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/raid1/www/Hosts/bankrupt/TCR_Public/051012.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, October 12, 2005, Vol. 9, No. 242 Headlines 280 ISLAND: Case Summary & 6 Largest Unsecured Creditors ADELPHIA COMMS: SEC Sanctions Two Deloitte Accountants for Audit ADELPHIA COMMS: Files Delinquent 2004 Quarterly Reports with SEC ADELPHIA COMMS: Delivers 2004 Annual Report to SEC AKERS BIOSCIENCES: June 30 Balance Sheet Upside-Down by $1.2 Mil. AFFINION GROUP: Moody's Affirms New $270 Million Notes' B1 Rating AMES TRUE: S&P Lowers Corporate Credit Rating to CCC+ from B- AMPHENOL CORP: Acquiring Teradyne Unit for $390 Million in Cash AMPHENOL CORP: Moody's Affirms Corporate Family Rating at Ba1 ANCHOR GLASS: U.S. Trustee Appoints Diageo to Creditors Committee ANCHOR GLASS: EPA Alleges Environmental Law Violations ANCHOR GLASS: Committee Taps Stichter Riedel as Counsel ASARCO LLC: Wants TRO Issued Against Arizona Retiree Class ASARCO LLC: Wants to Assume ESM Consulting Contract BAIS YAAKOV: Case Summary & 20 Largest Unsecured Creditors BELDEN & BLAKE: J.M. Vanderhider Replaces R.W. Peshek as VP & CFO CENTRAL WAYNE: Wants Until Nov. 30 to Solicit Plan Acceptances CHI-CHI'S: Disclosure Statement Hearing Set for Oct. 25 CITATION CORP: Disputes DaimlerChrysler's Right to Set Off Debt COLLEGE PROPERTIES: Ch. 11 Trustee Hires Osborn Maledon as Counsel COLLINS & AIKMAN FLOORCOVERINGS: S&P Revises Outlook to Negative COMDIAL CORP: Wants Excl. Plan Filing Period Stretched to Jan. 20 COMDIAL CORP: Has Until Nov. 22 to File Notices of Removal CONTINENTAL AIRLINES: Contributes $84 Mil. More to Pension Plans DANA CORPORATION: Restating 2004 and 2005 Financials DELPHI CORP: U.S. Trustee to Appoint Committee on Oct. 17 DELPHI CORP: Judge Gonzalez Directs Joint Administration of Cases DELPHI CORP: Wants GM to Commit to $1 Billion of Business a Month DELPHI CORP: Chapter 11 Filing Cues S&P to Lower Ratings to D DELPHI CORP: Fitch Junks Rating on Sr. Secured Bank Lines DELPHI CORP: NYSE Reviewing Continued Stock Listing Status DELTA AIR: Wants Court Nod to Sell Non-Core Assets for $10 Million ENVIRONMENTAL TRUST: Wants Exclusive Period Extended to Dec. 19 FALCON PRODUCTS: Emergence Is Contingent on Pension Termination FEDDERS CORP: Looks for New Auditors to Replace Deloitte & Touche FOOD CONCEPT: Case Summary & 20 Largest Unsecured Creditors FOSTER WHEELER: To Launch New Equity-for-Debt Exchange GENERAL MOTORS: Moody's Reviews Low-B Ratings & May Downgrade GENERAL MOTORS: S&P Lowers Corporate Credit Rating to BB- from BB GTC TELECOM: Squar Milner Raises Going Concern Doubt HIGH SPRUCE: Case Summary & 16 Largest Unsecured Creditors INTERNATIONAL PAPER: Completes $80-Mil Buy-Out of Compagnie Shares INTERNATIONAL RECTIFIER: Revises First Quarter Financial Outlook INTREPID TECHNOLOGY: Jones Simkins Raises Going Concern Doubt KAISER ALUMINUM: Wants Stay Enforced Against Insurers KRONOS ADVANCED: Sherb & Co. Expresses Going Concern Doubt LEVITZ HOME: Files for Chapter 11 Protection in S.D. New York LEVITZ HOME: Case Summary & 40 Largest Unsecured Creditors MIRANT CORP: Court Approves Plan Solicitation Procedures MOTHERS WORK: S&P Lowers Corporate Credit Rating to B- from B NORTHWEST AIRLINES: Wants to Employ Ordinary Course Professionals NORTHWEST AIRLINES: Gets Okay to Maintain Investment Guidelines OMNI CAPITAL: Wants Access to Wachovia's Cash Collateral OWENS CORNING: Has Until Year-End to File Plan of Reorganization OWENS CORNING: Wants to Sell Alabama Property to Tecvox OEM PONDEROSA PINE: Wants Until January 6 to Remove Civil Actions PRECISION TOOL: Court Confirms Amended Reorganization Plan PXRE GROUP: Fitch Maintains Watch Negative after Capital Raising QUICK MED: Daszkal Bolton Raises Going Concern Doubt QUIGLEY COMPANY: Files Third Amended Disclosure Statement RECYCLED PAPERBOARD: Wants to Borrow Money from Ackerman Realty REFGO GROUP: CEO Takes Leave Following Undisclosed $430 Mil. Deal REFCO GROUP: Moody's Lowers Sr. Sub. Debt Rating to Caa1 from B3 REFCO GROUP: S&P Lowers Counterparty Credit Rating to B+ from BB- REMEC INC: Voluntarily Delists Common Stock Trading from NASDAQ SAINT VINCENTS: 12 Tort Claimants Want to Proceed with Lawsuits SEDONA CORP: Gets $500K Final Tranche of $1-Mil Loan from W. Rucks SOUPER SALAD: Plan Confirmation Hearing Set for Oct. 31 SOUPER SALAD: Gets Court Order to Reject Sharpstown Lease STRATUS SERVICES: Has Until Oct. 14 to Comply with Credit Pact TECHNEST: Going Concern Outlook Improves After Markland Purchase TERAFORCE TECHNOLOGY: Can Walk Away From Three Unexpired Contracts TIMCO AVIATION: 98% of Senior Noteholders Tender Outstanding Bonds TITAN CRUISE: Wants to Reject Patriot Charter Agreement TOMMY HILFIGER: Moody's Lowers Corporate Family Rating to Ba2 TOWER AUTOMOTIVE: Wants to Disclose HIPAA-Protected Information TOWER AUTOMOTIVE: Wants Official Retirees Committee Appointed TOWER AUTOMOTIVE: Taps Foley & Lardner as Labor Counsel TOWER AUTOMOTIVE: Court Rules Federal Must Pay Defense Costs TUBE CITY: Moody's Revises Corporate Family Rating to B1 UAL CORP: Details $3 Billion All-Debt Exit Financing Package UAL CORP: Wants Court to Bless Credit Card Processing Pact UAL CORP: Court Directs October Pension Payment to Pilots UNISYS CORP: Low Earnings Forecast Cues Fitch to Downgrade Ratings US AIRWAYS: To Repurchase 7.7 Million Government Warrants USG CORP: Gets Court OK to Challenge & Pay Off Taxes in Ill. Court VILLAS AT HACIENDA: Court Grants Access to HUD Cash Collateral VILLAS AT HACIENDA: Lenox Wants $16 Million Claim Payment ASAP VISION AUTOMOTIVE: Case Summary & 20 Largest Unsecured Creditors VISPHOR CORP: Inks Agreement to Buy Sunaptic for $3.2 Million VISPHOR CORP: Raising C$5.5M in Private Equity Deal to Fund Merger WELCH PROPERTIES: Case Summary & 6 Largest Unsecured Creditors WINDSWEPT ENVIRONMENTAL: Borrows $1.35 Million More from Laurus WODO LLC: Can Borrow $5 Million to Fund WULA Settlement Agreement WORLDCOM INC: Bankr. Court Approves N.Y. Fund Claims Settlement WORLDCOM INC: DJP&A Wants to Withdraw as Counsel to Next Factors YOUTHSTREAM MEDIA: June 30 Balance Sheet Upside-Down by $79.28-Mil * Upcoming Meetings, Conferences and Seminars ********* 280 ISLAND: Case Summary & 6 Largest Unsecured Creditors -------------------------------------------------------- Debtor: 280 Island Avenue, LLC 429 West Plumb Lane Reno, Nevada 89509 Bankruptcy Case No.: 05-53856 Chapter 11 Petition Date: October 11, 2005 Court: District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Stephen R. Harris, Esq. Belding, Harris & Petroni, Ltd. 417 West Plumb Lane Reno, Nevada 89509 Tel: (775) 786-7600 Fax: (775) 786-7764 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ KL & J Management Co. Management Fees $875,000 429 West Plumb Lane Reno, NV 89509 Attn: Kevin Johnson President Kromer, Grady & Cheryl Litigation $421,000 Trustees, Kromer Family Trust c/o Walsh Baker & Rosevear 9468 Double R Boulevard, Suite A Reno, NV 89521 Granwest Exchange Corp. Litigation $279,000 c/o Walsh, Baker & Rosevear 9468 Doubld R Boulevard, Suite A Reno, NV 89521 Attn: William Baker, Esq. J & L Windows, Inc. Goods/Services $25,000 350 Greg Street Sparks, NV 89431 Banks Construction Company Goods/Services $10,000 5690 Riggins Court, Suite B Reno, NV 89502 Dragan Andjelkovich Judgment $5,000 c/o Treva J. Hearne, Esq. 910 Parr Boulevard Reno, NV 89512 ADELPHIA COMMS: SEC Sanctions Two Deloitte Accountants for Audit ---------------------------------------------------------------- The U.S. Securities and Exchange Commission issued orders instituting administrative proceedings against two Deloitte & Touche LLP professionals in connection with their audit of Adelphia Communications Corp.: (a) Gregory M. Dearlove, CPA; and (b) William E. Caswell, CPA Mr. Dearlove served as the engagement partner on Deloitte's audit of the financial statements contained in ACOM's 2000 Form 10-K. Mr. Caswell served as audit director. The Commission alleges that Mr. Dearlove engaged in improper professional conduct because he should have known that his failure to plan, conduct and supervise an audit that conformed to Generally Accepted Auditing Standards, and his approval of and signature on an unqualified audit report that ACOM filed with its 2000 Form 10-K, would contribute to the Company's violations of the Securities Exchange Act of 1934. The Commission instituted public administrative and cease-and- desist proceedings against Mr. Dearlove to: 1. determine whether the allegations set forth by the Division of Enforcement and the Office of Chief Accountant are true; 2. afford Mr. Dearlove the opportunity to establish any defenses; 3. determine whether remedial action is appropriate; 4. determine whether Mr. Dearlove should be ordered to cease and desist from causing violations of and any future violations of the securities laws; and 5. determine whether Mr. Dearlove should be ordered to pay disgorgement. The Commission alleges that Mr. Caswell failed to: -- ensure that ACOM's disclosure of its liabilities was sufficient; -- object to ACOM's netting of related-party payables and receivables; and -- ensure adequate disclosure of ACOM's related-party transactions. The Commission also finds that Mr. Caswell engaged in improper professional conduct due to his failure to comply with GAAS and to require ACOM to comply with Generally Accepted Accounting Principle. Accordingly, the SEC denied Mr. Caswell the privilege of appearing or practicing before it as an accountant, but permitted him to apply for reinstatement after two years. Pursuant to the Order, Mr. Caswell undertakes to continue to provide cooperation to the Commission and its staff in its investigation and litigation related to the Adelphia matters. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMS: Files Delinquent 2004 Quarterly Reports with SEC ---------------------------------------------------------------- Adelphia Communications Corp. filed quarterly reports on Form 10-Q for the quarters ended March 31, 2004, June 30, 2004, and Sept. 30, 2004, with the Securities and Exchange Commission on Oct. 7, 2005. The filings, ACOM Chief Financial Officer Vanessa A. Wittman says, reflect the Company's continued efforts to again be current in its periodic reporting obligations under the Securities Exchange Act of 1934. ACOM ceased compliance with those obligations as a result of the alleged improper actions of certain members of the John J. Rigas family who held all of the senior executive positions at ACOM and constituted five of the nine members of the Company's board of directors in the period prior to the commencement of the Chapter 11 bankruptcy proceedings. Snapshots of ACOM's financials during the three quarterly periods show stable revenues and continuing losses: March 31, 2004 -------------- Revenue $1,007,330,000 Net Income (Loss) (1,354,572,000) Assets 13,481,133,000 Liabilities 21,048,073,000 Equity (Deficit) (7,658,223,000) June 30, 2004 ------------- Revenue $1,036,470,000 Net Income (Loss) (169,217,000) Assets 13,308,093,000 Liabilities 21,046,337,000 Equity (Deficit) (7,824,402,000) September 30, 2004 ------------------ Revenue $1,041,366,000 Net Income (Loss) (260,797,000) Assets 13,140,561,000 Liabilities 21,143,321,000 Equity (Deficit) (8,084,328,000) Copies of ACOM's Quarterly Filings are available for free at: Quarter Ending URL -------------- --- March 31, 2004 http://ResearchArchives.com/t/s?242 June 30, 2004 http://ResearchArchives.com/t/s?243 September 30, 2004 http://ResearchArchives.com/t/s?244 Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMS: Delivers 2004 Annual Report to SEC -------------------------------------------------- Adelphia Communications Corp. delivered its annual report for the year ending Dec. 31, 2004, on Form 10-K to the U.S. Securities and Exchange Commission on October 6, 2005. Pursuant to its results of operations for the year ended Dec. 31, 2004, ACOM's revenue, as compared to 2003, increased by $574 million or 16%. The consolidation of the Rigas Co-Borrowing Entities accounted for the $194 million, or 5%. ACOM reported a $1.91 billion net loss for the year ending December 31, 2004. At December 31, 2004, ACOM's balance sheet shows $13.10 billion in total assets and a $21.23 billion in total debts. At December 31, 2004, ACOM's equity deficit widened to $8.19 billion from a $6.27 billion deficit at December 31, 2003. The financial, statistical and operating data in the Annual Report includes information with respect to Adelphia and its subsidiaries that are consolidated for financial reporting purposes as well as certain entities owned or controlled by members of the Rigas Family. Effective January 1, 2004, ACOM began consolidating certain cable television entities that were owned by the Rigas Family and their subsidiaries that are subject to co-borrowing arrangements with the Company. ACOM cautions that its periodic and other reports filed with or furnished to the SEC prior to May 24, 2002, must not be relied upon. The Annual Report, ACOM says, reflects its continued efforts to again be current in its periodic reporting obligations under the Securities Exchange Act of 1934. ACOM ceased to be in compliance with those obligations as a result of the improper actions of certain members of the John J. Rigas family who held all of the senior executive positions at Adelphia and constituted five of the nine members of Adelphia's board of directors before the company filed for bankruptcy in 2002. A full-text copy of the Company's 2004 Annual Report is available without charge at http://ResearchArchives.com/t/s?241 Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) AKERS BIOSCIENCES: June 30 Balance Sheet Upside-Down by $1.2 Mil. ----------------------------------------------------------------- Akers Biosciences Inc. (LSE: AKR) reported its interim results for the half year ended June 30, 2005. Revenues for the half-year ended June 30, 2005, were $1,042,117, compared with $855,417 during the same period in 2004. These revenues reflect initial sales into the Company's first established customer base, with significant growth potential. The loss for the period was $1,154,326, compared to $1,775,769 in the corresponding period of the preceding year. Research and development expenses decreased to $399,157 in the first half of 2005 from the $451,212 in the first half of 2004. The most significant objective of the Company's Research and Development department is coordination and follow-up with the FDA, while several tests undergo the approval process. Sales and general administrative expenses increased to $1,606,797 during the current period from $1,260,397 in the similar period of the preceding year. This increase reflects, for the most part, an increased level of sales and marketing activity to support the Company's product launch plans. "The second quarter of 2005 saw a distinct uplift in sales, due largely to our flagship PIFA Heparin/PH4 rapid test product," Ray Akers, Chief Executive Officer of Akers Biosciences, said. "As of today, our test for heparin/PF-4 antibodies is being used in approximately 140 hospitals in the United States, and that number continues to grow by 5-10 hospitals each week. We gained further momentum through the receipt of other product approvals and the establishment of important distribution and business relationships, and have begun to translate this momentum into product sales. This is the first time in the Company's history that we have an established customer base and one that is rapidly expanding. In addition, we have begun to establish a presence in UK and European markets and are in our most attractive position to date.' Funding On March 11, 2005, the Company completed a placement of $2,500,000, of principal amount of promissory notes to an investment group. The entire amount of these notes (principal and interest) has subsequently been converted into stock. After these new issuance and the transactions, the Company has 50,712,063 Common Shares in issue. Current Trading and Outlook The Company has successfully obtained FDA approvals for key products, allied itself with major pharmaceutical firms, and secured broad distribution channels with blue-chip medical products companies. A substantial portion of the sales achieved in the first half of the year occurred in the last two months of the period, and this positive trend for sales growth is expected to continue with a significant amount of revenue anticipated to occur in the fourth quarter as a consequence of additional sales and distribution partners as well as the expanding hospital customer base. At June 30, 2005, Akers Biosciences' balance sheet showed a $1,221,838 stockholders' deficit, compared to a $980,024 deficit at June 30, 2004. AFFINION GROUP: Moody's Affirms New $270 Million Notes' B1 Rating ----------------------------------------------------------------- Moody's Investors Service affirmed the B1 rating on the proposed $960 million senior secured credit facility and B3 rating on the proposed $270 million senior unsecured notes of Affinion Group, Inc. The credit facility and senior unsecured notes were upsized in connection with a change in financing mix for the company's proposed acquisition. Concurrently Moody's withdrew the ratings on the proposed senior subordinated notes offering (rated Caa1 on September 21, 2005) which was cancelled. The senior subordinated notes were replaced in the proposed capital structure by a $384 million senior subordinated bridge facility (not rated by Moody's). On July 26, 2005, Affinion (formerly Affinity Acquisition, Inc.), an affiliate of Apollo Management V, L.P., entered into a purchase agreement with Cendant Corporation. Pursuant to the agreement, Affinion will purchase all the equity interests in Affinion Group, LLC (formerly Cendant Marketing Group, LLC) and all the share capital of Affinion International Holdings Limited (formerly Cendant International Holdings Limited) for an aggregate purchase price of approximately $1.8 billion. Proceeds from a $860 million term loan, $270 million of senior notes and a $384 million senior subordinated bridge facility are expected to be used to fund the cash portion of the acquisition cost, including related transaction fees. The senior notes are expected to be issued in a private placement pursuant to Rule 144A of the Securities Act. The senior subordinated bridge facility will mature on the first anniversary of the closing of the acquisition. Any bridge loans which have not been refinanced by that date, will automatically be converted into an unsecured senior subordinated term loan due eight and a half years from the closing of the acquisition. The ratings reflect: * high leverage levels, * significant customer churn rates, * moderate revenue concentration, and * legal and regulatory risks. The ratings also consider the company's leading market position, long term relationships with leading affinity partners and recurring revenue base. Moody's affirmed these ratings: * $100 million (downsized from $125 million) senior secured revolving credit facility due 2011, B1 * $860 million (upsized from $760 million) senior secured term loan B due 2012, B1 * $270 million (upsized from $250 million) senior unsecured notes (guaranteed) due 2013, B3 * Corporate family (formerly senior implied) rating, B2 * Speculative grade liquidity rating, SGL-2 Moody's withdrew this rating: * $500 million senior subordinated notes (guaranteed) due 2015, Caa1 The ratings outlook is stable. The company offers its membership, insurance and package enhancement services through a network of over 4,500 affinity partners. The company has moderate customer concentration with end customers obtained through the company's top ten affinity partners accounting for over 50% of revenues in the LTM period ending June 30, 2005. These affinity partners, which are concentrated in the financial institutions industry, tend to be much larger and have greater financial resources than the company. Affinity partners can generally terminate new marketing agreements with limited notice and cease or reduce marketing the company's services at any time. Competition from affinity partners and other competitors could result in pricing pressure and loss of business. However, these risks are mitigated by company's long standing relationships with the major affinity partners and marketing expertise developed through the execution of over 46,000 marketing programs over the last 10 years. Churn rates are a key industry risk in the membership business. Increases in churn rates could have a significant impact on cash flow generation because new members are expensive to acquire. Churn rates in the company's insurance business are significantly lower than in its membership business. The company has shifted its business strategy in recent years to focus on profitability. Over the last 3 years, the company has increased prices significantly in its membership programs. A majority of new members are now signed up to monthly billing programs, which generally have higher annualized fees than annual billing programs. The company has also increased its marketing focus on the internet and direct mail channels, which tend to generate greater profitability over the membership life. A significant decline in the member base has followed the company's strategy of pursuing more profitable members. Total members in the company's membership programs have declined from over 19 million in 2002 to approximately 12.7 million as of June 30, 2005. Total revenues, adjusted to eliminate revenue streams monetized during 2004, have been relatively flat over the last few years ($1.3-$1.4 billion range) reflecting declining membership counts at higher average revenues per member. However EBITDA (as adjusted to eliminate the impact of monetized revenue streams, to expense insurance marketing costs consistent with the company's new accounting policy, to eliminate certain non-recurring charges and reflect estimated stand-alone costs of the company) grew from approximately $170 million in 2002 to over $250 million in the LTM period ended June 30, 2005. EBITDA has benefited from a restructuring of the company's businesses initiated in early 2004, which streamlined the organizational structure and eliminated redundant functions. Although the company has been successful in increasing adjusted EBITDA, the ratings reflect the risk that increasing price points may lead to higher than expected churn levels or slower than expected new member sign ups. The company is subject to significant legal and regulatory risks. The company markets its products and services through various distribution channels, including direct mail, online and telemarketing. These channels are subject to increasing regulation by federal, state and international regulatory agencies, which may limit the ability of the company to market its products to new and existing customers. The company is involved in a number of legal proceedings and governmental inquiries. In July 2005, the Attorneys General from California and Connecticut filed suit against the company, and the Attorney General of Maine filed a notice of its intention to sue, alleging that the company used deceptive marketing practices in connection with the offering of its membership services. The complaints seek restitution, civil penalties and orders permanently barring the company from engaging in the alleged practices. The company is in settlement discussions with all three states. These states along with certain other jurisdictions investigated these practices as part of a multi-state investigation and the company may face similar suits from other jurisdictions. In early 2005, the Company settled a case with the Florida Attorney General for approximately $0.4 million. The company is also a party to a number of lawsuits which were brought against the company or its affiliates, each of which alleges to be a class action in nature and each of which alleges that the company violated certain federal or state consumer protection statutes. The company is indemnified by Cendant for a portion of the cost of defending and settling these legal contingencies. The ratings benefit from: * a predictable revenue stream from a diverse customer base (over 70 million customers); * the company's leading market position; * minimal capital expenditure requirements; * significant tax benefits from the transaction; and * potential cost savings from further streamlining of operations. The stable ratings outlook anticipates relatively flat revenues and modestly improving profitability in the intermediate term as the company continues to implement its strategy of increasing average revenue per member and focusing on more profitable member acquisition channels. Moody's expects continuing declines in the member base as this strategy is implemented. Moody's expects Debt to EBITDA (which reflects Moody's standard adjustments, includes the preferred stock of the company's parent as a Basket C hybrid and excludes certain non-recurring items) of about 6.4x at December 31, 2005, declining to about 5.8x by December 31, 2006. Free cash flow in 2005 will be negatively impacted by the continuing shift in new member enrollments to monthly memberships, since the membership fees are collected over the course of the year instead of at the beginning of the billing term with an annual billing. Since the proportion of new monthly enrollments to total enrollments is expected to level out in 2006, free cash flow should more closely match profitability levels in 2006. Moody's expects free cash flow to debt of 5%-7% in 2006. The ratings could be upgraded if the execution of the company's business strategy results in strong profitability growth such that sustainable debt to EBITDA declines to less than 5x and free cash flow to debt increases to over 8%. The ratings could be downgraded if the company loses significant affinity partner relationships or experiences greater than expected churn rates such that debt to EBITDA levels increase to over 7x and free cash flow to debt declines below 5%. A significant legal judgment against the company which impairs the company's liquidity could also pressure the rating. The SGL-2 speculative grade liquidity rating reflects a good liquidity profile characterized by significant expected availability under the proposed $100 million revolving credit facility and ample cushion anticipated under bank covenants. Cash balances upon the closing of the acquisition are expected to be modest. Cash flow from operations over the next twelve months may be weak due to the timing of additional discretionary restructuring payments and the cash flow impact of the shift in new member enrollments towards monthly memberships which the company believes will be substantially complete by the end of 2005. As a result, the company may need to rely on its revolver, particularly during the next few quarters. Absent any further acquisitions, Moody's expects the company to have at least $60 million of availability under the $100 million revolver during each of the next four quarters. The credit facility is expected to allow the company to complete business acquisitions if pro forma covenant compliance is maintained and a minimum liquidity threshold is maintained. Recurring cash needs in the next twelve months include term loan amortization (approximately $9 million) and capital expenditure requirements (approximately $25-$30 million). The credit facility is expected to have an excess cash flow sweep, initially set at 50%, subject to a step down if the company achieves a specified decline in its leverage ratio. The company's bank facility is expected to contain financial covenants that set a maximum level of net leverage and a minimum level of cash interest coverage. Moody's expects the company to have ample cushion against these covenants over the next four quarters. As to alternate liquidity, substantially all of the company's assets are pledged under the company's secured credit facility and the company has few, if any, non-core assets that could be sold. The B1 rating assigned to the senior secured credit facility, notched one level above the corporate family rating, reflects strong enterprise value coverage in the event of default and loss absorption support from the senior notes, senior subordinated bridge facility and the equity base. The credit facility is secured by a first priority security interest in substantially all the assets of the company and its domestic subsidiaries and is guaranteed by substantially all of the company's domestic subsidiaries. The B3 rating assigned to the proposed senior unsecured notes, notched one level below the corporate family rating, reflects the effective subordination of these notes to borrowings under the senior secured credit facility. The senior notes will be pari passu in right of payment with all of the company's existing and future senior unsecured indebtedness and senior in right of payment to all future subordinated indebtedness. The senior notes are supported by guarantees on a senior basis by substantially all of the company's domestic subsidiaries. Headquartered in Norwalk, Connecticut, Affinion is a leading direct marketer of value-added membership, insurance and package enhancement programs and services to consumers. Net revenue on an unadjusted basis for LTM period ending June 30, 2005 was $1.47 billion. AMES TRUE: S&P Lowers Corporate Credit Rating to CCC+ from B- ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Ames True Temper Inc., a manufacturer of non-powered lawn and garden tools and accessories, including its corporate credit rating to 'CCC+' from 'B-'. The outlook remains negative. The Camp Hill, Pennsylvania-based company had about $302 million of debt outstanding (excluding operating leases) as of June 25, 2005. The downgrade reflects: * Ames' tight covenants on its senior secured credit facility; * weaker-than-expected operating performance; and * expectations for a further weakening of credit protection measures following the company's recently lowered earnings guidance and EBITDA estimates. "Specifically, we are concerned about Ames' narrow cushion on its bank loan financial covenants and the company's ability to be in compliance with its fiscal 2006 first quarter financial covenants," said Standard & Poor's credit analyst Mark Salierno. S&P also believes that the continued escalation of raw material, transportation, and other energy-related costs, combined with soft demand from the past summer season, has further weakened the company's business and financial risk profiles. AMPHENOL CORP: Acquiring Teradyne Unit for $390 Million in Cash --------------------------------------------------------------- Amphenol Corporation (NYSE-APH) reached an agreement to acquire the Connection Systems division of Teradyne, Inc. (NYSE-TER) for approximately $390 million in cash (subject to a post closing working capital adjustment). The sale is subject to regulatory approval and customary closing conditions and is expected to close in the fourth quarter. "We are extremely pleased to add TCS to the Amphenol family," said Martin H. Loeffler, Amphenol's Chairman and CEO. "TCS has enormous technological capabilities and is the leader in the development of high-speed, high-density board level interconnect products. The addition of TCS is entirely complementary to Amphenol's product offering and will significantly enhance our already strong position in the communication and information technology markets. We will now provide a complete and integrated interconnect solution to these markets, similar to what we have successfully achieved in other markets. In addition, we are excited about the possibilities created by the combination of Amphenol's strong operating discipline and TCS's industry leading technology, and we look forward to working in partnership with TCS's experienced management team. We plan to finance the acquisition through an increase in our revolving credit facility. Consistent with our acquisition strategy and assuming a continuation of current economic conditions, we expect the TCS acquisition to be accretive to earnings per share in the first year post acquisition." Headquartered in Nashua, New Hampshire, Teradyne Connection Systems supplies high-speed, high-density, printed circuit board interconnect products. TCS has annual sales of approximately $380 million and sells its products primarily to the data communications, storage and server markets, wireless infrastructure markets and industrial markets. TCS has facilities in North America, Europe and Asia and employs approximately 2,250 people worldwide. Amphenol Corporation is one of the world's leading producers of electronic and fiber optic connectors, cable and interconnect systems. Amphenol products are engineered and manufactured in the Americas, Europe and Asia and sold by a worldwide sales and marketing organization. The primary end markets for the Company's products are communication systems for the converging technologies of voice, video and data communications, industrial/automotive and military/aerospace applications. * * * As reported in the Troubled Company Reporter on June 8, 2005, Standard & Poor's Ratings Services raised its corporate credit and bank loan ratings on Wallingford, Connecticut-based Amphenol Corp to 'BBB-' from 'BB+' to reflect sustained improvements in the company's financial profile, as demonstrated by reduced financial leverage, improved cash flow adequacy, and expected moderate financial policies, along with a history of relatively consistent, strong operating performance. S&P said the outlook is stable. AMPHENOL CORP: Moody's Affirms Corporate Family Rating at Ba1 ------------------------------------------------------------- Moody's Investors Service affirmed the Ba1 corporate family rating on Amphenol Corporation. The ratings outlook is stable. The affirmation follows Amphenol's announcement that it is acquiring the Connection Systems division of Teradyne Incorporated (not rated) for about $390 million, representing about 1.0x TCS's 2005 sales of $380 million and about 7.8x TCS's estimated annual EBITDA of $50 million. Amphenol plans to finance the transaction with its existing unsecured revolving credit facility (not rated), which may be expanded with consent of the lenders from $750 million to $1 billion. The Ba1 corporate family rating is supported by Amphenol's financial profile, which remains well positioned within the Ba1 category, even though the transaction would moderately increase leverage and lower interest coverage. Pro forma for the transaction, for the twelve months ended June 30, 2005 Amphenol's adjusted total debt to EBITDA would rise to about 2.7x (2.2x unadjusted) from 1.7x (1.4x unadjusted). Pro forma adjusted EBITDA interest coverage is expected to be about 8.6x, down from about 13.7x. Amphenol expects the acquisition to be accretive to earnings and cash flow in the first year following the transaction. The Ba1 corporate family rating also is supported by Amphenol's business position and history of stable cash generation and healthy operating profit margins. The acquisition of TCS will add about $380 million in annual revenue and enhance Amphenol's position in communication and information technology markets with complementary products and leadership positions in backplane and backplane interconnect systems. Amphenol expects that it will be able to expand on TCS's profitability through materials sourcing efficiencies and pricing and cost disciplines. The stable outlook reflects Moody's expectation that Amphenol will adjust its financial policy to place greater emphasis on debt reduction, while scaling back share repurchase activity, and not undertake another large acquisition in the near term. The outlook or rating may be pressured, if Amphenol is unable to maintain current levels of operating profitability and substantial free cash flow or engages in further acquisitions or other actions that further increase financial leverage or otherwise weaken the credit profile. Headquartered in Wallingford, Connecticut, Amphenol Corporation manufactures and markets: * electrical, electronic, fiber optic connectors; * interconnect systems; and * coaxial and flat-ribbon cable. Pro forma for the acquisition of TCS, revenue for the twelve months ended June 30, 2005 amounted to $2.0 billion. ANCHOR GLASS: U.S. Trustee Appoints Diageo to Creditors Committee ----------------------------------------------------------------- Felicia S. Turner, the United States Trustee for Region 21, has appointed Diageo North America, Inc., to the Official Committee of Unsecured Creditors in Anchor Glass Container Corporation's Chapter 11 case. The Creditors Committee is now composed of eight members: 1. Stephen Schreiber Assistant Chief Counsel Pension Benefit Guaranty Corporation 1200 K Street, NW Washington, DC 20005 Tel No.: 202-326-4020 Ext. 3759 Fax No.: 202-326-4112 2. Scott Douglas Porter General Counsel and Secretary OCI Chemical Corporation Two Corporate Drive, Suite 400 Shelton, CT 06484 Tel No.: 203-225-3106 Fax No.: 203-225-3194 3. David Mohr Temple-Inland Corporate Services 1300 South MoPac Expressway Austin, TX 78746 Tel No.: 512-434-3929 Fax No.: 512-434-8051 4. Elizabeth Dunning Chief Financial Officer Packaging Dimensions, Inc. 2300 Raddant Road Aurora, IL 60504 Tel No.: 708-367-4019 Fax No.: 708-235-0903 5. Richard Walker, Jr. VP, Corporate Counsel and Secretary South Jersey Gas Company 1 South Jersey Plaza Folsom, NJ 08307 Tel No.: 609-567-4000 Ext. 4250 Fax No.: 609-561-7130 6. Wally Evans President Special Shapes Refractory Co., Inc. 1100 Industrial Boulevard Bessemer, AL 35022 Tel No.: 205-424-5653 Fax No.: 205-424-3290 7. Frank H. Markle Counsel UGI Energy Services, Inc. 1100 Berkshire Boulevard #305 Wyomissing, PA 19610 Tel No.: 610-373-7999 Fax No.: 610-374-4288 8. David Kirchoff Vice President Diageo North America, Inc. 801 Main Avenue Norwalk, CT 06851 Tel No.: (203)229-8216 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. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: EPA Alleges Environmental Law Violations ------------------------------------------------------ The U.S. Environmental Protection Agency Region 5 has cited Anchor Glass Container Corp. for alleged clean-air violations at the company's container glass manufacturing plant at 200 W. Belleview Dr., Lawrenceburg, Ind. EPA proposed a $96,901 penalty. EPA alleges that Anchor Glass failed to use its baghouses to control emissions of particulate matter at the plant as required by the company's state operating permit. EPA also alleges that the company failed to comply with a number of other requirements in its state-operating permit. EPA and the Indiana Department of Environmental Management discovered the alleged violations during a November 2004 inspection. Anchor Glass has 30 days from receipt of the complaint to file an answer and request a hearing. The company may request an informal conference with EPA at any time to discuss resolving the allegations. Inhaling high concentrations of particulates can affect children, the elderly and people with heart and lung diseases the most. 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. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Committee Taps Stichter Riedel as Counsel ------------------------------------------------------- The Official Committee of Unsecured Creditors of Anchor Glass Container Corporation asks the Hon. Alexander L. Paskay of the U.S. Bankruptcy Court for the Middle District of Florida for authority to retain Stichter, Riedel, Blain & Prosser, PA, as its counsel, nunc pro tunc to Aug. 26, 2005. As the Creditors' Committee's counsel, Stichter Riedel will: (a) provide legal advise with respect to the Committee's duties and powers in the Debtor's Chapter 11 case; (b) assist in the Committee's investigation of the Debtor's acts, conduct, assets, liabilities and financial condition, the disposition of assets, and any other matter relevant to the case or to the formulation of a Plan of Reorganization; (c) participate in the formulation of a plan of reorganization; (d) assist and advise the Committee in its examination and analysis of the conduct of the Debtor's affairs and the causes of insolvency; (e) assist and advise the Committee with regard to its communications with the general creditor body regarding its recommendations on any proposed plan of reorganization; (f) assist the Committee in requesting the appointment of a trustee or examiner, should the action become necessary; (g) review and analyze all applications, orders, financial information, budgets, statements of operations and schedules and statement of financial affairs filed with the Court or provided to the Committee, and advise the Committee as to their propriety; (h) confer with the Debtor's management counsel; (i) attend the meetings of the Committee; (j) prepare and file appropriate pleadings on behalf of the Committee; and (k) perform other legal services as may be required and in the interest of the creditors, including, but not limited to, the commencement and pursuit of adversary proceedings as may be authorized. The Creditors Committee relates that Stichter Riedel will specifically take complete responsibility for investigating and pursuing creditors' claims against Wachovia Capital Finance Corporation. Moreover, the firm will lead in responding to the Debtor's request to pay utility companies' prepetition claim and deposit requests. Also, Stichter Riedel conducted the Section 341 meeting and has taken the lead in discussions with the United States Trustee regarding various issues and has been primarily responsible for interfacing with the Debtor's counsel as to the general status of the case. The Creditors Committee emphasizes that on any issue where its other counsel has taken the lead, Stichter Riedel will provide any necessary support, and vice versa. The firm will respond to creditor inquiries directed to it. Stichter Riedel will be paid in accordance with its customary hourly rate for certain professionals: Professional Hourly Rates ------------ ------------ Partners $250 - $350 Associates $135 - $210 Paraprofessionals $100 The firm will also be reimbursed for all necessary out-of-pocket expenses and charges incurred in connection with its retention. Harley E. Riedel, Esq., an attorney at Stichter Riedel, assures Judge Paskay that the firm currently represents no interest adverse to the Creditors Committee, the Debtor, or any other party-in-interest in the Debtor's bankruptcy. 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. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASARCO LLC: Wants TRO Issued Against Arizona Retiree Class ---------------------------------------------------------- In 2003, ASARCO, LLC, Silver Bell Mining, L.L.C., and Encycle/Texas, Inc., initiated a class action civil suit No. 03-1297 in the United States District Court for the District of Arizona, Phoenix Division, seeking a declaratory judgment to determine rights under certain retiree health and benefit plans. The defendant unions filed counterclaims seeking declaratory relief and monetary damages from ASARCO, Encycle/Texas, and Silver Bell in connection with the same retiree plans. The retirees asserting the Retiree Claims in the Arizona Litigation are all retirees of ASARCO. ASARCO indirectly owns 75% of Silver Bell Mining. The defendant unions consist of: * United Steelworkers of America AFL-CIO/CLC, represented by Edward C. Yarter; * Local 518 International Brotherhood of Electrical Workers, represented by Ben Barcela; * Local 570 International Brotherhood of Electrical Workers, represented by Tony Ramos; * Local 583 International Brotherhood of Electrical Workers, represented by Bernard Zornacki; * Local 602 International Brotherhood of Electrical Workers, represented by Gonzalo Frias; and * International Chemical Workers Union, Council of the United Food and Commercial Workers International Union, AFL-CIO/CLC. The Automatic Stay at Issue On Aug. 18, 2005, ASARCO filed a bankruptcy notice in the Arizona Litigation, informing all parties involved that further actions were automatically stayed as of the Petition Date. James R. Prince, Esq., at Baker Bott, LLP, in Dallas, Texas, relates that the following day, counsel for one of the Unions stated their unwillingness to acknowledge the applicability of the automatic stay to the Arizona Litigation and threatened to continue to litigate claims against ASARCO and the other plaintiffs. Recognizing that it could be perceived as "unfair for ASARCO to continue pursuing its claims in the Arizona Litigation while the Defendants are stayed from pursuing their counterclaims," ASARCO offered to dismiss its claims in the Arizona Litigation, effectively agreeing to a self-imposed stay, Mr. Prince notes. As of Sept. 19, 2005, the Defendants in the Arizona Litigation accepted ASARCO's gesture, but responded by insisting that the automatic stay does not affect the Retiree Claims. The Arizona Litigation was previously set for trial on Sept. 13, 2005. During an Aug. 23, 2005, status conference, the Arizona Court extended the deadlines for the proposed pretrial order, the pretrial conference, and the firm trial date. The Arizona Court further ordered "as to all parties that the matter is stayed, without prejudice, and the entire action will be dismissed on Oct. 21, 2005, unless a notice is filed with the Court that the bankruptcy stay has been lifted or a motion to lift the stay has not yet been ruled on by the Bankruptcy Court." Mr. Prince states that the Defendants continue to insist that their claims in the Arizona Litigation are not subject to the automatic stay. Mr. Prince argues that the automatic stay applies to the Retiree Claims because they constitute actions that are "against the debtor" or that seek "to recover a claim against the debtor" within the meaning of Section 362(a)(1) of the Bankruptcy Code. In addition, the Retiree Claims also seek to "obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate" within the meaning of Section 362(a)(3), by virtue of the effort to take a judgment against a debtor's assets. Moreover, ASARCO has innumerable cases pending against it in various state and federal venues, including environmental and toxic tort suits, and thousands of asbestos-related lawsuits throughout the country. Against this backdrop, ASARCO seeks: -- a declaration that Section 362(a) has automatically stayed the commencement, prosecution, and continuation of the Retiree Claims in the Arizona Litigation; -- an injunction prohibiting the commencement or continued prosecution of any Retiree Claim against ASARCO, Silver Bell, and Encycle/Texas during the pendency of the Chapter 11 cases to permit the Debtors to attempt to reorganize in an orderly fashion; and -- issuance of a temporary restraining order to prohibit and restrain the Defendants, and any other claimants who may hold Retiree Claims, from commencing, prosecuting, or enforcing claims against the Debtors until the date that the Court rules on the Debtors' request. Mr. Prince asserts that a temporary restraining order is needed because of the upcoming deadlines in the Arizona Litigation, particularly the expiration of the stay on Oct. 21, 2005. ASARCO will seek to deal with the retiree health and benefit plans that are the subject of the Arizona Litigation and the Retiree Claims according to the framework established by Section 1114. Prosecution of Retiree Claims Impairs the Debtors Mr. Prince believes that in the absence of a declaration and injunction prohibiting the prosecution of the Retiree Claims, it is likely that the Defendants will seek to continue prosecution of the Retiree Claims in the Arizona Court. Mr. Prince explains that the prosecution of the Retiree Claims would result in irreparable harm to the Debtors because: (a) there is risk that shared assets will be diminished, to the detriment of the creditor body as a whole; (b) ASARCO will be hindered in dealing with its retiree benefits as part of the reorganization process in the Bankruptcy Court pursuant to the framework established by Section 1114 of the Bankruptcy Code; (c) if not enjoined, the Retiree Claims will likely impact the ability of ASARCO to assist and participate in reorganization by diverting personnel and financial resources and affecting the Debtors' ability to secure the necessary funding for a plan of reorganization; and (d) ASARCO will be required to assist in the handling and defense of certain of those claims. "The likelihood of irreparable harm to ASARCO and its creditors in the absence of injunctive relief far outweighs any harm to the Defendants asserting the Retiree Claims," Mr. Prince tells Judge Schmidt. Mr. Prince adds that the proposed injunction will likely to benefit all retirees by helping to pave the way for a reorganization plan. If ASARCO's efforts to confirm and consummate its contemplated plan succeeds, the Defendants will have benefited from the injunction. Furthermore, Mr. Prince avers that the injunctive relief will serve the public interest by promoting compliance with the congressional purposes underlying the automatic stay and furthering ASARCO's successful reorganization by preserving the status quo for a limited period of time, to permit ASARCO to deal with its retiree health and benefit plans and to allow the Court to consider confirmation of a reorganization plan. 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 Assume ESM Consulting Contract --------------------------------------------------- ESM Consulting Engineers, LLC, provides professional surveying services to ASARCO, LLC, in conjunction with a proposed re- development of the ASARCO site in Ruston, Washington, pursuant to a Contract Agreement entered on March 1, 2005. James R. Prince, Esq., at Baker Botts, L.L.P., in Dallas, Texas tells the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, that the parties have already invested six months in the project, and expect that the work will take one to two more months to complete. ESM Consulting has issued a preliminary survey with several discrepancies regarding property ownership, Mr. Prince notes. To date, ASARCO has received offers from four entities for the purchase of the Property. To maximize the Property's value, ASARCO intend to select one of the bidders to become a "stalking horse" in bidding procedures subject for Court approval. "An accurate property boundary survey is essential so that ASARCO can be confident that the Purchase and Sale Agreement accurately describes the Property to be sold," Mr. Prince says. Mr. Prince asserts that if the Contract were rejected, the work could be performed by another surveying service. However, because ESM Consulting has not yet prepared any final reports, the new surveyor would have to start the project over and redo ESM Consulting's work for which ASARCO has already paid $21,988. Moreover, the six months that ASARCO and ESM Consulting have already invested in that project would be lost, Mr. Prince states. Accordingly, ASARCO seeks Judge Schmidt's permission to assume the ESM Consulting Contract pursuant to Section 365(a) of the Bankruptcy Code. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000). BAIS YAAKOV: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Bais Yaakov of Brooklyn aka Children Center of Brooklyn aka Kesser Bais Yaakov aka Tiferes Bais Yaakov 1362 49th Street Brooklyn, New York 11219 Bankruptcy Case No.: 05-29266 Type of Business: The Debtor owns and operates a school and charitable programs in Brooklyn, New York. Chapter 11 Petition Date: October 10, 2005 Court: Eastern District of New York (Brooklyn) Debtor's Counsel: Isaac Nutovic, Esq. Nutovic & Associates 488 Madison Avenue, 16th Floor New York, New York 10022 Tel: (212) 421-9100 Total Assets: $14,646,055 Total Debts: $8,730,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Avi Taub Tort $300,000 c/o Ofeck & Heinze, LLP 401 Broadway New York, NY 10013 Mrs. Stein $297,000 1745 52nd Street Brooklyn, NY 11204 A. Schlussel IRA, KLD Inc. Loan $122,500 Def. Ben. Pl. c/o Sylvor & Richman, LLP 605 Third Avenue New York, NY 10158 Penina Rosenthal Salary $80,000 Rabbi Greenbaum $60,000 Mr. Ziegelheim Loan $60,000 Donna Suzsek $40,000 Tischler $40,000 Mrs. Pinter $40,000 Carlos Mendoza Salary $25,000 Eichlers $25,000 Semels $24,000 Mr. Greenberg $22,000 Ruthy Halpert Salary $19,000 Mrs. Oppenheim Salary $15,000 Miss Yael Arieff Salary $15,000 Chaya Fried Salary $13,000 Zeesy Klinger $13,000 Lilki Neiman $12,000 Miriam Tuller $12,000 BELDEN & BLAKE: J.M. Vanderhider Replaces R.W. Peshek as VP & CFO ----------------------------------------------------------------- Belden & Blake Corporation appointed James M. Vanderhider as its Vice President and Chief Financial Officer to replace Robert W. Peshek. Robert W. Peshek resigned on Oct. 6, 2005, by mutual agreement with the Company. He will remain with the Company during a transition period. Mr. Peshek's resignation was not the result of a disagreement with the Company related to any financial or accounting issues. Mr. Vanderhider, 46, is the Executive Vice President and Chief Financial Officer of EnerVest and has been with EnerVest since March 1996. Mr. Vanderhider holds a B.B.A. in Accounting from Texas A&M University and is a Certified Public Accountant. The Company does not anticipate entering into an employment agreement with Mr. Vanderhider. New SVP & COO The Company also appointed Kenneth Mariani as Senior Vice President and Chief Operating Officer on Oct. 3, 2005. Mr. Mariani replaces James M. Vanderhider as COO. Mr. Vanderhider will serve as Vice President and Chief Financial Officer to replace Robert W. Peshek. Mr. Mariani, 44, also serves as a Director of Belden & Blake and Vice President, Eastern Division for EnerVest. He has been with EnerVest since April 2000, based in EnerVest's Charleston, West Virginia office. He holds a degree in Chemical Engineering from the University of Pittsburgh, with a Petroleum option. He received his MBA degree from the University of Texas and is a Certified Professional Engineer. The Company does not anticipate entering into an employment agreement with Mr. Mariani. Belden & Blake engages in the exploitation, development, production, operation and acquisition of oil and natural gas properties in the Appalachian and Michigan Basins (a region which includes Ohio, Pennsylvania, New York and Michigan). Belden & Blake is a subsidiary of Capital C Energy Operations, LP, an affiliate of Carlyle/Riverstone Global Energy and Power Fund II, L.P. * * * As reported in the Troubled Company Reporter on Apr. 7, 2005, Moody's downgraded Belden & Blake's senior implied rating from B3 to Caa1 and its note rating from B3 to Caa2. The outlook is changed to negative. CENTRAL WAYNE: Wants Until Nov. 30 to Solicit Plan Acceptances -------------------------------------------------------------- Central Wayne Energy Recovery Limited Partnership asks the U.S. Bankruptcy Code for the District of Maryland, Baltimore Division, for more time to solicit acceptances of its proposed plan of liquidation. The Debtor wants until Nov. 30, 2005. The Debtor filed its Plan and Disclosure Statement on Sept. 17, 2004. For months, the Debtor has been engaged in extensive negotiations regarding the structure of the Plan with Wilmington Trust Company, as indenture Trustee for bondholders, VonWin Capital LP, and the Official Committee of Unsecured Creditors. The Debtor believes that as a result of the negotiations, all previously disputed issues have been resolved. The Debtor submits that the extension is warranted to finalize and wrap-up the negotiations with the indenture Trustee, VonWin and the Committee. Headquartered in Baltimore, Maryland, Central Wayne Energy Recovery LP owns a waste-to-energy system facility that converts the heat energy generated by incinerating waste to electricity. The Company filed for chapter 11 protection on December 29, 2003 (Bankr. D. Md. Case No. 03-82780). Maria Chavez Ruark, Esq., Piper Rudnick LLP represent the Debtor from its creditors. When the Company filed for protection from its creditors, it listed more than $10 million in assets and more than $100 million in debts. CHI-CHI'S: Disclosure Statement Hearing Set for Oct. 25 ------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware will convene a hearing at 10:00 a.m., on Oct. 25, 2005, to consider the adequacy of the Disclosure Statement explaining the Joint Plan of Liquidation filed by Chi-Chi's, Inc., and its debtor-affiliates. The Debtors filed their Disclosure Statement and Joint Plan on Oct. 7, 2005. Summary of the Joint Plan The Plan provides for the establishment of a Liquidating Trust to hold and distribute the Debtors' assets and funds for the benefit of holders of Allowed Claims against the Debtors. A Liquidating Trustee will be appointed on or before the Effective Date and approved by the Court in order to administer and manage the Trust. The Debtors through the Effective Date, and the Liquidating Trustee after that, will liquidate in a commercially reasonable manner all other property of the Debtors by sale or other disposition and distribute the proceeds in accordance with the Plan and the Liquidating Trust Agreement. On the Effective Date, the Debtors will transfer the Distribution Fund, except the Insurance Policies, the California Disability Reserve and, if already established, the Hepatitis A Reserve to the Liquidating Trust. If the Hepatitis A Reserve is established on the Effective Date, Chi-Chi's will transfer any Cash to be transferred to the Reserve and the Liquidating Trustee will manage and control the distribution of the Hepatitis A Reserve in accordance with the Plan. The Debtors will retain their rights under the Insurance Policies, subject to the right of the Liquidating Trustee to manage, liquidate and control the prosecution of any matters related to the Debtors' interest in the Insurance Policies and to receive any proceeds of the Insurance Policies to which the Debtors are entitled. On the Effective Date, the Debtors will transfer the California Disability Reserve to FRI-MRD, subject to control of Anthony Baril. The California Disability Reserve will only be used for the payment of obligations of FRI-MRD to the State of California for FRI-MRD's self-funded employee disability plan. After all of those obligations are satisfied, the remainder of the funds in the California Disability Reserve will be transferred to the Liquidating Trust. Treatment of Claims and Interests against Chi-Chi's Inc. The Plan groups claims and interests into seven classes against lead Debtor Chi-Chi's Inc. Unimpaired claims consist of: 1) Secured Claims, which will be cured and reinstated pursuant to Sec. 1124(2) of the Bankruptcy Code or for which the legal, equitable and contractual rights to which the holders of Allowed Secured Claims are entitled will remain unaltered; 2) Priority Claims, totaling approximately $7,000, which will receive on the Effective Date the principal amount of their Allowed Claims from the Chi-Chi's Assets without interest; and 3) Unsecured Hepatitis A Claims, which will be paid in full from the Hepatitis A Insurance Proceeds and, in the event that the Unsurance Proceeds are insufficient to pay all those Claims, any unpaid portion of their Allowed Claims will be paid from the Hepatitis A Reserve Fund; Impaired claims consist of: 1) Unsecured Claims of FRI-MRD, slated to receive the FRI-MRD Distribution as more fully described in Section VII.B of the Plan; 2) Other Unsecured Claims, totaling $9 million to $12 million, and will receive periodic payments from the Liquidating Trust only after full satisfaction of Holders of Secured Claims, Priority Claims, Unsecured Hepatitis A Claims and Unsecured Hepatitis A Claims. Each holder of an Allowed Other Unsecured Claim will receive either the lesser of: a) an amount equal to that Holder's Allowed Claim, or b) the Pro Rata share of the available sum of monies to be distributed to all holders of Allowed Other Unsecured Claims from the Chi-Chi's Assets by the Liquidating Trust; 3) Inter-Debtor Claims will receive periodic payments from the Liquidating Trust only after full satisfaction of Holders of Secured Claims, Priority Claims, Unsecured Hepatitis A Claims, Unsecured Hepatitis A Claims and Other Unsecured Claims. Each holder of an Allowed Inter-Debtor Claim will receive either the lesser of: a) an amount equal to that Holder's Allowed Claim, or b) the Pro Rata share of the available sum of monies to be distributed to all holders of Allowed Inter-Debtor Claims by the Liquidating Trustee; 4) Interests will be cancelled on the Effective Date and will not receive any distribution under the Plan on account of those claims. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=051011023605 A full-text copy of the Joint Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=051011023815 Objections to the Disclosure Statement, if any, must be filed and served by Oct. 18, 2005. Headquartered in Irvine California, Chi-Chi's, Inc., is a direct or indirect operating subsidiary of Prandium and FRI-MRD Corporation and each engages 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 Debtor filed for bankruptcy, it estimated $50 to $100 million in assets and more than $100 million in liabilities. CITATION CORP: Disputes DaimlerChrysler's Right to Set Off Debt --------------------------------------------------------------- Reorganized Citation Corporation and its affiliates ask the U.S. Bankruptcy Court for the Northern District of Alabama, Southern Division, to enforce the terms of their confirmed joint plan of reorganization and ban DaimlerChrysler Corporation from using its prepetition claims to reduce postpetition obligations to the Reorganized Debtors. Unauthorized Set Off Citation manufactures bearing caps for DaimlerChrysler. In March 2005, six months after its bankruptcy filing and three months after the claims bar date, DaimlerChrysler issued a debit memo to Citation for costs it allegedly incurred in connection with defective bearing caps supplied by the Debtors prepetition. Instead of filing a proof of claim as an unsecured creditor, DaimlerChrysler used the debit memo to reduce amounts it owed to Citation for post-petition deliveries under different purchase orders. DaimlerChrysler contends that it is entitled to reduce amounts it owes Citation under a theory of recoupment. DaimlerChrysler has debited approximately $199,396 against its debt to Citation and asserts a right to withhold approximately $274,137 more. Citation Says No Robert W. Tapscott, Jr., Esq., at Maynard, Cooper & Gale, PC, tells the Bankruptcy Court that DaimlerChrysler's actions are improper and violate the automatic stay, the confirmed plan, and the Bankruptcy Code. Mr. Tapscott explains that a right to recoupment is only available where mutual debts arise from a single integrated contract or transaction. Since the purchase orders debited by DaimlerChrysler are different from the purchase order covering the delivery of the defective bearing caps, DaimlerChrysler is not entitled to a set off. In addition, Mr. Tapscott says that DaimlerChrysler's failure to timely file a proof of claim for the alleged damages forfeit any right it has to a distribution under the confirmed plan. Headquartered in Birmingham, Alabama, Citation Corporation -- http://www.citation.net/-- designs, develops and manufactures cast, forged and machined components for the capital and durable goods industries, including the automotive and industrial markets. Citation uses aluminum, steel, gray iron, and ductile iron as the raw materials in its various manufacturing processes. The Debtors filed for protection on Sept. 18, 2004 (Bankr. N.D. Ala. Case No. 04-08130). Michael Leo Hall, Esq., and Rita H. Dixon, Esq., at Burr & Forman LLP, represent the Debtors. When the Company and its debtor-affiliates filed for protection from their creditors, they estimated more than $100 million in assets and debts. Judge Tamara O. Mitchell confirmed the company's Second Amended Joint Plan of Reorganization on May 18, 2005. COLLEGE PROPERTIES: Ch. 11 Trustee Hires Osborn Maledon as Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Arizona gave Brian Mullen, the Chapter 11 Trustee of College Properties 1 & 2 Limited Partners, permission to employ Osborn Maledon P.A. as his counsel. Osborn Maledon will: a) prepare pleadings, motions and applications as well as conducting examinations incidental to estates' administration; b) investigate the nature and amount of claims of creditors in this case; c) evaluate the Debtor's assets and pre-petition actions and advise the Trustee of his rights, duties and obligations as Trustee under Chapter 11 of the Bankruptcy Code; d) take any and all other necessary actions to recover assets of these Chapter 11 estates and to properly preserve and administer this Chapter 11 estates; and e) represent other services as circumstances dictate. The Firm's professionals' current hourly rates: Designation Hourly Rate ----------- ----------- Attorneys $160 - $345 Paralegals & Assistants $45 - $135 To the best of the Trustee's knowledge, Osborn Maledon does not represent any interest adverse to the Trustee or the bankruptcy estates. 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 FLOORCOVERINGS: S&P Revises Outlook to Negative ---------------------------------------------------------------- Standard & Poor's Ratings Service revised its outlook on carpet manufacturer Collins & Aikman Floorcoverings Inc. to negative from stable. At the same time, Standard & Poor's affirmed its ratings on the Dalton, Georgia-based company, including its 'B+' corporate credit rating. Total debt outstanding at July 30, 2005, was about $208 million. "The outlook revision reflects our expectation that the company will continue to face significant margin pressures, limiting its financial cushion within the rating category," said Standard & Poor's credit analyst Susan Ding. The combination of rapidly escalating raw material, energy, and transportations costs due to the recent hurricanes, and the uncertainty as to when these prices will stabilize, are a rating concern. In addition, unabsorbed fixed overhead and higher operating costs related to the company's facility maximization project will further pressure already weakening margins, which are well below the company's historical levels of above 20%. About Collins and Aikman Floorcoverings Collins and Aikman Floorcoverings, Inc., is a wholly owned subsidiary of Tandus Group, Inc., and is not affiliated with auto- part maker Collins & Aikman Corporation and its chapter 11 debtor- affiliates. Collins and Aikman Floorcoverings, Inc. was an operating unit of Collins and Aikman Corporation until 1997 when it was then split off in a sale transaction led by its executive management team and a private equity sponsor. Since that time there have been no legal association or business relationship between the companies and they have operated independently. Collins and Aikman Floorcoverings, Inc. markets commercial carpets under the "C&A Floorcoverings" and "C&A" brand names. Tandus unites the industry's leading specialized flooring brands -- Monterey, C&A, and Crossley. Drawing upon each brand's individual strengths, Tandus offers its customers single-source innovative product design and technology, comprehensive services, and environmental leadership. Based in Dalton, Ga., Tandus -- http://www.tandus.com/-- is a leading commercial floorcoverings company. Tandus' Collins and Aikman Floorcoverings, Inc. subsidiary files reports with the Securities and Exchange Commission. COMDIAL CORP: Wants Excl. Plan Filing Period Stretched to Jan. 20 ----------------------------------------------------------------- Comdial Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend, through and including Jan. 20, 2006, the time within which they alone can file a chapter 11 plan. The Debtors also ask the Court for more time to solicit acceptances of that plan from their creditors, through and including March 21, 2006. The Debtors give the Court four reasons that militate in favor of the extension: 1) their time and attention was recently devoted to negotiating and completing the sale of substantially all of their assets to Vertical Communications Acquisitions Corp., which recently closed on Sept. 28, 2005, and stabilizing their business affairs; 2) they are proceeding in good faith towards the resolution of their bankruptcy cases by resolving outstanding issues related to their cases, paying all of their post-petition bills in a timely fashion and using the remaining proceeds of the asset sale to cover the administrative costs of winding their estates; 3) they have demonstrated reasonable prospects for filing a viable chapter 11 plan because of the availability of funds from the asset sale for distribution to unsecured creditors; 4) the Debtors have cooperated and negotiated with creditors and other parties-in-interest with regards to the formulation of the plan and they are seeking the extension to exert any pressure on those creditors. The Court will convene a hearing at 9:30 a.m., on Oct. 25, 2005, to consider the Debtors' request. Headquartered in Sarasota, Florida, Comdial Corporation -- http://www.comdial.com/-- and its affiliates develop and market sophisticated communications products and advanced phone systems for small and medium-sized enterprises. The Company and its debtor-affiliates filed for chapter 11 protection on May 26, 2005 (Bankr. D. Del. Case No. 05-11492). Jason M. Madron, Esq., and John Henry Knight, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $30,379,000 and total debts of $35,420,000. COMDIAL CORP: Has Until Nov. 22 to File Notices of Removal ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Comdial Corporation and its debtor-affiliates an extension, through and including Nov. 22, 2005, the time within which they can file notices of removal of pre-petition Civil Actions pursuant to Bankruptcy Rule 9027(a)(2)(A). The Debtors explain that they are parties to numerous Civil Actions pending throughout the country, with most of those Civil Actions are subject to removal pursuant to 28 U.S.C. Section 1452, which applies to claims relating to bankruptcy cases. The Debtors give the Court four reasons in support of the extension: 1) it will give them more opportunity to consult with the various attorneys handling the Civil Actions to determine whether removal of those Actions should be appropriate; 2) it will give the Debtors' management more time to make fully informed decisions concerning the removal of each Civil Action and will assure that their estates' valuable rights under 28 U.S.C. Section 1452 can be exercised in the appropriate manner; 3) the rights of any party to the Civil Actions will not be prejudiced because Section 362 of the Bankruptcy Code has automatically stayed those Actions; and 4) if the Debtors ultimately seek to remove any Civil Action pursuant to Bankruptcy9027, any party to the litigation can seek to have that Action remanded pursuant to 28 U.S.C. Section 1452(b). Headquartered in Sarasota, Florida, Comdial Corporation -- http://www.comdial.com/-- and its affiliates develop and market sophisticated communications products and advanced phone systems for small and medium-sized enterprises. The Company and its debtor-affiliates filed for chapter 11 protection on May 26, 2005 (Bankr. D. Del. Case No. 05-11492). Jason M. Madron, Esq., and John Henry Knight, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $30,379,000 and total debts of $35,420,000. CONTINENTAL AIRLINES: Contributes $84 Mil. More to Pension Plans ---------------------------------------------------------------- Continental Airlines (NYSE: CAL) contributed an additional $84 million cash to its defined benefit pension plans. These contributions bring Continental's year-to-date pension contributions to $304 million and meet its minimum required contribution for 2005. "Continental's recent $84 million pension contribution demonstrates that we are working hard to fulfill our obligations and keep our promises to employees," said Larry Kellner, Continental's chairman and chief executive officer. Since 2002, Continental Airlines has contributed $826 million to its pension plans. Continental Airlines -- http://continental.com/-- is the world's sixth-largest airline, serving 128 domestic and 111 international destinations -- more than any other airline in the world -- and serving nearly 200 additional points via codeshare partner airlines. With 42,000 mainline employees, the airline has hubs serving New York, Houston, Cleveland and Guam, and carries approximately 51 million passengers per year. FORTUNE ranks Continental one of the 100 Best Companies to Work For in America, an honor it has earned for six consecutive years. FORTUNE also ranks Continental as the top airline in its Most Admired Global Companies in 2004. * * * As reported in the Troubled Company Reporter on Sept. 15, 2005, Moody's Investors Service assigned a Ba2 rating to the proposed Series 2005-ERJ1 Class A Pass Through Certificates of Continental Airlines, Inc. and affirmed Continental's long term debt ratings (corporate family rating at B3). Moody's said the rating outlook is negative. DANA CORPORATION: Restating 2004 and 2005 Financials ---------------------------------------------------- Dana Corporation (NYSE: DCN) reported that it will restate its: * 2004 financial statements; * first-quarter 2005 financial statements; and * second-quarter 2005 financial statements. The company also postponed its third-quarter 2005 earnings release and is withdrawing its earnings guidance for full-year 2005. Restatement of Financial Statements Dana's management and the Audit Committee of the Board of Directors have determined, as a result of their ongoing internal investigations, that the company did not properly account for certain items during 2004 and the first and second quarters of 2005. As a result, management and the Audit Committee have concluded that Dana's financial statements for these periods should no longer be relied upon and that restatements will be required for these periods. The primary purpose for the restatements is to correct issues involving customer pricing and transactions with suppliers in Dana's Commercial Vehicle business. The company's conclusions were reached in consultation with its independent registered public accounting firm, PricewaterhouseCoopers LLP, and independent investigators retained by the Audit Committee. The company will file amended reports on Forms 10-K/A and 10-Q/A for the periods being restated. Material Weakness In connection with the restatements, the company believes that there are material weaknesses in its internal control over financial reporting. The company has not completed its investigations. It has not determined whether it will be necessary to revise the estimated impact on second-quarter income of $10-15 million after tax, which it reported on Sept. 15, 2005, based on information available at that time from its preliminary review. The Company has also not determined what additional amounts will be required to adjust the statements for the other periods. Write Off of U.S. Deferred Tax Assets On Sept. 15, 2005, Cpmpany announced that it was evaluating its ability to maintain its U.S. deferred tax assets in light of the change in its earnings outlook. At June 30, 2005, the Company reported that its U.S. deferred tax assets totaled approximately $740 million. The company now believes that it will be unable to maintain its U.S. deferred tax assets or to record similar tax benefits in the future. The company is assessing the impact of this on its financial statements. The write-off of the U.S. deferred tax assets and the inability to record similar tax benefits in the future has a direct negative impact on net income but does not impact the company's cash flow. Impact on Financial Agreements Following the announcement on Sept. 15, 2005, that it would likely restate its second-quarter financial statements, the company received certain necessary waivers under its five-year bank facility and its accounts receivable securitization agreement for the second quarter. The company also received a waiver of the financial covenants under its bank facility for the third quarter. The company is now assessing the impact of the additional restatements and the decision to write off the U.S. deferred tax assets on its obligations under those credit facilities and other agreements. Third-Quarter Earnings Release Postponed As a result of the restatements, Dana will not release its third- quarter 2005 results on Oct. 19, 2005, as previously anticipated. At this time, no date has been set for the third-quarter release. Operational and Strategic Actions Being Evaluated The company continues to evaluate a number of significant measures, both operational and strategic, to improve its financial performance, and will make further announcements regarding its plans as soon as appropriate. Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. A leading supplier of axle, driveshaft, engine, frame, chassis, and transmission technologies, Dana employs 46,000 people in 28 countries. Based in Toledo, Ohio, the company reported sales of $9.1 billion in 2004. * * * As reported in the Troubled Company Reporter on Sept. 19, 2005, Fitch Ratings has downgraded the senior unsecured debt and senior unsecured bank facility of Dana Corp. one notch to 'BB+' and placed the ratings on Rating Watch Negative. These actions follow the announcement that the company has reduced its full-year 2005 earnings outlook, in part, as a result of manufacturing inefficiencies at its Commercial Vehicle unit and continued raw material cost pressures. DELPHI CORP: U.S. Trustee to Appoint Committee on Oct. 17 --------------------------------------------------------- Deirdre A. Martini, the United States Trustee for Region 2, will convene an organizational meeting of Delphi's largest unsecured creditors on Oct. 17, 2005, at 10:00 a.m. The meeting will be held in the New York Marriott Marquis Hotel located at 1535 Broadway in Manhattan. Ms. Martini explains that the sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. "This is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code," Ms. Martini emphasizes. Ms. Martini relates that a representative of the Debtors will attend and provide background information regarding the Chapter 11 petitions. Ms. Martini has obtained a list of the Debtors' 200-largest creditors from Delphi, and will send invitations to those 200 creditors. Creditors who want to serve on the Committee are required to complete and return an acceptance form to the U.S. Trustee's office. 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. (Delphi Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Judge Gonzalez Directs Joint Administration of Cases ----------------------------------------------------------------- Delphi Corp. sought and obtained an order from the Honorable Arthur J. Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York authorizing and directing the joint administration of the 38 chapter 11 cases filed by its direct or indirect subsidiaries with its chapter 11 case. The Debtors provided Judge Gonzalez with a corporate organization chart showing how each debtor is related to the other. A copy of that chart is available at http://bankrupt.com/misc/DPHChart.pdf at no charge. The Debtors make it clear that their request, pursuant to Rule 1015 of the Federal Rules of Bankruptcy Procedure, is for procedural purposes only. The Debtors are not asking the Court to substantively consolidate or otherwise co-mingle their assets at this juncture. Judge Gonzalez approved the Debtors' request, finding that there's no need for the Debtors to file 39 copies of each pleading or send creditors 39 copies of each notice required under the Bankruptcy Code and Rules. Judge Gonzalez directs that all pleadings and papers filed in Delphi's cases be captioned: UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - x : In re : Chapter 11 : DELPHI CORPORATION, et al., : Case No. 05-44481 : Debtors. : (Jointly Administered) : - - - - - - - - - - - - - - - - x 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. (Delphi Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Wants GM to Commit to $1 Billion of Business a Month ----------------------------------------------------------------- James Mackintosh, Bernard Simon and Ivar Simensen, writing for the Financial Times, report that Delphi Corp., the bankrupt U.S. auto parts maker, is asking General Motors to guarantee $1 billion of business per month. Delphi says that commitment is a cornerstone of the company's initial restructuring plan. Steve Miller, Delphi's chairman and chief executive, told the FT "At this moment we are going to see if we can create a business plan that's robust enough to support recovery of our underfunded pension plan and therefore avoid termination [of the plan]." However, Tom Kowaleski, head of communications at GM, told the FT that it is unlikely that the company will promise fixed levels of business to its former subsidiary. While General Motors and Delphi are separate entities, GM retains indemnification obligations for some employee obligations. Under the terms of the 1999 spin-off, General Motors agreed to provide medical and pension benefits to Delphi retirees if the company sought protection before mid-2007 -- potentially an $11 billion liability for GM. UAW Labor Talks Delphi is also asking the United Auto Workers for major concessions to avoid dumping its pension fund -- which is underfunded by $4.3 billion -- on to the Pension Benefit Guaranty Corp. Among Delphi's demands on the Union are: * Reducing pay by as much as 63% to $10 to $12 an hour and total wages and benefits by as much as 77% to $16 to $18 an hour. Delphi currently pays its union workers from $25 to $27 an hour and total wages and benefits of $65 to $70 an hour, making its employees among the best-paid industrial workers in America. * The right to close, sell or consolidate most of its U.S. plants over the next three years. * Ending all cost-of-living pay increases. * Eliminating pay during the Independence week shutdown in July. * Eliminating the jobs bank, under which Delphi guarantees the pay and benefits for unnecessary workers. * Reducing holidays to 10 to 12 days per year, down from about 16. * Reducing vacation to a maximum of four weeks per year. * Increasing employee contributions for health care to match the salaried plan by increasing doctor and prescription co- pays and other measures. Delphi hourly employees pay about 7% of their health care costs, compared with the 27% paid by salaried workers. * Changing pensions to reflect the lower wage rates by cutting them to less than $1,500 a month instead of the current rate of about $3,000. 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. DELPHI CORP: Chapter 11 Filing Cues S&P to Lower Ratings to D ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Delphi Corp. to 'D' after the company's U.S. operations filed for Chapter 11 bankruptcy protection. The recovery rating on Delphi's senior secured bank facility was withdrawn. Delphi, the largest U.S. manufacturer of automotive components, has total debt of about $6 billion and total unfunded pension obligations and other postretirement employee benefit liabilities of about $14.5 billion. "Delphi suffers from an uncompetitive business structure with high fixed costs, primarily because of the rich wages and benefits given to its U.S. hourly workforce," said Standard & Poor's credit analyst Martin King. "The company's largest customer, General Motors Corp., which contributes 50% of Delphi's sales, has recently lost market share and reduced production (see the related media release on GM). At the same time, Delphi faces higher costs for material and employee benefits, which have caused the company's earnings and cash flow to fall sharply this year. Delphi reported a $741 million net loss for the first six months of 2005, compared with a $206 million profit during the same period in 2004." The company's inflexible labor agreements prevent it from reducing headcount, shutting plants, selling unprofitable operations, or completing other restructuring actions that might improve profitability. For the past several months, Delphi had been engaged in discussions with GM and the United Auto Workers, its largest labor union, to restructure its unprofitable U.S. operations, but the parties were unable to reach an agreement. Delphi intends to use the Chapter 11 process to substantially restructure its U.S. operations. The company will realign its product portfolio and manufacturing footprint to focus on core businesses that have favorable growth prospects and can be operated profitably. It will also divest, consolidate, or wind down a large part of its U.S. manufacturing operations. Delphi plans to transform its labor agreements in order to create a more competitive labor cost structure, and it will also reduce pension and OPEB benefits. The restructuring process is likely to involve difficult and protracted negotiations with Delphi's customers, labor unions, and creditors. Delphi has received a commitment for up to $2 billion in senior secured debtor-in-possession financing from a group of lenders. The DIP loan, combined with cash generated from operations and $1.6 billion of cash on hand, will be used to fund post-petition operating expenses. More than $1 billion of Delphi's cash is held outside the U.S., and this will be used to support global operations, which were not included in the bankruptcy filing. DELPHI CORP: Fitch Junks Rating on Sr. Secured Bank Lines --------------------------------------------------------- Fitch downgraded Delphi Corporation's ratings following the Company's announcement that it has filed for Chapter 11 bankruptcy court protection: -- Issuer default rating (IDR) to 'D' from 'CCC'; -- Senior secured bank lines to 'CCC-' from 'B'. The recovery rating remains 'R1'; -- Senior unsecured notes to 'C' from 'CC'. The recovery rating remains 'R6'; -- Trust preferred securities to 'C' from 'CC'. The recovery rating remains 'R6'. Delphi's restructuring in bankruptcy is likely to produce a partial dismantling of the company, through facility closures and re-sourcing of contracts away from Delphi. Delphi's immediate challenge in bankruptcy will be to establish a new labor agreement with the UAW, given the deep cuts it is seeking in headcount, facilities, and benefits, without facing labor disruptions. Delphi has obtained $2 billion in Debtor-In-Possession financing to provide liquidity during its restructuring. Fitch's recovery analysis shows secured bank lines are expected to achieve full recovery while unsecured debt holders are likely to suffer substantial losses. Unsecured holders could be substantially diluted by Pension Benefit Guarantee Corp. claims (in the event of a termination of its pension plans) and GM claims arising from its guarantee of certain retiree benefits (estimated by GM to be as high as $11 billion). In the event of a termination of Delphi's pension plan, estimated PBGC claims are expected to be substantially higher than the GAAP underfunded position given the experience of recent airline bankruptcies. Together with GM's claims under its indemnification agreement with Delphi, unsecured debtholders' recovery could be minimal. DELPHI CORP: NYSE Reviewing Continued Stock Listing Status ---------------------------------------------------------- The New York Stock Exchange said Monday that it will continue to review and monitor the continued listing status of: * the common stock of Delphi Corp. -- ticker symbol DPH; * its 6-1/2% Notes due May 1, 2009 -- ticker symbol DPH 09; * its 7-1/8% debentures due May 1, 2029 -- ticker symbol DPH 29; and * the 8.25% Cumulative Trust Preferred Securities of Delphi Trust I -- ticker symbol DPH PR A. Delphi announced on October 8, 2005 that it and 38 of its domestic U.S. subsidiaries filed voluntary petitions for business reorganization under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. The NYSE has completed its review to-date and will begin the procedure to resume trading in the Company's securities. However, the NYSE will carefully consider the price indications obtained in the opening process. The NYSE will move to immediately suspend trading in the Company's securities should: (1) these price indications or subsequent trading reflect a price that the NYSE deems to be "abnormally low;" (2) the NYSE receives authoritative advice that the security is without value; or (3) the Company falls below the quantitative continued listing standards listed in the next paragraph. The NYSE will continue to closely monitor events at the Company and the appropriateness of continued listing of the Company's securities. The NYSE's quantitative continued listing standards require total market capitalization of not less than $75 million over a 30 trading day period and stockholders' equity of not less than $75 million, in addition to total market capitalization of not less than $25 million over a 30 trading day period. The NYSE's continued listing standards also require a minimum share price of $1 over a 30 trading day period. The Company is currently in compliance with all of these quantitative continued listing requirements. The Exchange notes that it may make an appraisal of, and determine on an individual basis, the suitability for continued listing of an issue in light of all pertinent facts whenever it deems such action appropriate, and that the Exchange may, at any time, suspend a security if it believes that continued dealings in the security on the NYSE are not advisable. DELTA AIR: Wants Court Nod to Sell Non-Core Assets for $10 Million ------------------------------------------------------------------ Before the Petition Date, Delta Air Lines Inc. and its debtor- affiliates routinely and in the ordinary course of business sold or, when necessary, otherwise disposed of non-core assets that are unnecessary or could not be used profitably in their operations. The Debtors seek the U.S. Bankruptcy Court for the Southern District of New York's authorization to establish uniform procedures to: (i) sell certain obsolete, surplus or burdensome assets having a sale price of $10,000,000 or less where the sale is arguably outside the ordinary course of their business; and (ii) abandon any de minimis assets where a sale cannot be consummated at a price greater than the costs of the sale. Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in New York, tells the Court that the sale or abandonment of the De Minimis Assets will reduce the burden on the Debtors' estates and will facilitate an improvement in the Debtors' cash position. However, he notes that, it would not be an efficient use of the Debtors' resources or the Court's time to seek Court approval each and every time the Debtors have an opportunity to sell or abandon De Minimis Assets. Sale Procedures The Debtors propose to implement their own procedures in lieu of the requirements set in Rule 6004-1 of the Local Bankruptcy Rules for the Southern District of New York. The Debtors' procedures for selling or abandoning De Minimis Assets will depend on the Sale Price. The Debtors define Sale Price as the net benefit estimated to be realized by their estates. The net benefit is the amount of cash consideration to be received by the Debtors plus the amount of liabilities to be assumed by the purchaser, less expenses to be incurred in connection with the sale, offsets or other deductions. The Debtors propose to pay any auctioneer or broker they engage in connection with any sale or attempted sale of De Minimis Assets. No auctioneer or broker will be required to file a retention application under Section 327 of the Bankruptcy Code. A. Sale Price below $3 million If the Sale Price of a De Minimis Asset is less than or equal to $3,000,000, no notice or hearing will be required. B. Sale Price between $3 million and $10 million If the Sale Price of a De Minimis Asset that the Debtors believe is arguably outside of the ordinary course of the their business is greater than $3,000,000 and less than or equal to $10,000,000, the Debtors will implement these procedures: (a) The Debtors will file with the Court and serve on limited parties a notice, specifying: (1) the assets to be sold, (2) if the purchaser is an affiliate of any of the Debtors, the identity of the purchaser, (3) any commissions to be paid to third parties, and (4) the proposed purchase price. (b) Any objection to the proposed sale is due within 10 days from the date of the Sale Notice and must be served on: -- the U.S. Trustee; -- attorneys of the Debtors; -- attorneys for the official committee of unsecured creditors in the Debtors' Chapter 11 cases; and -- the attorneys for the agent for the Postpetition Lenders. (c) A reply to an Objection must be filed with the Court and served on or before 12:00 p.m. on the day that is at least two business days before the date of the applicable hearing. (d) If no Objections are timely received and filed, the Debtors may immediately sell the De Minimis Assets listed in the Sale Notice and take any actions that are reasonable and necessary to close the transaction and obtain the sale proceeds. If an Objection is timely received and filed and cannot be settled by the parties, the De Minimis Asset that is the subject of the Objection will not be sold except upon order of the Court. C. Sale Price greater than $3 million If the Sale Price of a De Minimis Asset that the Debtors believe is arguably outside of the ordinary course their business is greater than $10,000,000, the Debtors will file a motion with the Court requesting approval of the sale. Pursuant to Section 363(f) of the Bankruptcy Code, the Debtors propose to sell De Minimis Assets free and clear of any liens, claims and encumbrances. Abandonment Procedures The Debtors expect to take all reasonable steps to sell the De Minimis Assets. However, these assets include obsolete materials and equipment, non-repairable equipment, and other assets that may not be saleable or where the costs of marketing or storing the assets in preparation for sale are likely to exceed the proceeds. To the extent the Debtors determine a sale of De Minimis Assets cannot be consummated at a price greater than the costs of sale, the De Minimis Assets may be abandoned in accordance with these procedures: A. Less than or Equal to $3,000,000 If the estimated gross proceeds of the De Minimis Asset to be abandoned is less than or equal to $3,000,000, the Debtors will serve notice on the person or entity to whom the personal property is to be abandoned and any person or entity known to the Debtors as having an interest in the De Minimis Asset to be abandoned, including any known creditor asserting a Lien on the De Minimis Asset to be abandoned. The notice will be served five business days before the De Minimis Assets are abandoned. B. Between $3 million to $10 million If the estimated gross proceeds of the De Minimis Asset to be abandoned is greater than $3 million and less than or equal to $10 million, the Debtors will implement these Procedures: a. The Debtors will file with the Court and serve on limited parties an abandonment notice, specifying: (i) the property to be abandoned, (ii) the reason for the abandonment, (iii) the parties known to have an interest in the property, and (iv) the entity to which the personal property is to be abandoned. b. Objections must be filed and served by 4:00 p.m. on the day that is ten days from the date the Abandonment Notice is filed and served. c. An Objection will be considered timely only if it is filed with the Court and actually received by these parties on or before the Abandonment Objection Deadline: (i) the U.S. Trustee, (ii) attorneys for the Debtors, (iii) the attorneys for the official committee of unsecured creditors in the Debtors' Chapter 11 cases and (iv) the attorneys for the agent for the Debtors' postpetition lenders. d. Unless otherwise ordered by the Court, a reply to an Objection may be filed with the Court and served on or before 12:00 p.m. on the day that is at least two business days before the date of the applicable hearing. e. If no Objections are timely received and filed, the Debtors may immediately abandon the De Minimis Asset listed in the Abandonment Notice and take any actions that are reasonable or necessary to abandon the subject property. If an Objection is timely received and filed and cannot be resolved between the parties, the De Minimis Asset that is the subject of the Objection will not be abandoned except upon Court order. C. Greater than $10,000,000 If the estimated gross proceeds of the De Minimis Asset to be abandoned is greater than $10,000,000, the Debtors will file a motion with the Court requesting approval of the abandonment. 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) ENVIRONMENTAL TRUST: Wants Exclusive Period Extended to Dec. 19 --------------------------------------------------------------- The Environmental Trust, Inc., asks the U.S. Bankruptcy Court for the Southern District of California to extend until Dec. 19, 2005, the time within which it has the exclusive right to file a plan of reorganization. The Debtor contends that: (1) the number of conserved properties, the environmental issues involved and the number of Federal, State and local entities having an interest in the case makes the case complex; (2) the conserved properties involved multiple transactions, different maintenance, monitoring, and management obligations, and a variety of both private and public parties; (3) the uniqueness of each property requires a very large number of classes but the environmental concerns required the Debtor to attempt to gain a broad base of support for a plan of reorganization; and (4) from the beginning of the case, the Debtor has solicited input from governmental agencies and creditors on designing a fair and feasible plan, which the Debtor has achieved with the plan if filed on July 29, 2005, 128 days after the petition date. The Debtor further discloses that even after filing the Plan, it accepted ongoing comments from governmental agencies and creditors resulting in the filing of an amended combined Disclosure Statement and Plan on Sept. 7, 2005. The Debtor says that given the complexity of the case and unique issues, it has acted diligently in proposing a plan and building the foundation for a consensual plan. The Debtor tells the Court that it believes the "cause" requirement of Section 1121(d) of the Bankruptcy Code is satisfied and asks the Court to grant its motion to extend its exclusive period. 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: Emergence Is Contingent on Pension Termination --------------------------------------------------------------- Falcon Products, Inc., and its debtor-affiliates want to terminate: 1) the Falcon Products, Inc., Retirement Plan; 2) the Shelby Williams Industries, Inc., Employees' Pension Plan; and 3) the Sellers & Josephson, Inc., Employees' Pension Plan. The Debtors believe that they satisfy the financial requirements under section 4041(c)(2)(B)(ii)(IV) of the Employee Retirement Income Security Act of 1974 for a distress termination of the pension plans. The success of the Debtors' Amended Chapter 11 Plan of Reorganization, confirmed on Friday, Oct. 7, 2005, is largely dependent on a $30 million exit facility that Whipporwill Associates, Inc., and Oaktree Capital Management, LLC, will provide. The exit lenders however, will only loan the money provided that the Debtors will eliminate its underfunding obligation to the Pension Plans. If the Debtors' pension plans are terminated, the PBGC will assume over $30 million in liabilities for unfunded pension benefits. However, the Pension Benefit Guaranty Corporation told the U.S. Bankruptcy Court for the Eastern District of Missouri, Eastern Division, that the Debtors have not presented sufficient evidence that they can't operate outside of bankruptcy protection without first terminating the three pension plans. Falcon reaffirms the need to terminate the plans. The Debtors tell the Court that with an underfunded pension on their shoulders, they won't be able to pay their debts, will never be able to emerge, much less successfully operate outside chapter 11. The PBGC said that it's premature for the Court to issue a resolution. It asked that Falcon come forward with a fully developed business plan that is based on credible and complete financial projections and other financial information which can support the termination of the pension plans. Falcon said that the Consolidation Plan discussed in its Disclosure Statement is precisely what the PBGC is asking for. The Consolidation Plan has been vetted by the Debtors, the DIP lender and their financial advisor, the Exit Facility Lenders, and the Official Committee of Unsecured Creditors and their financial advisors. In contrast, the PBGC has failed to submit any evidence that the financial projections are neither credible nor complete, the Debtors say. The Debtors emphasize that absent the infusion of new capital pursuant to the confirmed Plan, their operations will be jeopardized as cash will run out. The Debtors complain that the PBGC ignores the reality that their projections assume the $50 million exit loan and the completion of a business turnaround. Furthermore, the PBGC wanted the Debtors to seek a waiver of funding obligations for the next three years from the IRS. The Debtors argue that the IRS won't grant waivers without collaterals, which Falcon and its affiliates simply don't have. In addition, a short-term funding waiver won't protect the new investors because it will increase the total pension underfunding in the next five years. The $21 million obligation that would be due in four through seven years will necessitate the refinancing of the two-year Exit Facility and the Post-Confirmation Term B Loan. The result of which are likely bankruptcy filings for the Debtors. The Debtors insist that if the pension plans aren't terminated, they will be forced to liquidate. The pension plans would then be terminated, but the damage would be far more severe because many of the Debtors' employees will also lose their jobs, the communities in which they work will suffer the collateral financial damage of closed factories, and likely only the secured creditors will have any chance of recovery on their prepetition claims. Indeed, the PBGC's losses would be even greater in a liquidation, as there would be no recovery for general unsecured creditors, including the PBGC, the Debtors warn. 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. FEDDERS CORP: Looks for New Auditors to Replace Deloitte & Touche ----------------------------------------------------------------- Fedders Corporation's engagement of its independent registered public accounting firm, Deloitte & Touche LLP, ended on Sept. 30, 2005. Deloitte informed the Company on April 14, 2005, that it would not stand for reappointment as the Company's independent registered public accounting firm for the year ending Dec. 31, 2005, or for any of the 2005 quarterly reporting periods. Deloitte was engaged until Sept. 30, 2005, to: (1) audit the Company's financial statements: -- as of Dec. 31, 2003; -- for the transition period from Sept. 1, 2003, through Dec. 31, 2003; and -- the financial statements as of and for the year ended Dec. 31, 2004; and (2) audit management's assessment of the effectiveness of the Company's internal control over financial reporting and the effectiveness of the Company's internal control over financial reporting as of Dec. 31, 2004. Deloitte's audit reports, which include explanatory paragraphs for the audited financial statements: -- did not contain any adverse opinion or disclaimer of opinion; and -- were not qualified or modified as to uncertainty, audit scope or accounting principles. Deloitte's audit reports, however, contains an explanatory paragraph relating to a change in method of accounting for goodwill and intangible assets. Deloitte issued an adverse opinion with respect to the operating effectiveness of internal control over financial reporting as of Dec. 31, 2004. During the audited periods, there were no unresolved disagreements between the Company and Deloitte on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. The Company is in the process of securing the audit services of new independent registered public accountants for the year ending Dec. 31, 2005, and the year's quarterly reporting periods. The appointment of new independent registered public accountants will be placed in the Proxy for ratification by the Company's shareholders at the Company's next Annual Meeting. Fedders Corporation manufactures and markets worldwide air treatment products, including air conditioners, air cleaners, gas furnaces, dehumidifiers and humidifiers and thermal technology products. * * * As reported in the Troubled Company Reporter on July 5, 2005, Standard & Poor's Ratings Services lowered its corporate credit ratings on air treatment products manufacturer Fedders Corp. and Fedders North America Inc. to 'CC' from 'CCC'. At the same time, Fedders North America's senior unsecured debt rating was lowered to 'C' from 'CC'. S&P said the outlook remains negative. FOOD CONCEPT: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Food Concept Developers, Inc. 1925 Holmes Road Elgin, Illinois 60123 Bankruptcy Case No.: 05-48522 Type of Business: The Debtor develops and makes specialty dry powder mix. See http://www.fcd-inc.com/ Chapter 11 Petition Date: October 11, 2005 Court: Northern District of Illinois (Chicago) Judge: Pamela S. Hollis Debtor's Counsel: G. Alexander McTavish, Esq. Myler, Ruddy & McTavish 111 West Downer Plaza Aurora, Illinois 60506 Tel: (630) 897-8475 Fax: (630) 897-8076 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Chicago Sweeteners $414,771 1700 Higgins Road, Suite 610 Des Plaines, IL 60018 Flavorchem $233,277 1525 Brook Drive Downers Grove, IL 60515 Foodex $183,075 Attn: Fernando Rey Kilometro 10 Via Al Magdalena Manizales, Columbia Pacific Electronics $147,139 10200 US Route 14 Woodstock, IL 60098 Megasys, Inc. $142,914 8th Floor Mailroom 525 West Monroe Chicago, IL 60661 Paper Tubes & Sales Co. $124,308 1550 Hinton Dallas, TX 75235 Consolidated Press, Inc. $93,665 Quality Ingredients Corp. $88,844 Eastek International Corporation $66,701 Holmes Road Joint Venture $51,573 Indiana Sugars $45,415 Cross Container Corporation $42,026 DMH Ingredients, Inc. $40,448 Newco Enterprises, Inc. $36,316 Taico Design Products, Inc. $30,477 FedEx $30,550 Overwraps Packaging, L.P. $29,816 Manifest Funding Services $28,650 GE Capital Colonial Pacific $26,977 Chubb Group of Insurance Companies $22,245 FOSTER WHEELER: To Launch New Equity-for-Debt Exchange ------------------------------------------------------ Foster Wheeler Ltd. (Nasdaq: FWLT) intends to launch, within this week, an exchange offer and related consent solicitation for up to $150 million of the $261.5 million outstanding principal amount of its 10.359% Senior Secured Notes due Sept. 15, 2011. In connection with the exchange offer and consent solicitation, Foster Wheeler has entered into a lock-up agreement with certain holders of Senior Notes holding approximately $133.5 million, or 51.1 percent, of the outstanding principal amount of the Senior Notes. Under the terms of the offer, the Company intends to exchange 40.179 of its common shares for each $1,000 aggregate principal amount of Senior Notes including accrued and unpaid interest thereon. The Senior Notes are currently callable at a price of approximately 113.1 percent of each $1,000 aggregate amount of principal plus accrued and unpaid interest. On Oct. 7, 2005, the market value of each Senior Note approximated 112.5 percent. The number of common shares outstanding prior to the proposed exchange is 50,647,387. "This latest exchange offer is another significant step in our Company's deleveraging," said Raymond J. Milchovich, chairman, president and chief executive officer. "The three key accomplishments of this exchange offer are as follows: (1) Most importantly, this exchange will be accretive to expected 2006 earnings per share; (2) Up to $150 million principal amount of debt will be eliminated, reducing the Company's gross debt to its lowest level in more than 15 years; and (3) Up to $15 million of interest expense will be eliminated in 2006, all of which will flow to annual income. "I am very pleased that this exchange offer, together with our two previous successful exchange offers, establishes a much stronger financial foundation for Foster Wheeler, further enhancing our ability to deliver successful products and services that meet or exceed the expectations of our worldwide client base." Concurrently with the exchange offer, Foster Wheeler intends to solicit consents from holders of the outstanding Senior Notes to proposed amendments to the indenture under which the outstanding Senior Notes were issued. The amendments would eliminate the restrictive covenants contained in the Senior Note indenture but would not affect the security pledged to the Senior Notes or the guarantees. Under the terms of the consent solicitation, holders are being offered a consent fee of $10 for each $1,000 aggregate principal amount of Senior Notes. Mr. Milchovich added, "A successful consent solicitation will provide Foster Wheeler with an additional level of financial and operating flexibility." Lock-up Agreement Foster Wheeler has entered into a lock-up agreement with certain Senior Notes holders for approximately $133.5 million, or 51.1%, of the outstanding principal amount of the Senior Notes. This agreement requires such holders to tender their Senior Notes and deliver their consent to the indenture amendments within 10 business days after the exchange offer is commenced. The minimum consent requirement will be satisfied upon the delivery of consents by such holders. In the event that Foster Wheeler receives tenders in excess of $150 million, Foster Wheeler intends to exchange: (i) first, all notes tendered by holders that have signed the lock-up agreement and (ii) second, notes tendered by other holders pro-rata up to the $150 million limit. The consent fee will be paid on all notes tendered on, or prior to, the tenth business day. Foster Wheeler expects to have two settlement dates for the delivery of the common shares. The first will be for those holders with whom Foster Wheeler has entered into a lock-up agreement and shall be a date promptly following the tenth business day following the commencement of the exchange offer and consent solicitation. The second will be for non-locked-up holders and shall be a date promptly following the twentieth business day following the commencement of the exchange offer and consent solicitation. In each instance, Foster Wheeler expects the settlement date to be the fourth business day immediately following such closing. The Company expects to pay consent fees, if applicable, on the second settlement date. The exchange will result in an improvement in the Company's consolidated net worth, after taking into account a possible, primarily non-cash, accounting charge related to the exchange, by an amount approximately equal to the principal amount of the Senior Notes exchanged. The amount of the potential charge is dependent upon the principal amount of Senior Notes tendered, the principal amount of Senior Notes for which consents are received and the market value of Foster Wheeler's common shares exchanged at the time of closing of the offer. The charge reflects primarily the difference between the fair market value of the common shares to be issued and the book value of the debt exchanged. The actual charge will be determined at the closing date and will be recorded in the fourth quarter of 2005. Further details regarding the exchange offer and consent solicitation will be announced on the date the offer is commenced. Foster Wheeler Ltd. -- http://www.fwc.com/-- is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, upstream oil and gas, LNG and gas-to-liquids, petrochemical, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, New Jersey, USA. At July 1, 2005, Foster Wheeler Ltd.'s balance sheet showed a $490,198,000 stockholders' deficit compared to a $525,565,000 deficit at Dec. 31, 2005. GENERAL MOTORS: Moody's Reviews Low-B Ratings & May Downgrade ------------------------------------------------------------- Moody's Investors Service placed the Ba2 senior unsecured rating of General Motors Corporation and the Ba1 senior unsecured rating of General Motors Acceptance Corporation under review for a possible downgrade. Moody's said that the review is prompted by the concern that the potential pressure on GM posed by the Chapter 11 bankruptcy filing by Delphi Corporation, in combination with the continued erosion in US automotive market conditions, may severely constrain the company's ability to re-establish adequate levels of profitability and cash flow generation, particularly in its North American Automotive operations. The current estimated range of costs for GM stemming from the Delphi filing, combined with continued erosion of automotive demand, particularly for SUV's which are a critical part of GM's new product initiatives, have the potential to further impair the company's financial metrics. This could make it less likely that GM will be able to successfully restructure its North American operations in a manner that preserves a business position and credit metrics supportive of a Ba2 rating. Moody's review of GM will focus on the company's ability to successfully address a number of increasingly burdensome challenges that include: * managing potential risks that could result from the Delphi bankruptcy process; * achieving meaningful reductions in its cost structure, including potential relief from the UAW on health care costs; * stemming the decline in its US market share; * reducing employment levels and production capacity to better match its reduced share position in North America; * contending with an increasing shift in consumer preference from SUVs to smaller and more fuel efficient vehicles; and * reducing its dependence on price incentives to prop up its sagging market share position in the US. GM has indicated that it currently incurs a cost penalty of about $2 billion per year on North American supplies purchased from Delphi; and that a successful restructuring of Delphi could significantly reduce this cost penalty over the long-term. Moody's review will consider the magnitude of such potential savings and the timeframe in which they can be achieved. However, Moody's noted that GM also faces considerable near term financial risks in three areas as a result of the Delphi filing. First, Delphi could elect to reject individual GM supply contracts that are uneconomic; this could raise GM's near-term costs until the affected supplies are resourced. Second, GM's guarantee of the pension and healthcare benefits of former GM employees who transferred to Delphi could result in an increase in GM's annual legacy costs; these expenditures would grow over time. Third, under the most extreme circumstances, these legacy benefit costs could give rise to additional pension and OPEB liabilities of as much as $11 billion for GM. In order for GM to preserve the Ba2 rating, the company's business model and North American recovery plan will have to be capable of: 1) maintaining US market share of approximately 25%; 2) delivering strong market acceptance and sustaining healthy price realization for new products including the T900 light truck and SUV series; 3) earning automotive pretax profit in excess of $500 million for 2006; 4) generating at least breakeven automotive operating cash flow before pension, VEBA, GMAC dividends; 5) maintaining gross liquidity (cash and short-term VEBA balances) at or above $20 billion; and 6) preserving the sizable and stable dividend stream from GMAC. Sustaining the Ba2 rating will also require that GM's credit metrics, including GMAC's dividend and using Moody's standard adjustments, approximate: * EBITA margin exceeding 2%; * interest coverage of 1.5 times; and * free cash flow to debt in the mid-single digits range. Moody's Ba1 rating of GMAC represents a one-notch distinction from GM's rating. GMAC's condition and performance is closely tied to the fortunes of GM, due to the direct and indirect exposures and business connections between the two companies. The impact of the Delphi filing on GM's rating therefore potentially has a flow- through impact on Moody's view of GMAC's credit profile. GMAC's one-notch uplift from the GM rating reflects Moody's view that GMAC's unsecured creditors would likely experience a lower loss given default compared with the unsecured creditors of GM, due to the greater liquidity of GMAC's high quality assets. Moody's believes that any potential for increasing the notching would involve widening the probability of default between GM and GMAC through actions that change governance and ownership structures. During the review Moody's will examine the impact of any changes in GM's condition on GMAC's intrinsic credit profile, as well as the nature and extent of the various interconnections on the magnitude of the notching. General Motors Corporation, headquartered in Detroit, Michigan, is the world's largest producer of cars and light trucks. GMAC, a wholly-owned subsidiary of GM, provides retail and wholesale financing in support of GM's automotive operations and is one of the world's largest non-bank financial institutions. GENERAL MOTORS: S&P Lowers Corporate Credit Rating to BB- from BB ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on General Motors Corp. to 'BB-' from 'BB' and its short-term corporate credit rating to 'B-2' from 'B-1'. These ratings remain on CreditWatch with negative implications, where they were placed on October 3. The ratings of General Motors Acceptance Corp., and all GMAC-related entities, including Residential Capital Corp. are not changed. These ratings remain on CreditWatch but the implications are changed from negative to developing, which means that the ratings could be raised or lowered. The potential for downgrades of GMAC and ResCap does not reflect deterioration in their operating performance or financial condition, but stems strictly from the downgrade of parent GM. The potential for upgrades depends on these entities achieving substantial separation from their parent -- through strategic actions that would alter the ownership and control of the subsidiaries. Such an outcome now seems more likely to occur, given the increased challenges that GM is facing. Consolidated debt outstanding totaled $284 billion at June 30, 2005. "The downgrade follows Delphi Corp.'s bankruptcy filing, repercussions of which could impede GM's efforts to turn around its ailing North American automotive operations," said Standard & Poor's credit analyst Scott Sprinzen. GM will likely face demands from Delphi for price relief on components GM sources from Delphi. Absent such price concessions, GM's operations could be disrupted by actions on the part of Delphi to reject certain supply contracts with GM. GM also is exposed to the risk of supply disruptions caused by labor strife at Delphi, as Delphi seeks to downsize its workforce and reduce wage rates. In addition, developments at Delphi could adversely affect GM's own labor relations, at a time when GM continues to seek concessions from the UAW to reduce GM's burdensome health care costs. Moreover, GM will likely have to assume a portion of Delphi's pension and retiree medical obligations -- obligations which GM has guaranteed. GM may ultimately be able to reduce its purchased materials costs as a result of Delphi's restructuring and GM's ability to transfer components sourcing to other suppliers; however, any such saving will take a number of years to materialize, at best. The continuing CreditWatch review reflects other concerns about the state of GM's North American business, amid sharply deteriorating product mix and sales volume, and prospects for persisting severe pricing pressure. S&P believes soaring gasoline prices after Hurricanes Katrina and Rita are leading to an accelerating decline in demand for SUVs. GM will soon launch a family of all-new midsize and large SUVs. Given GM's disproportionate reliance on SUV-related earnings, its ability to return to meaningful profitability in its automotive business will be heavily influenced by the success of these new models, despite GM's efforts to strengthen its product offerings in other segments. GTC TELECOM: Squar Milner Raises Going Concern Doubt ---------------------------------------------------- Squar, Milner, Reehl & Williamson, LLP, expressed substantial doubt about GTC Telecom Corp.'s ability to continue as a going concern after it audited the Company's financial statements for the years ended June 30, 2005 and 2004. The auditing firm points to the Company's: -- recurring losses; -- $10.7 million accumulated deficit; and -- almost $200,000 stockholder's deficit at June 30, 2005. GTC Telecom's assets increased by $46,663 to $1,631,149 at June 30, 2005, from $1,584,486 at June 30, 2004. Liabilities decreased by $6,407,798 to $1,742,983 at June 30, 2005 from $8,150,781 at June 30, 2004. Stockholders' deficit decreased by $6,480,067 to $198,342 at June 30, 2005, from $6,678,409 at June 30, 2004. Net income increased $5,686,390 to $5,134,123 for the year ended June 30, 2005, from a $552,267 net loss of for the year ended June 30, 2004. GTC Telecom attributes the net income increase in 2005 primarily as a result of a gain on extinguishment of debt. MCI Debt Extinguishment GTC Telecom recorded a $6,301,935 gain on extinguishment of debt due to a $6,934,411 credit resulting from a settlement with MCI WorldCom Network Services, Inc., its former underlying network provider. MIC had issued a default notice against the Company in July 2004 for debts owing from a standing telecommunications and data services agreement. In Feb. 2005, the Company negotiated the settlement of all amounts due to MCI totaling approximately $7.7 million, in exchange for a $769,000 payment. The Company paid the settlement amount and satisfied the terms of the settlement on May 23, 2005. GTC Telecom (OTCBB: GTCC) -- http://www.gtctelecom.com/-- is a national communications provider offering telecommunication services such as local and long distance telephone services, Internet related services, and business process outsourcing services. The Company has focused on selling telecommunications products, including GTC Telecom Long Distance, GTC Internet, GTC Teleconferencing, Calling Planet and ecallingcards.com pre-paid calling cards. HIGH SPRUCE: Case Summary & 16 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: High Spruce Associates, LP 65 Spruce Street Newark, New Jersey 07102 Bankruptcy Case No.: 05-46330 Chapter 11 Petition Date: October 10, 2005 Court: District of New Jersey (Newark) Debtor's Counsel: Joseph J. Haspel, Esq. Joseph J. Haspel PLLC 40 Matthews Street, Suite 201 Goshen, New York 10924 Total Assets: $2,874,185 Total Debts: $4,552,281 Debtor's 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ City of Newark Real Estate Taxes $2,751,726 920 Broad Street Newark, NJ 07102 US Department of HUD Real Estate $1,458,824 One Newark Center Mortgage Newark, NJ 07102 City of Newark Water Business Debt $96,000 Division of Water Accounting P.O. Box 538 Newark, NJ 07101-0538 PSE & G $49,106 Broadway Premium Funding Corp. Business Debt $27,766 ATA Construction, Inc. Business Debt $27,043 Tullo Oil $24,596 Mitchell Supreme Fuel Oil Co. $21,999 Eichler Bergsman & Co., LLP $9,000 CS Brown Co. Mechanics Lien $8,152 Bureau of Housing Inspection Business Debt $7,500 Canawill, Inc. Business Debt $5,643 Druckman & Hill, LLP $5,500 Vincent Carter $3,500 Feinstein Raiss & Kelin $3,466 NJ DEP $582 INTERNATIONAL PAPER: Completes $80-Mil Buy-Out of Compagnie Shares ------------------------------------------------------------------ International Paper completed the acquisition of a majority share of Compagnie Marocaine des Cartons et des Papiers for approximately $80 million cash plus assumed debt of approximately $40 million. International Paper will immediately begin the process of integrating CMCP's four box plants and one recycled containerboard mill into its European Container Division, which comprises 25 box plants and two corrugated containerboard mills in France, Ireland, Italy, Spain, the United Kingdom, and through a joint venture in Turkey. Compagnie Marocaine des Cartons et des Papiers is a Moroccan paper packaging company. International Paper Inc. -- http://www.internationalpaper.com/-- is the world's largest paper and forest products company. Businesses include paper, packaging, and forest products. As one of the largest private forest landowners in the world, the company manages its forests under the principles of the Sustainable Forestry Initiative (R) (SFI) program, a system that ensures the continual planting, growing and harvesting of trees while protecting wildlife, plants, soil, air and water quality. * * * As reported in the Troubled Company Reporter on July 22, 2005, Moody's Investors Service placed International Paper Company's ratings on review for possible downgrade. International Paper Company: * Senior Unsecured Baa2 * Subordinate Shelf (P)Baa3 * Preferred Shelf (P)Ba1 * Commercial Paper P-2 International Paper Capital Trust II: * Bkd Preferred Stock Baa3 * International Paper Capital Trust III: * Bkd Preferred Shelf Baa3 International Paper Capital Trust IV: * Bkd Preferred Shelf (P) Ba1 * International Paper Capital Trust VI: * Bkd Preferred Shelf (P) Ba1 Champion International Corporation: * Senior Unsecured Baa2 * Federal Paper Board Co., Inc. * Senior Unsecured Baa2 Union Camp Corporation: * Senior Unsecured Baa2 INTERNATIONAL RECTIFIER: Revises First Quarter Financial Outlook ---------------------------------------------------------------- International Rectifier Corporation (NYSE:IRF) reported that, based on preliminary data, revenue for its fiscal 2006 first quarter ending September is expected to be approximately $273 million, down about 3% from June-quarter revenue of $281.8 million. Gross margin in the September quarter is expected to be approximately 40.5% versus 43.5% in the June quarter. On the July 28 conference call, IR had guided revenue to be flat to up 4% and gross margin to be flat to down 2% points in the September quarter. Adjusted earnings per share on a diluted basis is expected to be $0.40-0.42 for the September quarter. Including charges from previously announced restructuring and severance activities, GAAP earnings per share on a diluted basis is expected to be $0.35-0.37. "Although demand for our Focus products exceeded expectations in the September quarter, a large percentage of the orders came late in the quarter and the product mix was different than what was forecasted," CEO Alex Lidow said. "At the same time, the company did not have the incremental capacity to respond to the mix change by the end of the quarter. Additional planned capacity is scheduled to be brought online by the end of the calendar year. "We expect revenue to be up in the December quarter due to strong demand for our Focus products and a favorable seasonal pattern." International Rectifier -- http://www.irf.com/-- is a world leader in power management technology. IR's analog and mixed signal ICs, advanced circuit devices, integrated power systems and components enable high performance computing and reduce energy waste in motors, the world's single largest consumer of electricity. Leading manufacturers of computers, energy efficient appliances, lighting, automobiles, satellites, aircraft, and defense systems rely on IR's power management benchmarks to power their next generation products. * * * The Company's 4-1/4% Convertible Subordinated Notes due 2007 carry Standard and Poor's Rating Services' B+ rating. INTREPID TECHNOLOGY: Jones Simkins Raises Going Concern Doubt ------------------------------------------------------------- Jones Simkins, PC, expressed substantial doubt about Intrepid Technology and Resources, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended June 30, 2005. The auditing firm points to the Company's recurring losses, stockholders deficit and negative cash flows from operations. Jones Simkins replaced Eide Bailly LLP, fka Balukoff Lindstrom & Co., PA., as Intrepid Technology's independent auditors on July 6, 2005. Eide Bailly reported on the Company's financial statements for the years ended June 30, 2004, 2003, and 2002. Eide Bailly had issued unqualified reports following its audit of the Company's financial statements for fiscal 2004, 2003 and 2002. Fiscal 2005 Results In its Form 10-KSB for the fiscal year ended June 30, 2005, submitted to the Securities and Exchange Commission, Intrepid Technology reports a $1,471,208 net loss for fiscal 2005 compared to a $597,961 net loss in fiscal 2004. The Company's 2005 operating revenue was $399,153 compared to $2,077,631 in 2004. The Company's balance sheet showed $1,204,152 of assets at June 30, 2005, and liabilities totaling $1,680,924. As of June 30, 2005, the Company had a $599,197 working capital deficit compared to a $309,465 deficit for the previous year ending June 30, 2004. Based in Idaho, Intrepid Technology and Resources, Inc., (IESV:OB) -- http://www.intrepid21.com/-- specializes in renewable energy production projects. The Company's primary business is developing, constructing, and operating a portfolio of projects in the Renewable Energy sector, with a special emphasis on production of biofuels. Biofuels are combustible fuels such as biogas (methane), biodiesel, ethanol and hydrogen that are produced from biomass -- i.e. plant-derived organic matter. The Company provides the overall management and engineering for planning, building and operation - and owning or co-owing - biofuels production facilities. KAISER ALUMINUM: Wants Stay Enforced Against Insurers ----------------------------------------------------- Gregory M. Gordon, Esq., at Jones Day, in Dallas, Texas, relates that at the September 1, 2005, Disclosure Statement Hearing, certain insurers complained that the confirmation schedule set by the U.S. Bankruptcy Court for the District of Delaware did not provide them with enough time to conduct discovery and litigate issues relating to Kaiser Aluminum Corporation and its debtor- affiliates' pending plan of reorganization. The Insurers alleged that the Debtors' Plan is not "insurance neutral." At the omnibus hearing held on September 26, 2005, the Insurers also complained that some of the deadlines in a proposed pretrial scheduling order were too short and did not provide them with enough time to conduct discovery. Hence, the Court agreed to extend some of those deadlines. Consistent with their asserted intention to litigate alleged confirmation issues, including the proposed transfer of insurance rights under the Debtors' Plan, the Insurers filed a number of pleadings with the Bankruptcy Court, including: -- a motion for more definite statement seeking certain modifications to the Debtors' plan of reorganization; -- a motion for access to Bankruptcy Rule 2019 statements; and -- an omnibus objection to silica personal injury claims. The Insurers also served extensive discovery on the Debtors, the statutory committee of asbestos claimants, the legal representative for future asbestos claimants and the legal representative for future silica and coal tar pitch volatiles claimants. At the same time that the Insurers were leading the Court, the Debtors and other parties to believe that they were intending to litigate plan of reorganization issues with the Bankruptcy Court, including the validity of the insurance rights transfer, the Insurers were separately scheming to subvert the confirmation process by requesting the California state court presiding over certain insurance coverage litigation to enter an order preventing the transfer, pursuant to the plan, of the Debtors' rights under the applicable insurance policies, Mr. Gordon says. Specifically, on September 13, 2005, the Insurers asked Judge Peter J. Busch of the Superior Court of the State of California, City and County of San Francisco, for a declaration that the "No Assignment" clauses in policies they issued to Kaiser Aluminum & Chemical Corporation prevent the Debtors from assigning the Policies without the Insurer's consent. Mr. Gordon asserts that the Insurers' state court motion is a willful, blatant violation of the automatic stay. Through their motion, the Insurers seek: -- to preempt the pending confirmation process in the Debtors' cases by seeking a state court ruling on an issue that is properly before the Bankruptcy Court as a matter of federal bankruptcy law; and -- state court relief despite representations to the Bankruptcy Court that the proposed transfer of insurance rights is a plan confirmation issue and the filing or submission of a plethora of pleadings and discovery with the Bankruptcy Court. Mr. Gordon contends that the Insurers' misguided actions are part of an obvious effort to sidestep the Third Circuit Court of Appeals' recent ruling in the case of Combustion Engineering that rights under insurance policies may be transferred to a trust notwithstanding anti-assignment provisions in the applicable insurance policies. The Insurers' actions in California state court violate Section 362(a)(3) of the Bankruptcy Code and constitute a knowing, purposeful attempt to usurp the Bankruptcy Court's exclusive jurisdiction over plan confirmation issues, Mr. Gordon adds. Thus, the Debtors ask the Court to enforce the automatic stay and direct the Insurers to dismiss their state court motion. Because the Insurers' actions have been deliberate and willful, the Debtors also ask the Court to sanction the Insurers by requiring them to reimburse the Debtors for the attorneys' fees and expenses incurred in filing and litigating the stay request. 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) KRONOS ADVANCED: Sherb & Co. Expresses Going Concern Doubt -------------------------------------------------------- Sherb & Co., LLP, expressed substantial doubt about Kronos Advanced Technologies, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended June 30, 2005 and 2004. The auditing firm points to the Company's working capital deficiency and significant losses. Kronos' total assets at June 30, 2005 were $3,959,837 compared with $2,497,000 at June 30, 2004. Liabilities at June 30, 2005, total approximately $7,820,217 compared with $3,880,336 at June 30, 2004. At June 30, 2005, the Company had a $3.6 million working capital deficit, compared to a $1.2 million deficit at and June 30, 2004. This working capital deficit is primarily due to short-term borrowings from Cornell Capital Partners. For the fiscal year ended June 30, 2005 and June 30, 2004, Kronos had an operating cash flow deficit of $1.8 million and $2.8 million, respectively. In addition to currently not having sufficient financial resources to fund its operations, the Company cannot pay certain existing obligations, or the obligations of its subsidiary. Kronos incurred a net loss of $7.1 million for the fiscal year ended June 30, 2005 compared to a net loss of $2.5 million for the fiscal year ended June 30, 2004. The Company had accumulated deficit of $27.1 million at June 30, 2005. HoMedics Debt Restructuring Kronos reported a $3,857,000 one-time non-cash charge to operations for fiscal 2005 following the debt restructuring agreement with HoMedics, the Company's standalone consumer products partner. As a result, net operating loss increased during the year ended June 30, 2005 to $2,717,000 as compared with $1,935,000 for the prior year. HoMedics agreed in October 2004 to extend another $1 million in debt financing to Kronos and modify the quarterly debt payments and the maturity date for $2.4 million of the Company's existing debt. Quarterly payments will be due on Kronos' receipt of royalty payments from HoMedics' sale of Kronos-based air purification products, or two years. The maturity date of the debt has been extended to October of 2009. The interest rate will remain at 6%. As part of the restructuring and additional debt financing provided by HoMedics, Kronos has issued warrants to HoMedics to purchase 26.5 million shares of Kronos Common Stock, potentially increasing HoMedics equity position in Kronos to 30% on a fully diluted basis. Through its wholly owned subsidiary, Kronos Air Technologies, Inc., Kronos Advanced Technologies, Inc., -- http://www.kronosati.com/-- has developed a new, proprietary air movement and purification system that utilizes high voltage electronics and electrodes to silently move and clean air without any moving parts. Kronos is actively commercializing its technology for standalone and embedded products across multiple residential, commercial, industrial and military markets. The Company's business strategy includes a combination of building internal capabilities, establishing strategic alliances and structuring licensing arrangements. Kronos is located in Belmont, Massachusetts. LEVITZ HOME: Files for Chapter 11 Protection in S.D. New York ------------------------------------------------------------- Levitz Home Furnishings, Inc., filed for protection under chapter 11 of the U.S. Bankruptcy Code in the Southern District of New York. The company will continue to operate its retail furniture stores in the ordinary course of business while it restructures. The company filed the petition in order to complete the cost- saving and other initiatives that began in April 2005 and to provide customers, vendors and employees with the certainty of performance that they deserve. The company will reap the benefits of these initiatives through the infusion of $25 million in near- term financing and the opportunity to raise additional capital through a chapter 11 reorganization or sale as a going concern. These initiatives have already reduced costs by almost $40 million through: -- the rebranding of certain Seaman's stores under the Levitz name; -- the elimination of supply chain inefficiencies; and -- the reduction of general overhead expense. The filing will also allow the company to rationalize its capital structure, review its operations and make market decisions that maximize value for all parties and ensure that the company remains a leading furniture retailer for years to come. DIP Financing The company has arranged and sought Bankruptcy Court approval for a $90 million debtor-in-possession credit facility led by GE Commercial Finance, which includes an incremental credit facility of $25 million arranged by Prentice Capital Management LP and provided by its affiliates. These facilities will provide the company with sufficient liquidity to operate its business on an ongoing basis. "[Yester]day's steps are part of an important process to strengthen Levitz Home Furnishings," said C. Mark Scott, President and acting Chief Executive Officer of Levitz Home Furnishings, Inc. "With the commitment of financing from an experienced retail specialist like Prentice Capital Management in place, we are able to implement a restructuring plan that will provide us a platform for future success. Our stores are open for business, and we appreciate the support of our valued customers, vendors, lenders and employees." First Day Motions To ensure a smooth transition into bankruptcy and minimize the effects on its ordinary business operations, the company also has filed for Bankruptcy Court approval of various "first-day" motions. In order to ensure that customers are not adversely affected by the company's transition into chapter 11, the company has requested that the Bankruptcy Court approve its plans to continue all customer programs, including fulfillment of existing orders and honoring of deposits. The company has also asked the Court to authorize it to maintain payroll and employee benefits, and implement a severance program in the event that any employees are laid off in the course of its restructuring. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). Richard Engman, Esq., and David G. Heiman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated between $1 million to $10 million in assets and more than $100 million in debts. LEVITZ HOME: Case Summary & 40 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Levitz Home Furnishings, Inc. aka LHFI 300 Crossways Park Drive Woodbury, New York 11797 Bankruptcy Case No.: 05-45189 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Paralax Development Industries, Inc. 05-45143 Levitz Furniture Corporation 05-45194 Levitz Furniture, LLC 05-45198 Levitz Shopping Service, Inc. 05-45200 RHM, Inc. 05-45204 John M. Smyth Company 05-45207 Levitz Furniture Company of Delaware, Inc. 05-45211 Levitz Furniture Company of Midwest, Inc. 05-45212 Levitz Furniture Company of Washington, Inc. 05-45213 Seaman Furniture Company, Inc. 05-45214 Seaman Furniture Company of Pennsylvania, Inc. 05-45216 Seaman Furniture Company of Union Square, Inc. 05-45217 Type of Business: Levitz Home Furnishings, Inc., is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. See http://www.levitz.com Chapter 11 Petition Date: October 11, 2005 Court: Southern District of New York (Manhattan) Judge: Burton R. Lifland Debtors' Counsel: Richard Engman, Esq. Jones Day 222 East 41st Street New York, New York 10017 Tel: (212) 326-3939 Fax: (212) 755-7306 -- and -- David G. Heiman, Esq. Jones Day North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Tel: (216) 586-3939 Debtors' Financial Advisor: The Blackstone Group Estimated Assets: $1 Million to $10 Million Estimated Debts: More than $100 Million Debtor's 40 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ US Bank $130,000,000 100 Wall Street, Suite 1600 New York, NY 10005 Tel: (212) 361-6184 Decoro USA Ltd. $7,727,929 1403 Eastchester Drive Suite 104 High Point, NC 27265 Klaussner-Hukla $6,754,327 P.O. Box 60475 Charlotte, NC 28260 Tel: (336) 625-6175 ext. 8208 Palliser Furniture Corp. $6,706,868 P.O. Box 33020 Detroit, MI 48232 Tel: (204) 988-5600 Berkline, LLC $5,788,184 P.O. Box 6003 Morristown, TN 37815 Tel: (423) 585-4473 Sealy Mattress Company $4,205,677 P.O. Box 13709 Newark, NJ 01788-0709 Tel: (336) 861-3570 Steve Silver Company $3,748,683 P.O. Box 1709 Forney, TX 75126 Tel: (888) 400-8113 ext. 112 CARAT $3,625,341 Three Park Avenue New York, NY 10016 Tel: (212) 591-9196 Serta Matt/ $3,462,866 National Bedding Co. LLC 5401 Trillium Blvd Suite 250 Hoffman Estates, IL 60192 Tel: (630) 285-9300 Life Style Furniture Manufacturing Inc. $2,911,223 P.O. Box 146 Okolona, MA 38860 Tel: (800) 677-3878 ext. 102 Racanelli Construction Co. Inc. $2,803,897 1895 Walt Whitman Road, Suite 1 Melville NY 11747 Tel: (631) 454-1010 John Turano & Sons, Inc. $2,247,754 1532 South Washington Avenue Piscataway, NJ 08854 Tel: (732) 424-7000 Legacy Classic Furniture $2,192,947 6530 Judge Adams Road Whitsett NC 27377 Tel: (336) 449-4600 ext. 222 The Valspar Corporation $2,131,699 4999 36th Street, Southeast P.O. Box 88010, 49518 Grand Rapids, MI 49512 Tel: (616) 285-7830 Klaff-Realty L.P. $2,002,767 122 South Michigan Avenue, Suite 1000 Chicago, IL 60603 Tel: (312) 360-1234 Douglas Furniture of California $1,823,216 2559 Paysphere Circle Chicago, IL 60674-2559 Tel: (310) 643-7200 Joseph Eletto Transfer Inc. $1,314,389 600 West John Street, Suite 200 Hicksville, NY 11801 Tel: (516) 487-3950 Mike Cims Inc. $1,262,003 2300 East Curry Street Long Beach, CA 90805 Tel: (562) 428-8390 Brookwood Furniture Co. $1,195,687 P.O. Box 540 Pontotoc, MS 38863 Tel: (770) 664-6112 Benchcraft LLC $956,208 P.O. Box 6003 Morristown, TN 37815 Universal Furniture International $943,448 P.O. Box 751558 Charlotte, NC 28275-1558 Prime Resources/Harbor Home Int. $933,206 1805 Elmdale Avenue Glenview, IL 60025 Adplex Rhodes $849,368 P.O. Box 99888 Tacoma, WA 98499 Progressive Furniture Inc. $811,456 P.O. Box 633833 Cincinnati, OH 45263-3833 Good Bedroom $762,848 1118 East 223rd Street Carson, CA 90745 Bush Industries, Inc. $752,165 One Mason Drive P.O. Box 460 Jamestown, NY 14702-0129 Sofatrend $728,486 1790 Dornoch Court San Diego, CA 92154 Samuel Lawrence Furniture Co. $637,441 SDS 12-1432 P.O. Box 86 Minneapolis, MN 55486-1432 Kellermeyer Building Services $618,570 1575 Henthorne Maumee, OH 43537 Sofa Art by Nicoletti $541,203 816 North Elm Street, Suite 101 Highpoint, NY 27282 Bassett Mirror Co. $497,895 P.O. Box 60756 Charlotte, NC 28260 Viewpoint Leather Works $490,282 1590 South Milwaukee Avenue Libertyville, IL 60048 R B & G Construction Co. Inc. $472,957 3760 Orange Avenue Long Beach, CA 90807 Matrix/PR I LLC $468,100 Forsgate Drive CN 4000 Cranbury, NJ 08512 Louise Partners $466,750 919 Conestoga Road Building Two Suite 106 Rosemont, PA 19010-0000 New Generations $462,576 The CIT Group P.O. BOX 1036 Charlotte, NC 28201 Newsday Inc. $456,286 235 Pinelawn Road Melville, NY 11747-4250 Direct Marketing Worldwide $448,474 28000 Meadow Drive Evergreen, CO 80439 LJL Marketing $443,346 495 Main Street Hamden, CT 06514 Schnading Corp. $440,150 1111 East Touhy, Suite 500 Des Plaines, IL 60018 MIRANT CORP: Court Approves Plan Solicitation Procedures -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved Mirant Corporation and its debtor-affiliates' proposed procedures in soliciting acceptances for their plan of reorganization. Bankruptcy Services, LLC, and Financial Balloting Group, LLC, will assist the Debtors in the solicitation, balloting and tabulation of the votes of the Debtors' creditors and equity holders on the Plan. A. Proposed Voting Procedures a. If a claim is deemed allowed pursuant to the Plan, then that claim will be allowed for voting purposes; b. If a filed proof of claim asserts a claim in a wholly undetermined or unliquidated amount or is docketed in BSI's database as of the Record Date in the amount of $0, then that claim will be allowed for voting purposes as a general unsecured claim only in the amount of $1.00; c. If a filed proof of claim asserts a claim in a partially undetermined or unliquidated amount, then that claim will be allowed for voting purposes only in the amount of the known or liquidated portion of the claim; d. If a claim has been estimated and allowed by Court order, then that claim will be allowed for voting purposes in the amount approved by the Court; e. If a claim is listed in the Debtors' Schedules as contingent, unliquidated, or disputed and a proof of claim was not timely filed, then that claim will be disallowed for voting purposes; f. If the Debtors object to a claim, then that claim will be disallowed for voting purposes, as applicable; g. The allowed amount of any proof of claim for voting purposes will be the amount as docketed in BSI's claims database as of the Record Date; h. Classification of a claim will be determined based on the classification as docketed in BSI's claims database as of the Record Date; provided, however, that any claims for which BSI was unable to identify the classification will be classified as general unsecured claims; i. If a single proof of claim has been filed against multiple Debtors, then that claim will be allowed for voting purposes only against the Debtor as docketed in BSI's claims database as of the Record Date; j. If a claim or equity interest is allowed pursuant to a Court-approved settlement, then that claim will be entitled to vote on the Plan in accordance with the terms of that settlement; k. If a proof of claim asserts a claim that is not in U.S. dollars, that claim will be treated as unliquidated and allowed for voting purposes only in the amount of $1.00; l. If a proof of claim is filed late, then that claim will be disallowed for voting purposes only; m. If a proof of claim does not list a Debtor or the Debtor is unidentifiable on the proof of claim, then that claim will be disallowed for voting purposes; n. If a claim is disallowed or equitably subordinated, then that claim will be disallowed for voting purposes only; o. If the Debtors schedule a claim and the creditor filed a proof of claim superseding that scheduled claim, the scheduled claim is deemed superseded and that scheduled claim will be disallowed for voting purposes; p. If a union representative or plan administrator of an employee benefit program filed a claim on behalf of its constituents, then: (i) that constituent creditor will only be entitled to vote its claim in the amount and classification set forth in the claim filed by the union representative or plan administrator and any other separate claim filed by a constituent creditor based on the same facts and circumstances alleged in the claim filed by the union representative or plan administrator will be disallowed for voting purposes; and (ii) the union representative or plan administrator will not be entitled to vote any amount on account of its proof of claim; and q. The Debtors may seek a Court order disallowing a claim for voting purposes at anytime prior to the Confirmation Hearing. B. Temporary Allowance Motions If any claimant seeks to challenge allowance or disallowance of its claim for voting purposes that entity is directed to serve on the Debtors and file with the Court a motion seeking entry of an order pursuant to Bankruptcy Rule 3018(a) temporarily allowing that claim only for purposes of voting to accept or reject the Plan. C. Solicitation Procedures a. Record Date The Court set September 28, 2005, as the record date for all purposes under Rules 3017(d) and 3018(a) of the Federal Rules of Bankruptcy Procedure. b. Proposed Form of Ballots The Ballots are based on Official Form No. 14 pursuant to Rule 3018(c) of the Federal Rules of Bankruptcy Procedure. The Form have been modified to provide clear instructions to the Debtors' creditors as to voting procedures, the vote tabulation process and the effects of casting a particular Ballot. The appropriate Ballot forms will be distributed to holders of claims according to the nature of their claims. c. Public Securities Claims The Debtors will solicit votes from creditor constituencies entitled to vote directly on the Plan and whose underlying claims arise from debt securities, equity interests, or similarly situated obligations in which multiple creditors hold a portion of the ultimate claim or equity interests. The Debtors propose that the Solicitation Packages be sent in a manner customary in the securities industry so as to maximize the likelihood that beneficial holders of the Public Securities will receive the materials in a timely fashion. The balloting process for the Public Securities is multiple-tiered because the Debtors need to solicit votes through the trustee, agent bank, broker, dealer or other agents or nominees for the ultimate beneficial holders of the claims or interests. d. Solicitation Packages and Distribution Procedures The Solicitation Packages will contain copies of: -- the Disclosure Statement Order; -- the confirmation hearing notice; -- an applicable Ballot, together with the applicable voting instructions and a pre-addressed postage pre-paid return envelope; and -- a CD-ROM containing the Disclosure Statement. To facilitate the distribution to the Beneficial Holders, the Debtors ask that the Court order each of the Voting Nominees to distribute Solicitation Packages to the Beneficial Holders within five business days of the Voting Nominee's receipt of the Solicitation Packages. e. Publication Notice The Debtors will cause the Confirmation Hearing Notice to be published once in The Wall Street Journal (National Edition), The New York Times (National Edition), USA Today and Financial Times. Additionally, the Debtors will publish the Confirmation Hearing notice electronically at http://www.txnb.uscourts.gov/ -- and -- http://www.mirant-caseinfo.com/ D. Proposed Tabulation Procedures a. Votes will be tabulated both on an individual debtor basis for each relevant class and on a consolidated basis for each relevant class within a proposed consolidated group. b. A vote will be disregarded if the Court determines that a vote was not solicited or procured in good faith or in accordance with the provisions of the Bankruptcy Code. c. Any Ballot that is returned to the Solicitation and Tabulation Agent, but which is unsigned, or has a non- original signature, will not be counted, unless otherwise ordered by the Court. d. All votes to accept or reject the Plan must be cast by using the appropriate Ballot and in accordance with the voting instructions. e. A holder of claims and/or equity interests in more than one class must use separate Ballots for each class of claims and/or equity interests. f. If multiple Ballots are received for a holder of claims voting the same claims, the last Ballot received, as determined by the Solicitation Agent or the Tabulation Agent will be the Ballot that is counted. g. If multiple Ballots are received from different holders purporting to hold the same claim or equity interest, the last Ballot received prior to the Voting Deadline will be the Ballot that is counted. h. If multiple Ballots are received from a holder of a claim or equity interest and someone purporting to be his, her, or its attorney or agent, the Ballot received from the holder of the claim or equity interest will be the Ballot that is counted, and the vote of the purported attorney or agent will not be counted, unless otherwise ordered by the Court. i. A Ballot that is completed, but on which the claimant or holder of equity interest did not indicate whether to accept or reject the Plan or that indicates both an acceptance and rejection of the Plan will not be counted, unless otherwise ordered by the Court. j. Any Ballot that partially accepts and partially rejects the Plan will not be counted, unless otherwise ordered by the Court. k. A holder of claims or equity interest will be deemed to have voted the full amount of its claim in each class and will not be entitled to split its vote within a class. l. If no votes to accept or reject the Plan are received with respect to a particular class, that class is deemed to have voted to accept the Plan. m. Ballots sent by facsimile, telecopy transmission or electronic mail, unless otherwise ordered by the Court, will not be accepted. n. For the purpose of voting on the Plan, the Solicitation and Tabulation Agent will be deemed to be in constructive receipt of any Ballot timely delivered to any address that the Solicitation and Tabulation Agent designates for the receipt of Ballots cast on the Plan. 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. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) MOTHERS WORK: S&P Lowers Corporate Credit Rating to B- from B ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and unsecured note ratings on Philadelphia-based Mothers Work Inc. to 'B-'from 'B'. The outlook remains negative. "The rating action is based on Mothers Work's warning of a wider-than-expected loss for the fourth quarter ended Sept. 30, 2005, weakening credit protection measures, as well as expectations that the company's operating performance will remain pressured due to increased competition," said Standard & Poor's credit analyst Ana Lai. Although declines in comparable-store sales at the specialty maternity apparel retailer have slowed in recent months, performance was hurt by intense promotions in response to a more severe clearance environment for maternity apparel. Weaker-than- planned sales and lower gross margins are expected to contribute to wider-than-expected losses in the fourth quarter ended Sept. 30, 2005. As a result, credit measures are expected to weaken, with total debt to EBITDA increasing to about 7.7x for the fiscal year ended Sept. 30, 2005, from about 7.2x for the 12 months ended June 30, 2005. The speculative-grade ratings on Mothers Work reflect: * the high business risk associated with the company's participation in the narrowly defined maternity segment of the apparel retailing industry; * persistently weak operating performance; and * very high debt leverage. Mothers Work has experienced weak sales trends for the past several quarters, with comparable-store sales down 2.5% in fiscal year ended September 30, 2005, due to increased competitive pressure from mass merchants and other specialty retailers. Competition has especially intensified in the moderate segment, where the company derives the majority of its sales through its Motherhood stores. NORTHWEST AIRLINES: Wants to Employ Ordinary Course Professionals ----------------------------------------------------------------- Northwest Airlines Corporation and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's permission to employ and compensate certain professionals utilized in the ordinary course of their business. According to Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, these professionals render a wide range of legal, tax, real estate, finance, insurance, and other services for the Debtors that impact the Debtors' day-to-day operations. "It is essential that the employment of the Ordinary Course Professionals, many of whom are already familiar with the Debtors' affairs, be continued on an ongoing basis so as to avoid business disruption," Mr. Petrick says. The number of Ordinary Course Professionals involved, however, renders it costly and inefficient for the Debtors to submit individual applications and proposed retention orders to the Court for each professional, Mr. Petrick tells Judge Gropper. In this regard, the Debtors propose retention and compensation procedures that will save the estates substantial expenses associated with applying separately for the employment of each professional. The procedures avoids the incurrence of needless fees pertaining to preparing and prosecuting interim fee applications and relieves the Court and the United States Trustee of the burden of reviewing numerous fee applications involving relatively small amounts of fees and expenses. The Debtors will require each Ordinary Course Professional to file an affidavit with the Court, within the later of 30 days after approval of the Debtors' request, and the engagement of the professional during the Chapter 11 cases. The affidavit must set forth that the professional does not represent or hold any interest adverse to the Debtors or their estates. The Debtors propose to pay each Ordinary Course Professional, on an interim basis, and without an application to the Court by the professional, 100% of fees and disbursements incurred. The payments would be made following the submission to and approval by the Debtors of appropriate invoices setting forth in reasonable detail the nature of the services rendered and disbursements actually incurred. However, subject to further Court order, if any Ordinary Course Professional's fees and disbursements exceed a total of $50,000 per month or $500,000 for the duration of the Chapter 11 cases, then the payments to the professional for the excess amounts will be subject to the prior approval of the Court. A list of the Ordinary Course Professionals to be employed by the Debtors is available at no charge at: http://bankrupt.com/misc/nwaocplist.pdf The Debtors reserve the right to supplement the list from time to time as necessary. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05- 17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHWEST AIRLINES: Gets Okay to Maintain Investment Guidelines --------------------------------------------------------------- Northwest Airlines Corporation and its debtor-affiliates sought and obtained the U.S. Bankruptcy Court for the Southern District of New York's authority, on an interim basis, to: -- invest their cash and cash equivalents in accordance with their investment guidelines; -- continue to honor their existing prepetition hedging and derivative contracts in accordance with their past practices; -- enter, from time to time, into new hedging and derivative contracts, without further Court order; and -- provide credit support as may be necessary to implement the hedging and derivative contracts. The Court relieves the Debtors from the obligation under Section 345(b) of the Bankruptcy Code to obtain a bond from any entity with which money is deposited or invested in accordance with the Investment Guidelines. Investment Guidelines Bruce R. Zirinsky, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, explains that to maximize the value of the Debtors' estates, the Debtors must maintain their cash and cash equivalents in income-producing investments to the fullest extent possible. Because of the need for liquidity in the operation of the Debtors' businesses, however, these investments will be primarily short-term in nature. Mr. Zirinsky relates that the Debtors' Investment Guidelines will enable them to maintain the security of their investments, as required by Section 345, while at the same time provide them with the flexibility they require to maximize the yield on the investment and deposit of the Funds. The Debtors' Investment Guidelines include internal and external investment policies. The internal cash investment policy covers $1.2 billion in unrestricted cash. It permits investments only in securities of the United States government and its agencies and in securities of foreign governments, private corporations and domestic and foreign banks of substantial financial strength, as measured by investment ratings. The external investment policy utilizes professional investment managers who manage $500 million in "enhanced cash" portfolios. It is substantially similar to the Debtors' internal investment policy. However, the portfolios take on slightly higher credit and interest rate risk to generate additional return. Black Rock Financial Management, Inc., and Western Asset Management manage two of the three external policies relating to separately managed accounts specific to the Debtors. The third external policy relates to a commingled fund, managed by Pacific Investment Management Company LLC in which the Debtors own certain units. Hedging and Derivative Contracts Mr. Zirinsky discloses that the Debtors have entered or may enter into derivative contracts to reduce the risks associated with fluctuations in jet fuel prices, interest rates, and foreign currency exchange rates. Derivative contracts are financial contracts whose values are based on, or "derived" from, the price of a traditional security like a stock or bond, an asset like a commodity, or a market index. Derivative contracts include these contracts or their combinations: (a) Forward contract -- obliges one party to buy and one party to sell a security or asset on a specified date in the future at a specified price; (b) Futures contract -- differs from a forward contract in that it is available only on an organized commodity exchange or similar marketplace; (c) Swap contract -- obligates the parties to the contract to exchange a fixed payment and a floating payment or swap payment at specified intervals; and (d) Option contract -- provides the purchaser the right, but not the obligation, to purchase a security or asset at a specified price on a specified date. Each of these contracts typically involves the provision of a collateral support annex and the obligation to post margin. Posting of margin requires participants to deposit money with their counterparties based on the mark to market values of the derivative contracts. Mr. Zirinsky explains that a one-cent change in the cost of each gallon of fuel impacts the Debtors' operating expenses by approximately $1.6 million per month based on 2004 mainline and regional aircraft fuel consumption. To manage the price risk of fuel costs, the Debtors from time to time utilize futures contracts traded on regulated futures exchanges, swap agreements and options. According to Mr. Zirinsky, the changes in market value of the contracts have historically been highly effective at offsetting fuel price fluctuations. From time to time, the Debtors hedge some future fuel purchases to protect against potential spikes in price. In addition, a significant portion of the Debtors' operations is conducted in foreign locations. Therefore, fluctuations in foreign currencies can significantly affect their operating performance and the value of their assets and liabilities located outside of the United States. From time to time, the Debtors use financial instruments to hedge their exposure to the foreign currency exchange rates. Mr. Zirinsky asserts that a reasonable hedging strategy is necessary to responsibly manage risks attendant to the operation of an airline. If the market price falls below the hedge price, possibly resulting in a margin call, the negative impact on cash collateral in the hedge account will be more than offset by more profitable business operations. Credit Support In certain circumstances, and in the ordinary course of the Debtors' business operations, the Debtors' counterparties to their hedging and derivative contracts have required that the Debtors' performance obligations be secured by cash collateral, letters of credit or pledges of certain of their assets to the counterparty, where the Debtors' obligations to the counterparty under outstanding hedging and derivative contracts exceed a predetermined threshold. Thus, the Debtors need the ability to provide credit support as may be necessary to implement prepetition or postpetition hedging and derivative contracts, including but not limited to posting letters of credit, entering into escrow agreements, opening and funding escrow accounts, posting collateral or margin, and prepayment and delivery of settlement on account of the derivative and hedging contracts. As part of their use of collateral as credit support, the Debtors may need to grant new security interests in some of their unencumbered collateral to the counterparty to a hedging transaction or derivative contract. The Debtors anticipate that the counterparties will extend credit in exchange for certain inducements, like the granting of superpriority claims and liens pursuant to Sections 364(c)(1) and (2) of the Bankruptcy Code. Mr. Zirinsky relates that industry practice requires "out of the money" parties to provide credit support in the ordinary course of business based on net mark-to-market valuations. Given the Debtors' current financial condition, credit support may be maintained solely through the posting of collateral, generally in the form of letter of credit or cash. Mr. Zirinsky assures that the Debtors have every intention of performing under any postpetition hedging and derivative contracts as permitted by the Court. However, the request for credit support is necessary for the uninterrupted and successful operations of the Debtors' businesses. The circumstances of Debtors' cases require them to grant their counterparties administrative claim status under Section 364(c)(1) and liens on free assets under Section 364(c)(2) to protect the counterparties from the risk of the Debtors' nonperformance under the derivative and hedging contracts. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05- 17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) OMNI CAPITAL: Wants Access to Wachovia's Cash Collateral -------------------------------------------------------- Omni Capital LP asks the Honorable David T. Stosberg of the U.S. Bankruptcy Court for the Western District of Kentucky for authority to use cash collateral securing repayment of prepetition debt owed to Wachovia Bank, N.A. The Debtor's indebtedness to Wachovia stems from a $5,800,000 mortgage loan on an office building located at 9721 Ormsby Station Road, in Louisville, Kentucky. Omni Capital believes the building has a fair market value of $10,000,000. In addition to the mortgage on the office building, Wachovia's claim is also secured by an assignment of rents and a blanket lien under the Uniform Commercial Code. Wachovia contends that all rents, whether prepetition or postpetition, constitute cash collateral. The Debtor says that the Property is capable of generating sufficient income to pay Wachovia's claim and other unsecured claims against the estate. The Debtor will use the cash collateral to maintain the property and fund its day-to-day operations. The Court will review the Debtor's request on Oct. 20, 2005, at 9:00 a.m. at Courtroom #3, 5th floor, 601 West Broadway, in Louisville, Kentucky. Headquartered in Louisville, Kentucky, Omni Capital Limited Partnership collects rent from various tenants of its office building. The Debtor 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 $11,578,450 in assets and $7,424,571 in debts. OWENS CORNING: Has Until Year-End to File Plan of Reorganization ---------------------------------------------------------------- Judge Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware directed Owens Corning and its debtor-affiliates to file an amended disclosure statement and plan of reorganization before the end of 2005. To comply with that direction, the Debtors ask the Court to extend their Exclusive Periods, through and including January 31, 2006, so that they can: -- file their amended Disclosure Statement and Plan on or before December 31, 2005; and -- seek an additional extension of their Exclusive Periods to solicit acceptances of the amended Plan. Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington, Delaware, asserts that a January 31 extension will give the Court an opportunity to consider another request for further extension after the filing of an amended Plan. The Debtors contend that the January 31 extension will not give them enough time to solicit acceptances for their Amended Plan. The Court will convene a hearing on October 24, 2005, at 10:00 a.m., to consider the Debtors' request. 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 Sell Alabama Property to Tecvox OEM ----------------------------------------------------------- Owens Corning owns 2.039 acres of land and a 26,091-sq. ft. OEM/fabricated insulation production plant located at 8468 Highway 72, in Athens, Alabama. Owens Corning acquired the Property in 1995, as part of its acquisition of FiberLite Corporation. The Property served customers in the "commercial interiors" market and provided high density molded fiberglass board used in the production of partition panels for commercial office furniture. In 2001, the market demand for office construction collapsed and demands for the molded fiberglass product produced at the Property fell significantly. Accordingly, the Debtors closed the Athens facility in March 2002 and began marketing the Property for sale. Due to a lack of interest in the Property, the Debtors reduced their asking price for the Property in 2004. On September 14, 2005, the Debtors entered into an agreement with Tecvox OEM Solutions LLC, for the sale of the Property. The principal terms of the Agreement are: (a) The gross purchase price for the Property is $197,000 with a $5,000 refundable security deposit; (b) Tecvox is entitled to investigate certain matters regarding the Property, including: * the Property's zoning, any applicable use permits or any other governmental rules and regulations affecting the use of the Property; * documents regarding property condition, interior space plans, maintenance contracts, service contracts, reciprocal easement agreements, and other contracts or agreements affecting or relating to the ownership, operation, maintenance, construction, development, lease or use of the Property; and * the Property's environmental condition. (c) Tecvox is entitled to review the title commitment to be obtained with respect to the Property and is required to either approve the commitment or notify Owens Corning of any items, which are reasonably objectionable; (d) Tecvox agreed to accept the Property in an "as is, where is" condition; and (e) Closing will occur when all conditions have been satisfied. J. Kate Stickles, Esq., at Saul Ewing, in Wilmington, Delaware, tells the Court that the Debtors owe prepetition real and personal property taxes that may total $3,181 in principal, plus potential interest, penalties and other charges. Ms. Stickles adds that two judgment liens totaling $12,000 can potentially affect the Property. The First Judgment Lien -- $7,072 -- is held by Fidelity Financial Services. The Second Judgment Lien -- $4,978 -- is in the name of Post Airgas, Inc. Each of the judgments was obtained against the prior owner of a portion of the Property, and not against any of the Debtors. Thus, the Debtors ask the Court to authorize the sale of the Property, free and clear of all liens, claims, encumbrances and interests. The Debtors further ask the Court to authorize, but not direct: (a) the satisfaction of property taxes or liens at Closing from the proceeds of the sale; and (b) the establishment of appropriate escrow or reserve accounts with respect to the property taxes or liens. 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. 116; Bankruptcy Creditors' Service, Inc., 215/945-7000) PONDEROSA PINE: Wants Until January 6 to Remove Civil Actions ------------------------------------------------------------- Ponderosa Pine Energy Partners, Ltd., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New Jersey for an extension until Jan. 3, 2006, within which they may remove prepetition civil actions. The removal of the prepetition actions requires the evaluation of complex legal and factual issues. The Debtors' ability to successfully rehabilitate and reorganize their business and make distributions to unsecured creditors are affected by the outcome of the civil actions. The Debtors contend that without the extension, they would be forced to make removal decisions that could adversely affect their estates and creditors. 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. PRECISION TOOL: Court Confirms Amended Reorganization Plan ---------------------------------------------------------- The Honorable David T. Stosberg of the U.S. Bankruptcy Court for the Western District of Kentucky confirmed on Oct. 7, 2005, the Amended Plan of Reorganization filed by Precision Tool, Die and Machine Co., Inc. Judge Stosberg determined that the Plan met the 13 standards for confirmation required under Section 1129(a) of the Bankruptcy Code. The initial post-bankruptcy Board of Directors will consist of Thomson Hudson, Philip Gunn, John Calabrese, John Locke and Timothy Hester. The initial board of directors will be deemed appointed pursuant to the confirmed Plan. The appointment will be deemed ratified by the initial holders of Common and Preferred Stock. The Board will be fully authorized to take actions that are necessary to consummate the Plan and to operate Reorganized Precision's business. Reorganized Precision will be initially authorized to issue pursuant to the terms of the Plan and the Amended Certificate of Incorporation: (a) 5,878,000 shares of Class A Common Stock: -- 200,000 will be issued on the Effective Date to those individuals identified by Precision's current board of directors as Key Employees; -- 800,000 will be issued to Key Employees as determined by Precision's post-Effective Date board of directors; -- 1,211,000 will be issued on the Effective Date to holders of Allowed Class 2 Claims in accordance with Section 6.01(b) of the Plan; -- the remainder of Class A shares are being reserved for issuance as provided in the Plan. (b) 1,555,000 shares of Class B Common Stock: -- 555,000 will be issued to GE on the Effective Date; and -- 1,000,000 will be reserved for the ESOP in the event Reorganized Precision's Board of Directors votes to establish an ESOP as a substitute for the Employee Bonus Plan and it is determined that Class B Common Stock is a qualified employer security under the Internal Revenue Code. (c) 2,233,000 shares of Class C Common Stock -- 1,233,000 will be issued to Thomson Hudson on the Effective Date; and -- 1,000,000 shares will be reserved for issuance in connection with the Employee Bonus Plan, (d) 1,500,000 shares of Class A voting Convertible Preferred Stock to be issued to holders of Allowed Class 2 Claims on the Effective Date or as otherwise permitted under Section 6.01(b) of the Plan. (e) 500,000 shares of Class B voting Convertible Preferred Stock to be issued to GE on the Effective Date of the Plan. The Debtor is also authorized to purchase nine forklifts from Toyota Motor Credit Corporation for $34,587: Lease # Equipment Description Serial # ------- --------------------- -------- 02370-012-0001 FGC45 12508 02370-013-0002 7FGCU25 69701 02370-014-0001 7FGCU25 73643 02370-015-0001 7FGCU25 74187 02370-016-0001 7FGCU25 76038 02370-017-0001 7FGCU25 76477 02370-018-0001 6FGCU35 60295 02370-030-0001 7FGCU25 67807 02370-033-0001 7FGCU25 68283 A full-text copy of the confirmation order on Precision Tool, Die and Machine Co.'s Amended Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=051011033918 Headquartered in Louisville, Kentucky, Precision Tool, Die and Machine Co., Inc. filed for chapter 11 protection on Dec. 18, 2003 (Bankr. W.D. Ky. Case No. 03-38707). Laurence May, Esq., and Frederick E. Schmidt, Esq., at Angel & Frankel, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for chapter 11 protection, it estimated assets and debts of $10 million to $50 million. PXRE GROUP: Fitch Maintains Watch Negative after Capital Raising ---------------------------------------------------------------- Fitch Ratings commented that ratings of PXRE Group Ltd., PXRE Capital Trust I, PXRE Reinsurance Ltd., and PXRE Reinsurance Company remain on Rating Watch Negative following PXRE's successful capital raising in the form of common stock and the private placement of perpetual preferred shares, which together raised approximately $474 million, net of transaction costs. PXRE intends to contribute the proceeds to PXRE Reinsurance Ltd., its Bermuda reinsurance subsidiary, to support the underwriting of reinsurance business during upcoming renewal periods. Fitch views the new capital as a positive credit event. The amount raised is more than PXRE's current estimate of its net loss from Hurricanes Katrina and Rita of between $265 million and $340 million. Fitch also notes that, in the past, major insurance losses have spurred significant increases in insurance and/or reinsurance prices. PXRE's ability to successfully raise capital is an indication of the capital market's confidence in both PXRE's organization and future reinsurance pricing. Nonetheless, Fitch notes that the loss estimates are significant, with losses from Hurricane Katrina alone representing between 30% and 40% of PXRE's June 30, 2005 shareholders' equity. This represents a greater loss than Fitch had expected from a single event. The additional capital raised will help to replenish losses and replace capital; however, the onus will be on the company to manage risks appropriately so as to not unduly expose the new or existing capital to further loss. Fitch also notes that significant uncertainties remain. Loss estimates from Hurricane Katrina continue to develop, and Fitch believes this event presents unprecedented risks to the insurance industry. Thus, Fitch believes that it may take longer than normal for these losses to fully develop. Fitch further notes that PXRE's loss estimates are based on an industry loss estimate of $30 billion-$40 billion. With some estimates of the industry loss as high as $60 billion, it is very possible that PXRE's loss could grow beyond the high end of its estimated range. Resolution of the Rating Watch Negative will depend upon Fitch's updated assessment of PXRE's risk concentration relative to its capital base net of storm losses and capital replenishment. Fitch believes there is the possibility that some catastrophe reinsurers are materially under-estimating overall catastrophe exposure based in part on extensive reliance on catastrophe modeling an assumptions. Additionally, Fitch expects to be able to resolve the Rating Watch Negative once it believes there is a reasonably stable estimate of the industry's and PXRE's ultimate loss from Hurricane Katrina. Given the very unusual nature of the losses, this could take an extended period of time but no sooner than the reporting of third- quarter 2005 financial results. These current ratings remain on Rating Watch Negative by Fitch: PXRE Group Ltd. -- Long-term rating 'BBB-'. PXRE Capital Trust I -- Trust preferred securities $100 million 8.85% due Feb.1, 2027 'BB+'. PXRE Reinsurance Company PXRE Reinsurance Ltd. -- Insurer financial strength 'A-'. QUICK MED: Daszkal Bolton Raises Going Concern Doubt ---------------------------------------------------- Daszkal Bolton, LLP, of Boca Raton, Florida, expressed substantial doubt about Quick Med Technologies Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended June 30, 2005 and 2004. The auditing firm points to the Company's recurring losses, net capital deficiency, and negative cash flows from operations for the years ended June 30, 2005, and 2004. In its Form 10-KSB for the fiscal year ended June 30, 2005, submitted to the Securities and Exchange Commission, the Company reports a $1,927,343 net loss in fiscal 2005, compared to a $2,368,514 net loss in fiscal 2004. Quick Med's balance sheet showed $1,227,444 of assets at June 30, 2005, and liabilities totaling $1,579,653, causing a $352,209 stockholders' deficit. Total cash on hand at June 30, 2005 was $844,309. Management indicates that this cash balance will satisfy Quick Med's cash requirements for about five and a half months. At June 30, 2005, Quick Med had a working capital of $742,389, primarily due to: a) an accrued interest on a stockholder loan totaling $37,746; and b) accounts payable of $113,282. Liquidation Warning Quick Med's management states that the Company may need to liquidate its business if it fails to successfully repay or restructure a loan from Michael R. Granito, Chairman of the Board. As of June 30, 2005, Quick Med had notes outstanding to Mr. Granito totaling $1,268,625. During the year ended June 30, 2005, the short-term note with the Chairman of the Board was consolidated with the long-term convertible note under the same terms. The maturity date was extended to July 1, 2006 from July 1, 2004. On November 30 and December 31, 2004, a total of $1,326,087 of the long-term convertible note was converted into 3,489,703 shares of Company restricted common stock. Engelhard Default On Sept. 19, 2005, Quick Med sent a notice of material default and termination to Engelhard Corporation for breach of its contractual obligations under a product development and distribution agreement. The agreement gives Engelhard with exclusive worldwide rights to develop and market certain products relating to skin care employing the Company's MultiStat(TM) family of advanced compounds. From Sept. 2002 to Aug. 2005, the Company received approximately $220,000 in revenues under a product agreement. Engelhard failed at least two critical milestones under the product agreement: 1) to develop at least one significant sales contract within one year of the effective distribution date; 2) to have the Quick Med realize a combined annualized net profit of $1 million per year by May 2005. The Company is currently assessing its legal remedies and investigating damages related to Engelhard's breach. About Quick-Med Technologies Quick-Med Technologies, Inc., (OTC Bulletin Board: QMDT) -- http://www.quickmedtech.com/-- is a life sciences company focused on developing proprietary, broad-based technologies for consumer, industrial, and healthcare use, as well as for advanced military and civilian medical applications. The Company's two core products under development are: a) MultiStat(TM) - a family of advanced compounds shown to be effective in broad-based skin therapy applications; and b) NIMBUS(TM) - a family of advanced polymers that can be used in a wide range of applications from advanced wound care to industrial and consumer preservatives. QUIGLEY COMPANY: Files Third Amended Disclosure Statement --------------------------------------------------------- Quigley Company, Inc., filed its Third Amended Disclosure Statement explaining its Third Amended Plan of Reorganization with the Honorable Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York on Oct. 6, 2005. Summary of the Third Amended Plan The Plan resolves Quigley's liability for all Asbestos PI Claims by channeling them to the Asbestos PI Trust to be established on the Effective Date of the Plan. In exchange for the consideration to be contributed by Pfizer and Quigley to the Asbestos PI Trust pursuant to the terms of the Plan, the Asbestos PI Trust will assume and be responsible for all liability for Asbestos PI Claims and certain other obligations associated with the Quigley Transferred Insurance Rights and the Insurance Relinquishment Agreement. All Asbestos PI Claims will be determined and paid pursuant to the terms, provisions, and procedures of the Asbestos PI Trust, the Asbestos PI Trust Distribution Procedures, and the Asbestos PI Trust Agreement. All holders of Asbestos PI Claims will be permanently enjoined from pursuing their Asbestos PI Claims against Reorganized Quigley and their Asbestos PI Claims against certain other parties, including Pfizer and the other Pfizer Protected Parties, to the extent that their Asbestos PI Claims against the Pfizer Protected Parties are derivative of Quigley's business. All holders of Asbestos PI Claims will be permanently enjoined from pursuing their Asbestos PI Claims against Settling Asbestos Insurance Entities and Non-Settling Asbestos Insurance Entities. Quigley believes that the consideration that Pfizer and Quigley will contribute to the Asbestos PI Trust for ultimate distribution to holders of Asbestos PI Claims pursuant to the Asbestos PI Trust Distribution Procedures and the other contributions being made to Reorganized Quigley or the Asbestos PI Trust, will result in a greater recovery for holders of those Claims than would otherwise be available without those contributions, procedures, and channeling injunctions. Trust Contributions Quigley and Pfizer will make these contributions to the trust to fund the processing and payment of asbestos personal injury claims: -- $102.6 million of insurance that contains no restrictions on the payment of asbestos personal injury claims; -- $191 million of insurance that contains restrictions on the payment of certain asbestos personal injury claims; -- receivables owed by insurance companies to Quigley, as of the date its plan is confirmed, for amounts that Quigley billed the insurance companies before it filed bankruptcy (these receivables currently total $28.4 million); -- $4.2 million to be paid to Quigley prior to Jan. 1, 2006, by an insurer pursuant to a pre-bankruptcy asbestos-related insurance settlement agreement; -- $15.7 million in cash, which is currently in an insurance trust account jointly held by Quigley and Pfizer; -- $15.6 million in cash that Quigley is expected to have in its accounts when the trust begins operating; -- a non-interest-bearing note issued by Pfizer for $405 million, payable in equal installments over a period of 40 years, with the first installment payment payable on the date the trust begins operating; and -- Quigley's common stock, upon satisfaction of certain conditions described in Quigley's plan of reorganization. Treatment of Claims and Interests Pfizer, as a secured claimant, will receive 49% of its claims in cash. Pfizer has agreed to forgive $30 million of the Allowed Senior Secured Claim, as part of its contribution to the Asbestos PI Trust. The Secured Claimants -- Freeman, Reaud Claimants, Hatchett, Sherry, Ytuarte and other secured bond claimants -- will be entitled to proceed with the pending appeal to final judgment. If the trial court will affirm judgment in their favor, they will be entitled to seek payment of the final judgment from the their corresponding Bond. If there is a deficiency claim, they will have to proceed against the Asbestos PI Trust in accordance with the Asbestos PI Trust Distribution Procedures. If the trial court judgment will be reversed on appeal, any Asbestos PI Claim that they may have will be automatically channeled to and assumed by the Asbestos PI Trust. Holders of unsecured claims, totaling approximately $33.4 million, will recover 7.5% of their claims. Asbestos PI Claims will be channeled and assumed by the Asbestos PI Trust, which will be funded by contributions from Quigley and Pfizer. Pfizer, as the sole holder of the Equity Interests, will transfer the common stock of Reorganized Quigley to the Asbestos PI Trust on the Stock Transfer Date. The Debtor estimates that the effective date will be on Feb. 1, 2005. A full-text copy of Quigley Company, Inc.'s Third Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=051011025120 Headquartered in Manhattan, Quigley Company, Inc., is a subsidiary of Pfizer, Inc., which used to produce and market a broad range of refractories and related products to customers in the iron, steel, glass and other industries. The Company filed for chapter 11 protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to resolve legacy asbestos-related liability. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. Michael L. Cook, Esq., Lawrence V. Gelber, Esq., and Jessica L. Fainman, Esq., at Schulte Roth & Zabel LLP, represent the Company in its restructuring efforts. Albert Togut, Esq., at Togut Segal & Segal serves as the Futures Representative. RECYCLED PAPERBOARD: Wants to Borrow Money from Ackerman Realty --------------------------------------------------------------- Recycked Paperboard, Inc., asks the U.S. Bankruptcy for the District of New Jersey for authority to borrow money and incur debt from Ackerman Realty Group, LLC. The Debtor tells the Court that it has an urgent and ongoing need for cash to maintain and preserve the physical integrity of its assets pending the closing of the sale of its real property and improvements to RD Acquisition #3 LLC for $5,050,000. The Debtor has $700,000 in outstanding accounts receivable but believes $300,000 of that total is uncollectible. The Debtor says that it has not received payments on account of its receivables for approximately two months and collection efforts have proven to be ineffective. The Debtor reminds the Court that the only account receivable, which is in the process of settlement subject to Court approval, amounts only to $145,000. The Debtor further tells the Court that the remaining accounts are unresponsive and will require the institution of litigation to collect. The Debtor says it is exploring a sale of its remaining accounts receivable. The Debtor discloses that it only has $20,000 cash on hand and it needs to make certain ongoing payments including payroll, real estate taxes, the services of environmental contractors assisting the Debtor in its cleanup operation and the like. The Debtor says that $20,000 is not enough to make such payments. The Debtor discloses that it has approached Ackerman Realty and requested that Ackerman Realty loan monies to the Debtor on an interim basis. The Debtor reminds the Court that on Mar. 31, 2005, Ackerman Realty purchased the first priority secured claim of Valley National Bank in all of the assets of the Debtor including accounts receivable, machinery, equipment and furnishings, intangibles, and real estate and improvements. Furthermore, Ackerman Realty retains a lien upon all of the Debtor's assets. Ackerman Realty has agreed to loan a maximum amount of $150,000 to the Debtor on an as needed basis but only if an order is entered, pursuant to Sections 503(b) and 364(b) of the Bankruptcy Code, providing a priority to Ackerman realty for all such monies advanced as an administrative expense. The Debtor says that the monies advanced by Ackerman Realty shall be repaid as an administration expense from any and all cash available to the Debtor through the liquidation process plus an interest of 7%. Absent the loan from Ackerman Realty, the Debtor says it will have no ability to continue its liquidation effort. Headquartered in Clifton, New Jersey, Recycled Paperboard Inc., manufactures recycled mixed paper and newspaper to make index, tag and bristol, and blanks. The Company filed for chapter 11 protection on November 29, 2004 (Bankr. D.N.J. Case No. 04-47475). David L. Bruck, Esq., at Greenbaum, Rowe, Smith & Davis LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $17,800,000 and total debts of $41,316,455. REFGO GROUP: CEO Takes Leave Following Undisclosed $430 Mil. Deal ----------------------------------------------------------------- Refco Inc. (NYSE: RFX), the parent of Refco Group Ltd. LLC, discovered through an internal review a receivable owed to the Company by an entity controlled by Phillip R. Bennett, Chief Executive Officer and Chairman of the Board of Directors, in the amount of approximately $430 million. Mr. Bennett repaid the receivable in cash, including all accrued interest on Monday, Oct. 10. Based on the results of the review to date, the Company believes that the receivable was the result of the assumption by an entity controlled by Mr. Bennett of certain historical obligations owed by unrelated third parties to the Company, which may have been uncollectible. The Company believes that all customer funds on deposit are unaffected by these activities. Independent counsel and forensic auditors have been retained to assist the Audit Committee in an investigation of these matters. This receivable from the entity controlled by Mr. Bennett was reflected on the Company's prior period financials, as well as on the Company's May 31, 2005 balance sheet. The receivable was not shown as a related party transaction in any such financials. For that reason, and after consultation by the Audit Committee with the Company's independent accountants, the Company determined, on Oct. 9, 2005, that its financial statements, as of, and for the periods ended: * February 28, 2002, * February 28, 2003, * February 28, 2004, * February 28, 2005, and * May 31, 2005, taken as a whole, for each of Refco Inc., Refco Group Ltd., LLC and Refco Finance, Inc., should no longer be relied upon. Leave of Absence At the request of the Board of Directors, Mr. Bennett has taken a leave of absence. William M. Sexton, who recently announced his impending resignation as Executive Vice President and Chief Operating Officer of Refco Inc. and Refco Group Ltd., LLC, will remain with the Company and has been appointed as Chief Executive Officer of Refco Inc. Mr. Sexton said, "I am staying at Refco because I believe in our employees, customers and franchise. I am excited about the opportunities ahead and am eager to work with our management team to help the Company achieve even greater success." Joseph J. Murphy, Chief Executive Officer of Refco Global Futures and President of Refco LLC, has been appointed President of Refco Inc. and Refco Capital Markets, Ltd. Mr. Murphy said, "We continue to see strong momentum across our businesses with record derivative contract and foreign exchange volume in the quarter." Mr. Sexton and Mr. Murphy have been leaders of the senior management team at Refco for the past six years, and have been instrumental in the Company's growth and success. Also at the request of the Board, Santo C. Maggio, President and Chief Executive Officer of Refco Securities, LLC and Refco Capital Markets, Ltd., has taken a leave of absence. Peter McCarthy has been appointed President of Refco Securities, LLC. Financial Filing Delay In light of the Audit Committee's investigation, the Company, Refco Group Ltd., LLC and Refco Finance Inc. each will likely delay the filing of its Quarterly Report on Form 10-Q for the quarterly period ending Aug. 31, 2005, due on Oct. 17, 2005. The Company cannot estimate at this time when the Fiscal 2006 second quarter Form 10-Q filings will be made or when the Audit Committee investigation will be concluded. Business Highlights For the quarter ended Aug. 31, 2005, derivatives brokerage and clearing contract volumes increased by 61 million contracts, or 40.3%, to 212 million contracts for the second quarter compared to the same quarter a year ago, and by 5 million contracts, or 2.5%, compared to the quarter ended May 31, 2005. Foreign exchange dollar volumes increased by $172 billion, or 56.4%, to $477.4 billion for the second quarter compared to the same quarter a year ago, and by $67.6 billion, or 16.5%, compared to the quarter ended May 31, 2005. The average net customer securities financing portfolio, or average domestic net repo book, increased by 27.4% for the quarter ended Aug. 31, 2005 to $47 billion from $36.9 billion for the quarter ended Aug. 31, 2004. As of Aug. 31, 2005, cash and cash equivalents were $648.6 million (of which approximately $230 million was subsequently used to redeem a portion of the Company's subordinated debt), and regulated subsidiaries reported net capital of $665.8 million and excess regulatory capital of $279.3 million. These figures do not reflect the $433 million received today from Mr. Bennett to settle his outstanding receivable. Refco Inc. (NYSE: RFX) -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. REFCO GROUP: Moody's Lowers Sr. Sub. Debt Rating to Caa1 from B3 ---------------------------------------------------------------- Moody's Investors Service downgraded all ratings of Refco Group Ltd., LLC (corporate family rating downgraded to B2 from B1). The ratings remain on review for downgrade. The rating action reflects Refco's decision to ask its CEO to take a leave of absence, after failing to disclose a related party receivable of $430 million. The company also disclosed that its previously filed financial statements cannot be relied upon. These developments raise serious concerns about the effectiveness of internal controls within Refco's operationally intensive businesses Moody's said. The rating agency also noted that the disclosure increases the regulatory uncertainties and risks of litigation facing the company, and calls into question the quality of the firm's corporate governance. During the review Moody's will focus on the short-term credit and liquidity risks inherent in the operation of Refco's brokerage and capital markets businesses. In addition, Moody's will assess whether these adverse developments will damage the firm's customer relationships or hinder its business flows. These ratings of Refco Group Ltd., LLC were downgraded: * Long-term Corporate Family Rating to B2 from B1 * Senior Secured Bank Credit Facilities Rating to B2 from B1 * Senior Subordinated Debt to Caa1 from B3 All ratings remain on review for downgrade. Refco Finance Inc, which is a wholly-owned special purpose finance subsidiary of Refco, and is co-issuer of the Senior Subordinated Debt was also downgraded to Caa1 from B3 and remains on review for downgrade. Refco is an independent brokerage and clearing firm. REFCO GROUP: S&P Lowers Counterparty Credit Rating to B+ from BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered the counterparty credit rating of Refco Group Ltd. LLC to 'B+' from 'BB-' and placed the rating on CreditWatch with negative implications. The ratings on Refco's subordinated debt, bank term loan, and bank revolving credit facility were also lowered and placed on CreditWatch negative. The rating actions follow the announcement by Refco Inc., the parent of Refco Group Ltd. LLC, that it discovered an undisclosed receivable owed to it by an entity controlled by CEO and Chairman of the Board Phillip Bennett. Refco Inc. also announced that Mr. Bennett has taken a leave of absence from the company. William Sexton, former chief operating officer of the company, has been appointed CEO. "The CreditWatch review will focus on the firm's accounting controls and governance as well as on its ability to maintain access to the credit markets," said Standard & Poor's credit analyst Tom Foley. Even though Refco Inc. also reported today that the receivable in question, which amounted to $430 million, has been repaid, today's rating actions reflect the potential negative impact on the company. REMEC INC: Voluntarily Delists Common Stock Trading from NASDAQ --------------------------------------------------------------- REMEC, Inc. (NASDAQ:REMC) provided delisting notice to the Nasdaq Stock Market and requested that the Company common stock be delisted from the Nasdaq National Market as of Oct. 13, 2005. The last trading day for the Company common stock on the Nasdaq National Market will be today, Oct. 12, 2005. This delisting is the next logical step in the Company's strategy to divest its various business units in order to maximize the value to the Company's shareholders. As reported in the Troubled Company Reporter on Sept. 2, 2005, the Company's shareholders approved the sale of selected assets and liabilities of REMEC's Wireless Systems Business to Powerwave Technologies, Inc. pursuant to the Asset Purchase Agreement, dated March 13, 2005, as amended. In addition, the Company's shareholders approved the winding up and dissolution of the company pursuant to a Plan of Dissolution. The Company no longer operates an active business and has commenced liquidation distributions to its shareholders. REMEC common stock is eligible for quotation on the NASD Over-the- Counter Bulletin Board, and the Company anticipates that its common stock will be quoted on the OTCBB under the symbol "REMC" following its delisting from the Nasdaq National Market. REMEC, Inc. -- http://www.remec.com/-- designs and manufactures high frequency subsystems used in the transmission of voice, video and data traffic over wireless communications networks. SAINT VINCENTS: 12 Tort Claimants Want to Proceed with Lawsuits --------------------------------------------------------------- Bradley Zimmerman, Esq., at The Jacob D. Fuchsberg Law Firm, LLP, in New York, relates that 12 pending medical malpractice actions filed against Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates are stayed as a result of the Debtors Chapter 11 filing: A) Joann Barnard, Individually and as Administrator of the Estate of Aubrey Barnard, Deceased v. Saint Vincent's Hospital and Medical Center, et al. Court: Supreme Court - New York County Commenced: June 5, 2003 Debtor: Saint Vincent's Hospital and Medical Center Status: Settled for $360,000. Awaiting distribution of proceeds upon presentation of a compromise order. Insurance: Medical Liability Mutual Insurance Co. $1 million per occurrence/$3 million aggregate. Gen. Description: Improper placement of a hemodialysis catheter resulting in severe hemorrhaging. Injuries: Death B) Michael J. Coffey v. Lang, M.D., et al. Court: Supreme Court - Queens County Commenced: February 22, 2005 Debtor: Saint Vincents Catholic Medical Centers of New York (Manhattan) Status: Discovery to begin Insurance: according to Debtor's Register of Insurance, there is insurance coverage for the alleged claims. Gen. Description: Negligently performed heart surgery and improper monitoring thereafter. Injuries: Multiple strokes and permanent neurological problems arising from the negligence. C) Adhem Elbezra v. Reyes, M.D., et al. Court: Supreme Court - Bronx County. Currently pending in Richmond County. Commenced: June 23, 2003 Debtor: St. Vincent's Catholic Medical Centers of New York, also known as St. Vincent's Catholic Medical Centers of Richmond Status: The case ready to proceed to trial. Insurance: Medical Liability Mutual Insurance Co. $1 million per occurrence/$8 million aggregate. Gen. Description: Failure to diagnose an infant with congenital glaucoma and amblyopia resulting in numerous eye surgeries. Injuries: Among other things, permanent vision loss. D) Helen Platt v. Saint Vincents Catholic Medical Centers of New York also known as St. Vincent's Medical Center of Richmond, et al. Court: Supreme Court - Kings County Commenced: February 18, 2003 Debtor: Saint Vincents Catholic Medical Centers of New York also known as St. Vincent's Medical Center of Richmond Status: The case is ready to proceed to trial. Insurance: Medical Liability Mutual Insurance Company Policy $1million/$8 million aggregate. Gen. Description: Negligent installation of a pacemaker lead, and negligent post-operative evaluation and monitoring. Injuries: Ms. Platt has developed cardiac tamponade, become ventilator dependent, and developed congestive heart failure and related problems. E) Francesco Schirripa v. Sisters of Charity Medical Center St. Vincent's Hospital of Richmond, et al. Court/County: Supreme Court - King County Debtor: Sisters of Charity Medical Center St. Vincent's Hospital of Richmond Commenced: September 13, 2004 Status: Discovery is underway Insurance: Medical Liability Mutual Insurance Company. $1 million per occurrence/$8 million aggregate. Gen. Description: Failure to timely diagnose and treat malignant thymoma. Injuries: Spread of cancer and decreased life expectancy. F) Resham Singh, By and Through his Attorney-In-Fact, Parminder Kaur v. Tenenbaum, M.D., et al. Court/County: Supreme Court - Queens County Debtor: Saint Vincents Catholic Medical Centers of New York doing business as Saint Vincents Hospital Manhattan Commenced: February 18, 2004 Status: The parties are engaged in discovery Insurance: Medical Liability Mutual Insurance Company claims made policy of $1 million primary/$14 million aggregate. Gen. Description: Failure to timely and properly diagnose and treat Mr. Singh for a right cerebellar blockage. Injuries: Mr. Singh is conscious but is unable to move. G) Parminder Kaur, as temporary guardian of the goods and chattels of Resham Singh et al. v. Tenenbaum, M.D., et al. Court/County: Supreme Court - Queens County Debtor: Saint Vincents Catholic Medical Centers of New York, Saint Vincents Hospital and Medical Center Commenced: April 11, 2005 Status: This action will be consolidated with the the other Singh case. Insurance: Medical Liability Mutual Insurance Company claims made policy of $1 million primary/$14 million aggregate. Gen. Description: Failure to timely and properly diagnose and treat Mr. Singh for a right cerebellar blockage. Injuries: Mr. Singh is conscious but unable to move. H) Kim Burroughs, as Administrator of the Estate of Vernell Russell, decease, v. Catholic Medical Center of Brooklyn and Queens, Inc., et al. Court/County: Supreme Court - Kings County Debtor: Catholic Medical Center of Brooklyn and Queens, Inc., doing business as St. Mary's Hospital of Brooklyn Commenced: November 6, 2000 Status: Discovery is underway. Insurance: St. Mary's Hospital is self-insured. Gen. Description: Failure to diagnose patient's hip fracture and improper discharge. Injuries: Death I) Antoinette Hutchinson Individually and as Administratrix of the Estate of Freda T. Lewis, deceased v The United States of America, et al. Court/County: United States District Court (E.D.N.Y). Case No.: 01-CV-1198 Debtor: St. Mary's Hospital of Brooklyn Commenced: February 28, 2001, amended complaint filed On July 22, 2003 Status: Discovery complete. Plaintiff's summary judgment motion pending. Insurance: St. Mary's Hospital is self-insured. Gen. Description: Failure to timely diagnose and treat ovarian Cancer. Injuries: Death J) Mary Conway Paz v. St. John's Queens Hospital, et al. Court/County: Supreme Court - Queens County Debtor: St. John's Queens Hospital Commenced: July 29, 2004. Status: Discovery underway. Insurance: St. John's Queens Hospital is self-insured. Gen. Description: Failure to diagnose appendicitis in a 41- year-old woman. Injuries: Ruptured appendix, peritonitis, weight loss and extensive surgery and scarring. K) Shahid Pirzada and Romah Pirzada v. Miller, M.D., et al. Court/County: Supreme Court - Queens County. Debtor: St. John's Queens Hospital Commenced September 30, 2003 Status: Discovery nearly complete. Insurance: St. John's Queens Hospital is self-insured. Gen. Description: Failure to monitor patient's IV site Injuries Infection which ultimately caused patient to suffer endocarditis, and patient now needs a pacemaker. L) Alice Ransom and Rosalind Evans as Co-Administrators of the Estate of Shameaka Renay Ransom-Singleton, Deceased v. Balmir, M.D., et al. Court/County: Supreme Court - Kings County Debtor: St. Mary's Hospital of Brooklyn, et al. Commenced October 22, 2004 Status: Discovery has commenced. Insurance: On information and belief, St. Mary's Hospital of Brooklyn is self-insured. Gen. Description: Failure to diagnose and treat a viral infection of the brain. Injuries: Death Stay Should Be Lifted Mr. Zimmerman notes that a review of the pending Actions makes clear that Personal Injury Claimants would suffer significant hardship if the Actions are stayed. The patients in the Actions have suffered devastating, permanent injuries or have died. Delaying the resolution of the Actions would result in the aging of evidence and the loss of witnesses, and could effectively deny the Claimants their opportunity to litigate, Mr. Zimmerman asserts. Accordingly, the Personal Injury Claimants ask the Hon. Prudence Carter Beatty of the U.S. Bankruptcy Court for the Southern District of New York to: (a) modify the automatic stay to: (i) allow the Actions to proceed in their respective forums to judgment or settlement; and (ii) permit the plaintiff in each of the Actions to execute on any judgment or collect on any settlement against available insurance proceeds without further Bankruptcy Court order; and (b) permit the plaintiff in each of the Actions to participate in the bankruptcy proceeding as an unsecured creditor to the extent of any unsatisfied claim. Headquartered in New York, 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) SEDONA CORP: Gets $500K Final Tranche of $1-Mil Loan from W. Rucks ------------------------------------------------------------------ SEDONA Corporation received the final $500,000 tranche under a $1,000,000 loan agreement with William Rucks dated July 1, 2005. The Company received the first tranche on July 1, 2005. Mr. Rucks funded the second tranche on Aug. 2, 2005. As reported in the Troubled Company Reporter on Aug. 15, 2005, the Company is obligated to issue convertible notes to Mr. Rucks, as evidence of the Loan. The Convertible Notes will mature and are payable 24 months after the date of each Loan, unless converted. The Company is required to use the loan proceeds to pay the Company's existing obligations in this order of priority: (1) the Internal Revenue Service for any payroll, withholding and other employee taxes; (2) any state revenue department for which payroll, withholding or other employee taxes are due; (3) any state revenue department for any sales or use taxes owed by the Company; (4) proper parties to satisfy any ERISA, pension or benefit obligations; (5) proper parties and employees to satisfy any wage, current severance obligations, WARN Act or other employee related expenses; (6) proper parties to satisfy any outstanding environmental claims, demands, enforcement actions or judgments; (7) federal and state authorities for taxed based on income and for franchise taxes' and eighth, payment to accounts payables and expenses incurred in business operations. The Convertible Notes will bear interest on the principal outstanding at a rate of 8% per year due annually in arrears from the date of the Convertible Notes until the earlier of maturity or the date upon which the unpaid balance is paid in full or is converted into shares of common stock. The Investor may, at his option, at any time after each Loan, elect in writing to convert all or a designated part of the unpaid principal balance, together with the accrued and unpaid interest, of each Convertible Note into Shares. The number of Shares into which the principal may be converted is equal to $0.18 per share. The number of Shares issuable upon conversion of the $1 million principal balance of the Convertible Notes is 5,555,555. Accrued and unpaid interest may be paid in cash or, at the election of the Investor, in Shares at a conversion price of $0.18 per share. The conversion price for principal will be protected by full-ratchet anti-dilution, with the exemption of stock options issued to the Company's employees and directors only. In the event the Company's cash position increases to a significant level due to increased business activity, a legal settlement, or additional equity investment, the Company, after 30 days written notice, may elect to prepay the principal amount of the Convertible Notes, plus interest, in cash, at any time, without penalty, in the event the Investor does not elect in writing to convert all or a designated part of the principal amount of the Note to equity during the 30 day notice period. As additional consideration, the Investor will be granted one four-year warrant for every two converted Shares. The exercise price of the warrant will be $0.30 per share. Under the provisions of the Term Sheet, the Investor also has the right to assign all or any part of the Convertible Notes to related entities controlled by the Investor or to Independent Third Parties. The Investor is strictly prohibited from selling any Shares until all funding obligations due under the Term Sheet are fulfilled. The expiration date of 525,266 stock purchase warrants issued to Investor from prior financings with the Company shall be extended for a period of 12 months. SEDONA(R) Corporation (OTCBB: SDNA) is the leading technology and services provider that delivers verticalized Customer Relationship Management solutions specifically tailored for the small to mid- sized business market. Utilizing SEDONA's CRM solutions, community and regional banks, and insurance companies can effectively identify, acquire, foster, and retain loyal, profitable customers. As of June 30, 2005, Sedona's equity deficit widened to $5,610,000 from a $4,258,000 deficit at December 31, 2004. SOUPER SALAD: Plan Confirmation Hearing Set for Oct. 31 ------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona will convene a hearing at 10:00 a.m., on Oct. 31, 2005, to consider confirmation of the Plan of Reorganization filed by Souper Salad Inc. The Court approved the adequacy of the Debtor's First Amended Disclosure Statement explaining the Plan on Sept. 21, 2005. Summary of the Plan Prior to the Effective Date, the Debtor will form Merger Sub as a Delaware entity wholly owned by the Debtor. On the Effective Date, after the cancellation of the Equity Interests in the Debtor and the Convertible Subordinated Notes and the issuance of the Reorganized Debtor Common Stock to the holders of the Allowed Senior Lender Claims, the Debtor will merge with Merger Sub pursuant to the Plan of Merger for the purpose of changing its domicile to Delaware. Merger Sub, the surviving entity, will change its name to Souper Salad, Inc., pursuant to amendments to its certificate of incorporation in the Plan of Merger, and will continue as the Reorganized Debtor and be the successor to the Debtor. Pursuant to the Merger, each share of the Reorganized Debtor Common Stock will be converted into one fully paid and non- assessable share of common stock of Merger Sub and all of the common stock of Merger Sub owned by the Debtor at the Effective Date of the Merger will be cancelled. The former holders of the Allowed Senior Lender Claims will own all of the issued and outstanding common stock of Merger Sub, which common stock will after the Merger constitute the Reorganized Debtor Common Stock. All allowed Administrative Expense Claims, Priority Tax Claims, Other Priority Claims, and Perishable Agricultural Commodities Act Claims will be paid in full. All Equity Interests in the Debtor will be cancelled on the Effective Date and the Debtor's separate legal existence will terminate upon the effectiveness of the merger of the Debtor into the Reorganized Debtor. Unsecured Claims, totaling approximately $6.3 million will receive their Pro Rata Portion of the Unsecured Claims Cash in full satisfaction, settlement, release, and discharge of those Claims. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=051011030304 Objections to the Plan, if any, must be filed and served by Oct. 26, 2005. 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. SOUPER SALAD: Gets Court Order to Reject Sharpstown Lease --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona gave Souper Salad Inc., authority to reject its unexpired nonresidential lease located in Sharpstown, 7469 Southwest Freeway, Houston, Texas 77074. The Court approved the Debtor's request on Sept. 21, 2005. The Debtor explained that prior to filing its motion to reject the Sharpstown lease, it already closed the restaurant located on the property and vacated the premises. Prior to closing that restaurant, it suffered from poor performance and the area around the restaurant was plagued by vagrancy problems. The Debtor determined in the reasonable exercise of its business judgment that the Sharpstown lease should be rejected because it will minimize rejection damage and other claims the lessor may assert under the lease. Additionally, rejection of the Sharpstown lease is in the best interest of the Debtor's estate and its creditors. 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. STRATUS SERVICES: Has Until Oct. 14 to Comply with Credit Pact -------------------------------------------------------------- Stratus Services Group, Inc., Capital Temp Funds and ALS, LLC, all agreed by letter agreement to extend an amended forbearance agreement until Oct. 14, 2005. The lenders will forbear from exercising their rights and remedies under a loan and security agreement that expired on Aug. 12, 2005. During the Forbearance Period, the maximum credit line will continue at $10,500,000. In consideration for the Lenders' extension of forbearance, the Lenders will charge the Company a $300,000 forbearance fee. Failure of the Company to comply with the Forbearance Agreement will constitute a forbearance default. Stratus Services Group Inc. provides a wide range of staffing and productivity consulting services nationally through a network of offices located throughout the United States. As of June 30, 2005, Stratus Services' balance sheet reported a $4,249,489 equity deficit compared to a $4,507,221 equity deficit at September 30, 2004. TECHNEST: Going Concern Outlook Improves After Markland Purchase ---------------------------------------------------------------- Wolf & Company, PC, issued a clean and unqualified opinion in connection with its audit of Technest Holdings, Inc.'s financial statements for the transition period from Jan. 1, 2005, to June 30, 2005. Markland Technologies, Inc., an integrated homeland security and defense company, had acquired a controlling interest in the Company on Feb. 14, 2005. Technest's previous independent auditor, Sherb & Co., LLP, had expressed substantial doubt about Technest's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The Auditing firm pointed to the Company's: -- significant recurring operating losses; -- negative working capital of $309,177; and -- accumulated deficit of $15,531,599. Markland Technologies Acquisition Prior to the Markland deal, Technest was a public "shell" company with no operations, nominal assets, accrued liabilities totaling $309,316 and 29,408,870 shares of common stock issued and outstanding. Following Markland's investment, Technest acquired all of the capital stock of Genex Technologies, Inc., a private company with expertise in imaging and surveillance. The acquisition is in line with the Company's ongoing business strategy of creating an integrated portfolio of solutions for the Homeland Security, DOD and INTEL marketplaces. On Aug. 17, 2005, Technest purchased all of the outstanding stock of E-OIR Technologies, Inc., one of Markland's wholly owned subsidiaries. EOIR offers remote sensor systems and platforms for the U.S. Department of Defense, United States intelligence agencies and U.S. Department of Homeland Security. Technest issued 12 million shares of its common stock to Markland in consideration for the EOIR stock. Markland's ownership of Technest increased from 85% prior to the transaction to approximately 98%. Interim Financial Results In its Form 10-KSB for the transition period from Jan. 1, 2005 to June 30, 2005, submitted to the Securities and Exchange Commission, Technest reports a $2,728,639 net loss compared to a $112,508 net loss in the year ended Dec. 31, 2004. Technest had $1,664,075 in revenue during the six months ended June 30, 2005 compared with no revenue for the same period in 2004. Of the 2005 revenue, $504,196 was from sales to EOIR. The Company's balance sheet showed $7,785,896 of assets at June 30, 2005, and liabilities totaling 900,854. This concludes the Troubled Company Reporter's coverage of Technest until facts and circumstances, if any, emerge that demonstrate financial or operational strain or difficulty at a level sufficient to warrant renewed coverage. TERAFORCE TECHNOLOGY: Can Walk Away From Three Unexpired Contracts ------------------------------------------------------------------ The Honorable Barbara J. Houser of the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, authorized Teraforce Technology Corporation and its debtor-affiliate, DNA Computing Solutions, Inc., to reject three contracts with Vista Controls, Inc. The rejected contracts are: a) Technology License and Marketing Agreement, dated November 2003; b) Technology Transfer and Support Agreement, dated November 2003; and c) Distribution Agreement, dated November 2003. As reported in the Troubled Company Reporter on Sept. 21, 2005, the Debtors believed that the contracts would expand market exposure. Contrary to the Debtors' expectations, the contracts weren't as advantageous or profitable. The Debtors suspected that Vista and Curtiss-Wright Corporation, Vista's parent, failed to properly market its products. The Debtors also learned that Curtiss-Wright acquired two of Teraforce's direct competitors, breaching their obligations under the contracts. 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. TIMCO AVIATION: 98% of Senior Noteholders Tender Outstanding Bonds ------------------------------------------------------------------ TIMCO Aviation Services, Inc. (OTC Bulletin Board: TMAS) disclosed the expiration of the offer and consent solicitation to the holders of its 8% senior subordinated convertible PIK notes due 2006 and to the holders of its 8% junior subordinated convertible PIK notes due 2007 to receive a 15% premium for agreeing to an early conversion of their Notes into shares of the Company's authorized but unissued common stock. The offer and consent solicitation expired at 5:00 p.m., New York City time, on Oct. 6, 2005. As of 5:00 p.m., New York City time, on Oct. 6, 2005, the Company received tenders and the related consents from holders of 98% of its outstanding Senior Notes and tenders from the holders of 30% of its outstanding Junior Notes. In accordance with the terms of the offer, all Notes that were properly tendered were accepted for early conversion. The Company received consents representing a majority in aggregate principal amount of the outstanding Senior Notes in the consent solicitation, and accordingly, the proposed amendments to the indenture governing the Senior Notes will become effective upon the closing of the offer and consent solicitation. No such consent was sought from the holders of the outstanding Junior Notes, since the covenant protections contained in the indenture relating to the Junior Notes were previously terminated in connection with the closing of the Company's January 2005 tender offer. At the closing of the offer and consent solicitation, which is expected to take place today, Oct. 12, 2005, the Company will issue: -- 161.6 million shares of its authorized but unissued common stock to the holders of the Senior Notes who tendered in the offer (including 21.1 million premium shares); -- 0.9 million shares of its authorized but unissued common stock to the holders of the Junior Notes who tendered in the offer (including 0.1 million premium shares); and -- 60.6 million shares of its authorized but unissued common stock to LJH Ltd., an entity controlled by the Company's principal stockholder, in connection with its partial exercise of the LJH Warrant. After the closing of the offer and consent solicitation, the Company will have 479.5 million shares outstanding and the Company's principal stockholder, Lacy Harber, will own approximately 43% of the outstanding common stock. After completion of the offer and consent solicitation, an aggregate of approximately $2 million of Senior Notes and Junior Notes will remain outstanding. All the remaining Senior Notes and Junior Notes will convert into shares of common stock at their maturity. TIMCO Aviation Services, Inc. -- http://www.timco.aero/-- is among the world's largest providers of aviation maintenance, repair and overhaul (MRO) services for major commercial airlines, regional air carriers, aircraft leasing companies, government and military units and air cargo carriers. The Company currently operates four MRO businesses: Triad International Maintenance Corporation (known as TIMCO), which, with its four active locations (Greensboro, NC; Macon, GA; Lake City, FL and Goodyear, AZ), is one of the largest independent providers of heavy aircraft maintenance services in the world and also provides aircraft storage and line maintenance services; Brice Manufacturing, which specializes in the manufacture and sale of new aircraft seats and aftermarket parts and in the refurbishment of aircraft interior components; TIMCO Engineered Systems, which provides engineering services both to our MRO operations and our customers; and TIMCO Engine Center, which refurbishes JT8D engines and performs on-wing repairs for both JT8D and CFM-56 series engines. At June 30, 2005, TIMCO Aviation's balance sheet showed a $35,372,000 stockholders' deficit, compared to a $94,852,000 deficit at Dec. 31, 2004. TITAN CRUISE: Wants to Reject Patriot Charter Agreement ------------------------------------------------------- Ocean Jewel Casino & Entertainment, Inc., a debtor-affiliate of Titan Cruise Lines, Inc., asks the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division: 1) for authority to reject the Bareboat Charter Party with Circle Line Harbor Cruises, LLC, effective as of Sept. 30, 2005; and 2) to establish a deadline for Circle Line to file a proof of claim for rejection damages. The Bareboat Charter Party was inked on April 22, pursuant to which, Ocean Jewel leased the passenger vessel "Patriot" for ten months from Circle Line. The Patriot was used to shuttle passengers between John's Pass and Titan's gaming vessel, the Ocean Jewel of St. Petersburg. Ocean Jewel pays Circle Line $73,000 per month for the use of the vessel. Ocean Jewel tells the Court that while in chapter 11, the chartering of the Patriot is too costly for the Company. The rejection of the charter will save the estate some money, Ocean Jewel says. 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. TOMMY HILFIGER: Moody's Lowers Corporate Family Rating to Ba2 ------------------------------------------------------------- Moody's Investors Service lowered the corporate family and senior debt ratings of Tommy Hilfiger U.S.A. to Ba2/(P)Ba2 from Ba1/(P)Ba1, and kept the ratings on review for possible further downgrade. The downgrades reflect the company's weakening operating performance and debt metrics as derived from preliminary reports issued during 2005, which indicate that revenues and operating margin trends have been negative relative to prior periods. Moody's believes that only part of the decline can be attributed to Tommy Hilfiger's deliberate shift in operating strategy, and that it may prove challenging to regain the stronger metrics which the company demonstrated in fiscal year 2004 and prior periods. Furthermore, the company announced on September 30th that it again delayed filing its statements for its last fiscal year ended March 2005. The lack of financial filings (the last quarterly filing was for the quarter ended June 2004) creates uncertainty over the core levels of operating metrics, and whether the company can maintain this new rating level. Debt ratings were originally placed on review in November 2004 because of concerns about the amount of potential tax liability arising from a dispute with U.S. and Hong Kong tax authorities. The corporate family rating was placed on review in August 2005 because of indications of weak performance that could affect long term financial position Tommy Hilfiger Corp., the parent of the debt issuer, released information on September 30th which indicated that results for FYE March 2005 could be slightly less than had been originally estimated. Subsequently, the company announced that it was laying off about 135 employees to rationalize expenses in its shrinking U.S. wholesale division but did not revise guidance, indicating that one time costs are expected to be offset by savings during the period. Moody's estimates that next year's operating income could be relatively flat with estimated 2005 results, after adjusting for estimated one-time costs included in operating income. Flat operating income would suggest that the company's U.S. retail strategy and European growth effort is not yet overcoming the loss of U.S. wholesale volume. Over the past three years, Tommy Hilfiger had both planned and unplanned reductions of wholesale revenues, and opened a larger number of retail stores which carry higher ticket sales. Estimates of 2005 performance and 2006 guidance suggest that revenues are not rising commensurate with new store openings, and that profit margins are not returning to prior levels of 10% considered appropriate for a specialty apparel manufacturer and retailer at this ratings level. Moody's believes that liquidity is satisfactory based on estimates of unencumbered cash balances consistently above $300 million. Together with the one-year $150 million cash-collateralized credit facility negotiated in April 2005, these amounts should be sufficient to finance working capital needs and amounts due under recently announced settlements regarding various U.S. tax liabilities. TH is still in discussion with the Hong Kong authorities. The ratings remain on review pending release of financial statements for FYE 2005 and subsequent periods. The ratings could be confirmed if Moody's determines that Tommy Hilfiger's growth in Europe is sustainable, that profitability is likely to rise above 8% in the near future, and that the company renegotiates a longer term credit facility. The company has indicated that European sales have risen as U.S. sales have fallen, however, the sustainability of these sales or the success of its retail strategy remains unclear. Rationalization of its cost base, bringing resources into line with segment needs, could also be a long term positive. Ratings could fall if Moody's believes that revenues could decline, or that operating margins are likely to fall below 7%. The company's revenue base, international presence, and cash balances, combined with relatively low debt balances, suggest any downward movement would be held to one notch, absent a change in financial policy or significant revision in actual numbers compared to preliminary reports. Tommy Hilfiger U.S.A., Inc., headquartered in New York City, designs, sources, and markets: * men's and women's sportswear, * jeanswear, and * childrenswear under Tommy Hilfiger trademarks. Through a range of licensing agreements, the company also offers a broader array of related: * apparel, * accessories, * footwear, * fragrance, and * home furnishings. The company is a wholly-owned subsidiary of Tommy Hilfiger Corporation, headquartered in Kowloon, Hong Kong. TOWER AUTOMOTIVE: Wants to Disclose HIPAA-Protected Information --------------------------------------------------------------- Tower Automotive Inc. and its debtor-affiliates plan to commence negotiations in the near future with the authorized representatives of their various retiree constituencies pursuant to Sections 1114(c) and (d) of the Bankruptcy Code. As part of this process, the Debtors are required to provide the Authorized Retiree Representatives with relevant information that is necessary to evaluate the Debtors' proposal to modify retiree benefits. However, some of the relevant information the Debtors may provide to the Authorized Retiree Representatives may be private, confidential, and protected from disclosure under the Health Insurance Portability and Accountability Act of 1996, but which may be relevant to the Authorized Retiree Representatives' consideration of the Debtors' proposed changes to the retiree health benefits. James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, in New York, notes that the Debtors and third-party administrators of the Debtors' benefit programs generally cannot disclose "protected health information" without the individual participants' authorization. Nonetheless, HIPAA Privacy Regulations permit discovery of PHI so long as the Court prohibits disclosure of the Requested Information outside of the litigation and requires its return once the judicial proceedings are concluded. Accordingly, the Debtors seek the U.S. Bankruptcy Court for the Southern District of New York's permission to disclose the Requested Information to the Authorized Retiree Representatives to the extent necessary to preserve the privacy interests of the participants in the information, and without unduly impairing the public's right to be informed of the proceedings. The Debtors assure the Court that they will take every action possible to ensure that a minimum amount of PHI is disclosed as necessary to complete the Section 1114 negotiations. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOWER AUTOMOTIVE: Wants Official Retirees Committee Appointed ------------------------------------------------------------- Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, relates that Tower Automotive Inc. and its debtor-affiliates have recently completed a long-term business plan that seeks to address many of the issues that plague their ongoing operations. However, to ensure that the business plan is successful, the Debtors have determined that they must significantly reduce the cost of medical benefits for their 2,180 retirees who are receiving benefits under company-sponsored plans and collective bargaining agreements. The Debtors' retirees consist of: -- 1,960 union members who are receiving benefits under 11 collective bargaining agreements; and -- 220 non-union members, which include the Debtors' salaried and management retired employees, who are receiving benefits under various plans. The approximate cash costs to the Debtors for retiree benefits for 2006 is expected to be approximately $20 million. Mr. Sathy tells the U.S. Bankruptcy Court for the Southern District of New York that the Debtors are in the process of writing to each of their affected unions, including three unions who had represented employees at plants where the Debtors no longer operate, with the hope of making a proposal regarding the necessary modifications in the coming weeks. The Debtors expect that all of the unions who represent their employees will agree to serve as the authorized representatives for their retiree group under Section 1114(c)(1) of the Bankruptcy Code. To the extent that the Debtors do not receive confirmation of representation from any of their unions prior to October 7, 2005, the relevant retiree groups would be included in a retiree committee appointment process. Retiree Committee Appointment Procedures The Debtors intend to work with the United States Trustee and the Official Committee of Unsecured Creditors to develop an appropriate, open, and fair procedure to solicit interested retirees to serve on a committee that will serve as the authorized representative of the Debtors' retirees who are not represented by a labor organization or whose labor organization has declined to serve as an authorized representative. The Debtors ask the Court to approve these procedures for the appointment of the Retiree Committee: (1) Within three days of the entry of a Court order approving the proposed procedures for the establishment of the Retiree Committee, the Debtors will contact retired employees to solicit those who would be interested in serving on the Retiree Committee through any means necessary. Those who are interested in serving on the Retiree Committee should complete a questionnaire and submit it no later than October 26, 2005; (2) No later than October 31, 2005, the Debtors, in consultation with the U.S. Trustee, will file a report listing all those retired individuals who have volunteered to serve on the Retiree Committee, together with the questionnaires completed by those individuals. The Report will be served on the Creditors' Committee, the Debtors' unions, and all individuals who have volunteered to serve on the Retiree Committee; (3) No later than November 4, 2005, the parties may file a response to the Report and take any position that they deem appropriate, including their views on the propriety of the size, composition, and membership of the Retiree Committee, or the individuals who are more or less appropriate to serve on it; and (4) On November 8, 2005, or at the Court's earliest convenience, the Court will conduct a follow-up hearing on the Debtors' request and appoint the members of the Retiree Committee, after which the Debtors will immediately begin the negotiation process under Section 1114 by distributing their proposed modifications as well as the information relevant to evaluate its proposals to the Retiree Committee. Mr. Sathy contends that the proposed procedures "strike a balance among resolving the retiree benefit modifications before the Debtors' desired exit from bankruptcy as early as possible in 2006, the time necessary to negotiate fully in an effort to reach consensual agreement, and the statutorily-prescribed time periods under [S]ection 1114(k) for the Court, if the negotiations prove unsuccessful, to schedule a hearing and rule on the Debtors' [request]." TOWER AUTOMOTIVE: Taps Foley & Lardner as Labor Counsel ------------------------------------------------------- As previously reported, Tower Automotive Inc. and its debtor- affiliates intend to engage in negotiations with various constituents regarding labor-related concessions that they believe are necessary to increase the probability of a successful reorganization of their businesses. Accordingly, the Debtors ask the U.S. Bankruptcy Court for the Southern District of New York for authority to employ Foley & Lardner LLP as special labor negotiation counsel, effective as of September 9, 2005. Foley & Lardner will perform certain targeted and limited legal services in the form of direct support to the Debtors' ongoing labor negotiations during their Chapter 11 cases. James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, in New York, informs the Court that Foley & Lardner has significant experience in all aspects of labor and employment law and related labor negotiations, and has been engaged to provide similar advice to that requested by the Debtors in other large and complex matters. Thus, the Debtors believe that the firm is well qualified to act on their behalf given its extensive knowledge and expertise in the specific field in which it is to be employed. In exchange for its services, the Debtors will pay Foley & Lardner in accordance with its customary hourly rates: Partners $760 Junior Associates $215 Paraprofessionals $65 - $250 The Debtors will also reimburse Foley & Lardner for necessary costs and expenses incurred in connection with its services. The Debtors believe that Foley & Lardner may constitute an ordinary course professional. However, the Debtors have decided to employ the firm under Section 327(e) of the Bankruptcy Code due, in part, to the expected concentration of the firm's services over a short period of time, which may result in monthly fees that exceed the monthly fee cap prescribed by the Court's March 16, 2005, order authorizing the Debtors to employ and compensate professionals utilized in the ordinary course of businesses. Nevertheless, the Debtors expect that, despite the expected short-term concentration of Foley & Lardner's services, the firm's aggregate fees will not exceed the overall case cap under the OCP Order. Steven H. Hilfinger, Esq., a partner at Foley & Lardner, assures Judge Gropper that the firm does not: -- hold or represent any interest adverse to the Debtors or their Chapter 11 estates with respect to labor negotiation matters for which the firm is to be employed; and -- have any connection with the United States Trustee, or any of its employees. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOWER AUTOMOTIVE: Court Rules Federal Must Pay Defense Costs ------------------------------------------------------------ As previously reported, 11 purported class action lawsuits have been filed against Tower Automotive Inc. and its debtor- affiliates' current and former officers, directors and employees since the Debtors' bankruptcy filing. The Class Action Lawsuits sought hundreds of millions of dollars in potential damages for a variety of alleged violations of the Securities and Exchange Act of 1934 and the Employee Retirement Income Security Act. Federal Insurance Company, the Debtors' insurance carrier, has acknowledged coverage of the Securities Class Actions. Because the ERISA Class Actions allege ERISA violations, the Debtors promptly notified Federal and sought access to the insurance policy to cover defense costs related to the Class Action Lawsuits. Federal, however, denied coverage for the ERISA Class Actions. Subsequently, the Debtors filed a complaint against Federal seeking, among other things, declaratory relief to establish Federal's obligations to advance defense costs under Federal Policy No. 8151-5430. Federal has sought dismissal of the ERISA Coverage Litigation. Judge Gropper finds that Tower Automotive, Inc., is entitled to summary judgment requiring Federal Insurance Company to provide a defense to the ERISA Actions at least to the date of a determination as to whether the exclusion applies. The Court denies Federal's request to dismiss the complaint. Judge Gropper holds that, under Michigan law, Federal's duty to defend is broader than its duty to indemnify. "Where coverage is 'possible,' the insurer 'is obliged to defend until the claims against the policyholder are confined to those theories outside the scope of coverage under the policy," Judge Gropper says. In Polkow v. Citizens Insurance Co. of America, 476 N.W.2d 382 (Mich. 1991), Judge Gropper notes that the Michigan Supreme Court held that the insurer's duty to provide a defense extends to allegations which even arguably come within the policy coverage. The Supreme Court held that "[f]airness requires that there be a duty to defend at least until there is sufficient factual development to determine what caused the pollution so that a determination can be made regarding whether the discharge was sudden and accidental [and therefore excluded]. Until that time, the allegations must be seen as "arguably" within the comprehensive liability policy, resulting in a duty to defend." The principle in Polkow was followed in American Bumper & Manufacturing Co. v. Hartford Fire Insurance Co., 550 N.W.2d 475, 483 (Mich. 1996) and Aero-Motive Co. v. Great American Insurance, 2004 U.S. Dist. LEXIS 28327, at *10 (E.D. Mich. Nov. 23, 2004). According to Judge Gropper, those cases are precisely on point and impose on the insurer an obligation to defend during the period of a factual inquiry as to the applicability of an exclusion in an insurance policy. In denying Federal's request to dismiss the complaint, Judge Gropper explains that the ultimate issue on a motion to dismiss is "not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Judge Gropper notes that Tower's assertion that the Securities- Based Claims Exclusion in the ERISA policy bars coverage "only if the Securities-Based Claim 'or any other written demand or civil or administrative proceeding against an Insured' for which the Insured is seeking coverage under the Policy is brought by a non- Plan participant," makes more sense of the contract as a whole. Federal, Judge Gropper says, would exclude coverage as a consequence of an entirely unpredictable development, the existence, somewhere, of a Securities-Based Claim against just one of the ERISA defendants. Tower would exclude coverage only where the Securities-Based Claim seeks recovery on behalf of a non-Plan participant. "Because both parties have set forth possible constructions of the [Securities-Based Claims Exclusion], on the record before the Court, Federal's motion to dismiss, which is based on the premise that the contract is clear as a matter of law and can only be read in its favor, must be denied," according to Judge Gropper. Under applicable Michigan law, the construction of an insurance contract, like any contract, is based on a determination of the intention of the parties, Judge Gropper further points out, citing Auto-Owners v. Churchman, 489 N.W.2d 431, 435 (Mich. 1992); Fireman's Fund Ins. Co. v. Ex-Cell-O Corp., 702 F. Supp. 1317, 1323 (E.D. Mich. 1988); and Royal Ins. Co. of Am. v. Med. Evaluation Specialists, 1996 U.S. Dist. LEXIS 17741, at *8 (E.D. Mich. Oct. 10, 1996). According to Judge Gropper, the record and the words of the contract alone are not adequate to determine the intention of the parties or even if an ambiguity exists that must be construed against Federal. A full record as to the parties' intentions, including the relationship, if any, of coverage for the ERISA Actions and coverage for the Securities Actions, is necessary. The evidence would be particularly useful because Michigan recognizes the doctrine of reasonable expectations, pursuant to which a court will find coverage under an insurance policy if "the policyholder, upon reading the contract language is led to a reasonable expectation of coverage." Federal Asks Court to Reconsider Ira S. Greene, Esq., at Hogan & Hartson L.L.P., asserts that the Court's reasoning is directly at odds with the recent decision of the Michigan Supreme Court in "Rory v. Continental Insurance Co.", 703 N.W.2d 23 (Mich. 2005), a case decided after Federal's request to dismiss and the Debtors' request for summary judgment were argued and submitted. Mr. Green notes that the Court's reliance on the "reasonable expectations" doctrine and its holding that the "intent" of the parties was necessary to determine the language's meaning is clearly wrong. "[T]here is no 'reasonable expectations' doctrine in Michigan. The language is either clear, in which case it is enforced as written, or ambiguous, in which case the doctrine of contra proferentem requires that it be construed in favor of the insured." Mr. Greene also asserts that the exclusion's language is plain and susceptible to only one meaning -- there will be no coverage for any Securities-Based Claim if it or any other civil or administrative proceeding against an Insured seeks relief for any purchaser or holder of the Debtors' securities, who is not a Plan participant or beneficiary. Accordingly, Federal asks the Court to reconsider its Opinion and deny the Debtors' request for summary judgment. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) TUBE CITY: Moody's Revises Corporate Family Rating to B1 -------------------------------------------------------- Moody's Investors Service revised its corporate family rating for Tube City IMS Corporation, the successor company to Mill Services Corporation, to B1. The rating revision follows the cancellation of TCIMS's proposed offering of Income Participating Securities. The prospective ratings that Moody's assigned on Sept. 12, 2005, related to the IPS offering, were withdrawn. In addition, Moody's affirmed the B1 ratings for the company's secured credit facilities. In connection with a shareholder distribution, the company's first lien term loan is being increased by $65 million, to $328 million from $263 million. Moody's believes that the increased debt is manageable within the B1 rating given TCIMS's fairly stable business model, the broad range of steel mill services it provides to a diverse customer base, and a favorable outlook for these customers. The rating outlook is stable. These ratings were affirmed: For Tube City, LLC and International Mill Service, Inc., co- borrowers under the following credit facilities: * B1 for the $328 million (being increased from $263 million) 6-year term loan secured by a first priority lien on all the assets of the company; * B1 for the $55 million 5-year revolving credit facility, which is also secured by a first lien on all assets; and * B3 for the $50 million 7-year term loan secured by a second priority lien on the collateral securing the first lien facilities. TCIMS's ratings are constrained by its dependence on sales to customers in the highly cyclical steel industry, predominantly in the US. This makes the company vulnerable to the loss or bankruptcy of a large customer, shifts in outsourcing trends, or a general downturn in the steel industry (its revenues are generally not tied to steel prices, however). TCIMS's customer concentration is high, which is not surprising given increased concentration in the US steel industry. One steel company accounts for approximately 30% of pro forma net sales and the top five account for roughly 62% of sales. While appreciative of Mill Services' market position, Moody's believes that material organic growth may be difficult to achieve. Furthermore, since the winning of new business may require upfront capital investment and locks the company into multi-year contracts, management must exercise great care when bidding on new business in order to ensure that long-term value is created. TCIMS is highly leveraged; pro forma for the add-on to the term loan, total debt will increase to about $389 million, making pro forma debt to LTM EBITDA about 4.2x. At this level of debt, TCIMS's few tangible assets ($315 million as of June 30, 2005) and the specialized nature of its fixed assets lessens the likelihood of full creditor recovery should cash flow significantly diminish and the company experience a payment default. TCIMS's ratings are supported by the company's role as an entrenched provider of mill services at over 60 North American and Eastern European steel plants and its favorable track record of retaining customers and expanding services and revenues at a broad cross section of mills. The company often provides different services at the same mills, which represent a balanced mix of integrated and minimill steel plants. The company's business has been quite stable, albeit at lower levels prior to 2004. Stability has been enhanced by TCIMS's long-standing customer relationships, good reputation, and long-term contracts. Moody's believes that steel mills will continue to outsource non-core services such as material handling, scrap management, metal recovery and slag processing. While the majority of TCIMS's sales are linked to its customers' production levels and are, therefore, cyclical, IMS has introduced fee structures that are independent of production levels. TCIMS's stable outlook is supported by: * its diverse customer base, * long-term contracts with a current duration of around seven years, and * Moody's stable outlook for the steel industry. To the extent that these factors deliver on their potential to materially reduce debt or improve debt protection measurements over the next 18-24 months, as evidenced by debt to EBITDA of around 3x or free cash flow to debt of 7-10%, Moody's will raise its ratings. Conversely, its ratings could be pressured by: * erosion of credit metrics, * the loss or bankruptcy of any large customers, * the loss of key members of management, and * acquisitions or new service contracts that are not accompanied by free cash flow. Tube City IMS Corporation, headquartered in Glassport, Pennsylvania, is a leading North American provider of on-site steel mill services such as: * material handling, * scrap management, * metal recovery, and * slag processing. UAL CORP: Details $3 Billion All-Debt Exit Financing Package ------------------------------------------------------------ "In a powerful endorsement of the substantial progress achieved," JPMorgan Chase Bank, N.A. and Citicorp USA, Inc., have committed to provide UAL Corporation and its debtor-affiliates with an exit facility of up to $3,000,000,000, James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, tells the Bankruptcy Court. Mr. Sprayregen recounts that in January 2005, the Debtors received proposals for potential exit financing from JPMorgan Chase, Citicorp, General Electric Capital Corporation and Deutsche Bank. In July, the Debtors and their advisors sought $2,500,000,000 in secured exit financing from these Financial Institutions. The Debtors received proposals from all four Institutions ranging from $2,500,000,000 to $3,0000,000,000, in commitments. On August 24, 2005, each Financial Institution met with the Exit Financing Subcommittee of the Official Committee of Unsecured Creditors to present their proposals and answer questions. The Financial Institutions were asked to submit their best and final offers by September 21, which included detailed terms and conditions of their proposals. The banks were also told that two parties would be selected to negotiate a documentation package consisting of a commitment letter, detailed term sheet, and a fee letter. Following receipt of the best and final offers, the Debtors reviewed and discussed the proposals with the Exit Financing Subcommittee. The Debtors and their advisors eventually selected JPMorgan Chase and Citicorp to negotiate financing documentation. The parties began negotiations on the terms of an exit-financing package. The Debtors sought to improve the proposals, in part by selecting the best terms from each. JPMorgan Chase and Citicorp incrementally improved their proposals during negotiations. By combining favorable elements of both proposals, the Debtors arrived at the best proposal, which is presented to the Court. Mr. Sprayregen explains that the Exit Facility will be underwritten jointly by JPMorgan Chase and Citicorp, and structured, arranged and syndicated by J.P. Morgan Securities and Citigroup. Each Exit Lender will provide an equal share of the Exit Facility, up to $1,500,000,000 each. The Debtors must deliver definitive documentation of approval by March 31, 2006, for the commitments to become effective. The Exit Lenders are leading international financial institutions with vast experience financing companies emerging from bankruptcy, Mr. Sprayregen says. The Exit Lenders have extensive knowledge of the Debtors' business, gleaned from their position as lead DIP Lenders. By this motion, the Debtors seek the Court's authority to: (a) enter into, and perform under the Commitment Letter; (b) use estate funds to pay out-of-pocket costs and expenses to the Exit Lenders; (c) indemnify JPMorgan Chase, J.P. Morgan Securities, Citicorp, and Citigroup, and any affiliated entities; and (d) effectuate and close the Exit Facility upon confirmation and emergence from Chapter 11. Mr. Sprayregen clarifies that the Debtors are not seeking approval of the fees that will be payable upon closing of the Exit Facility. Rather, the Debtors are seeking approval of the Commitment Letter, with the accompanying provisions relating to the Expenses and indemnification, to facilitate the documentation and other actions necessary to allow for closing of the Exit Facility upon confirmation of their Joint Plan of Reorganization. Commitment Letter The material terms of the Exit Financing contemplated by the Commitment Letter are: Type & Amount of Loan: Credit Facility consisting of a Tranche A revolving commitment of up to $300,000,000, with a sub-limit of up to $150,000,000 in standby letters of credit, and a Tranche B term loan of up to $2,700,000,000. Borrower: United Air Lines, Inc. Guarantors: UAL Corporation and its domestic subsidiaries. Maturity Date: Six years after Closing. Use of Proceeds: To finance working capital needs and general corporate purposes of United Air Lines, Inc., UAL, and subsidiaries, but not for prepayment or refinancing of existing funded indebtedness other than repayment of the DIP Financing and payments on certain aircraft financings. Interest Rate: JPMorgan Chase's Alternative Base Rate plus 3.50% for the Tranche A Loans and Tranche B Loans or, at the Debtors' option, LIBOR plus 4.50% for the Tranche A Loan and Tranche B Loan for interests periods of 2 weeks, 1, 3, 6, 9, or 12 months. Default Rate: Upon any default, interest will be payable on written demand at 2% above the existing applicable rate. Commitment Fee: 1/2 of 1% per annum on the average unused amount of the revolving facility, payable quarterly in arrears. Minimum Revolver Borrowings: $1,000,000 for direct borrowing of Alternate Base Rate Loans and $5,000,000 for direct borrowing of LIBOR Loans. Amortization: The Tranche B Term Loan will be repaid at 1% of the original principal annually, in semi-annual installments, with the balance due on the Termination Date. Prepayment: Not less than $5,000,000 in integral multiples of $1,000,000. Financial Covenants: Fixed charge coverage ratio (EBITDAR) for the 12-months ending: December 2006 0.90:1.00 March 2007 0.95:1.00 June 2007 0.95:1.00 September 2007 1.00:1.00 December 2007 1.10:1.00 March 2008 1.10:1.00 June 2008 1.10:1.00 September 2008 1.10:1.00 December 2008 1.15:1.00 March 2009 1.15:1.00 June 2009 1.15:1.00 September 2009 1.15:1.00 December 2009 1.20:1.00 and thereafter for each fiscal quarter through the Maturity Date. Collateral: All unencumbered real and personal property, including all unencumbered aircraft, spare engines, spare parts inventory, accounts receivable, Pacific and Atlantic routes, domestic and international slots, quick engine change kits, certain flight simulators, domestic and international gate leaseholds, trademarks, tradenames, inventory, the the Debtors' frequent flyer program, UAL's world headquarters in Elk Grove Village, Illinois, the Denver training facility, the Debtors' plant and equipment and debt and equity investments -- including stock and other subsidiaries of UAL, provided that a pledge of any first tier foreign subsidiary will be limited to 65% of its stock and the first tier foreign subsidiary will not be required to pledge the stock of their subsidiaries -- the cash in the Letter of Credit Account, all other deposit accounts and all cash equivalents. Permitted Aircraft Disposition: -- N193UA -- N194UA -- N202UA -- N203UA -- N206UA -- N215UA -- N398UA -- N399UA -- N433UA -- N434UA -- N435UA -- N436UA -- N479UA -- N480UA -- N776UA -- N778UA -- N780UA -- N786UA -- N843UA Expenses: The Debtors will pay all reasonable out- of-pocket costs and expenses of the Exit Lenders related to the Commitment Letter, Fee Letter, the contemplated transactions and the Exit Lenders' continuing due diligence. The Commitment Letter contains sensitive, proprietary information and has been filed under seal. The Debtors need sufficient exit financing to emerge from bankruptcy, Mr. Sprayregen emphasizes. The Exit Facility will: * retire the Debtors' existing DIP financing facility; * allow the Debtors to fund their Plan; and * provide Reorganized United with enough liquidity to seamlessly operate its daily business following emergence from Chapter 11. The Court will convene a hearing on Oct. 21, 2005, at 9:30 a.m., to consider the Debtors' request. The Debtors anticipate filing an amended plan of reorganization and disclosure statement to include the Exit Financing terms. 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. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Wants Court to Bless Credit Card Processing Pact ---------------------------------------------------------- On April 22, 2005, the U.S. Bankruptcy Court for the Northern District of Illinois approved a stipulation among the UAL Corporation and its debtor-affiliates, National Processing Company, LLC, and National City Bank of Kentucky, which modified the automatic stay to allow NPC to terminate the Debtors' existing credit card processing agreement, in exchange for a 61-day extension of the agreement at no cost. The NPC credit card processing agreement will terminate on Jan. 16, 2006. According to James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, a credit card processor acts to facilitate credit card transactions between businesses and their customers. The processor provides the business cash in exchange for credit card purchase transactions. The processor, through the relevant interchange system and ultimately the bank issuing the credit card upon which the transaction was made, then seeks payment on the transaction from the customer. This process allows the business to immediately collect on its credit card purchases rather than having to wait on collections from the individual customers. Without a credit card processor, a business cannot accept payment for its services by credit cards. To procure a replacement processor on a timely and competitive basis, the Debtors undertook a comprehensive "request for proposal" process. The Debtors solicited offers from all known credit card service processors to the airline industry, particularly from First National Bank of Omaha, Fifth Third Bank, Citibank, Bank of America, J.P. Morgan Chase Bank, First Data, Inc., Global Payments, Inc., and US Bancorp. At the conclusion of the RFP process, the Debtors identified Paymentech, L.P., as offering the best terms for credit card processing services. Paymentech is a subsidiary of Chase Paymentech Solutions, L.L.C. -- a joint venture that includes an affiliate of JPMorgan. The Debtors entered into a Merchant Services Bankcard Processing Agreement with Paymentech. The salient terms of the Processing Agreement are: (a) Paymentech will provide the Debtors with the ability to accept credit card payments from customers; (b) The Debtors will pay Paymentech a fee based on the number of credit card transactions processed, estimated at $4,000,000 annually; (c) Paymentech will maintain a reserve account securing the Debtors' performance; and (d) The Debtors will initially fund the Reserve Account in cash through an advance. The amount of cash required in the Reserve Account will depend on the Debtors' economic performance relative to a minimum cash covenant and an EBITDAR covenant. The Advance will constitute an advance purchase of miles by Chase Bank USA N.A. to help fund the Reserve Account. Mr. Sprayregen notes that the initial cash balance required under the Reserve Account is the most favorable term offered under the Processing Agreement. Other proposals received by the Debtors under the RFP required initial reserve accounts far in excess of the initial Reserve Account required under the Processing Agreement. By entering into the Processing Agreement in conjunction with an amendment of a Co-Branded Marketing Services Agreement between UAL Corporation, UAL Loyalty Services, LLC, and Chase Bank, Paymentech can ask for a minimum reserve under the Processing Agreement at lower than market rates. The Co-Branded Marketing Services Agreement The Co-Branded Marketing Services Agreement governs Chase Bank's exclusive rights in the United States to issue credit cards that accumulate frequent flyer miles under the loyalty program Mileage Plus. Chase Bank, an affiliate of JPMorgan, buys Mileage Plus miles from the Debtors. The miles are transferred to cardholders' Mileage Plus accounts when purchases are made using the cardholders' Chase Bank/United credit cards. The Co-Branded Marketing Services Agreement will expire in 2007. The Debtors have been negotiating with Chase Bank to amend the existing Co-Branded Marketing Services Agreement. The amendments sought under the Co-Branded Agreement will provide the Debtors with these material benefits: (a) Chase Bank will make a substantial advance purchase of miles immediately following Court approval and the execution and delivery of the amendment, which will allow the Debtors to fund the Reserve Account under the Processing Agreement without any reduction of its existing cash base; (b) The Debtors' relationship with Chase Bank is extended through 2012 and is projected to generate several billion dollars in additional cash payments to the Debtors over the extended term of the agreement; (c) Creation of cross-selling opportunities to and beyond the Mileage Plus Visa base; (d) Reimbursement to the Debtors for various other charges and expenses, improving the Debtors' bottom line by millions of dollars per year; and (e) Increased rewards to the Debtors for new cardholder acquisitions. Upon closing of the Exit Facility and emergence under a Plan of Reorganization, the Debtors will grant Chase Bank a lien upon, and security interest in, their assets. The Security Interest will: -- secure the Debtors' payment obligation to Chase Bank to repurchase the pre-purchased miles; -- be junior to any security interest provided under the Debtors' Exit Facility or any security interest senior to those granted under the Exit Facility; and -- constitute a "silent lien." The Co-Branded Marketing Services Agreement Amendment will be effective immediately upon execution and Court approval. Credit Card Agreements Must Be Approved The Debtors seek the Court's authority to enter into the Merchant Services Bankcard Processing Agreement with Paymentech. They also seek permission to further amend the Co-Branded Marketing Services Agreement. Mr. Sprayregen tells the Court that the Processing Agreement will allow the Debtors to accept credit card payments from its customers. The Debtors cannot continue in business without this service. If a replacement processor for credit card services is not procured, the Debtors cannot emerge. The Co-Branded Marketing Services Agreement Amendment, on the other hand, will provide the Debtors with additional payments of several billion dollars through its extended term, plus millions of dollars in economic benefits under the new payment structure and incentive programs. The Co-Branded Marketing Services Agreement Amendment will instantly supply the Debtors with a substantial cash payment, which will assist in funding the Reserve Account under the Processing Agreement. The billions of dollars provided to the Debtors pursuant to the Co-Branded Marketing Services Agreement Amendment will also provide liquidity to continue business post-emergence. Terms Are Confidential The terms of both the Credit Processing Agreement and the Co- Branded Marketing Services Agreement Amendment are highly confidential and sensitive to the Debtors, Paymentech and Chase Bank. The Debtors cannot publicly describe the terms of either Agreement in detail. The Debtors will disclose the proprietary information to professionals for the Official Committee of Unsecured Creditors and the DIP Lenders' counsel, Morgan, Lewis & Bockius. 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. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Court Directs October Pension Payment to Pilots --------------------------------------------------------- The Air Line Pilots Association, International, and the United Retired Pilots Benefit Protection Association ask the U.S. Bankruptcy Court for the Northern District of Illinois to compel UAL Corporation and its debtor-affiliates to: * continue to process pilot retirement applications that seek partial lump-sum benefits; and * pay the non-qualified pension benefits that were due on October 1, 2005. According to Babette A. Ceccotti, Esq., at Cohen, Weiss and Simon, in New York City, 25 active pilots have recently applied for partial lump-sum distributions in the Debtors' cases. However, the Debtors did not process the benefit applications. Ms. Ceccotti also notes that the Debtors have made Non-Qualified Benefit Payments on the first day of every month through September 2005. However, the Debtors did not make the October 1, 2005 scheduled Non-Qualified Benefit Payment to the retired pilots. "This is a violation of the Letter Agreement reached between the Debtors and the ALPA," Ms. Ceccotti tells the Court. The retired pilots rely on their Non-Qualified Benefit Payments for financial support, including their first of the month financial obligations. Pilots who have applied for pension benefits are also entitled to timely processing of their retirement applications and payment of benefits. Ms. Ceccotti argues that the Debtors must be compelled to maintain the Pilot Plan obligations until the Court authorizes their cessation. Besides, Ms. Ceccotti says, the Court denied the Debtors' request to forego the October Non-Qualified Benefit Payment. * * * Until the Court formally terminates the Debtors' Pilots Defined Benefit Pension Plan, all pension payments must continue to be made in full, Judge Wedoff rules. Judge Wedoff, therefore, directs the Debtors to pay ALPA and URPBPA the October 2005 non-qualified pension payment to retired pilots, and to process retirement requests from active pilots. 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. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNISYS CORP: Low Earnings Forecast Cues Fitch to Downgrade Ratings ------------------------------------------------------------------ Fitch Ratings has downgraded Unisys Corporation's issuer default rating, senior bank credit facility, and senior unsecured debt ratings to 'BB' from 'BB+' and placed all ratings on Rating Watch Negative. The action affects approximately $1.4 billion of debt. Resolution of Fitch's Rating Watch Negative will be determined by further clarity to the earnings shortfall, earnings expectations for the remainder of 2005, and the company's liquidity profile. The downgrade is a result of Unisys's announcement that earnings and revenue for the third-quarter ending Sept. 30, 2005, will be lower than expected, coupled with the continued decline in credit protection measures and financial performance, and an inability to meet financial guidance. Unisys' deteriorating financial performance is the result of protracted difficulties with several large transformational business process-outsourcing contracts along with continued weakness in the technology segment. For the third time in 2005, Unisys has reduced its 2005 revenue growth forecast and materially lowered its earnings forecast. Fitch expects services margins to remain weak as it takes Unisys longer than expected to resolve problem contracts. Services operating margins continue to be negatively affected by challenges associated with improving certain problem contracts, and Fitch believes Unisys's technology segment continues to suffer from persistent weakness in higher margin ClearPath system sales relative to ES7000 servers. For the latest 12 months ending June 30, 2005, Unisys's pro forma leverage (measured by total adjusted debt [including A/R securitizations]-to-prepension EBITDAR) increased to 3.8 times (x) from 2.9x one year ago. Interest coverage (EBITDA/interest incurred) declined to 6.2x on a prepension expense basis from 8.5x for the same time period one year ago. Fitch believes these metrics will deteriorate further in the intermediate term. Free cash flow (cash flow from operations minus capital expenditures) has been negative in three of the past four quarters ended June 2005, with total free cash flow of negative $92.6 million over this period. Free cash flow has remained minimal in the past few years due to profitability pressures, increased capital expenditures for revenue-generating IT services contracts, and significant cash restructuring charges. Fitch believes the aforementioned cash flow issues will continue for the intermediate term due to ongoing cost restructuring initiatives and the negative financial impact from two large transformational outsourcing contracts. US AIRWAYS: To Repurchase 7.7 Million Government Warrants --------------------------------------------------------- US Airways Group, Inc., (NYSE: LCC) agreed to repurchase all of the replacement warrants recently issued to the Air Transportation Stabilization Board in connection with the recently completed merger with America West Holdings Corporation. US Airways Group will repurchase approximately 7.7 million warrants to purchase shares of common stock that have an exercise price of $7.27 per share. The total purchase price for the warrants will be approximately $115.8 million. "The merger between America West and US Airways has been supported by more than $800 million in new equity investments and we expect to have approximately $2.5 billion in total cash when certain transactions close this week," US Airways Group Chairman, President, and CEO Doug Parker said. "We have elected to use a portion of these cash balances to purchase the outstanding warrants held by the ATSB, which we believe is in the best interests of the shareholders of the new US Airways. "We are particularly pleased to meet our commitment to the ATSB. These warrants were created in conjunction with America West's $439 million ATSB loan in 2002, which continues to be repaid on schedule, with interest. In addition, the ATSB is now receiving an additional $116 million for the warrants. "When America West received its ATSB loan, we believed taxpayers would be well compensated on that loan. We are pleased to be a part of making that happen. Our thanks to the ATSB and their staff for their continued hard work on behalf of the United States' taxpayers." US Airways began operations in 1939 as All American Aviation, bringing the first airmail service to many small communities in Western Pennsylvania and the Ohio Valley. Its history includes mergers with North Carolina's Piedmont Airlines, California's PSA Airlines, and recently, Arizona's America West Airlines. US Airways and America West have joined together to create the fifth largest domestic airline employing nearly 38,000 aviation professionals. US Airways, US Airways Shuttle and the US Airways Express operate approximately 4,000 flights per day and serve more than 225 communities in the U.S., Canada, Europe, the Caribbean and Latin America. US Airways is a member of the Star Alliance, which was established in 1997 as the first truly global airline alliance to offer customers global reach and a seamless travel experience. Other members include Air Canada, Air New Zealand, ANA, Asiana Airlines, Austrian, bmi, LOT Polish Airlines, Lufthansa, Scandinavian Airlines, Singapore Airlines, Spanair, TAP Portugal, Thai Airways International, United and VARIG Brazilian Airlines. South African Airways and SWISS will be integrated during the next 12 months. Overall, member carriers of the Star Alliance offer more than 15,000 daily flights to 795 destinations in 139 countries. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. * * * As reported in the Troubled Company Reporter on Oct. 4, 2005, Fitch Ratings has affirmed the issuer default rating of 'CCC' and the senior unsecured rating of 'CC' on the debt obligations of America West Airlines, Inc. Fitch has also initiated coverage of US Airways Group, Inc., (NYSE: LCC) with an IDR of 'CCC' and a senior unsecured rating of 'CC'. The recovery ratings for the senior unsecured obligations of both US Airways Group and AWA are 'R6', indicating an expected recovery of less than 10% in a default scenario. USG CORP: Gets Court OK to Challenge & Pay Off Taxes in Ill. Court ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware gave USG Corporation and its debtor-affiliates permission to challenge the State of Illinois' tax deficiency notices in the Illinois state courts and to liquidate their tax liability in that forum. The State of Illinois recently completed an audit of USG and its debtor and non-debtor affiliates' Illinois tax returns for calendar years 1997 through 2000. As a result of the audit, Illinois issued notices of deficiency to the USG Companies in the amount of $2.1 million, including a $1,537,705 notice of deficiency issued to USG Corporation and a $630,505 notice of deficiency issued to USG Funding Corporation, a direct subsidiary of USG Corporation. The Court also gave the Debtors permission to make any Deposits required under Illinois law to create jurisdiction in the Illinois trial court to hear the tax dispute underlying the notices of deficiency. 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) VILLAS AT HACIENDA: Court Grants Access to HUD Cash Collateral -------------------------------------------------------------- The Hon. Eileen W. Hollowell of the U.S Bankruptcy Court for the District of Arizona allowed Villas At Hacienda Del Sol, Inc., to use cash collateral securing repayment of its debts to the U.S. Department of Housing and Urban Development. The Debtor asked the Bankruptcy Court for access to HUD's cash collateral in order to continue its business activities and achieve a successful reorganization. HUD's Claim The Debtor estimates the total amount due to HUD as of the petition date to be in excess of $12 million. Repayment of this debt is secured by: a) a first mortgage, blanket lien on the Debtor's 218 unit apartment complex; b) a blanket lien on all personal property, including licenses; and c) an assignment of rents, leases and management agreements. Adequate Protection As adequate protection for the use of cash collateral, the Debtor agrees to remit $5,000 monthly to the government beginning Aug. 20, 2005. The Debtor also grants HUD valid, binding and perfected replacement liens in all of the Debtor's postpetition leases, rents and revenues from the apartment complex. In addition, the Debtor will provide the federal housing authority with a monthly report establishing net income and copies of monthly bank statements from all debtor-in-possession accounts. Pursuant to the cash collateral order, the Housing Department is also allowed to make a physical inspection of the apartment complex and all books and records related to the collateral. The Debtor will use the cash collateral based on a 2005 annual budget, a copy of which is available at no charge at http://researcharchives.com/t/s?24a The Bankruptcy Court limits the Debtor's use of cash collateral to no more than 10% of any budgeted line item or 5% of the entire monthly operating budget without prior permission from HUD. Headquartered in Tucson, Arizona, Villas At Hacienda Del Sol, Inc. -- http://www.thevillasathaciendadelsol.com/-- filed for chapter 11 protection on March 28, 2005. (Bankr. D. Ariz. Case No. 05-01482). Matthew R.K. Waterman, Esq., at Waterman & Waterman, PC, represents the Debtor. When the Company filed for protection from its creditors, it estimated assets and liabilities ranging from $10 million to $50 million. VILLAS AT HACIENDA: Lenox Wants $16 Million Claim Payment ASAP -------------------------------------------------------------- Lenox Mortgage VI LLC, a secured creditor of Villas At Hacienda Del Sol, Inc., wants to receive full payment for its approximately 16,073,718 claim within 24 hours following the closing of the sale of the Debtor's 218-unit apartment complex to Wells Property Holdings, LLC. The sale is expected to close in November. Lenox Mortgage has requested the U.S. Bankruptcy Court for the District of Arizona to issue an order facilitating the accelerated payment. Lenox Mortgage's Claim Lenox Mortgage is a successor to a deed of trust, dated Oct. 22, 2002, between the Debtor and PFC Corporation in the original principal amount $16,120,600. Lenox Mortgage's claim is secured by a first priority lien on the apartment complex and additional liens on the Debtor's real and personal properties. The Bankruptcy Court approved the sale of the apartment complex to Wells Property for $27.1 million on Aug. 17, 2005. The Bankruptcy Court's order also allowed the Debtor to pay off its debt to Lenox Mortgage out of the sale proceeds. The 16,073,718 due to Lenox Mortgage includes principal, interest and a 5% pre-payment premium. As previously reported in the Troubled Company Reporter, the U.S. Dept. of Housing and Urban Development also holds a first mortgage, blanket lien on the apartment complex. The property is also encumbered by 11 other secured claims: Lien Holders Amount ------------ ------ Mechanics and Materialman's of Western Plains Development Corp. $1,669,705 David Dodrill, II, dba D&D Signs 7,313 Labor, Services, Material, 36,093 Machinery Fixtures, Tools of Eagle Rock Excavating Labor, Services, Material, 49,200 Machinery Fixtures, Tools of Blue Star Electric, Inc. Materialman and Mechanics lien of 83,243 Environmental Earhscapes, Inc. Mechanic's, Materialman's or 1,250 Professional lien of A-1 Steel Inc. Laborer & Materialman of M&B 36,660 Mechanical Inc. Laborer & Materialman of Ron's 105,493 Concrete Construction Inc. Mechanic's lien of Select Interiors 47,855 Materialman and Mechanics lien of 7,372 Central Valley Specialties, Inc. Labor, Services, Material, Machinery 10,525 Fixtures and Tools of Lee's Asphalt Inc. Headquartered in Tucson, Arizona, Villas At Hacienda Del Sol, Inc. -- http://www.thevillasathaciendadelsol.com/-- filed for chapter 11 protection on March 28, 2005. (Bankr. D. Ariz. Case No. 05-01482). Matthew R.K. Waterman, Esq., at Waterman & Waterman, PC, represents the Debtor. When the Company filed for protection from its creditors, it estimated assets and liabilities ranging from $10 million to $50 million. VISION AUTOMOTIVE: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Vision Automotive Group LLC P.O. Box 1725 Elkins, West Virginia 26241 Bankruptcy Case No.: 05-04856 Type of Business: The Debtor is a car dealer. See http://www.visionauto.com/ Chapter 11 Petition Date: October 5, 2005 Court: Northern District of West Virginia (Elkins) Judge: L. Edward Friend II Debtor's Counsel: Stephen L. Thompson, Esq. Barth & Thompson P.O. Box 129 Charleston, West Virginia 25321 Tel: (304) 342-7111 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ The Inter-Mountain $9,850 P.O. Box 1339 Elkins, WV 26241 Harris Oil Co. $6,847 P.O. Box 685 Spencer, WV 25276 ADP Dealer Services $5,305 P.O. Box 88921 Chicago, IL 60695-1921 Image Advertising II of WV LP $1,175 Unifirst Corp. $2,773 Allegheny Power $1,743 Dealer Tire $1,741 Advance Auto Parts $1,612 DHL Express $1,500 Bell & Howell Financial Services Co. $1,403 Fisher Auto Parts $1,387 Tygarts Valley Sanitation $1,219 Ogden Directories $1,166 Performance Motors $1,042 City Net $999 Elkins Tire $897 Purchase Power $833 Collett Janitorial Services $816 Clifford V. Henson $683 Glotfelty Tire Center $666 VISPHOR CORP: Inks Agreement to Buy Sunaptic for $3.2 Million ------------------------------------------------------------- Visiphor Corporation inked an agreement to acquire Sunaptic Solutions Incorporated, a privately held, Vancouver-based company specializing in providing integration solutions using Microsoft technologies such as .NET and BizTalk Server for the health care and financial services marketplaces. Visiphor will acquire 100% of the outstanding shares of Sunaptic for $3,200,000. The consideration consists of $2,720,000 in cash and 960,000 of Visiphor's common shares at a deemed price of $0.50 per share. The common shares issued by Visiphor will be held in escrow, with 50% to be released on the 12-month anniversary of closing of the acquisition and 50% to be released on the 18-month anniversary of the closing of the acquisition. The closing of the acquisition is subject to Visiphor completing an associated financing of sufficient size to fund the cash portion of the consideration. The transaction is required to close on or before November 15, 2005. This transaction is subject to regulatory approval. Sunaptic has a client list that includes several major provincial health authorities and companies in the aerospace, energy, financial services and media sectors. Sunaptic revenues were $1.2 million in 2004 and are expected to be over $4 million in 2005. The logistics involved in merging Sunaptic and Visiphor operations are significantly simplified by the fact that both companies have their head offices in Vancouver. As a result of the acquisition Visiphor becomes a Microsoft Gold Certified Partner. "I am thrilled with all aspects of this transaction," Visiphor President and CEO Roy Trivett said. "Sunaptic brings an immediate, significant footprint in the health care and financial services markets. They have great management, an incredibly talented pool of professional resources, and an impressive backlog of business. They are profitable and are expected be immediately accretive to Visiphor. This gives our company the critical mass necessary to address exciting growth opportunities in all major verticals of the business and data integration sectors. We are in the right place, at the right time with the right technology." Sunaptic President Mike Hilton added "This positions our combined entity with an optimal blend of product and solution delivery capability. Our industry-focused solution consulting will keep us in constant touch with the changing needs of our customer communities. This will allow us to maintain the leadership position that we enjoy in the marketplace today." Based in Vancouver, British Columbia, Visiphor Corporation specializes in developing and marketing software products that enable integrated access to applications and databases. The company also develops solutions that automate law enforcement procedures and evidence handling. These solutions often incorporate Visiphor's proprietary facial recognition algorithms and tools. Using industry standard "Web Services", Visiphor delivers a secure and economical approach to true, real-time application interoperability. The corresponding product suite is referred to as the Briyante Integration Environment (BIE). * * * Going Concern Doubt KPMG LLP, the Company's independent registered public accounting firm, in its audit report on the Company's December 31, 2004 financial statements, said that the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern. For the six-months ended June 30, 2005, the Company had incurred a loss from operations of $3,016,481 and a deficiency in operating cash flow of $1,788,221. In addition, the Company has incurred significant operating losses and net utilization of cash in operations in all prior periods. At June 30, 2005, the Company has a working capital deficiency of $54,290. VISPHOR CORP: Raising C$5.5M in Private Equity Deal to Fund Merger ------------------------------------------------------------------ Visiphor Corporation entered into an agreement with an unidentified agent to complete a proposed brokered private placement by way of an offering memorandum of up to C$5,500,000. The Offering will consist of up to 11 million units priced at $0.50 per Unit. Each Unit will consist of one common share and one half common share purchase warrant. Each whole warrant will entitle the holder for one year from the date of issue of the Units to acquire one additional common share in the capital of Visiphor at an exercise price of $0.60 or at $0.75 for a second year. The private placement is subject to regulatory approval. The Agent's consideration for the Offering will be: a) a cash commission of 7% of the gross proceeds of the offering; b) brokers' warrants entitling the holder to purchase up to such number of Units as is equal to 10% of the total number of Units sold through the Offering, each warrant exercisable for a period of two years for one Unit at $0.50; c) a CDN $25,000 work fee cash plus reasonable expenses. The proceeds of the private placement will be used to complete the acquisition of Sunaptic Solutions Incorporated and to provide the operating capital to fund the merger of the two companies and the expansion of the combined business. Based in Vancouver, British Columbia, Visiphor Corporation specializes in developing and marketing software products that enable integrated access to applications and databases. The company also develops solutions that automate law enforcement procedures and evidence handling. These solutions often incorporate Visiphor's proprietary facial recognition algorithms and tools. Using industry standard "Web Services", Visiphor delivers a secure and economical approach to true, real-time application interoperability. The corresponding product suite is referred to as the Briyante Integration Environment (BIE). * * * Going Concern Doubt KPMG LLP, the Company's independent registered public accounting firm, in its audit report on the Company's December 31, 2004 financial statements, said that the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern. For the six-months ended June 30, 2005, the Company had incurred a loss from operations of $3,016,481 and a deficiency in operating cash flow of $1,788,221. In addition, the Company has incurred significant operating losses and net utilization of cash in operations in all prior periods. At June 30, 2005, the Company has a working capital deficiency of $54,290. WELCH PROPERTIES: Case Summary & 6 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Welch Properties, LLC 1205 North Calumet Avenue Hammond, Indiana 46320 Bankruptcy Case No.: 05-66725 Chapter 11 Petition Date: October 10, 2005 Court: Northern District of Indiana (Hammond) Judge: J. Philip Klingeberger Debtor's Counsel: Kenneth A. Manning(KS), Esq. James, James & manning, P.C. 200 Monticello Drive Dyer, Indiana 46311 Tel: (219) 865-8376 Fax: (219) 865-4054 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ U.S. Small Business $700,000 Administration 429 North Pennsylvania St. #100 Indianapolis, IN 46204-1873 JP Morgan/Bank One, NA $676,000 c/o Susan Trent, Esq. Rothberg, Logan & Warsco, LLP P.O. Box 11647 Fort Wayne, IN 46859-1647 Lake County Treasurer $190,000 Attn: Faye Givens 2293 North Main Street Crown Point, IN 46307 David & Barbara Welch Advanced attorney fee $5,839 1169 Kenilworth Circle and filing fees Naperville, IL 60540 Indiana Dept. of Revenue (Notice purpose) $1 Bankruptcy Section, Room N203 Indiana Government Center North 100 North Senate Avenue Indianapolis, IN 46204 Internal Revenue Service (Notice purpose) $1 c/o Office of U.S. Attorney Attn: Rob Morlock Hammond, IN 46320 WINDSWEPT ENVIRONMENTAL: Borrows $1.35 Million More from Laurus --------------------------------------------------------------- Windswept Environmental Group, Inc., borrowed an additional $1,350,000 from Laurus Master Fund, Ltd., to finance additional anticipated expenses. Windswept, in turn, issued a new replacement note, dated Oct. 6, 2005, in the principal amount of $7,350,000. The new replacement note has substantially the same terms as the last replacement note dated Sept. 9, 2005, in the principal amount of $6,000,000 issued by Windswept to Laurus. The aggregate proceeds received by Windswept were used to pay a $52,650 management fee to Laurus Capital Management, L.L.C., and the balance of the proceeds are being used by Windswept to fund hurricane remediation projects pursuant to a written acknowledgement to Laurus. A copy of the amended and restated secured convertible note is available for free at http://ResearchArchives.com/t/s?245 Headquartered in Bay Shore, N.Y., Windswept Environmental Group, Inc. -- http://www.tradewindsenvironmental.com/-- through its wholly owned subsidiary, Trade-Winds Environmental Restoration, Inc., provides a full array of emergency response, remediation, disaster restoration and commercial drying services to a broad range of clients. At June 30, 2005, the Company's balance sheet shows $9,972,484 in total assets and a $1,310,050 stockholders deficit. Going Concern Doubt Massella & Associates, CPA, PLLC, the Company's auditor, expressed substantial doubt about the Company's ability to continue as a going concern pointing to the Company's: * recurring losses from operations, * working capital deficit, * stockholders' deficit, * difficulty in generating sufficient cash flow to meet its obligations and sustain its operations. WODO LLC: Can Borrow $5 Million to Fund WULA Settlement Agreement ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District Of Washington Gave its stamp of approval to Wodo, LLC, fka Trillium Commons, LLC's request to borrow $5 million from Trillium Corporation. The Debtor can now finance its settlement agreement with Western United Life Assurance Company. The proposed settlement agreement provides for payment to WULA of $15,800,000 in full satisfaction of its claims against the Debtor, conditioned upon WULA's receipt of: * $2,000,000 settlement payment by Oct. 21, 2005, * an additional $3,000,000 Settlement Payment on or before Dec. 1, 2005, and * the remaining $10,800,000 Settlement Payment on or before March 1, 2006. WULA holds a first position lien of the Debtor's property as a collateral allowing the Debtor to obtain the funds necessary to make the first two settlement payments. Proposed Borrowing and Granting of Liens Polygon Financial 05, LLC, a lender to Trillium Corporation, the Debtor's parent company, holds a loan to Trillium secured by various timberlands and other properties located primarily in Whatcom and Skagit Counties. Trillium is in the process of selling a portion of the timberland collateral for the Timber loan, and has negotiated an arrangement with Polygon that will enable the parent company to fund the first two WULA settlement payments. Polygon will loan $5 million to Trillium by allowing Trillium to retain and not repay a portion of the Timber Loan from the timberlands sale proceeds. Trillium will pledge to Polygon additional real property collateral to secure the WULA Settlement Loan. Trillium will provide the Debtor the WULA Settlement Loan in two tranches: a) $2 million in October 2005; and b) $3 million on Dec. 1, 2005. The Debtor will grant Trillium a junior deed of trust on the WULA collateral, which Trillium will immediately pledge to Polygon as an additional collateral for its obligations to Polygon. The Debtor will guarantee to Polygon Trillium's repayment of $2 million, then the additional $3 million, plus interest and costs. Headquartered in Bellingham, Washington, Wodo, LLC, fka Trillium Commons, LLC, is a real estate company. The Company filed for chapter 11 protection on January 18, 2005 (Bankr. W.D. Wash. Case No. 05-10556). Gayle E. Bush, Esq., at Bush Strout & Kornfeld represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $90,380,942 and total debts of $21,451,210. WORLDCOM INC: Bankr. Court Approves N.Y. Fund Claims Settlement --------------------------------------------------------------- Pursuant to Rule 7023 of the Federal Rules of Bankruptcy Procedure, Reorganized WorldCom, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to recognize the withdrawal of the New York Fund Claims in the context of the Ebbers Settlement and the related intercreditor agreement, as a settlement of claims on behalf of the entire Class. The Reorganized Debtors further ask the Court to disallow the Other Fund Claims as duplicative. The Debtors, the Class and Bernard J. Ebbers participated in intense, arm's-length negotiations to resolve the claims against Mr. Ebbers in the WorldCom Securities Litigation. The United States Attorney for the Southern District of New York facilitated the parties' settlement discussion. The negotiations culminated in a tripartite agreement, which provides for: -- Mr. Ebbers' turnover of substantially all of his assets; and -- the allocation of those assets among the Class and the Debtors in satisfaction of their claims against Mr. Ebbers. In consideration of the agreement to allocate a substantial portion of the Ebbers assets to the Class, the New York Fund has agreed to withdraw its claims against the Debtors, with prejudice. The Ebbers Settlement further contemplates the establishment of a liquidating trust for the benefit of the Class and the Debtors. The Debtors will contribute to the Liquidating Trust the Joshua Holdings Promissory Note, which was pledged and endorsed to the Debtors as collateral security for the financing arrangements it made with Mr. Ebbers prior to the Petition Date. To the extent a recovery is realized on the Joshua Holdings Promissory Note, the recovery will be allocated 2/3 to the Class and 1/3 to the Debtors. Otherwise, the Liquidating Trust will distribute 75% of the liquidated value of its assets to the Class, and 25% to the Debtors. Adam P. Strochak, Esq., at Weil, Gotshal & Manges, in Washington, D.C., explains that in consideration of the withdrawal of the New York Fund Claims, Class members who have not opted out will receive distributions on account of their securities fraud claims against the Debtors. However, the precise amount of any distributions related to the Joshua Holdings Promissory Note and other unliquidated assets cannot be determined at this time. Those distributions will be made after Judge Cote's final approval of all settlements and a plan of distribution, and after the Liquidating Trust liquidates its assets. The Securities Fraud Claims Various state and municipal retirement systems filed substantially similar proofs of claim, seeking damages on account of the purchase or sale of equity or debt securities of WorldCom or its subsidiaries: Claimant Claim No. -------- --------- Arkansas Teachers Retirement System 23121 Arkansas Public Employees Retirement System 22945 22946 Arizona State Retirement System 22900 - 22909 Iowa Public Employees Retirement System 20239 Iowa Public Employees Retirement System 20240 Kentucky Teachers' Retirement System 18235 Pennsylvania State Employees' 16154 Retirement System 16155 Public School Teachers Pension 22941 & Retirement Fund of Chicago Arizona Retirement Responds The Arizona State Retirement System objects to the Debtors' request for the disallowance and the expungement of its claims. The ASRS is asserting its rights to set off the claims it has against the Debtors against the Debtors' alleged claims for tax refunds due the Debtors from the Arizona Department of Revenue. Although the Debtors have been working with the Arizona Revenue Dept. for the past two years in auditing the amount of the tax refund, which may be owed to them, the ASRS is not privy to the amount in controversy, Tamalyn E. Lewis, Esq., at Ridenour, Hienton, Kelhoffer, Lewis & Garth, P.L.L.C., in Phoenix, Arizona tells Judge Gonzalez. Nonetheless, Ms. Lewis contends, ASRS is entitled to set off the entire amount of the refunds against the claims it has against the Debtors. Ms. Lewis asserts that setoff rights exist independent of the right to receive a distribution through the claims administrative process of the estate. Courts have routinely permitted claims to be asserted for setoff purposes even though no proof of claim was ever filed, Ms. Lewis states. In addition, courts have held that absent an express provision in a settlement agreement that terminates setoff rights, setoff rights are preserved even if the underlying claim in the bankruptcy has been compromised by the settlement. "The disallowance of ASRS' Proofs of Claim and the requisite waiver of ASRS' rights of setoff were not terms nor conditions of the Settlement with [Bernard] Ebbers and the Class, and, thus, MCI's request for this relief should be denied," Ms. Lewis argues. "ASRS may be prevented from participating is distributions from the estate by virtue of the Settlement, but ASRS' setoff rights should not be extinguished in connection with the approval of the Settlement." Ms. Lewis points out that it would be unfair to require the payment in full of the tax refunds alleged to be owed when ASRS has asserted valid claims against the Debtors. ASRS is entitled to set off its claims against the tax refunds allegedly due the Debtors and the issue should be resolved in the context of ASRS' pending motion for summary judgment assigned to Judge Hardin. * * * Judge Gonzalez approves the New York Fund Claims Settlement, subject to a final approval by the United States District Court for the Southern District of New York in the WorldCom Securities Litigation. The Court rules that in the event the Settlement is not finally approved by the District Court, all claims disallowed or withdrawn by the Bankruptcy Court Order will revert to their status as of the day immediately before the execution date of the Settlement. The Court deems the NY Fund Claims as withdrawn, with prejudice, except for the Claim Nos. 22900 through 22909 filed by the Arizona State Retirement System. The Court deems the ASRS to have waived any right to a distribution under the Plan or from the Debtors' estates on account of its Claims. Notwithstanding the waiver, Arizona State Retirement System's rights, if any, will not be affected: (a) The right to receive proceeds as a member of the Class of the WorldCom Securities Litigation; or (b) The right to setoff pursuant to Section 553 of the Bankruptcy Code or applicable non-bankruptcy law, or any of the Debtors' related claims or defenses. 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: DJP&A Wants to Withdraw as Counsel to Next Factors ---------------------------------------------------------------- Douglas J. Pick & Associates asks the U.S. Bankruptcy Court for the Southern District of New York to grant it leave to withdraw as counsel of record to Next Factors, Inc., in WorldCom, Inc., and its debtor-affiliates' chapter 11 cases. Next Factors is engaged in the business of purchasing creditors' claims in bankruptcy matters pending throughout the United States. Douglas J. Pick, Esq., relates that at various times throughout the pendency of the Debtors' bankruptcy cases, Next Factors has held an interest in approximately 112 claims against the Debtors, aggregating $793,798. Virtually all of the claims held by Next Factors were classified as Class 4 Convenience Claims under the Plan. In May 2004, Next Factors retained DJP&A to address what Next Factors perceived to be unauthorized demands or threats made by the Debtors and their professionals in connection with the treatment of Next Factors' claims. In accordance with the instructions received from Next Factors, DJP&A drafted numerous letters and made several telephone calls on Next Factors' behalf, but did not file any documents with the Court in connection therewith, Mr. Pick says. In October 2004, the Debtors filed numerous claims objections as to certain of the claims held by Next Factors. Next Factors interposed opposition papers in connection with the Claims Objections on a pro se basis. In early November 2004, Next Factors requested DJP&A's assistance in addressing and conducting discovery in connection with the Claims Objections. Thereafter, DJP&A drafted and served separate requests for production of documents in connection with the Claims Objections. Mr. Pick adds that DJP&A assisted Next Factors in attempting to resolve the Claims Objections by communicating with, and forwarding documents to, the Debtors' various professionals. In February 2005, Next Factors advised DJP&A that it would be handling all discussions and other matters in connection with the Claims Objections in-house. Since that time, Mr. Pick maintains, DJP&A's involvement in connection with the matter has been substantially limited -- responding to inquiries by the Debtors' professionals and advising them to contact Next Factors directly. Mr. Pick tells Judge Gonzalez that during the time that it performed services on Next Factors' behalf, DJP&A's invoices went largely unpaid. As a result, Next Factors owes DJP&A substantial amounts for professional services rendered in connection with the claims objection proceeding. Accordingly, in May 2005, DJP&A informed Next Factors that it would not continue to represent Next Factors unless Next Factors' account was current. Next Factors has since advised DJP&A that it has no intention of paying the amounts owed, Mr. Pick says. Nonetheless, Next Factors has refused to consent to DJP&A's withdrawal as its counsel, thus requiring DJP&A to seek the Court's approval. Mr. Pick asserts that DJP&A has demonstrated satisfactory cause to be permitted to withdraw as counsel of record to Next Factors. "[Morever,] it does not appear that Next Factors or the Debtors would suffer any prejudice if Next Factors is required to retain substitute counsel," Mr. Pick contends. Next Factors Objects David O'Donnell, president of Next Factors, Inc., argues that Mr. Pick's affidavit in support of its Motion to Withdraw contains factual errors and omits relevant facts necessary for the Court's consideration of the relief sought. Mr. O'Donnell relates that the purported outstanding invoices relate to motion prepared by Eric C. Zabicki, an associate of DJP&A, that was to be filed in the Debtors' bankruptcy cases. Mr. Pick refused to allow Mr. Zabicki to file the motion. "[Mr. Pick] failed to inform the Court that the Outstanding Invoices relate to the Zabicki Motion, and that all such work billed by Mr. Zabicki was to be nullified by Mr. Pick's unilateral Refusal." Next has always agreed to pay, and continues to stand ready to pay, the Outstanding Invoices provided that Mr. Pick withdraws his Refusal and the Zabicki Motion is zealously pursued. The Outstanding Invoices total approximately $5,000. According to Mr. O'Donnell, the Zabicki Motion: (1) Explains that the entrance of over 50 different claims traders before and after the retention of the many professionals hired by the Debtors poses a significant probability that one or more of the professionals may have failed to identify and disclose a particular claims trader with respect to their initial and continuing duties related to conflict checks; (2) Exposes the Debtors' threats on Undisputed Claims to extort broad release. Mr. O'Donnell says that the Debtors threatened to file objections on behalf of all of Next Factors' claims if Next Factors did not execute the Broad Release on various claims. Next Factors contends that demanding Broad Release, particularly via the withholding of distributions and threatening objections on Undisputed Claims, constitutes extortion; (3) Either provides or could result in the disclosure of evidence of criminal activity under the Crimes and Criminal Procedures Code; and (4) Seeks information which would expose differentiation in the treatment of claims traders in the timing and resolution of their claims. "Mr. Pick was aware that an eventual objective of Next [Factors] was the investigation of any correlation among the set of claims traders, conflicted parties, and beneficiaries of the Intercreditor Agreement [under the Confirmed Plan of Reorganization] with respect to disparities in treatment vis-a-vis other creditors," Mr. O'Donnell says. Mr. Pick tells Next Facts that his reason for his refusal was that the Zabicki Motion was "not supported in fact or law". However, Mr. O'Donnell points out that Mr. Pick also suggested that Next Factors take the very same Zabicki Motion and find another attorney to file it. "The Pick Motion is motivated by Mr. Pick's desire to keep the numerous issues related to the Zabicki Motion as well as information likely to become disclosed outside of public view and scrutiny," Mr. O'Donnell contends. Accordingly, Next Factors ask the Court to: (a) deny DJP&A's request to withdraw as its counsel; (b) compel Mr. Pick to explain his refusal, or in the alternative, direct DJP&A to file the Zabicki Motion; (c) rule that the Zabicki Motion is supported in fact and law, and could be filed without violating any rules of the Court; and (d) appoint an examiner not currently associated with the bankruptcy and reorganization industry that is empowered to: * coordinate a conflict update among all professionals of the Debtors for the set of claims traders and beneficiaries of the Intercreditor Agreement; * investigate any correlation between the identities of conflicted parties and (i) beneficiaries of the Intercreditor Agreement; and (ii) any disparity in the manner of treatment of distributions among claims traders and conflicted parties and vis-a-vis all general unsecured creditors; and * publicly report to the Court his findings. According to Mr. O'Donnell, the conflict check will define each Potential Conflict to be inclusive as to the parent-subsidiary and affiliate relationships existing for each Potential Conflict. Furthermore, the beneficial ownership as to each claim traded by each Potential Conflict will have the effect of enlarging the Potential Conflict set by the inclusion of each beneficial owner. For each member of the Potential Conflict set for which a Debtor professional was also employed, the examiner would confirm evidence of contemporaneously informed and granted releases by each conflicted party and the Debtors. Upon information and belief, a written release describing the issues affecting each party to a conflict is required by the bar associations of most, if not every state, notwithstanding any additional statutory requirements. 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) YOUTHSTREAM MEDIA: June 30 Balance Sheet Upside-Down by $79.28-Mil ------------------------------------------------------------------ YouthStream Media Networks, Inc., delivered its quarterly report on Form 10-QSB for the quarter ending June 30, 2005, to the Securities and Exchange Commission on Sept. 30, 2005. The Company reported a $1,784,024 net loss on $29,127,566 of net revenues for the quarter ending June 30, 2005. At June 30, 2005, the Company's balance sheet shows $34,857,302 in total assets and a $79,280,987 stockholders deficit. WeinbergCompany's independent registered public accounting firm, in its report dated Dec. 17, 2004, included an explanatory paragraph stating that the Company's recurring losses and accumulated deficit, working capital deficiency and negative cash flow, among other things, raise substantial doubt about the Company's ability to continue as a going concern. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?246 YouthStream Media Networks, Inc., owns and operates Kentucky Electric Steel. 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http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Board of Directors Meeting Rochester, New York Contact: 716-440-6615; http://www.turnaround.org/ December 12-13, 2005 PRACTISING LAW INSTITUTE Understanding the Basics of Bankruptcy & Reorganization New York, New York Contact: http://www.pli.edu/ December 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, Virginia Contact: 703-912-3309; http://www.turnaround.org/ January 5, 2006 TURNAROUND MANAGEMENT ASSOCIATION NJTMA Holiday Party Iberia Tavern & Restaurant, Newark, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ January 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION PowerPlay - TMA Night at the Thrashers Philips Arena, Atlanta, Georgia Contact: 678-795-8103 or http://www.turnaround.org/ January 26-28, 2006 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, Colorado Contact: 1-703-739-0800; http://www.abiworld.org/ February 9-10, 2006 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium Eden Roc, Miami, Florida Contact: 1-703-739-0800; http://www.abiworld.org/ March 2-3, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Legal and Financial Perspectives on Business Valuations & Restructuring (VALCON) Four Seasons Hotel, Las Vegas, Nevada Contact: http://www.airacira.org/ March 2-5, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES 2006 NABT Spring Seminar Sheraton Crescent Hotel, Phoenix, Arizona Contact: http://www.pli.edu/ March 9, 2006 AMERICAN BANKRUPTCY INSTITUTE Nuts & Bolts for Young Practitioners Century Plaza, Los Angeles, California Contact: 1-703-739-0800; http://www.abiworld.org/ March 10, 2006 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Century Plaza, Los Angeles, California Contact: 1-703-739-0800; http://www.abiworld.org/ March 22-25, 2006 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Desert Ridge, Phoenix, Arizona Contact: http://www.turnaround.org/ March 30 - April 1, 2006 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Scottsdale, Arizona Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ April 5-8, 2006 MEALEYS PUBLICATIONS Insurance Insolvency and Reinsurance Roundtable Fairmont Scottsdale Princess, Scottsdale, Arizona Contact: http://www.mealeys.com/ April 6-7, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES The Seventh Annual Conference on Healthcare Transactions Successful Strategies for Mergers, Acquisitions, Divestitures, and Restructurings The Millennium Knickerbocker Hotel, Chicago, Illinois Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ April 18-22, 2006 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting JW Marriott, Washington, D.C. Contact: 1-703-739-0800; http://www.abiworld.org/ May 4-6, 2006 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION Fundamentals of Bankruptcy Law Chicago, Illinois Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ May 8, 2006 AMERICAN BANKRUPTCY INSTITUTE NYC Bankruptcy Conference Millennium Broadway, New York, New York Contact: 1-703-739-0800; http://www.abiworld.org/ May 18-19, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Third Annual Conference on Distressed Investing Europe Maximizing Profits in the European Distressed Debt Market Le Meridien Piccadilly Hotel, London, UK Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ May 22, 2006 TURNAROUND MANAGEMENT ASSOCIATION LI TMA Annual Golf Outing Indian Hills Golf Club, Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ June 7-10, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 22nd Annual Bankruptcy & Restructuring Conference Grand Hyatt, Seattle, Washington Contact: http://www.airacira.org/ June 15-18, 2006 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ June 22-23, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Ninth Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel, Chicago, Illinois Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ July 13-16, 2006 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Newport Marriott, Newport, Rhode Island Contact: 1-703-739-0800; http://www.abiworld.org/ July 26-29, 2006 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz Carlton Amelia Island, Amelia Island, Florida Contact: 1-703-739-0800; http://www.abiworld.org/ September 7-9, 2006 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Wynn Las Vegas, Las Vegas, Nevada Contact: 1-703-739-0800; http://www.abiworld.org/ October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage, Long Island, New York Contact: 312-578-6900; http://www.turnaround.org/ October 25-28, 2006 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ February 2007 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium San Juan, Puerto Rico Contact: 1-703-739-0800; http://www.abiworld.org/ April 11-15, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI Annual Spring Meeting J.W. Marriott, Washington, DC Contact: 1-703-739-0800; http://www.abiworld.org/ June 6-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 23rd Annual Bankruptcy & Restructuring Conference Westin River North, Chicago, Illinois Contact: http://www.airacira.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, Florida Contact: http://www.ncbj.org/ October 22-25, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott, New Orleans, Louisiana Contact: 312-578-6900; http://www.turnaround.org/ December 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin Mission Hills Resort, Rancho Mirage, California Contact: 1-703-739-0800; http://www.abiworld.org/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, Arizona Contact: http://www.ncbj.org/ October 28-31, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ October 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, Nevada Contact: http://www.ncbj.org/ October 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://turnaround.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***