engagement or at any time during a period of 12 months following the effective date of termination of Lehman Brothers' engagement, other than termination as a result of Lehman Brothers' material breach, gross negligence or willful misconduct, ASARCO will pay Lehman Brothers a fee equal to 1% of the transaction value, payable in cash on the closing date of the Partial Assets Sale Transaction. (3) If (i) a Sale Transaction occurs pursuant to which all or substantially all of the assets of the company are sold or transferred, or (ii) an agreement is entered into that subsequently results in a Sale of All Assets either during the term of Lehman Brothers' engagement or at any time during the 12-month period following the effective date of termination, other than termination as a result of Lehman Brothers' material breach, gross negligence or willful misconduct, the company will pay Lehman Brothers a fee equal to 1% of the transaction value, payable in cash on the closing date of the Sale of All Assets, provided, however, that the Sale Transaction Fee will not exceed $4 million. (4) If a restructuring effective date occurs during the term of Lehman Brothers' engagement or at any time during the 12-month Tail Period, ASARCO will pay Lehman Brothers a $4 million fee, payable in cash on the Restructuring Effective Date. (5) All Advisory Fees paid, for up to 24 months, and 50% of all Advisory Fees paid subsequently, will be creditable against any Sale Transaction Fee or any Restructuring Transaction Fee paid or payable to Lehman Brothers. Any Sale Transaction Fee paid to Lehman Brothers in a Partial Assets Sale or a Sale of All Assets will be creditable against the Restructuring Transaction Fee paid to Lehman Brothers. However, in the case of a Partial Assets Sale Transaction, only 50% of the Sale Transaction Fee will be creditable against any Restructuring Transaction Fee paid to Lehman Brothers. Mr. Shapiro assures the Court that the firm does not have or does not represent any interest materially adverse to the interests of the Debtors or their estates, creditors, or interest holders. Moreover, Lehman Brothers is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Wants HR&A as Tort Claims Consultant ------------------------------------------------ Hamilton, Rabinovitz & Alschuler, Inc., is a consulting firm that provides analytical services focused on the estimation of claims and the development of claims procedures with regard to payments and assets of a claims resolution trust. ASARCO LLC and its debtor-affiliates believe that HR&A is well qualified to serve as their consultant in that, among other things, its members have assisted and advised numerous chapter 11 debtors and creditors in the estimation of the value of claims in other mass tort reorganizations. By this application, the Debtors ask Judge Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ HR&A to provide consulting services needed throughout the course of their bankruptcy, including: (a) estimating the number and value of present and future asbestos personal injury claims and silica personal injury claims; (b) formulating the Asbestos and Silica Trust Distribution Procedures; (c) formulating financial models of payments and assets of the Asbestos PI Trust and Silica PI Trust; (d) analyzing and responding to issues related to the provision of notice to asbestos and silica claimants, and assisting in the development of those notice procedures; (e) assisting in negotiations with various parties; (f) rendering expert testimony as required by the Debtors; (g) assisting the Debtors in preparing expert testimony or reports and in the evaluation of those reports by other experts and consultants; and (h) providing other advisory services as may be requested by the Debtors from time to time. The Debtors will pay HR&A on an hourly basis, in accordance with the firm's normal billing practices: Position Charge per hour -------- --------------- Senior Partners $550 Junior Partners $450 Managing Directors $400 Principals $300 Directors $275 Managers $250 Senior Analysts $200 Analysts $150 Research Associates $100 The Debtors will also reimburse the firm for reasonable out-of- pocket expenses incurred in connection with its employment. Francine F. Rabinovitz, a member of HR&A, assures the Court that the firm does not have or represent any interest materially adverse to the interests of the Debtors or their estates, creditors, or interest holders. Moreover, HR&A is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Govt. Wants CERLA Trial Upheld in Idaho District Court ------------------------------------------------------------------ On March 22, 1996, the United States Government filed an action against ASARCO, Inc., and several other defendants in the United States District Court for the District of Idaho pursuant to Section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act, and Section 311 of the Clean Water Act. The Idaho Action was commenced on behalf of the United States Department of the Interior, the United States Department of Agriculture, and the United States Environmental Protection Agency, and was filed in response to many decades of releases of hazardous substances from ASARCO's metals mining and smelting facilities. The Idaho Action seeks to recover around $1.5 billion in response costs and natural resource damages. By seeking to hold ASARCO accountable for the environmental damage, the suit also seeks to deter others from environmental violations. Kelly A. Johnson, Acting Assistant Attorney General of the Environment & Natural Resources Division of the U.S. Department of Justice, explains that the Idaho Action specifically concerns an area of over 800 square miles. The Idaho District Court divided the case so that liability and injury were tried first, and damages and cost issues tried if liability was found. The Phase I trial on liability and injury was held in 2001, wherein the Idaho Court ruled that certain natural resources were lost or injured and that ASARCO and Hecla Mining Company -- the remaining non-debtor defendant in the Idaho Action -- were liable for response costs and natural resource damages arising from mining contamination in the Coeur d'Alene Basin. Discovery is almost complete on Phase II issues, and hearings are currently scheduled to begin on Jan. 17, 2006, to determine the amount of response costs and natural resource damages for which the Defendants are liable. Essentially, therefore, the Idaho Action is mid-trial. According to Ms. Johnson, response costs recovered will be paid to the Hazardous Substances Superfund to finance response actions at the Site or other sites. Any sums recovered for natural resource damages will be used to restore, replace or acquire equivalent natural resources. After ASARCO LLC's bankruptcy filing, the Idaho Court issued an order staying the CERLA action against ASARCO because the Bankruptcy Court had not yet ruled whether the police and regulatory exception applies. Ms. Johnson notes that Section 362(b)(4) of the Bankruptcy Code provides that the automatic stay does not apply to the "commencement or continuation of an action or proceeding by a governmental unit . . . to enforce such governmental unit's . . . police and regulatory power, including the enforcement of a judgment other than a money judgment." The regulatory exception is based on the "compelling need for the government to continue to protect the public when a debtor files for bankruptcy and to "prevent a debtor from frustrating necessary governmental functions by seeking refuge in bankruptcy court." By this motion, the U.S. Government asks Judge Schmidt to issue a declaration that the Idaho Action is not subject to the automatic stay imposed by the Bankruptcy Code because the Action constitutes an exercise of the government's police and regulatory power. Ms. Johnson contends that, regardless of the applicability of the automatic stay to the U.S. Government's claims against ASARCO, the Idaho Action will proceed against Hecla. The Idaho Court has already ruled on the issue of divisibility between the two companies, finding Hecla responsible for 31% of damages and ASARCO for 22%. The issues in Phase II of the trial are essentially identical for ASARCO and Hecla, which issues primarily concern the amount of damages and response costs that are recoverable. Therefore, Ms. Johnson believes that it would be much more efficient to hold a single trial to determine those issues as to both Defendants as currently scheduled, rather than staying the trial as to ASARCO and requiring a second, duplicative trial later. Ms. Johnson relates that the Idaho Court is quite familiar with the detailed history of the CERCLA case and the issues related specifically to the upcoming Phase II trial. The Bankruptcy Court, on the other hand, would need to ascend the learning curve of the CERCLA case that the Idaho Court has spent nearly a decade mastering. Under the circumstances, it makes most sense for the Idaho Court to proceed with its trial as planned. This is especially true because the determination of the amount of ASARCO's damages and response costs likely would be referred back to the Idaho Court in any event. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000). ATA AIRLINES: Wants Court Nod on Goodrich Corp. Settlement ---------------------------------------------------------- ATA Airlines, Inc., and Goodrich Corporation are parties to a wheel and brake service and purchase agreement dated June 23, 2000. Goodrich filed Claim Nos. 69, 1354 and 2071, asserting certain amounts the Debtor owed Goodrich under the Agreement. Goodrich also commenced an adversary proceeding against the Debtor, asserting various causes of action. Moreover, Goodrich filed a $2,242,380 administrative expense claim against the Debtor. The Debtor argued that Goodrich owed them certain amounts under the Agreement. The Debtor asserted that it may seek to avoid certain prepetition payment to Goodrich as preferences. After engaging in arm's-length negotiations, the Debtor and Goodrich agree that: a. They will mutually terminate the prior Agreement and execute a new agreement for the inspection, repair, and replacement of ATA wheels and brakes for all or a portion of ATA's existing or future fleet; b. They will file a joint motion for an order to dismiss with prejudice the Adversary Proceeding; c. They will file a joint motion for an order resolving the Administrative Expense Motion; d. ATA will transfer to Goodrich ownership and possession of: * 737-800 Nose Wheels - 39 units of P/N 3-1559, * 737-800 Main Wheels - 52 units of P/N 3-1558, * 737-800 Brakes - 26 units of P/N 2-1587, * 757-300 Nose Wheels - 9 units of P/N 3-1423-2, * 757-300 Main Wheels - 24 units of 3-1581, and * 757-300 Brakes - 12 units of P/N 2-1617, 2-1617-1; e. Goodrich will withdraw the Wheel and Brake Claims; and f. They will exchange releases of claims and liabilities. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, ATA Airlines ask the Court to approve its settlement agreement with Goodrich. Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana, asserts that absent settlement, ATA may be compelled to expend substantial resources and incur unnecessary expenses in defending its disputes with Goodrich. Debtors File New Agreement Under Seal Ms. Hall tells the Court that the parties' new wheel and brake agreement contains confidential and proprietary information. Pursuant to Section 107(b)(1) of the Bankruptcy Code and Bankruptcy Rule 9018, the Debtors seek the Court's permission to file the agreement under seal. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) BEAZER HOMES: Registers $3M+ Convertible Senior Notes for Resale ---------------------------------------------------------------- Beazer Homes USA, Inc., filed a Registration Statement with the Securities and Exchange Commission for the resale of $3,042,000 of 4-5/8% Convertible Senior Notes due 2024 held by Goldman Sachs & Co. The Notes The Convertible Senior Notes bear interest at the rate of 4-5/8% per year. Interest on the notes is payable on June 15 and December 15 of each year. Beginning with the six-month interest period commencing on June 15, 2009, the Company will pay contingent interest during a six-month interest period if the average trading price is above a specified level during a specified period prior to such six-month interest period. The notes are convertible by holders into shares of the Company's common stock at an initial conversion rate of 6.48 shares of common stock per $1,000 principal amount of notes (subject to adjustment in certain events), which is equal to an initial conversion price of $154.32 per share, under these circumstances: (1) during any calendar quarter, if the price of the Company's common stock issuable upon conversion reaches specified thresholds during the previous calendar quarter; (2) subject to certain limitations, during the five business day period after any five consecutive trading day period in which the trading price per note for each day of that period was less than 98% of the product of the last reported sales price of the Company's common stock and the conversion rate of the notes for each such day; (3) if the Company calls the notes for redemption; (4) upon the occurrence of specified corporate transactions; (5) during any period in which the credit ratings assigned to the notes are below certain levels. The notes mature on June 15, 2024. The Company may redeem some or all of the notes at any time on or after June 15, 2009. A full-text copy of the Prospectus is available for free at http://ResearchArchives.com/t/s?1d8 The Convertible Notes carry these ratings: Rating Agency Rating ------------- ------ Fitch BB+ Moody's Ba1 S&P BB The common stock is listed on the New York Stock Exchange under the symbol "BZH." The Company's common shares traded around $66 per share in early August and have traded between $55.83 and $62.39 this month. A full-text copy of the Registration Statement is available for free at http://ResearchArchives.com/t/s?1d9 Headquartered in Atlanta, Beazer Homes USA, Inc., -- http://www.beazer.com/-- is one of the country's ten largest single-family homebuilders with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia and also provides mortgage origination and title services to its homebuyers. Beazer Homes, a Fortune 500 company, is listed on the New York Stock Exchange under the ticker symbol "BZH." * * * As reported in the Troubled Company Reporter on June 7, 2005, Fitch Ratings has assigned a 'BB+' rating to Beazer Homes USA, Inc. (NYSE: BZH) $300 million, 6.875% senior unsecured notes due July 15, 2015. The Rating Outlook is Stable. The issue will be ranked on a pari passu basis with all other senior unsecured debt, including the company's unsecured bank credit facility. A portion of the offering proceeds will be used to repay the company's existing $200 million term loan due 2008, with the remainder to be used for general corporate purposes. Ratings for Beazer are influenced by the company's operational record during the past decade and the financial progress that the company has achieved. Since Beazer went public in 1994, it has been an active consolidator in the homebuilding industry which has contributed to its above average growth. As a consequence, it has realized higher debt levels than its peers in recent years, especially following the Crossmann Communities acquisition. BELDEN & BLAKE: Extends Tender Offer for Sr. Sec. Notes to Oct. 12 ------------------------------------------------------------------ Belden & Blake Corporation has extended the expiration of its tender offer to purchase for cash any and all of its outstanding 8.75% Senior Secured Notes due 2012 in the aggregate principal amount of $192,500,000 (CUSIP Number 077447AE0). The Tender Offer will expire at 9:00 a.m., New York City time on Wednesday, Oct. 12, 2005, unless Belden & Blake extends it further. Requests for documentation may be directed to Global Bondholder Services Corporation, at (212) 430-3774 (collect; for banks and brokers) or (866) 795-2200 (toll free; for all other than banks and brokers). Belden & Blake engages in the exploitation, development, production, operation and acquisition of oil and natural gas properties in the Appalachian and Michigan Basins (a region which includes Ohio, Pennsylvania, New York and Michigan). Belden & Blake is a subsidiary of Capital C Energy Operations, LP, an affiliate of Carlyle/Riverstone Global Energy and Power Fund II, L.P. * * * As reported in the Troubled Company Reporter on Apr. 7, 2005, Moody's downgraded Belden & Blake's senior implied rating from B3 to Caa1 and its note rating from B3 to Caa2. The outlook is changed to negative. The downgrade, which concludes Moody's review that commenced on December 28, 2004, is a result of Moody's review of the company's 10-K which confirmed the credit deterioration through a combination of: * a greater than expected reserve revision; * poor capital productivity evidenced by drillbit F&D of $62.23/boe (excluding revisions) and only replacing 15% of production through extensions and discoveries; * very high leverage on the proved developed (PD) reserves of $7.64/boe; * B&B's very high full cycle costs that are unsustainable long- term; and * the free cash flow drain from currently out-of-the-money hedging that could otherwise be used for debt repayment or reinvestment. The notes are notched down from the senior implied rating due a combination of: * asset deterioration which impacts the coverage for the bondholders; * the increased use of the credit facilities (including L/C's) to support underwater hedging; and * the carveouts in the indenture that could permit additional secured debt to be layered in ahead of the notes. BUDGET GROUP: Administrator Asks for Decree Closing Ch. 11 Case --------------------------------------------------------------- Walker, Truesdell & Associates, the Plan Administrator for BRAC Group, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to enter a final decree closing the Reorganized Debtor's chapter 11 case. BRAC Group is the reorganized entity created pursuant to the merger of Budget Group, Inc., and its debtor-affiliates following the confirmation of their Second Amended Joint Liquidating Plan of Reorganization. The Plan Administrator reports that it has distributed approximately $81 million since the effective date of the Plan and holds approximately $1.1 million in reserves. The Plan Administrator adds that all claims asserted against the Reorganized Debtor have either been adjudicated by the Court or resolved by the parties involved, except for: a) Jaeban (U.K.) Limited's $4 million asserted cure claim. The claim is subject to a cure reserve maintained by the U.K. Administrator with Harris Bank having a balance of approximately $4.5 million. The U.K. Administrator is prosecuting defenses to the cure claims and certain counter-claims; and b) four cure claims, covered by a cure reserve with a balance of $927,000 at Sept. 12, 2005, subject to negotiations between the claim holders and Cendant Corporation, the buyer of the Reorganized Debtor's North American assets. 1) $70,000 cure claim of Cintas Corp. 2) $15,000 cure claim of IBM 3) $22,693 cure claim of Jani King 4) $299,000 cure claim of PeopleSoft The Plan Administrator tells the Bankruptcy Court that the Plan has been substantially consummated and that it does not anticipate filing any further motions, applications or pleadings except to the extent necessary to resolve the remaining claims and effect a turnover of the cure reserve to Cendant Corporation. A summary of professional fees paid and distributions made by the Plan Administrator is available for free at: http://researcharchives.com/t/s?1e0 A list of outstanding adversary proceedings commenced by the Plan Administrator and handled by Brown Rudnick Berlack Israels LLP and Ashby & Geddes, PA, is available for free at: http://researcharchives.com/t/s?1e1 A list of outstanding adversary proceedings commenced by the Plan Administrator and handled by Gazes LLC and Young Conaway Stargatt & Taylor, LLP, is available for free at: http://researcharchives.com/t/s?1e4 Headquartered in Daytona Beach, Florida, Budget Group, Inc., operates under the Budget Rent a Car and Ryder names -- is the world's third largest car and truck rental company. The Company filed for chapter 11 protection on July 29, 2002 (Bankr. Del. Case No. 02-12152). Lawrence J. Nyhan, Esq., and James F. Conlan, Esq., at Sidley Austin Brown & Wood and Robert S. Brady, Esq., and Edward J. Kosmowski, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,047,207,133 in assets and $4,333,611,997 in liabilities. On April 20, 2004, the Court confirmed the Debtors' Joint Liquidation Plan, as modified, in accordance with Sections 1129(a) and (b) of the Bankruptcy Code. CAPELLA HEALTHCARE: Moody's Junks $58 Million Sr. Sec. Term Loan ---------------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Capella Healthcare, a start up operator of acute care hospitals. Despite the strength of the management team, their familiarity with the acquired assets, and opportunities to improve the operating results of the company's hospital base, the ratings are constrained by: * high financial leverage and the expectation of future debt-financed acquisitions; * the absence of a track record of positive free cash flow; * significant concentration of EBITDA in one of the acquired facilities; and * the lack of any meaningful scale or geographic diversity. The proceeds of the proposed offering, along with $66 million of common equity contributed by GTCR Golder Rauner L.L.C. (GTCR) and management, will be used to acquire four hospitals from HCA, Inc. (HCA). Capella was formed through a partnership between senior members of the former Province Healthcare management team and GTCR for the purpose of acquiring and operating non-urban hospitals. Management will own 21% of Capella and made a cash contribution of approximately $2 million. The equity will be contributed to Capella Holdings, Inc., a holding company and ultimate parent of Capella. The debt will be issued by Capella, an intermediate holding company. Ratings assigned to Capella Healthcare: * $40 million senior secured revolving credit facility due 2011, rated B3 * $97 million senior secured 1st lien term loan due 2012, rated B3 * $58 million senior secured 2nd lien term loan due 2013, rated Caa2 * B3 corporate family rating The outlook for the ratings is stable. The ratings reflect the company's high leverage after the transaction. Moody's estimates that pro forma lease-adjusted debt to adjusted EBITDA will be high at 5.8 times by the end of fiscal 2005 if expected improvements in EBITDA are realized. Further, Moody's considered the high likelihood that the company will add to this base of hospitals through additional debt-financed acquisitions. The credit facilities allow for up to $60 million of additional borrowings, which are not yet committed and are subject to compliance with financial covenants. The ratings also reflect the absence of meaningful cash flow from these four facilities in prior periods, and constraints on near- term free cash flow due to the capital investments required to increase market share and facilitate physician recruiting. Further, the ratings consider: * the concentration of company pro forma EBITDA, as one of the four acquired facilities generates approximately 44% of total EBITDA; * the lack of significant scale, both in total and in any service area, that could improve operating results by leveraging costs and enhancing the company's position in managed care contracting and physician recruiting; and * the lack of geographic diversity. The four acquired facilities are in Tennessee, Washington and Oklahoma. Moody's considers Tennessee and Oklahoma particularly susceptible to changes in Medicaid reimbursement due to initiatives in those states to reduce the burden of Medicaid coverage on state budgets. Approximately 71% of the company's total net revenue is generated from facilities in Tennessee and Oklahoma. The ratings also reflect management's significant experience in acute care hospital operations and in many cases, first-hand experience with the assets being acquired and the markets in which they operate. Capella's management team consists predominantly of former management of Province Healthcare. Further, the expectation of continued support of the equity sponsor, GTCR, could limit acquisition-driven increases in leverage. Integration of the four acquired facilities should not present any significant risks since the hospitals have been operating on the HCA systems that Capella will initially use. The stable outlook reflects a stable environment with respect to Medicare reimbursement. Additionally, Moody's believes the company will be able to improve the operations of the acquired facilities by providing a level of focus that was not provided while the facilities operated as part of the much larger HCA system. Moody's believes that some of these improvements may require additional investment and time to be realized. However, in the near term, Moody's would not expect any deterioration of the historical operating performance of the acquired facilities. If the company shows stability in its operations over the next 12- 18 months and does not enter into a transaction that would significantly increase financial leverage or represent substantial integration risk, there could be upward pressure on the ratings. For example, if the company is expected to generate sustainable operating cash flow to adjusted debt in the range of 8%-10% and free cash flow to adjusted above 6%, Moody's would consider changing the ratings outlook to positive. However, many factors currently constraining the ratings are non-financial measures such as size and concentration. These factors would also be given significant consideration in any rating action. The ratings could come under pressure if Capella were to incur additional indebtedness for acquisitions or development beyond our expectations. If additional financial leverage resulted in the expectation of a prolonged period of negative free cash flow, Moody's would consider changing the ratings outlook to negative. Pro forma for the proposed transaction, Capella's cash flow coverage of debt would have been weak. Moody's estimates that for the year ended December 31, 2004, adjusted operating cash flow to adjusted debt would have approximated break even and adjusted free cash flow to adjusted debt would have been approximately -5%. Pro forma EBIT coverage of interest would have been weak at approximately 0.2 times for the year ended December 31, 2004. Adjusted debt to adjusted book capitalization pro forma for the transaction would have approximated 71% at December 31, 2004, and debt to revenues would have been approximately 83%. Moody's expects Capella to have adequate liquidity pro forma for the transaction. Capella will have approximately $2 million of cash on hand and access to a $40 million revolving credit facility that will be undrawn at closing. As noted above, free cash flow will be constrained in the near term due to service enhancement initiatives designed to increase market share and aid in physician recruitment. Moody's does not expect the company's access to the undrawn revolver to be constrained by financial covenants established in the new facilities. The B3 rating on the revolver and term loan B reflect the first lien priority of these instruments and the expectation of adequate collateral coverage. The term loan B amortizes 1% annually in quarterly installments with the remainder payable in the final year. The facility also calls for a 50% excess cash flow sweep with stepdowns if leverage reaches certain levels. Collateral includes a first priority security interest on all assets of the borrower (Capella) and guarantors and a first priority pledge of all capital stock of the borrower. The guarantors include Capella Holdings and all existing and subsequently acquired or organized wholly owned subsidiaries of Capella or Capella Holdings. The Caa2 rating on the term loan C, two notches below the corporate family rating, reflects: * the second lien position of the instrument; * the effective subordination to a sizable amount of first lien debt; and * the likely impairment to holders of the tranche in a distress scenario. Collateral and guarantees are the same as the first lien facility. Headquartered in Brentwood, Tennessee, Capella Healthcare, after the closing of the proposed transaction, will operate four acute care hospitals in three states. For the twelve months ended June 30, 2005, the facilities to be acquired generated revenues of approximately $198 million. CAPELLA HEALTHCARE: S&P Junks $58 Mil. Proposed Sr. Secured Debt ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to hospital company Capella Healthcare, Inc. The rating outlook is negative. In addition, Capella's proposed $137 million senior secured first- lien credit facility due in 2012 was rated 'B' with a recovery rating of '2', indicating the expectation for a substantial (80%- 100%) recovery of principal in the event of a payment default. The company's proposed $58 million senior secured second-lien term loan due in 2013 was rated 'CCC+' with a recovery rating of '4', indicating the expectation for a marginal (25%-50%) recovery of principal in the event of a payment default. These ratings are based on preliminary documentation. The company will use the proceeds from the senior secured loans, as well as $66 million in new equity to be provided by GTCR Golder Rauner LLC, to finance the purchase of four hospitals from HCA Inc. Pro forma for the bank loan transaction, outstanding debt will be $155 million. "The low-speculative-grade ratings reflect the numerous risks that Capella's experienced management team will have in operating a small start-up hospital company with no record as an independent entity," said Standard & Poor's credit analyst David Peknay. "The ratings also reflect the company's high debt burden." Capella's small, undiversified portfolio of only four hospitals and disproportionate dependence on one facility for nearly half of its EBITDA is characteristic of the company's vulnerable business risk profile. This lack of diversity presents a large risk, particularly because Capella also will be challenged to establish a corporate infrastructure capable of operating a hospital portfolio that is now located in only three states (though it will inevitably grow with additional acquisitions). The company will be highly leveraged following the bank loan transaction, with pro forma lease-adjusted debt to EBITDA at about 6.0x. Standard & Poor's expects Capella to remain highly leveraged for the next several years -- even if it has some success in improving the operating performance of its hospitals -- as future expansion will likely be financed heavily with debt. CATHOLIC CHURCH: Court Sets Status Conference Schedule in Portland ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Oregon sets this schedule for the status conference regarding the topic listing for "pattern and practice" witnesses: Date Event ---- ----- September 30, 2005 Deadline for Tort Claimants to amend Topic List October 21, 2005 Levada Scope Objections Due November 18, 2005 Tort Claimant Response Due December 5, 2005 Replies Due December 16, 2005 9:30 a.m. hearing The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTURY/ML: Century & ML Media Inks Estate Administration Accord ---------------------------------------------------------------- Under the terms of Century/ML Cable Venture's confirmed Plan of Reorganization, on the Effective Date, the management, control and liquidation of the Transferred Assets will become the responsibility of Century Communications Corp. and ML Media Partners, L.P. In their desire to establish a Plan Administration Board to manage, control and liquidate the Transferred Assets and to otherwise administer the estate in lieu of a Plan Administrator, Century and ML Media entered into an Estate Administration Agreement on September 7, 2005. The salient terms of the Estate Administration Agreement are: A. Plan Administration Board Century and ML Media will each be entitled to appoint two representatives to the Board, which will administer the estate in accordance with the Century/ML Plan and will perform all duties necessary or appropriate to manage, control and liquidate the Transferred Assets and the Excluded Liabilities and to otherwise administer the estate. Century designates Murray Flanigan and Mark Spiecker to act as initial representatives on the Board. ML Media designates I. Martin Pompadur and Elizabeth McNey Yates. B. Retained Cash Prior to the Effective Date, Century and ML Media will agree on the amount of cash to be initially designated as Retained Cash for the Plan Funding Reserve. C. Century and ML Media will provide or cause its affiliates or third-party service providers to provide transition services including preparation of tax returns, preparation of financial statements, audit of financial statements, management of liabilities of the estate and management of certain lawsuits. Each of the Transition Services will be provided under the overall supervision of the Plan Administration Board. The Third-Party Service Providers are: Third-Party Service Provider Services ---------------------------- -------- Morgan Lewis & Bockius LLP Legal representation Quinones Sanchez & Guzman Legal representation Rodriquez-Parissi Vazquez & Co. Tax representation Fisher & Phillips LLP Legal representation Schuster Usera & Aguilo Legal representation Andrea McDermott Accounting Shawn Gallagher Accounting Frank Lavalle Accounting D. Termination Except as otherwise agreed in writing by Century and ML Media, the Estate Administration Agreement will terminate upon the later to occur of the closing of Century/ML's Chapter 11 case, or the completion of all of the Transition Services as determined by the Administration Board. A full-text copy of the Estate Administration Agreement is available for free at http://ResearchArchives.com/t/s?1e7 Century Communications Corporation filed for Chapter 11 protection on June 10, 2002. Century's case has been jointly administered to proceedings of Adelphia Communications Corporation. Century operates cable television services in Colorado, California and Puerto Rico. CENTURY is an indirect wholly owned subsidiary of ACOM and an affiliate of Adelphia Business Solutions, Inc. Lawyers at Willkie, Farr & Gallagher represent CENTURY. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTURY/ML: Court OKs Stipulation on Transfer Accounting Dispute ---------------------------------------------------------------- Adelphia Communications Corp., its wholly owned, indirect subsidiary Debtor Century Communications Corp., Debtor Century/ML Cable Venture, Century/ML Cable Corporation and ML Media Partners, L.P., want to complete the consolidated audited financial statements of Century/ML, which include the accounts of Cable Corp. On March 28, 2002, approximately $25 million was transferred from the bank accounts of Cable Corp. to the bank accounts of Century and ACOM. At the time of the Transfer, Century/ML and Cable Corp. had consolidated liabilities to Century and ACOM of at least $25 million. Disputes have arisen between Century and ACOM, on one side, and ML Media, on the other, regarding: -- how to account for the Transfer, -- the effect of the Transfer on the Financial Statements, and -- other matters accounted for in the Financial Statements. Century and ML Media, as owners of Century/ML, agreed to adopt certain proposed accounting treatments in the Financial Statements for the Transfer Accounting Dispute and the Other Disputed Matters, subject to, among others, the preparation of language to be included in the notes to the Financial Statements reasonably acceptable to Adelphia and to ML Media. In a stipulation Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York approved, the parties agree that: 1. The Financial Statements, and the representation letters to be delivered by Century, ACOM and ML Media to Century/ML auditors in connection with the Financial Statements, are not intended to and will not preclude any of the parties from maintaining or asserting any claim, defense, or liability against each other; and 2. ML Media, Century and ACOM agree to the Proposed Accounting Treatment for the Transfer Accounting Dispute and waive all claims against each other, Cable Venture or Cable Corp. arising out of the adoption of the Proposed Accounting Treatment for the Transfer Accounting Dispute. Century Communications Corporation filed for Chapter 11 protection on June 10, 2002. Century's case has been jointly administered to proceedings of Adelphia Communications Corporation. Century operates cable television services in Colorado, California and Puerto Rico. CENTURY is an indirect wholly owned subsidiary of ACOM and an affiliate of Adelphia Business Solutions, Inc. Lawyers at Willkie, Farr & Gallagher represent CENTURY. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., 215/945-7000) CERVANTES ORCHARDS: Deere Credit Won't Allow Cash Collateral Use ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Washington approved the request of Deere Credit, Inc., to prohibit Cervantes Orchards and Vineyards LLC's continued access to cash collateral securing its prepetition debt. Deere Credit, a secured creditor, holds a fully secured claim for approximately $4.2 million. The claim arises under several notes executed on July 8, 2003, by the Debtor and various non-debtor entities. The notes are currently in default. To secure repayment of notes, the Debtor granted Deere Credit a security interest in substantially all of the Debtor's personal property. The Debtor continues to operate while disposing of the cash collateral subject to the first priority security interest of Deere Credit. To date, the Debtor has failed to perform its obligations. Deere Credit told the Court that the Debtor has failed to provide any financial information or information accounting for the use of cash collateral. Cervantes is not dependant on Deere for post-petition working capital. Cervantes has obtained post-petition DIP Financing from Gilbert Orchards. Headquartered in Sunnyside, Washington, Cervantes Orchards and Vineyards LLC, filed for chapter 11 protection on Aug. 19, 2005 (Bankr. E.D. Wash. Case No. 05-06600). R. Bruce Johnston, Esq., at Law Offices of R. Bruce Johnston represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. CHOICE FINANCIAL: Case Summary & 13 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Choice Financial Funding Inc. p/k/a Chase Financial Funding Inc. 21 Brookline Aliso Viejo, California 92656 Bankruptcy Case No.: 05-17111 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Chase Enterprises LLC 05-17110 Type of Business: The Debtor advertises, solicits, markets, and brokers mortgage loans. Chapter 11 Petition Date: September 26, 2005 Court: Central District of California (Santa Ana) Judge: John E. Ryan Debtors' Counsel: Leonard Pena, Esq. 555 West Fifth Street, 31st Floor Los Angeles, California 90013 Tel: (213) 966-8336 Fax: (213) 996-8337 Estimated Assets Estimated Debts ---------------- --------------- Choice Financial Funding $1 Million to Less than $50,000 Inc. $10 Million Chase Enterprises LLC $1 Million to Less than $50,000 $10 Million Choice Financial Funding Inc.'s 13 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Mintz Levin Cohen Ferris $100,000 1620 26th Street, Suite 2068N Santa Monica, CA 90404 Collier Shannon & Scott $69,000 Washington Harbour, Suite 400 3050 K Street Northwest Washington, DC 20007 PFE International $60,000 475 Goddard, Suite 150 Costa Mesa, CA 92626 Ricoh Copiers $50,000 Bank of America $11,278 M Power Communications $10,288 CDS Mortgage Reports $4,523 Federal Express $3,200 GE Capital $2,000 SBC $1,350 CR & R $540 SafeGuard $280 Cox $162 COIN BUILDERS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Coin Builders, LLC P.O. Box 455 Wisconsin Rapids, Wisconsin 54495-0455 Bankruptcy Case No.: 05-18109 Type of Business: The Debtor has four subsidiaries that operate in the merchandising, wholesale, restaurant, and aviation sectors. See http://www.coinbuilders.net/ Chapter 11 Petition Date: September 26, 2005 Court: Western District of Wisconsin (Eau Claire) Debtor's Counsel: George B. Goyke, Esq. Goyke, Tillisch & Higgins LLP 207 Grand Avenue P.O. Box 2188 Wausau, Wisconsin 54402-2188 Tel: (715) 849-8100 Fax: (715) 849-8102 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ 7-Eleven Inc. $9,987,814 2711 North Haskell Avenue Dallas, TX 75204 Active Consumer Promotions Inc. $1,850,000 1210 West Clay Street Houston, TX 77019 Circle K $1,346,342 P.O. Box 52085 Tempe, AZ 85281 Speedway Superamerica LLC $977,988 Attn: Treasury P.O. Box 7600 Springfield, OH 45501 Upper Deck Company $799,301 13326 Collection Center Drive Chicago, IL 60693 7-Eleven (Canada) $536,204 3185 Willington Green Burnaby, BC V5G 4P3 Topps Company Incorporated $363,093 P.O. Box 4050 Church Street Station New York, NY 10261-4050 Conoco Phillips $353,995 P.O. Box 66 Bartellsville, OK 66066 Rogers Video $352,442 Unit #11, 10991 Shellbridge Way Richmond, BC V6X 3C6 Nintendo of America Inc. $236,002 4820 150th Avenue Northeast Redmond, WA 98052 7-Eleven Inc. $230,175 2711 North Haskell Avenue Dallas, TX 75204 Playoff Corporation $202,418 P.O. Box 226467 Dallas, TX 75222 United Parcel Service $197,255 Lockbox 577 Carol Stream, IL 60132-0577 Bandai America Incorporation $176,524 P.O. Box 51330 Las Angeles, CA 90051 7-Eleven (Hawaii) $135,096 1755 Nuu Anu Avenue 2nd Floor Honolulu, HI 96817 Racing Champions $103,520 2418 Reliable Parkway Chicago, IL 60686-2418 Gas N Shop $81,035 P.O. Box 81463 Lincoln, NE 68501 Ultra Mar $74,194 2200 McGill College Montreal, QC H3A 3L3 Wizkids, Inc. $59,163 P.O. Box 1176 Spokane, WA 99210-1176 Shop Rite $31,416 115 East First Street Crowley, LA 70526 COLLINS & AIKMAN: GM Wants to Recover Tooling Equipment ------------------------------------------------------- Before the Petition Date, Collins & Aikman Corporation and its debtor-affiliates entered into various purchase orders and supply agreements with General Motors Corporation, pursuant to which they agreed to and are obligated to manufacture GM's requirements of certain component parts. Scott A. Wolfson, Esq., at Honigman Miller Schwartz and Cohn LLP, in Detroit, Michigan, relates that the Debtors are GM's sole source, just-in-time suppliers of the Component Parts since GM obtains all of its Component Part requirements from the Debtors. Pursuant to the just-in-time supply method, GM does not maintain a significant inventory of Component Parts and relies on frequent, even daily, shipments of Component Parts to meet production needs. Mr. Wolfson tells Judge Rhodes that due to the Debtors' Chapter 11 cases, GM is prompted to prepare for re-sourcing in the event that the Debtors are no longer able to provide the parts needed for its manufacturing processes. That preparation must include GM's ability to repossess a certain tooling currently used by the Debtors pursuant to bailment agreements. Mr. Wolfson explains that the Component Parts are of a specific manufacture and design. It is customary in the industry for manufacturers to pay for and own the tooling that is specific to the manufactured parts unique to their vehicles. Via bailment, GM has provided the Debtors with certain supplies, materials, tools, jigs, dies, gauges, fixtures, molds, patterns, equipment, and other items to enable them to perform the Production Purchase Orders. GM assures the Court that the company remains committed to proceed, in good faith, with all of the constituencies involved with Collins & Aikman Corp. in the pursuit of a successful conclusion of the Chapter 11 cases. However, GM must prepare for contingencies and circumstances in which the Debtors cannot or will not be able to timely deliver the Component Parts to GM, thus placing its assembly operations in jeopardy with consequential prejudice and actual harm to the company, its over 100,000 employees, and the persons and entities who rely on and engage in business with it. Under the Tooling Purchase Orders, upon GM's payment of amounts properly invoiced by the Debtors and validly due, GM would own the Tooling. GM believes that it has paid all the amounts due to the Debtors. The Tooling is GM's property and the Debtors' obligation to turn the Tooling over to GM is absolute and unconditional, Mr. Wolfson says. Mr. Wolfson contends that the Debtors have no equity in the Tooling and GM's repossession will not adversely affect any reasonable likelihood of the Debtors' pursuit of a successful conclusion to their Chapter 11 cases. Accordingly, GM asks the Court to lift the automatic stay to take all necessary actions to: a. recover possession of all Tooling associated with a rejected Production Purchase Order immediately on the rejection date; b. recover possession of all Tooling associated with a facility that the Debtors notify their intent to close; c. recover possession of all Tooling after September 30, 2005, in the absence of a final, non-appealable order approving further financing for the Debtors in amounts adequate to maintain their projected operations or on the cessation of financing under the Final Order; and d. recover possession of all Tooling in the event the Debtors materially interrupt GM's vehicle assembly operations as a result of the Debtors' failure to adequately supply GM its requirements of Component Parts. Although GM is entitled to immediate relief from the automatic stay for cause, Mr. Wolfson clarifies that GM only seeks relief contingent on the Debtors' lack of adequate financing to maintain operations, their rejection of any of the Production Purchase Orders, their decision to close a facility, or their causing a material interruption in its assembly operations. "The uncertainties confronting Collins & Aikman are self-evident. They include the limited amount and duration of its Debtor-in- Possession financing, as well as the aggressive combative actions and the threats of the General Unsecured Creditors Committee to induce Collins & Aikman to reject executory contracts with GM without an agreement to provide a reasonable transitional period to wind down the particular production and avoid unnecessary harm and damages," Mr. Wolfson says. GM will continue its discussions with Collins & Aikman and other parties-in-interest in pursuit of the Debtors' efforts to emerge from Chapter 11 as competitive, viable suppliers or to otherwise dispose of their assets in the best interests of the economic stakeholders. Brown Responds Brown Corporation is a Tier II supplier for GM. This means that GM contracted with the Debtors to produce the Component Parts pursuant to Production Purchase Orders, and the Debtors, in turn, contracted with Brown to: (a) produce certain component parts; and (b) acquire the tooling to manufacture the Brown Component Parts. Mark L. Collins, Esq., at Varnum, Riddering, Schmidt & Howlett LLP, in Grand Rapids, Michigan, relates that the Debtors issued purchase orders directly to Brown for the Brown Component Parts and the Brown Tooling. Brown is the current owner of the Brown Tooling. Brown objects to GM's request to the extent that GM may subsequently attempt to use any order issued by the Court as a means to obtain possession of the Brown Tooling. While Brown acknowledges that GM may only intend for its request to pertain to its Tooling in the Debtors' possession, Brown says the Request is ambiguous. GM's Tooling Purchase Orders to the Debtors do not preempt Brown's ownership of the Brown Tools. Thus, Brown asks the Court to limit the relief requested by GM so as to preclude GM from taking actions to recover possession of tooling which belongs to or is subject to the rights of Brown and other third parties. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) COMPOSITE TECH: Selling $6 Million Notes Via Private Placement -------------------------------------------------------------- Composite Technology Corporation (OTC Bulletin Board: CPTCQ) entered into an agreement to sell $6 million aggregate principal amount of senior convertible notes due December 2006, with an interest rate of 6.0% per annum, payable quarterly to certain institutional accredited investors in a private placement. The Notes will be convertible into shares of the Company's common stock at a conversion price of $1.60 per share. The institutional accredited investors will also receive two tranches of warrants, each of which will be exercisable for 562,500 shares of the Company's common stock. One such tranche of warrants will have an exercise price of $2.00 per share and the other tranche will have an exercise price of $1.84 per share. Both tranches of warrants will have a term of three years. The placement of the Notes and Warrants is expected to close on or before Sept. 30, 2005, subject to the Bankruptcy Court's approval. A hearing has been scheduled before Judge John E. Ryan, U.S. Bankruptcy Court, at 3:30 pm (PDT) on Sept. 28, 2005, for the Company to seek approval of this financing. The net proceeds of the offering will be used to pay allowed pre- petition claims and administrative fees and expenses upon confirmation and consummation of the Company's plan of reorganization in addition to providing capital for general operating purposes. A hearing to consider confirmation of the Company's plan of reorganization is currently scheduled for Oct. 12, 2005. Headquartered in Irvine, California, Composite Technology Corporation -- http://www.compositetechcorp.com/-- provides high performance advanced composite core conductor cables for electric transmission and distribution lines. The proprietary new ACCC cable transmits two times more power than comparably sized conventional cables in use today. ACCC can solve high-temperature line sag problems, can create energy savings through less line losses, and can easily be retrofitted on existing towers to upgrade energy throughput. ACCC cables allow transmission owners, utility companies, and power producers to easily replace transmission lines without modification to the towers using standard installation techniques and equipment, thereby avoiding the deployment of new towers and establishment of new rights-of- way that are costly, time consuming, controversial and may impact the environment. The Company filed for chapter 11 protection on May 5, 2005 (Bankr. C.D. Calif. Case No. 05-13107). Leonard M. Shulman, Esq., at Shulman Hodges & Bastian LLP, represents the Debtor in its restructuring efforts. As of March 31, 2005, the Debtors reported $13,440,720 in total assets and $13,645,199 in total liabilities. CORNERSTONE PRODUCTS: Panel Taps FTI as Financial Advisor --------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan gave the Official Committee of Unsecured Creditors of Cornerstone Products, Inc., permission to retain FTI Consulting, Inc., as its financial advisor. The Committee tells the Bankruptcy Court that FTI Consulting will aid in its assessment and monitoring of the Debtor's efforts to maximize the value of the estate and achieve a successful reorganization. In this engagement, FTI Consulting will: a) assist the Committee in the review of financial related disclosures required by the Court, including the Schedules of Assets and Liabilities, the Statement of Financial Affairs and Monthly Operating Reports; b) assist the Committee with information and analyses required pursuant to the Debtor's use of cash collateral including preparation for hearings regarding the use of cash collateral; c) assist with a review of the Debtor's short-term cash management procedures; d) assist and advice the Committee with respect to the Debtor's identification of core business assets and disposition of assets or liquidation of unprofitable operations; e) assist with a review of the Debtor's performance of cost/benefit evaluations with respect to the affirmation or rejection of various executory contracts and leases; f) assist in the valuation of the present level of operations and identification of areas of potential cost savings, including overhead and operating expense reductions and efficiency improvements; g) assist in the review of financial information distributed by the Debtor to creditors and others, including cash flow projections and budgets, cash receipts and disbursement analysis , analysis of various assets and liability accounts, and analysis of proposed transactions for which Court approval is sought; h) attend meetings and assist in discussions with the Debtor, potential investors, banks, other secured lenders, the Committee and any other official committees organized in this chapter 11 proceeding, the U.S. Trustee, other parties in interest and their professionals; i) assist in the review and preparation of information and analysis necessary for the confirmation of a Plan of Reorganization; j) assists in the evaluation any analysis of avoidance actions, including fraudulent conveyances and preferential transfers; and k) provide litigation advisory services with respect to accounting and tax matters, along with expert witness testimony on case related issues as required by the Committee; The hourly rates for FTI Consulting's professionals are: Designation Hourly Rate ----------- ----------- Senior Managing Directors $560 - $625 Directors and Managing Directors 415 - 560 Associates and Consultants 205 - 385 Administrative and Paraprofessionals 95 - 168 The Committee assures the Bankruptcy Court that FTI Consulting does not hold any interest adverse to the Debtor or its estate. FTI Consulting -- http://www.fticonsulting.com/-- is a premier provider of problem-solving consulting and technology services to major corporations, financial institutions and law firms when confronting critical issues that shape their future and the future of their clients, such as financial and operational improvement, major litigation, mergers and acquisitions and regulatory issues. Located in 24 of the major US cities, London and Melbourne, FTI's total workforce of more than 1,100 employees includes numerous PhDs, MBAs, CPAs, CIRAs and CFEs. Headquartered in Plano, Texas, Cornerstone Products, Inc. -- http://www.cornerstoneproducts.com/-- manufactures custom injection molded plastic products. The Company filed for chapter 11 protection on July 5, 2005 (Bankr. E.D. Tex. Case No. 05-43533). Frank J. Wright, Esq., at Hance Scarborough Wright Ginsberg & Brusilow, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $59,595,144 and total debts of $65,714,015. CUMMINS INC: Plans to Repay $250 Million 9-1/2% Notes in Dec. 2006 ------------------------------------------------------------------ In another move aimed at decreasing its debt and strengthening its balance sheet, Cummins Inc. (NYSE:CMI) intends to repay $250 million in 9-1/2 percent notes in December 2006, the first call date for the debt. The notes, which were issued in November 2002, will be repaid using cash generated from Cummins operations. The Company will also begin to repurchase shares of common stock with the intent to buy back $100 million worth of Cummins stock within two years. This repurchase reflects the Company's commitment to returning value to its shareholders. Cummins executives, outlined the Company's plans for continued profitable growth. The key points are: -- Cummins has improved its cost structure and is more diversified by product and geographic region than during the last peak in the North American heavy-duty truck cycle. As a result, the Company is poised to provide more stable earnings in the future and is better prepared to weather the next downturn in the business cycle. -- Cummins is a strong and growing presence in key emerging markets such as China and India. -- Cummins is focused on cash management and strengthening its balance sheet. -- Cummins has invested in the right technologies to meet global emissions standards. The Company also reaffirmed its 2005 full-year earnings guidance of $10.10-$10.30 and its third-quarter guidance of $2.40- $2.50 a share. "Over the past five years, we have worked hard to improve our cost structure, strengthen our balance sheet and restructure our businesses to make Cummins a stronger global competitor," said Tim Solso, Cummins Chairman and Chief Executive Officer. "In effect, we have created a 'new Cummins' that is well-positioned for the future." Cummins reported record earnings and revenues in 2004 and is on pace to do so again in 2005. For the first six months of 2005, Cummins reported net income of $238 million on sales of $4.70 billion - compared to net income of $115 million and sales of $3.90 billion for the same period of 2004. The Company raised its 2005 earnings guidance in late July to $10.10-$10.30. Debt repayment to strengthen balance sheet, lower future interest expense In repaying the debt at the first call date, the Company will pay note-holders a premium of 4.75 percent, bringing the total cost of the repayment to approximately $262 million. That premium, however, will be more than offset by the reduction in future interest expense. "Reducing debt is a central part of Cummins strategy to strengthen its balance sheet and improve its liquidity," said Cummins Chief Financial Officer Jean Blackwell. "We reduced our debt by $258 million early this year, and our continued strong operating performance has put us in the position to take further steps to lower our debt levels." Cummins Inc. -- http://www.cummins.com/-- a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves customers in more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. With more than 28,000 employees worldwide, Cummins reported sales of $8.4 billion in 2004. * * * As reported in the Troubled Company Reporter on Sept. 20, 2005, Moody's Investors Service raised its rating of Cummins Inc.'s debt securities (senior unsecured to Ba1 from Ba2), and also affirmed the company's Ba1 corporate family rating and SGL-1 speculative grade liquidity rating. The rating outlook is changed to positive from stable. As reported in the Troubled Company Reporter on Aug. 5, 2005, Standard & Poor's Ratings Services raised its rating on the $28,000,000 Structured Asset Trust Unit Repackagings Cummins Engine Co. Debenture-Backed Series 2001-4 certificates to 'BBB-' from 'BB+'. DAP HOLDING: Section 304 Petition Summary ----------------------------------------- Petitioner: Hermanus Johannes Touw Director and General Manager DAP Holding, N.V. Debtors Case No. ------- -------- DAP Holding N.V. 05-18816 Achmea Schadeverzekeringen N.V. 05-18820 AEGON Schadeverzekering N.V. 05-18824 Allianz Nederland Schadeverzekering N.V. 05-18825 AMEV Schadeverzekering N.V. 05-18827 Atradius Credit Insurance N.V. 05-18832 AXA Schade N.V. 05-18836 Delta Lloyd Schadeverzekering N.V. 05-18838 Fortis Corporate Insurance N.V. 05-18855 GENERALI Schadeverzekering Maatschappij N.V. 05-18857 Goudse Schadeverzekeringen N.V. 05-18858 N.V. Maatschappij van Assurantie, Discontering en Beleening der Stad Rotterdam Anno 1720 05-18859 N.V. Nationale Borg-Maatschappij 05-18860 N.V. Noordhollandsche Van 1816 Algemene Verzekeringsmaatschappij 05-18861 N.V. Verzekering Maatschappij de Noord-en Zuid-Hollandsche Lloyd 05-18862 Nationale-Nederlanden Internationale Schadeverzekering N.V. 05-18864 Nationale-Nederlanden Schadeverzekering Maatschappij N.V. 05-18865 Vereenigde Assurantiebedrijven "Nederland" N.V. 05-18866 Address: Hoogoorddreef 54E 1101 BE Amsterdam The Netherlands Type of Business: The Debtors are insurance companies that participated in a pool of insurers known as the Dutch Aviation Pool, which started operation in 1932. The Pool's business originally consisted of all aviation and aviation-related product liability insurance and reinsurance for airlines (hull and liability), for manufacturers and suppliers, airport liability, hangar keepers and personal accident. In January 1997, the Pool ceased writing new insurance and went into run-off. All Scheme Companies are solvent except DAP. The Scheme Companies wish to avoid prolonging the run-off through the Scheme of Arrangment. Under the Scheme, future and contingent liabilities of the Scheme Companies will be valued and paid earlier than would otherwise be the case under a normal run-off. The Petitioner wants the Scheme to be binding on all Scheme Creditors. Section 304 Petition Date: September 27, 2005 U.S. Bankruptcy Court: Southern District of New York (Manhattan) Petitioner's Counsel: Gregory M. Petrick, Esq. Ingrid Bagby, Esq. David Neiman, Esq. Cadwalader, Wickersham & Taft LLP One World Financial Center New York, New York 10281 Tel: (212) 504-6373 Fax: (212) 504-6666 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million DRUGMAX INC: Wells Fargo Commits $65 Million in New Financing ------------------------------------------------------------- DrugMax, Inc. (Nasdaq: DMAX) signed a commitment letter with Wells Fargo Retail Finance, LLC, to underwrite a new $65 million Senior Secured Revolving Credit Facility. The new credit facility, which has a maturity of five years, is expected to close on or before Oct. 30, 2005, and is contingent on executing a customary final credit agreement. The Company plans to use the proceeds from the new facility to replace its existing $65 million Senior Credit Facility. DrugMax has been in violation of certain covenants of the current Credit Facility since January 2005. In addition to refinancing the old facility, the new Wells Fargo facility provides more flexible terms and additional borrowing availability to allow the Company to use the facility for growth opportunities and acquisitions. "We are pleased to have signed a commitment letter for this new credit facility with such a prominent bank that understands our business, has extensive experience in the industry and supports our post-merger strategy," Jim Searson, Chief Financial Officer of DrugMax, said. "This credit facility, which has covenants consistent with our long-term strategy, provides the Company with additional liquidity and flexibility to both operate the business and take advantage of our future growth potential. Moving forward, our improved financial strength will be instrumental as we continue to strive towards achieving sustained profitable growth and position the Company to take advantage of the favorable dynamics in the specialty pharmacy industry." Timothy R. Tobin, Senior Vice President, National Director Marketing & Structure, Wells Fargo Retail Finance, added, "We are extremely pleased to establish a relationship with DrugMax and support the Company's efforts as it continues to execute its business strategy and enhance its position within the industry." Senior Credit Facility On Dec. 9, 2004, the Company entered into a Second Amended and Restated Credit Agreement with General Electric Capital Corporation, which increased the facility from $31 million to $65 million. The $65 million of maximum availability was reduced by $5.5 million of permanent availability, until the March 2005 Amendment, which increased the permanent availability reduction to $7.5 million. The Senior Credit Facility will mature on Dec. 9, 2007. The Senior Credit Facility includes a prepayment penalty of: (1) $1,300,000 if paid in full before December 9, 2005, (2) $975,000 if paid in full after December 9, 2005 but before December 9, 2006, and (3) $650,000 if paid after December 9, 2006. The Senior Credit Facility is secured by substantially all assets of the Company. As of April 2, 2005, $48 million was outstanding under the Senior Credit Facility and $1 million was available for additional borrowings. Going Concern Doubt In its Form 10-K filing, Deloitte & Touche LLP, the Company's independent registered certified public accounting firm, issued an unqualified audit report with an explanatory paragraph raising doubt about the Company's ability to continue as a going concern. About Wells Fargo Retail Finance Wells Fargo Retail Finance, headquartered in Boston, specializes in building relationships and delivering customized, flexible financial solutions to single and multi-channel retailers throughout North America. It is part of Wells Fargo & Company (NYSE: WFC), a diversified financial services company with $435 billion in assets, providing banking, insurance, investments, mortgage and consumer finance to more than 23 Million customers from more than 6,000 stores and the Internet - http://www.wellsfargo.com/-- across North America and elsewhere internationally. Wells Fargo Bank, N.A. is the only bank in the United States to receive the highest possible credit rating, "Aaa," from Moody's Investors Service. DrugMax, Inc. -- http://www.drugmax.com/-- is a specialty pharmacy and drug distribution provider formed by the merger on November 12, 2004 of DrugMax, Inc. and Familymeds Group, Inc. DrugMax works closely with doctors, patients, managed care providers, medical centers and employers to improve patient outcomes while delivering low cost and effective healthcare solutions. The Company is focused on building an integrated specialty drug distribution platform through its drug distribution and specialty pharmacy operations. DrugMax operates two drug distribution facilities, under the Valley Drug Company and Valley Drug South names, and 77 specialty pharmacies in 13 states under the Arrow Pharmacy & Nutrition Center and Familymeds Pharmacy brand names. DRUGMAX INC: Has Until Oct. 24 to Comply with Nasdaq Requirements ----------------------------------------------------------------- DrugMax, Inc. (Nasdaq: DMAX) received a letter from Nasdaq on Sept. 22, 2005, notifying the Company that it was not in compliance with Marketplace Rule 4310(c)(2)(B). This rule requires the Company to have a minimum $35 million in market value of listed securities, $2.5 million in shareholders' equity, or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years. Nasdaq informed the Company that it would be provided until Oct. 24, 2005, to regain compliance with the rule. DrugMax believes that it will regain compliance with the continued listing requirements of the Nasdaq SmallCap Market by Oct. 24, 2005. If the Company does not regain compliance by October 24th, it can request a hearing with Nasdaq. Going Concern Doubt In its Form 10-K filing, Deloitte & Touche LLP, the Company's independent registered certified public accounting firm, issued an unqualified audit report with an explanatory paragraph raising doubt about the Company's ability to continue as a going concern. DrugMax, Inc. -- http://www.drugmax.com/-- is a specialty pharmacy and drug distribution provider formed by the merger on November 12, 2004 of DrugMax, Inc. and Familymeds Group, Inc. DrugMax works closely with doctors, patients, managed care providers, medical centers and employers to improve patient outcomes while delivering low cost and effective healthcare solutions. The Company is focused on building an integrated specialty drug distribution platform through its drug distribution and specialty pharmacy operations. DrugMax operates two drug distribution facilities, under the Valley Drug Company and Valley Drug South names, and 77 specialty pharmacies in 13 states under the Arrow Pharmacy & Nutrition Center and Familymeds Pharmacy brand names. DURANGO GEORGIA: Paper Mill & Timberland to be Auctioned on Dec. 6 ------------------------------------------------------------------ Bridge Associates, LLC, will auction the assets held by the Bankruptcy Estate of Durango Georgia Paper Company on Dec. 6, 2005, at 10:00 a.m. at the Amelia Island Plantation, 6800 First Coast Highway in Amelia Island, Florida. The Durango bankruptcy estate includes a "moth-balled" paper mill situated upon approximately 750 acres of marsh and river-front land that make up the property of Durango Georgia Paper of St. Mary's, Georgia, along with the plant and equipment formerly operated as the paper mill and approximately 3,400 acres of timber tracts located near or abutting I-95 in Southeast Georgia, approximately 35 minutes north of Jacksonville, Florida. "This property is one of the few remaining large tracks suitable for resort, mixed use development located on the intercoastal waterway on the Georgia coast," Anthony Schnelling, the court- appointed Trustee for the Durango estate and a principal of Bridge Associates, said. "The 'moth-balled' paper mill also presents unique opportunities for paper producers seeking to expand production during the current strong paper market. We strongly recommend that any interested parties that are planning to attend the auction make their reservations well in advance. Since we announced the selection of the "stalking horse" bidder, there has been considerable interest in the estate's property, and we expect a productive and competitive bidding process." All pre-auction bids must be submitted to the Trustee, so as to be received by or before Dec. 1, 2005, 5:00 p.m. EST. Further details on the auction process will be provided to qualified bidders closer to the actual time of the auction. Hilco Real Estate, LLC of Northbrook, Illinois, is the exclusive real estate advisor to the Durango estate, and the company played a key role in the process that led to the ultimate selection of a "stalking horse" bidder. Al Lieberman, a Principal with Hilco Real Estate, commented, "We were pleased to have been selected for this important assignment and look forward to a very successful auction sale." On Sept. 19, 2005, St. Mary's Redevelopment Group, LLC, submitted a stalking horse bid in the amount of $15 million, plus 18.5 percent of all future gross revenues from development sales and from sale of the equipment out of the closed paper mill. St. Mary's, a sister company of RealtiCorp, a Greenville, South Carolina commercial real estate development Firm, indicated an intent to redevelop the mill property as a mixed-use resort. The Durango estate has been represented in connection with this transaction by Bridge Associates, LLC, as Trustee, Hilco Real Estate, LLC of Northbrook, Illinois, as exclusive real estate advisor, and by Ward Stone, Jr. of Stone & Baxter, LLP, a law firm based in Macon, Georgia, as counsel. Headquartered in St. Mary's, Georgia, Durango Georgia -- http://www.durangopaper.com/-- was a nationally recognized bleached board and kraft paper producer in the U.S. offering coast-to-coast and international service. On Oct. 29. 2002, Durango's creditors filed an involuntary chapter 7 petition against it and the Company consented to the petition. The Company filed for chapter 11 relief on Nov. 20, 2002 (Bankr. S.D. Ga. Case No. 02-21669). George H. Mccallum, Esq., at Stone & Baxter, LLP, Kate D. Strain, Esq., at Hunter, Maclean, Exley & Dunn, PC, and Neil P. Olack, Esq., at Duane Morris LLP, represent the Debtor in its restructuring efforts. Bridge Associates, LLC, was appointed as Trustee in the Case under the terms of a Plan of Liquidation approved by creditors and confirmed by the Bankruptcy Court in June 2004. DURA OPERATING: Moody's Junks $856 Million Senior Notes' Ratings ---------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Dura Operating Corp., its direct parent Dura Automotive Systems, Inc., and subsidiary Dura Automotive Systems Capital Trust. Dura Automotive's Corporate Family rating has been lowered to B3 from B2. Dura Operating Corp.'s senior secured second lien ratings were lowered to B3 from B2; senior unsecured to Caa1 from B3; and senior subordinated to Caa2 from Caa1. Dura Automotive Systems Capital Trust's preferred securities were lowered to Caa3 from Caa2. The speculative grade liquidity rating was affirmed at SGL- 2. The outlook is stable. The downgrades were driven by: * the confluence of weak operating results and free cash flow; * high leverage and continuing issues of customer concentration; and * an unfavorable product platform mix. Moody's anticipates a challenging production environment at Dura Automotive's key customers, ongoing uncertainty of future market shares for the North American Big 3 and continued demands by OEMs for price concessions. Weaker operating results combined with the company's financial leverage are expected to continue to pressure debt protection measures over the intermediate term. Free cash flow is expected to be negative for fiscal 2005 with debt persisting at elevated levels. The rating actions also incorporate the uncertain environment for automotive production in North America for the balance of 2005 and 2006 in the wake of higher petroleum prices, the cessation of significant incentive programs by major OEMs and the impact these factors may have on automotive build rates, and in particular some of Dura Automotive's key vehicle platforms, over the intermediate term. The SGL-2 rating represents good liquidity over the next twelve months. Ratings downgraded: Dura Automotive Systems, Inc.: * Corporate Family to B3, from B2 Dura Operating Corp.: * $150 million guaranteed senior secured second-lien term loan due April 2011 to B3 from B2 * $400 million of 8.625% guaranteed senior unsecured notes due April 2012 (consisting of $350 million and $50 million tranches, respectively) to Caa1 from B3; * $456 million of 9% guaranteed senior subordinated notes due May 2009 to Caa2 from Caa1; * ?100 million of 9% guaranteed senior subordinated notes due May 2009 to Caa2 from Caa1 Dura Automotive Systems Capital Trust's: * $55.25 million of 7.5% convertible trust preferred securities due 2028 to Caa3 from Caa2; * Dura Automotive's $175 million guaranteed senior secured first-lien asset-based revolving credit is not rated. * Dura Automotive's Speculative Grade Liquidity Rating has been affirmed at SGL-2 The B3 Corporate Family rating incorporates higher leverage and lower debt protection measures which have resulted from weak production levels and exposures to several structural challenges. The North American Big 3 OEMs accounted for 51% of the end use of Dura Automotive's revenues in fiscal 2004. Lower OEM production volumes, particularly from the Big 3, and uncertainty concerning the future market share of the Big 3 are expected to negatively impact Dura Automotive's operating results. Weak profitability by OEMs has led to a continued demand for price concessions from suppliers, including Dura Automotive. Unfavorable customer and platform mix have also affected Dura Automotive's results as some of the company's customers and product platforms are underperforming the broader industry. The aforementioned factors have led to a weakening in Dura Automotive's cash flow, leverage and interest coverage metrics. Dura Automotive's debt/EBITDA (calculated using Moody's standard adjustments) has increased from 6.0x at year-end 2003. In addition, with over $80 million of negative free cash flow (after capital expenditures) for the first six months of 2005 and challenging industry conditions, free cash flow is expected to be negative for fiscal year-end 2005. Free cash flow to debt has decreased from 4.2% in 2004 to negative 0.6% on an LTM basis at July 3, 2005. Dura Automotive's debt/EBITDA credit statistic could deteriorate to almost 7.0x for fiscal 2005 and EBIT/interest coverage could fall slightly below 1.0x. Dura Automotive's speculative grade liquidity rating was affirmed at SGL-2 reflecting good liquidity over the next twelve months. Dura Automotive's liquidity position includes an expectation of negative free cash flow (after capital expenditures) in fiscal 2005, but is offset to an extent by: * an adequate cash balance; * modest pension funding and cash restructuring requirements; and * a $175 million committed revolving credit facility. The revolving credit facility is subject to borrowing base limitations monitored on a monthly basis. Currently there are no financial covenant ratio requirements since the combination of balance sheet cash and excess availability is above the $35 million threshold. At July 3, 2005 the company had $101.7 million of cash on its balance sheet. The stable outlook is supported by: * Dura Automotive's geographic, * product and vehicle platform diversification, * cost reduction initiatives, and * good liquidity. In fiscal 2004, approximately 59% and 39% of sales were generated in North America and Europe, respectively. The company is strategically focusing on new safety items and electronics. In addition, the recreational vehicle part of the business (roughly 15% of Dura Automotive's business) offers some diversification away from the automotive supplier industry. The company commands the leading market position for certain of its product categories. Moody's notes that Dura Automotive's management has taken restructuring actions to reduce costs. These have allowed the company to remain competitive in a cyclical industry. Dura Automotive's management has implemented steps to further lower costs by freezing salaried wages through the remainder of 2005, eliminating Dura Automotive's 2005 performance based 401-K discretionary contributions and canceling the 2005 management bonus program. Other factors contributing to the stable outlook include: * the company's efforts to expand further into Eastern Europe and Asia; * its finalization of steel price negotiations with customers; and * its competitive low cost structure versus peers. A limited percentage of Dura Automotive's North American workforce is represented by unions. Developments that could result in lower ratings include: * EBITDA margins falling below 6%; * EBIT margins falling below 2%; * continued negative free cash flow generation, * leverage increasing to over 7.0x; * weakening liquidity; or * EBIT/interest coverage falling well below 1.0x. Factors that could lead to higher ratings include: * EBIT margins sustained at a minimum of 7-8%; * EBITDA margins reaching approximately 7.5%; * Debt/EBITDA falling below 6.0x; * sustaining positive free cash flow; and * an improved liquidity profile. Dura Automotive, headquartered in Rochester Hills, Michigan, designs and manufactures components and systems primarily for the global automotive industry including: * driver control systems, * structural door modules, * glass systems, * seating control systems, * exterior trim systems, and * mobile products. Dura Automotive is a public company whose predecessor was initially formed in November 1990. Annual revenues approximate $2.4 billion. ELITE GAMING: Case Summary & 8 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Elite Gaming LLC dba Barstow Development Associates 2501 East Chapman Avenue, Suite 220 Fullerton, California 92831-3108 Bankruptcy Case No.: 05-17156 Chapter 11 Petition Date: September 26, 2005 Court: Central District of California (Santa Ana) Judge: James N. Barr Debtor's Counsel: Garrick A. Hollander, Esq. Winthrop Couchot, Professional Corporation 660 Newport Beach, California 92660 Tel: (949) 720-4100 Total Assets: $2,050,000 Total Debts: $1,474,327 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Daehnke & Cruz Trade & repayment $31,892 Attn: Corporate Officer of funds 3333 Michelson Drive, #800 Irvine, CA 92612 Jon Kimbrell Unsecured loan $31,000 950 East Katella Avenue, Suite 4 Orange, CA 92867 Prospectus Printing Trade $13,034 Attn: Hellen Brown 918 North Morgan Street Orange, CA 92867 Steve Fink, Esq. Trade $12,839 Seagroves Studios Trade $10,000 Santos Vaquerano Unsecured loan $7,500 Airviews Inc. Trade $6,000 Diller & Associates Trade $5,000 ENRON CORP: Agrees to Allow ECP Claims for $12 Million ------------------------------------------------------ On Nov. 25, 2002, East Coast Power, LLC, filed Claim Nos. 22089 and 22090, each for $6,606,357 against Enron Corp. and EPC Estate Services, Inc., formerly known as National Energy Production Corporation. On March 9, 2005, Enron filed an Estimation Objection with respect to the ECP Claims. ECP was an appellant in an appeal before the Superior Court of New Jersey, Appellate Division, pursuant to which, among other things, ECP sought to retain up to $2,196,000 from a New Jersey lien pool. Pursuant to a stipulation, the parties agree that: (1) Claim No. 22089 will be allowed as a Class 185 Enron guaranty claim for $6,139,00; (2) Claim No. 22090 will also be allowed as a Class 67 general unsecured claim against NEPCO for $6,139,000; (3) ECP represents and warrants that: (a) the NJ Appellate Court has rendered a final decision against ECP in the NJ Lien Pool Appeal, and (b) ECP has not received and is not party to any agreement or understanding pursuant to which it will receive any portion of the Lien Pool Amount; (4) If ECP receives any amount from the Lien Pool prior to receiving distributions on the Allowed Claims, the amount of each of the Allowed Claims will be reduced by the amount of the Lien Pool Refund. If ECP receives a Refund after receiving the claim distributions, ECP will promptly pay to Enron an amount equal to the difference between: (x) the distribution received by ECP under the Plan on account of the Allowed Claims, and (y) the distribution ECP would have received under the Plan on account of Allowed Claims if the Allowed Claims had been reduced by the amount of the Lien Pool Refund; (5) The Objection will be withdrawn; and (6) They will mutually release each other from any obligations under the ECP Claims. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 159; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Wants Court Nod on Potomac Settlement Agreement ----------------------------------------------------------- Potomac holds 8,929.385 shares of Series A Preferred Stock of Organizational Partner, Inc. In connection with its holdings, on October 15, 2002, Potomac timely filed Claim No. 13097 against Enron Corp. Enron objected to the Claim. The Reorganized Debtors and Potomac subsequently asked the Court to adjourn the hearing on the Objection and agreed to negotiate a settlement. The salient terms of the settlement agreement entered into by the parties, along with Deutsche Bank AG, are: (1) In the event that the Closing Date occurs on or before September 30, 2005, OPI will pay Potomac $13,251,279: -- $10,000,000 represents a return of Potomac's equity investment in OPI, and -- $3,251,278 of which represents unpaid dividends and accrued interest; (2) In the event that the Closing Date occurs on or after October 1, 2005, OPI will pay Potomac the Base Payment, plus an additional $78,404 per month until the Closing Date occurs; (3) Upon payment of the settlement amount, OPI will redeem all of the Potomac Shares; (4) Any and all claims of Potomac or its affiliates related to the Potomac Shares, including but not limited to the Claim, will be deemed withdrawn, with prejudice, and expunged in their entirety, without any further action; and (5) The parties will exchange limited mutual releases. The Reorganized Debtors ask the Court to approve the Potomac Settlement. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 158; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENTERGY NEW ORLEANS: Court Approves Interim DIP Facility -------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Louisiana gave Entergy New Orleans interim access to $100 million of DIP financing from its parent, Entergy Corporation. The Debtor originally asked the Court for approval to borrow up to $150 million on an interim basis, but contracted its request by $50 million. The DIP loan will enable Entergy New Orleans to meet its near-term obligations, including employee wages and benefits, payments under power purchase and gas supply agreements, and its current efforts to repair and restore the facilities needed to serve its electric and gas customers. The Debtor will return to Court next month to request access to the full $200 million DIP Facility on a final basis. Entergy New Orleans, which provides electric and natural gas service to customers within the city of New Orleans, is the smallest of Entergy's five utility companies and represented about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in the bankruptcy filing. As previously reported, the Company's filing for chapter 11 protection was intended to address the very legitimate concern expressed recently in a letter by U.S. Senators Mary Landrieu and David Vitter from Louisiana to President Bush that the potential bankruptcy of Entergy New Orleans would stall or cease restoration efforts in the City as a result of creditor disputes that could arise in such a filing. Entergy Corporation -- http://www.entergy.com/-- is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, and it is the second-largest nuclear generator in the United States. Entergy delivers electricity to 2.7 million utility customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy has annual revenues of over $10 billion and approximately 14,000 employees. ESCHELON TELECOM: Registers 1.6-Mil Common Shares for Distribution ------------------------------------------------------------------ Eschelon Telecom, Inc., registers with the Securities and Exchange Commission 1,632,414 shares of common stock to be distributed under the 2002 Stock Incentive Plan. The Company valued the shares at an aggregate of $21,303,002. DLA Piper Rudnick Gray Cary LLP, the Company's counsel, evaluated the legal validity of these common shares. The Company's common shares trade at Nasdaq National Market under the symbol "ESCH" The Company's shares of common stock trade between $11.92 and $12.90 within the month. A full-text copy of the 2002 Stock Incentive Plan is available for free at http://ResearchArchives.com/t/s?1dd A full-text copy of the Registration Statement is available for free at http://ResearchArchives.com/t/s?1de Eschelon Telecom, Inc., is a facilities-based competitive communications services provider of voice and data services and business telephone systems in 19 markets in the western United States. Headquartered in Minneapolis, Minnesota, the company offers small and medium-sized businesses a comprehensive line of telecommunications and Internet products. Eschelon currently employs approximately 1,134 telecommunications/Internet professionals, serves over 50,000 business customers and has approximately 400,000 access lines in service throughout its markets in Minnesota, Arizona, Utah, Washington, Oregon, Colorado, Nevada and California. As of June 30, 2005, Eschelon Telecom's equity deficit more than doubled to $22,980,000 from an $8,180,000 deficit at Dec. 31, 2004. * * * As reported in the Troubled Company Reporter on Sept. 5, 2005, Standard & Poor's Ratings Services revised its outlook on Minneapolis, Minnesota-based Eschelon Telecom Inc. to positive from developing following the company's consummation of its initial public offering, resulting in net proceeds of $69.8 million, of which roughly $51 million will be used to redeem the senior second secured notes due 2010. Additionally, $63 million of preferred stock will be converted to common shares. All ratings, including the company's 'CCC+' corporate credit rating, were affirmed. FEDERAL-MOGUL: Inks Pact Resolving Dispute with UK Administrators ----------------------------------------------------------------- Federal-Mogul Corporation (OTCBB:FDMLQ) and various of its constituencies in the Chapter 11 proceedings have reached agreement with the United Kingdom Administrators of Federal- Mogul's UK affiliates. The result of the agreement will allow Federal-Mogul to retain the businesses and other assets of its UK affiliates in exchange for monetary amounts and reserves that will be used by the Administrators to provide a distribution to UK creditors. The agreement, which has been filed with the U.S. Bankruptcy Court in Delaware, is subject to approvals and determinations by the UK and U.S. Courts. Federal-Mogul Chairman, President and Chief Executive Officer Jose Maria Alapont said the agreement represents a major step toward the fulfillment of the Company's intention to emerge reorganized in a manner that separates the Company's operating potential from its asbestos liabilities. "Federal-Mogul, its employees and stakeholders, as well as the Administrators, are pleased with the agreement, which brings us closer to emergence from Chapter 11 in the U.S. and Administration in the UK," Mr. Alapont added. "On behalf of Federal-Mogul, I extend my sincere gratitude to our customers and vendors for their support; we are committed to driving global profitable growth through our leading technology and innovation, world-class portfolio of products and services, and competitive cost structure." Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on Oct. 1,2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a US$2.048 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. FEDERAL-MOGUL: Alan Haughie Appointed as Chief Accounting Officer ----------------------------------------------------------------- John J. Gasparovic, Federal-Mogul Corporation's Senior Vice President and General Counsel, informs the Securities and Exchange Commission that Michael Widgren submitted his resignation, effective Sept. 30, 2005, to pursue an opportunity at another corporation. At the time of his resignation, Mr. Widgren was the Company's Chief Accounting Officer. The Company has appointed Alan Haughie to the position of Chief Accounting Officer, effective on Sept. 26, 2005. Mr. Haughie will continue to serve as Vice President and Controller. Any change in Mr. Haughie's compensation will be determined at a later date. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a US$2.048 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. FIBERMARK INC: Files Revised Plan to Reflect New Bondholders Pact ----------------------------------------------------------------- FiberMark, Inc. (OTCBB: FMKIQ) has filed a revised Plan of Reorganization reflecting the settlement reached among FiberMark and its top three bondholders: * AIG Global Investment Corp., * Post Advisory Group, LLC, and * Silver Point Capital, L.P. The agreement was reached in response to the findings and recommendations of the independent examiner. Key provisions of the revised Plan include: (1) To settle potential causes of action by unsecured creditors against AIG and Post and litigation rights held by FiberMark against AIG and Post, bondholders and all other unsecured creditors-excluding the top three bondholders- will receive an all-cash payment estimated to provide a 70% recovery of claim amounts, which was the estimated recovery under FiberMark's initial plan of reorganization and compares favorably with the 54% estimated recovery levels under the plan filed in August. Alternatively, unsecured creditors interested in receiving an equity position in the reorganized company may elect a distribution that includes new common stock along with a partial cash payment, which would provide an estimated 62% recovery of claim amounts. Under both options, the recovery estimates assume that the current value of the allowed claims remains unchanged. AIG and Post will contribute to the funding of the cash payments 8% of unsecured claims, not to exceed $4.2 million. For unsecured creditors receiving the all-cash payment, a portion of the cash will be provided by Silver Point, which will effectively purchase the stock otherwise allocable to those creditors. (2) Silver Point will purchase the claims of AIG and Post for a negotiated amount. As a result of the purchase, AIG and Post will have no ownership interest in the reorganized company. (3) AIG, Post and Silver Point have agreed to vote in favor of the company's revised Plan. (4) The potential causes of action held by unsecured creditors against AIG and Post and litigation rights held by FiberMark against AIG and Post will be released and extinguished under the revised Plan. As a result, the Plan will contain no mechanism for litigating any such causes of action. However, the Plan does not abridge the rights of persons who hold individual causes of action, as defined in the Plan. (5) AIG, Post and Silver Point will split the cost of the examiner's investigation three ways, subject to a cap totaling $1.75 million. The settlement relates to the treatment of unsecured claims under the company's Plan of Reorganization. Shares held by current stockholders will be cancelled, as detailed in the initial plan. The previously approved disclosure statement has been modified to conform to the revised Plan and the company must now obtain Court approval to submit the Disclosure Statement and Plan to its creditors for voting. The company also expects the date for the confirmation hearing that will follow the voting process to be finalized shortly. The company continues to expect that it will have a confirmed Plan of Reorganization before the end of 2005. A full-text copy of the Revised Plan is available for free at http://ResearchArchives.com/t/s?1e8 Headquartered in Brattleboro, Vermont, FiberMark, Inc. -- http://www.fibermark.com/-- produces filter media for transportation applications and vacuum cleaning; cover stocks and cover materials for books, graphic design, and office supplies and base materials for specialty tapes, wall coverings and sandpaper. The Company filed for chapter 11 protection on March 30, 2004 (Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D.J. f, Esq., David M. Turetsky, Esq., and Rosalie Walker Gray, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $329,600,000 in total assets and $405,700,000 in total debts. FIDELITY NATIONAL: Schedules Equity Distribution on Oct. 17 ----------------------------------------------------------- Fidelity National Financial, Inc. (NYSE: FNF) disclosed final terms and set the record date and distribution date for the distribution of Fidelity National Title Group, Inc. (Pending NYSE: FNT) common stock to FNF stockholders. Under the terms of the distribution of FNT common stock, FNF stockholders will receive 0.175 shares of common stock of FNT for each share of common stock of FNF that they own on the record date. No fractional shares of FNT common stock will be issued, but new FNT stockholders will receive cash in lieu of any fractional shares. No action is required by FNF stockholders to receive their shares of FNT common stock or the cash in lieu of any fractional shares. After the completion of the distribution of FNT common stock, FNT will trade on the New York Stock Exchange under the trading symbol 'FNT'. The distribution will be made on Oct. 17, 2005 to FNF stockholders of record as of Oct. 6, 2005. Because of the nature of the distribution of FNT common stock, the New York Stock Exchange has determined that the ex- dividend date will be Oct. 18, 2005, the business day following the distribution date for the common stock of FNT. FNF stockholders of record on the Oct. 6, 2005 record date who subsequently sell their shares of FNF common stock through the Oct. 17, 2005, distribution date will also be selling their right to receive the distribution of FNT common stock. Investors are encouraged to consult with their financial advisors regarding the specific implications of the deferral of the ex- dividend date and the selling of shares of FNF common stock through the distribution date for the common stock of FNT. The distribution of FNT common stock to FNF stockholders is expected to be taxable to FNF stockholders at the dividend tax rate. Stockholders are encouraged to consult with their financial advisors regarding the circumstances of their individual tax situation. As previously disclosed, FNT intends to pay an annual cash dividend of $1.00 per common share, payable quarterly. The record and payable dates for the initial $0.25 per common share quarterly cash dividend are expected to be declared at the October meeting of the FNT Board of Directors. Additionally, FNT has paid the previously disclosed $295 million dividend to FNF. This was accomplished through a $150 million intercompany note and $145 million in an extraordinary dividend paid by an insurance subsidiary of FNT. The $150 million intercompany note will be repaid through $150 million in borrowings under a $300 million FNT bank credit facility at the time of the distribution of FNT common stock to FNF stockholders, or shortly thereafter. FNT intends to issue two $250 million intercompany notes payable to FNF, with terms that mirror the existing FNF $250 million 7.30% notes due in August 2011 and the $250 million 5.25% notes due in March 2013. FNT may make an exchange offer in which it would offer to exchange the outstanding FNF notes for notes that FNT would issue having the same interest rates, redemption terms and payment and maturity dates. If the exchange offer occurs, the intercompany notes payable will be retired. Fidelity National Financial, Inc. -- http://www.fnf.com/-- number 261 on the Fortune 500, is a provider of products and outsourced services and solutions to financial institutions and the real estate industry. FNF had total revenue of nearly $8.3 billion and earned more than $740 million in 2004, with cash flow from operations of nearly $1.2 billion for that same period. FNF is the nation's largest title insurance company, with nearly 31 percent national market share, and is also a provider of other specialty insurance products, including flood insurance, homeowners insurance and home warranty insurance. Through its majority-owned subsidiary Fidelity National Information Services, Inc., the Company is a leading provider of technology solutions, processing services and information services to the financial services and real estate industries. FIS' software processes nearly 50 percent of all U.S. residential mortgages, it has processing and technology relationships with 45 of the top 50 U.S. banks and more than 2,800 small and mid-sized U.S. financial institutions and it has clients in more than 50 countries who rely on its processing and outsourcing products and services. FIS also provides customized business process outsourcing related to aspects of the origination and management of mortgage loans to national lenders and servicers. FIS offers information services, including property data and real estate-related services that are used by lenders, mortgage investors and real estate professionals to complete residential real estate transactions throughout the U.S. * * * As reported in the Troubled Company Reporter on May 20, 2005, Fitch Ratings has placed the 'A-' insurer financial strength ratings of the title insurance underwriting subsidiaries of Fidelity National Financial, Inc., and the 'BBB-' long-term issuer rating of FNF on Rating Watch Negative. In addition, the 'BB-' rating on the senior secured credit facility of FNF's subsidiary, Fidelity National Information Services, is affirmed. FLYI INC: Cuts Service & Scours for Financing to Avert Bankruptcy ----------------------------------------------------------------- Mary Schlangenstein at Bloomberg News reports that FLYi Inc., the parent company of Independence Air, is erasing nine airports from its route map and preparing to reduce flights by 36%. These cost cutting measures run in tandem with FLYi's continuing search for additional funding sources in order to avert a bankruptcy filing, reported in The Wall Street Journal and elsewhere. If the Company fails to obtain additional funding, it could become the next airline after Delta and Northwest to file for bankruptcy court protection, according to several press sources. For the past several months, the Company has been losing large sums of money because of the greater crisis facing the airline industry, which is mainly caused by high fuel costs and intense competition from low-priced airlines. Since the beginning of the year, the Company's stock price has fallen nearly 90%, due to fears of a bankruptcy filing. In its Form 8-K filed with the SEC on Aug. 11, 2005, the carrier reported a net loss of $98.5 million for second quarter 2005, compared to second quarter 2004 net loss of $27.1 million. Revenue fell 24% to $117.5 million, and the Company's unrestricted cash was down to $66 million, from $107 million at the start of the quarter and $169 million at the end of 2004. At June 30, 2005, FLYi, Inc.'s balance sheet showed a $29,383,000 stockholders' deficit, compared to $167,134,000 of positive equity at Dec. 31, 2004. As reported in the Troubled Company Reporter on Aug. 12, 2005, Standard & Poor's Ratings Services revised the implications of its CreditWatch review on FLYi Inc. (CC/Watch Neg/--) to negative from developing. "The revision in CreditWatch status follows FLYi's second-quarter 10-Q filing, which continued to indicate substantial doubt about the airline's ability to continue as a going concern," said Standard & Poor's credit analyst Betsy Snyder. The company disclosed in its second-quarter 10-Q report with the SEC that it has engaged advisers and is making contingency plans for a potential Chapter 11 bankruptcy filing. Headquartered in Dulles, Virginia, FLYi Inc., -- http://www.flyi.com-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. Independence Air offers low fares every day to a total of 45 destinations across America with comfortable leather seats and Tender Loving Service(SM). FOAMEX INT'L: Final DIP Financing Hearing Set for October 17 ------------------------------------------------------------ As previously reported in the Troubled Company Reporter on Sept. 23, 2005, Bank of America, N.A., as administrative agent and as lender, agreed to make a debtor-in-possession financing facility available to Foamex L.P. Other lenders include: -- General Electric Capital Corporation -- JPMorgan Chase Bank, N.A. -- Congress Financial Corporation Central -- State of California Public Employees' Retirement System -- PNC Bank, National Association -- Wells Fargo Foothill, LLC The DIP Revolving Credit Lenders will make revolving loans and other extensions of credit available to Foamex L.P. up to a maximum outstanding principal amount of $240 million -- including a $40 million sub-limit for letters of credit. The Honorable Judge Walsh of the U.S. Bankruptcy Court for the District of Delaware entered an Interim DIP Financing Order on Sept. 20, 2005. Judge Walsh allowed Foamex International Inc., and its debtor-affiliates to access up to $221 million of the $240 million DIP Revolving Credit Facility arranged by Bank of America and obtain a new $80 million DIP Term Loan from Silver Point Finance, LLC. A copy of the order is available for free at http://bankrupt.com/misc/foamexDIPorder.pdf Judge Walsh will convene a Final DIP Financing Hearing on Oct. 17, 2005, at 1:30 p.m. in Delaware. Objections, if any, must be received no later than Oct. 11, 2005, and served to: Counsel for the Debtors: Alan W. Kornberg, Esq. Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019 Local counsel for the Debtors: Pauline K. Morgan, Esq. Young Conaway Stargatt & Taylor LLP The Brandywine Building 1000 West Street, 17th Floor Wilmington, Delaware 19801 Counsel for Bank of America, as DIP Revolving Credit Agent: Albert Fenster, Esq. Kaye Scholer LLP 425 Park Avenue New York, New York 10022-3598 Louis DeLucia, Esq. Marc Rosenberg and Buchanan Ingersoll The Nemours Building 1007 North Orange Street, Suite 1110 Wilmington, Delaware 19801 Counsel for Silver Point, as Administrative Agent: Frederic Ragucci, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 Counsel of the Ad Hoc Committee of Senior Secured Noteholders: Adam Harris, Esq. O'Melveny & Myers LLP Times Square Tower 7 Times Square New York, New York 10036 The United States Trustee: Kelly Beaudin Stapleton, Esq. Office of the U.S. Trustee 833 Chestnut Street, Suite 500 Philadelphia, Pennsylvania 19107 Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INT'L: Court Allows Continued Use of Existing Bank Accounts ------------------------------------------------------------------ To supervise the administration of Chapter 11 cases, the Office of the U.S. Trustee requires a Chapter 11 debtor to close all existing bank accounts and open new bank accounts. The requirement is designed to provide a clear line of demarcation between a debtor's prepetition and postpetition transactions and operations, and prevent the inadvertent postpetition payment of prepetition claims. Currently, Foamex International Inc., and its debtor-affiliates maintain 24 bank accounts: * five controlled disbursement accounts in Bank of America, N.A., and one in Citibank, N.A.; * three lock box accounts in Bank of America, one lock box account in Citibank and one lock box account in JP Morgan Chase; * eight checking accounts -- one each in Wachovia Corporation, Bank of America, Wells Fargo Indiana, Wells Fargo New Mexico, PNC Bank, Renasant Bank, National Bank of Indiana and Susquehanna; * two Master Funding Accounts in Bank of America; * one Master Collection Account in Bank of America; * one local depository account in Wachovia; and * one wire transfer account in Citibank. To require the Debtors to use new accounts would disrupt their business and would impair their efforts to maximize the value of their estates and reorganize their business, Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor, in Wilmington, Delaware, asserts. Moreover, Mr. Barry continues, opening new accounts would unnecessarily distract the Debtors' key accounting and financial personnel whose efforts are more appropriately focused on assisting with the reorganization. The Debtors believe that any delays or disruption in the payment of wages and other employee- related expenses resulting from changing bank accounts would erode employee morale at this critical time, and would cause the employees to suffer great hardship. This, in turn, could result in their departure, an outcome, which would severely hamper the Debtors' reorganization efforts. Accordingly, the Debtors ask the Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware for permission to continue using their existing bank accounts. Maintenance of the Bank Accounts will ensure a smooth transition into Chapter 11, Mr. Barry maintains. * * * Judge Walsh grants the Debtors' request. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INT'L: Court Okays Continued Use of Cash Management System ----------------------------------------------------------------- Foamex International Inc., and its debtor-affiliates maintain a centralized integrated cash management system in the operation of their business, Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor, in Wilmington, Delaware, relates. The Debtors deposit checks and receive wire transfers through six different accounts. Checks from customers on account of outstanding accounts receivable are deposited into one of five accounts. Wire transfers and automated clearinghouse credits are received by the Debtors into two accounts. The Debtors' remaining deposit account is with Wachovia Corporation and is used by Foamex L.P. to deposit non-accounts receivable checks for, among other things, rent receipts and vendor refunds. The amounts in the deposit accounts, except the Wachovia account, are swept daily into a Master Collection Account that is a "blocked account". Foamex LP typically sweeps the amounts in the Wachovia account into the Master Collection Account. Bank of America, N.A., in turn, then sweeps the Master Collection Account daily and applies the funds swept from the Master Collection Account to reduce the amount outstanding under the $190 million revolving credit facility. Each day a report is prepared that identifies checks that will be drawn from the Debtors' accounts at the end of the day. Based on this report and the Debtors' calculation of their other cash needs for the day, the Debtors determine their aggregate cash needs for the date and initiate a draw on the Bank Facility. BofA then transfers the amount requested by Foamex L.P. first to a master fund account and then into one of six disbursement accounts, as necessary, to cover the Debtors' checks or wire transfers. Mr. Barry points out that the Debtors maintain current and accurate accounting records of their daily cash transactions. The Debtors' cash management procedures are ordinary, usual and essential business practices. They are similar to those used by other large corporate enterprises and provide significant benefits to the Debtors, including the ability to: (a) accurately and immediately report receipts and expenditures; (b) control corporate funds centrally; (c) ensure the availability of funds when necessary; and (d) reduce administrative expenses by centralizing the movement of funds. At the Debtors' request, the U.S. Bankruptcy Court for the District of Delaware authorizes them to maintain their existing Cash Management System, provided that no prepetition check, drafts, wire transfers or other forms of tender that have not yet cleared as of the Petition Date will be honored unless authorized by a Court order. The Court also permits the Debtors to preserve various reporting and accounting mechanisms, like signatory authorizations and accounting systems central to the maintenance of the bank accounts. Among others, the Debtors assure the Court that they will maintain records of all transfers within the Cash Management System so that all transfers and transactions will be documented in their books and records to the same extent the information was maintained prior to the Petition Date. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) GENERAL MOTORS: Fitch Lowers Rating One Notch to BB From BB+ ------------------------------------------------------------ Fitch Ratings has downgraded the ratings of General Motors Corp., GMAC and related subsidiaries to 'BB' from 'BB+' due to a lack of tangible progress in reducing its fixed cost structure (including escalating health care costs and liabilities), the incrementally negative effect on GM's core large vehicles resulting from persistently high gas prices and heightened financial risks to GM associated with resolution of the Delphi restructuring. In addition, recent incentive programs have established lower market pricing that makes GM increasingly vulnerable to volume declines which could occur as a result of a decline in economic conditions or simply a sustained falloff following recent industry sales spikes. Given continued top-line pressures, financial stresses in the supplier base and numerous impediments to achieving significant structural cost reductions (legacy cost and labor contract restrictions), opportunities for cost reductions have continued to narrow. Persistently high gas prices are also expected to incrementally reduce demand for GM's large vehicles, where GM is disproportionately exposed in terms of volumes and profitability, and where its new product introductions are concentrated. Industry sale volumes in this segment saw a sharp decline in early 2005, which is likely to mute the volume impact and pricing potential of GM's new GMT-900 product series. In the absence of significant structural cost reductions, Fitch expects that negative operating cash flow (ex-working capital adjustments) is likely to deteriorate further in 2006, heightening the risks of a more fundamental restructuring and reduced liquidity (including long-term VEBA holdings) from currently healthy levels. Fitch has become increasingly concerned with the near-term financial costs that could fall on GM as part of Delphi's restructuring. Although the restructuring, in or out of court, is not currently expected to result in any interruption of supplies to GM, the risks of disruption during the adjustment process cannot be ruled out. The risk of a work stoppage could arise, however, in the event that GM does not, in the UAW's view, fully meet the obligations that GM may have to Delphi workers. The bulk of the restructuring costs, within or outside of bankruptcy, are expected to fall on the UAW through headcount reductions, facility closures and wage and benefit reductions. Although GM will benefit over the longer term by Delphi's expected lower cost structure and the ability to re-source product away from Delphi, Fitch is concerned about the short-term costs or other forms of financial support necessary to restore Delphi's financial position to viability. Of concern to Fitch is a revision of existing pricing wherein GM is forced to absorb meaningfully higher costs on a significant portion of its supply chain. Restructuring benefits would largely accrue to Delphi in the near term, with GM benefiting only over an extended time period. Fitch believes that GM could utilize a portion of its liquidity to accelerate workforce reductions at Delphi. In the event of a Delphi bankruptcy, Fitch expects that GM would also be absorbing substantial Delphi legacy costs in the form of pension and OPEB obligations. OPEB-related cash outflows are relatively modest (projected at $216 million in 2005) but accelerate sharply over the next four years. The ultimate cost and timing of Delphi's pension obligations that would be absorbed by GM is unknown. Due to the fact that GM is behind the PBGC, it is Fitch's assumption that GM will not absorb the plans (or the required contributions) but would be contingently liable for meeting certain benefit levels. Fitch expects that cash outflows associated with these obligations would be very long-term in nature. Pension benefits paid out by Delphi are projected at $556 million in 2006, growing rapidly through 2009. OPEB and pension benefit outflows at Delphi and GM will be further increased as headcount reductions are accelerated at both entities. Reducing the OPEB liability is clearly a top priority for GM in the short term and in the 2007 UAW contract negotiations. Because the pension and OPEB obligations are long- term in nature (and because the OPEB obligations are likely to me modified during this time), Fitch believes that GM could allow a Delphi bankruptcy and absorb these longer-term liabilities if GM is able to benefit on the cost side in exchange. Although GM is currently well-funded in its U.S. pension plans, several years of low asset returns could result in an underfunded position due to high level of benefits outflows. In addition, pending pension legislation could result in a re-measurement of liabilities and higher required contributions. Regarding GM's negotiations with the UAW regarding health care, Fitch believes that there may be progress in working toward a negotiated solution. Fitch expects that modest progress will be made in the short term, but that the more significant event will be the 2007 contract negotiations, at which point event risk could be high. Given Fitch's expectation of negative cash flows through 2006, even significant progress in reducing the cash outflows related to health care liabilities will be unlikely to restore GM to cashflow breakeven levels. GM retained liquidity of approximately $20.2 billion in cash and short-term VEBA at June 30, 2005, plus $16.2 billion currently held in long-term VEBA. GM's liquidity profile also benefits from substantial cash holdings at GMAC, and the ability to shrink GMAC's balance sheet or monetize assets. Although liquidity currently remains healthy, Fitch expects that negative operating cash flows (ex working capital) will deteriorate further in 2006 due to reduced unit sales, continuing price erosion and adverse mix. Coupled with any cash applied to resolve the Delphi and health care issues, long-term VEBA could be reduced meaningfully as GM applies these funds to permitted expenditures. Fitch is also concerned with the potential reduction in credit available to the automotive sector. Extended payment terms have long been an industry practice, and trade credit has become a critical part of the liability structure of the OEMs and their suppliers. Suppliers have also traditionally relied on the ability to finance OEM receivables. As the automotive supply chain comes under increasing financial stress and financial intermediaries limit credit exposures throughout the industry, restrictions on access to external financing and trade credit could have significant repercussions on GM and throughout the industry. Ratings lowered with a Negative Rating Outlook: General Motors Corp. General Motors Acceptance Corp. GMAC International Finance B.V. General Motors Acceptance Corp., Australia General Motors Acceptance Corp. of Canada Ltd. GMAC Bank GmbH General Motors of Canada Limited General Motors Acceptance Corp. (N.Z.) Ltd. GMAC Commercial Funding Asia K.K. (formerly GMAC Commercial Mortgage Japan K.K.) -- Senior debt to 'BB' from 'BB+'. Residential Capital Corp. GMAC Bank -- Senior debt to 'BBB-' from 'BBB'. S-T ratings lowered: Residential Capital Corp. GMAC Bank -- Short-term to 'F3' from 'F2'. Ratings affirmed: General Motors Corp. General Motors Acceptance Corp. GMAC International Finance B.V. General Motors Acceptance Corp., Australia General Motors Acceptance Corp. of Canada Ltd. GMAC Bank GmbH General Motors of Canada Limited General Motors Acceptance Corp. (N.Z.) Ltd. GMAC Commercial Funding Asia K.K. (formerly GMAC Commercial Mortgage Japan K.K.) General Motors Acceptance Corp. (U.K.) Plc GMAC Australia Finance -- Short-term 'B'. GMAC Bank -- Individual 'B/C'. Rating Watch revised to Positive from Evolving: GMAC Commercial Mortgage Bank -- Long-term deposits 'BB+'; -- Senior debt 'BB+' ; -- Short-term deposits 'B'; -- Short-term 'B'; -- Individual 'B/C'; -- Support '3'. GMAC Commercial Mortgage Bank Europe, plc -- short-term ratings 'F3'. GMAC Commercial Mortgage Funding, plc -- Long-term ratings 'BB+'. New rating assigned: GMAC Bank -- Long-term deposits 'BBB'; GMAC: Fitch Downgrades Senior Unsecured Rating to BB ---------------------------------------------------- Concurrent with Fitch Ratings' downgrade of General Motors Corp., Fitch has downgraded GMAC's senior unsecured debt rating to 'BB' from 'BB+'. In addition, Fitch has downgraded Residential Capital Corp.'s senior unsecured rating to 'BBB-' from 'BBB'. Fitch has affirmed the short-term 'B' ratings of GMAC and lowered the short-term ratings of ResCap to 'F3' from 'F2'. Lastly, Fitch has revised the Rating Watch status on GMAC Commercial Mortgage Bank to Positive from Evolving. The Rating Outlook for GMAC, ResCap and related entities remains Negative. Approximately $104 billion of senior unsecured debt is affected by this action. Monday's action on GMAC solely reflects its linkages with GM. Despite competitive and structural issues at GM, GMAC's own operating performance has fared much better, reflecting in part, the benefits of diversification from its mortgage and insurance businesses. In addition, Fitch recognizes GMAC's relatively sound liquidity profile over the near term, augmented by GMAC's recent whole-loan agreement with Bank of America. The rating action on ResCap solely reflects its ownership by GMAC. While Fitch continues to believe that ResCap maintains investment grade fundamentals, its ownership by GMAC is a limiting factor in terms of rating notching. At present, Fitch would allow for up to two notches between the ratings of ResCap and GMAC. Although Fitch does not differentiate the ratings of GM and GMAC currently, Fitch would consider a ratings distinction similar to ResCap in accordance with Fitch's criteria for parent and financial subsidiary relationships. The Rating Watch status on GMAC Commercial Mortgage Bank was revised to Positive from Evolving reflecting the expected partial spin-off from GMAC and Fitch's view of the resulting financial profile of GMAC Commercial Holding Corp., the parent company of GMAC Commercial Mortgage Bank. Fitch anticipates resolving the Rating Watch on GMAC Commercial Mortgage Bank at the time the spin-off closes, expected later this year. Ratings lowered with a Negative Rating Outlook: General Motors Acceptance Corp. GMAC International Finance B.V. General Motors Acceptance Corp., Australia General Motors Acceptance Corp. of Canada Ltd. GMAC Bank GmbH General Motors Acceptance Corp. (N.Z.) Ltd. GMAC Commercial Funding Asia K.K. (formerly GMAC Commercial Mortgage Japan K.K.) -- Senior debt to 'BB' from 'BB+'. Residential Capital Corp. GMAC Bank -- Senior debt to 'BBB-' from 'BBB'. S-T ratings lowered: Residential Capital Corp. GMAC Bank -- Short-term to 'F3' from 'F2'. Ratings affirmed: General Motors Acceptance Corp. GMAC International Finance B.V. General Motors Acceptance Corp., Australia General Motors Acceptance Corp. of Canada Ltd. GMAC Bank GmbH General Motors Acceptance Corp. (N.Z.) Ltd. GMAC Commercial Funding Asia K.K. (formerly GMAC Commercial Mortgage Japan K.K.) General Motors Acceptance Corp. (U.K.) Plc GMAC Australia Finance -- Short-term 'B'. GMAC Bank -- Individual 'B/C'. Rating Watch revised to Positive from Evolving: GMAC Commercial Mortgage Bank -- Long-term deposits 'BB+'; -- Senior debt 'BB+' ; -- Short-term deposits 'B'; -- Short-term 'B'; -- Individual 'B/C'; -- Support '3'. GMAC Commercial Mortgage Bank Europe, plc -- short-term ratings 'F3'. GMAC Commercial Mortgage Funding, plc -- Long-term ratings 'BB+'. New rating assigned: GMAC Bank -- Long-term deposits 'BBB'; HEILIG-MEYERS: Wachovia Bank Says Plan Shouldn't Be Confirmed ------------------------------------------------------------- Wachovia Bank, N.A., acting as administrative agent for bank lenders and as collateral agent for prepetition secured creditors of Heilig-Meyers Company and its debtor-affiliates, tells the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division, that it doesn't want the Debtors' Second Amended and Restated Joint Liquidating Plan to be confirmed. Wachovia's Objections First, the Bank says that the Plan improperly classifies the deficiency claims of the lenders in the same class as the unsecured claims of the bondholders. This scheme results to an inferior recovery for the lenders. Second, the Plan depends upon the substantive consolidation of the Debtors' estates. The Bank says that this is only a "pretend- form" because differing treatments among unsecured creditors, based on their separate claims against different Debtors, would continue to be recognized. Third, the liquidating Plan incorrectly treats the Lenders' secured claims as unimpaired and having been paid in full. Wachovia refutes this characterization. Currently, the Lenders have a pending appeal before the U.S. District Court for the Eastern District of Virginia seeking to remove the $128.5 million collateral cap enforced on the Lenders' claims. If the District Court will not affirm the cap, then, the Plan's treatment of the Lenders' secured claims will be insufficient. Wachovia surmises that after more than five years in bankruptcy, the Debtors hope that simple fatigue with the process will cause the Court to overlook fatal legal deficienies in the Plan. Heilig-Meyers Company filed for chapter 11 protection on Aug. 16, 2000 (Bankr. E.D. Va. Case No. 00-34533), reporting $1.3 billion in assets and $839 million in liabilities. When the Company filed for bankruptcy protection it operated hundreds of retail stores in more than half of the 50 states. In April 2001, the company shut down its Heilig-Meyers business format. In June 2001, the Debtors sold its Homemakers chain to Rhodes, Inc. GOB sales have been concluded and the Debtors are liquidating their remaining Heilig-Meyers assets. Bruce H. Matson, Esq., Troy Savenko, Esq., and Katherine Macaulay Mueller, Esq., at LeClair Ryan, P.C., in Richmond, Va., represent the Debtors. HILLMAN COS: AMEX Accepts Plan for Continued Listing Compliance --------------------------------------------------------------- The Hillman Companies, Inc. (Amex: HLM_P), the parent company of The Hillman Group Inc., disclosed that its plan of compliance had been accepted by the American Stock Exchange. The Company received a letter from AMEX on Aug. 24, 2005, advising that the Company is not in compliance with the AMEX requirements as set forth in Section 1101 of the Amex Company Guide for failure to file with the Securities and Exchange Commission its quarterly report on Form 10-Q for the quarter ended June 30, 2005. In addition, the letter advised the Company that as a result of the restatement of its financial statements as disclosed on a Form 8-K filed with the SEC on Aug. 23, 2005, the Company was not in compliance with the requirements of its listing agreement. The compliance letter gives the Company until Sept. 7, 2005, to submit a plan of action that the Company has taken, or will take, to bring it into compliance no later than Oct. 4, 2005. The Company submitted its plan of compliance on Sept. 7, 2005. On Sept. 9, 2005, the plan was accepted by AMEX, and the Company was granted an extension until Oct. 4, 2005, to regain compliance with the continued listing standards. The Company will be subject to periodic review to determine whether progress consistent with the plan is being made. If the Company is not in compliance with the continued listing standards by Oct. 4, 2005, or does not make progress consistent with the plan during the plan period, delisting procedures would be initiated. The Hillman Companies, Inc., manufactures key making equipment and distributes key blank, fasteners, signage and other small hardware components. The Company sells and markets to hardware stores, home centers and mass merchants in the United States, Canada, Mexico and South America. * * * As reported in the Troubled Company Reporter on Aug. 26, 2005, Standard & Poor's Ratings Services placed its 'B' corporate credit and senior secured bank loan ratings on Hillman Group Inc. on CreditWatch with negative implications. Total debt outstanding was about $378 million as of March 31, 2005, for this Cincinnati, Ohio-based manufacturer and distributor of fasteners and other hardware to the retail trade. HOME PRODUCTS: McGladrey & Pullen Replaces KPMG as Auditors ----------------------------------------------------------- Home Products International, Inc., dismissed KPMG LLP as its principal accountants on Sept. 20, 2005. The Audit Committee of the Company's Board of Directors approved this action. In connection with the audits of the two fiscal years ended Jan. 1, 2005, and Dec. 27, 2003, and the subsequent interim period through Sept. 20, 2005, there were no disagreements between the Company and KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures. Material Weakness in Internal Controls On Sept. 14, 2005, KPMG issued a letter to the Audit Committee to communicate a control deficiency that was considered to be a material weakness. KPMG indicated, and the Company agreed, that the Company did not maintain effective controls over the determination of the provision for income taxes and related deferred income tax accounts. The material weakness arose from a lack of sufficient knowledge of the detailed technical requirements related to the accounting for the increase in the deferred tax asset valuation allowance that results from the inability to offset the deferred tax liability related to goodwill, which has an indefinite life, against deferred tax assets that are created by other deductible temporary differences. As a result of this error in the application of U.S. generally accepted accounting principles related to accounting for income taxes, the Company determined it was appropriate to restate its consolidated financial statements as of and for the fiscal year ended January 1, 2005, and as of and for the quarterly period ended April 2, 2005 to reflect the appropriate deferred tax liability and income tax expense in the consolidated financial statements. Hires McGladrey & Pullen Effective September 20, 2005, the Company's Audit Committee of the Board of Directors appointed McGladrey & Pullen, LLP as the Company's independent registered public accounting firm, subject to McGladrey & Pullen's completion of their normal client acceptance procedures. Home Products International, Inc., is an international consumer products company specializing in the manufacture and marketing of quality diversified housewares products. The Company sells its products through national and regional discounters including Kmart, Wal-Mart and Target, hardware/home centers, food/drug stores, juvenile stores and specialty stores. As of July 2, 2005, Home Products' equity deficit widened to $11,203,000 from a $907,000 deficit at Jan. 1, 2005. HORNBECK OFFSHORE: Selling Debt & Equity in Private & Public Deals ------------------------------------------------------------------ Hornbeck Offshore Services, Inc. (NYSE: HOS) commenced a public offering of 4,750,000 shares of common stock plus an additional 2,000,000 shares to be sold by a selling stockholder. The underwriters have been granted an option by the Company to purchase up to an additional 1,012,500 shares. In addition, the Company intends to sell in a private placement an additional $75,000,000 aggregate principal amount of its 6.125% Senior Notes due 2014 under its indenture dated as of Nov. 23, 2004. The Company intends to use the proceeds from the offerings to partially fund the construction of new OSVs, ocean-going tugs and ocean-going, double-hulled tank barges and the retrofit or conversion of certain existing vessels, including MPSVs. In addition, the combined proceeds may be used in connection with possible future acquisitions and additional new vessel construction programs, as well as for general corporate purposes. Pending these uses, the Company will repay debt under its revolving credit facility, which may be reborrowed. Goldman, Sachs & Co. and Jefferies & Company, Inc. will act as joint book-running managers for the Offering. Lehman Brothers, Bear, Stearns & Co. Inc., Johnson Rice & Company L.L.C., Simmons & Company International, Hibernia Southcoast Capital, Inc. and Pritchard Capital Partners LLC will act as co-managers. The Offering is being made only by means of a prospectus and related prospectus supplement, copies of which may be obtained from Goldman, Sachs & Co., 85 Broad Street, New York, NY 10004, (212) 902-1171. Hornbeck Offshore Services, Inc., provides technologically advanced, new generation offshore supply vessels in the U.S. Gulf of Mexico, Trinidad and other select international markets, and is a leading transporter of petroleum products through its fleet of ocean-going tugs and tank barges, primarily in the northeastern U.S. and in Puerto Rico. Hornbeck Offshore currently owns and operates a fleet of over 50 U.S.-flagged vessels primarily serving the energy industry. * * * Hornbeck Offshore's 6-1/8% senior notes due 2014 carry Moody's Investors Service's Ba3 rating and Standard & Poor's BB- rating. INSEQ CORP: Acquires Separation and Recovery in All-Stock Deal -------------------------------------------------------------- INSEQ Corporation (OTC Bulletin Board: INSQ) has acquired Separation and Recovery Technologies, Inc., from UTEK Corporation (AMEX: UTK; LSE-AIM: UTKA), in an all-stock transaction. Pursuant to the terms of it agreement with UTEK, INSEQ acquired SRT, a 100% owned subsidiary of UTEK, in a tax-free stock-for- stock exchange through which INSEQ issued 434,782,608 unregistered shares of common stock to UTEK in exchange for 100% of the issued and outstanding shares of SRT. SRT holds certain exclusive rights to a new patented technology for the separation of plastics from solid wastes and non-exclusive rights to the technology for the separation of plastics from electronic equipment and white appliances. Argonne National Laboratory developed the new technology under a contract with the U.S. Department of Energy. In addition to the Argonne technology, SRT's assets at closing also included several hundred thousand dollars in working capital that INSEQ will use as seed capital as it commercializes the Argonne technology. "The Argonne technology enables the cost-effective preferential separation and recovery of specific targeted plastics from a mixed plastics stream, "said Kevin Kreisler, INSEQ's chairman. "This has compelling implications in a number applications, but INSEQ is predominantly interested in manufacturing systems that apply this technology at centralized solid waste processing facilities, at consumer electronics recycling facilities, and at targeted plastics manufacturers with the goal of separating key targeted plastics for recycling and reuse, and INSEQ hopes that this technology will result in a significant contribution to INSEQ's revenue and earnings as the first systems become operational." Mr. Kreisler continued, "Having the capability to separate targeted plastics from wastes streams provides value to recycling efforts. More importantly however, the Argonne separation technology allows for more efficient conversion of mixed plastic wastes into fuels such as diesel fuel. This can be achieved today by using this technology in conjunction with conventional refining technologies such as thermal deploymerization and we plan to steer our initial applications of the Argonne technology in this direction." A full-text copy of the Acquisition Agreements is available for free at http://ResearchArchives.com/t/s?1e6 Inseq Corporation -- http://www.inseq.com/-- through its wholly owned subsidiary, Warnecke Design Service, Inc., designs, builds, and installs manufacturing equipment used in industry. Project sites are located throughout the United States, but are concentrated in the states of Kansas and Ohio. INSEQ is 70% owned by GreenShift Corporation (OTC Bulletin Board: GSHF), a business development corporation whose mission is to develop and support companies and technologies that facilitate the efficient use of natural resources and catalyze transformational environmental gains. As of June 30, 2005, Inseq's total liabilities exceed its total assets by $414,700. Going Concern Doubt The Company's external auditors -- Rosenberg, Rich, Baker, Berman & Company -- raised going concern doubts after reviewing the company's 2004 financial statements. The Company incurred a loss of $1,346,773 for the six months ended June 30, 2005. As of June 30, 2005, the Company had $105,066 in cash, and current liabilities exceeded current assets by $455,606. INTERNATIONAL PAPER: Sells Carter Holt Equity Stake for $1.14B -------------------------------------------------------------- International Paper (NYSE: IP) has completed the sale of its 50.5% stake in Carter Holt Harvey Ltd. to Rank Group Investments Ltd. for NZ$2.50 per share, per the lock-in agreement signed by both companies on Aug. 16. Proceeds of the sale totaled US$1.14 billion, and will be used primarily to reduce debt. The Company's acceptance of the offer satisfies the minimum shareholder acceptance condition of the full takeover offer, launched Sept. 14, 2005. "This is an important first step in IP's transformation plan, and I'm pleased with how quickly we completed the transaction. It's an indication that we are serious and focused on getting value and executing our strategy," said John Faraci, IP's chairman and chief executive officer. "While we remain confident in CHH's leadership and strategy to grow and improve, our priorities have evolved and the business climate has changed. The timing was right for us to divest our interests." International Paper -- http://www.internationalpaper.com/-- is the world's largest paper and forest products company. Businesses include paper, packaging, and forest products. As one of the largest private forest landowners in the world, the company manages its forests under the principles of the Sustainable Forestry Initiative (R) (SFI) program, a system that ensures the continual planting, growing and harvesting of trees while protecting wildlife, plants, soil, air and water quality. * * * As reported in the Troubled Company Reporter on July 22, 2005, Moody's Investors Service placed International Paper Company's ratings on review for possible downgrade. International Paper Company: * Senior Unsecured Baa2 * Subordinate Shelf (P)Baa3 * Preferred Shelf (P)Ba1 * Commercial Paper P-2 International Paper Capital Trust II: * Bkd Preferred Stock Baa3 * International Paper Capital Trust III: * Bkd Preferred Shelf Baa3 International Paper Capital Trust IV: * Bkd Preferred Shelf (P) Ba1 * International Paper Capital Trust VI: * Bkd Preferred Shelf (P) Ba1 Champion International Corporation: * Senior Unsecured Baa2 * Federal Paper Board Co., Inc. * Senior Unsecured Baa2 Union Camp Corporation: * Senior Unsecured Baa2 INTERSTATE BAKERIES: Asks Court to Okay Nestle Purina Agreement --------------------------------------------------------------- On July 22, 1995, Interstate Bakeries Corporation and its debtor- affiliates, Continental Baking Company, VCS Holding Company and Ralston Purina Company executed a Tax Sharing Agreement, which addressed certain tax issues arising under a related Sale and Purchase Agreement between the Debtors, Continental Baking and Ralston. Ralston Purina Company is now known as Nestle Purina Petcare Company. Pursuant to the Tax Agreement, the parties allocated certain tax benefits and burdens among themselves, J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, relates. The Tax Agreement required the Debtors to pay Ralston in the event that an Internal Revenue Service audit resulted in a shift of certain tax deductions, leading to a tax benefit to Interstate Brands Corporation and a tax liability to Ralston. As a result of IRS audits, the Debtors made yearly Shifted Deduction Payments, aggregating $2,037,299, to Ralston from 1998 to 2003. However, on March 7, 2002, the IRS issued new regulations, which allowed certain losses previously disallowed by the IRS. These new regulations called into question whether Ralston truly suffered a tax liability as a result of shifted deductions. The parties disputed whether the tax liability truly existed. Mr. Ivester argues that to the extent there was no tax liability, as the Debtors contend, Nestle must reimburse the Debtors $2,037,299 for the Shifted Deduction Payments. In contrast, if the tax liability existed, as Nestle contends, the Debtors might owe Nestle up to an additional $388,207 for unpaid Shifted Deduction Payments, which includes future liabilities. Pursuant to the Tax Agreement, the Debtors also made payments to Ralston totaling $4,890,323, which represented the value of certain income tax benefits enjoyed by the Debtors as a result of certain employee severance payments made by Ralston after the closing of the Sales Transaction. However, the Debtors contend that Ralston was not entitled to retain the Severance Pay Tax Reimbursements due to the fact that Ralston received significant tax benefits as a result of making the post-closing severance payments. The Debtors further assert that Nestle is required to reimburse them for the Severance Pay Tax Reimbursements. To avoid the expense, delay, and uncertainty of litigation, the parties entered into a settlement agreement to resolve their disputes. The salient terms of the Settlement Agreement are: (a) Nestle holds the sole right, title and interest in and to all rights to reimbursement and recovery of all claims under the Tax Agreement originally held by Ralston or VCS; (b) Nestle will pay Interstate Brands $2,750,000, representing reimbursement of certain payments previously made by the Debtors to Nestle or Ralston under the Tax Agreement; (c) When Interstate Brands receives the Nestle Payment, Nestle will withdraw all of its claims against the Debtors relating to the Tax Agreement; and (d) The parties will execute mutual releases. The Debtors ask Judge Venters to approve their Settlement Agreement with Nestle. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) JACOBS INDUSTRIES: Case Summary & 80 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: Jacobs Industries, Inc. P.O. Box 9 Fraser, Michigan 48026 Bankruptcy Case No.: 05-72613 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- CEN Industries, Inc. 05-72619 Lightning Enterprises, Inc. 05-72623 PMG Enterprises 05-72624 Type of Business: The Debtor manufactures automotive interiors and specializes in roll forming and channel, stampings and assembled product. Chapter 11 Petition Date: September 26, 2005 Court: Eastern District of Michigan (Detroit) Judge: Thomas J. Tucker Debtors' Counsel: Charles J. Taunt, Esq. Erika D. Hart, Esq. Charles J. Taunt & Associates, P.L.L.C. 700 East Maple Road, Second Floor Birmingham, Michigan 48009-6359 Tel: (248) 644-7800 Total Assets Total Debts ------------ ----------- Jacobs Industries, Inc. $19,513,913 $21,413,576 CEN Industries, Inc. $16,654 $94,977 Lightning Enterprises, Inc. $13,099 $46,792 PMG Enterprises $10,372 $84,245 A. Jacobs Industries, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Daimler Chrysler Corporation $1,341,949 OL-4740401 P.O. Box 98298 Chicago, IL 60693 JYCO Sealing Technologies $327,844 UPS #WA0305 3995 Boul. Industriel Sherbrooke, PQ J1L 2S7, CA D&N Bending Corp. Trade debt $308,913 101 East Pond Romeo, MI 48065 MST Steel Corp. $262,278 24417 Groesbeck Highway Warren, MI 48089-4786 Paul McCaulley Unpaid salary $263,268 [address not provided] Shores Engineering $254,139 34632 Nova Clinton Township, MI 48035 Slidematic Products $223,411 Johnston Steel Service Inc. $218,291 Macsteel Service Centers USA $215,859 City of Fraser - Taxes Trade debt $205,386 Horizon Steel Company $188,695 Allison Engineering Inc. Trade debt $179,720 Timothy Kirby Unpaid salary $179,046 Preferred Industries $144,342 United States Steel $133,179 General Motors Powertrain $123,381 GDX Automotive - Magog $114,046 Powder Cote II, Inc. $102,821 Fabristeel Manufacturing $96,057 Blue Cross Blue Shield Trade debt $94,737 B. CEN Industries, Inc.'s 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Jacobs Industries, Inc. $94,977 34675 Commerce Fraser, MI 48026-0009 Adkins, Annetta Unknown 8414 Ashton Street Detroit, MI 48228 Adkins-Grayson, Michael Unknown 8414 Ashton Street Detroit, MI 48224 Allen, Christopher Unknown 9130 Bishop Street Detroit, MI 48224 Allen, Kieyana Unknown 15852 Faircrest Detroit, MI 48205 Alvarez-Ramirez, Oralia Unknown 5420 Proctor Street Detroit, MI 48210 Alvarez-T, Lucio Unknown 2539 Inglis Detroit, MI 48209 Arcos, Sebastian Unknown 8191 Lafayette Detroit, MI 48209 Avendano, Esteban Unknown 2607 Inglis Detroit, MI 48209 Avendano-Bautista, David Unknown 2607 Inglis Detroit, MI 48209 Badillo, Vicente-Argimiro Unknown 23179 Woodrow Wilson Warren, MI 48091 Baker, Gloria Unknown 12135 Minden Detroit, MI 48205 Balderrama-Tellez, Jacinto Unknown 294 West Grand Boulevard Detroit, MI 48216 Ballesteros-Mercado, Maria Unknown 1501 Cavalry Detroit, MI 48209 Berduo, Herelin Unknown 5833 Trenton Street Detroit, MI 48210 Betz, Wendy Lou Unknown 8350 Lane Street Detroit, MI 48209 Beverly, Lamark Unknown 14736 Rosemary Detroit, MI 48213 Bonacorsi, Robert Unknown 8833 Cologne Sterling Heights, MI 48314 Brown, Leroun Unknown 6280 Holcomb Detroit, MI 48213 Burris, Jervon Unknown 18312 Faust Avenue Detroit, MI 48219 C. Lightning Enterprises, Inc.'s 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Jacobs Industries, Inc. $46,792 34675 Commerce Fraser, MI 48026-0009 Angeles, Gudelia Unknown 5208 Daniels Detroit, MI 48210 Benson, Malcolm Unknown 13893 Pinewood Detroit, MI 48205 Campbell, Clarissa Unknown 20274 Goulburn Detroit, MI 48205 Cooper, Devin Unknown 6628 Mc Clellan Detroit, MI 48213 Dela Rosa Zetina, Ernesto Unknown 35321 Wee Care Drive #1 Clinton TWP, MI 48035 Eiland, Rosalyn Unknown 4124 Alter Road Detroit, MI 48215 Eliasz, Robert Unknown 50014 Degas Chesterfield, MI 48051 Ervin, Shaun Unknown 30545 Sandhurst Drive, Apartment 103 Roseville, MI 48066 Escorcia-Vazquez, Cristina Unknown 2003 Green Detroit, MI 48210 Gregorio-Rodriguez, Simon Unknown 4144 North Campbell Street Detroit, MI 48210 Herrera-Avalos, Marlon Ivan Unknown 3915 Tren Detroit, MI 48210 Holbdy, Chauncey Unknown 9226 Bishop Detroit, MI 48224 Lima, Ruben Unknown 15806 Marentette Clinton TWP, MI 48038 Matthew, Sumoth Unknown 25611 Thomas Drive Warren, MI 48091 Oropeza, Florencio Unknown 6409 Pelouze Detroit, MI Ortiz, Amparo Unknown 5623 Lumley Detroit, MI 48210 Parker, Ora Unknown 4358 Nottingham Detroit, MI 48224 Rafael, Julio Unknown 5229 Daniels Detroit, MI 48210 Reyes-Rodriguez, Bernardo Unknown 4144 North Campbell Detroit, MI 48210 D. PMG Enterprises' 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Jacobs Industries, Inc. $84,245 34675 Commerce Fraser, MI 48026-0009 Abraham, James Unknown 24085 Almond East Pointe, MI 48021 Adair, Roger Unknown 24170 Denise Road, Apartment 49B Clinton TWP, MI 48036 Aguilar, Elizabeth Esquivel Unknown 46220 Chadsworth, Lot 348 Macomb, MI 48044 Alexander, Eugene Unknown 17233 Patton Street Detroit, MI 48219 Anderson, Douglas Unknown 5231 East 10 Mile Road, #206 Warren, MI 48091 Anderson, Tiffany Unknown 8104 Marion Detroit, MI 48213 Buckwalter, Judith Unknown 23191 Hoover, Apartment 2A Warren, MI 48089 Burns, Cynthia Unknown 5071 Iroquois Detroit, MI 48213 Carreon, Maricela Unknown 7092 West Lafayette Detroit, MI 48209 Chris, Benny Unknown 25581 Cole Roseville, MI 48066 Clayton, Michael Unknown 12637 Barlow Detroit, MI 48205 Cleary, Mark Unknown 3962 Lake Forest Sterling Heights, MI 48314 Delgado, Olivia Unknown 3455 Alvina Avenue Warren, MI 48091 Dexter, Robert L. Unknown 21404 Lasalle Warren, MI 48089 Dixon, Camaro Unknown 6155 Crane Detroit, MI 48213 Dobine, Adrienne Unknown 19324 Ryan Road Detroit, MI 48234 Duran, Jose I. Unknown 2055 Vinewood #14 Detroit, MI 48216 Espinoza, Elfego Unknown 1472 Hubbard Street Detroit, MI 48209 Espitia, Pablo Corona Unknown 2055 Vinewood Detroit, MI 48216 JERNBERG INDUSTRIES: Retiree Panel Taps Fagelhaber LLC as Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois gave the Committee of Non-Union Retirees of Jernberg Industries, Inc., and its debtor-affiliates permission to employ the Law Firm of Fagelhaber LLC as its counsel. The Court approved the appointment of the members of the Retirees Committee on Aug. 22, 2005. The Retirees Committee is comprised of Clarence M. Berblinger, Howard C. Campbell and Leonard M. Lipinski. Fagelhaber LLC will: a) negotiate and the Debtors' and the Unsecured Creditors Committee's professionals or representatives concerning the administration of the non-union retiree benefits; b) prepare and review pleadings, motions and correspondences in the Debtors' chapter 11 cases; c) appear at and represent the Retirees Committee in proceedings held before the Bankruptcy Court; d) provide legal advice to the Retirees Committee in the Debtors' actions concerning non-union retiree benefits and any other matters relevant to the non-union retiree benefits, and any other matters relevant to the non-union retirees in the Debtors' chapter 11 cases; and e) provide all other legal services to the Retirees Committee, including any actions by the Debtors or the Unsecured Creditors Committee in the Debtors' chapter 11 cases pursuant to Section 1114 of the Bankruptcy Code. Lauren Newman, Esq., an Associate at Fagelhaber LLC, is one of the lead attorneys for the Retirees Committee. Ms. Newman charges $250 per hour for her services. Ms. Newman reports Fagelhaber LLC's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Dennis E. Quaid Partner $395 Clinton P. Hansen Associate $225 Christina M. Berish Associate $165 Wenette Bradford Paralegal $140 Designation Hourly Rate ----------- ----------- Partners $315 - $395 Associates $165 - $275 Paralegals $100 - $150 Fagelhaber LLC assures the Court that it does not represent any interest materially adverse to the Retirees Committee, the Debtors or their estates. Headquartered in Chicago, Illinois, Jernberg Industries, Inc., -- http://www.jernberg.com/-- is a press forging company that manufactures formed and machined products. The Company and its debtor-affiliates filed for chapter 11 protection on June 29, 2005 (Bankr. N.D. Ill. Case No. 05-25909). Jerry L. Switzer, Jr., Esq., at Jenner & Block LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts of $50 million to $100 million. CM&D Management Services, LLC's A. Jeffery Zappone serves as the Debtors' Chief Restructuring Officer. CM&D Joseph M. Geraghty sits as Cash and Restructuring Manager and Joshua J. Siano, Gerald B. Saltarelli and J. David Mathews serve as Cash and Restructuring Support personnel. KAIRE HOLDINGS: Registers 84 Million Common Shares for Resale ------------------------------------------------------------- Kaire Holdings, Inc., filed a Registration Statement with the Securities and Exchange Commission to allow the resale of common stock issuable upon the conversion of convertible notes and the exercise of warrants of up to 84,469,729 shares, including: (1) up to 22,685,185 shares of common stock issuable to Alpha Capital Aktiengesellschaft upon the conversion of $350,000 in secured convertible debentures and 1,944,444 shares from the exercise of warrants; (2) up to 34,277,066 shares of common stock issuable to Longview Fund, L.P., upon the conversion of $525,000 in secured convertible debentures and 6,652,778 shares from the exercise of warrants; (3) up to 11,778,846 shares of common stock issuable to Longview Equity Fund, L.P., upon the conversion of $175,000 in secured convertible debentures and 875,000 shares from the exercise of warrants; (4) up to 5,048,077 shares of common stock issuable to Longview Equity Fund, L.P., upon the conversion of $75,000 in secured convertible debentures and 375,000 shares from the exercise of warrants; and (5) 833,333 shares of common stock to Bicoastal Consulting Group from the exercise of warrants. The holders of the 8% convertible debentures may not convert its securities into the Company's common shares if after the conversion holder would beneficially own over 9.9% of the Company's outstanding shares. The Company's common stock is quoted on the OTC bulletin board under the symbol "KAIH". The Company's common shares traded between $0.023 and $0.033 this month. Kaire's shares of common stock are "penny stocks" as defined in the Securities Exchange Act. As a result, an investor may find it more difficult to dispose of or obtain accurate quotations as to the price of the shares of the common stock being registered hereby. In addition, the "penny stock" rules adopted by the Commission under the Exchange Act subject the sale of the shares of the common stock to certain regulations which impose sales practice requirements on broker-dealers. A full-text copy of the Registration Statement is available for free at http://ResearchArchives.com/t/s?1dc Kaire Holdings, Inc., delivers specialized programs and services targeted areas within the senior and chronic health care market. As of June 30, 2005, Kaire Holdings' balance sheet reflected a $1,790,816 stockholders' deficit compared to a $1,558,716 deficit at Dec. 31, 2004. KAISER ALUMINUM: Asks Court to Extend Deadline to Remove Actions ---------------------------------------------------------------- Kaiser Aluminum Corporation and its debtor-affiliates are parties to a wide-variety of non-asbestos prepetition litigation. Kaiser Aluminum & Chemical Corporation is also a party to a significant number of prepetition asbestos-related proceedings that are pending in various courts throughout the country. Due to several factors, including the number of Actions involved and the complex nature of the Actions, the Debtors have not yet determined which, if any, of the Actions should be removed and, if appropriate, transferred to the District of Delaware. Hence, the Debtors ask the U.S. Bankruptcy Court for the District of Delaware to further extend the time within which they may remove the Actions pursuant to Section 1452 of the Judiciary Procedures Code and Rule 9027 of the Federal Rules of Bankruptcy Procedure, to the later of 30 days after the: (a) effective Date of the Plan; or (b) entry of an order terminating the automatic stay with respect to a particular Action sought to be removed. Kimberly Newmarch, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, tells the Court that the Extension will protect the Debtors' valuable right economically to adjudicate lawsuits under Section 1452 of the Judiciary Procedures Code if the circumstances warrant removal. Absent an extension may frustrate the potential consolidation of the Debtors' affairs into one court. It may also force the Debtors to address claims and proceedings in a piecemeal fashion to the detriment of their creditors. Ms. Newmarch assures the Court that the Extension will not prejudice: -- the plaintiffs in the stayed Actions because the parties may not prosecute the Actions absent relief from the automatic stay; and -- any party to an Action that the Debtors seek to remove from pursuing remand under Section 1452(b). Judge Fitzgerald will convene a hearing on October 24, 2005, at 1:30 p.m. to consider the Debtors' request. By application of Del.Bankr.LR 9006-2, the Removal Period is automatically extended through the conclusion of that hearing. Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) KEY3MEDIA GROUP: Wants Until Dec. 31 to Object to Claims -------------------------------------------------------- Reorganized Key3Media Group, Inc., and its affiliates asks the U.S. Bankruptcy Court for the District of Delaware to extend, until Dec. 31, 2005, the period within which they, or the Creditor Representative appointed under their confirmed chapter 11 plan, can object to proofs of claims. As previously reported in the Troubled Company Reporter, the reorganized Debtors have substantially completed the review and reconciliation of approximately 380 claims filed against their estates. The extension will give the reorganized Debtors more time to review and reconcile remaining claims that are potentially objectionable. Headquartered in Los Angeles, California, Key3Media Group, Inc., produces, manages and promotes a portfolio of trade shows, conferences and other events for the information technology industry. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 3, 2003 (Bankr. D. Del. Case No. 03-10323). Christina M. Houston, Esq., at Richards, Layton & Finger, P.A., and David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman, LLP, represent the Debtor. When the Debtors filed for protection from their creditors, they listed $241,202,000 in total assets and $441,033,000 in total liabilities. The Court confirmed the Debtors' First Amended Joint Plan of Reorganization on June 4, 2003, and the Plan took effect on June 20, 2003. LEINER HEALTH: Completes Credit Agreement Amendment with Lenders ---------------------------------------------------------------- Leiner Health Products Inc. obtained consent from its secured lenders to amend its Credit Agreement. The amendment will enhance the company's flexibility to manage the business and support the acquisition of assets from Pharmaceutical Formulations, Inc. The Credit Agreement amendment revises required minimum Consolidated Indebtedness to Credit Agreement EBITDA Leverage Ratio and Credit Agreement EBITDA to Consolidated Interest Expense Ratio, commencing with the second quarter of fiscal 2006, ended Sept. 24, and extending throughout the term of the Credit Agreement. "We are pleased with the support and confidence our lenders have shown us in granting the amendment which will provide additional flexibility as we continue to navigate the transitions in product landscape," said Robert Kaminski, Chief Executive Officer. PFI Acquisition Leiner completed its transaction to purchase substantially all of the assets related to PFI's solid dose pharmaceutical products business for $23 million in cash. The purchase price was funded with $13 million in new equity from Leiner's equity sponsors and $10 million drawn on Leiner's revolving credit facility. The acquisition excludes PFI's manufacturing facilities and its branded fiber business, Konsyl Pharmaceuticals, Inc. "We are especially excited that the acquisition of PFI assets gives us the opportunity to be a leader in pain management products across both the VMS and OTC categories as 40 million Americans turn 50 over the next 20 years," Mr. Kaminski said. "The acquisition also allows us to enhance our contract manufacturing capabilities and expands our OTC product offering and customer base." Founded in 1973, Leiner Health Products, headquartered in Carson, Calif., is America's leading manufacturer of store brand vitamins, minerals, and nutritional supplements and its second largest supplier of over-the-counter pharmaceuticals in the food, drug, mass merchant and warehouse club (FDMC) retail market, as measured by retail sales. Leiner provides nearly 40 FDMC retailers with over 3,000 products to help its customers create and market high quality store brands at low prices. It also is the largest supplier of vitamins, minerals and nutritional supplements to the US military. Leiner markets its own brand of vitamins under YourLife(R) and sells over-the-counter pharmaceuticals under the Pharmacist's Formula(R) name. Last year, Leiner produced 27 billion doses that help offer consumers high quality, affordable choices to improve their health and wellness. * * * As reported in the Troubled Company Reporter on Aug. 19, 2005, Moody's Investors Service lowered the long and short-term ratings of Leiner Health Products Inc. by one notch and placed the long- term ratings on review for further possible downgrade. The rating action follows the sharp decline in first quarter profits that has resulted in negative free cash flow and has forced the company to seek an amendment to its bank credit agreement. Credit measures and liquidity have weakened beyond levels consistent with the previous ratings, and could be further constrained by ongoing industry and cost pressures or by the company's planned acquisition of Pharmaceutical Formulations Inc. These ratings were downgraded and placed under review for further possible downgrade: * Corporate family rating (formerly called "senior implied rating"), to B2 from B1; * $50 million senior secured revolving credit facility due 2009, to B2 from B1; * $240 million senior secured term loan facility due 2011, to B2 from B1; * $150 million 11% senior subordinated notes due 2012, to Caa1 from B3. These rating was downgraded: * Speculative grade liquidity rating, to SGL-4 from SGL-3. LIN TV: Subsidiary Selling $190 Mil. Notes Via Private Placement ---------------------------------------------------------------- LIN Television Corporation, a wholly owned subsidiary of LIN TV Corp. (NYSE: TVL), entered into an agreement to sell $190 million aggregate principal amount of 6.5% Senior Subordinated Notes due 2013. The Notes will be issued at a discount to their aggregate principal amount at maturity and will generate gross proceeds to LIN Television Corporation of $175.3 million. The yield to maturity of the Notes is 7.875% (computed on a semi-annual bond equivalent basis), calculated from Sept. 29, 2005. The Notes will be guaranteed by LIN TV Corp. The proceeds from the sale of the Notes will be used to repay the $170 million term loan under LIN Television Corporation's credit facility with the balance, if any, to repay a portion of the outstanding revolving indebtedness under LIN Television Corporation's existing credit facility. The offering is expected to close on September 29, 2005, subject to customary closing conditions. The Notes will be issued in private placements and are expected to be resold by the initial purchasers to qualified institutional buyers under Rule 144A of the Securities Act of 1933 and outside of the United States in accordance with Regulation S under the Securities Act of 1933. The Notes have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. LIN TV Corp., headquartered in Providence, Rhode Island, pro forma for the acquisition owns and operates 30 television stations in 14 markets. In addition, the company also owns approximately 20% of KXAS-TV in Dallas, Texas and KNSD-TV in San Diego, California through a joint venture with NBC. LIN TV is a 50% investor in Banks Broadcasting, Inc., which owns KWCV-TV in Wichita, Kansas and KNIN-TV in Boise, Idaho. * * * As reported in the Troubled Company Reporter on Aug. 29, 2005, Standard & Poor's Ratings Services lowered its ratings on LIN TV Corp., including lowering its long-term corporate credit rating to 'B+' from 'BB-'. S&P said the outlook is stable. On Aug. 23, 2005, Moody's Investors Service placed the ratings of LIN TV Corp., including the Ba2 corporate family rating, on review for possible downgrade following the company's announcement that it has entered into a definitive agreement to acquire five television station from Emmis Communications Corp. for $260 million with cash. MD BEAUTY: S&P Revises Outlook to Negative from Stable ------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on MD Beauty Inc. to negative from stable. In addition, Standard & Poor's affirmed all of its existing ratings on the company, including its 'B' corporate credit rating. About $398 million of pro forma debt is affected by this action. The revised outlook reflects MD Beauty's very aggressive financial policy because it intends to use the proceeds from the planned $177 million increase in its first and second lien bank facility to pay a substantial dividend to shareholders. This dividend is in addition to a $100 million dividend paid to shareholders in February 2005. As a result, pro forma debt leverage will increase to levels above the February 2005 transaction. While the company's operations continue to trend favorably, MD Beauty is in the process on enhancing its infrastructure with: * newly retained management; * a recently opened distribution facility; and * new operating systems that will be in place over the next year. "We view this transaction as limiting the company's flexibility to withstand any significant operating issue in the near term within the current rating category," said Standard & Poor's credit analyst Patrick Jeffrey. MEDICALCV INC: Files Supplemental Prospectus on 63 Million Shares ----------------------------------------------------------------- MedicalCV, Inc., filed a Prospectus Supplement with the Securities and Exchange Commission relating to the sale from time to time of up to 63,122,500 shares of its common stock to incorporate the latest financial information. As reported in the Troubled Company Reporter on Sept. 20, 2005, the Company reported $5,070,184 of net income for the quarter ending July 31, 2005, after recognizing a $6.4 million gain on account of decreased warrant-related liability. At July 31, 2005, the Company's balance sheet showed $10,972,691 in total assets and a $14,059,307 stockholders deficit. The Company's shares of common stock are quoted on the OTC Bulletin Board and trade under the ticker symbol "MDCV." The Company's common shares traded between $0.70 and $0.90 this month. A full-text copy of the Prospectus Supplement is available for free at http://ResearchArchives.com/t/s?1df MedicalCV, Inc., is a cardiothoracic surgery device manufacturer. Previously, its primary focus was on heart valve disease. It developed and marketed mechanical heart valves known as the Omnicarbon 3000 and 4000. In November 2004, after an exhaustive evaluation of the business, MedicalCV decided to explore options for exiting the mechanical valve business. The Company intends to direct its resources to the development and introduction of products targeting treatment of atrial fibrillation. At July 31, 2005, the Company's balance sheet showed $10,972,691 in total assets and a $14,059,307 stockholders deficit. MELLON RESIDENTIAL: Fitch Junks Rating on Class B-5 Certificates ---------------------------------------------------------------- Fitch Ratings has affirmed and taken rating action on these Mellon Residential Funding Corp issues: Series 1998-A -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'B'; -- Class B-5 downgraded to 'C' from 'CCC'. Series 1998-2 -- Classes A-11, A-12 affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-4 affirmed at 'AAA'; -- Class B-5 upgraded to 'AA+' from 'AA'. Series 1998-TBC1 -- Class A-3 affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'. Series 1999-TBC1 -- Class A-3 affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'. Series 1999-TBC2 -- Class A-3 affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-5 upgraded to 'AA+' from 'AA'. Series 1999-TBC3 -- Class A-2 affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 upgraded to 'AA+' from 'AA'; -- Class B-4 upgraded to 'AA-' from 'A+'; -- Class B-5 upgraded to 'BBB+' from 'BBB'. The affirmations on the above classes reflect adequate relationships of credit enhancement to future loss expectations and affect approximately $258 million of certificates. The upgrades reflect an improvement in the relationship of CE to future loss expectations and affect $4.43 million of certificates. Currently, the B-5 classes of series 1998-2 and series 1999-TBC2 are benefiting from 7.02% and 3.21% CE (originally 0.30% and 0.25%), respectively, and the B-3, B-4 and B-5 classes for series 1999-TBC3 are benefiting from 2.47%, 1.34% and 0.67% CE (originally 1.1%, 0.60% and 0.30%), respectively, in the form of subordination. The negative rating action on class B-5 of series 1998-A, affecting $1.18 million of outstanding certificates, is the result of higher-than-expected collateral losses to date and reflects the exhaustion of credit support to that class. As of the August 2005 distribution, the pool has incurred cumulative losses of 0.89% and approximately 4.14% of the remaining pool balance is more than ninety days delinquent. The above deals have pool factors (i.e., current mortgage loans outstanding as a percentage of the initial pool) ranging from 1% to 45%. The collateral for series 1998-A consists of Alt-A 30-year fixed- rate mortgage loans secured by first liens on one- to four-family residential properties. The mortgage loans are master serviced by Alliance Mortgage Company. The collateral of series 1998-2 consists of prime 20- to 30-year fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans. The weighted average loan-to-value ratio is approximately 74.4%. The three states that represent the largest portion of mortgage loans in Pool 1 are California, Massachusetts and New Jersey. The mortgage loans are master serviced by Atlantic Mortgage & Investment Corp. The collateral of the remaining transactions consist of hybrid adjustable-rate, 30-year fully amortizing mortgage loans secured by first liens on one- to four-family residential properties. The weighted average LTV for the transactions ranges from 66.42% to 68.70%. The three states that represent the largest portion of mortgage loans are California, Massachusetts and New York. The mortgage loans are master serviced by The Boston Safe Deposit and Trust Co., a wholly owned subsidiary of Mellon Bank Corp. METALFORMING TECHNOLOGIES: Court Approves $25 Mil. Sale to Zohar ---------------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware approved the sale of Metalforming Technologies, Inc., and its debtor-affiliates' Lexington business assets to Zohar Tubular Acquisition, LLC. As reported in the Troubled Company Reporter, Zohar Tubular offered to buy the Debtors' operating assets for $25 million plus the assumption of all postpetition liabilities. The asset sale includes the Debtors': a) structural and tubular business; b) Saline and Milan plants; and c) Metalform's 49% equity interests in the Lexington Joint Venture and the Engineered Systems business. GE Assets In connection with the asset sale, GE Commercial Finance agrees to sell equipment, currently leased by the Debtors, to Zohar Tubular for $780,000. With the sale of the GE assets, GE and the Debtors waive all claims against each other in connection with the lease contract. Judge Walrath further allows the Debtors to assume and assign unexpired leases and executory contracts associated with the Lexington assets to Zohar Tubular, including all of Johnson Control Inc.'s purchase orders and related agreements. The Bankruptcy Court will hear objections to the proposed cure amounts for the Lexington contracts at 4:00 p.m. on Oct. 4, 2005. Headquartered in Chicago, Illinois, Metalforming Technologies, Inc., and its debtor-affiliates manufacture seating components, stamped and welded powertrain components, closure systems, airbag housings and charge air tubing assemblies for automobiles and light trucks. The Company and eight of its affiliates, filed for chapter 11 protection on June 16, 2005 (Bankr. D. Del. Case Nos. 05-11697 through 05-11705). Joel A. Waite, Esq., Robert S. Brady, Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt & Taylor, represent the Debtors in their restructuring efforts. As of May 1, 2005, the Debtors reported $108 million in total assets and $111 million in total debts. METALFORMING TECH: Creditors Must File Proofs of Claim By Oct. 20 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware set Oct. 20, 2005 at 4:00 p.m., as the deadline for all creditors owed money by Metalforming Technologies, Inc., and its debtor- affiliates on account of claims arising prior to June 16, 2005, to file formal written proofs of claim. Governmental Units have until Dec. 13, 2005 to file formal written proofs of claim. Original proofs of claims must be delivered to: Metalforming Technologies, Inc. Claims Processing Center P.O. Box 5115, FRD Station New York, New York 10150-5115 or to the Debtors' claims agent at: Metalforming Technologies, Inc. Claims Processing Center c/o Bankruptcy Services LLC 757 Third Avenue, 3rd Floor New York, New York 10017 Creditors wishing to receive confirmation of the claims agents' receipt of their proof of claim must submit, along with their original proof of claim: a) a copy of the submitted proof of claim; and b) self-addressed, stamped, return envelope. Headquartered in Chicago, Illinois, Metalforming Technologies, Inc., and its debtor-affiliates manufacture seating components, stamped and welded powertrain components, closure systems, airbag housings and charge air tubing assemblies for automobiles and light trucks. The Company and eight of its affiliates, filed for chapter 11 protection on June 16, 2005 (Bankr. D. Del. Case Nos. 05-11697 through 05-11705). Joel A. Waite, Esq., Robert S. Brady, Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt & Taylor, represent the Debtors in their restructuring efforts. As of May 1, 2005, the Debtors reported $108 million in total assets and $111 million in total debts. METROPOLITAN MORTGAGE: Court Approves Amended Disclosure Statement ------------------------------------------------------------------ The Honorable Patricia C. Williams of the U.S. Bankruptcy Court for the Eastern District of Washington approved the adequacy of the Third Amended Disclosure Statement explaining the Third Amended Joint Plan of Reorganization filed by Metropolitan Mortgage & Securities Co., Inc., and its debtor-affiliate, Summit Securities Inc. Judge Williams put her stamp of approval on the Amended Disclosure Statement on Sept. 26, 2005. The Debtors are now authorized to send copies of the Amended Disclosure Statement and Amended Joint Plan to creditors and solicit their votes in favor of the Plan. Summary of the Amended Joint Plan The Amended Joint Plan focuses upon maximizing and expediting distributions to creditors through the efficient liquidation of all remaining assets of the Debtors. Because the amount owing on the Debtors' Debt Securities, which total approximately $470 million far exceeds the likely total value of the Debtors' combined remaining assets, the main focus of the Plan is to maximize the percentage recovery of Debt Security holders and other unsecured creditors from the limited pool of remaining assets. The Plan contemplates that after payment of secured claims, priority claims and administrative expenses, only certain unsecured creditors will receive distributions under the Plan. The holders of Equity Securities will have their securities canceled and will receive no distributions under the Plan or interests in the Creditors' Trusts. The Plan provides for the establishment of two trusts: 1) the Metropolitan Creditors' Trust, whose sole beneficiaries are certain unsecured creditors of Metropolitan, primarily the holders of Metropolitan's Debt Securities; and 2) the Summit Creditors' Trust, whose sole beneficiaries are certain unsecured creditors of Summit Securities, primarily the holders of Summit's Debt Securities. Projected Plan Distributions to General Unsecured Creditors Within the next year, beneficiaries of the Metropolitan Creditors' Trust may receive up to 14 cents for every dollar of their claims from the net proceeds of Metropolitan Core Assets and beneficiaries of the Summit Creditors' Trust may receive up to 14 cents for every dollar of their claims from the net proceeds of Summit Core Assets. Beneficiaries of the Creditors' Trusts may receive an additional estimated 15-18 cents for every dollar of their claims from recovery from the D&O Policies, Avoidance Actions and the sale of the Insurance Companies. In addition, there may be other distributions in the next year to beneficiaries of the Creditors' Trusts from other Causes of Action, excluding Avoidance Actions. Treatment of General Unsecured Claims for Metropolitan Mortgage and Summit Securities General Unsecured Claims of Metropolitan Mortgage, totaling approximately $357,245,839, will receive a Pro Rata beneficial interest in the Metropolitan Creditors' Trust, with that Pro Rata beneficial interest to be determined as if Metropolitan Mortgage's General Unsecured Claims and Intercompany Affiliate Claims were a single Class. General Unsecured Claims of Summit Securities, totaling approximately $157,909,000 will receive a Pro Rata beneficial interest in the Summit Creditors' Trust, with that Pro Rata beneficial interest to be determined as if Summit Securities' General Unsecured Claims and Intercompany Affiliate Claims were a single Class. A full-text copy of the Third Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=050927230200 All ballots must be returned by Nov. 18, 2005. Objections to the Amended Plan, if any must be filed and served by Nov. 28, 2005. Judge Williams will convene a confirmation hearing to consider the merits of the Amended Plan at 9:00 a.m., on Dec. 13, 2005, and at 9:00 a.m., on Dec. 14, 2005. Headquartered in Spokane, Washington, Metropolitan Mortgage & Securities Co., Inc., owns insurance businesses. Metropolitan filed for Chapter 11 protection (Bankr. E.D. Wash. Case No. 04-00757), along with Summit Securities Inc., on Feb. 4, 2004. Bruce W. Leaverton, Esq., at Lane Powell Spears Lubersky LLP and Doug B. Marks, Esq., at Elsaesser, Jarzabek, Anderson, Marks, Elliot & McHugh represent the Debtors in their restructuring efforts. When Metropolitan Mortgage filed for chapter 11 protection, it listed total assets of $420,815,186 and total debts of $415,252,120. METROPOLITAN MORTGAGE: SEC Sues Four Former Executives for Fraud ---------------------------------------------------------------- The Securities and Exchange Commission filed civil fraud charges against former executives and third party business associates of Metropolitan Mortgage and Securities Co., Inc., a long-standing Spokane, Washington finance and real estate company that collapsed in 2004. Metropolitan filed for bankruptcy in February 2004, devastating nearly 10,000 investors throughout the Pacific Northwest who had invested approximately $450 million in the once high-flying real estate company. The SEC's civil complaint, filed in the U.S. District Court for the Western District of Washington, alleges that Metropolitan's management falsified the company's 2002 financial results by reporting profits from circular real estate sales where Metropolitan purported to sell property to buyers who, in fact, received all of the money to pay for the purchase from Metropolitan or its affiliates. The fraud made Metropolitan appear profitable -- facilitating further sales of its bonds and preferred stock to investors -- when in reality the company was encountering its third straight year of mounting losses and verging on financial collapse. The Complaint A full-text copy of the Complaint is available at no charge at http://ResearchArchives.com/t/s?1eb Named in the complaint are: -- former Chief Executive Officer C. Paul Sandifur, Jr., 63, of El Centro, California; -- former executive Thomas G. Turner, 54, of Sparks, Nevada; and -- former Controller Robert Ness, 41, of Bellevue, Washington; as well as -- former Vice President Thomas R. Masters, 54, of Spokane, Washington, who is alleged to have participated in one of the fraudulent transactions. Rabbits According to the Commission's complaint, the bogus deals -- known internally as "rabbits" (as in, pulling a rabbit out of a hat) -- all materialized in the final days of Metropolitan's fiscal year 2002, allowing the company to report a profit rather than the loss it had anticipated. In the largest of these deals, Metropolitan reported a $10 million gain by completely financing the purchase of property by customer Trillium Corporation, a private company based in Bellingham, Washington. In order to evade accounting principles prohibiting companies from reporting profits from such sales, Metropolitan and Trillium agreed to make it appear that the property was being purchased by an unrelated third party, Jeff Properties -- in reality a shell company set up by an eighteen year old high school student, the son of a Trillium creditor, in exchange for a motorcycle. In addition to charges against Metropolitan's officers, the Commission's complaint levels fraud charges against Trillium, its President and CEO David Syre, 64, of Bellingham, Washington, and Trillium creditor Dan Sandy, 50, of Rochester, Washington. Among other claims, the Commission's complaint alleges that by engaging in the conduct described above, each of the defendants committed or aided and abetted violations of the antifraud provisions of the federal securities laws and aided and abetted Metropolitan's violations of reporting requirements. Specifically, the complaint alleges that Sandifur, Turner, Ness and Masters directly violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b- 5 thereunder. The complaint also alleges that Sandy, Syre, Trillium, Turner, Ness and Masters aided and abetted Metropolitan's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. All of the defendants are alleged to have aided and abetted Metropolitan's violations of the reporting requirements of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder, and Sandifur, Turner and Ness are also alleged to have aided and abetted Metropolitan's violations of Rule 13a-13 under the Exchange Act. Further, Sandifur, Turner, Masters and Ness are alleged to have violated Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder, and aided and abetted Metropolitan's violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. The complaint alleges that Sandifur, Turner and Ness violated Exchange Act Rule 13b2-2, and that through their certifications of Metropolitan's 2002 year-end false financial statements, Sandifur and Ness violated Exchange Act Rule 13a-14. Finally, the complaint charges Sandifur as a control person for Metropolitan's violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. The Commission's action seeks civil monetary penalties and injunctive relief from all defendants, as well as disgorgement from Sandifur, Turner, Ness and Masters, and orders barring Sandifur, Turner and Ness from serving as officers or directors of public companies. Thomas Turner Indicted In a separate action, the Criminal Division of the United States Department of Justice and the Spokane Office of the Federal Bureau of Investigation announced the filing of criminal charges against Thomas Turner. Additional details about that criminal proceeding were not available at press time. * * * Nicholas K. Geranios, writing for the Associated Press, recalls that the company's collapse last year cost more than 10,000 investors to lose $450 million. Headquartered in Spokane, Washington, Metropolitan Mortgage & Securities Co., Inc., owns insurance businesses. It filed for Chapter 11 protection (Bankr. E.D. Wash. Case No. 04-00757), along with Summit Securities Inc., on Feb. 4, 2004. Bruce W. Leaverton, Esq., of Lane Powell Spears Lubersky LLP and Doug B. Marks, Esq., of Elsaesser, Jarzabek, Anderson, Marks, Elliot & McHugh represent the Debtors in their restructuring efforts. When Metropolitan Mortgage filed for chapter 11 protection, it listed assets of $420,815,186 and debts of $415,252,120. The Company is subject to numerous ongoing investigations by state and federal regulators, including the U.S. Securities and Exchange Commission. METROPOLITAN MORTGAGE: Sues PwC for Negligence in Audit Work ------------------------------------------------------------ The Directors of Metropolitan Mortgage & Securities Co., Inc., and its affiliate, Summit Securities Inc., filed a lawsuit against their former accountants and auditors, PricewaterhouseCoopers LLC, over audit work performed in 1999 and 2000 that failed to warn the two companies were on the verge of bankruptcy. The lawsuit was filed in the U.S. District Court in Spokane, Washington, on Sept. 21, 2005, according to a report by the Associated Press and other published reports. The two companies assert in their lawsuit that PWC was negligent in its duties as their independent auditors by misrepresenting the truth in the Firm's audit reports that Metropolitan and Summit were in deep financial trouble. The lawsuit also alleges that PwC advised Metropolitan and Summit to set up a questionable tax shelter plan that was later disallowed by the Internal Revenue Service, which further drove the two companies into filing for bankruptcy. Headquartered in Spokane, Washington, Metropolitan Mortgage & Securities Co., Inc., owns insurance businesses. Metropolitan filed for Chapter 11 protection (Bankr. E.D. Wash. Case No. 04- 00757), along with Summit Securities Inc., on Feb. 4, 2004. Bruce W. Leaverton, Esq., at Lane Powell Spears Lubersky LLP and Doug B. Marks, Esq., at Elsaesser, Jarzabek, Anderson, Marks, Elliot & McHugh represent the Debtors in their restructuring efforts. When Metropolitan Mortgage filed for chapter 11 protection, it listed total assets of $420,815,186 and total debts of $415,252,120. MIRANT CORP: Selling Washington Power Unit to Longview for $17.2M ----------------------------------------------------------------- Mint Farm Generation, LLC, owns a partially constructed gas-fired combined-cycle electric generating power facility and related assets in Longview, Washington. Mint Farm was originally a wholly owned subsidiary of Avista Power, LLC, formed for the purpose of developing the Facility. On July 30, 2001, Mirant Corporation purchased Mint Farm and all of its assets from Avista. After the sale, Mirant immediately made arrangements for the construction of the Facility. However, because of Mirant's financial situation, construction of the Facility was suspended. Stone & Webster, the construction contractor, continues to provide maintenance and certain other services relating to the Facility under an existing construction contract. The total budget to maintain the Facility in its present condition, including property taxes, is $2 million per year. The Debtors analyzed the economics of owning, maintaining and operating the Facility both over the short and long-term future. The Debtors realized that they would not realize economic benefits because they: -- were not dedicating resources to support trading in the market where the Facility and related assets are located; -- did not own additional assets in that market; and -- did not desire to expand in the market. The Debtors determined that the incremental cost to construct, own, maintain and operate the Facility exceeded the risk adjusted present value of the cash flows that would be generated by the Facility. Accordingly, the Debtors concluded that provided appropriate consideration could be obtained, the sale of the Facility, together with certain real property and contracts, represents the highest and best use for the property. Marketing Process Almost a year after the construction was suspended, the Debtors engaged in efforts to sell the Facility. In March 2004, the Debtors enlisted the assistance of The Blackstone Group L.P. to run a formal marketing process. The Debtors received numerous indicative offers. Blackstone and the Debtors continued to facilitate due diligence with the interested bidders during the first quarter of 2005. The bidders used the time to arrange financing, line-up power purchasers and complete due diligence. In late March 2005, the Debtors received definitive offers from two of the bidders, and the negotiation of a model asset purchase agreement began with both parties. The Debtors, in consultation with their advisors, concluded that Longview Generation LLC's bid represented a commercially reasonable offer for the Facility. Purchase Agreement On Sept. 13, 2005, Mirant Corporation and Mint Farm entered into an Asset Purchase Agreement with Longview Generation. A full-text copy of the Asset Purchase Agreement is available at no cost at http://ResearchArchives.com/t/s?1e9 The salient terms of the Longview Agreement are: a. Mint Farm will sell the Facility and related assets to Longview Generation for $17,200,000, subject to certain adjustments; b. At the Closing, Longview Generation will pay, satisfy, perform and discharge all Assumed Liabilities provided in the Agreement, arising out of the ownership or operation of the Facility that arise or accrue after the Closing, including all liabilities and obligations arising or accruing under the Assumed Contracts listed in the Agreement; c. The Debtors will use commercially reasonable efforts to obtain the Court's approval of a Bid Procedures Order. The Approval Order must be entered on or before December 8, 2005; d. Longview Generation has provided the Debtors with $1,720,000 as earnest money deposit. Mint Farm will retain the Deposit as its sole and exclusive remedy in the event that Mint Farm terminates the Agreement due to a material breach committed by Longview Generation; and e. In the event that Longview Generation terminates the Agreement in accordance with the terms of the Agreement or if Mint Farm sells the Assets to an entity or entities other than Longview or any of its affiliates -- an Upset Sale -- then Longview Generation's sole and exclusive remedies will be limited to: -- the return of the Deposit; -- the payment of the Buyer Expense Reimbursement; and -- the payment of the Buyer Break-up Fee under certain circumstances. The Debtors ask the U.S. Bankruptcy Court for the Northern District of Texas to approve: (i) the Asset Purchase Agreement, free and clear of all liens, claims, encumbrances and interests, to Longview Generation or to any other party submitting the highest or otherwise best bid for the Purchased Assets at a scheduled Auction; and (ii) the assumption or assignment of certain executory contracts and permits. * * * Judge Lynn directs the Debtors to provide the Court, on or before September 29, 2005, with a Schedule identifying the contracts to be assumed and assigned and the permits to be assigned under the Asset Sale Agreement, and the corresponding cure amounts for the Assumed Contracts, if any, that the Debtors may seek to assume or assign to Longview or to any Successful Bidder. The Court further directs the Debtors to send a notice to the non-Debtor parties to the Assumed Contracts and Permits to give them an opportunity to object to the assumption and assignment, the Cure Amount relating to the Assumed Contracts or both. The Court rules that if no objection is timely received: -- the Cure Amount in the Schedule will be controlling; and -- each non-Debtor party to the Assumed Contract will be barred from asserting any other claim arising prior to the assignment against the Debtors or Longview Generation or any Successful Bidder as to the Assumed Contract. The Court has set a sale hearing for October 19, 2005, to consider the Debtors' request. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Bowline Gets Court OK to Recover $4.9M from Insurer ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas gave Mirant Bowline, LLC, a Mirant Corporation debtor-affiliates, permission to execute documents necessary and proper to secure payment of $4,889,764, representing the outstanding sum of the covered losses. As reported in the Troubled Company Reporter on Aug. 16, 2005, Unit 2 at the facility of Bowline suffered a serious equipment failure that forced the unit offline on January 17, 2004. Bowline submitted a claim pursuant to its all risk property insurance policy to certain insurers, including Underwriters at Lloyd's and Companies Collective. An adjuster was assigned to evaluate the claim. Michelle C. Campbell, Esq., at White & Case LLP, in Miami, Florida, related that the Adjuster's March 10, 2004, report to the Insurers estimated repair costs at $2,000,000, which is below the Policy's $5,000,000 property damage deductible. Thus, repair costs sought in the Claim were determined to be unrecoverable. However, the time required to repair and restore the unit to service exceeded the Policy's 60-day business interruption deductible, Ms. Campbell relates. So, Bowline also submitted an interruption claim for losses suffered in excess of the 60-day deductible to the Insurers. The claim was assigned to the Adjuster. In January 2004, the Debtors began meeting with the Adjuster to discuss the validity and amount of the Interruption Claim. Ms. Campbell reports that the Debtors were successful in demonstrating to the Adjuster an Interruption Claim for $6,537,022, representing: -- $1,086,145 in energy payment losses; -- $120,504 in ancillary service payment losses; and -- $5,330,373 in capacity payment losses. The Adjuster issued a report to the Insurers recommending payment of the entire amount without reduction. Underwriters at Lloyd's, as Lead Insurer, accepted and approved the Adjuster's recommendation on July 13, 2005. Ms. Campbell noted that the Insurers have tendered to Bowline a $1,647,259 partial payment. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., 215/945-7000) MOLECULAR DIAGNOSTICS: CFO Dennis L. Bergquist Resigns ------------------------------------------------------ David Weissberg, M.D., Molecular Diagnostics, Inc.'s Chief Executive Officer, informed the Securities and Exchange Commission in an 8-K filing that Dennis L. Bergquist resigned as Chief Financial Officer of the Company on Sept. 20, 2005. Molecular Diagnostics, Inc. -- http://www.molecular-dx.com/-- formerly Ampersand Medical Corporation, is a biomolecular diagnostics company focused on the design, development and commercialization of cost-effective screening systems to assist in the early detection of cancer. MDI has currently curtailed its operations focused on the design, development and marketing of its InPath(TM) System and related image analysis systems, and expects to resume such operations only when additional capital has been obtained by the Company. The InPath System and related products are intended to detect cancer and cancer-related diseases, and may be used in a laboratory, clinic or doctor's office. As of June 30, 2005, Molecular Diagnostics' balance sheet showed a $12,998,000 equity deficit, compared to a $12,123,000 deficit at Dec. 31, 2004. NATIONAL BENEVOLENT: Sues Weil Gotshal to Reduce Bankruptcy Costs ----------------------------------------------------------------- The St. Louis Business Journal reports that the National Benevolent Association filed an adversary proceeding with the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division, against its lead bankruptcy counsel, Weil Gotshal & Manges LLP. The suit alleges that the high-profile New York law firm misled the organization to file for bankruptcy, with disastrous results. National Benevolent is the social- and health-services division of the Christian Church (Disciples of Christ). The organization seeks unspecified punitive damages, fee forfeiture and other costs it incurred by hiring Weil Gotshal. The organization claims it paid the law firm more than $10 million in fees for its professional services during National's restructuring, the Journal relates. The organization further alleges it suffered "unnecessary" professional fees of at least $40 million because of the law firm's alleged breach of fiduciary duty. The St. Louis newspaper relates that the move is unusual because the organization is suing a law firm that helped it emerge from bankruptcy shedding about $230 million in liabilities. Some corporate restructuring observers shake their heads and say the lawsuit's absurd on its face. Daniel Sheehan, Esq., at Daniel Sheehan & Associates LLP, represents National Benevolent. A full-text copy of the Complaint, filed Sept. 14, 2005, is available at no charge at: http://bankrupt.com/misc/04-50948-2162.pdf Weil's time to file a motion to dismiss, answer, or other responsive pleading has not expired. Headquartered in Saint Louis, Missouri, The National Benevolent Association of the Christian Church (Disciples of Christ) -- http://www.nbacares.org/-- manages more than 70 facilities financed by the Department of Housing and Urban Development and owns and operates 18 other facilities, including 11 multi-level older adult communities, four children's facilities and three special-care facilities for people with disabilities. The non- profit organization filed for chapter 11 protection on February 16, 2004 (Bankr. W.D. Tex. Case No. 04-50948). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed more than $200 million in debts and assets at that time. The organization emerged from chapter 11 protection on April 15, 2005. NAVIGATORS GROUP: S&P Assigns Preliminary BB+ Pref. Stock Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'BBB' senior debt, 'BBB-' subordinated debt, and 'BB+' preferred stock ratings to Navigators Group Inc.'s (NASDAQ:NAVG; BBB/Negative/--) $250 million multipurpose shelf. The company intends to use the proceeds for general corporate purposes, which could include downstreaming funds to its insurance companies. NAVG's operating performance was strong in 2004 and in the first half of 2005, with $51 million and $30 million, respectively, in pretax operating income. Despite the pre-Katrina/Rita softening of the overall pricing environment of the property/casualty industry, NAVG generated strong earnings as it continued to benefit from moderate rate increases across its business lines. As a result, the company produced strong RORs of 15.0% and 16.5% in the same periods. NAVG's negative outlook reflects the company's short track record in new lines of business such as directors and officers and errors and omissions. This diversification strategy outside marine insurance, which is NAVG's longstanding area of specialization, was initiated in 2001 and has not yet been tested in a difficult cycle. Standard & Poor's expects that NAVG's debt-to-capital ratio will be consistent with the rating. NEIMAN MARCUS: Fitch Places Issuer Default Rating at B- ------------------------------------------------------- Fitch Ratings has assigned prospective ratings to the bank facilities and notes being issued by The Neiman Marcus Group, Inc.: -- Issuer default rating (IDR) 'B-'; -- $600 million secured revolving credit facility 'BB-/R1'; -- $1 billion secured term loan facility 'B/R3'; -- $850 million secured notes 'B/R3'; -- $750 million senior unsecured notes 'CCC+/R5'; -- $575 million senior subordinated notes 'CCC/R6'. Fitch has also assigned a rating of 'B/R3' to NMG's $125 million of 7.125% debentures due 2028. The Rating Outlook is Stable. The ratings reflect the significant increase in leverage expected with the pending completion of the $5.1 billion buy-out of the company by Texas Pacific Group and Warburg Pincus. Following the buy-out, the company expects to have debt of approximately $3.3 billion, which implies adjusted debt/EBITDAR of 6 times (x)-7x. The financing for the buy-out, which totals $5.5 billion including transaction costs and the refinancing of an existing note issue, includes cash of $825 million, new equity of $1.5 billion, and new debt of $3.2 billion. The new debt consists of a $1 billion term loan facility maturing in 2013, $850 million of new secured notes maturing in 2013, $750 million of new senior unsecured notes maturing in 2015, and $575 million of new senior subordinated notes maturing in 2015. The term loan facility is secured by a first lien on fixed assets and a second lien on inventories. The secured notes are expected to have the same security package as the term loan. In addition, the company has a commitment for a $600 million five-year revolver, secured by a first lien on inventories and a second lien on fixed assets. NMG also has two existing senior unsecured note issues of $125 million each, expiring in 2008 and 2028. The company plans to refinance the 2008 maturity but to keep the longer dated issue, which will then be equally and ratably secured with the collateral backing the secured notes. All debt will be at the Neiman Marcus Group, Inc. level. The ratings further reflect NMG's leadership position within the luxury retail segment and its well regarded management team. These factors are balanced against the cyclical nature of, and fashion risk associated with, luxury apparel retailing. NMG is currently operating at a high level, with strong comparable store sales increases and robust margin expansion. NMG had a strong fiscal 2005 (year ending July 31, 2005) as comparable store sales were up 9.9% and the EBIT margin expanded to 11.2% from 9.9% in fiscal 2004. Looking ahead, while the near-term outlook for the luxury segment remains solid, Fitch expects NMG's comparable store sales will gradually moderate from their current high single-digit pace given increasingly difficult comparisons with prior-year periods. NMG is a luxury retailer with 35 Neiman Marcus stores, two Bergdorf Goodman stores, and 17 clearance centers. The company also has a direct business - catalogs and online operations - under the Neiman Marcus, Horchow, and Bergdorf Goodman names. In addition, the company owns a 51% interest in Gurwitch Products, which markets the Laura Mercier cosmetics line, and 56% of Kate Spade. NORTH AMERICAN: Files Amended Plan & Disclosure Statement --------------------------------------------------------- North American Refractories Company and its affiliated operating companies, A.P. Green Refractories Company, ANH Refractories Company and Harbison-Walker Refractories Company, filed their First Amended Plans of Reorganization with the U.S. Bankruptcy Court for the Western District of Pennsylvania on Sept. 15, 2005. The next step in the process is for the Bankruptcy Court to determine that the Plans meet applicable legal requirements. Thereafter, the Debtors will solicit votes for the Plans from interested parties. The Plans, CEO Guenter Karhut said, provide a fair and balanced treatment for all interested parties. Mr. Karhut says the Debtors look forward to the solicitation and confirmation process, emerging from Chapter 11 protection and continuing to be a leading provider of refractory products and services to their loyal customer base. As reported in the Troubled Company Reporter on Sept. 15, 2005, the Debtors asked the Court to extend, until Jan. 31, 2006, the exclusive period within which they may solicit acceptances for their proposed Amended Reorganization Plans. The extension will provide the Debtors the time they need to finalize the negotiation, revisions, and solicitation of the Plan that has been agreed to in principle by the major creditor constituencies. The Debtor's exclusive period to solicit plan acceptances has been extended nine times since the Plan was filed on July 31, 2003. The Debtor sought bankruptcy protection in early 2002 after suffering a slump in the domestic economy and encountering an overwhelming number of claims from individuals asserting injuries or illnesses caused by exposure to asbestos containing products it manufactured. Headquartered in Pittsburgh, Pennsylvania, North American Refractories Company, was engaged in the manufacture and non- retail sale of refractory bricks and related products. The Company filed for chapter 11 protection on January 4, 2002 (Bankr. W.D. Pa. Case No. 02-20198). Paul M. Singer, Esq., of Pittsburgh represents the Debtor. When the Debtor filed for protection from its creditors, it listed $27,559,000,000 in assets and $18,634,000,000 in debts. NORTHWEST AIRLINES: Common Stock Stops Trading on NASDAQ -------------------------------------------------------- Northwest Airlines Corporation (Nasdaq: NWAC) announced that its common stock stopped trading on the NASDAQ stock market, effective with the opening of business on September 26, 2005. Northwest received written notification on September 15, 2005, from NASDAQ that its common stock would be delisted in accordance with Marketplace Rules 4300, 4450(f) and IM-4300. Because of the exchange notification, the fifth character "Q" has been added to the company's trading symbol. The symbol changed to NWACQ as of the opening of business on September 19, 2005. Following delisting from the NASDAQ, shares now trade in the "over-the-counter" market. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHWEST AIRLINES: UST Meeting to Form Committees Friday Morning ----------------------------------------------------------------- Deirdre A. Martini, the U.S. Trustee for Region 2, will convene an organizational meeting of Northwest Airlines Corporation and its debtor-affiliates' largest unsecured creditors on September 30, 2005, at 10:00 a.m. The meeting will be held at Sheraton New York Hotel and Towers, at 811 7th Avenue (near 53rd Street), in New York City. Brian A. Masumoto, Esq., trial attorney for the U.S. Trustee, explains that the sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. This is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code, Mr. Masumoto emphasizes. Mr. Masumoto relates that a representative of the Debtors will attend and provide background information regarding the Chapter 11 petitions. Creditors who want to serve on the Committee are required to complete an acceptance form, disclosing information regarding the creditors' connections or relationships to other U.S. airline bankruptcy cases. "The disclosure of any such information and/or relationship will not necessarily form the basis for disqualification as a proposed committee member, but may be relevant in determining whether the creditor can fulfill its fiduciary duties on the Creditors' Committee" Mr. Masumoto says. The U.S. Trustee reserves the right to seek Court authorization for the maintenance of certain information barriers and restrictions with respect to committee members who serve on more than one official committee of creditors in the U.S. airline bankruptcy cases currently pending in federal courts in the United States, Mr. Masumoto notes. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHWEST AIRLINES: Adjusts CEO Steenland Employment Agreement -------------------------------------------------------------- Northwest Airlines, Inc., the principal operating subsidiary of Northwest Airlines Corporation, entered into a new Management Compensation Agreement with its president and chief executive officer, Douglas M. Steenland, on September 14, 2005. The new agreement largely restates provisions contained in Mr. Steenland's prior Management Compensation Agreement, including provisions relating to term, termination, severance and other benefits. The company is required to seek Bankruptcy Court approval to assume the new agreement. The new agreement contains a one-year non-compete provision that would prevent Mr. Steenland from leaving the company to join another commercial airline, according to documents the bankrupt carrier filed with the Securities and Exchange Commission. "The Company believes that it is critically important to maintain the continuity of its management team during these challenging times and that Mr. Steenland's agreement to the one-year non- compete provision is one factor in achieving this goal," says Michael L. Miller, Northwest's vice president, law and secretary. The new agreement also updates Mr. Steenland's prior Management Compensation Agreement to reflect Mr. Steenland's election as president and CEO of NWA Corp. and Northwest Airlines effective October 1, 2004. In addition, given the current financial condition of the company and the airline industry generally, the prior agreement was revised to include certain provisions applicable should Northwest file for bankruptcy. In connection with the pay and benefit reductions implemented for management employees in 2004, Mr. Steenland's base salary and incentive compensation were reduced effective December 1, 2004. The new agreement does not make any changes in Mr. Steenland's overall level of compensation. The agreement provides for the same base salary and the same target level of incentive compensation that Mr. Steenland was entitled to under his prior agreement. The agreement also continues Mr. Steenland's arrangement under Northwest's Supplemental Executive Retirement Plan on the same terms and conditions as his current arrangement under that plan. Mr. Steenland has agreed to participate in future labor cost reductions imposed by Northwest, including reductions in his base salary and incentive compensation. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) NRG ENERGY: Continues Stock Repurchase Program ---------------------------------------------- On August 11, 2005, NRG Energy, Inc., closed its previously Disclosed convertible perpetual preferred stock issuance and, in a related transaction, completed a $250 million accelerated share repurchase of its common stock, in each case with an affiliate of Credit Suisse First Boston. As part of the Preferred Stock Purchase Agreement between NRG and CSFB, NRG issued and sold $250 million in new 3.625% convertible perpetual preferred stock to CSFB in a private transaction. Additional terms agreed by the parties are: -- The preferred stock may be settled at the option of either party during a 90-day period commencing August 11, 2015. Upon settlement, NRG will pay CSFB $250 million in cash plus accrued and unpaid dividends, if any, to redeem the preferred stock; -- If the market value of the underlying NRG common shares is in excess of $59.09 (150% of the closing price on August 10, 2005), NRG will pay CSFB the net difference in cash or shares of NRG common stock; -- If the Company's common share price at settlement is lower than $39.39, CSFB will pay NRG the net difference in cash or shares of NRG common stock; and -- Only common shares equal to the value of the security in excess of $59.09, may be included in the earnings per share dilution calculation, if dilutive. NRG expects to use the cash proceeds from the preferred stock issuance to repurchase approximately $229 million of its 8% second priority senior secured notes at 108% of par which will bring the total amount of our 8% notes redeemed or repurchased to $645 million during 2005. After the redemption, NRG says that it will have approximately $1.08 billion in aggregate principal amount of notes outstanding. NRG expects to complete the redemption of the 8% notes in September 2005. "This accelerated share repurchase provides an efficient, meaningful and immediate return of capital to shareholders while maintaining, and even enhancing, our capital structure," David Crane, NRG president and chief executive officer, said. "While we expect to be able to reinvest our capital in enhancing our asset portfolio, this decision to repurchase shares and notes is a sensible and efficient use of capital at this time." Issuing the preferred stock gave NRG the capacity, under its debt instruments, to use existing cash to fund the $250 million accelerated share repurchase program. NRG purchased 6,346,788 shares of common stock from CSFB at a price of $39.39 per share. Under the terms of the accelerated share repurchase agreement with CSFB, NRG will have fixed its price risk under the agreement at 97%-103% ($38.21 - $40.57 per share) of the common share price at execution. As a result of this transaction, NRG's outstanding shares have decreased to approximately 80,700,000. * * * As reported in the Troubled Company Reporter on Aug. 23, 2005, Moody's Investors Service has affirmed all of the debt ratings of NRG Energy, Inc., (NRG: B1 Corporate Family Rating (formerly known as Senior Implied Rating) following the Company's announcement to utilize cash on hand to repurchase $250 million of NRG's common stock and to use the proceeds of a $250 million privately placed convertible preferred offering to repurchase a portion of NRG's 8.0% $1.35 billion in second lien secured notes. Moody's said the rating outlook is stable. ON TOP: Gets Court Nod to Employ Thomas Lackey as Local Counsel --------------------------------------------------------------- The Honorable Paul Mannes of the U.S. Bankruptcy Court for the District of Maryland gave On Top Communications, LLC, and its debtor-affiliates permission to employ Thomas L. Lackey, Esq., as their local bankruptcy counsel. The Debtors selected Mr. Lackey because of his extensive experience in representing debtors and creditors in bankruptcy and other commercial matters. Mr. Lackey will: (a) advise the Debtor with respect to its powers and duties as debtors-in-possession in the continued operation of their business; (b) formulate a plan of reorganization and obtaining confirmation of that plan; (c) prepare and file on behalf of the Debtors all necessary applications, motions, orders, reports, adversary proceedings and other pleadings and documents; (d) appear in Court and protect the interests of the Debtors before the Court; and (e) perform all other legal services that may be necessary in the Debtors' chapter 11 cases. Mr. Lackey discloses that his Firm received $5,000 retainer. As the principal lawyer in the Debtors' cases, he will bill $200 per hour. The paraprofessionals will bill $80 to $110 per hour. The Debtors believe that Thomas L. Lackey, Esq., and his Firm are disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Mr. Lackey's address is: Thomas L. Lackey 4201 Northview Drive, Suite 407 Bowie, MD 20716 Headquartered in Lanham, Maryland, On Top Communications, LLC, and its affiliates acquire, own and operate FM radio stations located in the Southeastern United States. The Company and its debtor- affiliates filed for chapter 11 protection on July 29, 2005 (Bankr. D. Md. Case No. 05-27037). When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. PIPE CREEK: Case Summary & 34 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Pipe Creek Transport, Inc. 7270 South Warren Road Warren, Indiana 46792 Bankruptcy Case No.: 05-15201 Type of Business: The Debtor offers trucking services. Chapter 11 Petition Date: September 27, 2005 Court: Northern District of Indiana (Fort Wayne) Judge: Robert E. Grant Debtor's Counsel: Daniel Serban, Esq. 1016 Standard Federal Plaza 200 East Main Street Fort Wayne, Indiana 46802 Total Assets: $1,220,037 Total Debts: $1,394,843 Debtor's 34 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Robert L. Alspach $92,758 2090 South Warren Road Huntington, IN 46750 Ronald Pearson $75,000 5574 N-200 West Huntington, IN 46750 Internal Revenue Service $65,069 Cincinnati, OH 45999 Internal Revenue Service $65,069 Cincinnati, OH 45999 Larry and Loxie Hite $50,000 Indiana Dept. of Revenue $36,941 Indiana Dept. of Revenue $36,941 Xtra $30,838 Crazy D's $26,000 First Federal Savings Bank Value of security: $21,931 $258,680 Zurcher Tires $20,147 G.E. Finance Value of security: $15,000 $25,000 G.E. Finance Value of security: $15,000 $25,000 Christen and Heather $9,600 Kauffman Key Equipment Finance $5,457 Darla Kingrey $5,041 Vomac Truck Sales 7 Service $4,472 Truck Pro $4,424 Paschall Truck Lines, Inc. $3,543 Mid-States Power and $1,943 Refrigeration Fort Wayne Truck Center $1,842 J.J Keller & Associates $1,074 Navistar Value of security: $1,012 $90,000 American Transport Group $852 Cintas Location #338 $676 Interstate Battery of $608 Northeast Indiana Nendels Motel $516 Fedex $423 Quality Glass Service $386 United Directories of $350 America United Directories of $350 America Transcore $291 Redimed $112 Star Press $159 PROTOCOL SERVICES: Unsecured Creditors May Recover 7.5% of Claims ----------------------------------------------------------------- Protocol Services, Inc., and its debtor-affiliates delivered their Joint Chapter 11 Plan of Reorganization and an accompanying Disclosure Statement to the U.S. Bankruptcy Court for the Southern District of California. Mezzanine Notes In August 2002, the Debtors issued a 13% Series A Senior Secured Subordinated Noted due 2008 to the Mezzanine A Lenders in the principal amount of $40,947,514. The Mezzanine A Notes were issued in exchange for preexisting 13% Series A Senior Secured Subordinated Notes due 2007. Also that same date, the Debtors issued a 30% Series B Senior Secured Subordinated Notes due 2008 to the Mezzanine B Lenders in the principal amount of $14,168,869. These notes were issued in connection with a transaction in which the Mezzanine B Notes, the Series Z Redeemable Preferred Stock, and the Series B Warrants were issued in exchange for the cancellation of certain preexisting Tranche D Notes for $7,087,739 and cash totaling $16,250,000. Plan Structure The Debtors believe that Mezzanine A Lenders and Mezzanine B Lenders will vote in favor of the Plan. Also, the Debtors ink a settlement pact with the Mezzanine lenders which subordinates their claims to holders of general unsecured claims. Without these lenders' consent, general unsecured creditors are in danger of not recovering anything under the Plan. The Debtors don't think the Senior Lenders will vote in favor of confirmation. However, the Debtors are relying on Section 1129(b)(2)(A) to "cram down" the Senior Lenders objections, if any. These creditors assert claims purportedly secured by substantially all of the Debtors' assets: Creditors Claims --------- ------ Senior Lenders $119,403,515 Mezzanine A $61,736,530 Mezzanine B $34,614,677 The Debtors believe that their estates' enterprise value is in excess of their major creditors' claims. Senior lenders will receive in exchange for their claims, New Senior Tranche A Note and New Senior Tranche B Note. The Mezzanine A and B lenders' secured claims will be converted into common equity of Reorganized Protocol. The Debtors believe that the Mezzanine lenders will agree to provide general unsecured creditors with beneficial interests in an Unsecured Creditors Trust which will receive a New Unsecured Note for $1.2 million, provided that these creditors will vote to accept the Plan, otherwise, they'll get nothing. Unsecured creditors' recovery will be approximately 7.5% if their aggregate total allowed claim won't exceed $16.2 million. Old Protocol common stock and other interests will cancelled. Headquartered in Deerfield, Illinois, Protocol Services, Inc., and its subsidiaries offers agency services, database development and management, data analysis, direct mail printing and lettershops, e-marketing, media replication, and inbound and outbound teleservices. Protocol has offices and operations in California, Colorado, Illinois, Louisiana, Florida, Michigan, North Carolina, New York, Massachusetts, Connecticut and Canada and employs over 4,000 individuals. The Company and its affiliates -- Protocol Communications, Inc., Canicom, Inc., Media Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11 protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782 through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. PROTOCOL SERVICES: Gets Court Nod to Use $3.3 Mil. Cash Collateral ------------------------------------------------------------------ The Honorable James W. Meyers of the U.S. Bankruptcy Court for the Southern District of California gave Protocol Services, Inc., and its debtor-affiliates permission to access up to $3.3 million of cash collateral on a final basis. On Aug. 6, 2002, the Debtors entered into a Fifth Amended and Restated Credit Agreement with these Senior Lenders: -- Canadian Imperial Bank of Commerce, as Administrative Agent, -- ING Capital LLC, as syndication agent and co-book runner, & -- LaSalle Bank National Association, as documentation agent. The Credit agreement amounted to $122 million. As of the petition date, the Senior Lenders allege that the Debtors are indebted for $119 million. The Debtors also issued two notes: -- 13.5% Series A Senior Secured Subordinated Notes due 2008 for $41 million, and -- 30% Series B Senior Secured Subordinated Notes due 2008 for $14 million. The Second Lienholders allege that the Debtors are indebted for $96 million as of the petition date. The Senior Lenders assert a first priority security interest in substantially all of the Debtors' personal property and other assets, including all cash of the Debtors. The Second Lienholders assert second priority liens in the prepetition collateral, including cash. As adequate protection required under Sections 361(2) and 363(e) under the U.S. Bankruptcy Code for any diminution in the value of their collateral, the Debtors will grant the Senior Lenders replacement liens on all postpetition proceeds and all postpetition assets, excluding all claims, causes of action and proceeds arising from avoidance actions and customer deposits. The Debtors will use the cash collateral to fund its operations, payroll, and other operating expenses that are necessary to maintain the value of their estates. The Debtors are authorized to use the cash collateral so long as their total disbursements don't exceed 20% of their monthly budget. Headquartered in Deerfield, Illinois, Protocol Services, Inc., and its subsidiaries offers agency services, database development and management, data analysis, direct mail printing and lettershops, e-marketing, media replication, and inbound and outbound teleservices. Protocol has offices and operations in California, Colorado, Illinois, Louisiana, Florida, Michigan, North Carolina, New York, Massachusetts, Connecticut and Canada and employs over 4,000 individuals. The Company and its affiliates -- Protocol Communications, Inc., Canicom, Inc., Media Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11 protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782 through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. PROTOCOL SERVICES: Wants Until Nov. 30 to Assume or Reject Leases ----------------------------------------------------------------- Protocol Services, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of California for permission to extend until November 30, 2005, the period within which they can decide whether to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors have focused on resolving issues relating to the bankruptcy cases and have not been able to make a decision with respect to each unexpired lease. The Debtors believe that the extension period will allow them to maximize the value of their assets and avoid the incurrence of administrative expenses and other claims on their assets. A list of the Debtors' unexpired nonresidential real property leases is available for free at: http://ResearchArchives.com/t/s?1ea Headquartered in Deerfield, Illinois, Protocol Services, Inc., and its subsidiaries offers agency services, database development and management, data analysis, direct mail printing and lettershops, e-marketing, media replication, and inbound and outbound teleservices. Protocol has offices and operations in California, Colorado, Illinois, Louisiana, Florida, Michigan, North Carolina, New York, Massachusetts, Connecticut and Canada and employs over 4,000 individuals. The Company and its affiliates -- Protocol Communications, Inc., Canicom, Inc., Media Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11 protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782 through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. RAVEN MOON: Registers 3.7 Billion Common Shares for Resale ---------------------------------------------------------- Raven Moon Entertainment, Inc., filed a Registration Statement with the Securities and Exchange Commission to allow the resale of 3,697,766,666 shares of its common stock by these Selling Shareholders: Selling Shareholders Common Shares -------------------- ------------- Gina D, Inc. 873,600,000 MG Studios, Inc. 2,680,000,000 David D. Mouery. P.L. 96,000,000 Role Entertainment 48,000,000 Big Apple Consulting USA, Inc. 166,666 Of the shares offered, 1.6 billion shares are issuable upon exercise of options. The Company will not receive proceeds from the sale of the shares by the Selling Stockholders. However, it will receive proceeds equal to the exercise price, if the options held by the selling stockholders are exercised. The Company's common stock is traded on the over-the-counter bulletin board operated by the National Association of Securities Dealers, Inc., under the symbol "RVMN". The Company's common shares have traded between $0.004 and $0.0125 this month. Going Concern Doubt At June 30, 2005, the Company has $26,442 in cash, and total assets of $27,442. At June 30, 2005 Raven Moon's liabilities totaled $1,661,290. These circumstances raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon positive cash flows from operations and ongoing financial support. Adequate funds may not be available when needed or may not be available on terms favorable to the Company. If the Company is unable to secure sufficient funding, the Company may be unable to develop or enhance its products and services, take advantage of business opportunities, respond to competitive pressures or grow the Company's business in the manner that the Company's management believes is possible. This could have a negative effect on the Company's business, financial condition and results of operations. Without such support, the Company may not be able to meet its working capital requirements and accordingly the Company and its subsidiaries may need to reorganize and seek protection from its creditors. Raven Moon Entertainment, Inc. -- http://www.ravenmoon.net/-- develops and produces children's television programs and videos, CD music, and Internet websites focused on the entertainment industry. Raven Moon talks about music publishing and talent management on its Web site. Raven Moon indicates in its latest quarterly report that it wants to enter the plush toy market too. RELIANCE GROUP: Court OKs Gage Spencer as Panel's Special Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave the Official Unsecured Creditors' Committee seeks the U.S. Bankruptcy Court for the Southern District of New York's authority to retain Gage, Spencer & Fleming, LLP, as its special litigation counsel, nunc pro tunc to Aug. 25, 2005. Gage Spencer is a law firm devoted to the litigation of complex civil and criminal matters. The firm's practice emphasizes securities, accounting, employment and white-collar criminal litigation. Gage Spencer has tried a wide variety of criminal offenses, including securities, financial fraud, racketeering and tax offenses, and is experienced in the use of private investigators and coordinating civil litigation with state and federal prosecutors and regulatory agencies. Gage Spencer will be paid based on an agreed reduced fee arrangement. Pursuant to the contingency aspect of the fee arrangement, Gage Spencer will be paid only 60% of its fees unless money is recovered, plus 100% of actual expenses. This arrangement, Mr. Gulkowitz says, provides Gage Spencer with the incentive to maximize the dollar amount of recovery, which will financially benefit the estates. The firm's hourly rates before discounts are: G. Robert Gage, Jr. $525 William B. Fleming $425 Laura M. Rizzo $265 Associates $325 - $195 Legal Assistants $100 - $60 The Creditors' Committee has provided Gage Spencer with a $100,000 retainer, which will be applied against time charges and disbursements. Any balance remaining upon termination will be refunded. Gage Spencer may retain a forensic accountant or other expert to assist in the case and to serve as an expert witness at trial. The Creditors' Committee is responsible for retaining and paying any local or specialty counsel. RGH will first use the funds from any recovery to pay Gage Spencer the difference between 60% of normal hourly rates and 100% of normal hourly rates from the retention date until the date of payments, plus any unpaid disbursements. If the recovery exceeds the discrepancy between 60% and 100% of hourly rates, a percentage of the excess will be paid to the firm equal to: -- 15% of the next $1,000,000; -- 12.5% of the next $4,000,000; and -- 10% of any amount over $5,000,000. Gage Spencer will cap its fees at $1,000,000 if there is no recovery. Mr. Gulkowitz tells Judge Gonzalez that these terms are fair and beneficial to the estate, as the Creditors' Committee is retaining Gage Spencer on a win/win basis. If matters are successfully resolved, Gage Spencer will receive full payment for its services and has the potential to receive a premium. If matters are unsuccessfully resolved, Gage Spencer will only receive 60% of normal hourly rates, subject to the $1,000,000 cap that will limit the loss to the estates and creditors. G. Robert Gage, Jr., a member of the firm, assures the Court that Gage Spencer is "disinterested" as defined in Sections 101(14) and 101(31) of the Bankruptcy Code, and as modified by Section 1103. Gage Spencer does not represent or hold any interest adverse to RGH or its estate. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000) RIVER CITY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: River City Plastic, Inc. 55232 Franklin Drive Three Rivers, Michigan 49093 Bankruptcy Case No.: 05-14113 Type of Business: The Debtor manufactures molded plastic products. See http://www.rcplastic.com/ Chapter 11 Petition Date: September 26, 2005 Court: Western District of Michigan (Grand Rapids) Judge: James D. Gregg Debtor's Counsel: Robert Bassel, Esq. Kemp Klein 201 West Big Beaver, 6th Floor Troy, Michigan 48084 Tel: (248) 528-1111 Fax: (248) 528-5129 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Poly One Trade debt $415,003 Dept. CH 14046 Palatine, IL 60055-4046 GE Polymerland Trade debt $260,075 Polymerland Service Center P.O. Box 641071 Pittsburg, PA 641071 Lear Kitchener Trade debt $244,746 P.O. Box 1354 Detroit, MI 48231 Southco Trade debt $152,313 JLJ Properties, Inc. Building rent $89,835 Rocket Expedited Services Trade debt $48,829 TMG, LLC Trade debt $46,662 Marshall Sales Inc. Trade debt $44,622 Northpointe Plastics Corp. Trade debt $39,949 Uniform Color Company Trade debt $36,840 Vandorn Demag Trade debt $36,102 Accu Mold Trade debt $35,743 M. Holland Company Trade debt $35,600 Michael Day Enterprises Trade debt $35,091 Plastic Services of Michigan Trade debt $33,937 Meadwestvaco Corporation Trade debt $32,141 Weber Specialties Company Trade debt $26,604 Tecumseh Corrugated Trade debt $21,287 Peterson Spring-Cima Trade debt $19,942 W.S. Bell Cartage Trade debt $19,225 RUSSELL CORP: Moody's Downgrades Sr. Unsecured Debt Rating to B2 ---------------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of Russell Corp. The rating action reflects the medium term impact on Russell's financial position of lowered performance guidance for the seasonally important second half of this year, following an unexpectedly weak second quarter. The actions also reflect: * potentially longer term margin pressure as a result of increased production and distribution costs; * a more competitive pricing environment; and * lower sales volume to Wal-Mart in 2006. Wal-Mart, which accounted for over 20% of Russell's 2004 sales, notified the company that it would replace Russell with another vendor for its boys apparel. A failure to replace Wal-Mart would reduce sales by over 3% and could reduce profit margins as a result of lower operating leverage. These ratings were downgraded: * Corporate family rating to B1 from Ba3, * Senior secured debt rating to Ba3 from Ba2, * Senior unsecured debt rating to B2 from B1, The outlook is stable. Russell's ratings had been weakly positioned with little cushion following an anticipated series of debt-financed acquisitions, the most recent being the acquisition of Brooks in 2004. As a result, Russell's debt rose by more than 25% from the end of fiscal year 2002 to $398 million at the end of 2004. Net cash flow (cash from operations less capex) was expected to remain fairly stable through 2005. Moody's expected that debt metrics would improve as free cash flow was used to reduce debt and operating margins stabilized following a series of acquisitions and a five-year plan to improve production costs. Russell's margins have been negatively impacted throughout 2004 and into 2005 by pricing pressure. In the first half of 2005, margins and top line were further pressured by the cost of meeting volatile demand for its products. The company recently announced that Hurricane Katrina will increase the cost of doing business because of disruptions to operations, and could result in lost sales during a key season because of unavailability of product. In addition, the sustained high cost of oil will increase the cost of fleece and polyesters in the future. The new rating levels reflect Russell's anticipated weaker credit metrics through the near term, as well as the positives of the company's size and market position. Free cash flow available to repay debt is now expected to be negligible this year, and could remain below 10% of debt balances next year. Moody's expects debt to EBITDA to likely remain at or above 2.5 times over the next two years, and that EBIT to interest will likely be below 2.0 times for the next twelve months. Russell has experienced top line and margin volatility in the past, which is typical of an apparel manufacturer. Russell's rating outlook is stable, but the ratings are weakly positioned. There is only modest cushion for negative developments, such as a further sizable revision in earnings expectations or future damage to customer relationships as a result of recent problems. Recent events have the potential to disrupt relationships with longstanding customers, and effects could be long term. An additional risk includes the potential for Russell's costs of production and delivery to stabilize at levels higher than they have been in the past. Ratings could fall if free cash flow to debt is expected to stay at or below 6% for the medium term, or if the company has difficulty negotiating covenant relief or maturity extension for the revolving credit facility which matures in 2007. Ratings could stabilize or rise if the effects of weather-related disruptions prove to be short-lived, and if the company can restore operating profitability above 7% and free cash flow to debt to 10%. Russell Corp, headquartered in Atlanta, Georgia, is a major U.S. manufacturer and distributor of athletic apparel and equipment. Brands include: * American Athletic, * Huffy Sports, * Brooks, and * Spalding. Revenues were $1.4 billion for the twelve months ended July 1, 2005. SAINT VINCENTS: Has Full Access to $100 Million HFG DIP Facility ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York allowed Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates to obtain $100 million financing from HFG Healthco-4 LLC. The Court also directs the Debtors to immediately pay the $150,000 balance of the commitment fee to HFG. The Hon. Prudence Carter Beatty previously gave the Debtors authority, on an emergency basis, to draw up to $15 million under the HFG DIP Financing agreement. As reported in the Troubled Company Reporter, HFG agreed to provide the Debtors with up to $100 million of revolving debtor- in-possession credit. CMC Physician Services, P.C., CMC Radiological Services P.C., and CMC Cardiology Services P.C. guarantees repayment of SVCMC's obligations under the DIP Agreement. Maturity Date The DIP Facility is scheduled to expire on January 5, 2007. The Debtors can elect to terminate the facility on July 5, 2006, by delivering a notice to that effect by May 5, 2006. The Debtors can extend the maturity date to July 5, 2007, by filing a plan of reorganization acceptable to the DIP Lenders. Interest and Fees SVCMC will pay interest at a rate of 350 basis points over LIBOR on every dollar borrowed from the DIP Lenders. In the event of a default, the interest rate payable on DIP Loans jumps 2.5%. SVCMC promises to pay the DIP Lenders a variety of fees as well: -- a 0.50% annual Commitment Fee on every dollar not borrowed from the DIP Lenders; -- a 0.20% monthly Collateral Manager's Fee on every dollar borrowed; -- a one-time $375,000 Facility Fee; -- an additional $125,000 Facility Fee on the date that the Borrowing Limit exceeds $75,000,000; -- a $250,000 Facility Extension Fee if the facility is extended beyond July 5, 2006; -- a $250,000 Facility Extension Fee if the facility is extended beyond January 7, 2007; -- $25,000 quarterly Agent Fees; -- a $1,000,000 Exit Fee payable on the Maturity Date (which may be credited dollar-for-dollar against new fees payable under an exit facility extended by the DIP Lenders). The DIP Loan is granted superpriority administrative expense status pursuant to Section 364(c)(1) of the Bankruptcy Code, subject to the carve-out for professional fees. Parties-in-interest have until September 30, 2005, to initiate an action challenging the validity, enforceability, perfection and priority of the Prepetition Debt, the DIP Agent's security interest and Liens on the Prepetition Collateral, the Lender Debt and any Lien or security interest granted. The Official Committee of Unsecured Creditors has until 60 days after the entry of an order approving the retention of counsel for the Committee to commence a Challenging Action. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) SANDERS FARMS: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Sanders Farms aka Sanders Grain Farms 549 West, 800 South Burley, Idaho 83318 Bankruptcy Case No.: 05-42338 Chapter 11 Petition Date: September 26, 2005 Court: District of Idaho (Twin Falls) Judge: Jim D. Pappas Debtor's Counsel: Brent T. Robinson, Esq. P.O. Box 396 Rupert, Idaho 83350 Tel: (208) 436-4717 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ag Tech, Inc. Fertilizer $225,000 1247 West Main Burley, ID 83318 G.J. Verti-Line Pumps, Inc. Parts and repairs $54,745 P.O. Box 892 Twin Falls, ID 83303-0892 Pioneer Equipment Parts and repairs $13,011 Adams Petroleum Petroleum products $12,264 Butte Irrigation Sprinkler parts and $11,884 repairs Tires West Les Schwab Tires and repairs $5,972 Gene's Repair & Irrigation Equipment parts and $1,229 repairs Buckhorn Electric Electrical parts and $678 repairs A.M.I. Supply Parts and repairs $312 Mini-Cassia Equipment Co. Equipment parts and $236 repairs SILICON GRAPHICS: Wants to Save $100 Million Through Restructuring ------------------------------------------------------------------ Silicon Graphics, Inc., approved a restructuring plan and began to implement a reduction in its workforce with notifications to affected employees in North America and certain other locations on Sept. 1, 2005. The balance of the notifications will follow over a reasonable period, consistent with business and local legal requirements in other parts of the world. In addition to the headcount reductions, the restructuring plan includes initiatives to reduce expenses in other areas, including procurement costs for goods and services, consolidation and reorganization of operations in several locations, focusing marketing spending on the highest priority activities and benefits and other spending controls. The anticipated benefits of this restructuring plan are expected to be experienced beginning in the second quarter of fiscal 2006 with increasing benefits over the fiscal year. AlixPartners on Board The Company retained the turnaround firm AlixPartners LLC in the fourth quarter of fiscal 2005, to advise it regarding further expense reductions, increasing revenue, improving liquidity and our intentions to initiate restructuring actions in the first quarter of fiscal 2006. $80 to $100 Million Savings Goal The goal of the Company's fiscal 2006 restructuring plan is to achieve $80 to $100 million in annualized cost savings when fully realized. The benefits are expected to be reflected in a combination of lower operating expenses and improved gross margins. The Company expects savings from these initiatives to begin to be realized in the second quarter of fiscal 2006 with increasing benefits over the remainder of fiscal 2006. Approximately 60% to 70% of the savings are expected to result from reductions in the number of employee and contractor positions with the Company. The Company currently estimates that the total costs to be incurred in connection with these restructuring actions will be less than $20 million, principally relating to severance benefits. Substantially all of these costs will require the outlay of cash, although our severance programs provide wherever practical for payments to be made over the same period in which the payroll expenses otherwise would have been incurred, with the objective of minimizing the acceleration of cash expenditures. The Company expects the majority of the restructuring charges to be reflected in our financial results for the quarter ending December 30, 2005, and the restructuring to be largely completed by the end of the fiscal quarter ending March 31, 2006. Any forecast of operating results is inherently uncertain, and although the Company will seek to implement these actions in a manner that does not materially reduce revenue, it is cannot be certain that it will achieve this objective. Silicon Graphics, Inc. -- http://www.sgi.com/-- is a leader in high-performance computing, visualization and storage. SGI's vision is to provide technology that enables the most significant scientific and creative breakthroughs of the 21st century. Whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense or enabling the transition from analog to digital broadcasting, SGI is dedicated to addressing the next class of challenges for scientific, engineering and creative users. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, Standard & Poor's Ratings Services affirmed its 'CCC+' corporate credit rating on Mountain View, California-based Silicon Graphics, Inc. (SGI), and revised its outlook to negative from developing. The outlook revision reflects weak revenues and operating performance in the March 2005 quarter, and limited liquidity. "The ratings on Silicon Graphics reflect a leveraged financial profile, declining annual revenues, and negative free operating cash flow. While SGI has a good technology position in high-end computing and graphics solutions, the company has been struggling to establish revenue stability and profitability in the highly competitive technical workstation, server and storage markets," said Standard & Poor's credit analyst Martha Toll-Reed. The company's efforts have been hampered by reduced growth rates in information technology spending, particularly for high-end equipment, and a highly competitive industry environment. SILICON GRAPHICS: Balance Sheet Upside-Down by $191MM by June 24 ---------------------------------------------------------------- Silicon Graphics, Inc., delivered its annual report on Form 10-K for the fiscal year ending June 24, 2005, to the Securities and Exchange Commission on Sept. 22, 2005. Total revenue in fiscal 2005 decreased $112 million or 13% compared with fiscal 2004, and fiscal 2004 revenue decreased $55 million or 6% compared with fiscal 2003. Overall gross profit margin declined to 36.3% in fiscal 2005 from 41.5% in fiscal 2004. Product and other gross profit margin in fiscal 2005 decreased 6.8 percentage points compared with fiscal 2004. Total fiscal 2005 operating expenses decreased $53 million or 13% compared with fiscal 2004. Fiscal 2005 operating expenses included $24 million of charges for restructuring and asset impairment costs. At June 24, 2005, the Company's unrestricted cash and cash equivalents and marketable investments totaled $64 million compared with $157 million at June 25, 2004. Cash used in the Company's operating activities from continuing operations increased by $36 million from fiscal 2004 to fiscal 2005, which is primarily due to the Company's revenue decreasing more rapidly than it was able to adjust its operating expenses. The Company has incurred net losses and negative cash flows from operations during each of the past several fiscal years. At June 24, 2005, the Company's principal sources of liquidity included unrestricted cash and marketable investments of $64 million, down from $157 million at June 25, 2004. Currently, its cash level is inadequate to support its operations and the Company expects to continue consuming cash from operations in at least the first half of fiscal 2006. The Company reported a $76,008,000 net loss on $729,965,000 of net revenues for the fiscal year ending June 24, 2005. At June 24, 2005, the Company's balance sheet shows $452,125,000 in total assets and a $191,188,000 stockholders deficit. Ernst & Young LLP, the Company's auditor, expressed substantial doubt on the company's ability to continue as a going concern, pointing to the Company's: * recurring operating losses, * negative cash flows, and * stockholders' deficit. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?1d5 Silicon Graphics, Inc. -- http://www.sgi.com/-- is a leader in high-performance computing, visualization and storage. SGI's vision is to provide technology that enables the most significant scientific and creative breakthroughs of the 21st century. Whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense or enabling the transition from analog to digital broadcasting, SGI is dedicated to addressing the next class of challenges for scientific, engineering and creative users. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, Standard & Poor's Ratings Services affirmed its 'CCC+' corporate credit rating on Mountain View, California-based Silicon Graphics, Inc. (SGI), and revised its outlook to negative from developing. The outlook revision reflects weak revenues and operating performance in the March 2005 quarter, and limited liquidity. "The ratings on Silicon Graphics reflect a leveraged financial profile, declining annual revenues, and negative free operating cash flow. While SGI has a good technology position in high-end computing and graphics solutions, the company has been struggling to establish revenue stability and profitability in the highly competitive technical workstation, server and storage markets," said Standard & Poor's credit analyst Martha Toll-Reed. The company's efforts have been hampered by reduced growth rates in information technology spending, particularly for high-end equipment, and a highly competitive industry environment. TECHNEGLAS INC: Ohio EPA Wants Chapter 11 Plan Rejected ------------------------------------------------------- The Ohio Environmental Protection Agency tells the U.S. Bankruptcy Court for the Southern District of Ohio, Eastern Division, that the discharge provision discussed in Techneglas, Inc.'s First Amended Joint Plan of Reorganization is overbroad. The Agency asserts that the Plan violates 11 U.S.C. Section 1129(a)(1),(2),(3) and 28 U.S.C. Section 959(b). Remediation Issues On its Amended Disclosure Statement, Techneglas admits that the Columbus plant used lead, petroleum products and other materials of environmental concern. It is unclear to the Environmental Agency if the sale of the Debtor's real estate assets will generate sufficient fund to meet all future environmental obligations. The Plan doesn't state how the Debtor will fund the potential ground water contamination and decommissioning cost arising from contamination in the buildings and equipment. 28 U.S.C. Sec. 959(b) Violation Under this section, the Debtor is required to manage and operate its estate according to the requirements of the laws of the State of Ohio. The State mandates the Debtor to cleanup, abate and remediate all contamination at its Columbus Techneglas Plant. However, the Debtor's Plan transfers its remediation responsibility to a real estate entity. Also, the Plan provides that after the real estate entity disposes the Debtor's real estate assets, no one will be liable for the environmental-related claims channeled to the real estate firm. The government contends that this is a clear violation of the provisions of Section 959(b) of Title 28 of the United States Code. The Third Circuit states that a governmental unit may force a debtor to comply with applicable environmental laws by remedying an existing hazard. The terms of the Debtor's Plan prevents the government agency from commencing an action to enforce an environmental law or to abate a hazardous situation. To prevent discharge from its environmental responsibilities, the Agency urges the Court to reject the Debtor's Plan. About the Plan The Amended Joint Plan consists of five components. The first component provides Techneglas with the option of: a) creating a single Post Confirmation Entity for liquidating through prosecution, settlement or other disposition, Claims, Causes of Action, receivables, rights to payment of Techneglas, and other non-real estate assets; or b) liquidating its non-real estate assets directly through Reorganized Techneglas. The Post Confirmation Entity or Reorganized Techneglas will fund distributions to all Techneglas Non-NEG Creditors. The second component provides for the establishment of NEG Distribution NewCo, which will be created in the discretion of Techneglas as an ongoing business, wholly owned by NEG, created on the Effective Date that will: a) receive the Distribution Assets, and b) except as otherwise provided in the Plan, receive all of the assets that remain in the Reorganized Techneglas or Post Confirmation Entity, including any residual assets from the Real Estate Entity, following distributions to Techneglas Non-NEG Creditors; provided, however, in the event that there are no assets that are Distribution Assets, all assets that would otherwise be distributed to NEG Distribution NewCo will be distributed to NEG. The third component is the creation of a Real Estate Entity, to which Techneglas will transfer, for use and disposition, real estate assets that have not sold as of the Effective Date and that may potentially be subject to environmental liability and certain ther assets sufficient to manage that real estate pending its sale. The fourth and fifth components are the continuation of the businesses of NEG Ohio and NEG America, as Reorganized NEG Ohio and Reorganized NEG America, which will fund distributions to all NEG Ohio Creditors and NEG America Creditors, respectively. Treatment of Claims and Interests for Techneglas Inc. Secured Claims, Other Priority Claims and Union Priority Claims will be paid in full after the Effective Date. PBGC Claims will be paid after the Effective Date, a distribution of Cash amounting to 100% of $34,530,000 minus any amounts received by the PBCG or contributed to the Hourly Plan pursuant to any Court order entered prior to the Distribution Date. Other Unsecured Claims will be paid: 1) 63.5% of the amount of their Allowed Claims; plus 2) 3.5% of the Allowed Claim, if the Plan is confirmed prior to Sept. 15, 2005 or if there is a Court order entered prior to Sept. 15, 2005, in the Techneglas chapter 11 case that has not been stayed, authorizing the contribution of $17 million into the Hourly Plan or the payment of that amount to the PBGC; plus 3) if the total amount of Other Unsecured Claim Allowed Claims is less than $23,630,000; the difference between $23,630,000 and the total amount of Other Unsecured Claim Allowed Claims, multiplied by the percentage of the dollar amount of Other Unsecured Allowed Claims held by Third Party Claimants, multiplied by 63.5% if the condition of subparagraph (2) has not been satisfied, and 67% if that condition has been satisfied. Headquartered in Columbus, Ohio, Techneglas, Inc. -- http://techneglas.com/-- manufactures television glass (CRT panels, CRT funnels, solder glass and specialty glass), dopant sources, glass resins and specialty bulbs. The Company and its debtor-affiliates filed for chapter 11 protection on Sept. 1, 2004 (Bankr. S.D. Ohio Case No. 04-63788). David L. Eaton, Esq., Kelly K. Frazier, Esq., and Marc J. Carmel, Esq., at Kirkland & Ellis, and Brenda K. Bowers, Esq., Robert J. Sidman, Esq., at Vorys, Sater, Seymour and Pease LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $137 million and total debts of $336 million. TOWER AUTOMOTIVE: Inks Settlement Agreement With UNOVA Industrial ----------------------------------------------------------------- In May 2002, Tower Automotive Inc. and its debtor-affiliates filed a complaint against UNOVA Industrial Automation Systems, Inc., and its corporate parent, UNOVA, Inc., in the Circuit Court of Kent County, Michigan. The Debtors asserted damages for IAS' breach of contract, breach of warranty, promissory estoppel, and fraud, in connection with a $45 million commercial agreement between the Debtors and IAS for the turnkey design, manufacture, and installation of an automated assembly line system at the Debtors' manufacturing facility in Corydon, Indiana, for the production of vehicle frames for the Ford Explorer. In the Complaint, the Debtors alleged that IAS: -- had certain binding legal obligations as to the Corydon Assembly Line, particularly with respect to the installation and utilization of certain robotic material handling services and specialized welding operations systems; -- was obligated to produce the Corydon Assembly Line in compliance with certain capacity specifications and output capabilities consistent with the Debtors' operating schedules of six days per week, and 20 hours per day; -- caused them to (x) incur significant additional expenses associated with IAS' attempts to re-work the Corydon Assembly Line and (y) expend additional labor hours in connection with operating the line to meet their customers' requirements for the U-152 Frames; Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, relates that the Debtors demanded approximately $50 million in damages from excess labor costs and related overhead, and an additional $6 million in necessary capital improvements and related expenses for improving and supplementing the Corydon Assembly Line's production. "IAS denied (and continues to deny) these allegations and has vigorously defended against them." IAS has filed a counterclaim against the Debtors for $2 million alleging unpaid services related to the Corydon Assembly Line. Litigation & Settlement Process The Kent County Action was set for trial on September 13, 2005, and was anticipated to last approximately three months. In August 2005, less than one month prior to the scheduled trial date, IAS filed an interlocutory appeal with the Michigan Court of Appeals seeking a stay of the Kent County Action pending an appeal of a partial summary judgment order issued by the trial court in favor of the Debtors regarding the terms and conditions of the agreement with IAS. During the pre-trial period, the parties participated in court- ordered mediation conferences on July 29, 2005, and August 5, 2005, each of which lasted several hours Although settlement offers were exchanged on both occasions, the parties did not resolve the dispute. The trial court then ordered a settlement conference among the parties' respective chief executive officers and lead trial counsel. This settlement conference occurred on August 31, 2005. After approximately seven hours of negotiations, a settlement agreement was reached in principle and placed upon the record. The terms and conditions of the settlement are embodied in the Settlement Agreement.. The salient terms of the Settlement Agreement are: (1) IAS and UNOVA agree to, jointly and severally, pay $13,500,000 to the Debtors no later than 11 days following the date on which the Court enters a final, non-appealable order approving the Settlement Agreement; (2) Each party agrees to execute and file all pleadings necessary to effect a dismissal with prejudice and without costs of all claims and counterclaims in the Kent County Action; (3) All documents and information generated or exchanged by the parties in connection with the formation and implementation of the Settlement Agreement will remain confidential information, which must not be used for any purpose other than fulfilling or enforcing the terms of the Settlement Agreement; and (4) the parties execute mutual releases. "The Settlement Agreement resolves all of the outstanding claims between the Debtors, IAS and UNOVA arising from or relating to the Corydon Assembly Line without the need for furtherance of costly and time-consuming negotiations and additional uncertain litigation," Mr. Sathy tells Judge Gropper. "Absent authorization to enter into the Settlement Agreement, the Debtors and IAS and UNOVA would continue to proceed along a litigious and time-consuming path with respect to the disputes at issue." The Official Committee of Unsecured Creditors does not object to the approval of the Settlement Agreement, Mr. Sathy adds. Varnum Contingency Fee The Debtors intend to pay a contingency fee to the law firm of Varnum, Riddering, Schmidt & Howlett LLP in consideration for the firm's services as trial counsel in the Kent County Action. The Debtors ask the U.S. Bankruptcy Court for the Southern District of New York to approve the Settlement Agreement and Varnum's Contingency Fee. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOWER AUTOMOTIVE: Two Utility Companies Press for Deposits ---------------------------------------------------------- As previously reported, Tower Automotive Inc. and its debtor- affiliates claim that American Electric Power and DTE Energy Company are adequately protected because their financial condition has continuously improved. Contrary to the Debtors assertion, the two utility companies tell the U.S. Bankruptcy Court for the Southern District of New York that their financial state has not remained stable since their bankruptcy filing. Thomas R. Slome, Esq., at Scarcella Rosen & Slome LLP, in Uniondale, New York, on behalf of American Electric Power and DTE Energy Company, notes that the Debtors have incurred net losses of over $301 million since the Petition Date and their disbursements of $1.33 billion greatly exceed their $1.042 billion in revenue. "Although the Debtors have availability under their DIP Facility it has been substantially reduced as a result of their continued post-petition losses," Mr. Slome points out. "As of July 31, 2005, the availability had been reduced to $194,714,000 ($530,286,000 in DIP borrowings as of July 31, 2005). With the Debtors' monthly expenditures ranging from $144,415,404 (February 2005) to $285,699,491 (June 2005), the $194,714,000 in availability provides the Utilities with very little cushion, especially if the DIP Lender revokes the financing." According to Mr. Slome, the Debtors must provide adequate assurance of payment to American Electric and DTE for the postpetition utility services they have rendered to the Debtors because: (a) as set forth in the Debtors' Monthly Operating Reports from February through July 2005, the Debtors have incurred total disbursements of over $1.33 billion, with an aggregate net loss of over $301 million since the Petition Date; (b) as of July 31, 2005, the Debtors availability under their DIP Facility was only $194,714,000, which appears to be significantly less than their monthly expenses, plus applicable carve-out for professionals; (c) all of the Debtors' assets and proceeds are secured by first and superpriority security interests and liens; (d) during the postpetition period, the Debtors have shown a preference to favor certain "critical vendors," certain high-level employees and professionals, including the Debtors' counsel, to the detriment of their other postpetition creditors; (e) the Debtors have reduced their postpetition letter of credit availability by providing Entergy Mississippi, Inc., with adequate assurance of payment in the form of an $82,842 letter of credit; (f) the Debtors belong to a group of auto suppliers who are experiencing pressure from auto manufacturers that are demanding lower prices to offset incentives and other costs in a highly competitive market; (g) with higher prices for materials like steel contributing to the Debtors' seeking bankruptcy protection, the Debtors and other suppliers are hurt because they have no way to pass their costs to their customers, coupled with a drop in automaker production volumes; (h) Tower is among the medium-size auto suppliers -- between $500 million and $2 billion in annual revenues -- that filed for bankruptcy in the last five years, and experts predict that the universe of auto suppliers will contract significantly in the next decade, resulting in an industry in which domestic automakers rely less on U.S.-based parts suppliers and more on overseas companies that will be able to deliver products more cheaply. American Electric and DTE ask the Court to compel the Debtors to provide them with adequate assurance in the form of semi-monthly advance payments. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) TRAINER WORTHAM: Fitch Affirms BB Rating on $16 Mil. Pref. Shares ----------------------------------------------------------------- Fitch Ratings affirms all classes of notes issued by Trainer Wortham First Republic CBO III, Ltd. These affirmations are the result of Fitch's review process, and are effective immediately: -- $195,000,000 class A-1 notes at 'AAA'; -- $60,750,000 class A-2 notes at 'AAA'; -- $9,000,000 class B notes at 'AA'; -- $8,000,000 class C notes at 'A'; -- $13,651,023 class D notes at 'BBB'; -- $16,000,000 preference shares at 'BB'. Trainer Wortham III is a collateralized bond obligation managed by Trainer Wortham & Company, Inc., which closed Feb. 19, 2003. The notes issued by Trainer Wortham III are supported by a portfolio composed of 75% residential mortgage-backed securities, 5% commercial mortgage-backed securities, 3% asset-backed securities, 3% corporate debt, and 5% collateralized debt obligations. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios. As a result of this analysis, Fitch has determined that the current ratings assigned to all classes of notes still reflect the current risk to noteholders. Since the last rating action on Aug. 20, 2004, Trainer Wortham III has sold two distressed securities at significant losses but has maintained coverage levels and improved the weighted average spread and coupon of the portfolio. Over that time period, the class A/B and class D overcollateralization ratios have remained nearly unchanged at 111.5% and 103.1%, respectively, and are both in compliance with their triggers of 103.5% and 101.75%, as of the Aug. 15, 2005, note valuation report. The weighted average spread of the portfolio increased to 2.77% from 2.25% at the last review, bringing it back into compliance with its trigger of 2.45%. Similarly, the weighted average coupon of the portfolio increased to 6.57% from 6.37%, and is currently above its trigger of 6.45%. While Trainer Wortham III currently has no defaulted assets in its portfolio, it does hold two manufactured housing securities that could pose a credit concern. In addition, the deal is currently holding approximately $30.4 million in principal cash, which the manager plans to reinvest in additional collateral prior to the end of the reinvestment period on Feb. 19, 2006. For purposes of cash flow modeling, Fitch assumed a minimal level of recovery for each of the distressed assets and created various scenarios for the treatment of the cash balance. During simulations, the deal was able to withstand these stresses at its current ratings. Trainer Wortham III has several structural features, which Fitch believes will aid the deal's future performance. During the reinvestment period, there is an additional collateral coverage test, which if activated, would divert interest proceeds towards the purchase of new collateral. Also during the reinvestment period, the distributions to equity are limited to a 20% dividend yield and any excess interest proceeds are then used to redeem the class D notes. To date, approximately $1.6 million has been applied to redeem the class D notes through this mechanism. The ratings of the class A-1, A-2, and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class C and class D notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the preference shares addresses the likelihood that investors will ultimately receive the stated balance of principal by the legal final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralized Debt Obligations' dated Sept. 13, 2004, available on Fitch's web site at http://www.fitchratings.com/ UAL CORP: Contrarian Funds Buys Air Serv's $450,000 Claim --------------------------------------------------------- Certain trade creditors assigned six claims to Contrarian Funds, Revenue Management, Inc., and Newstart Factors: Transferor Transferee Claim No. Claim Amount ---------- ---------- --------- ------------ Air Serv Contrarian Funds 29945 $452,874 Advanced Ground Systems Engineer Newstart Factors unspecified 50,312 J Frank Associates Revenue Management 10063 $22,500 Premier Catering Revenue Management unspecified 69,097 Sky Caterers Revenue Management unspecified 106,715 Skytronics Revenue Management unspecified 42,228 Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 101; Bankruptcy Creditors' Service, Inc., 215/945-7000) USA MOTOR: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Lead Debtor: USA Motor Express, Inc. 4050 Helton Drive Florence, Alabama 35630 Bankruptcy Case No.: 05-85110 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- USA NationaLease, Inc. 05-85111 Type of Business: The Debtor is a service truckload and expediter carrier. See http://www.usamotorex.com/ Chapter 11 Petition Date: September 26, 2005 Court: Northern District of Alabama (Decatur) Debtors' Counsel: Garland C. Hall, III, Esq. Chenault, Hammond & Hall P.O. Box 1906 Decatur, Alabama 35602 Tel: (256) 353-7031 Total Assets Total Debts ------------ ----------- USA Motor Express, Inc. Not provided $500,000 to $1 Million USA NationaLease, Inc. Not provided Not provided List of 20 Largest Unsecured Creditors of: -- USA Motor Express, Inc. -- USA NatinaLease, Inc. Entity Claim Amount ------ ------------ J&P Trucking $81,450 c/o Corporate Billing P.O. box 2219 Decatur, AL 356029 Southern Freight Inc. $73,150 99 University Avenue Atlanta, GA 30315 United States Trustee $48,079 Internal Revenue Service P.O. Box 105421 Atlanta, GA 30348-5421 Arthur J. Gallagher & Co. $44,955 David K. Wilson $39,865 Communications $36,271 Rocky Top Carriers $34,300 Multimedia Advertising $32,102 A.I. Credit Corp. $31,827 Tidwell Dewitt LLC $25,316 Kottke Trucking Inc. $21,575 LogicGroup $20,900 Trucking $17,450 CEF 2002 LLC $17,159 Premier Distribution $15,400 American Marazzi Tile $14,743 BNSF Logistices $14,600 Michael Short Trucking $13,715 Twin City trailer Sales $11,241 Ashe & Wright PC $9,762 US AIRWAYS: Completes Merger With America West Airlines ------------------------------------------------------- US Airways Group, Inc., (NYSE: LCC), effective yesterday, has finalized its transaction enabling America West and US Airways to begin operating as one carrier -- US Airways. Customers should continue to book directly with US Airways or America West as they did before the merger. The airlines' Web sites - http://www.americawest.com/and http://www.usairways.com/-- will operate separately in the short term, as well as the two airlines' reservations systems. The new US Airways, which began trading yesterday on the New York Stock Exchange under the LCC symbol, represents the nation's largest full-service, low-cost, low-fare airline. Company officials and representatives from the airline's labor groups join US Airways Chairman, President and CEO Doug Parker at yesterday's opening bell ceremony at the New York Stock Exchange. "Today we start a new chapter in aviation history," said Mr. Parker. "The new US Airways combines our airlines' proud heritage with our employees' passionate commitment to provide our customers with friendly service and low fares. This is a great day for the employees of America West and US Airways as well as for the people in the hundreds of communities we serve." Benefits of the America West/US Airways merger include: -- US Airways will continue to operate hubs in Charlotte, N.C., Phoenix and Philadelphia, with secondary hub/focus cities in Las Vegas, Pittsburgh, Boston, New York (LaGuardia) and Washington (Ronald Reagan National Airport). In addition, two wholly owned subsidiaries operating as US Airways Express will continue to provide additional service to an expansive network. -- Extensive Dividend Miles frequent flyer program with the ability to earn and redeem miles for travel in destinations throughout the globe. Reciprocal frequent flyer benefits will begin on Oct. 5, 2005. -- First class cabins on both domestic and international flights, with advance seating assignments and in-flight amenities that include audio and video entertainment selections. -- Hourly US Airways Shuttle service between Boston, New York and Washington. -- Participation in the Star Alliance, the first truly global airline alliance comprising 16 of the world's most prominent airlines. Overall, the Star member carriers offer more than 15,000 daily flights to 795 destinations in 139 countries. Star Alliance benefits will be phased in over the next six months. -- 17 US Airways Clubs, providing a quiet and comfortable place to work or relax with personal travel assistance from professional Club representatives. -- Financial strength with more than $2.5 billion in restricted and unrestricted cash. -- Nearly 38,000 employees dedicated to service excellence. "We are confident that the enthusiasm and professionalism of our employees, combined with the experienced leadership team we have selected to run the new airline will give us greater financial stability and competitive strength in the marketplace," continued Mr. Parker. "Our business model will enable us to compete aggressively with any airline, legacy or low-cost, in terms of reliability, amenities and affordability." While the merged airline will operate under the US Airways name, America West and US Airways will maintain separate operating certificates for approximately two to three years. Once FAA (Federal Aviation Administration) approvals have been granted, the two airlines' operating certificates will be combined onto one. America West Airlines initiated service in 1983 with three aircraft and 280 employees. America West grew rapidly, and by 1990, was the first airline formed since industry deregulation to achieve major-airline status. America West served 94 destinations across the U.S., Mexico, Canada and Costa Rica with more than 900 daily departures. US Airways began operations in 1939 as All American Aviation, bringing the first airmail service to many small communities in Western Pennsylvania and the Ohio Valley. Its history includes mergers with North Carolina's Piedmont Airlines, California's PSA Airlines, and now Arizona's America West Airlines. Prior to the merger, US Airways operated approximately 3,300 daily flights to 183 communities in the U.S., Europe, Canada, Mexico and the Caribbean. US Airways and America West have joined together to create the fifth largest domestic airline employing nearly 38,000 aviation professionals. US Airways, US Airways Shuttle and the US Airways Express operate approximately 4,000 flights per day and serve more than 225 communities in the U.S., Canada, Europe, the Caribbean and Latin America. US Airways is a member of the Star Alliance, which was established in 1997 as the first truly global airline alliance to offer customers global reach and a smooth travel experience. The other members are Air Canada, Air New Zealand, ANA, Asiana Airlines, Austrian, bmi, LOT Polish Airlines, Lufthansa, Scandinavian Airlines, Singapore Airlines, Spanair, TAP Portugal, Thai Airways International, United and VARIG Brazilian Airlines. South African Airways and SWISS will be integrated during the course of the next 12 months. Overall, the member carriers offer more than 15,000 daily flights to 795 destinations in 139 countries. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. WESTPOINT STEVENS: Motion to Dismiss Chapter 11 Cases Draws Fire ---------------------------------------------------------------- As reported in the Troubled Company Reporter on August 16, 2005, WestPoint Stevens, Inc., and its debtor-affiliates asked the U.S. Bankruptcy Court for the District of New York to dismiss their chapter 11 cases. The Debtors inform the Court that they have no ongoing business operations and are administratively insolvent, thus, confirmation of a chapter 11 plan is impossible in accordance with the Bankruptcy Code. The Debtors believe that a chapter 7 conversion is not advisable because it will increase administrative cost to the estate and require the appointment of a chapter 7 trustee. Objections (1) Second Lien Agent and Funds Asserting that their estates are administratively insolvent with no hope or prospect of reorganization, the Debtors sought to dismiss their Chapter 11 cases to prevent any additional losses and incurrence of expenses. While GSC Partners, Pequot Capital Management, Inc., and Perry Principals LLC -- the Funds -- do not challenge the solvency of the Debtors' estates, they believe that dismissal at this juncture is premature and is not in the best interest of all parties. Gordon Z. Novod, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York, points out that there is at least one active major litigation in the Court -- the adequate protection escrow litigation -- and a number of other litigations that are active or potentially could come before the Court. The Court may be required to review and consider several factual and legal issues, including new issues not previously decided on, as a result of these litigations. Accordingly, the Motion should be, at minimum, adjourned for a reasonable period of time until the docket in the Debtors' bankruptcy cases becomes reasonably clearer. Moreover, Wilmington Trust Company, as Second Lien Agent, and the Funds believe that the various claims identified in the Dismissal Motion as rendering their estates administratively insolvent are, in essence, "sunk costs" that will remain the same or increase only modestly before the appeals process is completed. In the meantime, Mr. Novod suggests that the Debtors can progress toward recovery on the Excluded Assets and Avoidance Actions, which have about $6.2 million in aggregate value. Mr. Novod explains that though the Debtors' remaining assets have relatively small value in comparison to the alleged aggregate administrative expenses, there is no rational justification for abandoning that value, which is sufficient at least to fund Chapter 7 expenses and conceivably make a distribution on the substantial superpriority administrative expenses accrued in these cases. If the Dismissal Motion goes forward, the Second Lien Agent and the Funds ask the Court to converting the Debtors' cases to Chapter 7 to permit the Debtors to continue to pursue recovery on the Excess Assets and Avoidance Actions. (2) San Marcos City The City of San Marcos and San Marcos CISD, assert that if the Debtors' Chapter 11 cases are to be dismissed, all jurisdiction over the payment of tax claims should and must revert to the state courts of appropriate jurisdiction under applicable non-bankruptcy law. The Taxing Authorities want this clarification to be included in any dismissal order entered by the Court. The Taxing Authorities believe that the Debtors want to be relieved of their obligations and duties, which move would be inherent in concluding the bankruptcy processes while obtaining all of the rights and benefits which they would be allowed if the processes were brought to finality. The Taxing Authorities say that they have endured the delays to payment of their claims by virtue of the Debtors' bankruptcy cases, and should not be forced to adjudicate issues related to their claims in a foreign forum, particularly if the debtor is dismissed from the Court's jurisdiction. (3) PBGC As statutory trustee of the Pension Plans, Pension Benefit Guaranty Corporation is authorized to pursue the claims and rights of those plans. Joan Segal, Esq., in Washington, D.C., explains that the Pension Plans' claims may include causes of action under Title I of ERISA for violations of its fiduciary standard of care. A pension plan's fiduciaries are personally liable for any losses that the pension plan suffers from violations of the prescribed standard of care. At this stage of processing the Pension Plans, Ms. Segal relates that the PBGC is not aware that there has been any fiduciary breach associated with the Pension Plans. Yet, the PBGC's ability to recover any amounts rightfully due the Pension Plans from non- debtors should not be extinguished by an order dismissing the Debtors' Chapter 11 proceedings. Ms. Segal notes that the Dismissal Motion includes a far-reaching "Injunctive Relief" section that could operate to relieve a non- debtor fiduciary of the Pension Plans from liability imposed by ERISA for the protection of the Pension Plans. In the Dismissal Motion, the Debtors have supported their request for a permanent injunction by asserting that "the success of the Debtors' sale process could not have been achieved if not for the substantial efforts of the Exculpated Parties. . . ." The Debtors further stated that it would be "inequitable to subject the . . . [Exculpated Parties] to continued exposure after their substantial efforts contributed to the successful sale of the Debtors' businesses." However, Ms. Segal observes, the Debtors do not suggest that anything unique has been contributed by the Exculpated Parties. The Exculpated Parties presumably did their jobs with respect to furthering the sale, but that is a far cry from the extraordinary situation required by the law to justify non-debtor releases, Ms. Segal contends. Moreover, Ms. Segal asserts that it is unlikely that the PBGC, a substantial creditor of the Debtors, will receive any benefit from the "successful sale." The PBGC is statutorily obligated to pay benefits to over 30,000 participants in the Pension Plans, which are significantly under-funded. The PBGC will pay benefits to the Pension Plans' participants using about $260,000,000 of its own funds. According to Ms. Segal, although the PBGC has filed claims in the Debtors' Chapter 11 proceedings, it will probably not receive any distribution. It is difficult to see how the anticipated outcome of the Debtors' Chapter 11 cases can be characterized as a success. Ms. Segal argues that to permit the injunction against non-debtors would not only be contrary to bankruptcy law, but it also has the potential of effecting a serious inequity against creditors like the PBGC. Creditors may be precluded from seeking recoveries to which they are entitled by law. "The Debtors' Motion glosses over the fact that an integral principle of bankruptcy law is that the discharge of debts available to debtors is the result of a confirmed plan of reorganization that provides for the reorganized debtor to continue in business postconfirmation," Ms. Segal says. "The injunction sought by the Debtors is identical in its effect to a discharge, but it carries with it none of the protections of a plan of reorganization that has been subject to the voting and confirmation process. [The] Debtors identify no legal basis for granting a discharge in a dismissed Chapter 11 case." Therefore, the PBGC asks the Court to deny the Dismissal Motion to the extent that it precludes it from pursuing its statutory right and obligation to pursue recovery on behalf of the Pension Plans against non-debtor parties. (4) 1st Lien Agent Beal Bank, S.S.B., in its capacity as Successor First Lien Agent and Collateral Trustee, objects to the Dismissal Motion, specifically these broad and sweeping "Other Relief" requests: (i) rejection of unassumed executory contracts and leases; (ii) abandonment of property as burdensome or of little value; (iii) payment of professional fees and wind-down costs; (iv) termination of employee benefit and retirement plans; (v) filing of final tax returns and dissolution of corporate entity; (vi) dismissal of avoidance actions; and (vii) broad injunctive relief to third parties. "Simply stated, the Debtors have not met their burden of proof to establish that 'cause' exists under Section 1112(b) of the Bankruptcy Code to allow the Dismissal Motion," Gregory G. Hesse, Esq., at Jenkens & Gilchrist, in Dallas, Texas, says. Mr. Hesse argues that dismissing of the Debtors' Chapter 11 cases would not be in the best interest of their creditors and the estate. By application of Section 1112(b) of the Bankruptcy Code, the Debtors' cases are not a candidate for dismissal where "cause" has not been established and the "best interest of creditors" test is not met. Furthermore, Mr. Hesse maintains that the Debtors' request for modification of the effects of dismissal is exceedingly overbroad. In addition, the Court should refrain from dismissing the Debtors' Chapter 11 cases where a large amount of property remains to be administered. Ms. Hesse notes that the proposed injunctions as to would-be Exculpated Parties are without precedent in the absence of a confirmed plan. Also, the Debtors have not filed an adversary proceeding and have chosen to request injunctive relief outside the context of a plan. Mr. Hesse says the Debtors' proposed dismissal order would eviscerate the "bothersome" portions of Section 349 of the Bankruptcy Code and impermissibly expand the grant of power in Section 105 of the Bankruptcy Code. (5) Aretex While Aretex LLC, WestPoint International, Inc., and WestPoint Home, Inc., do not object in principle to the dismissal of the Debtors' administratively insolvent cases, they have not yet been provided a draft of the proposed dismissal order and want to confirm that the following items are being addressed to their reasonable satisfaction: -- Continuing jurisdiction of the Bankruptcy Court to enforce and interpret its orders, especially the July 8, 2005, sale order and other sale related matters; -- The resolution and disbursement of the adequate protection escrow, which Aretex has either a 52% interest in, as a holder of the Second Lien Debt, or a 40% interest, as a holder of the First Lien Debt; -- Sale or collection of the excluded assets, including the European proceeds, and their appropriate application to secured claims; -- Dismissal or other disposition of the adversary proceeding brought by the Steering Committee against Aretex and the Second Lien Agent and the pending motions to dismiss the complaint with prejudice; and -- WestPoint Home, Inc., acquired all of the Debtors' reversionary interest in the approximately $1 million held in escrow pursuant to the Key Employee Retention program. The applicable escrow agreement provides that the escrow is to be returned to the Debtors -- now to Purchaser -- unless a Chapter 11 plan is confirmed by December 31, 2006. Given that with dismissal of the Debtors' cases that a confirmation clearly will not occur, the dismissal order should provide and immediately direct the escrow agent to release such funds to Purchaser concurrently with the dismissal order. (6) Steering Committee Contrarian Funds, LLC, Satellite Senior Income Fund, LLC, CP Capital Investments, LLC, Wayland Distressed Opportunities Fund I-B, LLC, and Wayland Distressed Opportunities Fund I-C, LLC, agree with the First Lien Agent and the Second Lien Agent that the Dismissal Motion is premature because numerous legal issues remain unresolved and the outcome could affect the distribution of the estate's remaining assets. The Steering Committee also believes that the requests by various professionals retained by the Debtors and the Creditors Committee for payment of holdback amounts from the Carve-Out or otherwise is also premature as there may be secured claims that attach to the property remaining in the estate. Sidney P. Levinson, Esq., at Hennigan, Bennett & Dorman LLP, in New York, argues that the requests are also premature, in large part, because the District Court has not yet decided the Steering Committee's appeal of the Sale Order. If the District Court ultimately affirms the Sale Order in its entirety, the Steering Committee's interest in the Debtors' cases may be confined to its pending motion for payment of attorney's fees incurred in the Debtors' Chapter 11 cases. On the other hand, if the District Court reverses the Sale Order, the Steering Committee may have secured claims collaterized by a substantial portion of the estate's remaining assets. The Steering Committee believes that no meaningful prejudice will result from deferring a ruling until after the District Court issues its opinions. (7) Various Plaintiffs Debra McConnell, Angela Davidson and Horace Willis each have a pending lawsuit against the Debtors for various types of employment discrimination. Ann C. Robertson, Esq., at Wiggins, Childs, Quinn & Pantazis, LLC, in Birmingham, Alabama, notes that it is unclear whether the Dismissal Motion seeks -- without confirming a plan -- to enjoin the Plaintiffs from pursuing their Lawsuits and having their claims adjudicated in front of a jury as is their right. The Plaintiffs have no objection to an injunction against claims arising solely from the administration of the Chapter 11 cases or from the sale, Ms. Robertson clarifies. However, if the Dismissal Motion seeks a broader injunction, the arguments made by the Debtors to enter an injunction against those Lawsuits might be appropriate in the context of a proposed plan. Ms. Robertson observes that the Dismissal Motion, at times, seems to suggest that what the Debtors have accomplished is equivalent to a confirmation of a plan. However, Ms. Robertson notes that nothing in the law or in the equities would make a broader injunction appropriate. (8) HSBC Objects HSBC Bank U.S.A., National Association, objects to the Debtors' request to dismiss their Chapter 11 cases to the extent it seeks the: (a) dismissal of avoidance actions, without providing a basis for the Debtors' conclusory statement that they expect to recover only $2.3 million in actions seeking to recover in excess of $41 million; (b) entry of an Order granting, in essence, a general release to the Debtors and others; and (c) entry of an Order authorizing the destruction of the majority of the Debtors' records. HSBC currently wants the Debtors to pay its administrative expense claim against them. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) WILLIAMS COS: Inks $700-Mil Credit Pacts with Citicorp & Citibank ----------------------------------------------------------------- The Williams Companies, Inc., entered into: * a $500 million Five Year Credit Agreement, and * a $200 million Five Year Credit Agreement, with Citicorp USA, Inc., as the initial issuing bank and initial lender, and Citibank, N.A., as agent. The Credit Agreements provide for both borrowings and issuances of letters of credit, but the Company expects to utilize the Credit Agreements primarily for issuances of letters of credit. Williams is required to pay fixed facility fees at a rate of 2.025% on the total committed amount of the $500 Million Credit Agreement and 2.00% on the total committed amount of the $200 Million Credit Agreement. In addition, Williams will pay interest on any borrowings (including unreimbursed draws under letters of credit) under the Credit Agreements at either: * a floating base rate equal to the higher of: (a) Citibank, N.A.'s publicly announced base rate; or (b) 50 basis points above the federal funds rate; or * a floating LIBOR rate. Upon the occurrence of an event of default under a Credit Agreement or certain other events, Citicorp USA, Inc., as the initial lender, can deliver the Credit Agreement to the institutional investors to which Citicorp USA, Inc., has syndicated its associated credit risk under the Credit Agreements, whereby the institutional investors will replace Citicorp USA, Inc. as lender under the Credit Agreement. Upon such occurrence, the Company will continue to pay the fixed facility fees it was previously obligated to pay and will also pay the institutional investors interest at these rates per annum: * on any borrowings under the $500 Million Credit Agreement, a fixed rate of 4.35%; and * on any borrowings under the $200 Million Credit Agreement, a floating LIBOR rate. The Credit Agreements contain covenants that restrict the Company's ability to incur liens or merge, consolidate, or sell substantially all of its assets. Any borrowings under the Credit Agreements are to be repaid by the Company on the earlier of October 1, 2010, and the date on which Citibank, N.A., as agent, declares any such borrowings to be accelerated as a result of an event of default under the relevant credit agreement. Events of default under the Credit Agreements include: -- the Company's failure to pay any principal of any borrowing under the Credit Agreements when it becomes due or the Company's failure to pay any interest or other amounts due under the Credit Agreements within 30 days after it becomes due and payable; -- the Company's failure to comply with the restriction on its ability to incur liens or merge, consolidate, or sell substantially all of its assets or the Company's failure for 60 days after notice to observe any other term, covenant, or agreement contained in the Credit Agreements; -- the Company's failure to pay final judgments aggregating in excess of $100 million, which judgments are not paid, discharged, or stayed for a period of 60 days; and -- certain bankruptcy related events. The Williams' Companies, Inc. -- http://www.williams.com/-- through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. The company also manages a wholesale power business. Williams' operations are concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast, Southern California and Eastern Seaboard. A full-text copy of the $500 Million Five-Year Credit Agreement is available for free at http://ResearchArchives.com/t/s?1e2 A full-text copy of the $200 Million Five-Year Credit Agreement is available for free at http://ResearchArchives.com/t/s?1e3 * * * As reported in the Troubled Company Reporter on Jan. 24, 2005, Standard & Poor's Ratings Services assigned its 'B+' rating to The Williams Cos., Inc., Credit-Linked Certificate Trust IV's $100 million floating-rate certificates due May 1, 2009. The rating reflects the credit quality of The Williams Cos., Inc., ('B+') as the borrower under the credit agreement and Citibank N.A. ('AA/A-1+') as seller under the subparticipation agreement and account bank under the certificate of deposit. The rating addresses the likelihood of the trust making payments on the certificates as required under the amended and restated declaration of trust. WORLDCOM INC: Asks Court to Reject William Brown's Class Claim -------------------------------------------------------------- On Jan. 20, 2003, William J. Brown filed Claim No. 15494, a purported class proof of claim, seeking recovery "in excess of $100,000,000" on behalf of a putative class of MCI customers who allegedly were improperly assessed a $10 per month charge by the Debtors. Timothy W. Walsh, Esq., at DLA Piper Rudnick Gray Cary US, LLP, in New York, contends that Claim No. 15949 mimics allegations previously made in a civil action pending against MCI, Inc., in the United States District Court for the Central District of California. "Mr. Brown never moved to certify the putative class in the federal district court, and no motion for class certification has been filed in the 31 months that the Claim has been pending," Mr. Walsh argues. Mr. Brown has also made no meaningful effort to move the case forward, at least in the past year, Mr. Walsh adds. Mr. Walsh notes that Mr. Brown's Claim suggests that MCI erroneously billed certain customers a $10 monthly fee where the "account did not have a phone line assigned." Mr. Brown seeks relief under Federal Communications Act for the supposed overcharges. The Debtors ask the Court to disallow and expunge Claim No. 15494. Mr. Walsh states that for a class action to proceed in bankruptcy: -- a court must direct Rule 23 of the Federal Rules of Civil Procedure to apply; -- the claim must satisfy the requirements of Rule 23; and -- the benefits generally supporting class certification must be realizable in the bankruptcy. Mr. Walsh contends that Mr. Brown has not met the procedural requirements. Thus, the Court should use its discretion to deny class status to Mr. Brown's claim pursuant to Rule 7023 of the Federal Rules of Bankruptcy Procedure, Mr. Walsh asserts. In addition, Mr. Walsh points out that neither Mr. Brown nor his counsel can qualify as authorized agents pursuant to Bankruptcy Rule 3001(b). Furthermore, even assuming arguendo that they could be considered authorized agents, both have failed to file a verified statement to comply with the requirements of Bankruptcy Rule 2019(a), Mr. Walsh avers. The Debtors believe that the face value of Mr. Brown's individual claim is worth approximately $10. "Allowing Brown to transform his potential $10 claim into a massive $100 million class claim would be a wholly inappropriate use of the class action mechanism under Rule 7023," Mr. Walsh maintains. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 101; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLD HEALTH: Warns of Possible Bankruptcy Due to Financial Woes ---------------------------------------------------------------- World Health Alternatives, Inc., may file for bankruptcy protection after a California shareholder dropped plans to buy the troubled medical staffing company, Kathy Robertson and Kris Mamula of MSNBC.com reported Sunday. Eric Allison, a multimillionaire who sold Pulse Healthcare Staffing to World Health for more than $16 million last year, offered to buy back the Company but received no response to his two offers made early this month. He told Ms. Robertson and Ms. Mamula that he has abandoned plans to buy part of World Health, or raise money to keep it afloat in the short term. Palisades Default The Company is currently in default of a $4 million bridge loan from Palisades Master Fund LLP, which bears an 18% interest and was due and payable on Aug. 31, 2005. In addition, the Company received a $2,000,000 cash infusion from Palisades on Aug. 24, 2005, which the Company was unable to repay. Convertible Notes in Default On Sept. 19, 2005, the Company received a notice of default under its Convertible Debentures and related warrants to purchase common stock from Bristol Investment Fund, Ltd., due to alleged breaches by the Company of the terms of the Debenture and Purchase Agreement between the Company and Bristol. Bristol demanded a $6.29 million payment under the Debentures plus interest and any costs of collection. The Company has withdrawn its previously disclosed offer for a standstill agreement with Palisades and Bristol. Due to the Company's liquidity situation, the Company has engaged separate bankruptcy counsel to advise the Company on all of its options. Forbearance Agreement The Company and certain of its subsidiaries entered into an Amended and Restated Forbearance and Modification Agreement, dated as of Sept. 15, 2005, with CapitalSource Finance LLC. CapitalSource is the lender under the Company's Revolving Credit Agreement dated as of Feb. 14, 2005. Pursuant to the Revised Forbearance Agreement, CapitalSource has agreed until Dec. 15, 2005, to forbear exercising its rights and remedies under the Credit Agreement arising from the Company's prior noncompliance with certain terms of the Credit Agreement. The Revised Forbearance Agreement requires the Company to abide by the terms of the Credit Agreement and to satisfy additional requirements set forth in the Revised Forbearance Agreement. The Company may request a 30-day extension to the Revised Forbearance Agreement, if on Dec. 15, 2005, the Company is in full compliance with the Revised Forbearance Agreement and otherwise satisfies the additional requirements set forth in the Revised Forbearance Agreement. A full-text copy of the Amended and Restated Forbearance Agreement is available at no charge at http://ResearchArchives.com/t/s?1e5 Class Action Suits The Company faces three purported class action suits in the United States District Court for the Western District of Pennsylvania. The lawsuits alleged that the Company: -- made irregular reports to its lenders, resulting in excess funding which may have resulted in breaches of its financing agreements; -- had underpaid certain tax liabilities; and -- had not properly reported and/or accounted for all of its outstanding shares. Executive Changes On Aug. 16, 2005, the Company disclosed the resignation of Richard E. McDonald as its President and Chief Executive Officer due to family and health reasons. Three days later, on Aug. 19, 2005, the Company said it expected to restate its prior financial statements, that an independent investigation had been commenced, and that it had terminated its engagement with Daszkal Bolton LLP, its outside auditors. The Company has retained Alvarez & Marsal LLC early this month to work closely with the Company's board of directors and management team to evaluate the business plan and strategic capital structure of the organization. In light with this engagement, John Sercu has resumed his prior position of Chief Operating Officer effective Sept. 15, 2005. Scott Phillips, an A&M managing director, has been named chief restructuring officer. In addition, Dr. David Friend, an A&M managing director with an extensive background as a physician executive, has been named an executive officer. The A&M team will be responsible for reviewing and strengthening, where necessary, the company's infrastructure, with a primary focus on banking and financial areas. Headquartered in Pittsburgh, Pa., World Health Alternatives, Inc. (OTCBB:WHAIE) -- http://www.whstaff.com/-- is a premier medical staffing company that provides medical, professional and administrative staffing services to the healthcare industry. The Company places its experienced personnel on a project, temporary, permanent, or temporary-to-permanent basis. These options allow clients to control the expenses associated with new staff while also giving them the unique opportunity to evaluate a candidate's performance essentially risk-free. The Company provides services from locations in Birmingham, Ala., Mobile, Ala., Roseville, Calif., Boca Raton, Fla., Sanford, Fla., Atlanta, Ga., Danvers, Mass., Morrisville, N.C., Nashua, N.H., Cincinnati, Ohio, Cleveland, Ohio, Portland, Ore., Murray, Utah, Bellevue, Wash., and Seattle, Wash. * Juan Manuel Trujillo Joins Sheppard Mullin as NY Finance Partner ------------------------------------------------------------------ Juan Manuel Trujillo has joined the New York office of Sheppard, Mullin, Richter & Hampton LLP as a partner in the Finance & Bankruptcy practice group. Mr. Trujillo, most recently with Gibson, Dunn & Crutcher in New York, specializes in international, cross-border and corporate transactions and foreign investment. James J. McGuire, managing partner of the firm's New York office, said, "We are delighted to have Juan join the firm. He will strengthen our finance practice firmwide and extend the firm's Hispanic/Latino Business group to a national platform." "I am excited at the prospect of joining Sheppard Mullin, with its growing finance practice in the New York office and dedication to a firmwide Latin business specialization," commented Mr. Trujillo. Mr. Trujillo brings project, structured, cross-border and general finance experience. He has participated in the areas of power and infrastructure with different clients throughout Latin America, with a focus on Mexico, Brazil and Argentina. Mr. Trujillo has represented clients from the water, power generation, gas transportation and airport industries before commercial lenders, multi-lateral agencies and multiple governmental agencies. Additionally, Mr. Trujillo has distressed debt and restructuring experience in the United States and in emerging markets, including the representation of institutional creditors and investors in connection with restructuring proceedings. He has represented the National Law Center for Inter-American Free Trade as a permanent member of the United Nations Commission on International Trade Law in the UNCITRAL's model law on security interests project and as part of the working group of advisors on security interests to the Office of Legal Advisor of the Department of State. Mr. Trujillo's corporate practice includes extensive experience in M&A transactions and in joint-ventures throughout Latin America and the United States. Mr. Trujillo received his law degree from Instituto Tecnologico y de Estudios Superiores de Monterrey (Monterrey, Mexico) in 1993 where he was ranked first in his class. In 1994, Mr. Trujillo received the "Mexico's Top Students" award from the President of Mexico. In 1995, he received his LL.M. degree in International Trade Law from the University of Arizona. Sheppard, Mullin, Richter & Hampton LLP -- http://www.sheppardmullin.com/-- is a full service AmLaw 100 firm with 435 attorneys in nine offices located throughout California and in New York and Washington, D.C. The firm's California offices are located in Los Angeles, San Francisco, Santa Barbara, Century City, Orange County, Del Mar Heights and San Diego. Sheppard Mullin provides legal expertise and counsel to U.S. and international clients in a wide range of practice areas, including Antitrust, Corporate and Securities; Entertainment and Media; Finance and Bankruptcy; Government Contracts; Intellectual Property; Labor and Employment; Litigation; Real Estate/Land Use; Tax/Employee Benefits/Trusts & Estates; and White Collar Defense. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- September 28, 2005 NEW YORK STATE SOCIETY OF CPAs Half- Day Bankruptcy Conference 19th Floor, FAE Conference Center 3 Park Avenue, at 34th Street, New York, New York Contact: 1-800-537-3635; http://www.nysscpa.org/ September 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Joint CFA/RMA/TMA Networking Reception Woodbridge Hilton, Iselin, New Jersey Contact: 908-575-7333; http://www.turnaround.org/ September 28-30, 2005 PRACTISING LAW INSTITUTE Tax Strategies for Corporate Acquisitions, Dispositions, Spin-Offs, Joint Ventures, Financings, Reorganizations & Restructurings New York, New York Contact: http://www.pli.edu/ September 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION The 2005 Bankruptcy Amendments Seminar: The Law of Intended and Unintended Consequences Woodbridge Hilton, Iselin, New Jersey Contact: http://www.turnaround.org/ September 28, 2005 CONTINUING EDUCATION OF THE BAR Bankruptcy Reform: Changing the Ground Rules for Personal & Small Business Bankruptcy Practice San Diego, California Contact: http://www.ceb.com/;1-800-232-3444 September 29, 2005 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS West Coast Corporate Restructuring Conference Grand Hyatt on Union Square, San Francisco, California Contact: http://www.airacira.org/ October 1, 2005 CONTINUING EDUCATION OF THE BAR Bankruptcy Reform: Changing the Ground Rules for Personal & Small Business Bankruptcy Practice Sacramento, California Contact: http://www.ceb.com/;1-800-232-3444 October 1, 2005 CONTINUING EDUCATION OF THE BAR Selected Issues in Bankruptcy Practice Sacramento, California Contact: http://www.ceb.com/;1-800-232-3444 October 5, 2005 TURNAROUND MANAGEMENT ASSOCIATION Kurt Eichenwald, Author of Enron: Conspiracy of Fools Detroit, Michigan Contact: 248-593-4810 or http://www.turnaround.org/ October 6, 2005 FINANCIAL RESEARCH ASSOCIATES LLC Distressed Debt Summit New York, New York Contact: http://www.frallc.com/ October 7, 2005 AMERICAN BANKRUPTCY INSTITUTE Views from the Bench Georgetown University Law Center, Washington, D.C. Contact: 1-703-739-0800; http://www.abiworld.org/ October 12, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, Virginia Contact: 703-912-3309; http://www.turnaround.org/ October 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION TMA UK Annual Conference: Management & Teamwork in Stressful Situations Renaissance Chancery Court Hotel, London, UK Contact: 312-578-6900; http://www.turnaround.org/ October 17-18, 2005 AMERICAN CONFERENCE INSTITUTE Airline Restructuring Park Central New York, New York Contact: http://www.americanconference.com/ October 18, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Rochester, New York Contact: 716-440-6615; http://www.turnaround.org/ October 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Venue to be announced Contact: http://www.turnaround.org/ October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago, Illinois Contact: 312-578-6900; http://www.turnaround.org/ October 20, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, Colorado Contact: 303-457-2119; http://www.turnaround.org/ October 25, 2005 TURNAROUND MANAGEMENT ASSOCIATION Tampa Luncheon Centre Club, Tampa, Florida Contact: http://www.turnaround.org/ October 27, 2005 TURNAROUND MANAGEMENT ASSOCIATION Informal Networking *FREE Reception for Members* The Davenport Press Restaurant, Mineola, New York Contact: 516-465-2356; http://www.turnaround.org/ November 1-2, 2005 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC 2005 Fall Conference San Antonio, Texas Contact: http://www.iwirc.com/ November 2, 2005 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS AIRA/NCBJ Dessert Reception Marriott Riverwalk Hotel, San Antonio, Texas Contact: 541-858-1665 or http://www.airacira.org/ November 2-4, 2005 PRACTISING LAW INSTITUTE Tax Strategies for Corporate Acquisitions, Dispositions, Spin-Offs, Joint Ventures, Financings, Reorganizations & Restructurings Beverly Hills, California Contact: http://www.pli.edu/ November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, Texas Contact: http://www.ncbj.org/ November 3-4, 2005 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Second Annual Conference on Physician Agreements and Ventures Successful Strategies for Negotiating Medical Transactions and Investments The Millennium Knickerbocker Hotel, Chicago, Illinois Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ November 7-8, 2005 STRATEGIC RESEARCH INSTITUTE Seventh Annual Distressed Debt Investing Forum West Venetian Resort Hotel Casino, Las Vegas, Nevada Contact: http://www.srinstitute.com/ November 9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting The Center Club, Baltimore, Maryland Contact: 703-912-3309; http://www.turnaround.org/ November 10, 2005 TURNAROUND MANAGEMENT ASSOCIATION Second Annual Australian TMA Conference Sebel Pier One, Sydney, Australia Contact: http://www.turnaround.org/ November 10, 2005 TURNAROUND MANAGEMENT ASSOCIATION Second Annual Australian TMA Conference Sydney, Australia Contact: 9299-8477; http://www.turnaround.org/ November 11, 2005 AMERICAN BANKRUPTCY INSTITUTE Detroit Consumer Bankruptcy Workshop Wayne State University, Detroit, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ November 11-13, 2005 AMERICAN BANKRUPTCY INSTITUTE Corporate Restructuring Competition Kellogg School of Management, NWU, Evanston, Illinois Contact: 1-703-739-0800; http://www.abiworld.org/ November 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Workout Workshop Long Island, New York Contact: 312-578-6900; http://www.turnaround.org/ November 14-15, 2005 AMERICAN CONFERENCE INSTITUTE Insurance Insolvency The Warwick, New York, New York Contact: http://www.americanconference.com/ November 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Bankruptcy Judges Panel Pittsburgh, Pennsylvania Contact: http://www.turnaround.org/ November 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Speaker/Dinner Event Fairmont Royal York Hotel, Toronto, ON Contact: http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Buffalo, New York Contact: 716-440-6615; http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, Colorado Contact: 303-457-2119; http://www.turnaround.org/ November 17, 2005 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Networking Cocktail Reception New York, New York Contact: 541-858-1665 or http://www.airacira.org/ November 28-29, 2005 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Twelfth Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Essex House, New York, New York Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ November 29, 2005 TURNAROUND MANAGEMENT ASSOCIATION State of Banking 2006 and Beyond - Economy, Climate for Turnaround Industry, Banking Relationships Tournament Players Club at Jasna Polana, Princeton, New Jersey Contact: 312-578-6900; http://www.turnaround.org/ November 29, 2005 TURNAROUND MANAGEMENT ASSOCIATION Orlando Luncheon Citrus Club, Orlando, Florida Contact: http://www.turnaround.org/ December 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners Hyatt Grand Champions Resort, Indian Wells, California Contact: 1-703-739-0800; http://www.abiworld.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, California Contact: 1-703-739-0800; http://www.abiworld.org/ December 5-6, 2005 MEALEYS PUBLICATIONS Asbestos Bankruptcy Conference Ritz-Carlton, Battery Park, New York, New York Contact: http://www.mealeys.com/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Holiday Gathering & Help for the Needy *FREE to Members* Mack Hall at Hofstra University, Hempstead, New York Contact: 516-465-2356; http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Board of Directors Meeting Rochester, New York Contact: 716-440-6615; http://www.turnaround.org/ December 12-13, 2005 PRACTISING LAW INSTITUTE Understanding the Basics of Bankruptcy & Reorganization New York, New York Contact: http://www.pli.edu/ December 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, Virginia Contact: 703-912-3309; http://www.turnaround.org/ January 5, 2006 TURNAROUND MANAGEMENT ASSOCIATION NJTMA Holiday Party Iberia Tavern & Restaurant, Newark, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ January 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION PowerPlay - TMA Night at the Thrashers Philips Arena, Atlanta, Georgia Contact: 678-795-8103 or http://www.turnaround.org/ January 26-28, 2006 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, Colorado Contact: 1-703-739-0800; http://www.abiworld.org/ February 9-10, 2006 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium Eden Roc, Miami, Florida Contact: 1-703-739-0800; http://www.abiworld.org/ March 2-3, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Legal and Financial Perspectives on Business Valuations & Restructuring (VALCON) Four Seasons Hotel, Las Vegas, Nevada Contact: http://www.airacira.org/ March 2-5, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES 2006 NABT Spring Seminar Sheraton Crescent Hotel, Phoenix, Arizona Contact: http://www.pli.edu/ March 9, 2006 AMERICAN BANKRUPTCY INSTITUTE Nuts & Bolts for Young Practitioners Century Plaza, Los Angeles, California Contact: 1-703-739-0800; http://www.abiworld.org/ March 10, 2006 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Century Plaza, Los Angeles, California Contact: 1-703-739-0800; http://www.abiworld.org/ March 22-25, 2006 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Desert Ridge, Phoenix, Arizona Contact: http://www.turnaround.org/ March 30 - April 1, 2006 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Scottsdale, Arizona Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ April 5-8, 2006 MEALEYS PUBLICATIONS Insurance Insolvency and Reinsurance Roundtable Fairmont Scottsdale Princess, Scottsdale, Arizona Contact: http://www.mealeys.com/ April 6-7, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES The Seventh Annual Conference on Healthcare Transactions Successful Strategies for Mergers, Acquisitions, Divestitures, and Restructurings The Millennium Knickerbocker Hotel, Chicago, Illinois Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ April 18-22, 2006 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting JW Marriott, Washington, D.C. Contact: 1-703-739-0800; http://www.abiworld.org/ May 4-6, 2006 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION Fundamentals of Bankruptcy Law Chicago, Illinois Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ May 8, 2006 AMERICAN BANKRUPTCY INSTITUTE NYC Bankruptcy Conference Millennium Broadway, New York, New York Contact: 1-703-739-0800; http://www.abiworld.org/ May 18-19, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Third Annual Conference on Distressed Investing Europe Maximizing Profits in the European Distressed Debt Market Le Meridien Piccadilly Hotel, London, UK Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ May 22, 2006 TURNAROUND MANAGEMENT ASSOCIATION LI TMA Annual Golf Outing Indian Hills Golf Club, Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ June 7-10, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 22nd Annual Bankruptcy & Restructuring Conference Grand Hyatt, Seattle, Washington Contact: http://www.airacira.org/ June 15-18, 2006 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ June 22-23, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Ninth Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel, Chicago, Illinois Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ July 13-16, 2006 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Newport Marriott, Newport, Rhode Island Contact: 1-703-739-0800; http://www.abiworld.org/ July 26-29, 2006 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz Carlton Amelia Island, Amelia Island, Florida Contact: 1-703-739-0800; http://www.abiworld.org/ September 7-9, 2006 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Wynn Las Vegas, Las Vegas, Nevada Contact: 1-703-739-0800; http://www.abiworld.org/ October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage, Long Island, New York Contact: 312-578-6900; http://www.turnaround.org/ October 25-28, 2006 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ February 2007 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium San Juan, Puerto Rico Contact: 1-703-739-0800; http://www.abiworld.org/ April 11-15, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI Annual Spring Meeting J.W. Marriott, Washington, DC Contact: 1-703-739-0800; http://www.abiworld.org/ June 6-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 23rd Annual Bankruptcy & Restructuring Conference Westin River North, Chicago, Illinois Contact: http://www.airacira.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, Florida Contact: http://www.ncbj.org/ October 22-25, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott, New Orleans, Louisiana Contact: 312-578-6900; http://www.turnaround.org/ December 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin Mission Hills Resort, Rancho Mirage, California Contact: 1-703-739-0800; http://www.abiworld.org/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, Arizona Contact: http://www.ncbj.org/ October 28-31, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ October 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, Nevada Contact: http://www.ncbj.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, and Peter A. Chapman, Editors. Copyright 2005. 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 $675 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 ***