/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/051011.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, October 11, 2005, Vol. 9, No. 241 Headlines A NOVO BROADBAND: Trustee Has Until Oct. 31 to Object to Claims AES CORP: Senior Credit Facility Commitment Increased to $650 Mil. ANC RENTAL: Trust Has Until Dec. 15 to Object to Proofs of Claim ANCHOR GLASS: Inks New Long-Term Agreement with Snapple and Mott's ANCHOR GLASS: Wants To Reject Campbell Consulting Agreement ASARCO LLC: Section 341(a) Meeting Rescheduled to Nov. 17 ASARCO LLC: Wants to Sell Surplus Properties in Utah & New Mexico ASARCO LLC: Court Okays Assumption of Tucson Electric Service Pact ATKINS NUTRITIONALS: Gets Open-Ended Period to Decide on Leases BECKMAN COULTER: Inks Pact to Buy All of Diagnostic Systems' Stock BELLES AND BEAUS: Voluntary Chapter 11 Case Summary BETHLEHEM STEEL: ISG Wants Right to $1.6MM DOE Refund Distribution BLOCKBUSTER INC: Says 3rd Quarter Results Comply with Covenants BONUS STORES: Wants Until Feb. 13 to Remove Civil Actions BOWATER INC: Expects $35M to $40M Operating Income in 3rd Quarter BROOKFIELD PROPERTIES: O&Y Shareholders Okay Stock Acquisition CALPINE CORP: CCFC Unit Prices $300-Mil. Preferred Shares Offering C2 GLOBAL: Completes $19.2M Sale of Telecom Assets to N. Central CHAMPION HOME: Moody's Rates New $200 Million Facilities at B1 CHI-CHI'S: Court Permits Asset Sale to BR Acquisitions for $1.8MM CKE RESTAURANTS: Board Declares $0.04 Common Stock Dividend COLLEGE PROPERTIES: Brian Mullen Named as Chapter 11 Trustee COLLINS & AIKMAN: Resolves GECC's Objection to Access Agreement COLLINS & AIKMAN: Inks Customer Financing Agreement with OEMs COLLINS & AIKMAN: Proposes Cross-Border Insolvency Protocol CONSTELLATION BRANDS: Earns $98.1 Million in Second Quarter DELPHI CORP: Names Robert Dellinger as Chief Financial Officer DELTA AIR: Brings In BSI LLC as Claims Agent DELTA AIR: Appoints Domenico De Sole as New Director DELTA AIR: NYSE to Halt Common Stock Trading on Thursday, Oct. 13 DELTAGEN INC.: Plan Confirmation Hearing Set for November 14 DELTAGEN INC: Administrative Claims Bar Date Set on November 7 DENNIS STREETER: Case Summary & 20 Largest Unsecured Creditors DIGITAL LIGHTWAVE: Borrows $775,000 From Optel Capital DOANE PET: Moody's Junks $150 Million Senior Subordinated Notes DYKESWILL LTD: Trustee Wants Joe Adame as Real Estate Broker DYKESWILL LTD: Wants Wallace Gallup for Hawaiian Real Estate Work E*TRADE: Closes $700M Purchase of HARRISdirect from BMO Financial E*TRADE FINANCIAL: Closes on 3-Year $250 Million Credit Facility EMPLOYEE ACQUISITION: Involuntary Chapter 11 Case Summary ENRON CORP: Wants to Sell Centragas & EIDS Equity Interests ENRON CORP: Wants Court to Bless FERC Settlement Pact ENRON CORP: Court Nixes AEGON, et al.'s Amended Claims ENVIRONMENTAL TRUST: Confirmation Hearing Scheduled for Dec. 7 FALCON PRODUCTS: Court Confirms Second Amended Joint Plan FEDERAL-MOGUL: Inks Agreements to Amend Plan of Reorganization FEDERAL-MOGUL: In Compliance with $500 Million DIP Credit Facility FIBERMARK: Fourth Amended Disclosure Hearing Set for Oct. 27 FLYI INC: Names David Asai as New Chief Financial Officer FLYI INC: Cutting 600 Jobs & Halting Flights to East & West Coasts GARDEN STATE: Has Until Dec. 6 to File Notices of Removal GENCORP INC: Posts $29 Million Net Loss in Third Quarter 2005 GLOBAL ENVIRONMENTAL: Unsecured Creditors Want Case Dismissed GMAC COMMERCIAL: Fitch Holds Low-B Ratings on Eight Cert. Classes GRAPHIC PACKAGING: Moody's Affirms B1 Corporate Family Rating HAWS & TINGLE: Wants Neligan Tarpley as Bankruptcy Counsel HAWS & TINGLE: Wants Access to Cash Collateral Until Oct. 21 HOUSE2HOME: $6.4 Million of TJX Companies Claim is Senior Debt INDUSTRIAL ENTERPRISES: Liquidating 15 Million Power3 Shares INTERSTATE BAKERIES: 207 Creditors Sell $1.8 Million of Claims JOE PAULK: Case Summary & 15 Largest Unsecured Creditors JP MORGAN: Fitch Lifts $24 Million Class G Certs. One Notch to B+ KAISER ALUMINUM: Court Approves Modified UFWA Settlement Agreement LEHMAN BROTHERS: Poor Performance Cues Fitch to Downgrade Ratings LAFEYETTE'S EPOXY: Case Summary & 26 Largest Unsecured Creditors LONG ISLAND PHYSICIAN: PwC Raises Going Concern Doubt in Form 10K MERCURY INTERACTIVE: Nasdaq Extends Filing Deadline to Nov. 30 MERRILL LYNCH: Fitch Holds Low-B Ratings on Two Cert. Classes MIRANT CORP: Bankruptcy Court Approves NY-Gen's Consent Order MIRANT CORP: HVB Risk Management Holds $223 Mil. Unsecured Claim MIRANT CORP: Creditors Committee Objects to Use of PIRA Forecasts NATIONAL ENERGY: ET Power Wants Court Nod on CalPX Settlement Pact NATIONAL ENERGY: Inks Pact Resolving Citibank Claim OMNI CAPITAL: Foley Bryant Approved as Bankruptcy Counsel OMNI CAPITAL: Files Schedules of Assets and Liabilities OWENS CORNING: Plans to Acquire Wolverine Fabricating OWENS CORNING: Wants to Capitalize Non-Debtor Company in China PAETEC COMMS: Moody's Withdraws $200 Million Debts' B2 Ratings POLYONE CORP: Thomas Waltermire Steps Down as President & CEO PONDEROSA PINE: Files Joint Plan of Reorganization in New Jersey POP3 MEDIA: Can't File Annual Report on Time Due to Audit Review QUEEN'S SEAPORT: Wants Continued Access to Cash Collateral RADNOR HOLDINGS: Paul Ridder Replaces Michael Valenza as CFO RAYMOND PRYKE: Case Summary & 13 Largest Unsecured Creditors READING BROADCASTING: Case Summary & 20 Unsecured Creditors RELIANCE GROUP: Creditors Committee Files First Amended Plan REVLON INC: Registers Common Stock for $250 Million IPO RHODES COMPANIES: Moody's Rates Planned $150 Million Loan at B1 RISK MANAGEMENT: Has Until Nov. 4 to Decide on Leases RISK MANAGEMENT: Removal Period Stretched to April 7 S.S. SEEDING: Case Summary & 20 Largest Unsecured Creditors SAINT VINCENTS: Court Allows Govt. Fund Reallocation SAINT VINCENTS: K. Falk Wants St. Mary's Closure Order Stayed SAN BENITO HEALTH: Case Summary & 20 Largest Unsecured Creditors SATMEX: White & Case Partner Thomas Heather Appointed as Mediator SAVVIS INC: Has Until Apr. 3 to Regain Nasdaq Compliance SELF-SUFFICIENCY: Case Summary & 16 Largest Unsecured Creditors SOLUTIA INC: Expands Therminol Manufacturing in China SOLUTIA INC: Declares Force Majeure on Certain Nylon Products SOUPER SALAD: Wants to Employ Padgett Stratemann as Auditor SOUTHERN UNION: Amends Restated Revolving Credit Agreement SPIEGEL INC: Alvarez & Marsal Wins 'Turnaround of the Year' Award SPIKES ENTERPRISES: U.S. Trustee Wants Chapter 11 Case Dismissed STANDARD PACIFIC: Fitch Rates Sr. Unsecured Debt at BB STAR GAS: Commodity Price Concerns Prompt Fitch To Junk Ratings TAJ INVESTMENTS: Case Summary & 12 Largest Unsecured Creditors TARGA RESOURCES: Moody's Rates $350 Million Sr. Unsec. Notes at B2 TECHNEGLAS INC: Judge Hoffman Confirms Chapter 11 Plan TENNESSEE VALLEY: Case Summary & 20 Largest Unsecured Creditors TERAFORCE TECHNOLOGY: Court Okays Locke Liddell as Panel's Counsel TERAFORCE TECHNOLOGY: Ct. OKs GE Fanuc's Purchase of DNA's Assets TERAFORCE TECHNOLOGY: Court Okays BKR Cornwell as Tax Accountant TITAN CRUISE: Cascade Capital Approved as Financial Advisors TITAN CRUISE: Wants Open Ended Deadline to Decide on Leases TITAN GLOBAL: Case Summary & 10 Largest Unsecured Creditors TRUST ADVISORS: Wants to Hire Shipman & Goodwin as Bankr. Counsel TRUST ADVISORS: Taps Murray L. Becker as Financial Advisor UAL CORP: Court Grants Open-Ended Deadline to Decide on Leases UAL CORP: Says Wells Fargo Prevents Sr. Tranche Notes' Purchase UAL CORP: Court Sets Tentative Claims Resolutions Schedule USG CORP: Equity Panel Gets Court Nod to Hire Houlihan Lokey VARIG S.A.: Brazilian Court Refers GCAS Dispute to U.S. Court VARIG S.A.: Preliminary Injunction Expires on Nov. 11 W.R. GRACE: Battle Over Exclusivity to Continue on Dec. 19 W.R. GRACE: Wants Court to Enforce Stay on N.J. Civil Action WASTE SERVICES: Intends to Amend Existing Senior Credit Facility WELLSFORD REAL: Stockholders Meeting Set for Nov. 17 WESTERN WATER: Exclusive Plan Filing Period Stretched to Dec. 20 WORLDCOM INC: Provision of Net Proceeds to Underwriter Defendants WORLDCOM INC: Louisiana Right-of-Way Claims Hearing on Dec. 6 YU ZHENG ZHENG: Case Summary & 18 Largest Unsecured Creditors * Thomas Osmun Returns to AlixPartners * Large Companies with Insolvent Balance Sheets ********* A NOVO BROADBAND: Trustee Has Until Oct. 31 to Object to Claims --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Executive Sounding Board Associates, Inc. -- the Liquidating Trustee appointed under the confirmed Amended Plan of Liquidation of A Novo Broadband, Inc. -- a further extension, until Oct. 31, 2005, to object to proofs of claim filed against the Debtor's estate. As previously reported in the Troubled Company Reporter, the Court confirmed the Debtor's Plan on Jan. 8, 2004, and the Plan took effect on March 18, 2004. Pursuant to the Plan, Executive Sounding was appointed as the Liquidating Trustee to supervise the wind-down and dissolution of the former Debtor as a corporate and business entity. One of Executive Sounding's tasks is to file and prosecute objections to proofs of claim filed against the Debtor's estate. The Liquidating Trustee has determined that additional claims remain on the register are objectionable and an extension of the claims objection period is necessary. Headquartered in New Castle, Delaware, A Novo Broadband, Inc., was engaged primarily in the repair and servicing of broadband equipment for equipment manufacturers and operators of cable and other broadband systems in North America. The Company filed for chapter 11 protection on December 18, 2002 (Bankr. Del. Case No. 02-13708). Brendan Linehan Shannon, Esq., and M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor, LLP represent the Debtor. When the Company filed for protection from its creditors, it listed $12,356,533 in total assets and $10,577,977 in total debts. The Court confirmed the Debtor's chapter 11 Plan on Jan. 8, 2004, and the Plan took effect on March 18, 2004. Executive Sounding Board Associates, Inc., is the Liquidating Trustee for the Debtor's estate. James E. Hugget, Esq., at Harvey, Pennington Ltd., represents the Liquidating Trustee. AES CORP: Senior Credit Facility Commitment Increased to $650 Mil. ------------------------------------------------------------------ The AES Corporation amended its senior credit facility with: * Citicorp USA, Inc., as Administrative Agent; * Citibank, N.A., as Collateral Agent; * Citigroup Global Markets, Inc., as Lead Arranger and Book Runner; * Banc Of America Securities LLC, as Lead Arranger and Book Runner and as Co-Syndication Agent for the Initial Term Loan Facility; * Deutsche Bank Securities Inc., as Lead Arranger and Book Runner for the Initial Term Loan Facility; * Union Bank Of California, N.A., as Co-Syndication Agent for the Initial Term Loan Facility and as Lead Arranger and Book Runner and as Syndication Agent for the Revolving Credit Facility, * Lehman Commercial Paper Inc., as Co-Documentation Agent for the Initial Term Loan Facility; * Ubs Securities LLC, as Co-Documentation Agent for the Initial Term Loan Facility; * Societe Generale, as Co-Documentation Agent for the Revolving Credit Facility; * Credit Lyonnaise New York Branch, as Co-Documentation Agent; and * a consortium of lenders comprised of: Revolving Credit Loan Bank Commitment -------------------------- ---------- Bank of America, N.A. $60,000,000 Citicorp USA, Inc. 60,000,000 Credit Suisse, Cayman Islands Branch 60,000,000 Deutsche Bank Trust Company Americas 60,000,000 JPMorgan Chase Bank, N.A. 60,000,000 Lehman Commercial Paper Inc. 60,000,000 Union Bank of California, N.A. 60,000,000 UBS AG, Stamford Branch 40,000,000 CALYON New York Branch 35,000,000 Merrill Lynch Capital Corporation 35,000,000 Societe Generale - New York Branch 35,000,000 ABN Amro Bank N.V. 25,000,000 BNP Paribas 25,000,000 United Overseas Bank Ltd. 20,000,000 WestLB AG, New York Branch 15,000,000 ------------ Total $650,000,000 ============ The amendments increased the size of the revolving credit facility from $450 million to $650 million. A full-text copy of Amendment No. 4 is available for free at http://ResearchArchives.com/t/s?235 A full-text copy of Amendment No. 5 is available for free at http://ResearchArchives.com/t/s?236 AES Corporation -- http://www.aes.com/-- is a leading global power company, with 2004 revenues of $9.5 billion. AES operates in 27 countries, generating 44,000 megawatts of electricity through 124 power facilities and delivers electricity through 15 distribution companies. AES Corp.'s 30,000 people are committed to operational excellence and meeting the world's growing power needs. * * * As reported in the Troubled Company Reporter on June 23, 2005, Fitch Ratings has upgraded and removed the ratings of AES Corporation from Rating Watch Positive, where it was initially placed on Jan. 18, 2005 pending review of the company's year-end financial results. Fitch said the Rating Outlook is Stable. Following the completion of its review, Fitch's upgrade reflects the significant progress AES had made in retiring parent company recourse debt and improving liquidity. In addition, AES has refinanced several near term debt maturities and extended the company's debt maturity profile. The company has successfully accessed both the debt and equity markets in 2004 and 2003. ANC RENTAL: Trust Has Until Dec. 15 to Object to Proofs of Claim ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the deadline for ANC Liquidating Trust, as successor to ANC Rental Corporation and its debtor-affiliates, to file objections to proofs of claims to Dec. 15, 2005. As previously reported, the Debtors have filed 14 omnibus objections to claims, Joseph Grey, Esq., at Stevens & Lee, P.C., in Wilmington, Delaware, relates. The Debtors have asked the Court to expunge, reduce, reclassify or settle over 6,700 claims. About 4,800 claims are still subject to resettlement process. Mr. Grey states that 2,000 of the remaining claims may be characterized as personal injury or wrongful death claims. The Trust intends to seek leave to file an omnibus objection with respect to the Personal Injury or Wrongful Death Claims and compel the claimants to participate in mediation or voluntary arbitration programs. The Trust asserts that the requested extension will enable them to conclude the claims reconciliation process in a timely, cost- efficient and complete manner. Headquartered in Fort Lauderdale, Florida, ANC Rental Corporation, is the world's third-largest publicly traded car rental company. The Company filed for chapter 11 protection on November 13, 2001 (Bankr. Del. Case No. 01-11200). On April 15, 2004, Judge Walrath confirmed the Debtors' 3rd Amended Chapter 11 Liquidation Plan, in accordance with Section 1129(a) and (b) of the Bankruptcy Code. Upon confirmation, Blank Rome LLP and Fried, Frank, Harris, Shriver & Jacobson LLP withdrew as the Debtors' counsel. Gazes & Associates LLP and Stevens & Lee PC serve as substitute counsel to represent the Debtors' post-confirmation interests. When the Company filed for protection from their creditors, they listed $6,497,541,000 in assets and $5,953,612,000 in liabilities. (ANC Rental Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Inks New Long-Term Agreement with Snapple and Mott's ------------------------------------------------------------------ Anchor Glass Container Corporation (Pink Sheets:AGCCQ) entered into a new long-term agreement with Snapple Beverage Corp. and Mott's LLP to continue to supply their glass requirements through the year 2008 for certain items in their product lines including Snapple, Yoo Hoo, Nantucket Nectars, Mistic and Mott's items. "Completing this contract is an extremely important step in our restructuring process," said Mark Burgess, CEO of Anchor. "We are excited about continuing our relationship with this very important customer and look forward to supplying quality glass containers to Mott's and Snapple for the next several years." 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: Wants To Reject Campbell Consulting Agreement ----------------------------------------------------------- Anchor Glass Container Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida for permission to reject its Consulting Services Agreement and General Release dated March 9, 2005, with Darrin J. Campbell. Pursuant to the Campbell Contract, Mr. Campbell is to provide consulting services as to business strategy, customer relations and union relations as reasonably requested by Anchor's Board of Directors, for a term commencing April 2005, through December 31, 2005. In exchange, Anchor will pay $350,000 to Campbell in nine substantially equal monthly installments, commencing April 1, 2005. Kathleen S. McLeroy, Esq., at Carlton Fields PA, in Tampa, Florida, tells the Court that Mr. Campbell has not preformed any services pursuant to the Campbell Contract since the Petition Date. The Debtor believes it no longer needs Mr. Campbell's services. 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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASARCO LLC: Section 341(a) Meeting Rescheduled to Nov. 17 --------------------------------------------------------- The United States Trustee has rescheduled the statutory meeting of ASARCO LLC's creditors pursuant to Section 341 of the U.S. Bankruptcy Code to Nov. 17, 2005, at 10:30 a.m. The meeting will be held on the 16th floor of the Wilson Plaza Building located at 606 North Carancahua in Corpus Christi, Texas. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. 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. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Wants to Sell Surplus Properties in Utah & New Mexico ----------------------------------------------------------------- ASARCO LLC seeks authority from the U.S. Bankruptcy Court for the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, to sell surplus real estate in Salt Lake County, Utah, and Deming, New Mexico, free and clear of liens, claims, encumbrances and interests. ASARCO also seeks to assume the executory real estate contracts relating to the surplus real estate. Salt Lake Property Western States Lodging and ASARCO, LLC, entered into a Real Estate Purchase Contract dated July 15, 2005, for the sale of 6.9 acres known as 3422 South 700 West, located in Salt Lake County for $2,000,000. ASARCO holds a $5,000 earnest money deposit from Western States. While the Utah Transit Authority appraised the property at $2.15 million in July 2005, ASARCO relates that it has had the property on the market for four years, and has not received a better offer from a serious buyer. The closing date for the sale is Oct. 31, 2005. Deming Property As of July 13, 2005, ABC Mining, LLC, and ASARCO entered into a Purchase and Sale Agreement for the sale "as is, where is" to ABC Mining of ASARCO's mill site located on Peru Mill Road, in Town of Deming, in County of Luna, New Mexico. The property, consisting of 200 acres of permitted land for facility operations and an additional 80 acres of unpermitted land adjacent to the facility, is to be sold for $500,000, and the buyer has given ASARCO a $50,000 earnest money contract. The site value is estimated at $224,800, using appraisal comparables on Aug. 18, 2005. ASARCO says the offer from ABC Mining is the best one received from a serious buyer in eight years of marketing the property. $2.5-Mil. Cash Injection to ASARCO's Estate Jack L. Kinzie, Esq., at Baker Botts, L.L.P., in Dallas, Texas, tells the Court that the sale of both properties will bring in $2.5 million for assets that are not necessary to the Debtors' reorganization, and which is decreasing in value. Mr. Kinzie asserts that the net effect of the transactions, if approved, will be the divestiture of real property that has been on the market for several years for fair and reasonable prices. Under Section 363(f) of the Bankruptcy Code, a debtor may sell property free and clear of any lien, claim or interest if: (1) applicable non-bankruptcy law permits sale of the property free and clear of that interest; (2) the entity consents; (3) the interest is a lien and the price at which that property is sold is greater than the aggregate value of all liens on that property; (4) the interest is in bona fide dispute; or (5) that entity could be compelled, in a legal or equitable proceeding to accept money satisfaction of that interest. Mr. Kinzie attests that the Debtors satisfy the requirements because all Encumbrances will to attach to the proceeds from the sale of assets with the same force and effect as those liens previously had on the assets, subject to the Debtors' rights and defenses, if any. Moreover, the Debtors are not aware of any Encumbrances on the Surplus Property, Mr. Kinzie says. Mr. Kinzie further notes that the Real Estate Contracts will bring valuable consideration into the estate. 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. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Court Okays Assumption of Tucson Electric Service Pact ------------------------------------------------------------------ On Aug. 12, 2005, the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, issued an order restraining certain utilities from discontinuing, altering or refusing service and establishing procedures for determining that adequate assurance has been provided to utilities. The Injunction Order provides that any utility company may request additional assurances of payment in the form of deposits or other security. Nathaniel Peter Holzer, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., in Corpus Christi, Texas, informs the Court that Tucson Electric Power Company provides electrical services to ASARCO, LLC, pursuant to an Electric Service Agreement dated July 21, 1999, for ASARCO's Mission Complex operations in Pima County, Arizona. Mr. Holzer relates that ASARCO and Tucson Electric have entered into a Third Amended and Restated Memorandum of Understanding dated effective Sept. 1, 2005, which amends the payment terms of the Electrical Service Agreement. ASARCO is in default under the Agreement for $25,715. Mr. Holzer notes that Tucson Electric timely requested additional adequate assurance from ASARCO. ASARCO believes that the Electrical Service Agreement reflects special pricing for electricity that is tied to copper's price. A pricing arrangement has been and will continue to be a financial benefit to ASARCO during the term of the contract. Accordingly, ASARCO sought and obtained the Court's authority to assume the Electrical Service Agreement with Tucson Electric. ASARCO and Tucson will follow weekly billing procedures for its Mission Complex. In the event payment is not received for the Mission Account in accordance with the Memorandum of Understanding, Tucson Electric will have the right to terminate its service to ASARCO without further Court order. In addition, the parties agreed that Account No. 6837563881 for service at ASARCO's office in Tucson will be billed monthly. ASARCO will deposit with Tucson Electric $20,600 for the Office Account, representing 2-1/2 times ASARCO's estimated maximum monthly bill for the Office Account. Tucson Electric will also be entitled to an administrative priority claim for all postpetition electrical services provided. 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. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000). ATKINS NUTRITIONALS: Gets Open-Ended Period to Decide on Leases --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended until the confirmation of a plan of reorganization, the period within which Atkins Nutritionals, Inc., and its debtor- affiliates can elect to assume, assume and assign or reject their unexpired leases on four non-residential real properties. The Debtors told the Bankruptcy Court that they have been unable to evaluate the unexpired leases because they have concentrated on securing debtor-in-possession financing, formulating a plan of reorganization and disclosure statement and other pressing matters in their bankruptcy cases. The Debtors assured the court that the proposed extension will not prejudice their lessors, as they remain current on their obligations under the leases. A list of the four unexpired leases is available for free at http://researcharchives.com/t/s?175 Headquartered in New York, New York, Atkins Nutritionals, Inc. -- http://atkins.com/-- sells nutritional supplements based on its founder, Dr. Robert C. Atkins' nutritional philosophy of controlled-carbohydrate lifestyle. The Debtors also sell more than 100 food products and nutritional supplements, as well as informational products such as diet books and cookbooks. Atkins' products are sold in more than 30,000 stores in North America under numerous trademarks. The Company, along with Atkins Nutritionals Holdings, Inc., Atkins Nutritionals Holdings II, Inc., and Atkins Nutritionals (Canada) Limited, filed for chapter 11 protection on July 31, 2005 (Bankr. S.D.N.Y. Case No. 05-15913). Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represents the Debtors in the United States, while lawyers at Osler, Hoskin & Harcourt, LLP, represents the Debtors in Canada. As of May 28, 2005, they listed $265.6 million in total assets and $323.2 million in total debts. BECKMAN COULTER: Inks Pact to Buy All of Diagnostic Systems' Stock ------------------------------------------------------------------ Beckman Coulter, Inc., (NYSE:BEC) has signed an agreement to acquire all of the stock of Diagnostic Systems Laboratories Corporation of Webster, Texas, a leading provider of specialty immunoassays including proprietary technology for reproductive endocrinology and cardiovascular risk assessment. Subject to customary closing conditions, the acquisition is expected to close in mid-October. The acquisition is presently estimated to be $0.01 dilutive to Beckman Coulter's fourth quarter EPS and $0.06 dilutive in 2006 becoming accretive to earnings in the fourth quarter of 2006. "Coupling DSL's expertise and proprietary tests with Beckman Coulter's industry leading immunoassay platforms should be a winning combination," said Michael Whelan, group vice president of Beckman Coulter's immunoassay business. "DSL is a mature organization with significant scientific and clinical collaboration skills. Together we aim to quickly broaden our immunoassay menu and strategically advance our already successful immunoassay franchise." With 2004 sales of approximately $34 million, DSL competes in the specialty endocrinology segment of the immunoassay market. DSL markets three proprietary reproductive endocrinology tests, including Inhibin A and B, and anti-Mullerian hormone. In addition, DSL holds exclusive rights to PAPP-A, a marker being evaluated for cardiovascular risk assessment. Recently growing at about 15 percent per year, specialty endocrinology makes up about 10 percent of the $5 billion immunoassay market. "By joining Beckman Coulter and taking advantage of their established infrastructure, we believe we can boost our position in specialty immunoassay testing and enable our group to reach its full potential in the marketplace," said Gopal Savjani, president and founder of Diagnostic Systems Laboratories. DSL has a proven history of collaboration with clinical research leaders to identify new and innovative immunoassays to improve patient care. DSL has successfully combined these relationships with a rapid product development process to quickly deliver novel tests to the pharmaceutical and life science research community as well as the traditional clinical laboratory. DSL provides products in multiple formats and methodologies to meet a diverse variety of testing needs. Beckman Coulter, Inc., headquartered in Fullerton, California, is a leading provider of instrument systems and complementary products that simplify and automate processes in biomedical research and clinical laboratories. * * * As reported in the Troubled Company Reporter on May 27, 2005, Moody's Investors Service placed the ratings of Beckman Coulter, Inc. under review for possible upgrade reflecting double digit revenue growth and an expansion in free cash flow generated by the core business. In particular, the company continues to gain share in the immunodiagnostic market and will launch several new products including two new analyzers for its routine chemistry business. Moody's anticipates that continued growth in its core business will lead to higher free cash flow over the next few years. These ratings were placed under review for a possible upgrade: -- $500 Million Universal Shelf Registration (Senior and Subordinate) at (P) Baa3/ (P) Ba1 -- $240 Million 7.45% Senior Notes due 2008 at Baa3 -- $235 Million 6.875% Senior Notes due 2011 at Baa3 -- $100 Million 7.05% Senior Debentures due 2026 at Baa3 BELLES AND BEAUS: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Belles and Beaus, Inc. 282 Highway 314 Fayetteville, Georgia 30214 Bankruptcy Case No.: 05-13614 Type of Business: The Debtor sells bridal wear and tuxedos. See http://www.belles-beaus.com/ Chapter 11 Petition Date: October 7, 2005 Court: Northern District of Georgia (Newman) Judge: W. Homer Drake Debtor's Counsel: John C. Pennington, Esq. John C. Pennington, P.C. P.O. Box 275 Helen, Georgia 30545 Tel: (706) 878-0033 Fax: (706) 878-9916 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. BETHLEHEM STEEL: ISG Wants Right to $1.6MM DOE Refund Distribution ------------------------------------------------------------------ As reported in the Troubled Company Reporter on August 4, 2005, The Bethlehem Steel Corporation Liquidating Trust asked Judge Lifland to enforce the terms of the Asset Purchase Agreement and find that the Refund is an "Excluded Asset" as defined in the APA to be distributed to the beneficiaries of the Trust. In connection with the Refund Program, Bethlehem Steel Corporation duly submitted an application for a refund based on its refined petroleum purchases made during the program years. Mr. Kibler asserts that the refund process was delayed and prolonged because the DOE continued to collect crude oil overcharges into the 21st century. In May 2004, the DOE promulgated procedures for the final round of payments to successful claimants in the Refund Program. The DOE Notice was sent to all claimants purchasing a certain amount of refined petroleum products during the controls period, including Bethlehem Steel. The notice informed claimants of the availability of the final crude oil refund payment and sought verification of the information contained in the DOE's database for each claimant. Claimants were required to confirm by December 31, 2004, if they should receive the refund or not, for any reason, including their dissolution. The DOE Notice published in the Federal Register reflected the calculation of the final refund amounts. The published refund to which Bethlehem Steel is entitled to receive equaled $1.6 million. According to the Procedures, the DOE was tohave begun distributing refunds by February 1, 2005. International Steel Group Inc. advised The Bethlehem Steel Corporation Liquidating Trust of its position that the Refund was an Acquired Asset under the APA among Bethlehem, ISG and ISG Acquisition Inc., dated March 12, 2003, as subsequently amended on April 22, 2003, and May 6, 2003. Hence, ISG asserted that the Refund was an asset transferred to it under the APA. In response, the Liquidating Trust argued that the Refund was an Excluded Asset under the APA and that, accordingly, the Liquidating Trust intended to file the appropriate documentation with the DOE requesting the Refund. Subsequently, ISG filed a request with the DOE that ISG be listed as the beneficiary of the Refund. On December 22, 2004, the Liquidating Trust sent a Verification of the information contained in the DOE records seeking to establish the Liquidating Trust, the successor-in-interest to Bethlehem Steel, as the entity to which the Refund distribution should be made. ISG Responds Philip P. Kalodner, Esq., in Gladwyne, Pennsylvania, argues that the right to further crude oil refunds was conveyed to International Steel Group Inc., now known as Mittal Steel USA ISG Inc., pursuant to the Asset Purchase Agreement because: -- the Refund was an asset of Bethlehem Steel Corporation and the APA conveyed to ISG all assets of Bethlehem Steel; -- the Refund was an "account receivable" of Bethlehem Steel, and thus was explicitly conveyed; and -- even if the Refund could be categorized merely as a "claim," it was not an excluded claim, and was therefore part of "all claims" of Bethlehem Steel conveyed to ISG. Even if the right to the Refund was in the first instance excluded from the assets conveyed to ISG as an "excluded claim" and was retained by Bethlehem Steel, the right to further crude oil refund distributions, and any cash received in the distribution, are part of the "excess purchase price," which must be conveyed or paid to ISG pursuant to the APA, Mr. Kalodner says. Accordingly, ISG asks the Court to: (a) deny Bethlehem Steel Liquidating Trust's request; (b) declare that ISG has the right to the Refund; (c) direct the Liquidating Trust to advise the U.S. Department of Energy that the Liquidating Trust has no right to the further refunds to be distributed on the Bethlehem claim, and that the right is vested in ISG. Headquartered in Bethlehem, Pennsylvania, Bethlehem Steel Corporation -- http://www.bethlehemsteel.com/-- was the second- largest integrated steelmaker in the United States, manufacturing and selling a wide variety of steel mill products including hot- rolled, cold-rolled and coated sheets, tin mill products, carbon and alloy plates, rail, specialty blooms, carbon and alloy bars and large diameter pipe. The Company filed for chapter 11 protection on October 15, 2001 (Bankr. S.D.N.Y. Case No. 01- 15288). Jeffrey L. Tanenbaum, Esq., and George A. Davis, Esq., at WEIL, GOTSHAL & MANGES LLP, represent the Debtors in their restructuring, the centerpiece of which was a sale of substantially all of the steelmaker's assets to International Steel Group. When the Debtors filed for protection from their creditors, they listed $4,266,200,000 in total assets and $4,420,000,000 in liabilities. Bethlehem obtained confirmation of a chapter 11 plan on October 22, 2003, which took effect on Dec. 31, 2003. (Bethlehem Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) BLOCKBUSTER INC: Says 3rd Quarter Results Comply with Covenants --------------------------------------------------------------- Blockbuster Inc. (NYSE: BBI, BBI.B) reported that its third quarter reported results would reflect that the Company is in compliance with its debt covenants for the third quarter. The Company also disclosed that its domestic same-store rental revenues for the third quarter of 2005 outperformed the industry, which according to Rentrak estimates was down 11.7% for the quarter, including both store-based and online rental revenues. By contrast, Blockbuster preliminarily estimates domestic same- store rental revenues for the third quarter of 2005 to be down approximately 1%, including online rental revenues and after the impact of the elimination of extended viewing fees, which accounted for approximately 13% of the Company's third quarter 2004 rental revenues. Additionally, the Company said it remains committed to growing the online business, but that it expects to reach its goal of two million subscribers to BLOCKBUSTER Online(TM) later in 2006 than originally anticipated. "In the face of a challenging rental industry, we believe we will continue to outperform the store-based rental industry as a result of the elimination of extended viewing fees, and we see significant growth opportunities in the online rental business that we intend to aggressively pursue," said John Antioco, Blockbuster Chairman and CEO. The Company expects to announce its full third quarter results in early November. Blockbuster Inc. -- http://www.blockbuster.com/-- is a leading global provider of in-home movie and game entertainment, with more than 9,100 stores throughout the Americas, Europe, Asia and Australia. * * * As reported in the Troubled Company Reporter on Aug 15, 2005, Fitch has downgraded Blockbuster Inc. to: -- Issuer default rating (IDR) to 'CCC' from 'B+'; -- Senior secured credit facility to 'CCC' from 'B+' with an 'R4' recovery rating; -- Senior subordinated notes to 'CC' from 'B-' with an 'R6' recovery rating. Fitch said the Rating Outlook remains Negative. Also, Moody's Investors Service downgraded the long term debt ratings of Blockbuster Inc. (corporate family to B3 and subordinated notes to Caa3) and the Speculative Grade Liquidity Rating to SGL-4. The outlook is negative. These ratings are downgraded: * Corporate family rating to B3 from B1; * Senior secured bank credit facilities to B3 from B1; * Senior subordinated notes to Caa3 from B3. * Speculative grade liquidity rating to SGL-4 from SGL-3. BONUS STORES: Wants Until Feb. 13 to Remove Civil Actions --------------------------------------------------------- William Kaye, the liquidating agent of Bonus Stores, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to extend until February 13, 2006, the deadline to remove civil actions. Mr. Kaye tells the Court that the Debtor is a party to various actions currently pending in different state courts. He believes that an additional time to decide whether any state court actions remain with the Debtor's estate or removal of those actions is necessary. Furthermore, the extension of the removal period will protect the Debtor's right to remove any of the state court actions and any additional actions discovered through an investigation and review of claims asserted against the Debtor's estate. Headquartered in Columbia, Mississippi, Bonus Stores, Inc., operated a chain of over 360 stores in 13 Southeastern states offering everyday deep discount prices on basic everyday items. The Company filed for chapter 11 protection on July 25, 2003 (Bankr. Del. Case No. 03-12284). Joel A. Waite, Esq., at Young Conaway Stargatt & Taylor, LLP represents the Debtor. When the Company filed for protection from its creditors, it estimated assets and debts of more than $100 million. Bonus Stores, Inc. (fka Bill's Dollar Stores) declared its First Amended Liquidating Chapter 11 Plan effective on September 20, 2004. William Kaye is the Liquidating Agent under the Debtors' confirmed Plan. Edward J. Kosmowski, Esq., at Young Conaway Stargatt & Taylor, LLP represents the Liquidating Agent. BOWATER INC: Expects $35M to $40M Operating Income in 3rd Quarter ----------------------------------------------------------------- Bowater Incorporated (NYSE: BOW) expects third quarter operating income, excluding a gain of approximately $9 million on the sale of assets, to be in the range of $35 million to $40 million. Higher transaction prices for the company's paper products were offset by higher manufacturing and distribution costs, related to Hurricane Katrina, a stronger Canadian dollar and higher maintenance expenses. Prices of pulp and lumber in the third quarter were also lower than the second quarter. The company also disclosed a program, which is expected to reduce annual operating costs by $80 million. This program will be fully implemented by the end of 2006 and driven by operating and distribution cost savings. "The sharp rise in the Canadian dollar and energy prices requires us to be even more aggressive at reducing costs," said Arnold M. Nemirow, Chairman, President and Chief Executive Officer. "We have been very successful in implementing significant cost reduction programs in the past, and I expect we will execute this program in the same manner." Bowater will release third quarter financial results before the market opens on Wednesday, Oct. 26, 2005. A management conference call will be held to discuss these financial results at 10:00 a.m. EDT, October 26, 2005. The conference call number is 800-288-8967 or 612-234-9960 (international). The call will also be broadcast via the Internet. Interested parties may connect to the Bowater Web site at http://www.bowater.com/then follow the on-screen instructions for access to the call and related information. A replay of the call will be available from 1:30 p.m. EDT on Wednesday, October 26, through Wednesday, November 2, on the website or by dialing 800-475-6701 or 320-365-3844 (international) and using the access code 798866. Headquartered in Greenville, South Carolina, Bowater Incorporated is a leading producer of newsprint and coated mechanical papers. In addition, the company makes uncoated mechanical papers, bleached kraft pulp and lumber products. The company has 12 pulp and paper mills in the United States, Canada and South Korea and 12 North American sawmills that produce softwood lumber. Bowater also operates two facilities that convert a mechanical base sheet to coated products. Bowater's operations are supported by approximately 1.4 million acres of timberlands owned or leased in the United States and Canada and 30 million acres of timber cutting rights in Canada. Bowater is one of the world's largest consumers of recycled newspapers and magazines. Bowater common stock is listed on the New York Stock Exchange, the Pacific Exchange and the London Stock Exchange. A special class of stock exchangeable into Bowater common stock is listed on the Toronto Stock Exchange (TSX: BWX). * * * As reported in the Troubled Company Reporter on Apr. 22, 2005, Moody's Investors Service affirmed Bowater Incorporated's senior implied, senior unsecured and issuer ratings at Ba3, and concurrently, also affirmed the speculative grade liquidity rating as SGL-2 (indicating good liquidity). Moody's says the outlook remains negative. Ratings affirmed: -- Bowater Incorporated * Outlook: negative * Senior Implied: Ba3 * Senior Unsecured: Ba3 * Industrial and PC revenue bonds: Ba3 * Issuer: Ba3 * Speculative Grade Liquidity Rating: SGL-2 -- Bowater Canada Finance Corp. * Outlook: negative * Senior unsecured guaranteed notes: Ba3 As reported in the Troubled Company Reporter on Mar. 30, 2005, Fitch has rated Bowater's senior unsecured bonds and bank debt 'BB-'. Fitch says the Rating Outlook is Stable. Nearly $2.5 billion of debt is subject to the rating. As reported in the Troubled Company Reporter on May 14, 2004, Standard & Poor's Ratings Services assigned its 'BB' bank loan rating to newsprint producer Bowater Inc.'s $435 million senior unsecured revolving credit facility due 2007. All other ratings were affirmed at 'BB'. S&P says the outlook is stable. BROOKFIELD PROPERTIES: O&Y Shareholders Okay Stock Acquisition -------------------------------------------------------------- Brookfield Properties Corporation (BPO: NYSE, TSX) and its Canadian based subsidiary, BPO Properties Ltd. (BPP: TSX), reported that its bidding consortium, which includes BPO Properties, CPP Investment Board and Arca Investments Inc., received approval from the shareholders of O&Y Properties Corporation (OYP:TSX) to proceed with an arrangement whereby a newly formed company owned by the Consortium will acquire all of the issued and outstanding shares of O&Y Properties for C$12.72 per share in cash. Shareholders voted 99.9% in favor of the Arrangement. The transaction is conditional on Newco acquiring more than 50% of the issued and outstanding limited voting units of O&Y REIT, other than those owned by O&Y Properties, for C$16.25 per limited voting unit under a takeover bid that expires on Oct. 17, 2005. Institutional unitholders of O&Y REIT, who collectively hold an aggregate of 12.6 million limited voting units representing 72% of the limited voting units required to satisfy the minimum condition, have agreed to tender their limited voting units to the offer. "We, along with our partners, are pleased with the outcome of the vote by O&Y Properties' shareholders and look forward to a similarly successful completion of the tendering process for O&Y REIT unitholders," commented Ric Clark, President and CEO of Brookfield Properties Corporation. Listed on both the New York and Toronto Stock Exchanges under the symbol BPO, Brookfield Properties Corporation -- http://www.brookfieldproperties.com/-- owns, develops and manages premier North American office properties. The Brookfield portfolio comprises 47 commercial properties and development sites totaling 46 million square feet, including landmark properties such as the World Financial Center in New York City and BCE Place in Toronto. * * * As reported in the Troubled Company Reporter on Oct. 6, 2004, Standard & Poor's Ratings Services assigned its 'P-3(High)' Canadian national scale and 'BB+' global scale preferred share ratings to Brookfield Properties Corp.'s C$150 million -- with an underwriter's option of up to an additional C$50 million -- 5.20% cumulative class AAA redeemable preferred shares, series K. At the same time, Standard & Poor's affirmed its ratings outstanding on the company, including the 'BBB' long-term issuer credit rating. S&P said the outlook is stable. CALPINE CORP: CCFC Unit Prices $300-Mil. Preferred Shares Offering ------------------------------------------------------------------ Calpine Corporation's [NYSE:CPN] indirect subsidiary, CCFC Preferred Holdings, LLC, has priced its $300 million offering of 6-Year Redeemable Preferred Shares due 2011 at LIBOR plus 950 basis points. Net proceeds from the offering of the Redeemable Preferred Shares will be used as permitted by Calpine's existing bond indentures. Calpine expects the transaction to close within the next two weeks. The Redeemable Preferred Shares have not been registered under the Securities Act of 1933, as amended, and may not be offered in the United States or any state absent registration or an applicable exemption from registration requirements. The Redeemable Preferred Shares were offered in a private placement in the United States under Section 4(2) and Regulation D under the Securities Act of 1933. Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states, three Canadian provinces and the United Kingdom. Its customized products and services include wholesale and retail electricity, natural gas, gas turbine components and services, energy management, and a wide range of power plant engineering, construction and operations services. Calpine was founded in 1984. It is included in the S&P 500 Index and is publicly traded on the New York Stock Exchange under the symbol CPN. * * * As reported in the Troubled Company Reporter on June 23, 2005, Standard & Poor's Ratings Services assigned its 'CCC' rating to Calpine Corp.'s (B-/Negative/--) planned $650 million contingent convertible notes due 2015. The proceeds from that convertible debt issue will be used to redeem in full its High Tides III preferred securities. The company will use the remaining net proceeds to repurchase a portion of the outstanding principal amount of its 8.5% senior unsecured notes due 2011. S&P said its rating outlook is negative on Calpine's $18 billion of total debt outstanding. As reported in the Troubled Company Reporter on May 16, 2005, Moody's Investors Service downgraded the debt ratings of Calpine Corporation (Calpine: Senior Implied to B3 from B2) and its subsidiaries, including Calpine Generating Company (CalGen: first priority credit facilities to B2 from B1). C2 GLOBAL: Completes $19.2M Sale of Telecom Assets to N. Central ---------------------------------------------------------------- C2 Global Technologies Inc. (OTC-BB: COBT.OB) (f/k/a Acceris Communications Inc.) has completed the sale of its telecommunications assets and operations to North Central Equity LLC and its subsidiary, Acceris Management and Acquisition LLC. The asset sale transaction included substantially all of the assets of the telecommunications segment with a book value of approximately US$19.2 million, and the transfer of certain designated liabilities of the telecommunications segment in the aggregate amount of approximately US$24.2 million. "With the transaction of our telecommunications operations complete, we can fully focus our efforts on realizing value from our intellectual property, which includes two foundational patents in Voice over Internet Protocol (VoIP)," said Allan Silber, Chairman and Chief Executive Officer of C2 Global Technologies. "We believe that the acquisition of Acceris gives us a solid platform for further acquisitions in the telecommunications industry," said Elam Baer, Chief Executive Officer of North Central Equity LLC. About North Central Equity LLC North Central Equity LLC is a Minneapolis, Minnesota based privately owned holding company, established in 2004, with experience in the telecommunications industry. About C2 Global Technologies C2 Global Technologies -- http://www.c-2technologies.com/-- is a broad based communications company serving residential, small- and medium-sized business and large enterprise customers in the United States. A facilities-based carrier, it provides a range of products including local dial tone and 1+ domestic and international long distance voice services, as well as fully managed and fully integrated data and enhanced services. C2 offers its communications products and services both directly and through a network of independent agents, primarily via multi-level marketing and commercial agent programs. C2 also offers a proven network convergence solution for voice and data in Voice over Internet Protocol communications technology and holds two foundational patents in the VoIP space. As of June 30, 2005, C2 Global's stockholders' deficit widen to $77,442,000, compared to a $61,965,000 deficit at Dec. 31, 2004. CHAMPION HOME: Moody's Rates New $200 Million Facilities at B1 -------------------------------------------------------------- Moody's Investors Services assigned a B1 rating to Champion Home Builders Co.'s new $200 million credit facilities and affirmed the corporate family rating of Champion Enterprises, Inc. at B1 as well as a B3 rating on the company's $89 million senior notes. Additionally, Moody's changed Champion's outlook to positive from stable. The ratings and change in outlook reflect: * the company's reduced leverage; * improvement in free cash flow and operating margins; and * Champion's recent strong revenue growth due to an improving product mix and favorable pricing. Moody's has also affirmed the company's speculative grade liquidity rating at SGL-2 indicating expected good liquidity for the coming 12 month period. Moody's has assigned these ratings to Champion Home Builders Co.: * $100 million senior secured term loan facility, due 2012, rated B1 * $40 million senior secured revolving credit facility, due 2010, rated B1 * $60 million senior secured synthetic letter-of-credit back-up facility, due 2012, rated B1 Moody's has affirmed these ratings for Champion Enterprises, Inc.: * $89 million 7.625% senior notes, due 2009, rated B3 * $400 million multiple seniority shelf registration, rated P(B3)/(P)Caa1/(P)Caa2 * Corporate Family Rating, rated B1 * Speculative Grade Liquidity Rating, rated SGL-2 Moody's has withdrawn this rating for Champion Home Builders Co.: * $98 million 11.250% senior notes, due 2007 Moody's changed Champion's ratings outlook to positive from stable. The new $200 million credit facilities are comprised of: * a $100 million term loan; * $60 million unfunded letters of credit facility; and * $40 million revolving credit facility. The facilities are being issued by Champion Home Builders Co. to be used primarily to finance the company's tender offer and related consent solicitation for all of the company's 11.25% Senior Notes due 2007 and to refinance the company's previous undrawn credit facility. Moody's notes that prior to the refinancing, the company had approximately $52 million in letters of credit issued. The new facilities will be guaranteed by Champion Enterprises, Inc. and each existing and subsequently acquired or organized domestic and, with certain limitations, foreign subsidiary of the company and secured by substantially all the assets of Champion Enterprises, Inc., Champion Home Builders Co., and each other guarantor, subject to certain exceptions. The B1 rating on the new credit facilities is affected by the company's relatively high leverage and driven by the uncertainty in the company's ability to pass on higher input prices to customers in an increasing interest rate environment. Moody's notes that the company's strong recent revenue growth is primarily attributable to increasing unit prices and not to increasing unit volumes. The company's revenues could decline significantly were the economy, including manufactured housing segment, to soften. Moody's projects the company's total debt to EBITDA for the LTM period September 30, 2005 to be approximately 3.1 times. Interest coverage ratio for the same period is projected to be around 4 times. The change in outlook reflects the company's improving credit profile including, but not limited to, decreasing leverage relative to the company's past leverage levels and good cash flow generation. The positive outlook was primarily driven by the recent improvement in the company's free cash flow generation, for LTM period ended June 30, 2005 the company's free cash flow to total debt as adjusted by Moody's was 13% compared with negative 7.7% FYE 2004. Additionally, the upgrade in outlook considers the company's expanding margins and higher sales in dollar terms. Champion's second quarter 2005 manufacturing segment margin increased to 8.5% versus 6.5% in the second quarter of 2004. The increase represents the highest segment margin since the third quarter of 1998. The company's profitability is expected to improve further as the company is continuing to expand into the modular home segment. The ratings and/or outlook could improve if the company sustains and/or exceeds its current cash flow generation relative to debt and if there is improvement in unit sales. Moody's notes that while the company's free cash flow to debt ratio, as adjusted by Moody's, is an indicative of a Ba3 rating, the company's weak track record and industry's volatility calls for a sustainable improvement before upgrading the rating. In Moody's opinion the company is well positioned in its ratings category. The ratings and/or outlook could deteriorate if the company is not able to pass through input price increases thereby lowering its profitability and cash flow generation. Moody's also has affirmed Champion's SGL-2 rating. The rating considers the company's good liquidity as evidenced by: * recent good free cash flow generation, * expected revolver availability, and * sufficient covenant coverage. The company's internal cash generation is expected to cover the company's working capital needs and planned capital expenditures. The new financing structure will provide Champion with access to a $40 million revolving credit facility that is expected to remain mostly undrawn and a $60 million letters of credit facility that has approximately $52 million letters of credit issued. The covenants on the credit facilities are expected to include a maximum total debt ratio set initially at 4 times with step-down provisions to 2.75 times and minimum interest coverage covenant set at 3 times. Moody's notes that the company's capital expenditures will also be limited by the covenants. The SGL-2 rating is negatively impacted by significant seasonal working capital swings and limited sources of alternative liquidity. Headquartered in Auburn Hills, Michigan, Champion Enterprises, Inc. is the manufactured housing industry's leading producer, with 2004 revenues of $1,150 million. CHI-CHI'S: Court Permits Asset Sale to BR Acquisitions for $1.8MM ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Chi-Chi's, Inc., to : a) sell its interest in a parcel of commercial property located in Greenfield, Wisconsin, to BR Acquisitions, LLC free and clear of all liens, claims, rights interests and encumbrances; and b) pay brokerage commissions to The Polacheck Company, Inc., and Mid-America Real Estate-WI, LLC, pursuant to the Commercial Listing Contract entered into between the Debtor, Polacheck, OS Realy, Inc., and Emerald Realty, Inc. The Court approved the Debtor's request on Oct. 7, 2005. In June 2005, the Debtor and Polacheck entered into the Listing Contract for purposes of marketing and selling the commercial property. The Debtor originally obtained approval from the Court to sell the commercial property to WI QSL, LLC for $1.7 million. But one of the contingencies in the purchase agreement between the Debtor and WI was not fulfilled, and WI was permitted to back out of the asset sale and obtained the return of its deposit. As a result of Polacheck's renewed marketing efforts, the Debtor and BR Acquisitions entered into a Sale Agreement on Sept. 13, 2005, calling for the sale of the commercial property to BR Acquisitions for a total price of $1.8 million. The Debtor's 25% interest in the property accounts for $450,000 of the purchase price, and the Debtor will receive $423,000 of the net sale proceeds after payment of the applicable brokerage commissions. Pursuant to the terms of the Listing Contract, Polacheck will receive a brokerage commission of $108,000 to be split 50% with Mid-America, BR Acquisitions' broker. The Court orders that Polacheck's commission is subject to disgorgement if the Debtor's pending motion to employ Polacheck as an Ordinary Course Professional is not authorized in accordance with the procedures provided for by the Court's Ordinary Course Professional Order dated Feb. 14, 2004. A full-text copy of the Sale Agreement is available for free at http://bankrupt.com/misc/Chi-Chi'sSaleAgreement.pdf The Court orders that in the event that the current sale of the property to BR Acquisitions is not consummated, the Debtor is authorized to sell the property to any purchaser for a sale price greater than or equal to $1.7 million. The Court orders that if the Official Committee of Unsecured Creditors and the U.S. Trustee fail to object to the sale of the property to BR Acquisitions within 15 days of the Sale Notice sent to the Committee and the U.S. Trustee, the asset sale can then close without further action of the Court and its order authorizing the Debtor's motion will be the final order approving the asset sale. Headquartered in Irvine California, Chi-Chi's, Inc., is a direct or indirect operating subsidiary of Prandium and FRI-MRD Corporation and each is engaged in the restaurant business. The Debtors filed for chapter 11 protection on October 8, 2003 (Bankr. Del. Case No. 03-13063-CGC). Bruce Grohsgal, Esq., Laura Davis Jones, Esq., Rachel Lowy Werkheiser, Esq., and Sandra Gail McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they estimated $50 million to $100 million in assets and more than $100 million in liabilities. CKE RESTAURANTS: Board Declares $0.04 Common Stock Dividend ----------------------------------------------------------- CKE Restaurants, Inc.'s (NYSE: CKR) Board of Directors declared a third quarter dividend of $0.04 per share of common stock to be paid on Nov. 28, 2005, to its stockholders of record at the close of business on Nov. 7, 2005. The Company had 59,531,941 shares of common stock issued and outstanding as of Sept. 9, 2005. As reported in the Troubled Company Reporter on Sept. 23, 2005, net income for the second quarter of fiscal 2006 increased to $8.4 million, compared to a net loss of $12.7 million in the prior year quarter. This year's results include an $11.0 million charge to purchase stock options from the Company's former Chairman of the Board of Directors who retired during the quarter. Prior year results included $22.3 million of charges primarily related to legal settlements and early debt extinguishment. CKE Restaurants, Inc., through its subsidiaries, franchisees and licensees, operates some of the most popular U.S. regional brands in quick-service and fast-casual dining, including the Carl's Jr.(R), Hardee's(R), La Salsa Fresh Mexican Grill(R) and Green Burrito(R) restaurant brands. The CKE system includes more than 3,200 locations in 44 states and in 13 countries. CKE is publicly traded on the New York Stock Exchange under the symbol "CKR" and is headquartered in Carpinteria, California. * * * As reported in the Troubled Company Reporter on July 13, 2005, Standard & Poor's Ratings Services raised its ratings on quick- service restaurant operator CKE Restaurants Inc. The corporate credit and senior secured debt ratings were raised to 'B+' from 'B', and the subordinated debt rating was elevated to 'B-' from 'CCC+'. The outlook is stable. COLLEGE PROPERTIES: Brian Mullen Named as Chapter 11 Trustee ------------------------------------------------------------ The Honorable Charles G. Case II approved the request of the U.S. Trustee for Region 14 to appoint a chapter 11 trustee to take control of College Properties 1 & 2 Limited Partners' restructuring. The U.S. Trustee reports that he consulted with these parties-in- interest regarding the appointment of Brian Mullen to serve as the Chapter 11 Trustee: (a) Howard Meyers, Esq. Attorney for Loren Jessen, trustee, holder of 86% interest in the secured claim; (b) Cliff Altfeld, Esq. Attorney for Equity Security Holders Landis Mitchell, Anthony DePetris and Patricia Palmer; and (c) John Ryan, Esq. Attorney for the Debtor. Headquartered in Phoenix, Arizona, College Properties 1 & 2 Limited Partners filed for chapter 11 protection on June 3, 2005 (Bankr. D. Ariz. Case No. 05-10095). John T. Ryan, Esq., of Phoenix, Arizona, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts between $1 million to $10 million. COLLINS & AIKMAN: Resolves GECC's Objection to Access Agreement --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan approved the stipulation resolving General Electric Capital Corporation's objection to the inclusion of Collins & Aikman Corporation's Hermosillo facility in an exhibit to an Access Agreement. The Bankruptcy Court had approved a Customer Financing Agreement between the Debtors and certain Original Equipment Manufacturer customers and a related Access Agreement on August 11, 2005, that gives the Customers the right to access and take control over the Debtors' facilities for the Customers' sole benefit. The Stipulation clarifies that none of the Customer Financing Order, the Customer Agreement, the Access Agreement nor any related agreement in any way affects the rights of GECC or GE Mexico with regard to an existing Construction Agency Agreement. This includes, without limitation, any right GE Mexico has to prohibit Ford or any other third party from operating the equipment at the Hermosillo facility without GE Mexico's consent. Construction Agency Agreement Collins & Aikman Automotive Hermosillo, S.A. de C.V., a Mexican sociedad anonima de capital variable, and GE Capital De Mexico, S. de R.L. de C.V., a Mexican sociedad de responsabilidad Limitada de capital variable, are parties to a Construction Agency Agreement on November 8, 2004, for the construction and operation of an automotive facility in Hermosillo, Mexico. Although the Debtors and Ford Motor Company intended that the Access Agreement would extend to the Hermosillo, Mexico facility, GECC and GE Mexico did not understand that the Access Agreement would grant access to Ford with respect to the Hermosillo facility. GECC informed the Debtors and Ford that it intended to object to the inclusion of the Hermosillo facility in an exhibit to the Access Agreement. The Debtors and Ford explained that it was always their understanding that the Hermosillo facility was supposed to be included on the exhibit to the Access Agreement. 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Inks Customer Financing Agreement with OEMs ------------------------------------------------------------- As reported in the Troubled Company Reporter, Collins & Aikman Corporation and its debtor affiliates obtained approval from the U.S. Bankruptcy Court for the Eastern District of Michigan to enter into a Customer Financing Agreement with certain Original Equipment Manufacturer customers that provided them with, among other things, $82.5 million in immediate price increases, $82.5 million in additional financing and a definitive timetable for the renegotiation of contracts. Pursuant to the Customer Financing Agreement, the Debtors established an aggressive schedule for the analysis and renegotiation of unprofitable contracts with their customers. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, relates that to accomplish this task, the Debtors' senior management and advisors dedicated extensive resources to the task of identifying the product lines they manufacture for their customers and determining the profitability and strategic benefit of each of those product lines. This required a detailed and extensive analysis of numerous contracts. As a result of their analyses, the Debtors determined that many of the Contracts under their current terms and conditions were no longer economical, profitable or beneficial to ongoing operations. Mr. Schrock explains that the Contracts contained unfavorable pricing, payment or raw materials pricing terms and did not provide any ongoing benefits to the Debtors' estates sufficient for them to justify continuing to honor their obligations thereunder. The terms precluded the Debtors from generating any profit, or in some cases, sufficient profit relative to the risks involved, which caused the Debtors to continue to suffer significant financial losses, Mr. Schrock says. To stem the incurrence of those losses, the Debtors negotiated pricing and payment terms under the Contracts and other benefits relevant to their relationship with the Customers to a level that would justify continued performance under the Contracts. As a result of the negotiations, the Debtors have reached an agreement with each of these Customers: -- Honda of America Manufacturing Inc., -- Toyota Motor Manufacturing North America Inc., -- Nissan North America Inc., -- DaimlerChrysler Corporation, -- General Motors Corporation, and -- Ford Motor Company. Accordingly, the Debtors seek the Court's authority to enter into the Agreements. The Debtors believe that the terms of the Agreements will achieve substantial benefits to their ongoing business operations and estates. The basic terms of the Agreements include: (a) increases in interim or permanent pricing terms for certain or all programs; (b) the Customers' commitment not to re-source for a certain period; (c) continued acceleration of payment terms; and (d) certain confidential, customer-specific terms that inure to the benefit of the Debtors' estates. According to Mr. Schrock, much of the Debtors' liquidity problems are exacerbated by the business model of "Tier 1" suppliers to the automotive industry, which requires that the supplier advance certain capital expenditures, launch costs and tooling costs months, or even years, prior to recovering those costs from the customer once component parts are ready to ship. The Customers' willingness to continue funding capital expenditures, launch costs and tooling for a certain period could greatly improve the Debtors' liquidity, Mr. Schrock notes. "The Agreement a major accomplishment that provides immensely valuable benefits to the Debtors' estates, the Agreement demonstrates that the Debtors and the Customer are willing to work together to try to find a consensual resolution and reorganize the Debtors' operations," Mr. Schrock says. "Indeed, the Agreement is necessary for the Debtors to achieve stability and have a reasonable prospect of a stable business environment, which will maximize value for these estates through a plan of reorganization or sale." The Debtors also seek permission to file copies of the term sheets under seal. Each Term Sheet includes specific pricing information that, if revealed to the Debtors' competitors, would give the competitors an advantage in negotiating terms with the Customer. In addition, if the Customer's other suppliers knew the terms of the Agreement, this would provide the suppliers with a competitive advantage in negotiating contracts with the Customer. By harming the Customer, revealing the terms of the Agreement would also harm the Debtors' relationship with the Customer, and consequently, the Debtors' reorganization efforts. JPMorgan Responds Under the final order approving the DIP Financing Agreement, the stipulated principal amount of the bank debt owing to the prepetition secured lenders is about $748 million. That senior indebtedness is secured by liens and security interests held by JPMorgan Chase Bank, N.A., as administrative agent for the prepetition senior secured lenders, on substantially all of the prepetition assets of the Debtors' estates. Thus, the Prepetition Secured Lenders are the predominant creditor constituency in the Debtors' Chapter 11 cases, Brendan G. Best, Esq., at Dykema Gossett PLLC, Detroit, Michigan, tells the Court. JPMorgan's legal and financial advisors have had an opportunity to review the term sheets entered into by the Debtors and their principal Original Equipment Manufacturer customers. Mr. Best relates that while JPMorgan believes that the Debtors have made significant progress in their negotiations with the OEMs, there remains a looming and significant liquidity concern that the Court should require the Debtors and the OEMs to address through modification of the Term Sheets, as a condition to the Court's approval. Under the Customer Financing Agreement, the OEMs agreed that "the Customers' respective payment terms will be 'instant net' (net 5 days) or equivalent terms." In their current form, the Term Sheets fail to provide for the continuation of these critical payment terms beyond March 31, 2006. Thus, absent modification of the Term Sheets, not later than March 31, 2006, the Debtors potentially face an increase in their working capital requirements in an amount estimated by JPMorgan's financial advisor to be between $150 to $175 million. Mr. Best notes that it is readily apparent that the Debtors lack any source to fund a massive increase in working capital. As a condition to approval of the Term Sheets, Mr. Best suggests that the Court should require the OEMs and the Debtors to avert a potential liquidity crisis by agreeing that the critical "net 5-day" payment terms be continued through the conclusion of the Debtors' Chapter 11 cases. In addition, JPMorgan notes that under the "Protocol for Customer Funding of Capital Expenditure, Launch and Tooling Costs" between the Debtors and the OEMs, the Debtors are having difficulty obtaining payments on purchase orders for in-house tooling work performed by the Debtors for the benefit of the OEMs. The Debtors' inability to obtain timely payments for in-house tooling is having a significant negative impact on the Debtors' liquidity. The Debtors have informed JPMorgan that they are attempting to negotiate an addendum to the Protocol to address the prompt collection of in-house tooling payments from the OEMs. The Court should require the Debtors and the OEMs to reach a satisfactory addendum to the Protocol as a condition to approval of the Motions, Mr. Best says. Absent JPMorgan's consent, Mr. Best argues that the Debtors and the OEMs do not have the ability to agree to any terms that interfere with the liens and security interests held by JPMorgan for the benefit of the Prepetition Secured Lenders. Accordingly, JPMorgan asks the Court to condition the approval of the Motions upon the modification of the agreements reached between the Debtors and the OEMs to: (i) require the OEMs to continue to adhere to the previously agreed payment terms for component parts of "'net instant' (net 5 days) or equivalent terms" throughout the duration of the Debtors' Chapter 11 cases; and (ii) resolve the liquidity problems associated with the collection of in-house tooling payment orders under the Protocol. 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Proposes Cross-Border Insolvency Protocol ----------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to approve a cross-border insolvency protocol to facilitate the efficient administration of their Chapter 11 cases and the administrative proceedings of their European units. As previously reported, the Debtors' European units commenced administration proceedings before the Companies Court of the High Court of Justice, Chancery Division in London, England in accordance with the English Insolvency Law. The English Court has appointed, among others, Simon Appell and Alastair Beveridge at Kroll Talbot Hughes, also known as Kroll Ltd., as joint administrators of the European Debtors. In an administration in England, the administrators act for the debtors as their agent with a fiduciary duty to creditors and parties-in-interest. Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in New York, explains that the Protocol will ensure that the counsel, retained professionals and management for each of the U.S. Debtors and the European Debtors work cooperatively and effectively with minimal friction or duplication of efforts. The Administrators have approved the Protocol and have had the Protocol approved by the English Court. Although the Protocol has not yet been formally approved, the Debtors have been acting in accordance with the terms of the Protocol since it was developed on July 15, 2005. The Official Committee of Unsecured Creditors has been kept apprised at all times regarding the development and terms of the Protocol. Given the complex nature of the Insolvency Proceedings, Mr. Carmel asserts that a protocol is required to facilitate the efficient administration of the Debtors' cases. There are 38 U.S. Debtors and 24 European Debtors, with a total of 23,000 employees and operations covering nearly a dozen countries. In addition, having two parallel proceedings with jurisdictional issues like intercompany creditors and intercompany, cross-border debt further substantiates the need for a cross-border protocol. A protocol will help protect the rights of the Debtors and the Administrators, as well as the rights of creditors and other interested parties in the United States, England and other countries. The terms of the Protocol are designed to: (a) promote the orderly and efficient administration of the Insolvency Proceedings; (b) harmonize and coordinate activities undertaken and information exchanged in connection with the Insolvency Proceedings; (c) honor the independence and integrity of the US and English Courts; and (d) promote international cooperation and respect for comity among the U.S. and English Courts. Mr. Carmel says that the Protocol is designed to accomplish these goals while attempting to harmonize certain potentially conflicting concepts existing under the Bankruptcy Code and English Insolvency Law. Mr. Carmel assures the Court that the Protocol is the result of lengthy discussion and negotiation between the Debtors and the Administrators to balance the two different insolvency regimes while continuing to respect the independent jurisdiction of each of the Courts, all with a view toward maximizing the value of the Debtors' estates for the benefit of their creditors and other parties-in-interest. A full-text copy of the 15-page Protocol is available for free at http://bankrupt.com/misc/collins_protocol.pdf 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) CONSTELLATION BRANDS: Earns $98.1 Million in Second Quarter ----------------------------------------------------------- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR) reported net sales of $1.2 billion for the second quarter of fiscal 2006, up 15% over prior year. "Strong performance by our U.S. branded wine and imported beers businesses, together with the addition of Robert Mondavi brands, resulted in another solid quarter of financial performance," stated Richard Sands, Constellation Brands chairman and chief executive officer. Net sales for the second quarter of fiscal 2006 included $110.2 million from sales of brands from the December 2004 acquisition of The Robert Mondavi Corporation and $11.8 million from sales of Ruffino brands. In December 2004, the company purchased a 40 percent interest in Ruffino S.r.l. and on Feb. 1, 2005, the company began distributing Ruffino's products in the United States. Excluding Robert Mondavi and Ruffino brands, net sales grew three percent. "While this growth was a little lower than expected, it reflects tougher trading conditions in the U.K. market, impacting both our U.K. wholesale and branded business," stated Mr. Sands. "We are addressing this by focusing on margin improvements in other areas of our business." Operating income, as reported under generally accepted accounting principles, totaled $174.2 million, for the second quarter of fiscal 2006, or 14.6 percent of net sales, compared with $156.2 million or 15.1 percent of net sales for the second quarter of fiscal 2005. Reported net income for the second quarter increased two percent to $82.4 million, while diluted earnings per share for the second quarter totaled $0.34 compared with $0.35 for the prior year second quarter. Second quarter fiscal 2006 diluted earnings per share were impacted by additional shares outstanding. Second quarter fiscal 2006 and 2005 reported results include acquisition-related integration costs, restructuring and related charges and unusual items. Net income and diluted earnings per share, on a comparable basis, exclude these costs, charges and items. Second quarter operating income, on a comparable basis, was $197.0 million or 16.5 percent of net sales, compared with $158.3 million or 15.3 percent for the prior year period. Second quarter net income and diluted earnings per share, on a comparable basis, increased 20 percent to $98.1 million and 17 percent to $0.41. "We are pleased by the excellent operating margin expansion in the quarter," stated Mr. Sands. "The margin expansion and solid bottom line performance were driven by true growth in the right categories, and demonstrates the benefits of our diversified product portfolio and geographic markets." "During the second quarter of our fiscal 2006 the price of petroleum products moved into uncharted territory, tragic and senseless terrorist attacks rocked London and Hurricane Katrina ravaged the U.S. Gulf Coast. Our hearts go out to those impacted by these adversities. While these current events could have become distractions, Constellation's 8,500 employees around the world remained focused on delivering results and additional true growth opportunities to increase shareholder value," stated Mr. Sands. "We believe that in turbulent times the best course is always a steady one." Outlook Full-year guidance includes these assumptions: * Consolidated net sales growth in the mid-teens, including the benefit of 10 additional months of Robert Mondavi; * Interest expense in the range of $190-$195 million; * Tax rate of approximately 33 percent on a reported basis, which includes a benefit of three percent as a result of adjustments to income tax accruals in connection with the completion of various income tax examinations, and 36 percent on a comparable basis, which excludes the aforementioned three percent benefit; * Approximately 240 million weighted average diluted shares. * Cash provided by operating activities in the range of $380 to $400 million; * Capital expenditures to approximate $140 million; and * Debt of approximately $2.9 billion at Feb. 28, 2006. Constellation Brands, Inc. -- http://www.cbrands.com/-- is a leading international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Corona Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao, Black Velvet, Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Chi- Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Stowells, Blackthorn, Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi, Hardys, Nobilo, Alice White, Ruffino, Robert Mondavi Private Selection, Blackstone, Ravenswood, Estancia, Franciscan Oakville Estate, Simi and Robert Mondavi Winery brands. * * * As reported in the Troubled Company Reporter on Oct. 4, 2005, Moody's Investors Service placed the long-term ratings of Constellation Brands, Inc. under review for possible downgrade and lowered the company's speculative grade liquidity rating to SGL-2 from SGL-1. The review of Constellation's long-term ratings follows its announcement that it has offered to purchase all of the outstanding common shares of Vincor International Inc. in a transaction currently valued at approximately C$1.4 (US$1.2) billion, including approximately C$305 (US$260) million of assumed Vincor net debt. Ratings placed on review for possible downgrade: * Ba2 corporate family rating formerly senior implied rating) * Ba2 on the $2.9 billion senior secured credit facility consisting of a $500 million revolver, $600 million tranche A term loans and $1.8 billion tranche B term loans * Ba2 $200 million 8.625% senior unsecured notes, due 2006 * Ba2 $200 million 8% senior unsecured notes, due 2008 * Ba2 GBP 80 million 8.5% senior unsecured notes, due 2009 * Ba2 GBP 75 million 8.5% senior unsecured notes, due 2009 * Ba3 $250 million 8.125% senior subordinated notes, due 2012 Rating lowered: * Speculative grade liquidity rating to SGL-2 from SGL-1 As reported in the Troubled Company Reporter on Oct. 4, 2005, Standard & Poor's Ratings Services placed its 'BB' corporate credit rating and other ratings on beverage alcohol producer and distributor Constellation Brands Inc. on CreditWatch with negative implications. DELPHI CORP: Names Robert Dellinger as Chief Financial Officer -------------------------------------------------------------- The Board of Directors of Delphi Corp. (NYSE: DPH) named Robert J. Dellinger as the company's executive vice president and chief financial officer effective immediately. Mr. Dellinger, 45, most recently was the executive vice president and chief financial officer for Sprint Corp. He succeeds John D. Sheehan, who was named Delphi's vice president and chief restructuring officer and had served as acting CFO since March 4, 2005. Mr. Sheehan will retain his responsibilities as chief accounting officer and controller on an interim basis but his primary focus will be on leading Delphi's restructuring activities. Both Messrs. Dellinger and Sheehan will be members of the Delphi Strategy Board, the company's top policy-making group. "Bob's sound financial judgment, international experience and strength of leadership will be critical as we move ahead with our global transformation," said Robert S. "Steve" Miller, Delphi's chairman and chief executive officer. "John's leadership as acting CFO has been vital during this transition time and he will bring the necessary focus to Delphi's restructuring efforts in his new role." Prior to joining Sprint in June 2002, Mr. Dellinger was president and chief executive officer of GE Frankona Re based in Munich, Germany, with responsibility for General Electric's(GE) Employers Reinsurance Corporations (ERC) European and Asian operations. In his 19-year career at GE, he had diverse financial and operational experiences in both industrial and financial services. In March 1997, he was named an officer of GE and executive vice president and chief financial officer of ERC. He served as manager of finance for GE Motors and Industrial Systems from 1995 to 1997 and was director of finance and business development for GE Plastics Pacific based in Singapore from 1993 to 1995. He spent five years on the GE Corporate Audit Staff and completed the GE Financial Management Program. Mr. Dellinger graduated from Ohio Wesleyan University in 1982 with a bachelor of arts in economics and a minor in accounting. He serves on the board of directors of SIRVA, Inc., a NYSE- listed company. Headquartered in Troy, Michigan, Delphi Corp. -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. DELTA AIR: Brings In BSI LLC as Claims Agent -------------------------------------------- Edward H. Bastian, executive vice president and chief financial officer of Delta Air Lines, Inc., relates that the thousands of creditors and other parties-in-interest involved in the Debtors' Chapter 11 cases may impose heavy administrative and other burdens on the Court and the Office of the Clerk of the Court. To relieve the Clerk's Office of these burdens, Delta Air Lines Inc. and its debtor-affiliates asks permission from the U.S. Bankruptcy Court for the Southern District of New York to engage Bankruptcy Services LLC as notice agent and claims agent in their Chapter 11 cases. According to Mr. Bastian, BSI is one of the country's leading Chapter 11 administrators with experience in noticing, claims processing, claims reconciliation and distribution. BSI has substantial experience in the matters upon which it is to be engaged. BSI has acted or is acting as official notice agent and claims agent in recent notable cases including Enron Corp., WorldCom Inc., Global Crossing, Ltd., Adelphia Communications Corporation and Bethlehem Steel Corp. BSI, at the request of the Debtors or the Clerk's Office, will: (a) prepare and serve required notices in the Debtors' cases, including: * a notice of the Petition Date and the initial meeting of creditors under Section 341(a) of the Bankruptcy Code; * a notice of the claims bar date; * notices of objections to claims; * notices of any hearings on a disclosure statement and confirmation of a plan or plans of reorganization; and * other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of the Debtors' Chapter 11 Cases; (b) after the mailing of a particular notice, file with the Clerk's Office a certificate or declaration of service that includes a copy of the notice involved, an alphabetical list of persons to whom the notice was mailed and the date and manner of mailing; (c) maintain copies of all proofs of claim and proofs of interest filed; (d) maintain official claims registers; (e) implement necessary security measures to ensure the completeness and integrity of the claims registers; (f) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; (g) maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest, which list will be available upon request of a party in interest or the Clerk's Office; (h) provide access to the public for examination of copies of the proofs of claim or interest without charge during regular business hours; (i) record all transfers of claims and provide notice of the transfers in accordance with Rule 3001(e) of the Federal Rules of Bankruptcy Procedure; (j) comply with applicable federal, state, municipal, and local statutes, ordinances, rules, regulations, orders and other requirements; (k) provide temporary employees to process claims, as necessary; (l) at the close of the Debtors' cases, box and transport all original documents in proper format, as provided by the Clerk's Office, to the Federal Records Center; and (m) promptly comply with further conditions and requirements as the Clerk s Office or the Court may at any time prescribe. The Debtors propose to pay BSI in accordance with a Fee Schedule. A full-text copy of that Fee Schedule is available for free at: http://bankrupt.com/misc/delta_bsi_fees1.pdf Ron Jacobs, president of BSI, assures the Court that his firm will not seek any compensation from the U.S. Government in its capacity as notice agent and claims agent in the Debtors' cases. Mr. Jacobs attests that BSI is a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. * * * The Court approved the application on an interim basis. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Appoints Domenico De Sole as New Director ---------------------------------------------------- Delta Air Lines (NYSE:DAL) reported the election of Domenico De Sole to its Board of Directors, effective immediately. "We are delighted that Domenico De Sole is joining Delta's Board of Directors," said Jerry Grinstein, Delta's Chief Executive Officer. "He possesses a wealth of experience that will be very beneficial to Delta's Board." Mr. De Sole, 61, served as the President and Chief Executive Officer of Gucci Group, N.V., and Chairman of the Group's Management Board from 1995 to 2004, where he played a leading role in reestablishing the exclusivity and profitability of the Gucci brand. He joined Gucci in 1984 as Chief Executive Officer of Gucci America and in 1994 became Chief Operating Officer of Gucci Group. Prior to joining Gucci, Mr. De Sole was a partner with the law firm Patton, Boggs L.L.P. Mr. De Sole is a graduate of the University of Rome with a Law degree and earned a Master's Degree from Harvard Law School. Mr. De Sole serves on the Board of Directors of Bausch & Lomb, Incorporated, The Gap, Inc., TelecomItalia S.p.A. and is a member of the Harvard Law School Advisory Board. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: NYSE to Halt Common Stock Trading on Thursday, Oct. 13 ----------------------------------------------------------------- Delta Air Lines has been advised by the New York Stock Exchange (NYSE) that its common stock -- ticker symbol DAL -- and its 8-1/8% Notes due July 1, 2039 -- ticker symbol DNT -- will be suspended from trading on the NYSE on Thursday, Oct. 13, 2005, and that the NYSE will submit an application to the Securities and Exchange Commission to delist these securities. Delta received written notification from the NYSE on Oct. 4, 2005, that the average closing price of Delta's common stock fell below the NYSE's continued listing minimum share price standard of $1.00 over a consecutive 30-trading-day period as of Oct. 3, 2005. This condition subjected Delta's securities to the NYSE's suspension and delisting procedures. Delta has informed the NYSE that, due to its recent Chapter 11 filing, it does not intend to attempt to cure this deficiency and will not oppose the suspension and delisting of its common stock and its 8-1/8% Notes due July 1, 2039. The Company expects these securities to be delisted from the NYSE upon approval by the Securities and Exchange Commission. Once suspended from trading on the NYSE, Delta's securities may be quoted in the "over-the- counter" market. Delta cannot predict what the ultimate value of its securities may be or whether security owners should expect any financial recovery in Delta's Chapter 11 proceedings. However, in most Chapter 11 cases, owners of equity securities receive little or no recovery of value from their investment. As a result, Delta urges that appropriate caution be exercised with respect to existing and future investments in Delta's securities. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. DELTAGEN INC.: Plan Confirmation Hearing Set for November 14 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of California in San Francisco conditionally approved the Disclosure Statement explaining the Joint Plan of Reorganization of Deltagen, Inc., and Deltagen Proteomics, Inc. With a court-approved Disclosure Statement in hand, the Debtors can now solicit acceptances of its Plan from their creditors. Ballots accepting or rejecting the Joint Plan must be returned to the balloting agent designated on the ballots by Nov. 7, 2005. A combined hearing to consider final approval of the Disclosure Statement and confirmation of the Joint Plan will be held before the Hon. Dennis Montali at 9:30 a.m. on Nov. 14, 2005. Objections to the final approval of the Disclosure Statement or confirmation of the Joint Plan must be filed with the Bankruptcy Court by Nov. 7., 2005. Copies of any objections must be served by first class mail on: Counsel for the Debtors: Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC Attn: Henry C. Kevane, Esq. 150 California Street, 15th Floor San Francisco, California 94111 The United States Trustee: Office of the U.S. Trustee: Attn: Patricia Cutler, Esq. 250 Montgomery Street, Ste. 1000, San Francisco, California 94014 Counsel for the Official Committee of Unsecured Creditors: Cooley Godward, LLP Attn: Robert L. Eisenbach III, Esq. 101 California Street, 5th Floor San Francisco, California 94111 The Joint Plan As reported in the Troubled Company Reporter, the Debtors' Joint Plan effectuates a reorganization of Deltagen and the liquidation of Deltagen Proteomics. Following confirmation, Deltagen will emerge from bankruptcy as a reorganized company and will continue to conduct business as a tools and service vendor of knockout mouse data and materials. Deltagen anticipates paying its Creditors in full on or soon after the Effective Date of the Plan out of existing Cash. Deltagen's shareholders will retain their interests in the Reorganized Debtor unaffected. The Plan provides for the immediate liquidation of DPI and its separate assets and the distribution of the net proceeds to DPI's separate creditors. DPI will then dissolve under applicable non-bankruptcy law. The interests in DPI, which are currently held solely by Deltagen, will be extinguished. Terms of the Plan Creditor Class Amount of Claims Projected Recovery -------------- ---------------- ------------------ Priority Employee $50,000 100% Noteholders $300,000 100% Deltagen Unsecured Creditors $8,500,000 100% DPI Unsecured Creditors 850,000 2% Deltagen Interests Unimpaired DPI Interests Cancelled Deltagen Inc. provides essential data on the in vivo mammalian functional role of newly discovered genes. The Company and its debtor-affiliates filed for chapter 11 protection on June 27, 2003 (Bankr. N.D. Calif. Case No. 03-31906). Alan Talkington, Esq., and Frederick D. Holden, Esq., at Orrick, Herrington and Sutcliffe, and Henry C. Kevane, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. DELTAGEN INC: Administrative Claims Bar Date Set on November 7 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District Of California in San Francisco set Nov. 7, 2005, as the deadline for filing requests for the allowance and payment of administrative expense claims arising after June 27, 2003, in connection with Deltagen Inc.'s bankruptcy case. The Court also set Nov. 7, 2005, as the deadline for filing Requests for the allowance and payment of administrative expense claims arising after May 19, 2004, in connection with Deltagen Proteomics, Inc.'s bankruptcy case. Each payment application must be specifically designated as an Administrative Expense Request and must be filed with: The Clerk of the U.S. Bankruptcy Court Northern District Of California, San Francisco Division 235 Pine Street, 19th Floor San Francisco, California 94104 Deltagen Inc. provides essential data on the in vivo mammalian functional role of newly discovered genes. The Company and its debtor-affiliates filed for chapter 11 protection on June 27, 2003 (Bankr. N.D. Calif. Case No. 03-31906). Alan Talkington, Esq., and Frederick D. Holden, Esq., at Orrick, Herrington and Sutcliffe, and Henry C. Kevane, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. DENNIS STREETER: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Dennis L. Streeter 215 Lakefront Drive Beverly Shores, Indiana 46301 Bankruptcy Case No.: 05-66419 Chapter 11 Petition Date: October 7, 2005 Court: Northern District of Indiana (Hammond) Judge: J. Philip Klingeberger Debtor's Counsel: David M. Blaskovich, Esq. Casale, Woodward & Buls, LLP 9223 Broadway, Suite A Merrillville, Indiana 46410 Tel: (219) 736-2163 Fax: (219) 736-9991 Total Assets: $1,619,187 Total Debts: $5,535,728 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ NITCO Holdings Corp. $2,126,777 c/o Steven W. Handlon 3207 Willowcreek Road, Suite A Portage, IN 46368 David Lasco $350,000 c/o Michael W. Back One Professional Center, Suite 204 Crown Point, IN 46307 Bank One NA $320,529 Jeffrey C. McDermott One Indiana Square, Suite 2800 Indianapolis, IN 46204-2079 Wachovia Bank $314,748 c/o Carmen Piasecki 205 West Jefferson, Suite 600 South Bend, IN 46601 Donald Pesanto MD $240,000 Internal Revenue Service $238,550 Norman Parkhurst $208,000 Citizens Financial Services, FSB $172,740 Estate of Charles Yast $125,000 Internal Revenue Service $119,562 Michael Julovich $60,000 Christian Home Health $50,000 Rayu Nayak $50,000 MBNA America $48,767 Edward L. Peters $35,000 Goodman Ball & Van Bokkelen $21,674 Indiana Department of Revenue $20,618 Weichman and Associates, P.C. $15,040 MBNA America $10,386 John Laszlo $10,000 DIGITAL LIGHTWAVE: Borrows $775,000 From Optel Capital ------------------------------------------------------ Digital Lightwave, Inc., borrowed $775,000 from Optel Capital, LLC. Optel is controlled by the Company's largest stockholder and current Chairman of the Board, Dr. Bryan Zwan. The loan: * is evidenced by a secured promissory note, * bears interest at 10.0% per annum, and * is secured by a security interest in substantially all of the Company's assets. Principal and any accrued but unpaid interest under the secured promissory note is due and payable upon demand by Optel at any time after December 31, 2005. The entire unpaid principal amount of the loan, together with accrued but unpaid interest, will become immediately due and payable upon demand by Optel at any time on or following the occurrence of any of these events: (a) the sale of all or substantially all of the Company's assets or, subject to certain exceptions, any merger or consolidation of the Company with or into another corporation; (b) the inability of the Company to pay its debts as they become due; (c) the dissolution, termination of existence, or appointment of a receiver, trustee or custodian, for all or any material part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding by the Company under any reorganization, bankruptcy, arrangement, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect; (d) the execution by the Company of a general assignment for the benefit of creditors; (e) the commencement of any proceeding against the Company under any reorganization, bankruptcy, arrangement, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect, which is not cured by the dismissal thereof within 90 days after the date commenced; or (f) the appointment of a receiver or trustee to take possession of the property or assets of the Company. A full-text copy of the Promissory Note is available for free at http://ResearchArchives.com/t/s?23a Based in Clearwater, Florida, Digital Lightwave, Inc., provides the global communications networking industry with products, technology and services that enable the efficient development, deployment and management of high-performance networks. Digital Lightwave's customers -- companies that deploy networks, develop networking equipment, and manage networks -- rely on its offerings to optimize network performance and ensure service reliability. The Company designs, develops and markets a portfolio of portable and network-based products for installing, maintaining and monitoring fiber optic circuits and networks. Network operators and telecommunications service providers use fiber optics to provide increased network bandwidth to transmit voice and other non-voice traffic such as internet, data and multimedia video transmissions. The Company provides telecommunications service providers and equipment manufacturers with product capabilities to cost-effectively deploy and manage fiber optic networks. The Company's product lines include: Network Information Computers, Network Access Agents, Optical Test Systems, and Optical Wavelength Managers. The Company's wholly owned subsidiaries are Digital Lightwave (UK) Limited, Digital Lightwave Asia Pacific Pty, Ltd., and Digital Lightwave Latino Americana Ltda. As of June 30, 2005, Digital Lightwave's equity deficit widened to $42,616,000 from a $29,146,000 deficit at Dec. 31, 2004. DOANE PET: Moody's Junks $150 Million Senior Subordinated Notes --------------------------------------------------------------- Moody's Investors Service concluded its review of Doane Pet Care, Inc. for possible upgrade that commenced on August 25th by upgrading Doane's corporate family rating and existing $213 million 10.75% senior unsecured notes to B2 from B3. In addition, Moody's assigned a B1 rating to Doane's new proposed senior secured credit facilities, and a Caa1 rating to its new proposed senior subordinated notes. Moody's also upgraded Doane's existing senior secured bank facilities to B1 from B2, its existing senior subordinated notes to Caa1 from Caa2, and its existing mandatory redeemable preferred stock from Ca to Caa3. Ratings on the existing bank facilities and preferred stock will be withdrawn when the expected acquisition transaction closes. The outlook on the ratings is stable. The upgrade and rating assignments are in relation to the pending acquisition of Doane's parent company -- Doane Pet Care Enterprises, Inc. -- by Teachers' Private Capital for $840 million plus $20 million of expenses. As part of the transaction, Teachers will contribute sufficient equity capital to moderately reduce Doane's leverage to more manageable levels. The refinancing of existing debt will also increase Doane's financial flexibility and stabilize a precarious capital structure which includes a significant amount of debt and preferred stock which otherwise would begin maturing in early 2007. The ratings are based upon the expectation that the acquisition by Teachers' and the planned debt reductions are consummated as proposed. Ratings assigned are: * $65 million 5-year senior secured revolving credit at B1 * Euro 46.2 million (US$55 million equivalent) 7-year Euro-denominated senior secured term loan at B1 * $100 million 7-year US dollar-denominated senior secured term loan at B1 * $150 million 10-year senior subordinated notes at Caa1 Ratings upgraded are: * $35 million senior secured revolving credit facility to B1 from B2 (to be withdrawn) * $195 million term B loan to B1 from B2 (to be withdrawn) * $213 million 10.75% senior unsecured notes to B2 from B3 * $150 million 9.75% senior subordinated notes to Caa1 from Caa2 * $114 million mandatory redeemable preferred stock to Caa3 from Ca (to be withdrawn) * Corporate family rating to B2 from B3 Moody's considered Doane's ratings in relation to certain key rating drivers for the food industry. 1) Scale and diversification. Doane is a moderate sized manufacturer, concentrating in private label pet food, with sales and earnings highly concentrated among a small number of products and customers largely in the US but with some exposure in Europe. Sales are particularly concentrated with Wal-Mart which accounts for approximately 43% of revenues. 2) Franchise strength and growth potential. Doane's franchise strength is moderate. While it has a solid position with a concentrated customer group, it operates within a rather specialized industry niche and remains vulnerable to competitive threats from larger more powerful food companies. Internal growth has been solid over the recent past, and given its size, additional growth potential exists. 3) Distribution environment and pricing flexibility with customers. The company's use of contracts with its customers helps moderate -- but does not eliminate -- the impact of commodity cost fluctuations. 4) Assessment of cost efficiency and profitability. Doane's margins and return on assets are low relative to many companies in the food industry. 5) Financial policy and credit metrics. Doane's pro forma leverage following its acquisition by Teachers' remains high, and its coverages modest. Given capital expansion plans, Moody's does not expect major improvements in these over the rating horizon. Doane's ratings are limited by its leverage which -- although improved following the acquisition by Teachers' -- will remain high. Moody's expects Doane to once again begin pursuing acquisitions and internal growth in the years ahead. As a result, Moody's expects free cash flow to remain limited relative to debt, even with some expected earnings improvement. As a result, further leverage improvements are likely to be limited. The ratings also consider Doane's exposure to: * volatile commodity input, * packaging, and * fuel costs. While contracts negotiated with customers over the past year provide a mechanism to pass through a portion of commodity cost changes (upward and downward), Moody's believes the company still faces some practical limits on pricing flexibility in the highly competitive pet food segment. The company's products compete with the national brands of some of the nation's largest food and consumer products companies, which have substantial resources and financial flexibility. These companies have higher margins on their branded products than Doane and may choose not to pass on cost increases to gain market share. If private label price increases outpace branded price increases, narrowing the gap between branded and private label product prices, private label volumes can be negatively impacted, as they were during FY04. And, when commodity input costs fall, Wal-Mart and other large food retailers are likely to look for price decreases or other support from their branded and private label suppliers, which may restrain the extent of Doane's ability to significantly improve margins and sustain volume growth in a more favorable cost environment. Doane's ratings gain material support from: * its dominant position in the US private label dry pet food market; * the large scale of its dry pet food manufacturing operations; * its distribution reach; and * the strength of its relationship with Wal-Mart. Doane is the leading manufacturer of private label pet food, supplying 65% of private label dry volume in the US, and is the second largest manufacturer of dry pet food in the US, with over 20% volume share of the market. The company has had a long- standing relationship with Wal-Mart and Sam's Club, which account for about 43% of Doane's sales. Doane's business with Wal-Mart is supported by closely tied logistics and an infrastructure positioned to efficiently supply key products, including Wal- Mart's Ol' Roy dog food, the largest selling pet food brand by volume in the US. Doane's ratings also take into account the company's success in moving contracts with its major customers over the past year to a form that shares, on average 50%, of commodity cost movements, which enabled price increases during FY04 and should help reduce volatility going forward. In addition, the ratings recognize that Doane's European operations (about 27% of sales) could be sold without negative impact on the company's US business platform and could provide opportunity for debt reduction and de-leveraging if sold at a high enough multiple of cash flow. Doane's pro-forma balance sheet will include a significant component of intangible assets (55%). Low returns on assets suggest potential for asset write-downs. Pro forma debt of $586 million (incorporating Moody's standard analytical adjustments) represents approximately 5.4X LTM EBITDA. Free cash flow after interest expense, taxes and capital spending is estimated at about $33 million in FY'06 (first full year following the acquisition) or slightly above 6% of total debt. Given Moody's expectation that Doane is interested in resuming its internal and acquisition growth strategy, Moody's expects free cash flow after acquisitions to remain limited relative to debt, restraining the company's ability to significantly reduce debt levels. Pro forma interest coverage remains modest, with EBITDA less capex representing 1.7X cash interest expense. The new credit facility improves liquidity by reducing pricing, extending the maturity, and providing reasonable cushion under financial covenants. The outlook on Doane's ratings is stable. This reflects Moody's anticipation that the company's operating performance will remain solid, and that it will manage its future growth and financial policies in such as way as to maintain its leverage at levels commensurate with its new ratings. Doane's ratings could be downgraded if its operating performance falters, or if its future growth strategy involves significant debt-financed acquisitions which result in Debt/EBITDA exceeding 5.5X or free cash flow to debt falling below 4% for several quarters. Its ratings could experience upward pressure if: * the company continues to strengthen its operating performance; * gains greater scale and customer diversification; and * improves debt protection measures such that Debt/EBITDA can be sustained below 4.5X and free cash flow to debt rises consistently above 8%. The B1 rating on the senior secured credit facilities is notched up from the corporate family rating to reflect their preferential position in the capital structure. The facilities have upstream and downstream guarantees and are secured by substantially all the domestic assets and stock of the company and its domestic subsidiaries and by 65% of the stock of its foreign subsidiaries. Moody's believes there would be sufficient value for full coverage of outstandings in a distressed scenario. The B2 rating on the unsecured notes is at the corporate family rating, reflecting their position in the capital structure, effectively behind the secured credit facilities, but contractually ahead of the senior subordinated notes. The unsecured notes also have the benefit of upstream guarantees from Doane's domestic subsidiaries. Due to change-in-control provisions in the senior unsecured notes, Doane is required to publicly tender for these securities at par; however, as the notes are trading at a material premium given their 10.75% coupon. Moody's does not expect a significant portion of the notes to be tendered. If they are tendered, Doane is required to replace them with other senior unsecured debt. The Caa1 rating on the senior subordinated notes is notched down two levels from the corporate family rating to reflect their contractual subordination to a large amount of senior debt (the senior secured credit facilities and senior unsecured notes) and Moody's expectation that asset coverage of the subordinated notes would be weak in a distressed scenario, even with realization of a relatively high value for intangible assets. The subordinated notes also benefit from upstream guarantees from Doane's domestic subsidiaries. The existing redeemable preferred stock is notched down two levels from the senior subordinated notes to reflect the most junior debt position in the capital structure which is lodged at the holding company and does not benefit from any upstream guarantees. Ratings on the preferred stock will be withdrawn when acquisition transaction closes and the preferred is redeemed. Doane Pet Care, based in Brentwood, Tennessee, is a manufacturer of private label pet food for the US and European markets. DYKESWILL LTD: Trustee Wants Joe Adame as Real Estate Broker ------------------------------------------------------------ Ben B. Floyd, the Chapter 11 Trustee appointed in Dykeswill, Ltd.'s bankruptcy case, asks the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ Joe Adame & Associates, Inc., as his real estate broker. The Trustee wants Joe Adame to assist him in marketing and selling the Debtor's four commercial real property located in Nueces County, Texas. Joe Adame will: (a) prepare marketing materials or offering packages to be used in soliciting prospective purchasers for the properties; and (b) locate, qualify and furnish potential purchasers of the properties to the Trustee. James Hoenscheidt, agent for Joe Adame, will be the professional in charge of marketing the property. Mr. Hoenscheidt discloses that the Firm will be paid a 6% commission of the gross sale price. Should Joe Adame procure a tenant to lease all or part of the properties, the Firm will be paid 6% of the rents, to be paid each during the term of the lease. Mr. Hoenscheidt assures the Court that the Firm does not represent any interest adverse to the U.S. Trustee, the Chapter 11 Trustee or Debtors and its estates. Headquartered in Corpus Christi, Texas, Dykeswill Ltd., filed for Chapter 11 protection on July 26, 2004 (Bankr. S.D. Tex. Case No. 04-20974). Harlin C. Womble, Jr., Esq., at Jordan, Hyden Womble and Culbreth, P.C., represents the Debtor in its restructuring efforts. When the company filed for protection from its creditors, it listed over $10 million in assets and debts of more than $1 million. DYKESWILL LTD: Wants Wallace Gallup for Hawaiian Real Estate Work ----------------------------------------------------------------- Ben B. Floyd, the Chapter 11 Trustee for Dykeswill, Ltd., asks the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ Wallace H. Gallup, Jr., as his Hawaiian real estate counsel. Mr. Gallup will review, analyze, advise, and assist the Trustee on all matters relating to the Debtor's Hawaiian real property. The Trustee discloses that Mr. Gallup will be paid $200 per hour. To the best of the Trustee's knowledge, Mr. Gallup is a "disinterested person" as that term is defined is Section 101(14) of the Bankruptcy Code. Headquartered in Corpus Christi, Texas, Dykeswill Ltd., filed for Chapter 11 protection on July 26, 2004 (Bankr. S.D. Tex. Case No. 04-20974). Harlin C. Womble, Jr., Esq., at Jordan, Hyden Womble and Culbreth, P.C., represents the Debtor in its restructuring efforts. When the company filed for protection from its creditors, it listed over $10 million in assets and debts of more than $1 million. E*TRADE: Closes $700M Purchase of HARRISdirect from BMO Financial ----------------------------------------------------------------- E*Trade Financial Corporation (NYSE: ET) completed the acquisition of the U.S.-based online brokerage operations of Harrisdirect from BMO Financial Group (TSX, NYSE: BMO), for a purchase price of $700 million, payable in cash. As reported in the Troubled Company Reporter on Aug. 11, 2005, Harrisdirect will distribute, at closing, approximately $50 million to BMO Financial, resulting in aggregate proceeds of approximately $750 million (CDN$910 million). "The close of the Harrisdirect acquisition marks a milestone in the evolution of E*Trade Financial," said Mitchell H. Caplan, Chief Executive Officer. "Harrisdirect customers are highly valuable, holding a high industry average asset balance. Our goal is to leverage each customer relationship across our integrated platform of investing, cash, and credit to further strengthen our franchise and accelerate our growth goals." Harrisdirect has approximately 430,000 active accounts and US$32 billion in assets under administration. The business provides online brokerage services to individual investors as well as third-party brokerage services to institutional clients. Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of CDN$292 billion as at April 30, 2005, and more than 33,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and solutions. BMO Financial Group serves clients across Canada through its Canadian retail arm, BMO Bank of Montreal, and through BMO Nesbitt Burns, one of Canada's leading full-service investment firms. In the United States, BMO serves clients through Chicago- based Harris, an integrated financial services organization that provides more than 1.5 million personal, business, corporate and institutional clients with banking, lending, investing, financial planning, trust administration, portfolio management, family office and wealth transfer services. The E*Trade Financial family of companies provide financial services including trading, investing, banking and lending for retail and institutional customers. Securities products and services are offered by E(x)TRADE Securities LLC (Member NASD/SIPC). Bank and lending products and services are offered by E(x)TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries. * * * As reported in the Troubled Company Reporter on Oct. 4, 2005, Standard & Poor's Ratings Services affirmed its 'B+' rating on E*TRADE Financial Corp. as a result of the announcement that E*TRADE will purchase BrownCo, a discount on-line broker with approximately 200,000 active customer accounts, from J.P. Morgan Chase & Co. S&P said the outlook on E*TRADE is stable. E*TRADE FINANCIAL: Closes on 3-Year $250 Million Credit Facility ---------------------------------------------------------------- E*Trade Financial Corporation (NYSE: ET) completed a three-year $250 million senior secured revolving credit facility. The facility will be used for general corporate purposes which may include the funding of transaction-related expenses and regulatory capital needs associated with the Company's acquisition of Harrisdirect and planned acquisition of BrownCo. "We are pleased to have established a $250 million bank facility," said Robert J. Simmons, Chief Financial Officer, E*Trade Financial. "This transaction provides the Company with ongoing access to long-term liquidity and improves our financial flexibility." The E*Trade Financial family of companies provide financial services including trading, investing, banking and lending for retail and institutional customers. Securities products and services are offered by E(x)TRADE Securities LLC (Member NASD/SIPC). Bank and lending products and services are offered by E(x)TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries. * * * As reported in the Troubled Company Reporter on Oct. 4, 2005, Standard & Poor's Ratings Services affirmed its 'B+' rating on E*TRADE Financial Corp. as a result of the announcement that E*TRADE will purchase BrownCo, a discount on-line broker with approximately 200,000 active customer accounts, from J.P. Morgan Chase & Co. S&P said the outlook on E*TRADE is stable. EMPLOYEE ACQUISITION: Involuntary Chapter 11 Case Summary --------------------------------------------------------- Alleged Debtor: Employee Acquisition Company, L.L.C. 113 North Pat Street Lafayette, Louisiana 70533 Involuntary Petition Date: October 7, 2005 Case Number: 05-52875 Chapter: 11 Court: Western District of Louisiana (Lafayette/Opelousas) Petitioners' Counsel: Robin B. Cheatham, Esq. Adams and Reese, LLP 339 Florida Street, 2nd Floor Baton Rouge, Louisiana 70801 Tel: (225) 615-8400 Petitioners Amount of Claim ----------- --------------- John A. Brady, Jr. $6,800,141 P.O. Box 895 Larose, LA 70373 Lafourche Telephone Company, LLC $6,432,408 P.O. Box 188 112 West 10th Street Larose, LA 70373 ENRON CORP: Wants to Sell Centragas & EIDS Equity Interests ----------------------------------------------------------- Reorganized Debtors Enron Corp., Enron Development Corp., Enron Commercial Finance Ltd., and Enron International Holdings Corp. seek the U.S. Bankruptcy Court for the Southern District of New York's authority to sell to Arctas-Paragon Investments LLC: (i) an aggregate 50% partnership interest in Centragas - Transportadora de Gas de la Region Central de Enron Development & Cia., S.C.A., and (ii) 100% of the equity interest in Enron International Development Services LLC. Centragas, a non-debtor Colombian partnership, was formed to develop, own and operate a 359-mile natural gas pipeline extending from Ballena to Barrancabermeja in Colombia. On May 12, 1994, Centragas entered into a transportation services contract with Empresa Colombiana de Petroleos, the state-owned oil company of Colombia, under which Ecopetrol purported to assign certain rights to Empresa Colombiana de Gas, a state-owned gas transportation company in 1998. Since that time, Ecogas has acted as Centragas' functional counterparty under the Transportation Contract. Centragas currently transports gas exclusively for Ecopetrol and Ecogas pursuant to the Transportation Contract. None of the Debtors have been a party to the Transportation Contract. EIDS provides technical services to Centragas pursuant to a Technical Services Agreement, dated October 13, 1994. Enron Affiliates' Interests Certain Enron affiliates are limited partners of Centragas, and hold ownership interests in the partnership: Affiliate Ownership --------- --------- Enron Colombia Investments 11.485% Limited Partnership Enron Pipeline Colombia 37.500% Limited Partnership EDC 1.000% ECFL 0.015% ------- 50.000% ECILP and EPCLP are non-debtor affiliates of Enron. EDC is also the general partner of Centragas. ECFL owns a 99% limited partnership interest in both ECILP and EPCLP, and a 100% equity interest in Enron Colombia Transportation Ltd., the general partner of both ECILP and EPCLP. EIHC, a Reorganized Debtor, owns 100% of the equity interests in EIDS, a non-Debtor. Pursuant to an Equity Purchase Agreement dated July 25, 2005, each of EDC, ECFL and EIHC is transferring its equity interests in Centragas and EIDS to Arctas-Paragon. Other Parties' Interests in Centragas Promigas S.A. E.S.P. owns 25% limited partnership interest in Centragas and provides operations and maintenance services to Centragas. On August 31, 2004, consistent with the terms of the Plan, Enron's indirect 42.92% interest in Promigas was transferred to Prisma Energy International Inc., a wholly owned non-debtor subsidiary of Enron. Accordingly, through Prisma, the Reorganized Debtors hold a minority interest in Promigas. Tomen Corporation owns the remaining 25% limited partnership interest in Centragas. Tomen is not affiliated with Enron. Neither Promigas nor Tomen are transferring interests in Centragas to the Purchaser nor are any of their contractual relationships with Centragas affected by the EPA. None of the Reorganized Debtors are parties to the agreements between Promigas and Tomen, on the one hand, and Centragas, on the other hand. Promigas has indicated its consent to the proposed sale. Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that the Reorganized Debtors anticipate that they will timely receive Tomen's consent to the proposed sale. The parties are finalizing the consent documentation. The Reorganized Debtors and Arctas-Paragon will reimburse Tomen and Promigas for certain expenses incurred in connection with closing. Equity Purchase Agreement A. Sale of Equity Interests In the fall of 2004, Enron began preparations for a marketing and bidding process with respect to the Equity Interests, including setting up a data room and identifying potential purchasers. According to Mr. Rosen, the Equity Purchase Agreement negotiated with Arctas-Paragon is the best offer for the Equity Interests. Pursuant to the Equity Purchase Agreement, each of EDC, ECFI and EIHC will (i) sell the Equity Interests and (ii) assign certain contracts related to the Equity Interests to Arctas- Paragon for an aggregate purchase price of $8,663,600. Each Seller is allocated a share of the purchase price commensurate with their share of the Equity Interests. B. Assignment of Centragas Agreements EDC and ECFL are parties to five prepetition executory contracts, primarily in the form of shareholder or partnership type agreements: (i) the Partners Agreement, dated September 13, 1994, by and among EDC and the limited partners of Centragas; (ii) the Agreement Among Partners, dated January 23, 1996, by and among EDC, EPCLP, ECILP, Enron International, Inc., Enron International Development Services, Inc., Enron Pipeline, Colombia G.P., Inc., and Tomen; (iii) the Agreement as to the Acknowledgment and Performance of Obligations to Restore Loaned Funds, dated Dec. 16, 2002, by and among the Enron Partners and Centragas; (iv) the Escrow Agreement, dated December 16, 2002, by and among the Enron Partners, Centragas and JP Morgan Chase Bank; and (v) the Loan Status Agreement, dated December 16, 2002, by and among the Enron Partners, Promigas, Tomen and Centragas. The Partners Agreement governs Centragas and the disposition of the partnership capital of Centragas. It provides that each of the partners of Centragas: (1) has the right to withdraw a percentage of available funds from Centragas in an amount equal to the partner's percentage ownership of the partnership capital and (2) must restore any withdrawn funds to Centragas. The Agreement Among Partners relates to and governs Tomen's acquisition of a 25% interest in Centragas from EPC and makes the Partners Agreement applicable to Tomen. In accordance with the Partners Agreement, Centragas loaned funds to Enron Development Funding Ltd., a Reorganized Debtor, and Enron Pipeline Company Argentina S.A. Subsequently, the Enron Partners and Centragas entered into the Acknowledgment Agreement, which sets forth the terms of the Enron Partners' repayment of the Partner Loans. In particular, the Acknowledgment Agreement provides that Centragas will hold any dividends or other distributions that may be or become payable to the Enron Partners in escrow and those amounts will be applied towards the Partner Loans. The Enron Partners pledged to Centragas the rights to receive the dividends or other distributions to secure payment under the Partner Loans. In furtherance of the Acknowledgment Agreement, the Enron Partners and Centragas entered into the Escrow Agreement, which governs management and disbursement of the dividends and other distributions back to Centragas. In addition, the Enron Partners, Promigas, Tomen and Centragas executed the Loan Status Agreement, which provides, inter alia, that those parties will refrain from asserting or pursuing any claim of breach or default arising from or relating to the Partner Loans against any party to the Loan Status Agreement or the Acknowledgment Agreement. To maximize the value of the Equity Interests, in conjunction with confirmation of the Plan, the Reorganized Debtors assumed each of the Centragas Agreements. Except those obligations to be assumed by Arctas-Paragon, all cure obligations were satisfied in conjunction with the assumption of these agreements. Because the Centragas Agreements generally govern EDC and ECFL's rights and interests in connection with their equity interests in Centragas, pursuant to the EPA, those rights and interests will be assigned to the Purchaser. In accordance with the Plan, the assignment will be free and clear of all liens, claims and encumbrances as of the Effective Date of the Plan. C. Discharge of Prepetition Obligations The Plan provides that, as of its Effective Date, the Debtors' assets vest free and clear of all liens, claims and encumbrances in the Reorganized Debtors. The Plan also provides for the discharge of prepetition obligations and a permanent injunction on pursuing prepetition claims. Accordingly, the Reorganized Debtors will transfer, convey and assign the Equity Interests and the Centragas Agreements to the Purchaser free and clear in accordance with the terms of the Plan. Among the prepetition obligations discharged pursuant to the Plan are claims arising from: (a) a guaranty agreement, dated December 16, 1994, pursuant to which Enron guaranteed, for the benefit of The Bank of New York, the performance of EIDS Inc. of its obligations under the Technical Services Agreement between Centragas and EIDS Inc. and (b) an agreement between Enron and Ecopetrol, dated May 12, 1994, regarding, inter alia, Enron holding an indirect voting interest in Centragas. According to Mr. Rosen, the Enron Guaranty and the Enron Hold Agreement were either executory contracts rejected pursuant to the Plan or non-executory agreements giving rise solely to prepetition claims. As of October 6, 2005, no proofs of claim have been filed setting forth claims arising under the Enron Guaranty or the Enron Hold Agreement nor did Enron schedule any claims arising under these agreements. D. Mutual Release and Indemnification The parties, including the affiliate of Arctas-Paragon designated to act as the new general partner of Centragas, will enter into a Release and Indemnification Agreement. The designated general partner and Centragas will unconditionally release and forever discharge the Reorganized Debtors and their affiliates from any liabilities relating to: (i) the Acknowledgment Agreement or the Partners Loan, (ii) the Project or (iii) impairment or damage to the environment for failure to comply with environmental laws. The Reorganized Debtors will unconditionally release and forever discharge ECILP, Enron Colombia Transportation Ltd., EPCLP and from any and all liabilities, including claims arising out of an any business dealings, intercompany accounts or other arrangements or transactions with Enron, any Seller or any of their affiliates, that existed on or before the closing of the proposed transaction. E. Noteholder Consent Solicitation Mr. Rosen relates that a portion of the financing for Centragas was obtained through issuance of $172 million of 10.65% Senior Secured Notes Due 2010 pursuant to an indenture, dated December 8, 1994, between Centragas and the Bank of New York. The Indenture requires that Enron hold at least a 25% interest in Centragas and at least a 51% direct or indirect interest in EDC. In addition, the Indenture requires EDC to remain the general partner of Centragas. In conjunction with the sale under the EPA, the Sellers have obtained the noteholders' consent to modify the Indenture and eliminate the hold requirements. As is customary, Centragas has agreed to pay a consent fee equal to $1.20 per $1,000 of the face amount of the bonds payable upon consummation of the transaction. 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. 160; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Wants Court to Bless FERC Settlement Pact ----------------------------------------------------- Reorganized Enron Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to approve a settlement agreement dated Aug. 24, 2005, that provides for a comprehensive resolution of disputed regulatory proceedings, bankruptcy and adversary proceedings, appellate proceedings, litigation and investigations relating to events in the California and western electricity and natural gas markets. The parties to the Settlement are: a. the Enron Parties: -- Enron Corp., -- Enron Power Marketing, Inc., -- Enron North America Corp., -- Enron Energy Marketing Corp., -- Enron Energy Services Inc., -- Enron Energy Services North America, Inc., -- Enron Capital & Trade Resources International Corp., -- Enron Energy Services, LLC, -- Enron Energy Services Operations, Inc., -- Enron Natural Gas Marketing Corp., and -- ENA Upstream Company, LLC; b. the Federal Energy Regulatory Commission's Office of Market Oversight and Investigations -- OMOI; c. the California Parties: -- Pacific Gas and Electric Company, -- Southern California Edison Company, -- San Diego Gas & Electric Company, -- the California Attorney General, -- California Department of Water Resources -- CERS, -- California Electricity Oversight Board, and -- California Public Utilities Commission; and d. the Oregon Attorney General and the Washington Attorney General -- the Additional Claimants. According to Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, in New York, the Settlement will avoid future disputes and litigation concerning the disputes since the parties have agreed, subject to certain restrictions and reservations, to release one another from claims, causes of action, obligations and liabilities with respect to the matters addressed in the Settlement. The Settlement will also result in the resolution of billions of dollars in claims filed by a number of the Settling Participants, California Power Exchange Corporation, and the California Independent System Operator Corporation. The material terms of the Settlement are: A. Monetary Consideration The Enron Parties will provide monetary consideration, including: 1. the assignment to the California Parties the Enron Parties' rights, title and interest in the first $25,000,000 of certain undistributed funds relating to transactions in the markets of the PX and the ISO currently held by the PX in all its accounts or the reorganized PX holding funds in trust pursuant to the terms of the PX Tariff, ISO Tariff, or a court order; 2. granting the Settling Claimants an allowed Class 6 unsecured claim pursuant to the Plan totaling $875,000,000 against EPMI, without offset, defense or reduction on account of any claim or counterclaim the Enron Parties may have against any of the Settling Claimants; 3. collectively granting the California Attorney General, the CPUC, the CEOB and the Additional Claimants an allowed subordinated Class 380 penalty claim aggregating $600,000,000; 4. assignment of any refunds or rights to refunds that the Enron Parties have received or will receive from other entities in the refund proceeding conducted before the FERC, or the FERC Refund Related Proceedings, excluding the California Energy Resources Scheduling division of CERS, to the California Parties; 5. assignment to CERS of the Enron Parties' claim for refunds, and related right, title or interest, resulting from any mitigation of sales by CERS of imbalance energy into the ISO real-time market, as well as any interest, surcharges, other charges or payments associated with the sales, that may be payable pursuant to FERC's May 12, 2004 Order on Requests for Rehearing and Clarification and subsequent orders. B. Non-Monetary Consideration The Enron Parties also agreed to provide certain non-monetary consideration. Specifically, the Enron Parties agreed to cooperate with the Settling Claimants in the Claimants' pursuit of claims against entities other than the Enron Parties and their affiliates relating to events in the western energy markets or relating to third-party participation in alleged Enron financial misconduct during the Settlement Period. The Enron Parties have also authorized the PX and the ISO to provide the California Parties any additional information, materials, or data that would otherwise be available to one or more of the Enron Parties and that are related to Enron's sales and purchases in the ISO and PX markets, provided that the California Parties have agreed to maintain the information in confidence and not to disclose it to third-parties, with certain exceptions. C. Withdrawals, Releases and Waivers All claims against Enron for the Settlement Period by the Settling Claimants for refunds, disgorgement of profits, or other monetary or non-monetary remedies in the FERC Proceedings will be deemed settled and fully discharged. The FERC Proceedings will not be deemed settled or discharged as to the Non-Settling Participants. The Enron Parties will, without prejudice to any subsequent action, withdraw all subpoenas they have served in any of the FERC Proceedings against PG&E, SCE, or their employees. Enron and the Settling Claimants will be deemed to reserve and retain all claims and defenses they may have against Non- Settling Participants. The Settling Claimants will sign and file all documentation necessary to effectuate withdrawal of their Proofs of Claim. Enron will sign any documentation necessary to effect withdrawal of Claim No. 8879 in the PG&E bankruptcy case, in a form and content acceptable to PG&E. All Scheduled Liabilities relating to any of the Settling Claimants will be disallowed in their entirety and each of the Enron Parties will release the Settling Claimants from all claims, obligations, causes of action, liabilities under specified provisions of the Bankruptcy Code. A full-text copy of the Settlement Agreement is available for free at http://ResearchArchives.com/t/s?238 The Settlement is subject to certain conditions and to final approval by the FERC, the Bankruptcy Court and the CPUC. The Settlement Agreement will clearly benefit the Enron Debtors and their estates and creditors, Mr. Smith says. The Enron Parties believe that the compromise embodied in the Settlement is fair, equitable and reasonable. 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. 160; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Court Nixes AEGON, et al.'s Amended Claims ------------------------------------------------------ Three entities filed statutory securities and common law fraud claims against Enron Corp.: Claimant Claim No. -------- --------- Principal Capital Management LLC 7602 Pacific Investment Management Company LLC 8044 AEGON USA Investment Management, LLC 8133 The Claims alleged misrepresentations and omissions in connection with the Claimants' purchases of certain senior secured notes sponsored by Enron and issued by Osprey Trust and Osprey I, Inc., of: (i) $1.4 billion aggregate principal amount of 8.31% Senior Secured Notes due 2003; (ii) $750 million aggregate principal amount of 7.79% Senior Secured Notes due 2003; and (iii) EUR315 million aggregate principal amount of 6.375% Senior Secured Notes due 2003. On February 21, 2003, Enron commenced an adversary proceeding against, among others, Whitewing Associates, L.P., in connection with the Osprey Note structure. Enron later filed an amended complaint to include the Claimants as defendants. On February 26, 2004, the parties to the Whitewing Litigation entered into a settlement agreement, providing, among other things, Enron's payment of an aggregate $75 million as cash settlement consideration and an allowed $3.6 billion general unsecured claim against Enron. The Court-approved Settlement also provided that the Fraud Claims asserted by Claimants in their Original Proofs of Claims were expressly preserved. Pursuant to the Settlement Agreement and Enron's express agreement, the Claimants amended the Claims to eliminate all claims other than the Osprey Fraud Claims, which were realleged in their entirety. On April 13, 2004, Principal, PIMCO and Aegon filed Amended Claim Nos. 24743, 24741 and 24742. The Debtors objected to the Amended Claims. Pursuant to a settlement agreement with various third parties, the Claimants have agreed to withdraw the Amended Claims. Pursuant to Rule 3006 of the Federal Rules of Bankruptcy Procedure, the Claimants sought the Court's authority to withdraw the Amended Claims. A. Brent Truitt, Esq., at Hennigan, Bennett & Dorman LLP, in New York, argues that the Claimants should be allowed to withdraw the Amended Claims without prejudice, based on these factors: (i) The Claimants exercised diligence in bringing the Motion to Withdraw. The Claimants reached the Third Party Settlement, which obviated the need for continued prosecution of the Amended Claims, only within the last few months. Furthermore, since the time the Settlement was reached, Enron has not had to take any further court action with respect the Amended Claims. (ii) There has been no "undue vexatiousness" on the Claimants' part. To the contrary, the Claimants filed the Amended Claims to preserve their rights and claims as against Enron. The only action Enron has been required to take in court with respect to those claims was the filing of an objection back in March, before the Third Party Settlement was reached. Now that they have reached that settlement, the Claimants are promptly seeking to withdraw the Amended Claims with prejudice, without the need for further litigation and without any payment or distribution by Enron. (iii) The resolution of the Amended Claims has not progressed to the extent that would necessitate a great deal of effort and expense on Enron's part. To the contrary, all that Enron has had to do up to this point is to prepare and file the Objection. (iv) There will be no duplicative expense of relitigation, as there will be no relitigation -- the Claimants are seeking to withdraw their claims with prejudice. (v) The Claimants' explanation for the need to withdraw the Amended Claims warrants the Court's authorizing them to do so. Their settlement with third parties requires them to do so and they no longer intend to continue to prosecute the claims. * * * The Court gave the Claimants authority to withdraw the amended claim. 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) ENVIRONMENTAL TRUST: Confirmation Hearing Scheduled for Dec. 7 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of California will convene a hearing on Dec. 7, 2005, at 2:00 p.m. to discuss the merits of The Environmental Trust, Inc.'s Liquidating Plan of Reorganization. The Court approved the Debtor's Amended Disclosure Statement on Sept. 22, and the plan was sent to creditors for a vote. As previously reported, the Debtor's Plan provides for its liquidation by selling some assets for distribution to creditors. Most of the Debtor's assets are not saleable due to their environmentally sensitive habitat or condition. These assets, comprised of 90 parcels of protected habitat, will be offered to claimants (subject to environmental protections) together with a pro rata share of an Endowment Fund. If the claimants reject the non-saleable assets, they will be turned over to the State of California. The entities which will get first priority to acquire the habitats are direct permitees or developers. Funds A & B will be established for distribution to creditors. Fund A will hold 75% of cash proceeds while Fund B will hold the remaining 25% of cash proceeds. Pursuant to the terms of the Plan, * administrative claims; * priority tax claims; * secured tax claims; * priority wage claims and * secured claims will be paid in full. Endowment-related claim holders will be given interests on the Debtor's properties and pro rata shares of an endowment fund. For any deficiency, claimants will be given pro rata shares of Fund B. General Unsecured creditors owed $550,225 will be paid pro rata from Fund A. Headquartered in San Diego, Calif., The Environmental Trust, Inc., filed for chapter 11 protection on Mar. 23, 2005 (Bankr. S.D. Calif. Case No. 05-02321). Michael D. Breslauer, Esq., at Solomon Ward Seidenwurm & Smith, LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it listed $1 million to $10 million in assets and $10 million to $50 million in debts. FALCON PRODUCTS: Court Confirms Second Amended Joint Plan --------------------------------------------------------- The Honorable Barry S. Schermer of the U.S. Bankruptcy Court for the Eastern District of Missouri confirmed Falcon Products, Inc., and its debtor-affiliates' Second Amended Joint Plan of Reorganization on Oct. 6, 2005. The Plan, filed by the Debtors, is co-proposed by OCM Principal Opportunities Fund II, LP, and Whippoorwill Associates, Inc. Judge Schermer determined that the Plan met the 13 standards for confirmation required under Section 1129(a) of the Bankruptcy Code. Business Consolidation The Reorganized Debtors' profitability is dependent on the success of its consolidation plan. The plan is designed to increase their responsiveness to customers, add value through reduced costs and reliability, improve efficiency and financial performance. These steps include: a) consolidation and reduction of administrative overhead along with elimination of redundancies and inefficiencies throughout the entire company; b) alignment of sales, marketing and customer service functions with the manufacturing and product development functions in order to improve responsiveness and quality; c) continued growth of the Debtors' international design and sourcing capabilities; d) creation of partnership network with high quality suppliers who provide superior value; e) improvement of customer service by exceeding expectations in product quality and designs, and improving the timeliness of deliveries in order to provide maximum value and satisfaction; f) consolidation of product lines by eliminating low-margin, low-volume wood chairs, conference tables, metal stack chairs and other product lines; g) downsizing of facilities in the United States and relocation of support services, accounting, field service, and customer service functions to Tennessee; production will be concentrated in the Morristown and Newport facilities; h) outsourcing product and reducing material costs; i) process improvement in plants and improvement in support functions; j) implementing a pricing strategy which will maximize profitability in the future; a tiered-pricing based on standards will be introduced to customers; k) quality improvements; and l) disposition of subsidiaries and other assets: -- transition of employees to the Morristown facility; -- downsizing the St. Louis headquarters; -- sale of the Phillocraft product lines; -- closure of the Epic offices in Florida; and -- sale of Sellers & Josephson, Inc., the Mimon facility in the Czech Republic and excess inventory. Plan Structure Under the Plan, these claims will be fully paid in cash: -- allowed administrative claims; -- allowed administrative tax claims; -- DIP facility; and -- priority claims. General unsecured creditors and noteholders won't get anything under the Plan. However, these creditors will be given the right to purchase shares of the New Common Stock of Reorganized Falcon. A portion of the New Common Stock of Reorganized Falcon will be issued to the Term B Secured Lenders in exchange for their $45.7 million claims, subject to dilution by the Rights Offering and the Management Incentive Plan. The Rights Offering is expected to infuse $30 million in cash into Reorganized Falcon. OCM POF II, OCM POF III, OCM POF III-A, Whipporwill and Dalton will lend $20 million to the Reorganized Debtors pursuant to the Term B secured loan. Proceeds from the Rights Offering and the Term B secured loan will be used to pay down $25 million of what's owed to the Term A secured lenders. The $45 million balance will be reinstated in accordance with the Amended Term A Loan Agreement. The $37.8 million DIP loan will be paid by $20 million from the proceeds of the Rights Offering and the Term B secured loan, and then will be refinanced and replaced by an exit facility of at least $45 million. Shareholders won't get anything under the Plan. The Debtors will emerge as a private company and the New Common Stock to be issued will be restricted securities that are not publicly traded and will have limited liquidity. Asset Sale Separately, the Company disclosed that it has completed the sale of the assets of its Sellers & Josephson wallcoverings subsidiary. The sale was approved by the Bankruptcy Court at a hearing on Sept. 28, 2005. Headquartered in Saint Louis, Missouri, Falcon Products, Inc. -- http://www.falconproducts.com/-- designs, manufactures, and markets an extensive line of furniture for the food service, hospitality and lodging, office, healthcare and education segments of the commercial furniture market. The Debtor and its eight debtor-affiliates filed for chapter 11 protection on January 31, 2005 (Bankr. E.D. Mo. Lead Case No. 05-41108). Brian Wade Hockett, Esq., and Mark V. Bossi, Esq., at Thompson Coburn LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $264,042,000 in assets and $252,027,000 in debts. FEDERAL-MOGUL: Inks Agreements to Amend Plan of Reorganization -------------------------------------------------------------- As reported in the Troubled Company Reporter on Sept. 28, 2005, 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. In conjunction with the U.K. Settlement Agreement, at the omnibus hearing dated September 29, 2005, the Debtors delivered to the Bankruptcy Court two agreements that reflect the terms of amendments that will be made to the Third Amended Joint Plan of Reorganization: 1. A Term Sheet entered into by Federal-Mogul, the other Plan Proponents and High River Limited Partnership; and 2. A Letter Agreement between Carl Icahn and the Official Committee of Unsecured Creditors relating to the Term Sheet and certain corporate governance in the reorganized Federal-Mogul. The Term Sheet The Term Sheet provides that the Asbestos Trust to be created under the Plan and Section 524(g) of the Bankruptcy Code will: a. obligate itself to make a payment to the reorganized Federal-Mogul, or pay a portion of the stock in the reorganized Federal-Mogul to be issued to the Trust, for the agreed amounts that will be used by the Administrators as distributions on account of the U.K. asbestos personal injury claims pursuant to the U.K. Settlement Agreement; and b. grant an option for the purchase of the remaining stock of the reorganized Federal-Mogul that will be issued to the Asbestos Trust under the Plan. The Asbestos Trust will issue to Federal-Mogul a $125 million note that matures 10 business days after the Effective Date of the Debtors' Plan. On the Maturity Date, in exchange for the Note, the Trust will pay 13.88% of the Trust's distribution of stock obtained from Federal-Mogul pursuant to the Plan -- the distribution being 50.1% of the reorganized Federal-Mogul stock -- in complete satisfaction of the Note; provided, however, that: -- 32% of the 13.88% of the stock will be held in escrow by Federal-Mogul; and -- after resolution of claims filed by (i) Chester Street Insurance Holdings Limited, (ii) Chester Street Employers Association Limited, (iii) QBE Insurance Company (UK) Limited, (iv) all or any shipyard companies insured by the entities, and (v) any employee or employees of those insured shipyard companies and (vi) the Financial Services Compensation Scheme from a EUR22,000,000 reserve established under the U.K. Settlement Agreement, if any amount is returned to Federal-Mogul pursuant to the U.K. Settlement Agreement, Federal-Mogul will return an equivalent amount of the escrowed stock to the Trust. Mr. Icahn will be granted a call on the remaining stock held by the Asbestos Trust. The Call will expire on the 60th day after the Effective Date, provided however that if the schemes of arrangement or company voluntary arrangements are not yet approved then the Call Period will be extended to the earlier of July 31, 2006, or the Effective Date of the Schemes or CVAs. In the event Mr. Icahn exercises the Call option, upon resolution of the Chester Street claims, the Federal-Mogul stock held in escrow will be offered to Mr. Icahn for cash consideration on the same terms as the Call stock. If Mr. Icahn, on the other hand, declines, then the Asbestos Trust can sell the stock in the market, subject to regulatory and contractual compliance. At the expiration of the Call Period and in the event that Mr. Icahn does not exercise the Call, Mr. Icahn will provide the Asbestos Trust with a $100 million term facility secured by the remaining shares of common stock of Federal-Mogul held by the Asbestos Trust. The common stock will have a quarterly interest payable at LIBOR plus 100 bps (not to exceed 5.5%) that matures four years from the Effective Date. If Mr. Icahn exercises the Call then he will pay to the Asbestos Trust $775 million consisting of: * $375 million in cash; and * $400 million note payable in equal quarterly installments beginning in year three maturing 7 years from the date of issuance with interest payable quarterly at LIBOR plus 100 bps (not to exceed 5.5%). The Icahn Note will be issued by High River or American Real Estate Partners LP, and the Asbestos Trust will be entitled to receive from time to time, at its request, information to assure itself of High River's or AREP's ability to satisfy the Icahn Note. In the event that Mr. Icahn exercises the Call and the claims of Cooper Industries, Inc., against Federal-Mogul and its affiliates have not been settled, released and resolved pursuant to the Plan then the indemnification obligations of the Asbestos Trust relating to the Cooper Claims will be secured by the Icahn Note. All proceeds, including interest received from the Icahn Note will be paid to Federal-Mogul until any amounts paid by Federal- Mogul or any of its affiliates on account of the Cooper Claims are repaid in full. Until the Cooper Payments are repaid in full, after 45 days, they will accrue interest at 15%. If at any time all incurred Cooper Payments have been repaid in full, but the Cooper Claims have not been fully satisfied, a portion of the proceeds, including interest, received from the Icahn Note will be paid to the Asbestos Trust subject to an appropriate reserve for expected future Cooper Payments. The obligations under the Term Sheet will take effect on the Effective Date of Federal-Mogul's Third Amended Plan. A full-text copy of the Term Sheet is available at no charge at: http://bankrupt.com/misc/FMOTermSheet.pdf The Letter Agreement The Creditors Committee informed Mr. Icahn of their willingness to execute the Term Sheet on the condition that Mr. Icahn and his affiliates support the amendments to the Third Amended Joint Plan of Reorganization and related Plan Documents. Mr. Icahn agreed. The terms of the Letter Agreement provides that: a. The Creditors Committee will designate Neil Subin as one of the initial members of the reorganized Federal Mogul's board of directors. Mr. Icahn's exercise of the Call option under the Term Sheet will be deemed his and his affiliates' agreement to vote all of their common equity interests in Reorganized Federal Mogul in favor of Mr. Subin at all shareholders' meetings so that Mr. Subin remains a director during the period from and after the Effective Date until at least the second anniversary of the Effective Date. If at any time during the Term Reorganized Federal Mogul's directors are to be elected by written consent in lieu of a meeting of shareholders, Mr. Icahn and his affiliates will deliver their consents in favor of Mr. Subin; b. Federal-Mogul will be a mandatory reporting company under Section 12 of the Securities Exchange Act of 1934, as amended. If Mr. Icahn exercises the Call option, he and his affiliates will not support any action that will cause Reorganized Federal-Mogul not to continue, during the Term, to be a mandatory reporting company under the Securities Exchange Act, with respect to the Class A stock to be issued pursuant to the Plan; c. Should Mr. Icahn exercises the Call and, thereafter, it is proposed that Reorganized Federal-Mogul would engage, during the Term, in any transaction other than in the ordinary course or of a de minimis nature to Federal-Mogul with Mr. Icahn or one of his affiliates, Mr. Icahn agrees that as a prerequisite to the consummation of any Icahn Transaction, Federal-Mogul will obtain an opinion from an investment banking firm of national repute to the effect that the transaction is fair, from a financial point of view, to Federal-Mogul and its common equity holders. If requested by Mr. Subin, in his capacity as a director, Federal-Mogul will select an investment banking firm from among a list of five firms furnished to Federal-Mogul by Mr. Subin. If none of those firms is acceptable to Federal-Mogul then, in that event, Federal-Mogul and Mr. Subin will each select an investment banking firm and that firm will select a third investment banking firm for the purpose of delivering the Opinion; and d. During the Term, if Mr. Icahn and his affiliates will sell or otherwise dispose of more than an aggregate of 40% of the aggregate common equity interests of his and his affiliates in Reorganized Federal-Mogul immediately after exercising the Call, other than through public open market sales, then that kind of sale or disposition will not be consummated until Mr. Icahn have caused the purchaser to afford each of Reorganized Federal Mogul's minority common equity holders the right to sell or dispose of their common equity interests to that purchaser on the same terms and conditions, including price and proportion of ownership, as would have been negotiated by Mr. Icahn and his affiliates with that purchaser. A full-text copy of the Letter Agreement is available at no charge at http://bankrupt.com/misc/LetterAgreement.pdf Agreements Draw Debtors Closer to Exit The agreements represent one of the most significant steps toward emergence from Chapter 11 in the U.S. and Administration in the U.K., Federal-Mogul Chairman President and Chief Executive Officer Jose Maria Alapont said in a press release issued on September 30. "We are pleased with the support and collaboration in the recent months from Mr. Icahn, our Plan Proponents and stakeholders. We will welcome Mr. Icahn's potential increased stake in the emerging and reorganized Company," he said. Mr. Icahn said in a statement that he was "extremely pleased by the settlement agreement among the parties and was gratified that he was able to lend assistance to the settlement process." He further stated that he looked forward to the company's early emergence from Chapter 11, "especially at a time when it appeared that other companies in the auto parts industry were moving in the opposite direction." 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 Bankruptcy News, Issue No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: In Compliance with $500 Million DIP Credit Facility ------------------------------------------------------------------ Federal-Mogul Corporation and its debtor-affiliates disclose in a regulatory filing with the Securities and Exchange Commission that they are in compliance with all debt covenants under their $500,000,000 DIP credit facility. The Debtors report that as of June 30, 2005, they have drawn $386,900,000, including $24,100,000 in letters of credit, from the facility. The DIP credit facility expires in December 2005. The Debtors intend to renegotiate the DIP credit facility upon expiration. The Debtors expect to be in compliance of the loan terms through the expiration of the DIP credit facility. The DIP credit facility charges interest at either the alternate base rate plus 1-1/4 percentage points or the London Inter-Bank Offered Rate plus 2-1/4 percentage points. The ABR is the greater of either the bank's base rate or the federal funds rate plus 1/2 percentage point. The commitment available under the DIP credit facility is mandatorily reduced by a portion of proceeds received from future asset or business divestitures. 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 Bankruptcy News, Issue No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIBERMARK: Fourth Amended Disclosure Hearing Set for Oct. 27 ------------------------------------------------------------ Fibermark Inc.'s third proposed Disclosure Statement explaining its third proposed Amended Plan was approved by the U.S. Bankruptcy Court for the District of Vermont on Sept. 19, 2005. The revised Disclosure Statement and Plan reflected the findings of Harvey R. Miller, the Court-appointed examiner in the Debtor's case. After the unsealing of the Examiner's report, a settlement of issues identified in the report was reached among Fibermark and its top three bondholders: * AIG Global Investment Corp., * Post Advisory Group, LLC, and * Silver Point Capital, L.P. The 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. A full-text copy of the Revised Plan is available for free at http://ResearchArchives.com/t/s?1e8 The Court required the Debtor to incorporate the terms of the settlement in a revised plan and disclosure statement. On Sept. 23, Fibermark filed its fourth proposed Disclosure Statement and Plan. The Court will convene a hearing on Oct. 27, 2005, at 10:30 a.m. to consider the adequacy of information in Fibermark's Disclosure Statement as required by 11 U.S.C. Section 1125. Objections to the Disclosure Statement, if any, must be filed by 5 p.m. of Oct. 17. 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. FLYI INC: Names David Asai as New Chief Financial Officer --------------------------------------------------------- Low-fare airline Independence Air (Nasdaq: FLYI) appointed David Asai to the position of Chief Financial Officer, effective immediately. Mr. Asai has been with Independence Air (and Atlantic Coast Airlines) for more than seven years, serving as its Vice President, Controller and Assistant Secretary since January 1998. He has been actively involved in leading the finance activities at the company and led the company's Sarbanes-Oxley internal control compliance effort last year. Before joining the company, Mr. Asai served as Vice President, Controller and Chief Accounting Officer of Reno Air. Prior to that, he was Vice President Finance and Chief Financial Officer of Spirit Airlines. Mr. Asai is a Certified Public Accountant. "I have worked closely with David for many years and am confident he is the right person to take over responsibility as the CFO," Independence Air Chairman and CEO Kerry Skeen said. "His strong accounting and finance background make him the ideal candidate for the job." Richard Surratt, the company's current Chief Financial Officer, has resigned in order to pursue other opportunities. Mr. Surratt has agreed to remain with the company until Oct. 28, 2005, in order to ensure a smooth transition. Mr. Skeen continued, "I would like to thank Richard for his contributions to the company over the past six years. He has been a valuable part of our team and we wish him the best in his pursuit of new challenges and opportunities." Independence Air offers low fares every day with comfortable leather seats and Tender Loving Service(SM). Financial Woes 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, Va., 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). FLYI INC: Cutting 600 Jobs & Halting Flights to East & West Coasts ------------------------------------------------------------------ FlYi Inc., the parent company of Independence Air Inc., has disclosed that it will cut its labor force by 18%, or about 600 of its 3,400 employees by the end of October and cut flight services as part of its efforts to cut costs and prevent a bankruptcy filing, according to published reports. The Company said that it is gradually discontinuing its service to its western destinations, including San Diego, Los Angeles, San Francisco, Seattle and Las Vegas. All flight services to the West Coast would be completely discontinued by Dec. 1, 2005. The East Coast destinations the airline would cut include its services to Cleveland, Louisville and Indianapolis, but it will retain its flights to Pittsburgh, New York, Chicago and Charlotte. 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. Headquartered in Dulles, Va., 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). GARDEN STATE: Has Until Dec. 6 to File Notices of Removal --------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey extended until Dec. 6, 2005, the time within which Garden State MRI Corporation an extension, can file notices of removal of pre- petition civil actions pursuant to Bankruptcy Rule 9006(b)(1). The Debtor explained that prior to the Petition Date, it was involved in litigation against Dr. Golestaneh and his related entities in the Superior Court of New Jersey, Chancery Division for Cumberland County, Docket No. C-13-05. The Debtor gives the Court four reasons in support of the extension: 1) the extension is necessary in order to protect its estate's right to remove the State Court Litigation and any additional actions discovered through an investigation and review of asserted claims against its estate; 2) it has been in constant negotiations with secured creditors and potential financing sources, which if successful, would potentially lead to a resolution of the State Court Litigation; 3) the extension will assure that it does not forfeit valuable rights under 28 U.S.C. Section 1452; and 4) the extension will not prejudice the rights of Dr. Golestaneh and his related entities or other adversaries and it will not prejudice any non-Debtor party to a proceeding that Debtor seeks to remove from pursuing remand under 28 U.S.C. section 1452(b). Headquartered in Vineland, New Jersey, Garden State MRI Corporation, dba Eastlantic Diagnostic Institute -- http://www.eastlanticdiagnostic.com/-- operates an out-patient imaging and radiology facility. The Company filed for chapter 11 protection on June 9, 2005 (Bankr. D. N.J. Case No. 05-29214). Arthur Abramowitz, Esq. and Jerrold N. Poslusny, Jr., Esq., at Cozen O'Connor, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of less than $50,000 and estimated debts between $10 million to $50 million. GENCORP INC: Posts $29 Million Net Loss in Third Quarter 2005 ------------------------------------------------------------- GenCorp Inc. (NYSE: GY) reported results for the third quarter ended Aug. 31, 2005. Sales from continuing operations for the third quarter 2005 totaled $134 million, 16% above the $116 million in the third quarter 2004. Sales for the first nine months of 2005 were $421 million compared to $350 million for the first nine months of 2004, an increase of 20%. Sales in 2005 reflect growth in the Company's Aerospace and Defense business. The Company's net loss for the third quarter 2005 was $29 million compared to a net loss of $47 million for the third quarter 2004. The net loss for the first nine months of 2005 was $54 million compared to a net loss of $378 million for the first nine months of 2004. The loss in 2004 included a one-time charge of $261 million associated with the disposition of the GDX Automotive segment and a $33 million tax provision to reflect the uncertainty of realizing deferred tax benefits, given historical losses. The loss in the third quarter 2005 includes a one-time charge of $28 million associated with the anticipated disposition of the Fine Chemicals business. The third quarter and nine-month periods in 2005 and 2004 reflect the Company's decision to classify its GDX Automotive and Fine Chemicals segments as discontinued operations. The GDX Automotive sale was completed on August 31, 2004. Asset Sale In July 2005, the Company disclosed its plan to sell the Fine Chemicals business to American Pacific Corporation for $119 million, consisting of: * $100 million of cash, * seller note of $19 million, and * the assumption by the buyer of certain liabilities. American Pacific Corporation and the Company recently agreed to amend the purchase agreement to modify the sale price and payment terms related to the Fine Chemicals sale. The revised purchase price will consist of: * $89 million of cash payable at closing, * seller note of $25 million delivered at closing, * a contingent payment of up to $5 million if the Fine Chemicals business achieves specified earning targets in the Twelve month period ending September 30, 2006, and * the assumption by the buyer of certain liabilities. The Company has recorded a loss of $28 million in the third quarter based on the difference between current estimated cash proceeds to be received on disposition less the carrying value of net assets being sold and related transaction selling costs. The Company continues to expect the transaction to close in October 2005. "The sale of Fine Chemicals allows us to focus our attention and our capital on our two core segments: Aerospace and Defense and Real Estate. Both segments continue to make good progress toward the Company's strategic goals," said Terry Hall, chairman, president and chief executive officer. "The increase in Aerojet's sales both in the third quarter and in the year to date period supports our strategic objective to strengthen our position as a critical supplier of propulsion technologies to our customers. Aerojet's nine month sales were up $62 million over 2004 and contract backlog exceeded $935 million at August 31, 2005. With the recent completion of the Rocketdyne Propulsion Unit purchase by United Technologies, U.S. industry consolidation within the solid and liquid propulsion markets in which we compete is essentially complete with Aerojet firmly established as one of two major suppliers in each of those markets. "In our Real Estate segment, the rezoning applications for the Rio Del Oro, Glenborough and Westborough projects are moving through the administrative process of the City of Rancho Cordova and Sacramento County. The schedule for the final approvals of all three projects remains on track with our previous guidance," concluded Mr. Hall. Decrease in Debt Total debt decreased to $424 million at Aug. 31, 2005, from $577 million at November 30, 2004. Total debt less cash increased from $308 million at November 30, 2004 to $421 million as of Aug. 31, 2005. The $113 million increase resulted from: * costs associated with the recapitalization transactions completed in the first quarter of 2005, * working capital requirements due to the timing of payables and receivables and associated with the growth in Aerojet's business volume, * Atlas V inventory increases relating to deliveries scheduled for later in 2005, * capital expenditure requirements, * non-recurring investment in the Fine Chemicals business, and * cash interest expense. The Company believes that with its existing cash combined with the anticipated proceeds from sale of the Fine Chemicals business, and $70 million of borrowings available under its credit facilities, it will have sufficient funds to meet the operating plan for the next twelve months. GenCorp Inc. -- http://www.GenCorp.com/-- is a leading technology-based manufacturer of aerospace and defense products and systems with a real estate business segment that includes activities related to the development, sale and leasing of the Company's real estate assets. * * * The Company's 2-1/4% Convertible Subordinated Debentures due 2024 carry Moody's Investors Services' Caa2 rating. GLOBAL ENVIRONMENTAL: Unsecured Creditors Want Case Dismissed ------------------------------------------------------------- Mildred Rostolder dba North American Transfer Company, Anthony Liberatore, Elizabeth Liberatore, Mark Liberatore, and Michael Liberatore ask the U.S. Bankruptcy Court for the Eastern District of Louisiana to dismiss the chapter 11 proceeding of Global Environmental Energy Corporation. The petitioners hold a $1,980,000 unsecured claim from a litigation judgment against Global Environmental. According to these unsecured creditors, the Debtor fails to meet the requirements for proper venue of its bankruptcy filing as it doesn't have its principal place of business or principal assets in the United States. Laura E.F. Thompson, Esq., Dominic Gianna, Esq., and Barry H. Grodsky, T.A., at Middleberg Riddle & Gianna, contend that the chapter 11 filed in an improper district violates Rule 1014(a)(2) of the Bankruptcy Procedures. Against this backdrop, the attorneys urge the Court to dismiss the case. The Court will convene a hearing on Oct. 26, 2005, at 9:00 a.m. to consider the unsecured creditors' request. Headquartered in New Orleans, Lousiana, Global Environmental Energy Corporation aka Life Energy and Technology Holdings, Inc., aka Heath Pak, Inc., manufactures the Biosphere Process 'TM' System, an autonomous multifuel micro-power electricity generation system. The Debtor also sells and leases waste management systems to government entities and corporate clients worldwide. The Company filed for chapter 11 protection on May 19, 2005 (Bankr. E.D. La. Case No. 05-14201). Douglas S. Draper, Esq., at Heller, Draper, Hayden, Patrick & Horn, LLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $10 million to $50 million in assets and debts. GMAC COMMERCIAL: Fitch Holds Low-B Ratings on Eight Cert. Classes ----------------------------------------------------------------- Fitch Ratings affirms GMAC Commercial Mortgage Securities, Inc.'s, mortgage pass-through certificates, series 2000-C3: -- $79.1 million class A-1 at 'AAA'; -- $851.4 million class A-2 at 'AAA'; -- Interest-only class X at 'AAA'; -- $54.0 million class B at 'AA+'; -- $57.1 million class C at 'A+'; -- $12.1 million class D at 'A'; -- $35.1 million class E at 'BBB'; -- $19.1 million class F at 'BBB-'; -- $8.0 million class G at 'BBB-'; -- $9.9 million class H at 'BB+'; -- $25.5 million class J at 'BB'; -- $4.5 million class K at 'BB-'; -- $9.6 million class L at 'B+'; -- $15.9 million class M at 'B'; -- $3.2 million class N at 'B-'; -- $3.2 million class O at 'CCC'; -- $12.8 million class S-MAC-1 at 'A-'; -- $9.0 million class S-MAC-2 at 'BBB'; -- $5.5 million class S-MAC-3 at 'BB+'; -- $14.4 million class S-MAC-4 at 'BB'. Fitch does not rate classes P and S-AM. Classes S-MAC-1, S-MAC-2, S-MAC-3, and S-MAC-4 represent the interest in the trust fund corresponding to the junior portion of the MacArthur Center loan. The rating affirmations reflect overall stable performance of the transaction. Although 19 loans (14.52%) have fully defeased, Fitch loans of concern have increased to 9.5% of the transaction. As of the September 2005 distribution date, the pool's collateral balance has decreased 5.81% to $1.20 billion from $1.27 billion at issuance. Currently, there are five specially serviced loans (0.75%) in this transaction. The largest specially serviced loan (0.27%) consists of 11 apartment buildings located around the Quad Cities in Illinois and Iowa and is 90+ days delinquent. The special servicer is in the process of initiating a foreclosure action. Based on current appraisal values, a significant loss is expected upon liquidation. The second largest specially serviced loan (0.18%) is a multifamily property located in Beaumont, TX. This loan is 30 days delinquent and the special servicer anticipates foreclosing on this property in early October. Current appraisal values indicate a small loss upon liquidation. Fitch reviewed the transaction's three credit assessed loans and their underlying collateral. The Fitch stressed debt service coverage ratio is calculated using servicer provided net operating income less required reserves divided by debt service payments based on the current balance using a Fitch stressed refinance constant. Due to their stable performance, the loans retain their investment grade credit assessments. The Arizona Mills loan (11.26%) is secured by a 1.23 million square feet regional mall and is located in Tempe, AZ. The year- end 2004 DSCR for the loan was 1.65 times (x) versus 1.72x as of YE 2003 and 1.58x at issuance. Occupancy as of YE 2004 is 96.5% compared to 96.0% as of YE 2003 and 98.0% at issuance. The MacArthur Center loan (7.7%) is secured by 528,846 sf in a 942,662 sf regional mall in Norfolk, VA. The property is the dominant upscale mall serving the Hampton Roads MSA. The YE 2004 DSCR for the A note of this loan is 1.81x compared to 1.92x at issuance. Occupancy as of January 2005 is 100% compared to 92% at issuance. The AmeriSuites loan (2.4%) is secured by eight limited service, cross-collateralized, cross-defaulted hotels located in eight states. The DSCR as of YE 2004 for the A note of this loan is 1.88x compared to 1.67x as of YE 2003 and 1.75x at issuance. As of YE 2004, the occupancy is 70%, compared to 78% as of YE 2003, and 69.3% at issuance. While occupancy has decreased since issuance, increased room revenues and higher income from food and beverage and telephone have all attributed to an increase in the property's net cash flow in comparison to 2003. GRAPHIC PACKAGING: Moody's Affirms B1 Corporate Family Rating ------------------------------------------------------------- Moody's Investors Service changed the outlook on Graphic Packaging International, Inc.'s ratings to negative from stable, and affirmed the company's Corporate Family Rating at B1. At the same time, Moody's lowered Graphic's Speculative Grade Liquidity Rating to SGL-3 from SGL-2. The change in the outlook to negative is based on Moody's expectation that pressure on Graphic's operating earnings and cash flow, which continue to be impacted by steady gross margin deterioration due to higher prices for chemical based inputs, fiber, and energy, will continue over the intermediate term. These inflationary pressures coupled with a delay in an ability to raise prices to certain contracted customers significantly impact margins. Ratings actions are: Ratings Affirmed: * Corporate Family Rating at B1 * Senior Secured Term Loan and Revolving Credit Facility at B1 * Senior Unsecured Notes at B2 * Senior Subordinated Notes at B3 Ratings Lowered: * Speculative Grade Liquidity Rating to SGL-3 from SGL-2 Outlook: To negative from stable In December of 2004, Moody's stated that the company's inability to improve credit metrics or deterioration in liquidity, due in part to poor pricing, increased competition, or increasing input costs could negatively impact the outlook and/or ratings. Specifically, if the company failed to reduce leverage (as measured by debt to EBITDA) below 5.0x over the next 12 to 18 months, then the ratings could go down. For the twelve months ended June 30, 2005, Graphic's leverage remained high with EBITDA coverage of total debt of approximately 6.6x, although interest coverage was reasonable on an EBITDA basis at 2.0x. Over the next 12 months, if it is not evident that the company is making progress towards achieving a leverage ratio of 5.0x on an adjusted basis, and retained cash flow to total debt around 8% on an adjusted basis, the ratings are likely to go down. The downgrade of the Speculative Grade Liquidity Rating to SGL-3 from SGL-2 follows Graphic's announcement that the company will seek an amendment to its $1.6 billion credit agreement in order to avoid any potential violations due to inflationary pressures and an inability to pass through all cost increases, and reflects Moody's expectation of lower cash flow over the next 12 months. The bank covenants step down in the fourth quarter of 2005 and will require some modification since operating performance or margins will deteriorate. Although the company is likely to receive covenant relief from its lenders, anticipated lower free cash flow will mean that the SGL rating is not likely to be upgraded back to the SGL-2 level over the near term. Over the next twelve months, Moody's expects the company to generate modest free cash flow, which includes: * cash interest expense of approximately $145 million; * estimated capital expenditures of about $100 million; and * other cash charges. Due to the expected deterioration of margins, the company is more likely to rely on its bank revolver for working capital needs. As of June 30, 2005, the company had approximately $35.8 million outstanding on its $325 million revolving credit facility with undrawn availability of about $275 million after $14 million of LC's and covenant limits. Moody's views alternate sources of liquidity available to the company as limited. All assets are encumbered with the bank facility having a priority claim to all tangible and intangible assets of the company. Graphic's B1 corporate family rating reflects the company's leading position in folding consumer cartons and coated unbleached kraft paperboard, in addition to extensive customer relationships, continued focus on cost improvements, and adequate liquidity. However, the ratings also incorporate: * Graphic's high leverage, * increased competition, and * higher input costs. Graphic Packaging International, Inc., located in Marietta, Georgia, is a provider of paperboard packaging solutions. HAWS & TINGLE: Wants Neligan Tarpley as Bankruptcy Counsel ---------------------------------------------------------- Haws & Tingle, Ltd., asks the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, for permission to employ Neligan Tarpley Andrews & Foley LLP, as its bankruptcy counsel. Neligan Tarpley will: (a) advise the Debtor of its rights, powers, and duties as debtor and debtor-in-possession; (b) take all necessary actions to protect and preserve the estate of the Debtor, including the prosecution of actions on the Debtor's behalf, the defense of actions commenced against the Debtor, the negotiation of disputes in which the Debtor is involved and the preparation of objections to claims filed against the estate; (c) prepare on behalf of the Debtor, as debtor-in-possession, all necessary motions, applications, answers, orders, reports, and papers in connection with the administration of the estate; (d) draft, negotiate and prosecute on behalf of the Debtor a liquidating plan of reorganization, the related disclosure statement, and any revisions or amendments, relating to the said documents, and all related materials; (e) perform all other necessary legal services in connection with the Debtor's case and any other bankruptcy related representation that the Debtor requires; and (f) handle all litigation, discovery and other matters for the Debtor arising in connection with its bankruptcy case. Mark Edward Andrews, Esq., a partner at Neligan Tarpley Andrews & Foley LLP, discloses that as of the bankruptcy filing, the Firm is holding a $19,410.49 retainer. The hourly rates of professionals engaged are: Professional Designation Hourly Rate ------------ ----------- ----------- Mark E. Andrews, Esq. Partner $375 Omar J. Alaniz, Esq. Associate $150 Kathy Gradick Legal Assistant $115 The Debtor believes that Neligan Tarpley Andrews & Foley LLP is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Fort Worth, Texas, Haws & Tingle, Ltd., is a building contractor. The Debtor filed for chapter 11 protection on October 6, 2005 (Bankr. N.D. Tex. Case No. 05-82478). When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million to $50 million. HAWS & TINGLE: Wants Access to Cash Collateral Until Oct. 21 ------------------------------------------------------------ Haws & Tingle, Ltd., asks the Honorable Harlin DeWayne Hale of the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, for authority to use its lenders' cash collateral through Oct. 21, 2005. Prepetition Debt The Debtor owes Summit National Bank approximately $1.4 million. Summit has a lien on a building, which is currently under a sale contract. In addition, Summit has liens on accounts receivable and general intangibles and certain life insurance policies. The Debtor says that the sale of the building will clear the debt owed to Summit. Zurich American Insurance Company claims to be a secured creditor and has claims in excess of $2 million. Because Zurich filed a Form UCC-1 with the Secretary of State on July 26, 2005 (less than 90 days before the chapter 11 filing) to perfect its security interest, the Debtor says the purported lien is subject to avoidance as a preference. The Debtor takes the position that Zurich is not secured at this time, subject to further investigation. The Debtor owes Orix approximately $250,000. Orix filed liens on a crane, which is tentatively sold, subject to Court approval. The Debtor says the sale of the crane will satisfy Orix's lien. The Debtor asserts that its use of cash collateral is minimal and necessary to fund operations. The Debtor also asserts that Summit and Orix are oversecured. The equipment and building materials in Fort Worth provide ample collateral to offset Zurich's purported unperfected lien. The Debtor will use the cash collateral to fund its winding down operations, payroll, and other operating expenses that are necessary to maintain the value of the estate. A full-text copy of Haws & Tingle's budget is available for free at http://bankrupt.com/misc/Haws&TingleBudget.pdf Headquartered in Fort Worth, Texas, Haws & Tingle, Ltd., is a building contractor. The Debtor filed for chapter 11 protection on October 6, 2005 (Bankr. N.D. Tex. Case No. 05-82478). Mark Edward Andrews, Esq., and Omar J. Alaniz, Esq., at Neligan Tarpley Andrews & Foley LLP represent the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million to $50 million. HOUSE2HOME: $6.4 Million of TJX Companies Claim is Senior Debt -------------------------------------------------------------- House2Home, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for Central District of California, Santa Ana Division, to approve the stipulation recognizing approximately $6,350,000 of TJX Companies, Inc.'s claim as an allowed senior debt claim under Class 4 of their confirmed Joint Chapter 11 Plan of Liquidation. The Stipulation is the product of negotiations between TJX Companies and U.S. Bank National Association, successor to State Street Bank and Trust Company of California, N.A. U.S. Bank succeeded State Street Bank as trustee to Notes issued by Homebase, Inc., under an Indenture dated Nov. 10, 1997. TJX Companies' Claims The Debtors' plan of liquidation, confirmed in June 2003, classifies approximately $19,102,749 of TJX Companies' Claims as an allowed general unsecured claim. In Nov. 2003, TJX Companies filed a notice asserting that it holds approximately $43,024,715 in claims, plus additional contingent and unliquidated sums, against the Debtors' estate. TJX Companies argued that its claim is a senior debt and should be treated as Class 4 claim under the plan. In conjunction with the filing of notice, TJX Companies commenced a civil action (Civil Action No. 03-5237 BLS) against U.S. Bank in the Commonwealth of Massachusetts, Suffolk Superior Court. U.S. Bank responded to the complaint by denying that TJX Companies' senior debt claim constitutes a senior debt under the indenture. The Settlement Following a round of negotiations, TJX Companies has agreed to be paid $6,350,000 in full and complete satisfaction of its senior debt claims. TJX Companies will receive the settlement amount in addition to its previously allowed $19,102,749 general unsecured clam. The Estate Manager will pay TJX Companies' senior debt claim out of cash otherwise distributable to holders of allowed Class 6 claims. Upon receipt of the settlement amount, TJX Companies agrees to withdraw the Commonwealth of Massachusetts civil action. House2Home, Inc., stores offer an expansive selection of specialty home decor merchandise across four broad product categories -- outdoor living, indoor living, home decor and accessories, and seasonal goods. The Company filed for chapter 11 protection on November 7, 2001, (Bankr. C.D. Calif. Case No. 01-19244). Oscar Garza, Esq., at Gibson, Dunn & Crutcher represents the Debtor in this liquidating proceeding. When the Debtor filed for protection from its creditors, it listed $181,244,162 in assets and $192,961,553 in liabilities. INDUSTRIAL ENTERPRISES: Liquidating 15 Million Power3 Shares ------------------------------------------------------------ Industrial Enterprises of America, Inc. (OTCBB:ILNP) disclosed that its management has decided to sell and/or dividend the Company's full stake in Power3 Medical Products, Inc. (OTC:PWRM). Industrial Enterprises of America currently owns 15 million shares of Power3 Medical's stock obtained in consideration for the sale of intellectual property to PWRM in May of 2004. The Company plans to initiate transactions to begin liquidating all of its holdings in Power3 Medical in full accordance with SEC rules and regulations. Industrial Enterprises management made this decision after requesting that Power3's transfer agent remove the transfer restrictions from the Power3 stock held by the Company. Power3's transfer agent informed Industrial Enterprises that it could only remove the legend after receiving an opinion from Power3's counsel, Sichenzia Ross Friedman Ference LLP. Sichenzia Ross Friedman Ference has since refused to issue the opinion and has not provided a reason for the refusal. Litigation between the two companies had already ensued over another matter and has not been settled at this point. Headquartered in New York, New York, Industrial Enterprises of America, Inc. -- http://www.TheOtherGas.com/-- is one of the largest worldwide providers of refrigerant gases, specializing in converting the hydroflurocarbon gases, R134a and R152a, into branded and private label refrigerant and propellant products. The Company's main product, the "gas duster" is used in a variety of industries including consumer electronics, medical, and the automotive aftermarket. * * * Going Concern Doubt Beckstead and Watts, LLP, had expressed substantial doubt about Industrial Enterprises' ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended June 30, 2005. The auditors point to the Company's sustained net losses and stockholders' deficit. At March 31, 2005, Industrial Enterprises' total liabilities exceed its total assets by $1,681,900. INTERSTATE BAKERIES: 207 Creditors Sell $1.8 Million of Claims -------------------------------------------------------------- From September 1 to September 30, 2005, the Clerk of the Bankruptcy Court recorded 207 claim transfers to: (a) 3V Capital Master Fund Ltd. Creditor Claim Amount -------- ------------ Sparks Belting Company $57,732 (b) Argo Partners Creditor Claim Amount -------- ------------ Earle M. Jorgensen $10,126 E T Oakes Corporation 1,040 Excellent Consulting 2,079 Fleischmann's Vinegar 2,997 Flooring & Concrete Technology 2,031 Immediate Family Medical Care 964 Island Environmental Services, Inc. 1,013 Laranda Farms, Inc. 1,120 Middle East Baking Co. 14,017 Middle J. Enterprise, Inc., d/b/a Sitka 2,593 Pepsi Cola of Havre 724 Pepsi Cola7 Up Co. Sprng 3,055 Pepsi of Pocatello d/b/a Old Faithful 1,351 Rental Uniform Service 1,042 Stanion Wholesale Electric Co. 6,392 Tab Label Co. 1,400 Tierra Environmental & Industrial 5,275 Vincent Electric Motor Co. 14,524 (c) 3V Capital Master Fund Ltd. Creditor Claim Amount -------- ------------ Burford Corp. $116,921 SCI Commercial Center 308,313 (d) Contrarian Funds, LLC Creditor Claim Amount -------- ------------ FreundBaking $32,911 Jenco, Inc. 26,072 Jenco, LLC 222,410 (e) Debt Acquisition Company of America V, LLC Creditor Claim Amount -------- ------------ AAA Automotive Towing & Recovery SE $575 Acme Doors, Inc. 95 Advanced Cleaning System 250 Allen's Auto Service 275 Alonzo's Lawn Maintenance 50 Ambucare Clinic 134 Amedure's Cleaning Svc 164 Ark La Tex Glass, Inc. 261 Auburn Trader 210 Avenel Truck & Equipment 231 B & K Overhead Door 773 Bauer Auto Parts, Inc. 200 Bear Heating Air Conditioning & Refrig. 175 Best Engine Parts 364 Bill Smith 160 Bleu Water of Baltimore 171 Blue Hills Towing Co., Inc. 823 Bob Clark 185 Bob Hearod Ideal Cleaning 806 Burk's Beverage LP 511 Brandt Truck Line, Inc. 181 Bruce Perry d/b/a Perry's Lawn Care 300 Buetow Lighting 106 C&B Auto Parts, Inc. 670 Carolina Yard Pro LLC 320 Central Valley Business Sys., Inc. 90 Champion Lawn Care 873 Chazen Engineering & Land Surveying PC 73,450 City Wide Sewer & Drain Service 299 Clawson's Air Conditioning & Furnace 643 Climate Control 278 Clyde Stewart & Son Excavating 850 Columbus Automatic Sprayer Co. 155 Comfort Inn Great Falls 360 Complete Comfort 164 Complete Scale Service 705 Conders Service Center 536 Consolidated Trash Service 58 Continental Courier System, Inc. 647 Continental Fire & Safety Services L 106 Crowell & Moring LLP 6,194 D & D Floor Care 280 D & J Locksmith 60 D&D Sunoco, Inc. 284 Day's Inn Glendive 567 Dei Monti, Inc. 392 Del Van Auto Glass, Inc. 967 Dooley Glass Service 267 Dura Freight, Inc. 68 Economy Pest Control 192 EMS, Inc. 150 Energy Savers of Georgia, Inc. 529 Fillingham Roofing & Sheet Metal 387 Fish Window Cleaning 129 Fleetwash 505 FM George Safe & Lock Company 182 Gabbard Towing 474 General Air 97 General Energy Corp. 587 Geoffrey Mann 108 George O. Pasquel Co. 651 Gould Center Automotive 460 Greener Pastures Lawn 195 Hart's Pest Control 120 Hauk's Alignment 217 HCI-Metromedic 203 Helman's Service 150 Hot Fire & Safety Equipment 181 HPI Cuda 161 Hy-Vee 1610 750 Jeff Champagne Electric 533 JJB D00035_54S041 175 Jo Jack's Landscaping & Mowing, Inc. 104 Jolley Towing & Recovery 341 Judith Pennefather 50 Kay's Vending & Catering 172 Kenny Riechers K & R Towing 195 Kim A. Wattam 310 Kingscape Landscape 319 Kirk Welding Supply, Inc. 351 K-Tech Supply 62 LaClepe Cab 120 Lane Fire & Safety 205 Lazerpipes Services, Inc. 255 LMK Service 600 Logic Computer Products 289 Los Castillos Auto Detailing 171 Maddox Hockey, Inc. 981 M & B Auto Radiator Works 832 M & D Supply, Inc. 113 Marx Bros Fire Extinguisher 607 Maurer's Textile Rental Svc., Inc. 247 Mechanical Fire & Ice, Inc. 228 Metro Beverage of Phila 295 M H Sales Co. 177 Michele Walenciak 100 Mikki Crane 160 Moses Ndiritu d/b/a Neat Cleaning Svc. 396 Muscle Shoals Electric Board 527 Music Mountain 184 Nancy Leon 336 North Coast Couriers, Inc. 214 OPIS 125 PCBC of Pittsburgh 410 Performance Driveline & Clutch 392 Precision Crank Shaft Service, Inc. 369 Prismatic Promotions 208 Process Division, Inc. 798 PSI Environmental Systems, Inc. 0182 61 PSI Environmental Systems, Inc. 0183 81 PSI Environmental Systems, Inc. 0202 105 PSI Environmental Systems, Inc. 0210 229 R & R Engine Machine 3,674 Randy Scott Corporation 349 Ray Dennison Chevrolet 821 Ray Skillman Shadeland Kia 832 Reuland Electric 983 Richie's Tire Service, Inc. 201 Rivcomm LLC 398 Roger's Safe & Lock LLC 166 Rosemary Farm 246 Safety Roofing Systems, Inc. 175 Sampson Dairy Foods, Inc. 368 Santee Elec. Supply Co. 64 Secondi, Inc. 242 Seltzer & Rydholm 337 Semedo's Cleaning, Inc. 840 Serv A Rack, Inc. 150 Shroyer's Towing, Inc. 50 Smith Systems Driver 998 Source Tech 1,233 Southern Refrigeration Company 116 Stacy Woods 180 Star Ice & Fuel, Inc. 797 Stepping Stones 630 Sterling Pest Control 3,512 Steve Venable 554 Stoops-Freightliner-Lima 142 Thayer Industries, Inc. 569 The Calk Company, Inc. 106 The Key People Company Building 214 The Pros Janitorial 270 The Scoh Group, Inc. 105 Town & Country Advertising 62 Tracey Freightliner of Albany, Inc. 134 Trimark Central Billing 104 Troiano Waste Service, Inc. 146 Truck Parts Specialists 447 USA Town & Country Hauling 118 Vogel Heating & Cooling Co. 811 VOL Coffee Service 683 Wahler Coding-Heating, Inc. 102 Waterloo Cedar Falls Courier 598 West Nashville Wrecker 1,117 White Oak Ice Company LLC 420 William Green 124 WJBZ FM 963 Radio 200 WM Klinge G. Son, Inc. 271 Woodward Wash on Wheels 255 Workman Cleaning Co. 1,125 Yates Overhead Door, Inc. 784 (f) Fair Harbor Capital, LLC Creditor Claim Amount -------- ------------ A J Carpenter $1,944 AL Doggett, Inc. 1,050 Astbury Environmental Engineering 1,641 Betty Zielenski Super Coupls of So 1,625 Examinetics, Inc. 4,524 Heartland Inn 1,096 Moline Dispatch Publishing Co. Lic 1,208 (g) Longacre Master Fund, Ltd. Creditor Claim Amount -------- ------------ National Starch and Chemical Company $406,357 Renfro Industries, Inc. 114,617 Securitas Holdings, Inc. 150,779 (h) Madison Investment Trust-Series 17 Creditor Claim Amount -------- ------------ Allstate Maintenance $2,400 Barry's AC Heating, LLC 2,014 Bus Service Incorporated 1,976 Fergan's Auto Parts 3,587 Hampel Oil Distributors 14,977 Indiana Corrugated 35,187 Parts Distribution Service 3,123 Ramona Bakery 15,845 Rowe's Body Shop 3,222 Unifirst Corporation 35,090 (i) Sierra Liquidity Fund Creditor Claim Amount -------- ------------ Brenda Langley $12,500 Sara Moore 10,500 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. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) JOE PAULK: Case Summary & 15 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Joe Paulk Company P.O. Box 248 Russellville, Arkansas 72811 Bankruptcy Case No.: 05-24812 Type of Business: The Debtor is a distributor of products for the correctional commissary industry and convenience stores. Chapter 11 Petition Date: October 7, 2005 Court: Eastern District of Arkansas (Little Rock) Judge: Richard D. Taylor Debtor's Counsel: Timothy W. Murdoch, Esq. Laws & Murdoch, P.A. P.O. Box 3000 Russellville, Arkansas 72811 Tel: (479) 968-1168 Fax: (479) 968-5590 Total Assets: $1,757,300 Total Debts: $1,416,238 Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Najim Jamell Loan to corporation $260,000 1205 North Ithica Russellville, AR 72801 Martin and Kayla Jennen Loan to corporation $55,791 208 Craigwood Circle Russellville, AR 72801 Navajo Manufacturing Company Trade debt $16,046 5330 Fox Street Denver, CO 80216-1630 NVE Pharmaceuticals, Inc. Trade debt $7,932 U.S. Treasury Withholding $5,785 Arkansas Dept. of Finance Tax withholding $4,797 Citicorp Vendor Finance Inc. Trade debt $4,356 Airosol Company, Inc. Trade debt $3,496 Del Pharmaceuticals, Inc. Trade debt $2,149 Bristol-Myers Products Trade debt $1,875 Kenray Associates Trade debt $1,542 Sun-Fun Products, Inc. Trade debt $1,428 K&K Veterinary Supply, Inc. Trade debt $1,425 Orincipal Life Insurance Co. 401-K withholding $1,367 and matching AFLAC Payroll withholding $37 JP MORGAN: Fitch Lifts $24 Million Class G Certs. One Notch to B+ ----------------------------------------------------------------- Fitch Ratings upgrades J.P. Morgan Commercial Mortgage Finance Corp.'s mortgage pass-through certificates, series 1999-C7: -- $52.1 million class D to 'AA-' from 'A+'; -- $12.0 million class E to 'A' from 'A-'; -- $38.1 million class F to 'BBB-' from 'BB+'; -- $26.0 million class G to 'B+' from 'B'; -- $4.0 million class H to 'B' from 'B-'. Fitch affirms these classes: -- $16.1 million class A-1 'AAA'; -- $357.0 million class A-2 'AAA'; -- Interest-only class X 'AAA'; -- $40.1 million class B 'AAA'; -- $40.1 million class C 'AAA'. The $24.0 million class NR certificates are not rated by Fitch. The upgrades reflect the increased credit enhancement levels from loan payoffs and amortization. As of the September 2005 distribution date, the pool's aggregate principal balance has been reduced by 24% to $609.4 million from $801.4 million at issuance. In addition, the largest loan in the pool (8.3%) has defeased. One asset (1.3%) is currently specially serviced and real estate owned. The REO is secured by an office property in Jackson, Mississippi. The special servicer is working on stabilizing the property before marketing it for sale. Losses are expected. There have been no realized losses in the pool to date. KAISER ALUMINUM: Court Approves Modified UFWA Settlement Agreement ------------------------------------------------------------------ As reported in the Troubled Company Reporter on Sept. 30, 2005, Kaiser Aluminum & Chemical Corporation and the United Steelworkers commenced discussions regarding certain aspects of their amended agreement to modify retiree benefits and collective bargaining agreements that needed modification. Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, relates that USW raised concerns that, pursuant to the existing terms of the First Amended 1113/1114 Agreement, the Voluntary Employee Beneficiary Association might have insufficient liquidity on the Debtors' emergence from bankruptcy to pay then-existing benefits to its beneficiaries. The Debtors asked the U.S. Bankruptcy Court for the District of Delaware to approve the modifications to the First Amended 1113/1114 Agreement. The modifications will have minimal economic effect on the Debtors or on Reorganized KAC, Ms. Newmarch assures Judge Fitzgerald. Reorganized KAC will only be required to make advances if the VEBA experiences liquidity problems and will be entitled to reimbursement for the full amount of any advances, with interest, Ms. Newmarch explains. * * * Judge Fitzgerald approves the Settlement Agreement. The Court overrules all objections filed and not withdrawn. Judge Fitzgerald emphasizes that nothing in her order will affect any insurers' rights, if any, to assert a contribution, subrogation, reimbursement or indemnification claim against the Underwriters and those insurers' rights to object to any channeling injunctions in any plan of reorganization in connection with confirmation of that plan are preserved. 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. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEHMAN BROTHERS: Poor Performance Cues Fitch to Downgrade Ratings ----------------------------------------------------------------- Fitch Ratings downgrades Lehman Brothers floating-rate commercial mortgage trust 2002-LLF C3: -- $25.3 million class L to 'BB+' from 'BBB-'; -- $25.1 million class M to 'B+' from 'BB-'. Fitch upgrades these classes: -- $25.1 million class H to 'AAA' from 'A'; -- $25.1 million class J to 'AA+' from 'BBB+'; -- $20 million class K to 'A' from 'BBB'. In addition, Fitch affirms these classes: -- $4.9 million class G at 'AAA'; -- Interest-only (IO) classes X-2 and X-FLP at 'AAA'. Classes A, X-1, X-FLWPB, X-FLWT, X-FLH, X-XSWPB, B, C, D, E, and F have paid in full. The downgrades to classes L and M are due to the lack of substantial improvement in leasing activity and net cash flow performance at both the Michigan Industrial Portfolio and the Boulder Portfolio since Fitch's last review. The upgrades are due to the recent repayment of the Printer's Square loan and scheduled amortization, which have resulted in increased credit enhancements to the classes. As of the September 2005 distribution date, the pool's outstanding principal balance has been reduced 87.9% to $125.6 million from $1.3 billion at issuance. Sixteen loans have paid off since issuance. The Michigan Industrial Portfolio (68.4%) is secured by 25 industrial properties containing 5.2 million square feet in the Grand Rapids, Michigan, submarket. Overall portfolio occupancy as of July 2005 was 63.8%, compared to 62.6% as of Dec. 31, 2004 and 81% at issuance. Year to date June, 30, 2005, the Fitch adjusted normalized net cash flow decreased 36.5% since issuance, reflecting the declines in occupancy. The Fitch stressed debt service coverage ratio for the trust mortgage balance as of YTD June 30, 2005 was 0.87 times (x) compared to year-end 2004 at 0.74x and 1.35x at issuance. Affiliates of Kojaian Management Co., one of the largest industrial owners in the submarket, own and manage the properties and are actively marketing the vacant space. Although Fitch remains concerned with the loan performance, the loan is amortizing on a 30-year schedule and benefits from a low loan per square foot of less than $17. The Boulder Portfolio (31.6%) consists of three office properties located in Boulder, Colorado. Occupancy for the portfolio as of June 2005 was 68.1%, compared to 66.7% as of Dec. 31, 2004 and 95.4% at issuance. As of YE 2004, the Fitch adjusted NCF declined 14.4% since issuance, reflecting the decline in occupancy. The DSCR as of YE 2004 for the trust mortgage balance was 1.20x compared to 1.40x at issuance. The servicer is holding a $1.2 million lease rollover reserve as of September 2005. Although Fitch remains concerned with the loan performance, the loan remains current with a maturity of March 2006. The borrower, an affiliate of Investcorp, is actively marketing the vacant space. As part of its review, Fitch analyzed the performance of the two remaining loans and the underlying collateral. DSCRs were calculated based on a Fitch adjusted NCF and a stressed debt service constant. For the Michigan Industrial and Boulder Portfolio loans, an all-in DSCR was also calculated in order to fully reflect the entire stress on the loan. LAFEYETTE'S EPOXY: Case Summary & 26 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Lafeyette's Epoxy Floor Coatings, Inc. a/k/a Lafeyette's Seamless Epoxy Floor Coatings a/k/a Lafeyyette Floor Systems, LLC 5342 Elmwood Avenue, Suite E Indianapolis, IN 46203 Bankruptcy Case No.: 05-23889 Chapter 11 Petition Date: October 7, 2005 Court: Southern District of Indiana (Indianapolis) Debtor's Counsel: Deborah Caruso, Esq. Dale & Eke 9100 Keystone Xing Suite 400 Indianapolis, Indiana 46240-2159 Tel: (317) 844-7400 Total Assets: Not Provided Total Debts: $100,000 to $500,000 Debtor's 26 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Betty M. Welch $80,452 c/o Eric N. Allen Allen Wellman McNew Five Courthouse Plaza, Box 455 Greenfield, IN 46140 Beaver Ready Mix $48,204 16101 River Avenue Noblesville, IN 46062 Job Site Supply $28,773 624 South Missouri Street Indianapolis, IN 46225 Litteton & Sons $9,446 Mid-West Concrete $6,917 CRF Solutions $6,600 VanSickle $5,861 Rainbow $4,427 Best Buy $4,064 D. Grant Concrete $3,500 RCS $3,489 General Polymers $3,169 Litgen Concrete Cutting $1,785 GMAC $1,603 Tyson $1,223 Swanson Excavating $1,050 Vectren $672 MICCS $600 Sprint/Nextel $588 SBC $289 Indianapolis Star $271 Crider & Crider $225 Ace Checking Cashing $210 American Express $123 Don Griffin $20 Midwest Toxicology $13 LONG ISLAND PHYSICIAN: PwC Raises Going Concern Doubt in Form 10K ----------------------------------------------------------------- Pricewaterhousecoopers, LLP, expressed substantial doubt about Long Island Physician Holdings Corporation's ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2004 and 2003. The auditing firm points to the Company's substantial working capital deficit, cumulative losses since inception and the continuing decline in enrollment for the health plans offered by its sole operating subsidiary MDNY Healthcare, Inc. Losses and Enrollment Decline The Company incurred a $908,572 for the year ended Dec. 31, 2004 on $135,209,066 of revenues compared to a $1,010,000 net profit in 2003. Management attributes the negative result in 2004 primarily to a 14% enrollment drop during the year. MDNY Healthcare recorded 40,447 enrollments in 2004 compared to 47,029 enrollments in 2003. MDNY is focusing on six areas to achieve profitability, expansion and enrollment growth in 2005: -- Applying for an Article 42 accident and health company license to allow MDNY to develop new products and benefit plan designs and match increased cost sharing provisions that certain of MDNY's competitors have marketed to their customers. -- Achieving administrative efficiencies by, among other things, increased use of automation and electronic transmission. -- Marketing to brokers in Nassau and Suffolk Counties, New York to increase name recognition and promote enrollment growth. -- Expanding into Queens County, New York, where MDNY has an established provider network. -- Expanding marketing of MDNY's self-insured products. -- Pursuing potential partnerships investments in and acquisitions of MDNY Accumulated Deficit Long Island Physician's balance sheet showed $35,230,000 of assets at Dec. 31, 2004, and liabilities totaling $33,083,000. At Dec. 31, 2004, the Company had a $10,540,765 accumulated deficit. The Company had negative working capital of approximately $17.2 million at Dec. 31, 2004. Diocese of Rockville Non-Renewal The Catholic Health Services of Long Island, Inc. and the Diocese of Rockville Centre has notified MDNY Healthcare that they will not renew their current subscriber contracts with MDNY upon expiration effective January 1, 2006 and 2005 respectively. MDNY Healthcare subject to the New York Women's Health and Wellness Act, which, as of January 1, 2003, obligates MDNY to provide contraceptive drugs and devices to its members. The family planning program is in conflict with the ethical policies of the Diocese of Rockville Centre, to which CHSLI and Catholic Healthcare Network of Long Island, Inc., are affiliated. Because of the ethical conflict, MDNY and CHNLI executed the Stock Purchase Agreement so as to allow CHNLI to exit as an MDNY shareholder. CHNLI had owned the remaining 33% of the stock in MDNY. CHNLI's departure resulted in the loss of approximately 3,800 members. About Long Island Physician Long Island Physician Holdings Corporation was formed in 1994 by physicians residing and practicing in New York State. The Company conducts no operating activities of its own. Long Island Physician Holdings' principal asset is a 67% equity interest in MDNY Healthcare, Inc. -- http://www.mdny.com/-- an independent practice association-model health maintenance organization, that currently operates in Nassau and Suffolk counties, New York. The financial statements of MDNY are consolidated into the audited financial statements of Long Island Physician Holdings. MERCURY INTERACTIVE: Nasdaq Extends Filing Deadline to Nov. 30 -------------------------------------------------------------- The NASDAQ Listing Qualifications Panel, subject to certain conditions, has granted Mercury Interactive Corporation an extension of time until Nov. 30, 2005, in which to: -- file its Forms 10-Q for the periods ended June 30, 2005 and Sept. 30, 2005; -- file all required restated and other financial statements for previous periods; and -- otherwise meet all necessary listing standards of the NASDAQ National Market. However, there can be no assurance that the Company will be able to make the required filings by Nov. 30, 2005, or that NASDAQ will grant any additional extension if necessary. During the extension period, the Company's common stock will continue to be listed on the NASDAQ National Market under the trading symbol: MERQE. Mercury Interactive Corporation -- http://www.mercury.com/-- is committed to helping customers optimize the business value of information technology. Founded in 1989, Mercury conducts business worldwide and is one of the largest enterprise software companies today. Mercury provides software and services for IT Governance, Application Delivery, and Application Management. Customers worldwide rely on Mercury offerings to govern the priorities, processes and people of IT and test and manage the quality and performance of business-critical applications. Mercury BTO offerings are complemented by technologies and services from global business partners. * * * Financial Restatements As reported in the Troubled Company Reporter on Aug. 31, 2005, the Company concluded that its previously issued financial statements for the fiscal years 2002, 2003 and 2004, which are included in the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2004, the Quarterly Reports on Form 10-Q filed with respect to each of these fiscal years and the financial statements included in the Company's Quarterly Report on Form 10-Q for the first quarter of fiscal year 2005, should no longer be relied upon and will be restated. In addition, the restatement will affect financial statements for prior fiscal years, and the Company will also require a revision of the previously reported financial information included in its press release of July 28, 2005 and its Current Report on Form 8-K dated Aug. 17, 2005. Mercury intends to complete the restatements and make the required amended Form 10-K and Form 10-Q filings and to file its Form 10-Q for the second quarter of fiscal year 2005 as soon as practicable following completion of the Special Committee investigation, the Company's review and restatement of its historical financials and completion of the audit process. The Company does not expect that it will be able to complete this process and make the required filings before November 2005. The errors resulting in the required restatement relate to the Special Committee's conclusion that the actual dates of determination for certain past stock option grants differed from the originally selected grant dates for such awards. Because the prices at the originally selected grant dates were lower than the price on the actual dates of determination, the Company will incur additional charges to its stock-based compensation expense, which were not included in the above-referenced financial statements. The Company has determined that the amounts of these charges are material but has not yet determined the final amount of the additional charges to be incurred. Likely Material Weakness Additionally, Mercury is evaluating Management's Report on Internal Control Over Financial Reporting set forth in Item 9a on page 53 of the Company's 2004 Annual Report. Although Mercury has not yet completed its analysis of the impact of management's evaluation on its internal controls over financial reporting, it has determined that it is highly likely that Mercury had a material weakness in internal control over financial reporting as of Dec. 31, 2004. MERRILL LYNCH: Fitch Holds Low-B Ratings on Two Cert. Classes ------------------------------------------------------------- Merrill Lynch Mortgage Investors, Inc.'s commercial mortgage pass- through certificates, series 1996-C2 are upgraded by Fitch Ratings: -- $56.9 million class D to 'AAA' from 'AA'; -- $28.5 million class E to 'AA+' from 'A+'. In addition, Fitch affirms six classes: -- $104.3 million class A-3 at 'AAA'; -- $68.3 million class B at 'AAA'; -- $62.6 million class C at 'AAA'; -- interest only class IO at 'AAA'; -- $62.6 million class F at 'BB+'; -- $39.8 million class G at 'B-'. Fitch does not rate the $22.0 million class H. Classes A-1 and A-2 have been paid in full. The upgrades reflect improved credit enhancement levels due to loan payoffs and amortization. As of the September 2005 distribution date, the pool's aggregate certificate balance has decreased 59% to $445.0 million from $1.1 billion at issuance. There are currently 123 loans remaining in the pool of the original 300 at issuance. Currently, six loans (5.43%) are in special servicing. The largest specially serviced asset (1.40%) is a real estate owned limited service hotel located in Portland, OR. The property is currently under contract for sale. Fitch expects a significant loss upon liquidation of the asset. The second largest specially serviced asset (1.37%) is an REO limited service hotel in Seattle, WA. The special servicer has taken title to the property and is preparing to list the property for sale. Fitch expects a loss upon liquidation of the property based on the most recent appraised value. Fitch continues to monitor the Shilo portfolio of loans within this transaction. The loans are current and performing under a modification agreement. Recent operating data reported by the master servicer shows several properties have a negative cash flow. Fitch analyzed each loan in the pool and assumed stressed default probabilities and loss severities for loans of concern, including liquidation scenarios of current specially serviced loans and certain Fitch Loans of Concern. The required credit enhancement that resulted from this remodeling of the pool warranted the upgrades to classes D and E. MIRANT CORP: Bankruptcy Court Approves NY-Gen's Consent Order ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas: a. approved a Remediation Consent Order entered into between Mirant NY-Gen, LLC, a Mirant Corporation affiliate, and the New York State Department of Environmental Conservation; and b. permit Mirant Corporation, its debtor-affiliates and NY-Gen to enter into a related Reimbursement Consent Order that will govern certain penalties and cost reimbursements to the DEC, and an environmental audit. Jason D. Schauer, Esq., at White & Case LLP, in Miami, Florida, relates that the Consent Orders are products of the discussions between Mirant NY-Gen and the DEC to resolve the environmental concerns discovered at the Company's electric power generation station in Hillburn, New York. A full-text copy of the Reimbursement Consent Order or the Implementation Consent Decree dated September 15, 2005, between Mirant NY-Gen and the New York State Department of Environmental Conservation that will govern certain penalties and cost reimbursements to the DEC, and an environmental audit, is available at http://ResearchArchives.com/t/s?23e 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: HVB Risk Management Holds $223 Mil. Unsecured Claim ---------------------------------------------------------------- On October 11, 2001, Mirant Americas Energy Marketing, LP, entered into a swap agreement with each of HVB Risk Management Products, Inc., and Scarlett Resource Merchants LLC. The Scarlett Swap and the HVB RMP Swap were memorialized by these agreements dated October 11, 2001: (1) the ISDA Master Agreement, (2) the Schedule to the Master Agreement, and (3) the Amended and Restated Confirmation. Mirant Corp. guaranteed MAEM's obligations under the two Swaps. By the Assignment and Novation Agreement dated January 30, 2003, Scarlett assigned its rights and obligations under the Scarlett Swap, including the Scarlett Contracts and the Scarlett Guaranty, to HVB RMP. Upon the assignment, the Original Guarantees were merged into, and upon that merger the Original Guarantees were cancelled and replaced by, one master guaranty. On September 2, 2003, HVB RMP assigned to Bayerische Hypo und Vereinsbank all of its rights, title and interest in and to the amounts payable to it with respect to: (i) the HVB RMP Swap Master Agreement, including the HVB RMP Schedule, the HVB RMP Confirmation and the Scarlett Confirmation; and (2) the Master Guaranty. Prepetition Payments under the Swaps On October 15, 2002, MAEM paid $28,751,179 to Scarlett and received a $3,751,179 payment from HVB RMP pursuant to the Swaps. Under the Scarlett Confirmation, either MAEM or Mirant Corp. was required to indemnify Scarlett for all reasonable third-party out-of-pocket expenses and additional costs, excluding lost profit or margin or expenses associated with closing the transaction. On January 6, 2003, an additional $893,387 was paid as a result of additional cost attributable to the downgrade. Swaps Termination and Motion to Reject On August 26, 2003, HVB RMP sent a notice of termination to MAEM. In the termination letter, HVB asserted that the HVB RMP Contracts and the Scarlett Contracts were "safe harbor" contracts under Section 560 of the Bankruptcy Code. To ensure that the Swaps were terminated, on October 2, 2003, the Debtors filed a motion to reject executory contracts with Scarlett Resource Merchants LLC and HVB Risk Management Products, Inc. On July 7, 2004, the Bankruptcy Court authorized the rejection of the Contracts. The Proofs of Claim On December 15, 2003, HVB filed: * Claim No. 6045 for $222,913,568 against MAEM, arising from the termination of the Swaps; and * Claim No. 6046 for $222,913,568 against Mirant Corp. based on the Master Guaranty. The Debtors objected to the HVB Claims, seeking the reduction of the MAEM Claim and the disallowance of the Mirant Corp. Claim as fraudulent transfers. Tolling Agreement Subsequently, HVB and the Debtors agreed to toll the statues of limitations for certain claims, causes of action, proceedings or counterclaims that might be asserted by and between HVB and the Debtors under various provisions of the Bankruptcy Code and any applicable provisions of non-bankruptcy law. On August 2, 2005, the Bankruptcy Court stayed the Debtors' Objection. HVB has made informal and formal objections to the Debtors' Disclosure Statement. After engaging in discussions regarding modifications to the Plan and Disclosure Statement and various related matters, HVB and the Debtors agreed to enter into a Stipulation to avoid the cost and expense of unnecessary motion practice and litigation. The general terms of the Stipulation are: a. HVB will have an allowed claim against MAEM for $222,913,568, plus accrued interest at the non-default imputed contract rate commencing as of Mirant's and MAEM's Petition Date; b. HVB's Claims will be deemed Allowed Unsecured Claims against the Mirant Debtors as Class 3 Unsecured Claims and treated in accordance with the Amended Plan; c. HVB will not receive any distribution based on the Mirant Corp. Claim under the Amended Plan; d. The Debtors will withdraw their Objection, without prejudice; e. HVB will withdraw the Disclosure Statement Objections, without prejudice, and will support the Amended Disclosure Statement and confirmation of the Amended Plan. In addition, HVB will not oppose the substantive consolidation of the Debtors; f. If the Debtors are substantially consolidated, no holder of a claim similar to the Claims will receive treatment more favorable than the treatment afforded to the Claims. To the extent another holder receives more favorable treatment, HVB will also receive more favorable treatment; and g. The Tolling Stipulation is terminated and rendered void and all statutes of limitation tolled under the Tolling Stipulation are deemed to have expired on the Effective Date. 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: Creditors Committee Objects to Use of PIRA Forecasts ----------------------------------------------------------------- In behalf of the Official Committee of Unsecured Creditors appointed in Mirant Corporation and its debtor-affiliates' chapter 11 cases, Paul N. Silverstein, Esq., at Andrews Kurth LLP, in New York, points out that there are a number of aspects of the U.S. Bankruptcy Court for the Northern District of Texas' ruling and its implementation by the VIC that the Mirant Committee disagrees with and would like the Court to "clarify" or "reconsider." The Mirant Committee believes that: -- the Court's instruction to use a 12% to 16.6% cost of equity is too low and not supported by the record; -- the 2006 multiples should not be included in the CompCo analysis given the lack of management projections, or at the very least, should be given a lower weighting; -- the manner in which the NRG multiple is being calculated is not correct; -- it is improper to add NOL value to the CompCo analysis because it leads to a double counting and thus grossly overstates the NOL value applicable to Mirant; and -- Blackstone's cash flow assumptions for the Philippines are incorrect and overstated because they are based on an artificial 2% escalator as opposed to the known actual contract rates for these facilities. As reported in the Troubled Company Reporter on July 7, 2005, Judge Lynn reached certain conclusions regarding modifications necessary to the Debtors' 2005 Business Plan and the report of The Blackstone Group, to be used in determining the enterprise value of Mirant, after a 23-day hearing in Fort Worth, Texas. The Wall Street Journal summarizes the different valuations of the parties, in a previous report: $8 billion -- Creditors' committee, led by Citigroup $9 billion -- Company $13 billion++ -- shareholder group As of September 6, 2005, the Mirant Committee has not filed a motion for reconsideration on these and a number of other issues because the Court clearly indicated that it would not entertain those motions, Mr. Silverstein says. Mr. Silverstein notes that as has been confirmed by all three members of the VIC, PIRA has not issued a new long-term coal price forecast since October 2004, and it would be inappropriate and inconsistent with the Court's directive to somehow "deem" the October 2004 forecast to be a "new long-term forecast" simply because PIRA recently issued a new short-term forecast. "In fact, by this same reasoning, the VIC should be using the long- term gas price forecasts issued by EVA in August 2004 because EVA also issued a short-term update earlier this year." The Mirant Committee says it understands that the Court has already rejected the argument in connection with EVA, thus, there is no reason that the PIRA forecasts should be treated any different. 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) NATIONAL ENERGY: ET Power Wants Court Nod on CalPX Settlement Pact ------------------------------------------------------------------ California Power Exchange Corporation is a public utility that provided various auction markets for the trading of electricity in California under rate schedules and tariffs approved by the Federal Energy Regulatory Commission. In 2000, due to the then-ongoing California energy crisis, Pacific Gas & Electric Company could not meet its obligations to CalPX. By the end of January 2001, CalPX had suspended trading in its markets and on March 9, 2001, CalPX filed for protection under Chapter 11 of the Bankruptcy Code. In response to the California energy crisis, the FERC adopted a number of remedies to address flaws it found in the California markets and the governing rules. These actions led to the FERC's termination of CalPX's rate schedules effective April 30, 2001. After CalPX closed its markets, the FERC permitted CalPX to charge "wind-up" rates to its former customers, which included NEGT Energy Trading-Power, L.P., to fund its remaining activities. However, on July 9, 2004, the United States Court of Appeals for the District of Columbia Circuit held that the "wind-up" rates were a form of retroactive ratemaking, and that the method that FERC had used to allocate the "windup" rates was unreasonable and violated federal law. Settlement Agreement In light of the ruling of the D.C. Circuit and CalPX's resulting inability to fund its wind-up activities through involuntary charges imposed upon its former customers, the parties commenced FERC-mediated settlement negotiations to attempt to arrive at a consensual funding solution to allow CalPX to continue its wind-up activities on an orderly basis. The negotiations culminated into a settlement agreement among the parties. Generally, the Settlement Agreement allocates among the numerous CalPX participants what the Settlement Agreement defines as: (a) Historical Costs -- payments made for all expenses from December 5, 2001 through December 31, 2004; and (b) Going-Forward Costs -- costs associated with certain "necessary functions" of CalPX after December 31, 2004. The "necessary functions" related to the Going-Forward Costs are, inter alia: (i) managing funds and assets held by CalPX; (ii) maintaining CalPX's books and records, and performing ordinary business tasks to maintain corporate compliance; and (iii) participating in litigation, with the advice and approval of CalPX Board. CalPX and ET Power will mutually release each other from any claims either may have against the other. Dennis J. Shaffer, Esq., at Whiteford, Taylor & Preston LLP, in Baltimore, Maryland, relates that CalPX's wind-up costs allocated to ET Power under the Settlement Agreement, to the extent not secured by amount owed to ET Power that are being held by CalPX, would constitute general unsecured, prepetition claims against ET Power. While CalPX contends that the wind-up cost claims are entitled to administrative priority, nothing in the Settlement Agreement or in a related letter agreement is prejudicial to ET Power's position with respect to this issue, Mr. Shaffer says. Letter Agreement In connection with the Settlement Agreement, CalPX and ET Power also entered into the Letter Agreement, subject to the Court's and the FERC's approval. Pursuant to the Letter Agreement, inter alia: (i) ET Power agrees to reserve $150,000 in its reserve for disputed claims on account of potential wind-up costs owed by ET Power; (ii) the parties agree that establishment of the Reserve will be without prejudice to the rights of any party with regard to the validity or priority of any claim; and (iii) ET Power agrees not to pursue an objection of, or seek the estimation of, any claim by CalPX until at least December 31, 2005. Mr. Shaffer points out that the Settlement Agreement provides a fair method for allocating wind-up costs without the need for costly and protracted litigation, thereby enabling ET Power to maximize recoveries and expedite distributions to its creditors. In addition, the Letter Agreement avoids premature litigation of claims asserted by CalPX in ET Power's bankruptcy case. Overall, ET Power believes that the Agreements offer the most effective and equitable solution for resolving a complicated issue confronting the estate. Accordingly, ET Power asks the Court to approve the Agreements. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and its debtor-affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, L.L.P., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and that plan took effect on Oct. 29, 2004. The Hon. Paul Mannes confirmed NEGT Energy Trading Holdings Corporation, NEGT Energy Trading - Gas Corporation, NEGT ET Investments Corporation, NEGT Energy Trading - Power, L.P., Energy Services Ventures, Inc., and Quantum Ventures' First Amended Plan of Liquidation on Apr. 19, 2005. The Plan took effect on May 2, 2005. (PG&E National Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL ENERGY: Inks Pact Resolving Citibank Claim --------------------------------------------------- Prior to the Petition Date, NEGT Energy Trading - Power, L.P., was party to agreements providing for the sale and purchase of gas and electricity with La Paloma Generating Company, LLC, and Lake Road Generating, L.P. Dennis J. Shaffer, Esq., at Whiteford, Taylor & Preston, LLP, in Baltimore, Maryland, informs the U.S. Bankruptcy Court for the Western District of Missouri that the Agreements were terminated in May 2003 and ET Power agreed to make termination payments to the Project Companies. Citibank, N.A., is the security agent under various loan agreements between certain lenders and investors, and the Project Companies. Mr. Shaffer explains that Citibank, as security agent for the Lenders, was granted a security interest in substantially all of the Project Companies' assets. The Project Companies' rights under the Agreements were assigned to Citibank. Citibank filed Claim No. 322 against ET Power in an undetermined amount to preserve the bank's rights under the Agreements and arising out of their termination. Subsequently, in an effort to amicably settle all matters related to the Claim, ET Power and Citibank entered into a stipulation and agreed that: (i) the Claim will be allowed as a general unsecured claim against ET Power for $5,500,000; and (ii) the Allowed Claim will be treated as an Allowed Class 6 General Unsecured Claim against ET Power for all purposes, including distributions, in accordance with the ET and Quantum Debtors' Plan. Mr. Shaffer asserts that the Stipulation, which is the result of arm's-length negotiations between the parties, fairly resolves the Claim, without the need for costly litigation, which could potentially delay distributions to creditors. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and its debtor-affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, L.L.P., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and that plan took effect on Oct. 29, 2004. The Hon. Paul Mannes confirmed NEGT Energy Trading Holdings Corporation, NEGT Energy Trading - Gas Corporation, NEGT ET Investments Corporation, NEGT Energy Trading - Power, L.P., Energy Services Ventures, Inc., and Quantum Ventures' First Amended Plan of Liquidation on Apr. 19, 2005. The Plan took effect on May 2, 2005. (PG&E National Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 215/945-7000) OMNI CAPITAL: Foley Bryant Approved as Bankruptcy Counsel --------------------------------------------------------- Omni Capital Limited Partnership sought and obtained permission from the U.S. Bankruptcy Court for the Western District of Kentucky for permission to employ Foley Bryant & Holloway, PLLC as its general bankruptcy counsel. Foley Bryant will: 1) advise the Debtor of its powers and duties as a debtor in its bankruptcy proceeding; 2) advise and consult the Debtor concerning questions arising in the conduct of the administration of its estate and concerning its rights and remedies with regard to the estate's assets and the claims of secured, preferred and unsecured creditors and other parties in interest; 3) assist in the preparation of pleadings, motions, notices and that are required for the orderly administration of the Debtor's estate; 4) consult and advise the Debtor in connection with the operation and management of its business and properties; and 5) perform all other legal services to the Debtor that are necessary in its chapter 11 case. Wm. Stephen Reisz, Esq., a Member of Foley Bryant, is the lead attorney for the Debtor. Mr. Reisz disclosed that his Firm received a $6,000 retainer. Mr. Reisz charges $200 per hour for his services. Foley Bryant assured the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Louisville, Kentucky, Omni Capital Limited Partnership filed for chapter 11 protection on Sept. 9, 2005 (Bankr. W.D. Ky. Case No. 05-36490). 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. OMNI CAPITAL: Files Schedules of Assets and Liabilities ------------------------------------------------------- Omni Capital Limited Partnership delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Western District of Kentucky, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $11,000,000 B. Personal Property $578,450 C. Property Claimed as Exempt D. Creditors Holding $5,802,771 Secured Claims E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $1,621,800 Unsecured Nonpriority Claims ----------- ---------- Total $11,578,450 $7,424,571 Headquartered in Louisville, Kentucky, Omni Capital Limited Partnership filed for chapter 11 protection on Sept. 9, 2005 (Bankr. W.D. Ky. Case No. 05-36490). William Stephen Reisz, Esq., at Foley Bryant & Holloway, PLLC 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. OWENS CORNING: Plans to Acquire Wolverine Fabricating ----------------------------------------------------- Owens Corning has reached a tentative agreement to acquire Wolverine Fabricating, Inc., a producer of side walls and other products for the RV industry. Terms were not disclosed. "This acquisition is a strategic addition to the Owens Corning Fabwel business," said Chuck Jerasa, general manager - Owens Corning Fabwel. "The new combined product offering better serves our customers while extending our geographic reach to the West Coast of the U.S. The addition of Wolverine will allow us to expand our product offering and improve our market share within the RV industry. We are very excited about this opportunity and look forward to working with Wolverine and its employees as we increase our participation in the growing RV and cargo trailer industries." Located in Riverside, California, Wolverine produces exterior side walls, fold-down ramp doors, motor home basement doors and full interior walls for the RV industry. Steve Thomas, president - Wolverine, will remain as a key part of the Owens Corning Fabwel management team. "The leadership position of Owens Corning Fabwel in the RV side-wall market carries Wolverine far beyond its own capability alone," said Thomas. "This is a great opportunity for Wolverine to grow with a strong Owens Corning brand in the industry." For the past 33 years, Owens Corning Fabwel has been the leading manufacturer and fabricator of RV components and side walls, providing integrated solutions for recreational vehicles, marine and transportation businesses worldwide. The company is a fabricator of fiberglass, aluminum and steel products for supply to the RV and cargo trailer industries. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 117; Bankruptcy Creditors' Service, Inc., 215/945-7000) OWENS CORNING: Wants to Capitalize Non-Debtor Company in China -------------------------------------------------------------- Owens Corning has been developing a market in China for its products since 1995 and continues to evaluate and analyze the market in China for new opportunities. As of October 5, 2005, Owens Corning (China) Investment Company Ltd. -- Owens Corning's indirect, wholly owned, non-debtor subsidiary in China -- has established a series of non-debtor subsidiaries under the laws of the People's Republic of China to manufacture, market, distribute and sell the Company's products. The Chinese non-debtor subsidiaries include: Subsidiary Date Est. Purpose ---------- --------- ------------------- Owens Corning (Guangzhou) 1994 Manufacture and sell Fiberglas Co. Ltd. fiberglass insulation products Owens Corning (Shanghai) 1996 Manufacture and sell Fiberglas Co. Ltd. fiberglass insulation products Owens Corning (Anshan) 1996 Market, distribute Fiberglas Co., Ltd. and sell fiberglass insulation products Owens Corning (Nanjing) 1996 Manufacture and sell Foamular Board Co., Ltd. foam insulation products Owens Corning (Shanghai) 2002 Manufacture, sell Composites Co., Ltd. and distribute muffler products to be used for various automobile platforms to tier-one automotive product suppliers in China Owens Corning (Tianjin) 2004 Develop, manufacture Building Materials Co., and sell building Ltd. materials, including fiberglass insulation products Owens Corning (Jiangyin) 2004 Develop and Building Materials Co., manufacture building Ltd. materials and provide related technical services Owens Corning (Shanghai) 2003 Provide, trade and International Trading Co., business consulting Ltd. services in the Waigaoquia free trade zone in Shanghai Despite its successes and growth in the Chinese markets, certain of Owens Corning's operations have been limited by various restrictions on foreign owned entities imposed by the Ministry of Commerce of the People's Republic of China. Among other things, these restrictions limited the ability of the foreign owned entities to import commodities and third parties' products for sale in China, or sell to Chinese customers goods containing a preponderance of third party's products. Those restrictions have largely been lifted, after the People's Republic of China's entry into the World Trade Organization in 2001. Accordingly, Owens Corning has concluded that it can best take advantage of the increasingly permissive foreign investment and trading climate in China by establishing a new "trading company" in accordance with the Management of Commercial Enterprises With Foreign Investment regulations promulgated on April 16, 2004, as MOFCOM Order [2004] No. 8. J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington, Delaware, tells the U.S. Bankruptcy Court for the District of Delaware that unlike Owens Corning's existing affiliates in China, TradeCo. would have the corporate authorization, permits and licenses required to: -- toll-manufacture products; -- import affiliates' or third parties' products for distribution and sale in China; -- export third parties' products for sale; -- act as a commission sales agent; and -- undertake related commercial activities, in full compliance with Chinese law. Ms. Stickles points out that to comply with the requirements regarding "paid-in capital" and provide adequate working capital for its operations, TradeCo. must be capitalized with $1.5 million, with 15% of the amount required promptly on formation and the balance due within two years thereafter. The funds would be loaned by Owens Corning to Owens Corning China, and then contributed by Owens Corning China to TradeCo. Subject to certain assumptions regarding the overall Chinese economy, the Debtors' internal business plan anticipates that TradeCo. will be profitable and increase Owens Corning's sales and profits. The Debtors ask the Court to authorize: (i) them to lend to Owens Corning China $1,500,000; and (ii) Owens Corning China to capitalize TradeCo. with the loan amount, in one or more capital contributions. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 117; Bankruptcy Creditors' Service, Inc., 215/945-7000) PAETEC COMMS: Moody's Withdraws $200 Million Debts' B2 Ratings -------------------------------------------------------------- Moody's Investors Service withdrew all ratings for Paetec Communications, Inc. Due to unfavorable market conditions, the company recently decided not to proceed with its initial public offering and concurrent proposed $40 million 5-year senior secured revolving credit facility and $160 million 6-year term loan facility. Moody's has withdrawn these ratings: * Corporate Family Rating -- B2 * $40 million Senior Secured Revolving Credit Facility due 2010 -- B2 * $160 million Senior Secured Term Loan due 2011 -- B2 * Speculative Grade Liquidity -- SGL-1 Paetec, headquartered in Fairport, New York, is a competitive local exchange carrier and generated revenues of approximately $414 million in 2004. POLYONE CORP: Thomas Waltermire Steps Down as President & CEO ------------------------------------------------------------- PolyOne Corporation (NYSE: POL) disclosed that Thomas A. Waltermire has stepped down as the company's president, chief executive officer and director, effective immediately. The board has asked William F. Patient, non-executive chairman of the board, to serve as interim chief executive officer until a permanent successor is named. Mr. Waltermire stated, "As the company enters the next phase of its strategic evolution, the Board and I agree that the time is right for new leadership. I take pride in our many accomplishments, starting with the creation of PolyOne, and I wish my colleagues the best of luck in the future." Mr. Patient added, "The board understands Tom's difficult but reasoned decision that now is an appropriate time for a change in leadership. During his tenure, we have made significant progress on many fronts, including improvement of our core businesses, divestiture of our non-core assets, achievement of our targeted cost structure and investment in our people. We believe that PolyOne is positioned for future growth and profitability. "As PolyOne's leader since its formation five years ago, Tom has played a vital role in the Company's transformation. On behalf of the entire board, I would like to thank him for his many years of dedicated service," Mr. Patient added. PolyOne will begin its search for a permanent chairman and chief executive immediately. The board has retained the global executive search firm, Russell Reynolds Associates, to conduct the search. The Company anticipates completing the process by early 2006. During the decade of the 1990s, Mr. Patient helped to transform The Geon Company, one of PolyOne's predecessor companies, into an industry leader in polymers. He retired in 1999 as chairman and chief executive officer. He joined PolyOne's Board of Directors as non-executive chairman in November 2003. Mr. Waltermire became chairman and chief executive officer of PolyOne in September 2000, with the consolidation of The Geon Company and M.A. Hanna Corporation. His title became president and CEO in November 2003, when Mr. Patient joined PolyOne's board as non-executive chairman. Prior to PolyOne, Mr. Waltermire served in a variety of positions with The Geon Company, beginning in 1993 and culminating in his being named chairman and CEO in May 1999. He began his career with The BF Goodrich Company. Headquartered in northeast Ohio, PolyOne Corporation -- http://www.polyone.com/-- is a leading global compounding and North American distribution company with continuing operations in thermoplastic compounds, specialty polymer formulations, color and additive systems, and thermoplastic resin distribution. PolyOne, with 2004 annual revenues of approximately $2.2 billion, has employees at manufacturing sites in North America, Europe, Asia and Australia, and joint ventures in North America and South America. * * * As reported in the Troubled Company Reporter on July 5, 2005, Fitch Ratings has affirmed PolyOne Corporation's credit ratings at 'BB-' for the senior secured credit facility rating and 'B' for the senior unsecured debt. Fitch said the rating outlook is stable. PONDEROSA PINE: Files Joint Plan of Reorganization in New Jersey ---------------------------------------------------------------- Ponderosa Pine Energy, Inc., and its debtor-affiliates delivered a Joint Plan of Reorganization and accompanying Disclosure Statement to the U.S. Bankruptcy Court for the District of New Jersey on Oct. 7, 2005. Terms of the Plan Under the Plan, these claims are unimpaired: * administrative expense claims, * priority non-tax claims, * claims of Chase Manhattan Bank, N.A., nka JP Morgan Chase Bank, on account of a Construction and Term Loan Agreement dated December 16, 1994, * general unsecured claims, * secured claims, and * equity interests. Priority Tax claims will receive from the Reorganized Debtors, equal quarterly cash payments in arrears over a period not exceeding six years. The initial distribution will be made on: * the Effective Date; or * a claim becomes allowed; or * a date agreed by both parties. KBC Bank N.V.'s secured claim is impaired. The Debtors' Plan didn't state how's KBC's claim will be paid. Plan Funding The Reorganized Debtors will make payments in accordance with the terms of the Plan from existing cash balances, cash generated from operations, net proceeds from causes of action and an exit loan from an undisclosed lender. Delta Power will make a capital contribution of not less than $1,000,000. The contribution may be in cash or forgiveness of administrative claims. Headquartered in Morristown, New Jersey, Ponderosa Pine Energy, LLC, and its affiliates are utility companies that supply electricity and steam. The Company and its debtor-affiliates filed for chapter 11 protection on April 14, 2005 (Bankr. D. N.J. Case No. 05-22068). Mary E. Seymour, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. POP3 MEDIA: Can't File Annual Report on Time Due to Audit Review ---------------------------------------------------------------- Pop3 Media Corporation, fka ViaStar Holdings, Inc., informed the Securities and Exchange Commission that it could not timely file its annual report on Form 10-KSB for the fiscal year ended June 30, 2005, because its independent auditor had not been able to complete its review of the financial statements in time for the filing deadline. Amended Quarterly Report The Company delivered its amended quarterly report on Form 10- QSB/A for the three-months ended March 31, 2005, to the Securities and Exchange Commission on Sept. 14, 2005. For the quarter ended March 31, 2005, Pop3 Media incurred a $7,101,776 net loss, compared to a $1,023,458 net loss for the same period ended March 31, 2004. The increased loss is attributed to the Company's decision to write off approximately $6,466,860 of the retail distribution agreements it acquired from Level X Media Corporation in 2003. The Company impaired its distribution agreements in June 2005 upon the recommendation of its independent registered accountant and legal counsel. At March 31, 2005, the Company's balance sheet showed $9,374,411 of assets and liabilities totaling $2,618,212. Going Concern Doubt Pop3 Media has accumulated a $13,852,323 loss since inception. Recurring losses coupled with the risks associated with raising capital through the issuance of equity or debt securities, creates uncertainty as to the Company's ability to continue as a going concern. Armando Ibarra, CPA, expressed substantial doubt about Pop3 Media's ability to continue as a going concern after it audited the Company's consolidated balance sheets as of June 30, 2003 and December 31, 2002, and the related consolidated statements of operations, cash flows and stockholders' equity for the six months ended June 30, 2003 and 2002. Mr. Ibarra pointed to the Company's recurring losses. Pop3 Media -- http://www.pop3media.com/-- is engaged in the development, production and distribution of entertainment related media for film, television, music and publishing interests. The Company distributes its products to over 20,000 retail outlets nationwide and globally. The Company's portfolio currently includes ownership of ViaStar Distribution Group, A.V.O. Studios, Moving Pictures International, ViaStar Records, Quadra Records, Light of the Spirit Records, and ViaStar Classical, ViaStar Artist Management group and Masterdisk Corporation. QUEEN'S SEAPORT: Wants Continued Access to Cash Collateral ---------------------------------------------------------- Queen's Seaport Development, Inc., asks the Honorable Vincent P. Zurzolo of the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, for continued access until Feb. 12, 2006, to cash collateral securing repayment of prepetition debts owed to BAR-K, Inc., as loan servicing agent for R.E. Loans, LLC, and Bruce Horowitz Family Partnership, as successor in interest to Gold Mountain Financial Institution, Inc. This is the company's third cash collateral request. The Court granted the Debtor's initial request to use the cash collateral for a 16-week period through July 9, 2005, and granted a second 16-week extension through Oct. 29, 2005. The Debtor's indebtedness to Gold Mountain stems from a loan for $24,500,000. The Debtor granted Gold Mountain a lien and security interest on some tide and submerged lands located within the City of Long Beach and some personal property. The parties stipulate that the Debtor can continue using the cash collateral and will make three interest payments: -- $190,000 due on Nov. 13, 2005; -- $190,000 due on Dec. 18, 2005; -- $190,000 due on Jan. 15, 2005. To provide the lenders with adequate protection required under section 363 of the U.S. Bankruptcy Code for any dimunition in the value of their collateral, the Debtor will grant them a replacement lien to the same extent, validity and security as the prepetition lien. The Debtor will use the cash collateral to fund its operations, payroll, and other operating expenses that are necessary to maintain the value of the estate. A full-text copy of Queen's Seaport's 16-week budget is available for free at http://ResearchArchives.com/t/s?23d Headquartered in Long Beach, California, Queen's Seaport Development, Inc. -- http://www.queenmary.com/-- operates the Queen Mary ocean liner, various attractions and a hotel. The Company filed for chapter 11 protection on March 15, 2005 (Bankr. C.D. Calif. Case No. 05-15175). Joseph A. Eisenberg, Esq., at Jeffer Mangles Butler & Marmaro LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. RADNOR HOLDINGS: Paul Ridder Replaces Michael Valenza as CFO ------------------------------------------------------------ Radnor Holdings Corporation launched its strategic supply chain management initiative. Michael V. Valenza, the former Chief Financial Officer of the Company, will lead the initiative and will be responsible for all aspects of supply chain management. Paul D. Ridder, the former Corporate Controller, has been appointed the Chief Financial Officer of the Company. "As a result of rapid growth and new product introductions, supply chain management has become a primary focus of our Company. The initiative will coordinate purchasing, forecasting and logistics, products planning, and customer service. Measuring our performance and providing leadership, as well as training, in these key areas will be the cornerstone to our success as we continue to grow our business. We are excited about our future and grateful for Michael's and Paul's leadership to our organization," said Michael T. Kennedy, Radnor's Chairman and Chief Executive Officer. Mr. Valenza has been with the Company for thirteen years and has significant experience in the areas of forecasting, purchasing and logistics. Prior to joining Radnor, Mr. Valenza served in several positions with Arthur Andersen LLP, most recently as a Manager in the Enterprise Group. Mr. Valenza earned a B.S. and M.A. in Accounting from Utah State University. Mr. Ridder has been with the Company for nine years and has served as Manager of Financial Reporting and most recently as Vice President and Corporate Controller. Prior to joining Radnor, Mr. Ridder held various positions at PricewaterhouseCoopers LLP. Mr. Ridder received his B.S. in Business Administration from Bucknell University and earned his MBA from Villanova University. In addition, Michael P. Feehan will become Corporate Controller of the Company. Mr. Feehan joined the Company in 2004 as Director of Finance. Prior to joining Radnor, Mr. Feehan held various positions at Arthur Andersen LLP and KPMG LLP, most recently as an Audit Manager. Mr. Feehan received a B.S. in Business Administration from the University of Notre Dame and is currently pursuing his MBA from Villanova University. Radnor Holdings Corporation -- http://www.radnorholdings.com/-- is a leading manufacturer and distributor of a broad line of disposable foodservice products in the United States and specialty chemical products worldwide. The Company operates 15 plants in North America and 3 in Europe and distributes its foodservice products from 10 distribution centers throughout the United States. At July 1, 2005, Radnor Holdings' balance sheet shows an $18,940,000 equity deficit, compared to a $770,000 deficit at Dec. 31, 2004. RAYMOND PRYKE: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Raymond & Rosemarie Jane Pryke a/k/a Raymongd S.G. Pryke d/b/a Apple Valley News d/b/a Adelanto Bulletin 26745 Roundup Way Apple Valley, California 92308 Bankruptcy Case No.: 05-22000 Type of Business: The Debtors previously filed for chapter 11 protection on Feb. 17, 2005 (Bankr. C.D. Calif. Case No. 05-11439) (Jury, J.). That case was dismissed on Apr. 27, 2005. Chapter 11 Petition Date: October 7, 2005 Court: Central District of California (Riverside) Judge: Meredith A. Jury Debtors' Counsel: Lazaro E. Fernandez, Esq. 3403 Tenth Street, Suite 714 Riverside, California 92501 Tel: (951) 684-4474 Estimated Assets: $10 Million to $50 Million Estimated Debts: $1 Million to $10 Million Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Nancy Bohl, et al. Litigation $4,000,000 36442 Wildwood Canyon Road Yucapia, CA 92399 Juniper Riviera City Water Pryke share of C.O. $200,000 District P.O. Box 386 Apple Valley, CA 92307 Bank of America Credit card $40,000 P.O. Box 21848 purchases Greensboro, NC 27420-1848 Reid & Hellyer Legal fees $22,443 3880 Lemon Street P.O. Box 1300 Riverside, CA 92502-1300 Anna Hafeli Personal loan $10,000 Juniper Riviera City Water Stand-by charges $6,900 District being disputed Home Depot Business purchases $6,300 Band of America $2,500 Lowes $2,100 Home Depot Business purchases $2,100 Don and Darla Ferrarese $410 Steven Piesner Rent for the County $250 Legal Reporter Don Carlo $200 READING BROADCASTING: Case Summary & 20 Unsecured Creditors ----------------------------------------------------------- Debtor: Reading Broadcasting, Inc. 1729 North 11th Street Reading, Pennsylvania 19604 Bankruptcy Case No.: 05-26563 Type of Business: The Debtor operates a full-power television station, WTVE, Channel 51. See http://www.wtve.com/ Chapter 11 Petition Date: October 7, 2005 Court: Eastern District of Pennsylvania (Reading) Debtor's Counsel: Frederick L. Reigle, Esq. Frederick L. Reigle, P.C. 3506 Perkiomen Avenue, Suite A Reading, Pennsylvania 19606 Tel: (610) 779-4550 Total Assets: $1,541,679 Total Debts: $3,845,424 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Montgomery McCracken Walker & Trade debt $590,482 Rhoads c/o Frank A. Mayer, III, Esq. 123 South Broad Street Philadelphia, PA 19109 SWOB, Inc. Bank loan $252,953 1505 Lorraine Reading, PA 19602 Helene Associates LP Bank loan $135,450 1505 Lorraine Reading, PA 19602 The Cohen Group, LP Bank loan $105,000 George A. Mattmiller, Jr. Trade debt $45,078 Robert H. Clymer Bank loan $32,250 FCC Regulatory Trade debt $20,025 John and Mary Linton Bank loan $19,350 James P. and Dama Linton Bank loan $19,350 George A. Mattmiller, Jr. Trade debt $13,500 Capital One FSB Bank loan $13,454 William R. Maslo Trade debt $13,250 Jack A. Linton Bank loan $12,900 Darcie Brauner Bank loan $12,900 SOT, Inc. Trade debt $12,243 ATT Trade debt $3,163 David S. Nichols Trade debt $2,500 Eyewitness Kids News LLC Trade debt $1,300 Riverside Key and Lock Shop Trade debt $276 Network Music, Inc. Trade debt $146 RELIANCE GROUP: Creditors Committee Files First Amended Plan ------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in Reliance Group Holdings, Inc.'s Chapter 11 proceedings filed a First Amended Plan of Reorganization and Disclosure Statement on Sept. 21, 2005. According to Arnold Gulkowitz, Esq., at Orrick, Herrington & Sutcliffe, in New York City, the First Amended Plan provides the estimated claim amount for these Classes: Class Estimated Amount ----- ---------------- Class 2 Secured Claims $0 Class 3a Senior Bondholder Claims $320,700,869 Class 3b Subordinated Bondholder Claims $190,307,317 Class 5 Subordinated Claims Uncertain Assuming that neither significant litigation nor objections are filed with respect to the Plan and assuming the Plan is confirmed by November 30, 2005, the Creditors' Committee estimates that unpaid Professional Compensation and Reimbursement Claims as of the Effective Date should approximate $2,000,000. Class 3 Claims Under the First Amended Plan, holders of claims in Classes 3a, 3b, and 3c will be deemed to assign any D&O Litigation Claims and Creditor Litigation Claims they may have to RGH, on the Effective Date. To the extent the Holders "opt-out" of assigning their D&O Litigation Claims and Creditor Litigation Claims to the Debtor, the Holders will not be entitled to receive certain distributions pursuant to the Plan. Holders of Class 3a and 3b Claims will separately indicate whether they wish to elect to opt out of assigning their D&O Litigation Claims and Creditor Litigation Claims to the Debtor and return duly completed election forms to the appropriate Record Holder. The elections must be received by the Record Holder in sufficient time for the Record Holder to deliver, electronically, the securities to the account established for that purpose, by the October 28, 2005 Voting Deadline. Mr. Gulkowitz notes that any Holder of a Claim or Claims in Class 3c that executes a Ballot, but does not indicate on the Ballot that the Holder elects to opt out of assigning its D&O Litigation Claims and Creditor Litigation Claims to the Debtor, and any Holder of a Claim or Claims in Class 3a or 3b whose Record Holder fails to deliver the securities to the account established for that purpose, will be deemed to have consented to the assignment of its D&O Litigation Claims and Creditor Litigation Claims, if any, to the Debtor, as of the Effective Date. Furthermore, subject to, and upon the occurrence of, the Securities Class Action Settlement, Holders of Class 3a and Class 3b Claims that are not Opt-Out Claimants and who could be class members in the Securities Class Action, including any members who request exclusion from the class, release the current and former directors, officers and employees of the Debtor and Reliance Financial Services Corporation from and any all claims asserted in the Securities Class Action. Mr. Gulkowitz asserts that Holders of Class 3a and 3b Claims that do not want to participate in the Securities Class Action Settlement, and would, therefore, wish to retain the claims asserted in the Securities Class Action, should consider their decision not to be an Opt-Out Claimant. No Solicitation The Creditors' Committee will not solicit votes on the Plan from holders of Classified Priority Claims, Secured Claims, Subordinated Claims and Equity Interests because these Claimholders are either Unimpaired or deemed to reject the Plan. Ballots will not be transmitted to them, Mr. Gulkowitz says. Voting Procedures After reviewing the Disclosure Statement, each Voting Party is instructed to: * vote using the enclosed form of ballot; * check the box to accept or reject the Plan; * check the box to opt out of assigning D&O Litigation Claims and Creditor Litigation Claims to RGH; and * return the Ballot in the pre-addressed envelope. Voting Parties must allow ample time for the Ballot to be received by the Record Holder and processed on a Master Ballot. Ballots must be sent to the Voting Agent: Bankruptcy Services LLC c/o Financial Balloting Group 757 Third Avenue New York, New York 10017-2072 Attention: Reliance Group Holdings The Voting Agent must receive Ballots and Master Ballots by October 28, 2005 by 4:00 p.m. (Prevailing Eastern time). Substitution of Contract Party In accordance with the First Amended Plan's provisions for assumption and rejection of executory contracts, the Liquidating Trust will be substituted for RGH and the Creditors' Committee. The Liquidating Trust will perform and succeed to all of RGH's and the Creditors' Committee's rights and obligations under the Assumed Contracts, including the RGH/RFSC Settlement Term Sheet, the PA Settlement Agreement, the Senior Secured Credit Agreement, the Tax Sharing Agreement and the D&O Settlement Agreement. Additionally, the Liquidating Trust will be substituted as a party for the Bank Committee and will perform and succeed to all of the Bank Committee's rights and obligations under the PA Settlement Agreement, except to the extent the rights and obligations have been, or are to be, performed or succeeded to by Reorganized RFSC. Releases Subject to the occurrence of the "effective date," as that term is used in the D&O Settlement, the release by RGH will include, but will not be limited to, the release of the current and former directors, officers and employees of RGH and RFSC, to the extent provided for in the D&O Settlement, of the D&O Litigation Claims and the Creditor Litigation Claims assigned to RGH pursuant to the Plan. Nothing in the First Amended Plan is intended to affect the continued prosecution of any former or pending actions being prosecuted by the Liquidator, other than to give effect to the Mutual Release attached to the D&O Settlement Agreement, or to affect the capacity of the Liquidator to prosecute any other claims or causes of action in the future other than those held by the Liquidator as a result of being a creditor of RGH. A full-text copy of the Creditors' Committee's First Amended Plan of Reorganization for RGH is available for free at http://ResearchArchives.com/t/s?23b A full-text copy of the First Amended Disclosure Statement accompanying the Plan is available for free at http://ResearchArchives.com/t/s?23c 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. 82; Bankruptcy Creditors' Service, Inc., 215/945-7000) REVLON INC: Registers Common Stock for $250 Million IPO ------------------------------------------------------- Revlon, Inc., filed a Registration Statement with the Securities and Exchange Commission for the sale of its Class A shares of common stock. The aggregate initial public offering price of all securities that may be offered pursuant to the Prospectus filed with the SEC will not exceed $250 million. The net proceeds will be used for general corporate purposes, including the repayment of outstanding debt, for working capital or capital expenditures. Revlon is currently authorized to issue: * 900 million shares of Revlon Class A common stock, par value $.01 per share, * 200 million shares of its Class B common stock, or Revlon Class B common stock, par value $.01 per share; and * 20 million shares of preferred stock, par value $.01 per As of June 30, 2005, Revlon had outstanding: -- 340,175,694 shares of Revlon Class A common stock; and -- 31,250,000 shares of Revlon Class B common stock; all of which are currently owned by MacAndrews & Forbes. The holders of Revlon Class A common stock and Revlon Class B common stock are entitled to receive dividends and other distributions as may be declared by Revlon's board of directors out of assets or funds legally available for that purpose, The Company's common shares trade at the New York Stock Exchange under the symbol "REV". The Company's common shares trade between $2.94 and $3.10 this month. A full-text copy of the Prospectus is available for free at http://ResearchArchives.com/t/s?239 Revlon Inc. is a worldwide cosmetics, skin care, fragrance, and personal care products company. The Company's vision is to deliver the promise of beauty through creating and developing the most consumer preferred brands. Websites featuring current product and promotional information can be reached at http://www.revlon.com/and http://www.almay.com/ Corporate and investor relations information can be accessed at http://www.revloninc.com/ The Company's brands, which are sold worldwide, include Revlon(R), Almay(R), Ultima(R), Charlie(R), Flex(R), and Mitchum(R). As of June 30, 2005, Revlon's equity deficit widened to $1.1 billion from a $1.02 billion deficit at Dec. 31, 2004. RHODES COMPANIES: Moody's Rates Planned $150 Million Loan at B1 --------------------------------------------------------------- Moody's Investors Service assigned first-time ratings to The Rhodes Companies, LLC, including a B1 Corporate Family Rating, a Ba3 rating on the proposed $450 million senior secured first lien term loan, and a B1 rating on the proposed $150 million senior secured second lien term loan. The ratings outlook is stable. The stable ratings outlook is based on Moody's expectation that: 1) the company will maintain generally level collateral coverage through 2007 before beginning gradually to reduce debt/total net value in 2008 and beyond; and 2) the estimated $280+ million of cash on hand after the close of the transaction will be used largely for seasonal working capital needs and for future land purchases which will be added to the collateral package. The ratings reflect: * the company's aggressive pro forma adjusted debt leverage (as measured by adjusted debt/capitalization and adjusted debt/EBITDA); * relatively small size and scale; * limited geographic reach and product diversity; * some prior indications of speculative excess in the Las Vegas housing market; and * the cyclical nature of the homebuilding and land development industries. At the same time, the ratings recognize: * the significant collateral in the structure (as represented by the Cushman & Wakefield asset appraisal of $1.6 billion); * the ongoing strength of the Las Vegas housing market; * the company's reasonably strong historical track record; and * the considerable infrastructure spending completed to date in the Rhodes Homes master planned communities. These ratings were assigned: * B1 Corporate Family Rating * Ba3 rating on the $450 million five-year senior secured first lien term loan * B1 rating on the $150 million six-year senior secured second lien term loan All of Rhodes Homes' debt is guaranteed by substantially all the company's material operating subsidiaries, except entities that hold unentitled land. Pro forma for the takedown of $600 million of first and second lien term loans, repayment of $211 million of existing debt, addition of $275 million to the company's cash balances, payment of a $100 million dividend to the owners, and funding of $13.5 million of transaction fees and expenses, the debt leverage metrics as of year-end 2005 are expected to be approximately: * 85% debt/capitalization, * 5.9x debt/EBITDA, * 28.5% first lien debt/total net value, and * 38.3% total debt/total net value. Adjusted debt metrics as of the same date, after adding $89.5 million to the consolidated debt totals for specific performance options that the company has in its Tuscany master planned community, would be approximately: * 86% debt/capitalization, * 6.7x debt/EBITDA, * 34.2% first lien debt/total net value, and * 44% total debt/total net value. The debt/cap and debt/EBITDA metrics, by which traditional homebuilders are measured, are aggressive for the rating. The debt/net value calculations, by which land developers are measured, are reasonably strong for the rating. Founded in 1992, Rhodes Homes conducts land development and homebuilding operations in two master planned communities and one planned area development in Las Vegas and is building a base for developing a Las Vegas bedroom community in Kingman, Arizona. This geographic concentration, plus the company's relatively limited product and price point diversity as well as its overall small relative size, make the company more susceptible to a cyclical industry downturn and/or regional downturn than its much larger competitors. The Las Vegas housing market has experienced very rapid price appreciation in recent years, most significantly in the past two years. As a result, speculative buying and flipping have increased, leading to an increase in the number of resales on the market that are competing with new home sales and causing at least one homebuilder (Pulte) to have to give back some of its 2004 price increases in order to drive cancellation rates back down to more normal levels. Rhodes Homes was affected by the fallout from the Pulte action, saw its own cancellation rates soar, and had fewer deliveries and lower revenues and EBITDA in 2004 as compared to 2003. The company has since instituted stiffer underwriting and down payment requirements and has seen a strong recovery in year-to-date 2005 results. On the plus side, Rhodes Homes' land and home inventory was valued by Cushman & Wakefield in September 2005 at a Total Net Value of approximately $1.6 billion. As a result, substantial collateral protection for both the first and second lien term loans. Las Vegas has consistently been one of the strongest residential housing markets in the country with lot supply being constrained by the timing of land sales by the Bureau of Land Management, which is the dominant land owner in the area. The company's two largest master planned communities, Rhodes Ranch and Tuscany, have been under development since the mid-1990's. To date, the company has invested approximately $335 million in land, infrastructure buildup, and amenities. Rhodes Homes' pre-transaction metrics were very strong for the ratings, with: * interest coverage rising from 4x to 11x; * debt/capitalization falling from 77% to 62%; * debt/EBITDA declining from 3.8x to 3.4x; and * gross margins soaring from 37% to 49% over the three-year period 2002-2004. The $450 million senior secured first lien term loan will mature in 2010 and will benefit from a first lien on substantially all the property of The Rhodes Companies, LLC and its co-borrowers, excepting entities that hold unentitled land. In addition, there will be a 100% excess cash flow sweep in place until half of the total debt outstanding at closing is repaid and total debt/total net value falls below 30% (i.e., when the "trigger date" is reached), at which point the excess cash flow sweep drops down to a 50% rate. A tight restricted payments basket, which permits distributions to pay the taxes of the owners plus up to an additional $2.5 million per year until the trigger date is reached (after which distributions can be up to half of excess cash flow), offers additional protection. The $150 million senior secured second lien term loan will mature in 2011 and benefit from a second lien on substantially all of the property of The Rhodes Companies, LLC and its co-borrowers, excepting entities that hold unentitled land. In addition, there will be additional financial covenants, governing both loans, in the form of first lien debt and total debt/total net value tests and a Cash EBITDA/Cash Interest coverage test. These additional covenants are still being negotiated. Going forward, the ratings and outlook would be strengthened by: * a significant build-up in the company's equity base; * successful diversification into other markets; and/or * a permanent reduction in the company's debt leverage metrics. The ratings and outlook would be stressed by: * a misstep in the company's expansion process; * a significant increase in debt leverage; or * use of the $280+ million current cash balances for anything other than seasonal working capital needs and additional land purchases that would be added to the collateral package. Headquartered in Las Vegas, Nevada, The Rhodes Companies, LLC and its co-borrowers (Heritage Land Company, LLC and Rhodes Ranch General Partnership) comprise the largest private community developer and homebuilder in Las Vegas. Projected revenues and EBITDA for the year that will end December 31, 2005 are $262 million and $103 million, respectively. RISK MANAGEMENT: Has Until Nov. 4 to Decide on Leases ----------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Ohio, Eastern Division, extended until Nov. 4, 2005, the period within which Risk Management Alternatives, Inc., and its debtor- affiliates can elect to assume, assume and assign, or reject 20 unexpired non-residential real property leases. The Debtors told the Bankruptcy Court that they have been unable to sufficiently review the importance of these leases to their reorganization because they have focused their time on operating their businesses and negotiating a sale of substantially all of their assets to NCO Group, Inc. Matthew A. Salerno, Esq., at McDonald Hopkins Co., LPA, related that the leases are essential assets of the Debtors' estates and integral to the continued operation of their businesses in the face of an impending sale. Mr. Salerno explains that the extension will give the Debtors more time to make an intelligent decision as to which of these leases to assume or reject. The Debtors assured the Bankruptcy Court that the requested extension will not prejudice any of their lessors because they are current and will continue to pay all postpetition rent. A list of the Debtor's unexpired non-residential real property leases is available for free at: http://researcharchives.com/t/s?11c Headquartered in Duluth, Georgia, Risk Management Alternatives, Inc. -- http://www.rmainc.net/-- provides consumer and commercial debt collections, accounts receivable management, call center operations, and other back-office support to firms in the financial services, telecommunications, utilities, and healthcare sectors, as well as government entities. The Company and ten affiliates filed for chapter 11 protection on July 7, 2005 (Bankr. N.D. Ohio Case Nos. 05-43959 through 05-43969). Shawn M. Riley, Esq., at McDonald, Hopkins, Burke & Haber Co., LPA, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and between $50 million to $100 million in debts. RISK MANAGEMENT: Removal Period Stretched to April 7 ---------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Ohio, extended to Apr. 7, 2006, the period in which Risk Management Alternatives, Inc., and its debtor-affiliates' can remove prepetition civil actions pending in various state and federal courts. The Debtors told the Court that during the early stages of their chapter 11 cases, they were unable to have an opportunity to evaluate the actions and determine which they will seek to remove. The Debtors said that following their filings, they focused their energy and resources on: * streamlining their business operations; and * maintaining their relationships with their vendors and customers. Most recently, the Debtors said, they have been focused on negotiating and preparing for a sale of substantially all of their assets. The Debtors told the Court that the extension will afford them sufficient opportunity to make fully informed decisions concerning the removal of each action. Headquartered in Duluth, Georgia, Risk Management Alternatives, Inc. -- http://www.rmainc.net/-- provides consumer and commercial debt collections, accounts receivable management, call center operations, and other back-office support to firms in the financial services, telecommunications, utilities, and healthcare sectors, as well as government entities. The Company and ten affiliates filed for chapter 11 protection on July 7, 2005 (Bankr. N.D. Ohio Case Nos. 05-43959 through 05-43969). Shawn M. Riley, Esq., at McDonald, Hopkins, Burke & Haber Co., LPA, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and between $50 million to $100 million in debts. S.S. SEEDING: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: S.S. Seeding, Inc. 22704 Melia Road Gretna, Nebraska 68028 Bankruptcy Case No.: 05-84160 Type of Business: The Debtor is a seeding, farming, and erosion control sub-contractor. Chapter 11 Petition Date: October 4, 2005 Court: District of Nebraska (Omaha Office) Debtor's Counsel: Howard T. Duncan, Esq. Howard T. Duncan, P.C., L.L.O. 1910 South 72nd Street, Suite 304 Omaha, Nebraska 68124-1734 Tel: (402) 391-4904 Fax: (402) 391-0088 Total Assets: $768,705 Total Debts: $1,529,980 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of Bennington Machinery, fixtures, $620,000 12212 North 156th Street equipment & supplies Bennington, NE 68007 Value of security: $451,705 John Deere Credit Machinery, fixtures, $187,711 P.O. Box 6600 equipment & supplies Johnston, IA 501316600 Value of security: $451,705 Burlington Employees Credit Machinery, fixtures, $104,938 Union equipment & supplies 4302 Gibson Road Value of security: Omaha, NE 68107 $451,705 Wiles Bros Fertilizer Inc. $95,000 John Deere Credit Multiple accounts $72,148 Metro Health Service FCU Machinery, fixtures, $58,684 equipment & supplies Value of security: $451,705 Stock Seed Farms Inc. $40,000 Central Valley Ag $38,844 Farm Plan $36,390 Precision Agronomy LLC $12,773 Great American Insurance Group $8,677 Monke Bros Fertilizer $6,700 Crocker Huck Kasher Dewitt $6,466 Chase AgriCredit System $6,181 Johnson Farm Equipment $5,659 Roger Gerdes $5,000 Allied Insurance $3,973 McClymont Inplement Inc. $3,891 Thomas Kunc and Black LLP $3,000 HCI Distribution $2,258 SAINT VINCENTS: Court Allows Govt. Fund Reallocation ---------------------------------------------------- The Hon. Prudence Carter Beatty of the U.S. Bankruptcy Court for the Southern District of New York granted Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates request to: (a) modify an application for a government grant to obtain $700,000, which sum was originally earmarked for employee retraining and to which, as a result of the closing of St. Mary's Hospital in Brooklyn, New York, the Debtors would not otherwise be entitled; (b) transfer $700,000 to the League/1199 SEIU Training and Upgrading Fund and the Registered Nurse Training and Upgrading Fund, to facilitate the retraining of union employees from St. Mary's; and (c) cooperate in the reallocation of $600,000 of the grant to institutions other than St. Mary's to support training of former St. Mary's employees who are currently enrolled in nursing, radiology, physician assistant, and social work programs. As reported in the Troubled Company Reporter, the Community Health Care Conversion Demonstration Project grants are available to support workforce retraining, primary care expansion and other initiatives, which will enable hospitals and their community- based partners to transition to a managed care environment Due to the closure of St. Mary's the Debtors had asked for the re- allocation of the funds to other hospitals who will be responsible of funding the participation of former St. Mary's employees currently enrolled in nursing and other programs. Clarifications At the behest of the New York State Department of Health, the Debtors provided these clarifications in connection with the proposed transfer. (a) Before the DOH reallocates any portion of the funds awarded to St. Mary's Hospital of Brooklyn, New York, by the Community Health Care Conversion Demonstration Project the DOH has to have approval from the League/1199 SEIU Training and Upgrading Fund and the Registered Nurse Training and Upgrading Fund of the reallocation, and receive documentation from the Hospital that it incurred infrastructure spending prior to St. Mary's closure and during the applicable contract period for the CHCCDP Grant; (b) The reallocation of the grant funds is subject to the DOH's review of the reallocation request and supporting documentation in conformance with the terms, conditions and operational protocols of the CHCCDP; (c) With respect to the Debtors' intent to cooperate with the DOH and others in the hope that $600,000 of the CHCCDP Grant can be allocated to other hospitals, the Debtors understand that: -- funds are allocated to institutions that provide training and are not directly allocated to individual employees; -- as a result, the funds will not necessarily follow the former St. Mary's Hospital employees; and -- any reallocation of the $600,000 will be made in conformance with the terms, conditions and operational protocols of the CHCCDP; (d) Unless the grant is reallocated as the Debtors intend to request, those funds will be "forfeited." That, with respect to the $700,000, the process will ensure that an equal amount of value will be directed to the former employees of St. Mary's. The Debtors do not suggest that the funds would not be utilized to support the CHCCDP program generally; and (e) Any of the St. Mary's CHCCDP Grant that they do not use will be reallocated to other hospitals in conformance with the terms, conditions and operational protocols of CHCCDP. 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. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: K. Falk Wants St. Mary's Closure Order Stayed ------------------------------------------------------------- Kenneth Falk asks the U.S. Bankruptcy Court for the Southern District of New York to stay its previous order approving the closure of St. Mary's Hospital of Brooklyn, New York, until the hearing of an Order to Show Cause dated September 23, 2005. As reported in the Troubled Company Reporter St. Mary's approved closure plan calls for the phased closing of all services at the facility by October 4, with the exception of the outpatient family health center located at the hospital, which will transition patients over 60-90 days to one of the other family health centers. As approved by DOH, the hospital will immediately curtail admissions to St. Mary's, stop scheduling surgeries and begin the process of compressing and closing inpatient departments. Mr. Falk's Objection The death rate in Brownsville, Brooklyn, is 31% higher than all of New York, yet St. Mary's and Brookdale are the only two hospitals in that community, Mr. Falk explained in a handwritten letter, dated Sept. 28, 2005. "The rate of deaths for infants was 12.2 deaths per 1000 births. More will die," he says. Mr. Falk has attached to the Stay Request an assortment of maps, correspondence and newspaper articles relating to the closure of St. Mary's Hospital. Among the correspondence is a letter, dated September 30, 2005, from Khidmah Corporation to the Court expressing an interest and an ability "to purchase St. Mary's Hospital in its entirety" for $25 million. In the September 30 Letter, Lateef Sadiq, president of Khidmah, said the company has a $3 million housing project on 1515-27 St. Johns place. Mr. Sadiq said Khidmah has funds to purchase St. Mary's Hospital. He promised to show financial proof if the Court allots Khidmah time to contact its bankers. Mr. Sadiq said he has communicated with members of the Brooklyn Safety Net, Gerard Connelly, CEO of St. Mary's Hospital and Eugene Colon, legal advisor of St. Vincent's Hospital. He even signed a confidentiality letter in July, but St. Vincent's never contacted him. Debtors Respond Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, asserts that the unverified "offer" by Khidmah merely seeks to bootstrap onto the failed Brooklyn Safety Net proposal. Mr. Troop reiterates that the BSN proposal was not in the best interest of the Debtors' estates because, among other reasons: (a) there was significant risk that the New York State Department of Health would not approve a license to BSN for the continued operation of St. Mary's; and (b) BSN did not appear to fully apprehend the operational requirements of owning and operating an acute care facility, including the cost and provision of malpractice insurance and receivables financing. According to Mr. Troop, SVCMC could not be expected to bear these costs without, at a minimum, BSN funding St. Mary's $500,000-a- week losses. On the other hand, SVCMC would need to obtain a purchase price for St. Mary's Hospital of at least $65 million to offset the likely base economic benefits to the estates from proceeding with the proposed closure of the Hospital and the sale of its campus. Mr. Troop says closing the Hospital would result to gross proceeds of: -- $25 million from the sale of the St. Mary's campus based on current negotiations with a financially capable developer; -- $25 million in present value based on the $3 million per year income stream to be received by SVCMC from the behavioral health outpatient clinics to be retained and operated by SVCMC after St. Mary's closure; and -- $15 million in realizable value from the $20 million in accounts receivable. Mr. Troop explains that while the Khidmah Letter could be construed as reducing the execution risk that BSN could actually raise $25 million, it does not address fundamental problems with the BSN proposal, that is, BSN has not demonstrated the ability to obtain regulatory approval to operate a hospital and the BSN proposal is at least $20 million too low for SVCMC, consistent with its fiduciary duties to creditors, to accept. Mr. Troop notes that Khidmah failed to provide that it has a license to run or has experience running a hospital. Accordingly, the Debtors did not pursue Khidmah; they pursued possible transactions with other entities that could continue operations of the Hospital with some certainty. Nevertheless, the Debtors' investment bankers, Cain Brothers & Company, LLC, have contacted Lateef Sadiq, the president of Khidmah, to coordinate the execution of a nondisclosure agreement and access to the Debtors' "virtual" data room so that Khidmah may participate in the auction for the St. Mary's campus, Mr. Troop informs the Court. In the event Khidmah is the highest and best bidder for the St. Mary's campus, it will be free, subject to regulatory approval, to seek to re-open the hospital, according to Mr. Troop. Mr. Troop maintains that nothing raised by the Stay Request justifies a change of course. Thus, it should be denied. Mr. Troop also notes that the Debtors have reviewed the docket of their chapter 11 cases and cannot locate an order to show cause filed. Presumably, Mr. Troop says, the "order to show cause" to which the Stay Request refers is the unsigned and undated Reconsideration Request, which has already been denied. 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. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAN BENITO HEALTH: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: San Benito Health Care I L.L.C. dba Dolly Vinsant Memorial Hospital P.O. Box 42 San Benito, Texas 78586 Bankruptcy Case No.: 05-11412 Type of Business: The Debtor operates a hospital located in San Benito, Texas. Chapter 11 Petition Date: October 7, 2005 Court: Southern District of Texas (Brownsville) Judge: Richard S. Schmidt Debtor's Counsel: Richard S. Hoffman, Esq. Andarza & Hoffman, PC 500 West 16th Street, Suite 103 Austin, Texas 78701 Tel: (956) 544-2345 Fax: (512) 322-9802 Total Assets: $4,200,000 Total Debts: $2,029,986 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Hibernia National Bank Business expenses $794,883 P.O. Box 1911 San Benito, TX GE Capital Health Care Medical supplies $168,511 P.O. Box 641419 Pittsburg, PA M Power Retail Energy Utilities $79,274 P.O. Box 203811 Houston, TX Pharmasource Healthcare Medical supplies $77,984 4936 Blazer Parkway Dublin, OH Regions Leasing Business expense $72,946 P.O. Box 1203 Montgomery, AL Emergency Care Specialist Medical supplies $70,500 500 West Cypress Creek Fort Lauderdale, FL Travcorps Cross Country Staffing expense $65,245 Staffing c/o Paul Wilson 323 West Cano Edinburg, TX 78539 San Benito ISD Property taxes $53,170 P.O. Box 651109 Salt Lake City, UT Tony Yzaguirre Jr. - TA Taxes $41,985 964 East Harrison Brownsville, TX Texas Hospital Insurance Business expense $41,880 P.O. Box 14626 Austin, TX Valley Nuclear Inc. Medical supplies $38,152 1101 Pamela Dr. Mission, TX Blue Cross and Blue Shield Business expense $32,154 P.O. Box 1186 Chicago, IL Ownes Minor Inc. Medical supplies $31,284 P.O. Box 84142 Dallas, TX Medical Capital Reco Medical expenses $29,318 P.O. Box 6457 Austin, TX Transhealth LLC Medical supplies $25,996 5121 Maryland Way, Suite 301 Brentwood, TN American Investigation $25,427 275 Kings Highway, Suite 108 Brownsville, TX Alcon Laboratories Medical expenses $23,944 P.O. Box 954425 Dallas, TX South Star Ambulance Medical supplies $23,300 P.O. Box 1677 Weslaco, TX SBC Utilities $21,778 PO Box 930170 Dallas, TX 75393-0170 Clinical Pathology Lab Medical equipment $18,679 P.O. Box 141669 Austin, TX SATMEX: White & Case Partner Thomas Heather Appointed as Mediator ----------------------------------------------------------------- White & Case partner Thomas S. Heather has been appointed by Mexico's Communications Ministry to serve as mediator in the complex restructuring of Satmex, the Mexican satellite company, in order to accelerate the insolvency process. The matter is considered to be one of the first major Mexico-US cross-border insolvency cases. "Satmex has until October 31 to present a draft restructuring plan in the New York court. Failing to meet the deadline without some show of advancement could result in the case being reheard before Judge Robert Drain of US Bankruptcy Court of the Southern District of New York where creditors had filed an involuntary Chapter 11 proceeding, but was then dismissed," Mr. Heather said. "Such litigation could be costly in many ways to all parties involved, so my job is to help move the process forward as efficiently as possible with a plan that works for everyone." Mr. Heather, who is based in White & Case's Mexico City office, has more than 20 years experience in the areas of restructurings, mergers and acquisitions, banking, securities and corporate governance. A co-founder and immediate past chair of the Mexican Mediation Institute, Heather chairs the Financial Law Section of the Mexican Bar Association and is a member of the Board of the Mexican Institute of Corporate Governance. In addition, Heather has been at the forefront of significant alternative dispute resolution and trade-related initiatives. He participated in the NAFTA negotiations with respect to the Financial Services Chapter, and has been selected on several occasions as an arbitrator by the ICC Court of International Arbitration in Paris. He has served on several boards of leading corporations and financial institutions and has lectured extensively in Mexico and in the US. The Mexican magazine Lawyers World (El Mundo del Abogado) named him one of "Mexico's Top 100 Lawyers-2005." Mr. Heather's first task will be to oversee the proof of claims process to make sure all the creditors' claims have been properly identified and are valid. Mr. Heather will also oversee Satmex's financial reporting as agreed upon by the company and its creditors, who are mostly US-based investors. Mexican law does not require companies undergoing reorganization to make any information available to creditors, which is unacceptable to Satmex's US investors. The Mexican government is a shareholder of Satmex, a creditor of a Satmex holding company, a regulator of the satellite industry as well as the owner of the satellite concession that is the key to Satmex's business. Both the creditors and Satmex's shareholders have been frustrated by the lack of progress in the restructuring talks, which is why the Ministry made the bold move of appointing an experienced insolvency lawyer with significant cross-border experience to jumpstart the negotiations. Court documents indicate that one reason for the breakdown in talks has been the Mexican government desire to include the menoscabo, a conditional indebtedness incurred by Satmex's parent on behalf of the Mexican government which allowed the new owners of SatMex to leverage their investment in a previously debt-free company. "All issues related to the complex bankruptcy must be analyzed carefully from each stakeholders' point of view. This will be no easy task given that there is a parallel US proceeding in New York, SatMex has several concessions to deal with and the company itself is vital to keeping Mexico operating effectively due to SatMex's communications purpose. Resolving the matter is also compounded by the fact that creditors hold both private and publicly placed debt in the US capital markets and the bankruptcy involves a number of complex issues in multiple jurisdictions involving different agencies even within Mexico," Mr. Heather said. About White & Case White & Case recently was involved in another milestone bankruptcy in Mexico, representing paper conglomerate Corporacion Durango, S.A. de C.V. in its restructuring of more than $800 million of unsecured debt, marking the largest reorganization to date under Mexico's new bankruptcy act. With more than 150 restructuring and bankruptcy lawyers in 25 countries, White & Case has long been recognized as a leader in complex cross-border insolvencies and workouts such as the Satmex matter. The Firm is serving as key advisors and litigators in some of the most high-profile restructurings, including Asia Pulp & Paper, SK Global, United Pan-Europe Communications and Mirant, generally regarded as one the of most complex Chapter 11 cases in recent years with pre-petition litigation that includes more than 200 matters with a total value exceeding $20 billion. White & Case LLP is a leading global law firm with nearly 1,900 lawyers in 38 offices in 25 countries. Our clients value both the breadth of our network and depth of our US, English and local law capabilities in each of our offices and rely on us for their complex cross-border commercial and financial transactions and for international arbitration and litigation. Whether in established or emerging markets, the hallmark of White & Case is our complete dedication to the business priorities and legal needs of our clients. About Satmex Headquartered in Mexico, Satelites Mexicanos, S.A. de C.V. -- http://www.satmex.com/-- is the leading provider of fixed satellite services in Mexico and is expanding its services to become a leading provider of fixed satellite services throughout Latin America. Satmex provides transponder capacity to customers for distribution of network and cable television programming and on-site transmission of live news reports, sporting events and other video feeds. Satmex also provides satellite transmission capacity to telecommunications service providers for public telephone networks in Mexico and elsewhere and to corporate customers for their private business networks with data, voice and video applications, as well as satellite internet services. The Debtor is an affiliate of Loral Space & Communications Ltd., which filed for chapter 11 protection on July 15, 2003 (Bankr. S.D.N.Y. Case No. 03-41710). Some holders of prepetition debt securities filed an involuntary chapter 11 petition against the Debtor on May 25, 2005 (Bankr. S.D.N.Y. Case No. 05-13862). The Debtor, through Sergio Autrey Maza, the Foreign Representative, Chief Executive Officer and Chairman of the Board of Directors of Satmex filed an ancillary proceeding on Aug. 4, 2005 (S.D.N.Y. Case No. 05-16103). Matthew Scott Barr, Esq., Luc A. Despins, Esq., Paul D. Malek, Esq., and Jeffrey K. Milton, Esq., at Milbank, Tweed, Hadley & McCloy LLP represent the Debtor. When the Debtor filed an ancillary proceeding, it listed $900,000,000 in assets and $688,000,000 in debts. SAVVIS INC: Has Until Apr. 3 to Regain Nasdaq Compliance -------------------------------------------------------- SAVVIS, Inc. (NASDAQ:SVVS) received a letter from The Nasdaq Stock Market advising that the company has 180 days, until April 3, 2006, to regain compliance with The Nasdaq SmallCap Market's $1.00 minimum bid price rule. The grace period is extendable by another 180 days, to Oct. 2, 2006, if SAVVIS meets certain other listing requirements. If the company does not regain compliance within the allotted period, Nasdaq will send the company a notice that it is subject to a delisting from Nasdaq, which SAVVIS would be able to appeal to a Nasdaq Listing Qualifications Panel. SAVVIS received the notification because the bid price of SAVVIS' common stock closed below $1.00 per share for 30 consecutive business days. Under NASD Marketplace Rules, $1.00 per share is the minimum required for continued listing. If, at any time during the grace period, the bid price of the company's common stock closes at $1.00 per share or more for at least ten consecutive business days, Nasdaq will notify the company that it complies with the Rule. SAVVIS has existing stockholder authorization for both a one-for-fifteen and a one-for-twenty reverse split of its outstanding common stock. SAVVIS, Inc. (NASDAQ:SVVS) -- http://www.savvis.net/-- is a global IT utility services provider that focuses exclusively on IT solutions for businesses. With an IT services platform that extends to 47 countries, SAVVIS has over 5,000 enterprise customers and leads the industry in delivering secure, reliable, and scalable hosting, network, and application services. These solutions enable customers to focus on their core business while SAVVIS ensures the quality of their IT systems and operations. SAVVIS' strategic approach combines virtualization technology, a global network and 24 data centers, and automated management and provisioning systems. At June 30, 2005, SAVVIS Inc.'s balance sheet showed a $106,176,000 stockholders' deficit, compared to a $63,941,000 deficit at Dec. 31, 2004. SELF-SUFFICIENCY: Case Summary & 16 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Self-Sufficiency Through Housing & Economic Development aka SHED 3939 North Freeway Houston, Texas 77022 Bankruptcy Case No.: 05-46900 Type of Business: The Debtor provides low-income housing. Chapter 11 Petition Date: October 4, 2005 Court: Southern District of Texas (Houston) Judge: Wesley W. Steen Debtor's Counsel: Pete W. Weston, Esq. Law Offices of Pete W. Weston 3100 Weslayan, Suite 250 Houston, Texas 77027 Tel: (713) 623-4242 Fax: (713) 623-2042 Total Assets: $4,384,700 Total Debts: $2,542,971 Debtor's 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Harris County Judgment $266,000 1310 Prairie, Suite 880 Houston, TX 77002 Evans & Kosut, PC Legal services $44,500 616 FM 1960 West, Suite 400 Houston, TX 77090 Wells Fargo Credit line $44,100 Business Line P.O. Box 348750 Sacramento, CA 95834 Chase Small Business Credit line $32,500 Reliant Energy Trade debt $20,500 City of Houston Water and sewer $11,300 Home Depot Commercial Trade debt $10,300 CitiCorp Credit Services, Inc. Trade debt $10,000 Citi Bank $9,100 Chase Trade debt $7,732 Unicare Life & Health Trade debt $3,398 Bank of America Trade debt $2,089 Office Depot Trade debt $1,300 Republic Waste Services Trade debt $800 Capital One, F.S.B. Trade debt $351 United Collection Bureau, Inc. Trade debt $1 SOLUTIA INC: Expands Therminol Manufacturing in China ----------------------------------------------------- Solutia Therminol Co. Ltd., a subsidiary of Solutia Inc. (OTC Bulletin Board: SOLUQ), has officially opened a new Therminol(R) heat transfer fluid manufacturing facility in Suzhou, China, in a joint venture with Jiangsu Suhua Group Co., Ltd. More than doubling the production capacity of Solutia's original manufacturing plant, the new facility will support China's rapidly growing market for heat transfer fluids. "This facility will enable Solutia to meet the needs of our current and future customers in China by ensuring that production capacity is aligned with market demand," said Dale Kline, global business director for Specialty Fluids. Since 1995, Solutia has become China's leading provider of products and services related to heat transfer fluids. "We are extremely pleased with the reception Therminol has received in China. This expansion represents a key component of our global strategy and our long-term commitment to serve our Chinese customers, partners and employees," Kline said. For its expansion, Solutia selected Suzhou as a location that is well positioned to meet customers' current and emerging heat transfer fluid product, customer service and technical service needs. "Our ability to provide locally produced products and services to the same exacting standards as our other worldwide manufacturing facilities sets Solutia apart," said Sam Yiu, general manager of Solutia Therminol Co. Ltd. "Our expanded production capacity will enhance customers' confidence that they are buying the best high temperature heat transfer fluids in the world." Demand for Therminol heat transfer fluids has increased steadily in China since production started there 10 years ago. Construction on the newly opened facility began in 2003. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. (Solutia Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA INC: Declares Force Majeure on Certain Nylon Products ------------------------------------------------------------- Solutia Inc. (OTCBB: SOLUQ) declared force majeure for certain products within its Integrated Nylon Division. Hurricane Rita has caused raw material and utility supply limitations, and some of Solutia's suppliers have declared force majeure. The hurricane and supply limitations have impacted manufacturing operations throughout Solutia's Integrated Nylon Division. As a result of the supply limitations, Solutia is allocating available supply of certain products during the force majeure period. Solutia has contacted customers and is actively managing the situation to mitigate the effects of this interruption in supply on its operations and customer deliveries. However, the duration of the force majeure period and the potential financial impact of this situation on the company are unknown at this time. In order to alleviate the potential financial impact of this situation on its liquidity, Solutia will retain a portion of its net proceeds from the sale of Astaris LLC, its 50/50 joint venture with FMC Corporation, rather than using all of these proceeds to partially pay down the term loan portion of its debtor-in- possession financing. As a result, Solutia anticipates it will be able to maintain liquidity consistent with levels experienced thus far during 2005. Closing of the Astaris sale is subject to various conditions and contingencies, including regulatory and Bankruptcy Court approval, all of which are expected to be satisfied by mid November. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. SOUPER SALAD: Wants to Employ Padgett Stratemann as Auditor ----------------------------------------------------------- Souper Salad Inc. asks the U.S. Bankruptcy Court for the District of Arizona for permission to employ Padgett, Stratemann & Co., LLP, as its auditor. The Debtor wants Padgett Stratemann to provide audit services in connection with the company's 401(k) Plan. As approved by the Court, the Debtor was permitted to honor all prepetition employee's obligations and continue past practices under the Debtor's 401(k) Plan in order to retain employees and preserve employee morale. Padgett Stratemann will be paid $7,500 fee for its services, plus out of pocket expenses. The audit services to be provided by the firm are appropriate for proper continuation of the Debtor's 401(k) Plan. David R. Waddell, at Marcum & Kleigman, assures the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in San Antonio, Texas, Souper Salad Inc. -- http://www.soupersalad.com/-- operates an all-you-care-to-eat soup and salad bar restaurant chain. The Debtor filed for chapter 11 protection (Bankr. D. Ariz. Case No. 05-10160) on June 6, 2005. Daniel Collins, Esq., at Collins, May, Potenza, Baran & Gillespie, P.C., and Mark W. Wege, Esq., at Bracewell Giuliani, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $16,115,715 in assets and $50,383,179 in debts. SOUTHERN UNION: Amends Restated Revolving Credit Agreement ---------------------------------------------------------- Southern Union Company entered into a Fourth Amended and Restated Revolving Credit Agreement with: Commitment Lender ---------- ------ $36,000,000 JPMORGAN CHASE BANK, N.A., for itself and as Administrative Agent $36,000,000 Wachovia Bank, N.A. $35,000,000 Bank of America, N.A. for itself and as Syndication Agent $25,000,000 UFJ Bank Limited, New York Branch $20,000,000 KBC Bank, N.V. $20,000,000 Wells Fargo Bank, NA $20,000,000 Calyon New York Branch $20,000,000 Merrill Lynch Bank USA $20,000,000 Sovereign Bank $20,000,000 LaSalle Bank N.A. $20,000,000 The Bank of Tokyo-Mitsubishi, Ltd. $19,000,000 UMB Bank, N.A. $15,000,000 Bayerische Landesbank, Cayman Islands Branch $15,000,000 Credit Suisse, Cayman Islands Branch $15,000,000 PNC Bank, National Association $15,000,000 Sumitomo Mitsui Banking Corporation $15,000,000 Mizuho Corporate Bank (USA) $12,000,000 Bank of China, New York Branch $12,000,000 Royal Bank of Canada $5,000,000 Bank of Communications, New York Branch $5,000,000 Chinatrust Commercial Bank, New York Branch ------------ $400,000,000 ============ Amendments The Agreement extends the maturity of the existing credit facility by one year to May 28, 2010, and modified the pricing grid linking the cost of borrowings to the company's credit rating. Currently, Moody's Investor Service, Inc., rates the Company's senior unsecured debt at Baa3. If the company's credit rating rises to BB+, the interest rate will fall by 25 basis points. As full-text copy of the Fourth Amended to the Credit Agreement is available for free at http://ResearchArchives.com/t/s?237 Southern Union Company -- http://www.southernunionco.com/-- is engaged primarily in the transportation, storage and distribution of natural gas. Through Panhandle Energy, the Company owns and operates 100% of Panhandle Eastern Pipe Line Company, Trunkline Gas Company, Sea Robin Pipeline Company, Southwest Gas Storage Company and Trunkline LNG Company - one of North America's largest liquefied natural gas import terminals. Through CCE Holdings, LLC, Southern Union also owns a 50 percent interest in and operates the CrossCountry Energy pipelines, which include 100 percent of Transwestern Pipeline Company and 50 percent of Citrus Corp. Citrus Corp. owns 100 percent of the Florida Gas Transmission pipeline system. Southern Union's pipeline interests operate approximately 18,000 miles of interstate pipelines that transport natural gas from the San Juan, Anadarko and Permian Basins, the Rockies, the Gulf of Mexico, Mobile Bay, South Texas and the Panhandle regions of Texas and Oklahoma to major markets in the Southeast, West, Midwest and Great Lakes region. Through its local distribution companies, Missouri Gas Energy, PG Energy and New England Gas Company, Southern Union also serves approximately one million natural gas end-user customers in Missouri, Pennsylvania, Rhode Island and Massachusetts. SPIEGEL INC: Alvarez & Marsal Wins 'Turnaround of the Year' Award ----------------------------------------------------------------- Alvarez & Marsal, a global professional services firm, has been recognized by the Turnaround Management Association with the "Large Company Turnaround of the Year" award for its restructuring of Spiegel, Inc. William C. Kosturos, CTP, managing director and co-head of the firm's West region, will be honored at the TMA Annual Convention, October 18-21, at the Chicago Hilton & Towers. "We are proud to be recognized by our industry peers for the turnaround of Spiegel, Inc.," said Mr. Kosturos. "The success of this restructuring is a testament to the talented team we brought to the engagement, the value we were able to derive from the business and the strong working relationships we developed with company management, the creditors' committee and others who played a key role in the process." Founded in 1865 as a home furnishings business, Spiegel expanded into mail order catalogs and became a pioneer in extending credit to customers. But by early 2003, high customer credit card default rates, plummeting sales and costly overhead had created a financial crisis of enormous scope and complexity. The company, whose merchant operations included Spiegel Catalog, Newport News and Eddie Bauer, had breached loan covenants, ceased filing financial statements and was under investigation by multiple U.S. government authorities. Alvarez & Marsal was named to lead the restructuring effort, serving as CEO/CRO and other interim management roles. On March 17, 2003, Spiegel filed for bankruptcy protection after its credit card trust went into default, triggering an immediate liquidity crisis. A&M began executing a plan that established a new credit card program, reduced overhead, closed underperforming stores, improved merchandising and revamped back-end operations. Spiegel Catalog and Newport News were sold to investor groups and a standalone business was created around Eddie Bauer. Toward the conclusion of the case, the bankruptcy court judge heralded the case as "almost a perfect poster child of what Chapter 11 is designed to be." Not only was the retailer back in the black, but it had also built a substantial cash reserve, enabling the company to progress through the bankruptcy without utilizing its debtor- in-possession financing. On the heels of greatly improved comp store sales and earnings performance, Eddie Bauer Holdings exited bankruptcy in June of 2005. Spiegel's unsecured creditors recovered in excess of 90% of claims, receiving 100% of Eddie Bauer Holdings equity and the remainder in cash. Over the course of the case, Spiegel's cash balance had grown from $35 million to $327 million and when combined with exit financing and other settlements, the resulting cash payout to creditors was in excess of $730 million. This marks the second win for Alvarez & Marsal in the "Large Company Turnaround" category from the TMA. Alvarez & Marsal was recognized for its work on Warnaco in 2003. The criteria to qualify for the "Large Company Turnaround" category is $300 million USD or greater. The TMA recognizes industry leaders who are outstanding examples of how using a unique set of skills in operations, management, and finance can turn around a company once thought to be unsalvageable. About Alvarez & Marsal Alvarez & Marsal -- http://www.alvarezandmarsal.com/-- is a leading global professional services firm with expertise in guiding companies and public sector entities through complex financial, operational and organizational challenges. Employing a unique hands-on approach, the firm works closely with clients to improve performance, identify and resolve problems and unlock value for stakeholders. Founded in 1983, Alvarez & Marsal draws on a strong operational heritage in providing services including turnaround management consulting, crisis and interim management, performance improvement, creditor advisory, financial advisory, dispute analysis and forensics, tax advisory, real estate advisory and business consulting. A network of seasoned professionals in locations across the US, Europe, Asia and Latin America, enables the firm to deliver on its proven reputation for leadership, problem solving and value creation. About Spiegel Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. The Court confirmed the Debtors' Modified First Amended Joint Plan of Reorganization on May 23, 2005. Impaired creditors overwhelmingly voted to accept the Plan. SPIKES ENTERPRISES: U.S. Trustee Wants Chapter 11 Case Dismissed ---------------------------------------------------------------- Felicia S. Turner, the U.S. Trustee for Region 21, asks the U.S. Bankruptcy Court for the Northern District of Georgia to dismiss Spikes Enterprises, Inc.'s chapter 11 case. The Justice Department official says that the Debtor has not fulfilled its duties as debtor-in-possession. Specifically, the Debtor: (1) has not filed monthly reports; (2) has not filed a plan of reorganization; and (3) has not paid quarterly fees. The U.S. Trustee offers the Court an alternative equally acceptable to her: convert to a chapter 7 liquidation. Headquartered in Fayetteville, Georgia, Spikes Enterprises is a Kentucky Fried Chicken franchisee. The Company filed for chapter 11 protection on June 6, 2005 (Bankr. N.D. Ga. Case No. 05-17180). Paul Reece Marr, Esq., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets between $1 million to $10 million and estimated debts between $500,000 to $1 million. STANDARD PACIFIC: Fitch Rates Sr. Unsecured Debt at BB ------------------------------------------------------ Fitch Ratings initiates ratings on Standard Pacific Corp. (NYSE:SPF). Fitch assigns a 'BB' rating to the senior unsecured debt. The rating applies to approximately $1.1 billion in outstanding senior notes and Standard Pacific's revolving credit agreement. A rating of 'B+' has been assigned to the company's outstanding $150 million senior subordinated notes. The Issuer Default Rating is 'BB'. The Rating Outlook is Positive. Ratings for Standard Pacific are based on the company's successful execution of its business model, relatively conservative land policies, and geographic and product line diversity. The company has been an active consolidator in the homebuilding industry, which has contributed to the above-average growth during the past four years, but has kept debt levels a bit higher than its peers in recent years. Management has also exhibited an ability to quickly and successfully integrate its acquisitions. In any case, now that the company has reached current scale there may be somewhat less use of acquisitions going forward and acquisitions may be smaller relative to Standard Pacific's current size. Risk factors include the inherent (although somewhat tempered) cyclicality of the homebuilding industry. The ratings also manifest the company's aggressive yet controlled growth strategy, and Standard Pacific's capitalization, size, and still heavy (although diminished) exposure to California markets. The company's EBITDA, EBIT, and FFO to interest ratios tend to be somewhat below the average public homebuilder, as does inventory turnover. Standard Pacific's leverage is somewhat higher and debt-to-EBITDA ratio is slightly below the averages of its peers. However, the company's margins are substantially above the average of other public builders. Although the company has certainly benefited from the generally strong housing market of recent years, a degree of profit enhancement is also attributed to purchasing, design, and engineering, access to capital, and other scale economies that have been captured by the large national and regional public homebuilders in relation to non-public builders. These economies, the company's presale operating strategy, and a return on equity and assets orientation provide the framework to soften the margin impact of declining market conditions in comparison to previous cycles. Standard Pacific's ratio of sales value of backlog to debt during the past few years has ranged between 1.6 times (x) to 2.1x and is currently 2.1x - a comfortable cushion. Standard Pacific employs conservative land and construction strategies. The company typically options or purchases land only after necessary entitlements have been obtained so that development or construction may begin as market conditions dictate. The company extensively uses a combination of lot options and joint ventures. The use of nonspecific performance rolling options gives Standard Pacific the ability to renegotiate price/terms or void the option, which limits downside risk in market downturns and provides the opportunity to hold land with minimal investment. At present 25.4% of its lots are controlled through options and 16.7% are controlled in JVs. A high percentage of its homes are pre-sold, especially in California. Fitch views Standard Pacific's partnerships and JVs to be strategically and financially material to the company's operations. However, the manageable leverage levels and the supply of land in attractive markets held in the partnerships mitigate this risk to some extent. The company's unconsolidated homebuilding and land development JV leverage was 47.0% at the end of second-quarter 2005. Standard Pacific's homebuilding leverage was 44.9%. Adjusting for off-balance-sheet commitments, Standard Pacific's adjusted homebuilding debt to adjusted capital was 50.9%. Standard Pacific has pursued growth opportunities within and adjacent to existing markets. The company has also diversified geographically during the past few years by expanding into some of the largest homebuilding markets in the United States. Since 1998, it has expanded through acquisition into Arizona, Colorado, Florida, and the Carolinas. Each of the acquisitions included substantial strategic lot inventories as well as experienced management teams. As a result of these acquisitions, Standard Pacific's non-California divisions represented over 60% of homes delivered in 2004, compared to just over 20% of deliveries in 1997. Standard Pacific renewed its revolving line of credit on Aug. 31, 2005. The term was extended four years to Aug. 31, 2009; the facility increased from $600 million to $925 million. The facility includes an accordion feature allowing the company to increase the commitment to $1.1 billion. As of June 30, 2005, the company had $150 million in debt outstanding on its revolving credit facility and $65.4 million in letters of credit outstanding. As of second-quarter end, Standard Pacific had $7.1 million in cash and equivalents and $384.6 million available under the $600 million revolving credit facility, adjusting for letters of credit. The company has purchased modest to moderate amounts of stock in the past and has repurchased $6.9 million of common stock so far in 2005. As of June 30, 2005, $44.3 million was authorized for future share repurchase. STAR GAS: Commodity Price Concerns Prompt Fitch To Junk Ratings --------------------------------------------------------------- Fitch Ratings has downgraded Star Gas Partners, L.P.'s $265 million principal amount of 10.25% senior unsecured notes due 2013 (co-issued with its special purpose financing subsidiary Star Gas Finance Company) to 'CCC' from 'B-'. The Rating Outlook is Negative. The securities are removed from Rating Watch Negative where they were placed on Feb. 9, 2005, following reports of deterioration of Star Gas' heating oil business. Today's rating action primarily reflects Fitch's concern that high prices for home heating oil entering the winter heating season will put additional strain on the company's already weak financial profile and inhibit ongoing efforts to improve operating results. Current spot prices of approximately $2.00 per gallon are about 40% higher than this time last year. As a result, already high levels of customer attrition, price-induced conservation, and margin compression could worsen. Fitch is also concerned with the adequacy of Star Gas' liquidity provided under its $260 million secured revolving credit facility to manage its supply and collateral requirements. Higher commodity prices increase working capital needs and heighten the likelihood that the company will draw from the remaining proceeds from the sale of its propane operations to buy heating oil and not apply the cash proceeds to debt reduction. Based on the company's June 30, 2005 Form 10Q, $93.2 million remained available to repurchase Star Gas senior notes. The company has disclosed it is evaluating its near-term and short-term liquidity position with external financial advisers. Fitch is not cognizant of any specific findings or recommendations based on these evaluations nor the implications to creditors. Fitch will continue to monitor operating and financial results as they are disclosed by the company. A continuation of current operating trends could lead to further negative rating actions. TAJ INVESTMENTS: Case Summary & 12 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Taj Investments, Inc. dba Executive Inn fka Best Value Inn 3222 Airways Boulevard Memphis, Tennessee 38116 Bankruptcy Case No.: 05-36257 Type of Business: The Debtor operates a hotel located in Memphis, Tennessee. Chapter 11 Petition Date: October 5, 2005 Court: Western District of Tennessee (Memphis) Judge: William Houston Brown Debtor's Counsel: Ellen B. Vergos, Esq. Martin, Tate, Morrow & Marston, P.C. 6410 Poplar Avenue, Suite 1000 International Place, Tower II Memphis, Tennessee 38119-4843 Tel: (901) 522-9000 Fax: (901) 527-3746 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ BLX Capital, LLC 123 room hotel, $1,347,926 645 Madison Avenue rents leases, 19th floor receivables New York, NY 10022 3222 Airways Blvd., Memphis, TN Value of security: $1,250,000 Business Loan Center, LLC 123 room hotel $1,207,000 645 Madison Avenue 3222 Airways Blvd., 19th floor Memphis TN, rents, New York, NY 10022 leases & receivables Value of security: $1,250,000 Bob Patterson, Trustee County property $111,816 P.O. Box 2751 taxes Memphis, TN 381012751 City of Memphis $104,059 City of Memphis Personal property $28,505 taxes penalties interest Bob Patterson, Trustee $20,996 Memphis Light Gas and Water Utilities $8,949 ASSA ABLOY Hospitatlity Inc. Locks $5,173 Xspedius $902 Waste Connections of Tennessee Trash pickup $729 Time Warner Cable $651 Computel Computer services $232 TARGA RESOURCES: Moody's Rates $350 Million Sr. Unsec. Notes at B2 ------------------------------------------------------------------ Moody's Investors Service assigned first-time ratings to Targa Resources, Inc., a provider of midstream natural gas and natural gas liquids services. Moody's assigned a Ba3 corporate family rating to Targa, a Ba3 rating to its proposed $2.4 billion senior secured credit facilities (consisting of a $1.15 billion senior secured term loan facility, a $700 million asset sale bridge loan facility, a $250 million revolving credit facility, and a $300 million synthetic letter of credit facility), and a B2 rating to its proposed $350 million of senior unsecured notes (consisting of senior unsecured floating rate notes and senior unsecured fixed rate notes in amounts to be determined). Proceeds from the proposed offerings, combined with $315 million of expected equity contributions from Targa's private equity sponsor, will be used primarily to fund the acquisition of Dynegy Midstream Services, Limited Partnership from Dynegy, Inc. for $2.35 billion. The acquisition is expected to close at the end of October 2005 (all comments below pertain to Targa pro forma for the DMS transaction). The rating outlook is stable. The ratings are restrained by: 1) very high leverage; 2) the company's limited operating history; 3) the integration risks associated with the DMS transaction, which is a significant transformation for the company; 4) risks associated with the natural gas gathering and processing business in general including risks associated with commodity price changes, volume declines in areas where the company operates, and competition from other companies in the business, several of which have significant financial resources; 5) concerns about the damage inflicted by recent hurricanes on the company's assets and potentially medium- and long-term financial performance despite what appears to be adequate insurance; and 6) execution risk associated with the company's proposed sale of the North Texas assets. The ratings are supported by: 1) the company's size and scale, which makes it one of the largest integrated companies in the midstream sector; 2) expected de-leveraging over the near-term based on the proposed sale of the North Texas assets; 3) expected de-leveraging over the medium-term based on free cash flow which is supported by the company's contract profile and hedging positions that help mitigate the risks of potential changes in commodity prices, in addition to relatively low levels of maintenance capital expenditures; 4) the company's seasoned management team which has a successful track record in the midstream sector; and 5) the company's position in attractive areas of oil and gas production where drilling activity is active. The stable outlook reflects Moody's expectation of a successful integration of the DMS acquisition and execution of the company's plans to sell the North Texas assets for net proceeds of at least $700 million. Should Targa be unable to or, for any reason, decide not to sell the North Texas assets by June 30, 2006, the ratings will likely be lowered. Also, financial performance below expectations or other distrations that prevent the company from reducing Debt/Adjusted EBITDA to less than 5.0x by the end of 2006 could have negative rating implications. Conversely, financial performance above expectations combined with the achievement of the company's de-leveraging plans could have positive ratings implications. Targa was formed in 2004 and began substantive operations with an acquisition of midstream natural gas assets from ConocoPhillips in April 2004. With the acquisition of DMS, Targa will become a large-scale, integrated midstream energy company with: * 12,090 miles of owned and operated natural gas and natural gas liquids pipelines; * significant natural gas gathering systems; * 21 natural gas processing plants (15 of which are company-operated); * 12 terminals; * net NGL fractionation capacity of 299 Mbbls per day; and * NGL storage capacity of 122 Mmbbls. This is a transforming deal for Targa and given the size of the transaction and the nature of the business, there are significant integration risks including: * potential difficulties with systems integration; * strains on internal controls; and * the effects of DMS being part of a smaller entity with high growth expectations and a need to prove itself. After the DMS acquisition, Targa will have two divisions: 1) Natural Gas Gathering and Processing; and 2) NGL Logistics and Marketing. The Natural Gas Gathering and Processing division consists of the company's gathering systems and processing plants and constitutes approximately 70-75% of the company's total gross margin. The NGL Logistics and Marketing division consists of the company's natural gas fractionation, storage and terminalling, refinery services, wholesale propane marketing, and NGL distribution and marketing businesses and constitutes the remaining 25-30% of the company's total gross margin. A significant part of Targa's post-closing de-leveraging plan depends on the sale of the North Texas assets. The North Texas assets consist of two wholly owned natural gas processing plants (Chico and Shackelford) and an associated gathering system located in the Fort Worth Basin. Even though these assets are attractively positioned, the company does not have other infrastructure in the area and believes that the assets' growth potential would offer significant value to third parties and therefore command a high multiple. Targa expects that the sale of these assets will generate proceeds above those required to repay the $700 million asset sale bridge loan facility. The terms of the senior secured credit facilities require that 100% of the first $700 million of sale proceeds be used to pay off the asset sale bridge loan facility. After that, 50% of sales proceeds between $700 million and $850 million and 25% above $850 million will be required to repay the term loan facility. Sales proceeds not required to be used for mandatory repayment will be available as an permitted distribution to equity holders. Given the high likelihood of a sale in light of the attractive nature of the assets, Moody's factored in the sale of the assets and associated debt repayment in arriving at Targa's Ba3 corporate family rating. Several of DMS' facilities were severely damaged as a result of the recent hurricanes. Three of DMS' facilities in the region were damaged as a result of Hurricane Katrina including: * the Yscloskey processing plant (ownership interest, 25.6%); * the VESCO complex (ownership interest, 22.9%); and * the non-operated Toca processing plant (ownership interest, 11.6%). Based on the latest information available, it will likely be several months before the plants return to service. Preliminary assessments of the effects of Hurricane Rita indicate some flooding and wind damage to DMS' Barracuda and Stingray processing plants (all wholly owned) in southern Louisiana and potentially to DMS' gathering systems in the Gulf of Mexico. Dynegy carries business interruption insurance that will transfer to Targa upon closing of the transaction. Dynegy will retain the deductible with respect to business interruption insurance which consists of a waiting period of 30 days for onshore facilities. Even though Targa will have what appears to be adequate insurance coverage, Moody's has some concerns about the potentially medium- and long-term effects of the hurricane damage as some of the inlet volumes lost may never be restored or may potentially be diverted elsewhere if repairs at the facilities take a long time. However, Moody's observes that the income generated by the facilities (on a net basis) relative to the overall company is modest and that the negative effects from the hurricanes, at least in the near-term, have led to a higher commodity price environment which is benefiting the company elsewhere. DMS has several significant commercial contracts with Chevron, its largest customer. On the gathering and processing side of the business, Chevron has dedicated substantially all of its natural gas production, on a life-of-field basis, in the Permian Basin and Gulf of Mexico to DMS (these volumes constitute approximately 25- 30% of DMS' natural gas gathered for processing). In September 2006, each party has the right to renegotiate the pricing provisions of these contracts if they no longer reflect current market conditions. Accordingly, there is a risk of potential margin erosion if the pricing provisions in these contracts are revised downward. While this is a risk, Moody's notes that the company receives the benefit of having a meaningful portion of its business coming from dedicated areas and that pricing provisions are renegotiated at market rates. In addition to DMS' contracts with Chevron for gathering and processing, DMS also has contracts with Chevron to provide refinery services (NGL logistics, feedstock supply, and marketing activities) for several refineries and a contract to sell NGLs to Chevron Phillips Chemical (CPC). The refinery services contracts may be terminated or re-negotiated in September 2006 and yearly thereafter and the contracts with CPC may be terminated in September 2008 and yearly thereafter with two years' advance notice. Given the established relationships that DMS has with Chevron (also considering that most, if not all, of the employees providing these services currently will become Targa employees as a result of the acquisition) and the difficulties associated with switching to other service providers, it is unlikely these contracts will be terminated. Like all midstream natural gas companies, Targa's financial performance can be expected to fluctuate with commodity prices. Price cycles account for much of the industry's relatively poor performance in 2002 as well as the significant upswing in recent periods. These cycles can be fleeting and hard to predict over even short periods. Although Targa's performance is affected by the prices of natural gas, NGLs, and the spreads between them, its contract profile and hedging program help to reduce volatility. Pro forma for the DMS acquisition and the sale of the North Texas assets, approximately 50-55% of the company's total gross margin and 80% of the company's gathering and processing gross margin is priced under percentage-of-proceeds contracts. The margin earned under these contracts fluctuates with the prices of natural gas and NGLs. In order to protect its margin under such contracts, Targa has hedged approximately 70-85% of its equity natural gas and NGL volumes through 2009 (excluding volumes associated with the North Texas assets). Previously, hedging NGL price exposure required the use of "dirty" or "proxy" hedges using crude oil contracts based on the correlations between the prices of crude oil and NGLs; however, Targa has arranged to hedge the specific components of its NGL production which provides better price protection. Approximately 5-6% of the company's gathering and processing gross margin comes from keep-whole contracts, which expose the company to the risk of negative frac spreads (the spread between natural gas and NGLs) which it is largely able to mitigate by bypassing processing. Another 8-10% of the company's gathering and processing gross margin comes from hybrid contracts that operate like a percent-of-liquids contract in times of favorable processing economics and a fee-based contract in times of unfavorable processing economics. The rest of the company's gathering and processing gross margin comes from fee-based contracts that involve little or no commodity price risk. Aside from its gathering and processing business, the company's NGL logistics and marketing business varies with commodity prices as many of those contracts price based on margin and also volumes are affected by the amount of gas processed which is dependent on frac spreads. Thus, as frac spreads tighten or turn negative, Targa's straddle plants and other plants owned by third parties process less gas, reducing volumes feeding into its fractionation facilities and also reduce the volumes available for marketing. Overall, Moody's believes that the company's exposure to commodity prices is manageable. The company's contract profile and hedging positions improve predictability and provides for a tighter range of expected financial performance. Pro forma for the DMS acquisition and the sale of the North Texas assets, Targa's Adjusted EBITDA was approximately $281 million for the LTM period ended June 30, 2005. Relative to pro forma debt of $1.5 billion (which assumes the asset sale bridge loan facility is paid off), Targa's Debt/Adjusted EBITDA was approximately 5.3x, which is elevated for the company's rating category. Pro forma assuming the sale of the North Texas assets does not occur, Debt/Adjusted EBITDA was approximately 6.3x for the same period, which is out of range for the company's rating category. Looking ahead to 2006, Moody's expects that Targa will generate pro forma Adjusted EBITDA (excluding the North Texas assets) in the $300 million to $325 million range, assuming supportive commodity prices and a positive frac spread, which should translate into Debt/Adjusted EBITDA in the 4.5x-5.0x range by the end of 2006 which is somewhat elevated relative to Ba3-rated peers. Our expectations for Targa's Debt/Adjusted EBITDA on a longer term basis is in the 4.0x-4.5x range. Targa's Adjusted EBITDA/Interest, pro forma for the DMS acquisition and the sale of the North Texas assets, was approximately 2.5x for the LTM period ended June 30, 2005 and is expected be in the 2.5x to 3.0x range next year, which is somewhat low for the company's rating category. As of June 30, 2005, Targa's Debt/Book Capitalization was approximately 77% on a pro forma basis (assuming the sale of the North Texas assets for $700 million), which is on the high end for Ba-rated peers. At closing, which is prior to the planned sale of the North Texas assets, Targa's pro forma Debt/Book Capitalization is expected to be approximately 83% (excluding any unrealized losses recognized in earnings or through accumulated OCI associated with the hedges put in place in connection with the DMS acquisition), which reflects the fact that approximately 87% of the purchase price of the DMS acquisition is being financed with debt. The senior secured credit facilities are not notched up from the corporate family rating because they constitute the preponderance of the company's debt structure. The senior unsecured notes are double-notched down from the corporate family rating to reflect Moody's expectations of a much lower recovery in the event of default. Including the entire $250 million revolving credit facility (currently expected to be undrawn at closing) but excluding the $300 million synthetic letter of credit facility, Targa's secured debt is expected to be approximately $2.1 billion (86% of total debt) prior to the sale of the North Texas sale and $1.4 billion (80% of total debt) after the sale. There is no structural subordination currently as there is no debt outstanding at any of Targa's operating subsidiaries. Both the notes and the senior secured credit facilities are guaranteed by Targa's material operating subsidiaries with the exception of Versado Gas Processors, L.L.C. (ownership interest, 63%) and Cedar Bayou Fractionators, L.P. (ownership interest, 88%). The ratings are subject to Moody's review of final documentation. In summary, these ratings have been assigned to Targa with a stable outlook: 1) Proposed $1.15 billion senior secured term loan facility, rated Ba3 2) Proposed $700 million asset sale bridge loan facility, rated Ba3 3) Proposed $250 million revolving credit facility, rated Ba3 4) Proposed $300 million synthetic letter of credit facility, rated Ba3 5) Proposed $350 million of senior unsecured floating rate notes and senior unsecured fixed rate notes (in amounts to be determined), both due 2013, rated B2 6) Corporate family rating, Ba3 Targa Resources, Inc. is headquartered in Houston, Texas. TECHNEGLAS INC: Judge Hoffman Confirms Chapter 11 Plan ------------------------------------------------------ The Honorable John E. Hoffman Jr. of the U.S. Bankruptcy Court for the Southern District of Ohio confirmed on Friday, the First Amended Joint Plan of Reorganization filed by Techneglas, Inc., and its debtor-affiliates. Judge Hoffman put his stamp of approval on the Amended Disclosure Statement on Aug. 25, 2005. Judge Hoffman determined that the Plan met the 13 standards for confirmation required under Section 1129(a) of the Bankruptcy Code. 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 been sold as of the Effective Date and that may potentially be subject to environmental liability and certain other 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. TENNESSEE VALLEY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Tennessee Valley Press, Inc. 11 East Moulton Street Decatur, Alabama 35601 Bankruptcy Case No.: 05-85657 Type of Business: The Debtor is a printing company. Chapter 11 Petition Date: October 7, 2005 Court: Northern District of Alabama (Decatur) Judge: Jack Caddell Debtor's Counsel: Cynthia R. Slate-Cook, Esq. Slate, Cook & Waters P.O. Box 1344 Decatur, Alabama 35602 Tel: (256) 353-7912 Total Assets: $155,400 Total Debts: $1,126,581 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Johnson Partnership Capital loan $325,000 P.O. Box 1115 Decatur, AL 35602 IRS/Special Procedures 941 taxes $200,000 801 Tom Martin Drive Room 126 Birmingham, AL 35202 Athens Paper Open account $99,500 9312 A. Madison Boulevard Madison, AL 35758 Heritage Bank Douctech machinery $45,000 ten years old; not working and in several pieces; to be surrendered to Heritage Bank Value of security: $500 State of Alabama Taxes $30,000 Department of Revenue Tarpon Paper Open account $26,612 Southtrust Bank Card Open account $20,943 Enovation Open account $16,853 MBNA American Quantum Open account $15,906 Vaughn Printing Open account $14,867 MBNA America Open account $12,000 Academy Looseleaf Open account $11,860 Overnite Transport Judgment $11,268 Overnite Transportation Open account $11,000 Academy Looseleaf & Binder Lawsuit/colelction $9,600 Chase Open account $8,568 First USA Bank Open account $8,302 Kodak Polchrome Graphics Open account $8,067 Gibbons & Furman Legal fees $7,700 Lamination Services Open account $7,602 TERAFORCE TECHNOLOGY: Court Okays Locke Liddell as Panel's Counsel ------------------------------------------------------------------ The Honorable Barbara J. Houser of the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, gave the Official Committee of Unsecured Creditors appointed in Teraforce Technology Corporation and its debtor-affiliate, DNA Computing Solutions, Inc.'s chapter 11 cases authority to retain Locke Liddell & Sapp LLP as its counsel effective Aug. 10, 2005. As reported in the Troubled Company Reporter on Sept. 8, 2005, the Committee and Locke Liddell have agreed that the Firm will receive 90% of its normal hourly rates, adjusted from time to time, as approved by the Court. Doug Skierski, Esq., a Locke Liddell associate, discloses that he charges $300 per hour for his services. Court documents do not disclose the current hourly rates for other professionals. Headquartered in Richardson, Texas, Teraforce Technology Corporation -- http://teraforcetechnology.com/-- markets the products and services of its affiliate, DNA Computing Solutions, Inc. DNA Computing -- http://www.dnacomputingsolutions.com/-- designs, produces and sells board-level products that deliver high performance computing capabilities for embedded applications in the military/aerospace, industrial, and commercial market sectors. Davor Rukavina, Esq., at Munsch, Hardt, Kopf & Harr, PC, represents the Debtors in their restructuring efforts. The Company and its affiliate filed for chapter 11 protection on Aug. 3, 2005 (Bankr. N.D. Tex. Case Nos. 05-38756 & 05-38757). When the Debtors filed for protection from their creditors, they listed assets totaling $4,338,000 and debts totaling $14,269,000. TERAFORCE TECHNOLOGY: Ct. OKs GE Fanuc's Purchase of DNA's Assets ----------------------------------------------------------------- The Honorable Barbara J. Houser of the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, gave Teraforce Technology Corporation and its debtor-affiliate, DNA Computing Solutions, Inc., permission to sell substantially all of DNA Computing's assets free and clear of liens, claims, interest, and encumbrance to GE Fanuc Embedded Systems Inc. for $2,895,000. The Court also approved the asset purchase agreement between the parties. GE Fanuc's purchase is subject to the indemnity escrow of $300,000. As previously reported in the Troubled Company Reporter on Sept. 9, 2005, DNA Computing's assets are generally composed of: (a) intellectual property and technology, including patents, marks, copyrights, etc.; (b) inventory; (c) equipment; (d) rights under the Assumed Contracts; (e) rights under non-disclosure, non-compete, confidentiality or non-solicitation agreements, and Debtors' rights under warranties and other documents from third-party sellers or providers of services; (f) documents and permits; and (g) all rights, claims, and causes of action against third parties relating to any of the assets. Headquartered in Richardson, Texas, Teraforce Technology Corporation -- http://teraforcetechnology.com/-- markets the products and services of its affiliate, DNA Computing Solutions, Inc. DNA Computing -- http://www.dnacomputingsolutions.com/-- designs, produces and sells board-level products that deliver high performance computing capabilities for embedded applications in the military/aerospace, industrial, and commercial market sectors. Davor Rukavina, Esq., at Munsch, Hardt, Kopf & Harr, PC, represents the Debtors in their restructuring efforts. The Company and its affiliate filed for chapter 11 protection on Aug. 3, 2005 (Bankr. N.D. Tex. Case Nos. 05-38756 & 05-38757). When the Debtors filed for protection from their creditors, they listed assets totaling $4,338,000 and debts totaling $14,269,000. TERAFORCE TECHNOLOGY: Court Okays BKR Cornwell as Tax Accountant ---------------------------------------------------------------- The Honorable Barbara J. Houser of the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, gave Teraforce Technology Corporation and its debtor-affiliate, DNA Computing Solutions, Inc., authority to employ BKR Cornwell Jackson as their tax accountants. As reported in the Troubled Company Reporter on Sept. 9, 2005, BKR Cornwell will prepare and file the Debtors' corporate tax returns for tax year 2004. The Debtors tell the Court that BKR Cornwell will be paid $8,950 for its services. The Debtor discloses that $4,500 was paid prior to the commencement of services and $4,450 will be payable after the completion of the tax services. Headquartered in Richardson, Texas, Teraforce Technology Corporation -- http://teraforcetechnology.com/-- markets the products and services of its affiliate, DNA Computing Solutions, Inc. DNA Computing -- http://www.dnacomputingsolutions.com/-- designs, produces and sells board-level products that deliver high performance computing capabilities for embedded applications in the military/aerospace, industrial, and commercial market sectors. Davor Rukavina, Esq., at Munsch, Hardt, Kopf & Harr, PC, represents the Debtors in their restructuring efforts. The Company and its affiliate filed for chapter 11 protection on Aug. 3, 2005 (Bankr. N.D. Tex. Case Nos. 05-38756 & 05-38757). When the Debtors filed for protection from their creditors, they listed assets totaling $4,338,000 and debts totaling $14,269,000. TITAN CRUISE: Cascade Capital Approved as Financial Advisors ------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida gave Titan Cruise Lines and its debtor-affiliate permission to employ Cascade Capital Group as their financial advisors and investment bankers. Cascade Capital will assist the Debtors in evaluating their business operations and in considering asset dispositions, and in negotiating and proposing a plan of reorganization. If a sale of the Debtors' assets is necessary, Cascade Capital will assist them with the due diligence process and participate in negotiations for that proposed sale. Cascade Capital will also provide all other financial advisory and investment banking services to the Debtors that are appropriate and necessary in their chapter 11 cases. Mark Calvert, C.P.A., a Managing Director of Cascade Capital, disclosed that his Firm received a $60,000 retainer. Mr. Calvert reports that Cascade Capital will be paid with: 1) a Monthly Fee of $10,000 per month; 2) a Success Fee equal to: a) 1% of Enterprise Value, which is the projected EBITDA over a 5-year period with a terminal value based upon a growth rate the same as the first five years, and to be paid only if the Debtors become operationally successful or they sustain break even for a period of not less than three consecutive months; b) 3% of the Enterprise Value if the Debtors are successfully reorganized through a chapter 11 plan; and 3) 2% of the Purchase Price if the Debtors are sold or merged. Cascade Capital does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Saint Petersburg, Florida, Titan Cruise Lines and its subsidiary owns and operates an offshore casino gaming operation. The Company and its subsidiary filed for chapter 11 protection on August 1, 2005 (Bankr. M.D. Fla. Case Nos. 05-15154 and 05-15188). Gregory M. McCoskey, Esq., at Glenn Rasmussen & Fogarty, P.A., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. TITAN CRUISE: Wants Open Ended Deadline to Decide on Leases ----------------------------------------------------------- Titan Cruise Lines and its debtor-affiliate ask the U.S. Bankruptcy Court for the Middle District of Florida for an extension, until the confirmation date of a plan of reorganization, the period within which they can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors believe that they do not have significant leases subject to Section 365(d)(4) of the Bankruptcy Code but they are filing a request to extend their lease decision period out of an abundance of caution on their part. The Debtors relate that they do not have the funds to incur large administrative expenses and they do not wish to assume any leases or create large administrative claims until the time they have the funds available to develop a concrete plan of reorganization. The requested extension is in the best interest of their estates and their creditors and other parties-in-interest. The Court will convene a heating at 9:00 a.m., on Oct. 18, 2005, to consider the Debtor's request. Headquartered in Saint Petersburg, Florida, Titan Cruise Lines and its subsidiary owns and operates an offshore casino gaming operation. The Company and its subsidiary filed for chapter 11 protection on August 1, 2005 (Bankr. M.D. Fla. Case Nos. 05-15154 and 05-15188). Gregory M. McCoskey, Esq., at Glenn Rasmussen & Fogarty, P.A., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. TITAN GLOBAL: Case Summary & 10 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Titan Global 19, LLC P.O. Box 71 Panama City, Florida 32401 Bankruptcy Case No.: 05-50819 Chapter 11 Petition Date: October 7, 2005 Court: Northern District of Florida (Panama City) Debtor's Counsel: Louis L. Long, Jr., Esq. Chesser & Barr, P.A. 1201 Eglin Parkway Shalimar, Florida 32579 Tel: (850) 651-9944 Fax: (850) 651-9867 Total Assets: $3,800,000 Total Debts: $2,406,284 Debtor's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Emily Dowdy Loan $341,916 436 McKenzie Avenue Panama City, FL 32401 Joseph Sergo Loan $341,916 436 McKenzie Avenue Panama City, FL 32401 Donna C. Click Loan $154,000 c/o H.L. Perry 2612 West 15th Street Panama City, FL 32401 Sunshine Kitchens, Inc. Goods/materials $22,500 purchased A/C Service of the Panhandle Services rendered $12,000 Inc. Steel City Inc. Services rendered $7,300 Custom Glass & Fabricators Goods/materials $7,264 purchased Otis Elevator Goods/materials $6,288 purchased Padgett Plumbing Services rendered $2,500 Disposal Depot Services rendered $1,600 TRUST ADVISORS: Wants to Hire Shipman & Goodwin as Bankr. Counsel ----------------------------------------------------------------- Trust Advisors Stable Value Plus Fund asks the U.S. Bankruptcy Court for the District of Connecticut for permission to employ Shipman & Goodwin LLP as its general bankruptcy counsel. Shipman & Goodwin will: 1) advise the Debtor of its rights, powers and duties as a Debtor and debtor-in-possession in the continued management and operation of its business and property, including the management and control of funds in the trust; 2) advise and assist the Debtor in the negotiation and documentation of debt restructuring and its related transactions; 3) advise the Debtor concerning the actions that it might to collect and recover property for the benefit of its estates; 4) prepare on behalf of the Debtor certain necessary and appropriate applications, motions, pleadings, draft orders, notices, schedules and other documents; 5) counsel the Debtor in connection with the formulation, negotiation and promulgation of a plan of reorganization and its related documents; and 6) perform all other legal services to the Debtor that are necessary or appropriate in the administration of its chapter 11 case. Ira H. Goldman, Esq., a Partner of Shipman & Goodwin, is one of the lead attorneys for the Debtor. Shipman & Goodwin intends to apply with the Court for compensation for services rendered and reimbursement of expenses incurred post- petition in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules and the Local Rules of Bankruptcy Procedures. Shipman & Goodwin had not yet submitted its retainer amount and hourly rate of its professionals to the Debtor when the Debtor filed its request with the Court to employ the Firm as its general bankruptcy counsel. Shipman & Goodwin assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Darien, Connecticut, Trust Advisors Stable Value Plus Fund is a collective trust for employee benefit plan investors and was created to serve as an investment vehicle for various types of pension plans qualified under Section 401(a)of the Internal Revenue Code. The Company filed for chapter 11 protection on Sept. 30, 2005 (Bankr. D. Conn. Case No. 05-51353). When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. TRUST ADVISORS: Taps Murray L. Becker as Financial Advisor ---------------------------------------------------------- Trust Advisors Stable Value Plus Fund asks the U.S. Bankruptcy Court for the District of Connecticut for permission to employ Murray L. Becker, a Fellow of the Society of Actuaries (FSA) as its financial advisor and consultant. Mr. Becker will: 1) evaluate the Debtor's current investment policy and action plan for restoring the Debtor's Plus Fund's assets to book value, including underlying support to determine the reasonableness of the assumptions used to develop the action plan; 2) assist the Debtor with the formulation of a plan of reorganization and any alternatives that may be developed; 3) render expert testimony, as requested by the Debtor from time to time, regarding stable value investment issues, the feasibility of a plan of reorganization and other related matters; 4) assist the Debtor in complying with the reporting requirements of the Office of the U.S. Trustee; and 5) perform all other financial advisory and consulting services as requested by the Debtor from time to time. Mr. Becker disclosed that he charges $400 per hour for his services and his advisory and consulting fee is $10,000. Mr. Becker assures the Court that he does not represent any interest materially adverse to the Debtor or its estate Headquartered in Darien, Connecticut, Trust Advisors Stable Value Plus Fund is a collective trust for employee benefit plan investors and created to serve as an investment vehicle for various types of pension plans qualified under Section 401(a)of the Internal Revenue Code. The Company filed for chapter 11 protection on Sept. 30, 2005 (Bankr. D. Conn. Case No. 05-51353). Scott D. Rosen, Esq., at Cohn Birnbaum & Shea P.C. and Ira H. Goldman, Esq., at Shipman & Goodwin LLP represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. UAL CORP: Court Grants Open-Ended Deadline to Decide on Leases -------------------------------------------------------------- The Hon. Eugene Wedoff extends the period within which UAL Corporation and its debtor-affiliates may assume or reject unexpired leases through the date wherein a Plan of Reorganization is confirmed. By Oct. 21, 2005, the Debtors will file a request to assume these unexpired leases: Location Contract -------- -------- Austin Bergstrom Airport Airport Use & Lease Agreement Austin Bergstrom Airport Lease Agreement Cleveland Airport Agreement & Lease Columbus Municipal Airport Signatory Airline Operating Agreement & Lease Wayne County Detroit Airport Airport Use Agreement McCarran International Airport Lease Oakland International Airport Space/Use Permit Oakland International Airport Airline Operating Agreement Portland Airport Facility Lease Portland Airport Amended Facility Lease Portland Airport Above-Ground Storage Tank Use Agreement Portland Airport Permit 101647 Allocation Agreement SW Florida Int'l Airport Fuel System Agreement John Wayne Airport Certified Passenger Airline Lease John Wayne Airport Club Room Lease John Wayne Airport Perimeter Fence License Tucson Int'l Airport Airport Use Agreement Tucson Int'l Airport License Agreement Tucson Int'l Airport Lift Device Use Agreement The Debtors also have until Oct. 21, 2005, to file a request to reject their unexpired lease for Terminal and Cargo Space with the Southwest Florida International Airport. The Debtors' request to assume and reject the unexpired leases will be heard by Nov. 18, 2005. The Debtors agree to conditionally assume any Municipal Bond Lease relating to the adversary proceeding they commenced against the City and County of Denver, Colorado, and the California Statewide Communities Development Authority Special Facilities Lease Bonds with respect to the San Francisco Municipal Bonds. The order does not prejudice any rights or claims of parties involved in the Municipal Bond Litigation. 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. 102; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Says Wells Fargo Prevents Sr. Tranche Notes' Purchase --------------------------------------------------------------- On July 28, 2005, UAL Corporation and its debtor-affiliates purchased the Junior Tranches of the 1997-1 EETC from Kreditanstalt fur Wiederaufbau. Completion of the transaction gave the Debtors the right to purchase the Senior Tranche with 10 days' written notice. In August 2005, the Debtors notified Wells Fargo Bank -- as Trustee of the Pass Through Trust Agreement -- that they intended to purchase the Senior Tranche. To consummate the purchase, the Debtors stood ready to deposit the purchase price into an account designated by Wells Fargo. Judge Wedoff authorized the Debtors to purchase the Senior Tranche on August 8, 2005. James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, relates that although the Debtors were ready to pay the purchase price, Wells Fargo prevented consummation of the transaction. Specifically, Wells Fargo refused to designate an account into which the Debtors could deposit their payment. Wells Fargo argued that the Debtors' proposed purchase price was insufficient. Wells Fargo claimed that the Debtors used an incorrect interest rate to calculate the purchase price and related interest. Wells Fargo alleged that a New York statutory judgment rate of 9% should apply, rather than the applicable Senior Tranche interest rate of LIBOR plus 22 basis points. Mr. Sprayregen notes that the interest rate discrepancy would inflate the purchase price by around $65,000,000. Against this backdrop, the Debtors ask the Court to: (1) declare that, as rightful owner of all Junior Tranches in the 1997-1 EETC Transaction, they have the right to purchase the Senior Tranche, and that the purchase price, calculated in accordance with the Transactional Documents, is $292,225,804. They ask the Court to declare that Wells Fargo, as Trustee, is obligated to provide an account for the Debtors to deposit the purchase price, and that each Senior Tranche Holder, by its acceptance of the purchase price, agrees to sell the Debtors their Senior Tranche Certificates. The Debtors should also be declared rightful owner of the Senior Tranche Certificates upon acceptance of the purchase Price. (2) order specific performance of the Pass Through Trust Agreement to effectuate the Debtors' purchase of the Senior Tranche. The Debtors ask the Court to direct Wells Fargo to designate an account in which to deposit the purchase price. Wells Fargo should be compelled to treat the Debtors as the sole owner of the Senior Tranche Certificates. (3) compel turnover of property of the Debtors' estate. Specifically, the Debtors ask the Court to order Wells Fargo to deliver the right, title and interest of each Senior Tranche Certificate. (4) issue a mandatory injunction ordering Wells Fargo to designate an account for the Debtors to deposit the purchase price. Wells Fargo should treat the Debtors as the sole owner of the Senior Tranche and comply with its obligations pursuant to the buyout procedure of the Pass Through Trust Agreement. Wells Fargo Wants Complaint Dismissed Wells Fargo Bank serves as Pass Through Trustee for the Class A Certificates, Class B Certificates, Class C Certificates and Class D Certificates. The Pass Through Trust Agreement was entered into in December of 1997 as part of the 1997-1 Enhanced Equipment Trust Certificates, to finance 14 aircraft. According to Franklin H. Top, III, Esq., at Chapman and Cutler, in Chicago, Illinois, an Intercreditor Agreement governs the rights of each Class of Certificates and details the payment waterfall under different scenarios. As per the Intercreditor Agreement, a "Triggering Event" occurred when the Debtors filed for bankruptcy. The Triggering Event required the Debtors to first pay amounts outstanding to the Liquidity Provider, then pay the Trusts, which would pass the payments to the holders of the Class A, Class B, Class C and Class D Certificates, in that order. Mr. Top recounts that at all relevant times, the Debtors have held the Class D Certificates. On July 28, 2005, the Debtors purport to have purchased the Class B and Class C Certificates. On August 2, 2005, the Debtors sent a Purchase Notice to Wells Fargo alleging the right to purchase the Class A Certificates. The Debtors accuse Wells Fargo of preventing completion of the transaction. Mr. Top finds it ironic that the Debtors, after defaulting on the Equipment Notes and Indentures, want to enforce a provision of the transactional documents. "The Debtors' action against Wells Fargo violates the terms of the Pass Through Trust Agreement," Mr. Top asserts. Specifically, Mr. Top notes that: * The Pass Through Trust Agreement contains a No Action Provision, which limits costly and expensive litigation and ensures that security holders are treated in accordance with their ratable interest in the Trust. * The Debtors are required to advise Wells Fargo of the alleged defaults under the Pass Through Trust Agreement and ask Wells Fargo to bring an action against the Class A Pass Through Trust. The Debtors may only bring an action if Wells Fargo refuses to do so on their behalf within 60 days. * The Debtors failed to purchase the Class A Certificates in compliance with the Pass Through Trust Agreement. The Debtors were required to purchase the Class A Certificates while simultaneously purchasing the Class B and Class C Certificates. Mr. Top speculates that the Debtors "overpaid for the B and C Certificates and are now trying to shortchange the holders of the Class A Certificates." The Debtors' failure to make these purchases simultaneously is fatal to the ability to purchase the Class A Certificates, Mr. Top asserts. The Debtors' bankruptcy filing initiated a Triggering Event, which required payments on Class A Certificates prior to payments on subordinate Certificates. The Debtors' purchase of the Class B and Class C certificates represents payments in violation of the distributive scheme of the Trust. Mr. Top points out that the simultaneous purchase requirement reflects the intent of the Trust. Wells Fargo need not surrender the Class A Certificates if the purchaser does not comply with the Pass Through Trust Agreement. Since the Debtors did not comply with the simultaneous purchase provision, the Class B Certificateholders' option to purchase the Class A Certificates has expired. The Court cannot order the Class A Certificateholders to turn over their notes. 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. 102; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Court Sets Tentative Claims Resolutions Schedule ---------------------------------------------------------- As previously reported, more than 40,000 claims asserting over $3,600,000,000,000 against UAL Corporation and its debtor- affiliates estates have been filed. The Debtors have eliminated more than 25,000 claims, reducing the face amount on the claims register to approximately $45,000,000,000. The Debtors continue to resolve outstanding claims to maximize distributions and to minimize the reserve for disputed claims. URPBPA Responds Frank Cummings, Esq., at LeBoeuf, Lamb, Greene & MacRae, in Washington, D.C., asserts that the Pension Benefit Guaranty Corporation is violating the allocation scheme and recovery ratio of the Employee Retirement Income Security Act by assigning 45% of its claims against the Debtors back to the Debtors. Members of the United Retired Pilots Benefit Protection Association are entitled to assert a claim against the Debtors for the PBGC's 45% reassignment, Mr. Cummings explains. Debtors' Stand on the PBGC Claim James J. Mazza, Jr., Esq., at Kirkland & Ellis, in Chicago, Illinois, notes that the Pension Benefit Guaranty Corporation wants an extra month to litigate the unfunded liability claim. However, the Debtors' proposed four-month allocation is "more than adequate time to resolve the issue prior to confirmation." Under the proposed schedule, Mr. Mazza notes that the Debtors will not have to hold back a disproportionate and unnecessary amount of distributions in a disputed claim reserve, which could impact the trading price of the Debtors' securities. Although there are no objections to the PBGC claim yet, the Official Committee of Unsecured Creditors has been conducting analysis and has retained an expert to provide valuation assistance. The actuarial calculation of PBGC's claim may be complex. However, the proper discount rate has been litigated in several previous bankruptcy cases. Mr. Mazza maintains that the Court's determination of the PBGC Claim before exit will provide parties with some certainty regarding a disputed claim reserve, even if an appeal is filed. The scheduling of a trial on PBGC's claim at or before confirmation increases the chances for a consensual resolution. * * * Judge Wedoff sets this schedule for: (1) The Pension Benefit Guaranty Corporation Claim: Date Event ---- ----- September 23, 2005 PBGC Claim Objection Deadline October 14, 2005 Deadline to reply in support of PBGC Claim October 18, 2005 Deadline to file pretrial statement October 21, 2005 PBGC Claim pretrial conference Any party that does not object to allowance of the PBGC Claim by the PBGC Claim Objection Deadline will be deemed to have forever waived any alleged right to object to the allowance of the Claim. If no objections are filed with respect to the PBGC Claim prior to the PBGC Claim Objection Deadline, then the PBGC Claim will be allowed, and any purported third-party reservation to object to the allowance will be extinguished. (2) The 9/11 Claims: Date Event ---- ----- October 7, 2005 9/11 Claims Objection Deadline October 28, 2005 Reply deadline for 9/11 Claimants to support 9/11 Claims November 18, 2005 9/11 Claims pretrial conference Any objection to 9/11 Claims should contain any legal arguments that 9/11 Claims may not be asserted against the Debtors' estates as a matter of law. Any replies in support of 9/11 Claims should include any legal argument opposing the position. "All dates set forth in this Order are tentative and subject to change," Judge Wedoff states. 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. 102; Bankruptcy Creditors' Service, Inc., 215/945-7000) USG CORP: Equity Panel Gets Court Nod to Hire Houlihan Lokey ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware authorizes the Statutory Committee of Equity Security Holders appointed in USG Corporation and its debtor-affiliates' chapter 11 cases to employ Houlihan Lokey Howard & Zukin Capital as its financial advisor, nunc pro tunc to May 18, 2005. Judge Fitzgerald rules that the Retention Order will be reviewed monthly to determine whether the Equity Committee still require a financial advisor's service and to assess what benefits are provided to the Equity Committee. Houlihan Lokey Capital has been providing critical services to the Equity Committee, including: -- the review of operating and financial information and the conduct of general due diligence on the Debtors' business and case matters; -- meeting with the Debtors' management, advisors and other professionals involved in the cases; -- participating in meetings with the Equity Committee; and -- responding to multiple inquiries from equity holders. Under an Engagement Letter executed between the parties, Houlihan Lokey will, among others: (1) evaluate the Debtors on a current and ongoing basis; (2) assess the Debtors' value and debt capacity; (3) evaluate any capital market transactions, including financing or merger and acquisition transactions; (4) assist in the development and negotiation of potential plan of reorganization structures and securities; (5) assist the Equity Committee in its evaluation of various asbestos issues in the Debtors' cases; (6) attend meetings and provide periodic updates and reports and respond to inquiries from the Equity Committee members and other equity holders, as appropriate; and (7) confer with the Debtors' financial and other professionals, and those representing other statutory committees. Houlihan Lokey will be paid a $100,000 fixed monthly fee, and an additional transaction fee equal to: * $250,000 plus the Transaction Fee in the case of a consensual transaction; * the lesser of $4.5 million and the sum of 0.15% times "Equity Holder Recoveries", minus 50% times the first nine installments of monthly fees plus 100% times all monthly fees in the case of a Litigation Result Transaction; * $1 million, if a Legislative Result Transaction occurs within one year of the Agreement's effective date; * $1.5 million, if the transaction date occurs one year but within 18 months of the Agreement's effectivity; * $2 million, if the transaction date occurs beyond 18 months but within two years of the Agreement's effective date; and * a Transaction Fee payable on a Litigation Result Transaction, if the transaction date occurs beyond two years of the Agreement's effectivity. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at Jones Day represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) VARIG S.A.: Brazilian Court Refers GCAS Dispute to U.S. Court ------------------------------------------------------------- The Hon. Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York, at the request of Vicente Cervo and Eduardo Zerwes, the Foreign Representatives appointed in the reorganization proceedings of VARIG S.A. and its debtor- affiliates, directs GE Commercial Aviation Services, LLC, and JPMorgan Chase Bank to show cause before the U.S. Court in New York, on Oct., 2005, why an order should not be issued compelling them to deliver certain property of the Foreign Debtors' estate, or the proceeds of the property, to the Foreign Representatives. The Bankruptcy Court had previously denied the Debtors' request to direct GE Commercial Aviation Services, LLC, to turn over the Debtors' receivables in its possession. Judge Drain said he recognizes the jurisdiction of the Brazilian courts to decide issues involving VARIG and GE Commercial Aviation Services, LLC, regarding the Judicial Recovery Plan. As reported in the Troubled Company Reporter, Mr. Cervo and Mr. Zerwes alleged that GE Commercial wrongfully instructed JPMorgan Chase Bank, N.A., to distribute funds out of the Foreign Debtors' JPMorgan account as accelerated payment of a prepetition debt. GE Commercial had served a notice on JPMorgan declaring a default -- as a result of the Foreign Debtors' bankruptcy in Brazil and the Section 304 Proceedings. In accordance with the instructions in the Default Notice, yet without notice to the Foreign Debtors, JPMorgan wired $5,076,961 to GE Commercial. The total amount disbursed by JPMorgan constituted the proceeds of the Foreign Debtors' accounts receivable GECAS Defends Case The Foreign Debtors' submitted their request before the 8th Corporate Court of the District of Rio de Janeiro following Judge Drains' denial. Joao Luiz Aguiar de Medeiros and Luiz Fernando Valente de Paiva, counsel to GECAS in Rio Janeiro, tell the Brazilian Court that VARIG omitted a relevant fact. The debt VARIG assumed was already due when they entered into a settlement agreement with the Lessors. The Lessors only agreed to grant a new time limit to pay it off and to pardon part of the debt if VARIG complied with certain obligations and if they abstained from committing certain acts -- it being certain that any failure to comply with the obligations would make the debt immediately and fully due and payable. Mr. Aguiar argues that GECAS and the Lessors' exercise of their contractual rights does not violate any material Brazilian law or infringe any procedure rules and principles of the Code of Civil Procedure or the New Bankruptcy Law of Brazil. Mr. Aguiar explains that under the Settlement Agreement, the Lessors agreed to reschedule the debt in monthly payments beginning in March 2004 and terminating in December 2009. If and only if there were no occurrence of an event of default and VARIG and Rio Sul paid $83,000,000 of the total debt within a certain time, the Lessors would pardon the remaining $38,471,000. "The Lessors granted VARIG and Rio Sul a clear, effective and unquestionable commercial benefit, which today could amount to approximately BRL90,000,000," Mr. Aguiar says. Mr. Aguiar notes that VARIG granted the Lessors a real guarantee for a portion of the debt, a guarantee that is constituted and governed by the laws of New York. The guarantee includes a bank account held by VARIG with JPMorgan Chase Bank. Mr. Aguiar also points out that VARIG notified the International Air Transport Association of the terms of the Settlement Agreement and a related Security Agreement that VARIG granted the Lessors and GECAS, all rights to withhold, in an event of default, payments owed by IATA or by its ticketing system, reports, currency remittance and compensation in VARIG's name in relation to the sale of airfares and correlated services effected in France and the United Kingdom. VARIG agreed that in the event of default, the Lessors could, without the need for notice of any type to the Lessees, declare early call-in of the debt. GECAS also questions the jurisdiction of the Brazilian Court to act on the issue, considering that the governing law of the Agreement is New York law. Brazilian Court Sides with VARIG Judge Luiz Roberto Ayoub of the 8th Corporate Court of the District of Rio de Janeiro, Brazil, directs GECAS to abstain from transferring the amounts derived from the liquidation of the VARIG group's receivables generated by the BSP/IATA system and to return the amounts transferred as of the Petition Date. "I feel that I must grant the request submitted by VARIG in its entirety," says Judge Ayoub in his six-page decision. Judge Ayoub explains that the provisions of article 50 of Law no. 11.101/2005 render GECAS' actions abusive. Under article 50, "all the credits existing on the date of the request, even if not yet due, are subject to the Judicial Recovery." Thus, it is not conceivable that, after the Judicial Recovery was authorized, any creditor could -- no matter what its reason may be -- take possession of funds earmarked for the company's recovery, according to Judge Ayoub. The conclusion to accelerate the debt's payment date does not have the power to affect funds constituted after the recovery process has commenced. Judge Ayoub says accelerating the debt frustrates VARIG's restructuring plan. The legal purpose of guaranteeing the protection of the debtor and its property, starting on the filing date of the request for judicial recovery, is clear and enough reason to recognize that GECAS abused a right when it took possession of funds earmarked for the company's recovery plan. Judge Ayoub further notes that that the issue is of the public interest, insofar as the principle of preservation of the business is the basis for the entire system initiated by Law no. 11.101/05, which went into effect as of June 9, 2005. In addition, Judge Ayoub says the transcript of the hearing held in the U.S. Court shows that the Bankruptcy Court of the Southern District of New York recognizes the jurisdiction of the Brazilian courts to decide issues involving VARIG and GECAS regarding the Judicial Recovery Plan. Judge Ayoub maintains that under Section 552(a) and (b) of the U.S. Bankruptcy Code, "property generated after the request for restructuring was filed must be free from any lien so that the debtor can use it to effectively reorganize." Due to identical reasons for justifying the concern for protecting the debtor and the debtor's estate, Judge Ayoub says the Brazilian legislation grants the same treatment as the U.S. legislation, aimed at making the company's recovery feasible. Judge Ayoub orders that notification of the requests and the decision be given to Judge Drain of the U.S. Bankruptcy Court, which has jurisdiction to enforce the decision. Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in-possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. (VARIG Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) VARIG S.A.: Preliminary Injunction Expires on Nov. 11 ----------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York directs that all persons subject to the jurisdiction of the U.S. Court are enjoined and restrained from commencing or continuing any action to collect a prepetition debt against VARIG S.A. and its debtor-affiliates without obtaining relief from the Court. The Hon. Robert Drain rules that the Preliminary Injunction will expire at the end of the day on November 11, 2005. The Court will convene a hearing on November 9 to consider whether to continue the terms of the Preliminary Injunction. Objections to the continuation of the Preliminary Injunction are due November 4. As reported in the Troubled Company Reporter, Varig obtained a preliminary injunction from the Bankruptcy Court enjoining and restraining U.S. creditors from seizing its U.S. assets or repossessing aircraft landing in United States airports. The Court directs the Foreign Debtors to provide to their aircraft lessors, and to any other creditors upon written request: (a) cash flow projections showing the Foreign Debtors' actual sources and uses of funds during the past three-month period, and estimated future sources and uses of funds through the 180-day period as provided in Section 6 of the NBRL, together with any assumptions underlying the projections; (b) updated cash flow projections approximately every 30 days showing actual sources and uses of funds on a trailing three-month basis and any adjustments made to estimated future sources and uses of funds or assumptions set forth in the most recent prior projections and assumptions; and (c) a fleet plan, to be updated periodically, indicating which aircraft are expected to be operational and in use each month by the Foreign Debtors. The Foreign Debtors are also directed to develop a contingency plan for the reasonable and orderly process of removing aircraft from commercial service. Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in-possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. (VARIG Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) W.R. GRACE: Battle Over Exclusivity to Continue on Dec. 19 ---------------------------------------------------------- Judge Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware ruled in open court at an August 29, 2005, hearing that the periods within which W.R. Grace & Co. and its debtor- affiliates have the exclusive right to file a plan and to solicit acceptances for that plan are extended until December 19, 2005, the next omnibus hearing in the case. The Official Committee of Asbestos Personal Injury Claimants, the Official Representative of Future Asbestos Personal Injury Claimants and the Official Committee of Asbestos Property Damage Claimants have taken potshots at the Debtors' attempt to extend the periods within which they have the exclusive right to: (a) file a Chapter 11 plan of reorganization through and including Nov. 23, 2005; and (b) solicit acceptances for that plan through and including Jan. 23, 2006. David T. Austern, the legal representative for future asbestos claimants, said that since the only plan on file is the Debtors' patently unconfirmable plan, real negotiations will not proceed until the playing field is finally made level by the termination of exclusivity. Theodore J. Tacconelli, Esq., at Ferry, Joseph & Peace, P.A., in Wilmington, Delaware, speaking for the Asbestos Property Damage Committe, said that the Debtors cannot point to one significant financing or business contract that would be jeopardized by terminating exclusivity speaks volumes about the marketplace's perception of the Debtors' exclusivity. Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., 215/945-7000) W.R. GRACE: Wants Court to Enforce Stay on N.J. Civil Action ------------------------------------------------------------ On June 1, 2005, the New Jersey Department of Environmental Protection brought a civil action against W.R. Grace & Co., W.R. Grace & Co-Conn., and two Grace employees, in the Superior Court of New Jersey, in Mercer County. The DEP seeks to recover more than $800 million on account of environmental claims. Grace Filed "False Report" James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young Jones & Weintraub, P.C., in Wilmington, Delaware, informs Judge Fitzgerald that the New Jersey State Action charges Grace with violating two state statutes: (1) the Industrial Site Recovery Act, N.J.S.A. 13:lk8 et seq.; and (2) the New Jersey Spill and Compensation Act, N.J.S.A. 58:10 23.116 et seq. The New Jersey Action alleges that Grace, which operated an industrial plant in Hamilton Township, New Jersey, together with Grace's former employees, Robert J. Bettacchi and Jay H. Burrill, failed to disclose in a June 5, 1995, report to the DEP certain material facts concerning the risks of processing asbestos- contaminated vermiculite. The New Jersey Action also alleges that the Grace Defendants has continued to withhold the correct information that should have been included in the report and has failed to correct the misinformation provided there. Allegations against Messrs. Bettacchi and Burrill track verbatim those raised against the Debtors themselves, because Messrs. Bettachi and Burrill were acting on Grace's behalf in their capacities as Vice President and Environmental Coordinator when they made the representations that New Jersey now asserts were "false and misleading." As a result of filing the allegedly false report, the New Jersey Action seeks to assess liability against each Grace defendant for $25,000 under the ISRA and $50,000 under the Spill Act. In addition, the New Jersey Action alleges that the Defendants have committed a separate violation of the ISRA and the Spill Act for "each day Defendants failed to correct the false information" set forth in the Report. Therefore, the DEP asserts that the Defendants' refusal to concede the falsity of the Report equates to a $75,000 liability for every day from June 5, 1995, until the present day, for a total amount of civil penalties that exceeds $800 million and presumably grows each day. As stated in a notice filed with the New Jersey Superior Court on September 19, 2005, the Grace Defendants have removed the New Jersey Action to the United States District Court of New Jersey. The Defendants also intend to further seek the transfer of the Action to the District Court of Delaware so that the Bankruptcy Court may assume jurisdiction over it and decide on the case in the course of the Debtors' bankruptcy. Mr. O'Neill relates that the separate prosecution of the New Jersey Action will inevitably threaten the orderly administration of the Grace estate. New Jersey Action Violates Sec. 362 The Debtors ask Judge Fitzgerald to find that the continued prosecution of the New Jersey Action would violate the automatic stay. Section 362(a) of the Bankruptcy Code prohibits the commencement or continuation of any judicial proceeding against a debtor to recover on claims that arose before the Petition Date. Mr. O'Neill tells Judge Fitzgerald that because the $800 million that New Jersey seeks to recover from the defendants is not proportional to any safety or welfare interest that the State may have in the Action, the Action should be recognized for being "a sizable financial claim on the bankruptcy estate, which should be dealt with on the same terms that the Bankruptcy Code provides for all other creditors." As the Third Circuit of Appeals has recognized, "[i]n addition to providing the debtor with a 'breathing spell,' the [automatic] stay is intended to replace an unfair race to the courthouse with an orderly liquidation procedure designed to treat all creditors equally." The magnitude of the fines in the New Jersey Action and its lack of proportion to any real harm to the public health and welfare demonstrates that its underlying purpose is to put money in the State's coffers, not to enforce any conceivable regulatory interest, Mr. O'Neill notes. The New Jersey Action does not seek to protect the "general safety and welfare" by requiring the debtors to clean up the environment or repay the government for damages caused. "Because the extravagant size of the claimed liability bears no proportional relationship to the State's interest in the 'general safety or welfare,' the DEP's interest extends 'principally' to the State's 'interest in the debtors' property' and should therefore be declared subject to the automatic stay," Mr. O'Neill says. Mr. O'Neill adds that the New Jersey Action does not constitute a "police power" action under the Bankruptcy Code. The Bankruptcy Code provides that automatic stay will not apply to actions "by a governmental unit to enforce such government unit's police or regulatory power, including the enforcement of a judgment other than a money judgment." Request for Section 105 Injunction Alternatively, if the Bankruptcy Court determines that the New Jersey Action is not subject to the automatic stay, the Debtors seek a preliminary and permanent injunction staying the prosecution of the New Jersey Action under the general equitable powers provided by Section 105 of the Bankruptcy Code. Mr. O'Neill contends that the New Jersey Action clearly and unduly interferes with the bankruptcy and threatens the estate's assets. Given the potential size of the New Jersey Action, the Debtors and the creditors simply could not agree on a reorganization plan that did not account for the threat of the massive additional liability hovering outside the bankruptcy case. In addition, the Debtors would also suffer irreparable harm if they were forced to litigate the New Jersey Action outside the confines of the bankruptcy process. The Debtors want the responsible New Jersey DEP officials enjoined from prosecuting the New Jersey Action until the time that the Bankruptcy Court assumes jurisdiction over the removed and transferred action, or if the action is not brought before the Bankruptcy Court, until the Debtors emerge from bankruptcy. Complaint vs. Officers Should be Stayed Mr. O'Neill relates that the Debtors' by-laws require that Grace indemnify, to the fullest extent allowed under applicable law, each person who was, is made, or is threatened to be made a party to or is involved in any action by reason of his employment with Grace. Thus, the financial burdens of the entire New Jersey litigation fall squarely on the Debtors and, by extension, all creditors of the estate. Therefore, the Debtors also ask Judge Fitzgerald to rule that the New Jersey Action is stayed against Messrs. Bettacchi and Burrill because the claims against these individuals cannot be separated from the claims against Grace. The DEP has filed suit based on the Individual Defendants' conduct as Grace's employees. The Debtors argue that the lawsuit against Messrs. Bettacchi and Burrill to recover civil penalties for alleged submissions of false statements is a "transparent attempt to circumvent the protections of the automatic stay." Mr. O'Neill contends that there is a substantial identity of interest between Grace and its employees, and the stay against Grace should be extended to the action against its co-defendants. Moreover, it is plain that Grace is the real party defendant. Any judgment against Grace's employees might be imputed against the Debtors in subsequent litigation, thus, Grace has a direct interest in the outcome of New Jersey's action against the individual Grace officers. The action against Messrs. Bettacchi and Burrill is in fact an action against the Debtors. Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 96; Bankruptcy Creditors' Service, Inc., 215/945-7000) WASTE SERVICES: Intends to Amend Existing Senior Credit Facility ---------------------------------------------------------------- Waste Services, Inc. (Nasdaq: WSII) intends to seek an amendment to its existing senior credit facility in order to secure more favorable terms, including lower interest cost and greater flexibility and liquidity, in light of its improved financial performance over the past year. The company says it will disclose the terms of any amendment if and when it has been completed. Waste Services, Inc. is a multi-regional integrated solid waste services company that provides collection, transfer, disposal and recycling services in the United States and Canada. The company's web site is http://www.wasteservicesinc.com/ * * * As reported in the Troubled Company Reporter on Oct. 10, 2005, Moody's Investors Service upgraded the ratings of Waste Services, Inc. These ratings were affected: * $160 million guaranteed senior secured credit facility due 2011, upgraded to B2 from Caa1; * $160 million guaranteed senior subordinated notes due 2014, upgraded to Caa2 from Ca; and * the company's Corporate Family Rating upgraded to B3 from Caa1. Moody's assigned a stable outlook. WELLSFORD REAL: Stockholders Meeting Set for Nov. 17 ---------------------------------------------------- Wellsford Real Properties, Inc. (AMEX:WRP) said that its annual stockholder meeting will be held on Nov. 17, 2005 at 9:30AM. The board of directors of the Company has fixed the close of business on Oct. 11, 2005, as the record date for determining the stockholders entitled to receive notice of and to vote at the stockholder meeting. One of the purposes of this meeting is to consider and vote regarding the previously announced plan of liquidation and dissolution of Wellsford Real. As reported in the Troubled Company Reporter on May 23, 2005, the Company's Board of Directors approved a Plan of Liquidation and a 1-for-100 Reverse Stock Split and a 100-for-1 Forward Stock Split of its common shares. Under the Plan, the Company intends to sell its assets, to pay or provide for its liabilities, and to distribute its remaining cash to its stockholders. The Board currently estimates that stockholders could receive $18.00 to $20.50 per share in total distributions over the liquidation period including an initial distribution of $12.00 to $14.00 per share within 30 days after the later of the closing of the sale of the Palomino Park rental apartments and stockholder approval of the Plan. The estimated time frame for payment of these proceeds will be described in the proxy statement to be filed. A Stock Split would reduce the number of record holders of the Company's common stock to below 300, thereby making the Company eligible for: (i) deregistration under the Securities Exchange Act of 1934, as amended, and (ii) the de-listing of its common stock from the American Stock Exchange. Accomplishing these objectives would relieve the Company of the costs associated with complying with the various reporting and governance requirements of the Securities and Exchange Commission and American Stock Exchange. This action also would save the Company significant expenses associated with Sarbanes-Oxley Act reporting requirements. It is anticipated that only stockholders owning 99 or fewer pre-split common shares of the Company would receive $20.50 per pre-split share in cash for their shares. Currently, the Company has 6,467,639 common shares outstanding and it is anticipated that approximately 4,000 common shares will be purchased by the Company in order to complete the Stock Split. WRP is a real estate merchant banking firm headquartered in New York City which acquires, develops, finances and operates real properties, constructs for-sale single family home and condominium developments and organizes and invests in private and public real estate companies. WESTERN WATER: Exclusive Plan Filing Period Stretched to Dec. 20 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California extended Western Water Company's period until Dec. 20, 2005, within which it alone can file a chapter 11 plan. The Court also gave the Debtor until Feb. 20, 2006, to solicit acceptances of that plan from its creditors. The Debtor explained that it is in the best interest of its estate and creditors to wait until the sale transaction for the Cherry Creek Project and its other assets is approved and completed before it files a chapter 11 plan. The Cherry Creek assets, consisting of real property and water rights in the Cherry Creek basin, Colorado, is the Debtor's most valuable asset. The assets are recorded at approximately $12.5 million in the Debtor's books but the Debtor says it is worth substantially more than its book value. The Debtor has already obtained authorization to retain real estate brokers to market the Cherry Creek Project and it has a pending request with the Court to approve the sale of substantially all of its assets, including the Cherry Creek assets. The hearing to approve that sale request is tentatively scheduled on Sept. 26, 2005. The sale of the Cherry Creek assets, together with the Debtor's other remaining assets, will provide the needed funding to pay creditors under its proposed plan. Headquartered in Point Richmond, California, Western Water Company manages, develops, sells and leases water and water rights in the western United States. The Company filed for chapter 11 protection on May 24, 2005 (Bankr. N.D. Calif. Case No. 05-42839). Adam A. Lewis, Esq., at the Law Offices of Morrison and Foerster 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 and $50 Million. WORLDCOM INC: Provision of Net Proceeds to Underwriter Defendants ----------------------------------------------------------------- As previously reported, Judge Denise Cote of the United States District Court for the Southern District of New York approved settlements between WorldCom investors and these defendants: (1) 17 Underwriter Defendants, (2) WorldCom's former auditor Arthur Andersen LLP, (3) former WorldCom chief financial officer Bernard J. Ebbers, (4) former WorldCom chief financial officer Scott D. Sullivan, (5) former WorldCom officer Buford Yates, (6) former WorldCom officer David Myers, and (7) 12 Director Defendants. A full-text copy of Judge Cote's 91-page Opinion and Order is available for free at http://ResearchArchives.com/t/s?23f Plans of Allocation Judge Cote rules that subject to the provisions of the Supplemental Plan of Allocation, the net proceeds of the settlements with the Underwriter Defendants will be distributed only to Class Members who purchased WorldCom bonds issued in the May 2000 and May 2001 bond offerings, as: May 2000 May 2001 Underwriter Defendant Purchasers Purchasers --------------------- ---------- ---------- Bank of America Securities 14% 86% and Fleet Securities Lehman Brothers, Inc. 100% -- Credit Suisse First Boston Goldman, Sachs & Co. UBS Warburg LLC ABN AMRO, Inc. -- 100% Mitsubishi Securities, Int'l. BNP Paribas Securities Corp. Mizuho International WestLB AG Caboto Holding SIM S.p.A Deutsche Bank 4% 96% J.P. Morgan Chase 23% 77% Utendahl Capital -- 100% Blaylock Partners 43% 57% Judge Cote further rules that the amounts paid for the benefit of the Class in the Director Defendants, Andersen, Ebbers and Sullivan Settlements will be allocated to members of the Class as: (a) 4.774% for purchasers of debt securities in May 2000; (b) 15.226% for purchasers of debt securities in May 2001; and (c) 80% for Class Members who, during the Class Period, purchased WorldCom stock or other publicly traded securities. Attorneys' Fees and Costs The District Court directs that $10,736,948 may be distributed to Lead Counsel of the WorldCom Securities Litigation from the Settlement Fund, as reimbursement of litigation expenses. The Reimbursement Amount will be allocated by the Lead Counsel as: (a) $5,389,994 for the Lead Counsel's expenses in connection with the prosecution of the Litigation; (b) $2,365,301 to a litigation fund to which Lead Counsel and certain of the assisting firms had contributed; (c) $11,064 for the Lead Plaintiff's expenses; and (d) $2,970,589 for The Garden City Group for the services it rendered as Notice Administrator and Notice and Claims Administrator 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. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM INC: Louisiana Right-of-Way Claims Hearing on Dec. 6 ------------------------------------------------------------- On October 5, 1994, William Kimball, H.M. Kimball, Jr., and Elizabeth Kimball Lewis, together with XCL, Ltd., Katherine McClelland Sibille, The Sibille Co., Inc., Lutcher Moore Land & Royalty Company, L.M. Holding Associates, LP, Colonial Sugars, Inc., and David Odom filed two separate class action petitions against WorldCom Inc., and its debtor-affiliates in the 18th Judicial District Court, West Baton Rouge Parish, Louisiana: (1) State of Louisiana, XCL, Ltd., William Kimball, et al., individually and as representatives of a class of those similarly situated v. WilTel, Inc. and WilTel Communications; and (2) State of Louisiana, William Kimball, et al., individually and as representatives of a class of those similarly situated v. Sprint Communications Company, et al. The Louisiana Suits were consolidated for pre-trial management, administration and discovery on July 3, 1996. The defendants in the Louisiana Suits included Sprint Communications and the predecessors of MCI WorldCom Network Services, Inc. The Louisiana Plaintiffs alleged that: (1) they represented a class of persons who own or owned property on which Sprint and MWNS placed telecommunications facilities; (2) the telecommunications facilities were located within servitudes granted by their predecessors-in-title to other entities, like railroads, which have tracks running through the property; and (3) the language granting the servitudes was not broad enough to include the placement of the telecommunications facilities, thus, the telecommunications facilities were improperly located on their land. On November 18, 2000, the Parties to the Louisiana Suits reached an agreement in principle for the settlement of the claims. The terms of the Settlement, which the Parties executed in 2001, are: (a) The Settlement Class does not include landowners who opt out during the notification and approval process; (b) Pecuniary benefits were offered to the class members based on two categories: * Fully Qualifying Landowner Benefits who are entitled to payment of a determinable amount per linear foot; and * Partially Qualifying Landowner Benefits who are entitled to a set amount per linear foot. (c) In exchange for the pecuniary benefits, class members will release any and all of their claims against Sprint and MWNS arising out of the presence of the telecommunications facilities on their property or servient estate, and will formally recognize and grant servitudes and rights of way for the telecommunications facilities. (d) A claims procedure will be administered by an independent third party claims administrator. The claims administration process included the retention of a mapping company and an abstract company to search the tax assessor records of the parishes through which the telecommunications cables pass and to identify potential class members who own land under or adjacent to the cable side of the rights of way in which the telecommunications cables lie. In September 2001, the Louisiana State Court approved the Class Action Settlement Agreement. On May 29, 2002, the Louisiana Court approved the form of a notice and the procedure of distribution of the Notice of the Class Action Settlement Agreement. The Notice was distributed to over 8,000 landowners. Pursuant to the notice, members of the Settlement Class were given the option of (i) submitting claims for Fully Qualifying Landowner Benefits or Partially Qualifying Landowner Benefits; (ii) taking no action; or (iii) opting out of the Settlement Class. Only 38 landowners submitted forms opting out of the Settlement Class. As of the Petition Date, the Louisiana Suits were stayed as to MWNS. However, it went forward with respect to Sprint. The Louisiana Court granted final approval to Sprint's Settlement Agreement on December 5, 2002. The Louisiana First Circuit Court of Appeal subsequently issued a decision, reversing the approval on the ground that the class members were not given adequate notice about MWNS's bankruptcy filing, which could have an effect on how the settlement was implemented with respect to the remaining parties. The Louisiana Right-of-Way Claims After the Petition Date, numerous Louisiana landowners filed timely proofs of claims asserting right-of-way claims or claims based on the Settlement Agreement. To resolve the proofs of claim and the underlying right-of-way causes of action, the Claimants and MWNS agreed to go forward with the Settlement Agreement with respect to MWNS as a prepetition contract. Accordingly, on May 18, 2005, William Kimball, H.M. Kimball, Jr., Elizabeth Kimball Lewis and the Debtors executed a Settlement Implementation Agreement, providing that: (a) Benefits paid to members of the Settlement Class who submit valid Settlement Claims will be paid as either allowed Class 4 convenience claims or allowed Class 6 general unsecured claims; (b) All attorneys fees and expenses awarded to class counsel will be paid as allowed Class 6 general unsecured claims; (c) All fees and expenses of the Claims Administrator will be paid in cash as administrative expenses of the Debtors' bankruptcy estate; and (d) Benefits paid to members of the Settlement Class will be calculated to take into account the absence of Sprint from the Settlement. Accordingly, the Kimballs ask the Court to: (a) certify a settlement class of Louisiana landowners with potential claims based on the presence of the Debtors' fiber optic cables in the rights of way on or adjoining the landowners' property; (b) designate representatives of the settlement class; (c) appoint these professionals as counsel to the settlement class: (1) Victor J. Marcello and Donald T. Carmouche of Talbot, Carmouche & Marcello; (2) Michael R. Mangham of Mangham & Fuqua; (3) Patrick W. Pendley; (4) Allen J. Myles of Myles&Myles; and (5) William E. Steffes of Steffes, Vingiello & McKenzie; (d) preliminarily approve the settlement; (e) authorize the Parties to provide the class members with appropriate notice; and (f) grant final approval of the settlement after an appropriate hearing. William E. Steffes, Esq., at Steffes, VIngiello & McKenzie, LLC, in Baton Rogue, Louisiana, asserts that the Court should certify the Settlement Class because the Class satisfies the requisites of Rule 23(a) of the Federal Rules of Civil Procedure, including numerosity, commonality, typicality and adequacy of representation. Mr. Steffes also asserts that the Settlement Class satisfies the Civil Rule 23(b)(3) requirements by eliminating individual issues that would otherwise predominate over the common issues and render the class action an inferior means of adjudication. The Parties believe that the Court should designate the Louisiana Plaintiffs as class representatives and the Plaintiffs' counsel as Class Counsel because they have diligently advanced the interests of the Settlement Class for more than 10 years, from the filing of the Louisiana Suits in 1994. Mr. Steffes asserts that the Kimballs' request is warranted for these reasons: (1) The Settlement Agreement was negotiated by the Parties in the Louisiana Suits at arm's-length with the assistance of an impartial third-party mediator providing no preferential treatment for the class representatives. The Implementation Agreement likewise was negotiated at arm's- length by counsel for the Debtors and the Kimballs. (2) Under the settlement terms, no preference is given to any single class member over the class as a whole. (3) Extensive discovery has taken place over the years by both sides. (4) The advantages offered by the settlement are further demonstrated by comparison with the costs and risks of litigating the class certification issue. A settlement agreement is particularly favorable when it avoids the cost of litigating class status which is often a complex litigation within itself. (5) The overwhelming majority of the class members remained in the Settlement Class because they saw it as providing generous payments to class members with valid claims in exchange for formal recognition of a servitude for telecommunications facilities that have no or little impact on a landowner's use of the property at issue. (6) The Implementation Agreement benefits the members of the Settlement Class by entitling them to be paid on the same terms as the Debtors' other creditors in the same position. (7) The Implementation Agreement and proposed notice address the concerns raised by the Louisiana appellate court in its reversal of the approval of the settlement with respect to Sprint. The Kimballs propose that a notice will be provided in accordance with the Louisiana appellate court's ruling with respect to Sprint. The Proposed Notice will inform the Class Members that only MWNS -- and not Sprint -- is involved in the implementation of the portion of the settlement. * * * Judge Gonzalez rules that the Settlement Class is preliminarily certified for settlement purposes pursuant to Civil Rule 23 and Rule 7023 of the Federal Rules of Civil Procedure. The Settlement Class will comprise of all persons possessing or claiming to possess, for some period of time within the Compensation Period, a Servient Estate or a full ownership interest in the Covered Property, except: (a) Sprint and its affiliates and directors or officers; (b) MWNS and its affiliates and directors or officers; (c) the United States of America; (d) any parishes, municipalities, State Governments, foreign governments, or other public entities; (e) any railroad or any person controlled by, under the control of, or under common control with any railroad; (f) any utility that granted rights for use of Right-of-Way to any of the Settlement Class Defendants for purposes of that particular Right-of-Way, or any person controlled by, under the control of, or under common control with any utility with respect to such Right-of-Way; and (g) any person or entity that has previously granted a servitude to any of the Settlement Class Defendants granting permission to install Telecommunications Facilities on Right-of-Way. The Court appoints William Kimball, H.M. Kimball Jr., and Elizabeth Kimball Lewis as representatives of the Settlement Class. The Court also appoints Claimants' Counsel as counsel for the Settlement Class. The Court will hold a final fairness hearing on December 6, 2005, to determine whether to grant final certification of the Settlement Class and final approval of the Settlement. The Court directs the Parties to provide notice to members of the Settlement Class by mailing to them the Class Action Settlement Implementation Notice to the extent practical and by supplementing the notice with two publications of the Class Action Settlement Implementation Notice. 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. 102; Bankruptcy Creditors' Service, Inc., 215/945-7000) YU ZHENG ZHENG: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Yu Zheng Zheng & Jiao Ying Wu d/b/a Hong Kong Seafood Supermarket f/d/b/a China Garden Super Buffet f/d/b/a China Garden Restaurant f/d/b/a No. 1 Grand Buffet 101 Claridge Road East Mobile, Alabama 36608 Bankruptcy Case No.: 05-15892 Type of Business: The Debtor operates an eat-in and carry-out Chinese restaurant and supermarket. Chapter 11 Petition Date: October 7, 2005 Court: Southern District of Alabama (Mobile) Debtors' Counsel: Lionel C. Williams, Esq. 118 North Royal Street, Suite 604 Mobile, Alabama 36602-3610 Tel: (251) 433-5703 Total Assets: $1,138,432 Total Debts: $1,603,511 Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Fa Le Ni $434,600 3173 Sheridan Drive Amherst, NY 14226 ABN AMRO Mortgage $32,500 4242 North Harlem Avenue Norridge, IL 60706-1204 Marilyn E. Wood Tax debt $29,167 Revenue Commissioner Citi Cards $21,788 MBNA America Bank, N.A. $14,670 Discover Platinum $14,576 Lamar Advertising $14,075 Chase Customer Service $11,120 Citi Cards $10,050 Chase Customer Service $9,670 Discover Platinum $8,500 Arctic Seafood, Inc. $8,033 MBNA America Bank, N.A. $6,830 Citi Cards $5,846 Advanta $5,000 Mobile Register $971 Yun Da Chen $1 Ni Feng Restaurant, Inc. $1 * Thomas Osmun Returns to AlixPartners -------------------------------------- AlixPartners, the international corporate restructuring, turnaround, performance improvement, and financial advisory firm, announced that Thomas Osmun has rejoined the firm as a Director in its New York office. Mr. Osmun specializes in providing strategic, financial, and operational advice to financially challenged companies, and he has a wide range of industry experience, including health care, transportation, retail, and technology. Prior to rejoining AlixPartners, he was a Managing Director at Conway DelGenio Gries & Co., LLC, New York, a financial advisory firm specializing in restructuring, crisis and turnaround management, and merger and acquisition services. "I am excited to be back with AlixPartners," Mr. Osmun said. "It is truly a pioneer organization, having spearheaded so much of the corporate turnaround industry." Mr. Osmun holds a bachelor's degree in business administration from Bucknell University, and a master's degree in business administration from the Fuqua School of Business at Duke University. About AlixPartners AlixPartners -- http://www.alixpartners.com/-- is internationally recognized for its hands-on, results-oriented approach to solving operational and financial challenges for large and middle market companies globally. Since 1981, the firm has become the "industry standard" for performance improvement aimed at producing bottom- line results quickly and helping clients achieve a more positive outcome during times of transition. The firm has over 450 employees in its Chicago, Dallas, Detroit, D�sseldorf, London, Los Angeles, Milan, Munich, New York, San Francisco, and Tokyo offices. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- ACCO Brands Corp ABD (28) 878 (364) Abraxas Petro ABP (43) 106 (5) AFC Enterprises AFCE (44) 216 52 Alliance Imaging AIQ (52) 621 43 Amazon.com Inc. AMZN (64) 2,601 782 AMR Corp. AMR (615) 29,494 (2,230) Atherogenics Inc. AGIX (76) 235 213 Bally Total Fitn BFT (172) 1,461 (290) Biomarin Pharmac BMRN (110) 167 (4) Blount International BLT (220) 446 126 CableVision System CVC (2,430) 10,111 (1,607) CCC Information CCCG (107) 96 20 Centennial Comm CYCL (463) 1,456 85 Choice Hotels CHH (185) 283 (36) Cincinnati Bell CBB (625) 1,891 (18) Clorox Co. CLX (553) 3,617 (258) Columbia Laborat CBRX (12) 18 11 Coley Pharma COLY (5) 71 30 Compass Minerals CMP (81) 667 129 Crown Media HL-A CRWN (34) 1,289 (130) Deluxe Corp DLX (124) 1,508 (276) Denny's Corporation DENN (260) 494 (73) Domino's Pizza DPZ (574) 420 (21) Echostar Comm-A DISH (972) 7,281 269 Emeritus Corp. ESC (123) 720 (43) Foster Wheeler FWLT (490) 2,012 (175) Guilford Pharm GLFD (20) 136 60 Graftech International GTI (34) 1,006 264 I2 Technologies ITWO (153) 386 124 ICOS Corp ICOS (57) 243 160 IMAX Corp IMAX (38) 241 27 Immersion Corp. IMMR (11) 46 30 Intermune Inc. ITMN (7) 219 133 Investools Inc. IED (22) 56 (47) Isis Pharm. ISIS (124) 147 46 Kulicke & Soffa KLIC (44) 365 182 Lodgenet Entertainment LNET (72) 275 15 Lucent Tech Inc. LU (70) 16,437 2,517 Maxxam Inc. MXM (681) 1,024 103 Maytag Corp. MYG (77) 3,019 398 McDermott Int'l MDR (140) 1,489 123 McMoran Exploration MMR (39) 377 135 Nexstar Broadc - A NXST (51) 684 27 NPS Pharm Inc. NPSP (98) 310 215 ON Semiconductor ONNN (346) 1,132 270 Owens Corning OWENQ (8,225) 7,766 1,391 Primedia Inc. PRM (771) 1,506 16 Quality Distrubu QLTY (26) 380 18 Qwest Communication Q (2,663) 24,070 1,248 RBC Bearings Inc. ROLL (5) 247 125 Revlon Inc. - A REV (1,102) 925 70 Riviera Holdings RIV (27) 216 5 Rural/Metro Corp. RURL (184) 221 18 Rural Cellular-A RCCC (465) 1,376 30 Ruth's Chris Stk RUTH (49) 110 (22) SBA Comm. Corp.-A SBAC (50) 857 19 Sepracor Inc. SEPR (201) 1,175 717 St. John Knits Inc. SJKI (52) 213 80 Tiger Telematics TGTL (16) 17 (23) TRX Inc. TRXI (9) 62 (27) US Unwired Inc. UNWR (76) 414 56 Vector Group Ltd. VGR (33) 527 173 Verifone Holding PAY (36) 248 48 Vertrue Inc. VTRU (48) 447 (96) Weight Watchers WTW (36) 938 (266) Worldspace Inc.-A WRSP (1,720) 560 (1,786) WR Grace & Co. GRA (605) 3,423 811 ********* 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 ***