/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/051026.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 26, 2005, Vol. 9, No. 254 Headlines 127 RESTAURANT: Creditor Supports Proposed Ch. 11 Case Dismissal AAMES MORTGAGE: Poor Performance Cues S&P to Junk Class B Certs. ACTIVANT SOLUTIONS: Gets $182.4 Mil. from Private Debt Placements ADELPHIA COMMS: Asks Court to Approve Hanover Settlement Agreement AHPC HOLDINGS: Grant Thornton Raises Going Concern Doubt AMERICAN AIRLINES: Equity Deficit Widens to $352 Mil. at Sept. 30 AMERICAN MOULDING: Look for Bankruptcy Schedules on November 7 AMERICAN MOULDING: Section 341(a) Meeting Slated for November 15 AOL LATIN AMERICA: Selling AOL Argentina to Datco for $1 Million ARLINGTON HOSPITALITY: Wants Until October 31 to Decide on Leases ATA AIRLINES: Can Use ATSB Lenders' Cash Collateral Until Nov. 1 ATA AIRLINES: Wants Confirmation Hearing Scheduled on December 20 ATA AIRLINES: Asks Court to Establish Solicitation Procedures ATLANTIC & WESTERN: Fitch Rates $300MM Catastrophe Bonds at Low-B AUBURN FOUNDRY: Ch. 7 Trustee Wants Laderer & Fischer as Counsel BANK of AMERICA: Fitch Upgrades Low-B Ratings on 11 Cert. Classes BEAR STEARNS: Fitch Rates $2.79 Million Class M-10 Certs. at BB BOYDS COLLECTION: Look for Bankruptcy Schedules on December 15 CHUKCHANSI ECONOMIC: S&P Rates Proposed $310M Senior Notes at BB- CHRISTOPHER MILLER: Case Summary & 6 Largest Unsecured Creditors COLLINS & AIKMAN: Wants Court OK to Tap Deloitte Tax as Consultant COLLINS & AIKMAN: DaimlerChrysler Asserts Recoupment Rights COLLINS & AIKMAN: GECC Asks Court to Enforce Right to Payment COLONIAL ADVISORY: Fitch Retains Junk Ratings on $168.56M Notes COMMERCIAL MORTGAGE: S&P Assigns Low-B Ratings to 6 Cert. Classes COMPOSITE TECH: Plan Confirmation Hearing to Continue on Oct. 28 CREDIT SUISSE: Moody's Junks Series 2001-HE 17 Class B Certs. CREDIT SUISSE: S&P Downgrades Cert. Class I-B-3 to BB from BBB- DALRADA FINANCIAL: Pohl Mcnabola Raises Going Concern Doubt DANA CORP: Board Approves Operational & Strategic Initiatives DPAC TECH: Incurs $1.3MM Net Loss in Quarter Ended August 31 DPAC TECH: Amends QuaTech Reorganization and License Agreement DURANGO GEORGIA: Heightened Interest Prompts Change of Bid Venue EMPIRE FINANCIAL: Miller Ellin Replaces Sweeney Gates as Auditor ENRON CORP: Bankruptcy Court Okays JPMorgan Bilat L/C Agreement ENRON CORP: Coyote Springs Holds $90 Mil. Allowed Unsecured Claim ENRON CORP: Court Allows ECP Estate Unsec. Claims for $12.3-Mil. FEDERAL-MOGUL: Wants Court Nod to Perform Under U.K. Settlement FEDERAL-MOGUL: Resolving Owens-Illinois Dispute for $4.8 Million FIRST BANCORP: Fitch Pares Rating to BB After SEC Audit Inquiry FOAMEX INT'L: Court Sets December 8 as General Claims Bar Date FREEDOM RINGS: Can Use Up to $500K of Krispy Kreme Cash Collateral FREEDOM RINGS: Wants to Walk Away from Two Lease Agreements GARDENBURGER INC: CapitalSource Forebears Default Until Dec. 15 GLYCOGENESYS INC: Inks $20-Million Stock Deal with Fusion Capital GMAC COMMERCIAL: Principal Loss Cues S&P to Rate Class F at BB HARRIS CORP: Leitch's Shareholders Approve $14 Per Share Buy-Out HEILIG-MEYERS: Asks Court to Disallow Five Indiana Tax Claims HEWETT'S ISLAND: Fitch Affirms BB Rating on $4.74MM Secured Notes HEXCEL CORPORATION: Sept. 30 Balance Sheet Upside-Down by $8 Mil. ICOS CORP: Lilly ICOS Venture Earns $19.8 Million in 3rd Quarter IMPAC SECURED: Moody's Lowers Class B Certificates' Rating to B1 INTERSTATE BAKERIES: Creditors Panel Hires Shughart as Co-Counsel JOHN Q. HAMMONS: S&P Withdraws B Rating on Senior Secured Notes KMART CORP: Judge Martin Named Mediator for Critical Vendor Suits LAND O'LAKES: Earns $80.4 Million of Net Income in Third Quarter LAND O'LAKES: Buying Back $150MM of Senior Notes in Dutch Auction METRIS COMPANIES: Earns $53.7 Million of Net Income in 3rd Quarter MSGI SECURITY: Working Capital Deficit Spurs Going Concern Doubt NOBLE DREW: Wants More Time to File & Solicit Plan Acceptances NORTHWEST AIRLINES: Fifth Third Objects to Bank Account Use NORTHWEST AIRLINES: Lessors Balk at Aircraft Lease Rejection Pitch O'SULLIVAN INDUSTRIES: Court Okays $35 Million DIP Facility O'SULLIVAN INDUSTRIES: Gets OK to Pay Prepetition Tax Obligations O'SULLIVAN IND: Can Honor Prepetition Customer Obligations OWENS CORNING: Banks Want Exclusivity Terminated to File Own Plan PAUL CIVETTI: Case Summary & 20 Largest Unsecured Creditors PREMIER PROPERTIES: LaSalle Bank Objects to Plan Confirmation PRESTWICK CHASE: Files Plan & Disclosure Statement in New York QUIGLEY CO: Geritz Objects to 3rd Amended Disclosure Statement RASC SERIES 2005-EMX3: Moody's Rates Class M-10 Sub. Certs. at Ba1 REFCO INC: Files Consolidated List of 100 Largest Unsec. Creditors REFCO INC: Bidding War Continues After JC Flowers Drop $768M Bid REFCO INC: Organizational Meeting of Creditors Set on October 28 REVLON CONSUMER: Exchanging $80M Senior Notes for Registered Bonds RHODES COS: S&P Assigns Low-B Ratings to $600 Million Loans RHODES INC: Files Joint Plan of Liquidation in Georgia RHODES INC: Has Until December 31 to Solicit Plan Acceptances ROUNDY'S SUPERMARKETS: S&P Lifts Ratings on Proposed $1-Bil Debts RUSSELL-STANLEY: Court Approves Prepackaged Plan of Reorganization SAINT VINCENTS: Clarifies Nature of Queensbrook Capitalization SEARS HOLDINGS: Appoints Germano and Rogers to Executive Positions SEGA GAMEWORKS: Court Confirms Amended Plan of Reorganization SENSE TECHNOLOGIES: Balance Sheet Upside-Down by $757K at Aug. 30 SHOPKO STORES: Buy-Out Agreement Cues S&P to Retain Low-B Ratings SOUTHWEST HOSPITAL: Confirmation Hearing Set for November 29 SOUTHERN INVESTORS: Judge Bohm Confirms Amended Chapter 11 Plan STERLING FINANCIAL: Earns $13.9 Million of Net Income in 3rd Qtr. STEWART ENTERPRISES: Files Partially Completed Financials SUBURBAN PROPANE: S&P Pares Senior Unsecured Rating to B- from B SYSTEMS EVOLUTION: Independent Auditor Raises Going Concern Doubt TARGUS GROUP: S&P Junks $150 Million Senior Subordinated Notes TKO SPORTS: Case Summary & 20 Largest Unsecured Creditors TRUDY DEVELOPMENT: Has to Make Land Purchase Decision by Nov. 15 UAL CORP: Files First Amended Plan & Disclosure Statement UAL CORP: Gets Court Authority to Enter Into $3-Bil Exit Financing UAL CORP: Judge Wedoff Approves Plan Solicitation Procedures USGEN NEW: Wants Court to Compel Ocean State to Pay $593,000 USN CORPORATION: Appoints Mark Miller Chief Executive Officer VARELA ENTERPRISES: Court Okays Amended Ballot Report Filing W.R. GRACE: Asks Court to OK BofA Multi-Million Settlement Accord WILLIAMS CONTROLS: American Industrial Divests Equity Stake WILLIAMS INDUSTRIES: Accelerated Debt Prompts Going Concern Doubt WILLIAMS INDUSTRIES: Applying for NASDAQ Capital Market Listing WINN-DIXIE: Can Reject Seven Kentucky Real Property Leases XYBERNAUT CORP: Taps Szabo Zelnick as Special Corporate Counsel XYBERNAUT CORP: Arch Wants Rule 2004 Exam to Get Insurance Info * LeBoeuf Lamb Names Ralph Ferrara as Washington Office Head * Upcoming Meetings, Conferences and Seminars ********* 127 RESTAURANT: Creditor Supports Proposed Ch. 11 Case Dismissal ---------------------------------------------------------------- 127 Restaurant Corp. and its parent company Toscorp, Inc., ask the U.S. Bankruptcy Court for the Southern District of New York to dismiss their respective chapter 11 cases. The Bankruptcy Court previously dismissed the chapter 11 cases of 127 Restaurant's debtor-affiliates following the sale of their individual assets. The Debtors decided to have their chapter 11 cases dismissed after concluding it would be impossible for them to effectuate a chapter 11 plan of reorganization. Leonard H. Gerson, Esq., at Angel & Frankel, PC, explains that the Debtors will still owe their secured creditor, Corsair Special Situations Fund LP, more than $3 million after distributing the proceeds from the sale of substantially all of their remaining assets. Corsair, a successor-in-interest to GMAC Commercial Credit LLC, holds approximately $5.9 million in secured claims against the Debtors, including GMAC's rights under a cash collateral order previously granted by the Bankruptcy Court. Corsair's claim is secured by liens on all of the Debtors' assets. Corsair supports the Debtors' request for the dismissal of their chapter 11 cases. Asset Sale The Debtors sold virtually all of their remaining assets to Rose Realty Group, LLC, on Feb. 18, 2005. Rose Realty paid approximately $1.2 million, including a $370,000 credit bid, to acquire the assets. The proceeds of any recoveries on account of any of 127 Restaurant's causes of action were excluded from the sale. Corsair received payments from the previously approved sale of the Debtors' other assets. Pursuant to the sale order governing the Rose Realty transaction, Corsair is entitled to receive the proceeds of the Rose Realty sale net of $120,000 reserved for postpetition tax payables, $200,000 held in escrow to pay the Debtor's cure obligations and any outstanding US Trustee fees. Causes of Action 127 Restaurant is presently appealing the Summary Judgment Decision issued by the Supreme Court, County and State of New York, related to the lawsuit the Debtor filed against Rose Realty. 127 Restaurant had sought injunctive and monetary relief of at least $1 million against Rose Realty for encroaching on the Debtor's Le Madri restaurant easement, resulting in a constructive eviction and loss of profits. Rose counterclaimed rent due in excess of $300,000. In December 2004, the State Court granted a $367,152 summary judgment to Rose Realty and dismissed 127 Restaurant's first, second, third, fourth and sixth causes of action. Headquartered in New York City, New York, 127 Restaurant Corp., operates a restaurant. The Company along with its debtor- affiliates filed for chapter 11 protection on Aug. 27, 2003 (Bankr. S.D.N.Y. Case No. 03-15359). Joshua Joseph Angel, Esq., at Angel & Frankel, PC., represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $2,710,160 in total assets and $12,906,360 in total debts AAMES MORTGAGE: Poor Performance Cues S&P to Junk Class B Certs. ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class B from Aames Mortgage Trust 2001-1 to 'CCC' from 'BB'. Concurrently, ratings on the four other classes from this series are affirmed. The lowered rating on the B class is based on poor collateral performance, which has led to actual and projected credit support levels that do not support the former 'BB' rating. Originally rated 'BBB', class B is supported by excess spread and overcollateralization, which continue to decrease every month, while monthly net losses have not. As of the September 2005 remittance period, losses have continued to severely outpace excess interest cash flow for the most recent 12 months, thereby reducing the remaining o/c credit support considerably to approximately $150,000. Based on the current performance trend, o/c coverage is projected to deplete during the next remittance period. As of the September 2005 distribution date, cumulative realized losses were 6.65% of the original pool balance, while total delinquencies were 33.91%. Serious delinquencies were 28.50%. While the mortgage pool has paid down to approximately 15.02% of its original balance, substantial losses have contributed to the near depletion of o/c to 0.67% of the original pool balance from its original target of 3.00%. Given the delinquency status and performance trend, collateral performance is likely to continue to result in losses that will outpace excess interest in the transaction moving forward. The transaction will continue to be monitored closely. Despite poor collateral performance at this time, the affirmations of the ratings on the four remaining classes from this transaction reflect adequate actual and projected credit support provided by subordination and, to a lesser extent, excess interest and o/c. The underlying collateral for this transaction originally consisted of subprime fixed-rate and adjustable-rate first lien mortgage loans with terms of maturity of no greater than 30 years. Rating Lowered Aames Mortgage Trust 2001-1 Rating Class To From ----- -- ---- B CCC BB Ratings Affirmed Aames Mortgage Trust 2001-1 Class Rating ----- ------ A-1, A-2 AAA M-1 AA+ M-2 A ACTIVANT SOLUTIONS: Gets $182.4 Mil. from Private Debt Placements ----------------------------------------------------------------- Activant Solutions Inc. completed a private placement of $145 million aggregate principal amount of floating rate senior notes due 2010 on October 17, 2005. Activant Solutions Holdings Inc., the Company's parent holding company, also completed a private placement of $40 million aggregate principal amount of senior floating rate pay-in-kind notes due 2011. The Company Notes will bear interest at LIBOR plus 6.00% and the Holdings Notes will bear interest at LIBOR plus 8.50%. The Company Notes are general, unsecured obligations of the Company and were issued under, and are subject to the terms and conditions contained in, an Indenture, dated March 30, 2005, among the Company, certain subsidiary guarantors and Wells Fargo Bank, National Association, as trustee. Holdings and the Company received approximately $182.4 million of proceeds from the private placements, after deducting the initial purchasers' discount, the interest accrued from October 1, 2005 on the Company Notes and a funding fee rebate. The proceeds of the private placements were used: (1) to repay Holdings $40 million bridge loan and the Company's $140 million bridge loan, each incurred in connection with the Company's acquisition of Prophet 21, Inc., on September 13, 2005, and (2) to pay related transaction fees and expenses. Activant Solutions Inc. -- http://www.activant.com/-- is a technology provider of vertical ERP solutions servicing the automotive aftermarket, hardware and home center, wholesale trade, and lumber and building materials industry segments. Over 20,000 wholesale, retail and manufacturing customer locations use Activant to help drive new levels of business performance. With proven experience and success, Activant is fast becoming an industry standard for companies seeking competitive advantage through stronger customer integration. * * * As reported in the Troubled Company Reporter on Sept. 29, 2005, Moody's Investors Service downgraded the corporate family rating of Activant Solutions Inc. to B2 from B1 while confirming ratings of B2 on existing outstanding debt. Concurrently, Moody's confirmed a B2 rating to Activant's incremental debt of $140 million senior unsecured notes due 2010, issued to finance its acquisition of Prophet 21, Inc., and assigned Caa1 rating to a $40 million PIK notes issued by Activant Solutions Holdings Inc. This rating has been assigned to the new issue: * Caa1 to $40 million senior unsecured notes due 2011 (new issue) issued by Holdings This rating has been revised down: * Corporate Family Rating to B2 from B1 These ratings have been confirmed: * B2 to $157 million (face value) senior unsecured notes due 2011 * B2 to $140 million incremental senior unsecured notes (total 260 million) due 2010 The ratings outlook is Stable. As reported in the Troubled Company Reporter on Sept. 28, 2005, Standard & Poor's Ratings Services announced affirmed its 'B+' corporate credit and senior unsecured debt ratings on Austin, Texas-based Activant Solutions Inc. At the same time, Standard & Poor's assigned its 'B+' debt rating to the proposed $140 million senior unsecured floating rate notes, which will have essentially the same terms as the existing floating rate notes, and its 'B-' debt rating to the proposed $40 million senior PIK notes, which will be an obligation of Activant Solutions Holdings Inc., and will be structurally subordinated to all indebtedness of Activant Solutions Inc. The outlook is now negative. ADELPHIA COMMS: Asks Court to Approve Hanover Settlement Agreement ------------------------------------------------------------------ Adelphia Communications Corp. and its debtor-affiliates ask the Court to authorize Adelphia to enter into a Settlement Agreement with Hanover Insurance Company. Brian E. O'Connor, Esq., at Willkie Farr & Gallagher, in New York, explains that, in the ordinary course of the ACOM Debtors' cable business, it is necessary for the Debtors to maintain a surety credit for various obligations including: -- "performance" and "franchise" bonds that guarantee the Debtors' obligations to municipalities under cable franchise agreements; -- "pole attachment" bonds that guarantee the Debtors' use of owners' poles in connection with the Debtors' furnishing of cable service; -- "contract" and "permit" bonds that guarantee the Debtors' contractual or permit obligations; and -- "miscellaneous" bonds that guarantee the Debtors' prompt payment of all obligations and charges arising under underlying agreements. Hanover acted as the ACOM Debtors' principal surety credit provider prepetition. Before the Petition Date, Hanover issued in excess of 850 surety bonds, aggregating more than $80,000,000, for the Debtors. On July 3, 2002, Hanover sought relief from the automatic stay to authorize it to take all actions necessary to cancel the surety bonds it had issued on the ACOM Debtors' behalf. The Lift Stay Motion was settled by negotiation and execution of a new Court- approved postpetition surety credit agreement with Hanover. In the Surety Credit Agreement, Hanover agreed to continue as the ACOM Debtors' surety on the old Hanover Bonds and, subject to standard underwriting practices, to issue new bonds up to an aggregate penal amount of $95,000,000 for all bonds. The Debtors believe that $95,000,000 in bonds would be sufficient to permit them to operate their business, although they also continued to explore supplemental bonding sources. In addition to the Initial and Additional Collateral, Mr. O'Connor points out that Hanover's collateral also included a Franchise and Pole Fees Account, in which ACOM deposited $27,200,000 in cash. The Surety Credit Agreement was scheduled to expire on June 24, 2004. Accordingly, on April 8, 2004, the Debtors sought and obtained the Court's authority to enter into a new surety credit agreement with Travelers Casualty and Surety Company of America. On March 12, 2004, Hanover filed a proof of claim for $5,000,000 arising out of a surety bond issued for the benefit of Adelphia Business Solutions, Inc., for which Hanover contends ACC is liable for reimbursement. The Debtors have disputed the timeliness of the claim. The transition to Travelers as their new surety provider required, among other things, that the ACOM Debtors cancel outstanding Hanover Bonds and replace them with bonds issued by Travelers. According to Mr. O'Connor, there were about 1,000 bonds, in the aggregate penal amount of $75,000,000, issued and outstanding under the Surety Credit Agreement. On May 17, 2004, Hanover sent cancellation notices to the obligee of each of the outstanding Hanover Bonds and likewise, the Debtors sent release requests to each of the obligees. The Debtors have been able to deliver releases to Hanover for 59% of the Hanover Bonds. Despite the expiration of the Surety Credit Agreement on June 24, 2004, the ACOM Debtors, at Hanover's insistence, continued to maintain letters of credit in place in the aggregate amount of all Hanover Bonds for which the Debtors had been unable to provide Hanover with a release. To maintain the necessary L/Cs in place, the Debtors were required to pay $81,000 to the DIP Lenders per month, or $972,000 per year. Despite repeated efforts to obtain releases for the remaining Hanover Bonds, the ACOM Debtors have been unable to obtain releases for 50% of the Hanover Bonds, Mr. O'Connor says. The L/Cs outstanding for the Hanover Bonds were set to expire on June 30, 2005. In advance of that date, the Debtors and Hanover engaged in extensive negotiations concerning both the dispute regarding collateral in respect of the Surety Credit Agreement and the Hanover Claim. Settlement Agreement The discussions culminated in an agreement in principle. The ACOM Debtors agreed to renew L/Cs aggregating $6,000,000 through September 30, 2005. The salient terms of the Settlement are: A. To fully settle the Collateral Dispute and the Hanover Claim, the ACOM Debtors will pay Hanover $1,495,000. The Hanover Claim will be reduced and allowed as a general unsecured claim in the ACOM Debtors' Chapter 11 cases for $450,000. B. Subject to a $3,000,000 cap in the aggregate, Hanover will have the right to file an administrative claim for any loss or expense that it incurs on the Hanover Bonds that were secured by L/Cs for which Hanover did not receive a valid release and for which Hanover receives notice of a claim on or before June 30, 2006, but in no event later than July 30, 2006 -- a Covered Claim. C. Hanover will release or return to the ACOM Debtors the collateral that it is holding for the Hanover Bonds: a. The $6,000,000 face amount of L/Cs that expired on August 29, 2005; and b. The $195,568 cash collateral initially provided by the ACOM Debtors in 2003. D. Upon the payment of the Settlement Amount, the Surety Credit Agreement will be of no further force and effect. E. The ACOM Debtors and Hanover will negotiate in good faith to resolve the amount of premiums paid by the Debtors for surety bonds that were cancelled, for which return premium is due the Debtors. F. The ACOM Debtors will make all good faith efforts to resolve the $87,000 claim for reimbursement filed by the Town of Falmouth, Massachusetts, against Hanover alleging delinquent performance under a franchise agreement between the Debtors and Falmouth. G. The Parties will execute mutual releases, subject only to a reservation of rights concerning the Premium Reimbursement Dispute and any claims relating to the enforcement of the Settlement Agreement. Given their cost savings resulting from the release of the L/Cs, as well as the avoidance of risk and costs associated with litigation, the ACOM Debtors assert that the Settlement Agreement is a fair and reasonable settlement of the Hanover Claim and the Collateral Dispute, and thus must be approved. 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. 110; Bankruptcy Creditors' Service, Inc., 215/945-7000) AHPC HOLDINGS: Grant Thornton Raises Going Concern Doubt -------------------------------------------------------- Grant Thornton LLP expressed substantial doubt about American Health Products Corporation'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, including the $1,151,549 net loss incurred for the year ended June 30, 2005. AHPC Holdings, Inc., fka WRP Corporation, operates through American Health Products, its wholly owned subsidiary. Fiscal 2005 Results In its Form 10-K for the fiscal year ended June 30, 2005, submitted to the Securities and Exchange Commission, AHPC Holdings reports a $1,151,549 net loss on $26,553,241 of net sales compared to a $2,849,943 net loss on 36,560,430 of net sales in fiscal 2004. Management attributes the 27.4% decrease in consolidated net sales in fiscal 2005 to the redemption of the Company's common stock from WRP Asia and the resulting loss of PT WRP Buana Multicorpora sales. The Company sold its stake in Indonesia-based PT Buana in April 2004. The Company's balance sheet showed $7,683,518 of assets at June 30, 2005 and liabilities totaling $4,387,859. At June 30, 2005, the Company had accumulated deficit of $9,262,766. Credit Facility Renewal AHPC Holdings announced on Oct. 3, 2005, that it has completed the private placement of $1.2 million in secured notes and renewed its line of credit with Greenfield Commercial Credit, LLC. The secured notes bear interest at a rate of 7% per annum with a maturity date of two years after the date of the issuance. The secured notes will have attached warrants entitling the holders to purchase shares of AHPC common stock with an exercise term of five years from closing and a price ranging from $3.50 to $4.50 per share. The amount available under the Greenfield line of credit was increased from $3 million to $5 million with a term of one year and an automatic one-year renewal option. The Company will use the funds for general working capital purposes, to increase its sales and marketing efforts, and to enable it to expand its product offerings. Legal Proceedings As of June 30, 2005, AHPC Holdings is actively involved or named in nine latex glove product liability suits pending throughout the United States. The lawsuits pertain to alleged injuries associated with the continued use and exposure to latex glove products. There are no latex glove product liability claims pending directly against the Company. Material Weakness During the process of responding to a recent SEC comment letter, AHPC Holdings' management identified a material weakness relating to the lack of formal policies and procedures related to the financial statement reporting and regulatory filing process. The error relates to the Company's accounting and disclosure of the reverse three for one stock split effective Jan. 20, 2004, and the calculation of the reported basic and diluted net loss per share. The Company incorrectly included potential common shares in the denominator of a diluted per-share computation that resulted in the disclosure of an anti-dilutive per share amount, which is not the equivalent of a diluted earnings per share disclosure. Additionally, in connection with the reverse three for one stock split, the Company failed to retroactively adjust its loss per share amounts to reflect the stock split. The Company's failure to accurately report its basic and diluted net loss per share did not have any affect on the Company's cash balance for the applicable periods. About AHPC Holdings headquartered in Glendale Heights, AHPC Holdings, Inc., -- http://www.ahpc.com/-- markets disposable medical examination, foodservice and retail gloves. The Company's wholly owned subsidiary, American Health Products Corporation, supplies branded and private label disposable gloves to the healthcare, foodservice, retail and industrial markets nationwide. AMERICAN AIRLINES: Equity Deficit Widens to $352 Mil. at Sept. 30 ----------------------------------------------------------------- American Airlines delivered its quarterly report on Form 10-Q for the quarter ending September 30, 2005, to the Securities and Exchange Commission on October 21, 2005. The Company's revenues increased approximately $1.4 billion, or 10.1%, to $15.5 billion for the nine months ended September 30, 2005 from the same period last year. The Company's total operating expenses increased 9.6%, or $1.3 million, to $15.4 billion for the nine months ended September 30, 2005, compared to the same period in 2004. The Company incurred a $161 million net loss during the third quarter of 2005 compared to a net loss of $225 million in the same period last year. At September 30, 2005, the Company's balance sheet shows $5.87 billion in total assets. At September 30, 2005, the Company's equity deficit widened to $352 million from a $105 million deficit at December 31, 2004. The Company's management says its third quarter 2005 results were impacted by the continuing increase in fuel prices and certain other costs, offset by an improvement in revenues, a $27 million decrease in depreciation expense related to a change in the depreciable lives of certain aircraft types, and productivity improvements and other cost reductions resulting from progress under the Turnaround Plan. The Company's third quarter 2005 results were also impacted by an $80 million charge related to a contract termination and a $22 million credit for the reversal of an insurance reserve. Outlook The Company expects to post -- at the current level of fuel prices -- a significant loss in the fourth quarter. The Company currently expects fourth quarter mainline unit costs to be approximately 11.42 cents, including the 0.09 cent favorable impact of the $37 million potential gain. Capacity for American's mainline jet operations is expected to remain approximately flat in the fourth quarter of 2005 compared to the fourth quarter of 2004. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?27c American Airlines is the world's largest airline. American, American Eagle and the AmericanConnection regional airlines serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American's award- winning Web site -- http://www.AA.com/-- provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld Alliance, which brings together some of the best and biggest names in the airline business, enabling them to offer their customers more services and benefits than any airline can provide on its own. Together, its members serve more than 600 destinations in over 135 countries and territories. American Airlines, Inc. and American Eagle are subsidiaries of AMR Corporation (NYSE: AMR). AMERICAN MOULDING: Look for Bankruptcy Schedules on November 7 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of California gave American Moulding and Millwork Company until Nov. 7, 2005, to file its Schedules of Assets and Liabilities and Statements of Financial Affairs. The Debtor tells the Court that it is currently working with its proposed reorganization consultants, Development Specialists, Inc., who has the general responsibility for overseeing preparation of the Schedules and Statements, to complete those documents. The Debtor and Development Specialists had to prioritize the works related to preparing the budgets necessary to obtain court approval for the use of cash collateral and other urgent matters in the early days of the Debtor's chapter 11 case. The extension gives the Debtor and Development Specialists more time and opportunity to prepare and complete all the information needed for the Schedules and Statements. Headquartered in Sanford, North Carolina, American Moulding and Millwork Company -- http://www.amfurniture.com/-- is a supplier of real wood furniture and cabinetry. The Company filed for chapter 11 protection on Oct. 6, 2005 (Bankr. E.D. Calif. Case No. 05-34431). Thomas A. Willoughby, Esq., at Felderstein Fitzgerald Willoughby & Pascuzzi LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. AMERICAN MOULDING: Section 341(a) Meeting Slated for November 15 ---------------------------------------------------------------- The U.S. Trustee for Region 17 will convene a meeting of American Moulding and Millwork Company's creditors at 1:30 p.m., on November 15, 2005, at the Office of the U.S. Trustee, 501 I Street, Suite 7-500, Sacramento, California 95814. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Sanford, North Carolina, American Moulding and Millwork Company -- http://www.amfurniture.com/-- is a supplier of real wood furniture and cabinetry. The Company filed for chapter 11 protection on Oct. 6, 2005 (Bankr. E.D. Calif. Case No. 05-34431). Thomas A. Willoughby, Esq., at Felderstein Fitzgerald Willoughby & Pascuzzi LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. AOL LATIN AMERICA: Selling AOL Argentina to Datco for $1 Million ---------------------------------------------------------------- America Online Latin America, Inc., through its subsidiaries entered into an agreement to sell all the outstanding equity of its subsidiary in Argentina to Datco S.A. and Comnet S.A. and to assign certain intercompany debt owed by AOL Argentina to AOLA and one of its subsidiaries. AOLA will receive $377,000 for the assignment of the debt and the sale of the equity of AOL Argentina. The Buyers will pay this amount in seven installments over a one-year period. Under the deal valued at more than $1 million, a Datco affiliate will assume all of AOL Argentina's liabilities including the $324,000 the unit owed to AOL Spain, as well as the $67,000 it owed to AOL Latin America. AOL Latin America said it would save at least $700,000 by selling the unit now rather than liquidating its assets in a court- supervised wind down. Under the proposed sale, AOL Latin America will net $302,000 in cash because the Company is required to pay S$75,000 to America Online under a services agreement. Judge Mary F. Walrath, of the U.S. Bankruptcy Court for the District of Delaware has scheduled a hearing on the proposed sale for Nov. 7. Objections are due Oct. 31. If AOLA fails to obtain approval of the bankruptcy court by December 15, 2005, the Agreement will terminate. In the event that the conditions to the closing of the sale transaction are fulfilled and such closing does not take place due to the parties' willful failure to close or gross negligence, the breaching party will be obligated to pay the other party $100,000. Headquartered in Fort Lauderdale, Florida, America Online Latin America, Inc., -- http://www.aola.com/ -- offers AOL-branded Internet service in Argentina, Brazil, Mexico, and Puerto Rico, as well as localized content and online shopping over its proprietary network. Principal shareholders in AOLA are Cisneros Group, one of Latin America's largest media firms, Brazil's Banco Itau, and Time Warner, through America Online. The Company and its debtor- affiliates filed for chapter 11 protection on June 24, 2005 (Bankr. D. Del. Case No. 05-11778). Pauline K. Morgan, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP and Douglas P. Bartner, Esq., at Shearman & Sterling LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $28,500,000 and total debts of $181,774,000. ARLINGTON HOSPITALITY: Wants Until October 31 to Decide on Leases ----------------------------------------------------------------- Arlington Hospitality, Inc., and its debtor affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, to extend, until Oct. 31, 2005, the period within which they can elect to assume, assume and assign, or reject 13 unexpired nonresidential real property leases. The Debtors tell the Bankruptcy Court that the requested extension will give them sufficient time to make a decision on the leases that would preserve the going-concern value of their businesses for the benefit of creditors. According to the Debtors, the unexpired leases remain to be valuable assets of the estate and are integral to the continued operation of their businesses. A list of the unexpired leases is available for free at http://ResearchArchives.com/t/s?281 Headquartered in Arlington Heights, Illinois, Arlington Hospitality, Inc., and its affiliates develop and construct limited service hotels and own, operate, manage and sell those hotels. The Debtors operate 15 AmeriHost Inn Hotels under leases from PMC Commercial Trust. Arlington Hospitality, Inc., serves as a guarantor under these leases. Arlington Inns Inc., an affiliate, filed for bankruptcy protection on June 22, 2005 (Bankr. N.D. Ill. Case No. 05-24749), the Honorable A. Benjamin Goldgar presiding. Arlington Hospitality and additional debtor- affiliates filed for chapter 11 protection on Aug. 31, 2005 (Bankr. N.D. Ill. Lead Case No. 05-34885). Catherine L. Steege, Esq., at Jenner & Block LLP, provides the Debtors with legal advice and Chanin Capital LLC serves as the company's investment banker. As of March 31, 2005, Arlington Hospitality reported $99 million in total assets and $94 million in total debts. ATA AIRLINES: Can Use ATSB Lenders' Cash Collateral Until Nov. 1 ---------------------------------------------------------------- In a stipulation approved by the U.S. Bankruptcy Court for the Southern District of Indiana, ATA Airlines, Inc., its debtor- affiliates and these ATSB Lenders: * Govco Incorporated, * Citibank, N.A., * AFS Investments XII, Inc., and * International Lease Finance Corporation agree that the Debtors may use the ATSB Lenders' cash collateral and other collateral through the earliest of: (i) the close of business on November 1, 2005; (ii) the occurrence of any event of default set forth in the December 10, 2004 Cash Collateral Order; or (iii) the time the Debtors' settlement agreement with the ATSB Lenders and the Official Committee of Unsecured Creditors, approved by the Court on April 15, 2005, will be materially breached or rendered null and avoid. The parties stipulate that the Debtors will continue paying for the services of Sage-Popovich, Inc., and Lazard Freres & Co. LLC. Unless the Debtors obtain additional Available Cash pursuant to their capital-raising efforts, the Debtors' Available Cash is projected to fall to precariously low levels by the end of October 2005, which could result in an event of default under the Cash Collateral Order. Therefore, the Debtors and the ATSB Lenders agree to modify the event of default provisions of the Cash Collateral Order to include these terms: (a) By the close of business on October 30, 2005, the Debtors have not entered into a fully executed definitive agreement with one or more investors that is: (x) consistent with the terms of the Cash Collateral Order, as expressly modified by the Stipulation; (y) consistent with certain Investment Agreement parameters; and (z) subject only to Court approval and the closing conditions set forth in the Investment Agreement -- which closing conditions will be subject to the prior written approval of the ATSB Lenders -- or (b) the Debtors fail to file a revised disclosure statement with the Court within three business days of the execution of the Investment Agreement. Subject to the prior written consent of the ATSB Lenders, an Investment Agreement must provide for the Debtors to receive: (a) no less than $30,000,000 of debtor-in-possession financing by no later than 5:00 p.m. (New York time) on November 4, 2005, on terms and conditions acceptable to the ATSB Lenders in their sole discretion; and (b) an investment of no less than $70,000,000 in the reorganized Debtors, on terms and conditions acceptable to the ATSB Lenders in their sole discretion, by no later than the earlier of: (x) the effective date of a plan of reorganization in ATA's Chapter 11 Case; or (y) 5:00 p.m. (New York time) on January 20, 2006. In addition, the Debtors and the ATSB Lenders agree that the Cash Collateral Order will be expressly modified so that an event of default under the Cash Collateral Order will occur one business day after any ATSB Lender provides notice to the Debtors and the Official Committee of Unsecured Creditors that, in the ATSB Lenders' reasonable judgment, one or more of the closing conditions to the Investment Agreement will not be satisfied in the time period provided, and the closing condition has not been waived or deemed satisfied by the relevant party to the Investment Agreement. The ATSB Lenders stipulate that any amendment to the Southwest DIP financing, which is approved according to the terms of the Southwest DIP financing, is acceptable to them. The Debtors, the ATSB Lenders and the Creditors Committee agree that the deadline by which the Committee must file any challenge, on the basis of Sections 544 and 548 of the Bankruptcy Code, to the ATSB Lenders' "Guarantor Unsecured Claims" will be extended until the Debtors' deadline to use the Cash Collateral. The Debtors and the ATSB Lenders further stipulate and agree that the $2,300,000 Quarterly Payment, which ATA is obligated to pay to the Agent for the benefit of the ATSB Lenders on October 19, 2005, will be deferred to, and due and payable on, October 28, 2005. The Debtors covenant with the ATSB Lenders to maintain: (i) at least $29,815,904 in Available Cash during the Extension Period; and (ii) at least 90% of the Available Cash amount forecasted at each weekend in the Debtors' 13-week cash forecast dated October 11, 2005: Week Ending Available Cash 90% of Available Cash ----------- -------------- --------------------- 10/21/05 $48,467,778 $43,621,000 10/28/05 $43,527,362 $39,174,626 11/04/05 $38,432,984 $34,589,686 Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Wants Confirmation Hearing Scheduled on December 20 ----------------------------------------------------------------- ATA Airlines, Inc. and its debtor-affiliates ask Judge Lorch of the U.S. Bankruptcy Court for the Southern District of Indiana to convene a hearing to consider confirmation of their joint plan of reorganization on December 20, 2005. The Reorganizing Debtors also ask the U.S. Bankruptcy Court for the Southern District of Indiana to continue the Confirmation Hearing from time to time by announcing the continuance in open court, and that the Plan may be modified pursuant to Section 1127 of the Bankruptcy Code prior to, during or as a result of the Confirmation Hearing, in each case without further notice to parties-in-interest. The Reorganizing Debtors want confirmation objections be filed and served by December 13, 2005, at 4:00 p.m. (EST, prevailing Indianapolis Time). The Reorganizing Debtors ask Judge Lorch to consider only timely filed and served written objections that state: (a) the name and address of the objecting party; (b) the amount of the party's Claim or the nature of its Interest; and (c) the nature and legal basis of the objection. Objections not timely filed and served in accordance with the provisions of the Debtors' request will be overruled on this basis alone. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Asks Court to Establish Solicitation Procedures ------------------------------------------------------------- ATA Airlines, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Indiana to approve a set of uniform noticing, balloting, voting and tabulation procedures to be used in connection with asking creditors to vote to accept their Chapter 11 plan of reorganization. Terry E. Hall, Esq., at Baker & Daniels LLP, in Indianapolis, Indiana, reminds the Court that the Reorganizing Debtors filed their Plan and a Disclosure Statement explaining the Plan on September 30, 2005. A hearing to consider the adequacy of the Disclosure Statement is slated for October 28. The deadline for filing and serving Objections to the Disclosure Statement is October 24 at 4:00 P.M. (EST, prevailing Indianapolis time). Record Date Rule 3017(d) of the Federal Rules of Bankruptcy Procedure governs the record date for determining the "holders of stocks, bonds, debentures, notes and other securities" entitled to receive ballots and the other materials specified in Bankruptcy Rule 3017(d). The default date is the date the court approves the Disclosure Statement, but the Court can fix another date for cause. Because of the number of note holders and the necessity to obtain the holders names from the commercial holders of the notes, the Reorganizing Debtors ask Judge Lorch to fix October 21, 2005, as the record date for determining holders of Claims entitled to receive a Solicitation Package and to vote to accept or reject the Plan. Solicitation of Votes The Reorganizing Debtors propose to solicit votes from creditors holding Claims in Classes 1, 2, 3, 4, 6, and 7. These creditors are impaired and entitled to vote to accept or reject the Plan. Holders of interests in Class 8 and 9 won't receive a dime under the Plan and are deemed to reject the Plan. BMC Group, the Debtors' official balloting agent, will mail copies of the Plan, the Disclosure Statement, customized ballots, and solicitation letters and notice of the Confirmation Hearing to creditors entitled to vote. The Debtors anticipate BMC to finish sending out the Solicitation Packages by November 9, 2005. The Debtors will also instruct BMC to mail the Solicitation Package to: (i) beneficial owners of publicly traded securities of the Debtors as of the Record Date; and (ii) each bank or brokerage firm -- Nominee -- identified by BMC as an entity through which Public Holders hold a Claim. To facilitate this mailing, the Reorganizing Debtors ask the Court to direct Wells Fargo Bank Northwest, N.A., as the trustee for the Old Holdings Unsecured Notes, and National City Bank, Corporate Trust Operations, as the stock transfer agent for the Old ATA Holdings Common Stock, to provide BMC by October 24, 2005, with a list containing the names, addresses and holdings of the Public Holders as of the Record Date and a Depository Trust Company Security Position Listing as of the Record Date. To ensure that the beneficial owners of the Old Holdings Unsecured Notes receive the Solicitation Packages and have an opportunity to vote, the Reorganizing Debtors ask the Court to require the Nominees through which beneficial owners hold the Old Holdings Unsecured Notes to distribute the Solicitation Packages within five business days of receipt to the Public Holders for which they hold the Old Holdings Unsecured Notes. The Reorganizing Debtors will also publish notice of the solicitation process and the Confirmation Hearing in The Wall Street Journal (national edition), the Indianapolis Star and Chicago Tribune. The Debtors want all ballots returned to BMC by December 9, 2005 in order to be counted. Contingent, Unliquidated or Disputed Claims If any holder of a contingent, unliquidated or disputed claim wants to vote on the Plan, the Debtors propose that motions for temporary allowance of a claim for voting purposes be filed by November 1, 2005. Unless the holder of an Unliquidated/Contingent Claim obtains a Court order allowing the Claim for voting purposes, the Debtors want any Ballot cast with respect to the Claim be counted in determining whether the numerosity requirement of Section 1126(c) has been satisfied. However, the Claim will not be counted in determining whether the aggregate dollar amount requirement has been satisfied. Tabulation Procedures The Reorganizing Debtors propose that these Ballots and Master Ballots be counted and be deemed to be cast as acceptances of the Plan: (a) any Ballot or Master Ballot timely received that contains sufficient information to permit the identification of the creditor and is cast as an acceptance of the Plan; (b) any Ballot or Master Ballot timely received that contains sufficient information to permit the identification of the creditor and indicates both acceptance and rejection of the Plan; and (c) any Ballot or Master Ballot, otherwise proper, that indicates neither an acceptance nor rejection of the Plan. The Reorganizing Debtors propose that these Ballots and Master Ballots not be counted in determining whether the Plan has been accepted or rejected: (a) any Ballot or Master Ballot received after the Voting Deadline: (b) any Ballot or Master Ballot that is illegible or contains insufficient information to permit the identification of the creditor; (c) any Ballot or Master Ballot cast by: (i) a creditor who has not timely filed a Proof of Claim with respect to the Claim being voted and whose Claim either is not listed, or is listed as a disputed, contingent or unliquidated Claim on the Schedules; or (ii) a creditor who has timely filed a Proof of Claim which is the subject of a pending objection and has not been temporarily allowed by the Court for voting purposes; (d) any Ballot or Master Ballot cast by a person that does not hold a Claim in a Class that is entitled to vote to accept or reject the Plan; (e) any Ballot or Master Ballot that is transmitted to the Voting Agent electronically by facsimile or e-mail; and (f) any Ballot or Master Ballot that does not have an original signature. Section 1126(c) provides that "a class of claims has accepted a plan if the plan has been accepted by creditors . . . that hold at least two-thirds in amount and more than one-half in number of the allowed claims of the class held by creditors . . . that have accepted or rejected such plan." The Reorganizing Debtors propose these guidelines for determining the amount and number of Claims voted: (a) In determining whether a Class of Claims has accepted the Plan by the requisite dollar amount, the amount of a Claim will be either: (i) the amount allowed by the Court; (ii) the amount temporarily allowed by the Court for voting purposes pursuant to Bankruptcy Rule 3018(a); or (iii) if not so allowed because it was received after the Voting Deadline or it contains insufficient information, then: (x) the liquidated amount specified in a Proof of Claim timely filed with the Court or the Voting Agent by the voting creditor and not purported to be contingent and not subject to a pending objection, or (y) if no Proof of Claim has been timely filed, on the basis of the undisputed, noncontingent and liquidated amount of the Claim as it appears in the Schedules on or before the Record Date. (b) Ballots and Master Ballots may be preprinted with the dollar amount indicated above and, if they are so preprinted, the Reorganizing Debtors propose that the Voting Agent use the preprinted amount in tabulating votes unless the holder of the Claim obtains an order from the Court under Rule 3018(a) on or before December 16, 2005. Whenever two or more Ballots are cast voting the same Claim prior to the Voting Deadline, the last Ballot received prior to the Voting Deadline will be deemed to reflect the voter's intent and thus will supersede any prior Ballots. The Debtors propose that any person who holds Claims in more than one Class or multiple Claims within a Class must vote separately with respect to each Claim. A Ballot with respect to multiple Claims within a single Class that partially rejects and partially accepts the Plan will be deemed to be and be counted as an acceptance of the Plan. The Debtors want all Nominees through which Public Holders hold the Notes to be required to collect and summarize on a Master Ballot all Ballots cast by the Public Holders for which they serve and then return the Master Ballot to the Voting Agent. The Reorganizing want the Nominees to retain for inspection by the Court the Ballots cast by Public Holders for one year following the Voting Deadline. To avoid double counting, the Reorganizing Debtors propose that: (i) votes cast by Public Holders holding Notes through a Nominee and transmitted by means of a Master Ballot be applied against the positions held by the Nominees, as evidenced by the record list of the holders of the Notes or through participation in a securities depository, and (ii) votes submitted by a Nominee on a Master Ballot not be counted in excess of the position maintained by the Nominee on the Record Date. To the extent that conflicting votes or duplicative votes are submitted on a Master Ballot, the Reorganizing Debtors propose that, to the extent that any duplicative votes are not reconcilable prior to the Voting Deadline, the Voting Agent will count votes in respect of the Master Ballot in the same proportion as the votes to accept and reject the Plan submitted on the Master Ballot that contained the duplicative vote, but only to the extent of the applicable Nominee's position on the Record Date in the Notes. To avoid inconsistent treatment and provide guidance to the Reorganizing Debtors and the Voting Agent, the Reorganizing Debtors request that the Court order that each record holder or Public Holder of the Notes will be deemed to have voted the full principal amount of its Claim relating to the Notes, notwithstanding anything to the contrary on any Ballot. The Court will convene a hearing to consider the Debtors' request on October 28, 2005. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATLANTIC & WESTERN: Fitch Rates $300MM Catastrophe Bonds at Low-B ----------------------------------------------------------------- Fitch Ratings has issued a presale report on the Atlantic & Western Re Limited catastrophe bond, discussing the rating analysis behind Fitch's expected 'BB' rating on the $100 million class A notes and 'B' rating on the $200 million class B notes. The presale report is available to all investors on Fitch's corporate site at http://www.fitchratings.com/ For more information about Fitch's comprehensive subscription service Fitch Research, which includes all presale reports, surveillance, and credit reports on more than 20 asset-backed securities asset classes, including collateralized debt obligations, contact product sales at +1-212-908-0800 or at http://webmaster@fitchratings.com/ AUBURN FOUNDRY: Ch. 7 Trustee Wants Laderer & Fischer as Counsel ---------------------------------------------------------------- Rebecca Hoyt Fischer, Esq., the chapter 7 Trustee for Auburn Foundry, Inc., asks the U.S. Bankruptcy Court for the Northern District of Indiana in Fort Wayne for permission to serve as the estate's counsel together with Laderer & Fischer, PC. Ms. Fischer tells the Bankruptcy Court that she and Lewis Laderer, Jr., Laderer & Fischer's other shareholder, possess the necessary expertise with regard to bankruptcy and debtor and creditor matters in cases under the Bankruptcy Code. Laderer & Fischer will assist the Trustee in bringing any necessary legal proceedings to recover assets for the benefit of the estate and for all other legal matters incidental to the administration of the estate. The hourly billing rates for Laderer & Fischer's professionals are: Designation Hourly Rates ----------- ------------ Attorneys $225 Paralegals $125 The Trustee assures the Bankruptcy Court that Laderer & Fischer are disinterested persons within the meaning of section 101(13) of the Bankruptcy Code. Lewis C. Laderer, Esq., and Rebecca H. Fischer, Esq., have been providing legal representation to lending institutions, individuals and businesses throughout northern Indiana for over 52 years. Their law firm, Laderer & Fischer, PC. -- http://www.ladfislaw.com/-- offers services related to Bankruptcy and Secured Transactions, Mediation and Arbitration, Banking and Commercial Law, Business Insolvency and Creditor Rights, Trial Litigation, Corporate and Business, Real Property Transactions and Litigation, Appellate, and Insurance Law. Headquartered in Auburn, Indiana, Auburn Foundry, Inc. -- http://www.auburnfoundry.com/-- produces iron castings for the automotive industry and automotive aftermarket industry. The Company filed for chapter 11 protection on February 8, 2004 (Bankr. N.D. Ind. Case No. 04-10427). John R. Burns, Esq., and Mark A. Werling, Esq., at Baker & Daniels, represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. The Debtor's chapter 11 case was converted into a liquidation proceeding under chapter 7 of the Bankruptcy Code on Oct. 11, 2005. BANK of AMERICA: Fitch Upgrades Low-B Ratings on 11 Cert. Classes ----------------------------------------------------------------- Fitch Ratings has taken rating actions on these Bank of America Mortgage Securities, Inc., mortgage pass-through certificates: Series 2003-1 Group 1: -- Class A affirmed at 'AAA'; -- Class 1-B-1 affirmed at 'AAA'; -- Class 1-B-2 affirmed at 'AA+'; -- Class 1-B-3 upgraded to 'AA' from 'AA-'; -- Class 1-B-4 upgraded to 'A' from 'A-'; -- Class 1-B-5 upgraded to 'BB' from 'BB-'. Series 2003-1 Group 2: -- Class A affirmed at 'AAA'. Series 2003-2 Group 1: -- Class A affirmed at 'AAA'. Series 2003-2 Group 2: -- Class A affirmed at 'AAA'. Series 2003-3 Group 1: -- Class A affirmed at 'AAA' Series 2003-3 Group 2: -- Class A affirmed at 'AAA'; -- Class 2-B-1 affirmed at 'AAA'; -- Class 2-B-2 affirmed at 'AA'; -- Class 2-B-3 affirmed at 'A'; -- Class 2-B-4 affirmed at 'BBB'; -- Class 2-B-5 affirmed at 'BB'. Series 2003-4 Group 1: -- Class A affirmed at 'AAA'. Series 2003-4 Group 2: -- Class A affirmed at 'AAA'; -- Class 2-B-1 upgraded to 'AA+' from 'AA'; -- Class 2-B-2 upgraded to 'A+' from 'A'; -- Class 2-B-3 upgraded to 'BBB+' from 'BBB'; -- Class 2-B-4 upgraded to 'BB+' from 'BB'; -- Class 2-B-5 upgraded to 'B+' from 'B'. Series 2003-7: -- Class A affirmed at 'AAA'. Series 2003-A: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA'; -- Class B-3 affirmed at 'A'; -- Class B-4 affirmed at 'BBB'; -- Class B-5 affirmed at 'BB'. Series 2003-F: -- Class A affirmed at 'AAA' -- Class B-1 upgraded to 'AA+' from 'AA'; -- Class B-2 upgraded to 'A+' from 'A'; -- Class B-3 upgraded to 'BBB+' from 'BBB'; -- Class B-4 upgraded to 'BB+' from 'BB'; -- Class B-5 upgraded to 'B+' from 'B'. Series 2003-H: -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A'; -- Class B-3 upgraded to 'A' from 'BBB'; -- Class B-4 upgraded to 'BBB' from 'BB'; -- Class B-5 upgraded to 'BB' from 'B'. Series 2003-6 Group 1: -- Class A affirmed at 'AAA'. Series 2003-10 Group 1: -- Class A affirmed at 'AAA'; -- Class 1-B-1 affirmed at 'AA'; -- Class 1-B-2 affirmed at 'A'; -- Class 1-B-3 affirmed at 'BBB'; -- Class 1-B-4 affirmed at 'BB'; -- Class 1-B-5 affirmed at 'B'. Series 2003-10 Group 3: -- Class A affirmed at 'AAA'; -- Class 3-B-1 affirmed at 'AA'; -- Class 3-B-2 affirmed at 'A'; -- Class 3-B-3 affirmed at 'BBB'; -- Class 3-B-4 affirmed at 'BB'; -- Class 3-B-5 affirmed at 'B'. Series 2003-10 Groups 2&4: -- Class A affirmed at 'AAA'; -- Class X-B-1 affirmed at 'AA'; -- Class X-B-2 affirmed at 'A'; -- Class X-B-3 affirmed at 'BBB'; -- Class X-B-4 affirmed at 'BB'; -- Class X-B-5 affirmed at 'B'. Series 2003-8 Group 1: -- Class A affirmed at 'AAA'; -- Class 1-B-1 affirmed at 'AA'; -- Class 1-B-2 affirmed at 'A'; -- Class 1-B-3 affirmed at 'BBB'; -- Class 1-B-4 affirmed at 'BB'; -- Class 1-B-5 affirmed at 'B'. Series 2003-8 Group 2: -- Class A affirmed at 'AAA'. Series 2003-8 Group 3: -- Class A affirmed at 'AAA'. Series 2003-9 Group 1: -- Class A affirmed at 'AAA'; -- Class 1-B-1 affirmed at 'AA'; -- Class 1-B-2 affirmed at 'A'; -- Class 1-B-3 affirmed at 'BBB'; -- Class 1-B-4 affirmed at 'BB'; -- Class 1-B-5 affirmed at 'B'. Series 2003-9 Group 3: -- Class A affirmed at 'AAA'; -- Class 3-B-1 affirmed at 'AA'; -- Class 3-B-2 affirmed at 'A'; -- Class 3-B-3 affirmed at 'BBB'; -- Class 3-B-4 affirmed at 'BB'; -- Class 3-B-5 affirmed at 'B'. Series 2003-9 Groups 2&4: -- Class A affirmed at 'AAA'. Series 2003-G: -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AA+' from 'AA'; -- Class B-2 upgraded to 'A+' from 'A'; -- Class B-3 upgraded to 'BBB+' from 'BBB'; -- Class B-4 upgraded to 'BB+' from 'BB'; -- Class B-5 upgraded to 'B+' from 'B'. Series 2003-I: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2003-J: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2003-K: -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AA+' from 'AA'; -- Class B-4 upgraded to 'BB+' from 'B'; -- Class B-5 upgraded to 'B+' from 'B'. Series 2003-L: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. The underlying collateral for Bank of America transactions consists of 15- to 30-year fixed-rate mortgages and adjustable-rate mortgages extended to prime borrowers. The transactions are primarily secured by first liens on one- to four-family residential properties. As of the September 2005 distribution date, the transactions are seasoned from a range of 20 to 32 months and the pool factors -- current mortgage loan principle outstanding as a percentage of the initial pool -- range from approximately 25% to 67%. The master servicer for the above deals is Bank of America Mortgage Securities, which is currently rated 'RPS1' by Fitch. The affirmations reflect satisfactory credit enhancement relationships to future loss expectations and affect approximately $4.95 billion in outstanding certificates. The upgrades reflect an improvement in the relationship of CE to future loss expectations and affect approximately $1.20 billion in certificates. The CE levels for all the classes affected by the upgrades have at least doubled their original enhancement levels since closing date. BEAR STEARNS: Fitch Rates $2.79 Million Class M-10 Certs. at BB --------------------------------------------------------------- Bear Stearns Asset-Backed Securities I Trust 2005-CL1 asset-backed certificates are rated by Fitch Ratings: -- $246.13 million class A 'AAA'; -- $9.35 million class M-1 'AA+', -- $4.88 million class M-2 'AA'; -- $3.21 million class M-3 'AA-'; -- $3.35 million class M-4 'A+'; -- $1.68 million class M-5 'A'; -- $1.40 million class M-6 'A-'; -- $1.40 million class M-7 'BBB+'; -- $1.40 million class M-8 'BBB'; -- $1.40 million class M-9 'BBB-'; -- $2.79 million privately offered class M-10 'BB'. The mortgage loans consist of fixed- and adjustable-rate closed-end subprime mortgage loans that are secured by first and second liens on one- to four-family residential properties. The 'AAA' rating on the senior certificates reflects the 11.80% credit enhancement provided by the 3.35% class M-1, 1.75% class M-2, 1.15% class M-3, 1.20% class M-4, 0.60% class M-5, 0.50% class M-6, 0.50% class M-7, 0.50% class M-8, 0.50% class M-9, and 1.00% class M-10, as well as 0.75% target over-collateralization. Additionally, all classes have the benefit of monthly excess cash flow to absorb losses. The ratings also reflect the quality of the mortgage collateral and strength of the legal and financial structures. As of the cut-off date, the mortgage loans have an aggregate balance of $279,053,015. The weighted average mortgage rate is approximately 10.086% and the weighted average remaining term to maturity is 197 months. The average cut-off date principal balance of the mortgage loans is $51,686. The weighted average original combined loan-to-value is 68.64%. The properties are primarily located in New York, Ohio, North Carolina, Pennsylvania, and Michigan. The mortgage loans were acquired through the exercise of the optional termination provisions of four securitizations. Approximately 78.59% of the mortgage loans were included in either the ContiMortgage Home Equity Loan Trust 1998-2 or ContiMortgage Home Equity Loan Trust 1998-3. These mortgage loans were sold to either Ellington Acquisition Trust 2005-1 or Ellington Acquisition Trust 2005-2 by the respective trustees for these transactions, pursuant to optional termination provisions contained in the related pooling and servicing agreements. Approximately 21.41% of the mortgage loans were included in either the Delta Funding Home Equity Loan Trust 1997-4 or the Delta Funding Home Equity Loan Trust 1998-3. These mortgage loans were sold to Ocwen Mortgage Asset Trust I by the respective trustees for these transactions, pursuant to optional termination provisions contained in the related pooling and servicing agreements. BOYDS COLLECTION: Look for Bankruptcy Schedules on December 15 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maryland gave The Boyds Collection, Ltd., and its debtor-affiliates until Dec. 15, 2005, to file their Schedules of Assets and Liabilities and Statements of Financial Affairs. The Debtors gave the Court three reasons in support of the extension: a) they have limited staff available to perform the internal review of their business and affairs and the press of numerous other matters incident to the commencement of their chapter 11 cases; b) they have approximately 1,000 creditors and the size and complexity of their business operations require them to maintain voluminous books and records and complex accounting systems; and c) certain prepetition invoices have not yet been received or entered into their financial accounting systems. Headquartered in McSherrystown, Pennsylvania, The Boyds Collection, Ltd. -- http://www.boydsstuff.com/-- designs and manufactures unique, whimsical and "Folksy with Attitude(SM)" gifts and collectibles, known for their high quality and affordable pricing. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 16, 2005 (Bankr. Md. Lead Case No. 05-43793). Matthew A. Cantor, Esq., at Kirkland & Ellis LLP represents the Debtors in their restructuring efforts. As of June 30, 2005, Boyds reported $66.9 million in total assets and $101.7 million in total debts CHUKCHANSI ECONOMIC: S&P Rates Proposed $310M Senior Notes at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to the Chukchansi Economic Development Authority's proposed $310 million senior notes, which will be sold in two tranches consisting of senior notes due 2013 and floating rate senior notes due 2012. In addition, a 'BB-' issuer credit rating was assigned to the CEDA. The outlook is stable. Proceeds from the proposed note issue will be used to refinance existing debt, pre-fund expansion capital spending and for fees and expenses. Coarsegold, California-based CEDA was created to operate the Chukchansi Gold Resort & Casino for the Picayune Rancheria of the Chukchansi Indians. The Tribe's compact with the state of California was entered into in 1999 and expires in 2020. The compact permits forms of Class III gaming, including slot machines and card games. "The ratings on the CEDA reflect its narrow business position as an operator of a single casino, competitive market conditions, and construction and disruption risks associated with a likely near-term expansion project. Still, the Chukchansi Gold Resort & Casino's operating performance has steadily improved since its opening in mid-2003, the demographics of its target market are favorable, and the potential exists for continued EBITDA growth post-expansion," said Standard & Poor's credit analyst Michael Scerbo. CHRISTOPHER MILLER: Case Summary & 6 Largest Unsecured Creditors ---------------------------------------------------------------- Debtors: Christopher Scott Miller and Mary Jane Miller 218 Whisper Lane Midland City, Alabama 36350 Bankruptcy Case No.: 05-12994 Chapter 11 Petition Date: October 24, 2005 Court: Middle District of Alabama (Dothan) Debtors' Counsel: David G. Poston, Esq. Espy, Metcalf & Poston, PC P.O. Drawer 6504 Dothan, Alabama 36302 Tel: (334) 793-6288 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtors' 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Federal Income $777,000 Attn: Bankruptcy Mail Clerk Taxes 801 Tom Martin Dr., Suite 126 Birmingham, AL 35211 Stone Creek Holdings Inc. House & lot $230,000 4601 West Sierra Avenue, Suite 1 Las Vegas, NV 89102 Concord Servicing Group Deficiency Balance $29,750 6560 N Scottsdale Road, Suite G Paradise Valley, AZ 85253-4449 Wachovia/Southtrust Line of Credit $19,904 P.O. Box 2554 Birmingham, AL 35290 Chase Automotive Finance 1996 Toyota $15,659 Bankruptcy Tacoma truck 900 Stewart Avenue Garden City, NY 11530 GMAC 2005 Chevrolet $17,869 Bankruptcy Department Cobalt P.O. Box 5055 Troy, MI 48007-5055 COLLINS & AIKMAN: Wants Court OK to Tap Deloitte Tax as Consultant ------------------------------------------------------------------ Collins & Aikman Corporation and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the Eastern District of Michigan to retain Deloitte Tax, LLC, as their tax service providers and tax consultants, nunc pro tunc to September 1, 2005. The Debtors' management believes that Deloitte Tax is well qualified to act on their behalf, given its extensive knowledge and experience in tax consulting as well as its familiarity with their operations. Marc J. Carmel, Esq., at Kirkland & Ellis LLP, says that the tax consulting and other tax services will be valuable to the Debtors in their efforts to reorganize. Deloitte Tax's services to the Debtors will include: -- assistance with Federal tax effects of bankruptcy filing; -- general corporate tax advisory assistance; -- IRS examination services; -- assistance with state tax post-bankruptcy emergence planning; -- contingent fee strategic property tax review services, -- international assignment services advisory assistance; and -- other related or similar tax services. Mr. Carmel tells Judge Rhodes that Deloitte Tax will use reasonable efforts to coordinate with the Debtors' other retained professionals to avoid unnecessary duplication of services. As tax consultants, the Debtors will pay Deloitte Tax's professionals at these hourly rates: Partner/Principal/Director $540 - $675 Senior Manager $450 - $550 Manager $360 - $475 Senior Staff $270 - $375 Staff $200 Through May 17, 2005, Deloitte Tax received about $266,000 during the preceding 12 months from the Petition Date from the Debtors for services rendered and expenses incurred, of which $240,000 was paid within the 90 days prior to the Petition Date. In addition, as of Petition Date, Deloitte Tax was owed $53,092 for prepetition fees and expenses incurred but not paid by the Debtors, an amount Deloitte Tax has waived. Deloitte Consulting LLP, an affiliate of Deloitte Tax, is owed $117,215 for its prepetition services to the Debtors. Subject to the Court's approval of the Application, Deloitte Tax will waive collection of this amount. Scott L. Shekell, a member of the firm, assures that Court that Deloitte Tax does not represent or hold any interest adverse to the Debtors or their estates with respect to the matters on which it is to be employed. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: DaimlerChrysler Asserts Recoupment Rights ----------------------------------------------------------- DaimlerChrysler Corporation asserts it is entitled to recoup its damages from the Collins & Aikman Corporation's breach of its purchase orders. "Recoupment is not subject to the automatic stay and does not require the Court's authorization," James A. Plemmons, Esq., at Dickinson Wright PLLC, in Detroit, Michigan, points out. In the alternative, DaimlerChrysler asks the U.S. Bankruptcy Court for the Eastern District of Michigan to lift the automatic stay in order to exercise its state law right of setoff so that it may offset prepetition damages it has incurred against amounts owing from DaimlerChrysler to the Debtors for prepetition shipments of goods. The Debtors supply DaimlerChrysler with component parts for installation into new vehicles. To maintain continuity of supply, DaimlerChrysler paid, or committed to pay, certain of the Debtors' operational expenses that were necessary for the Debtors' production and supply of Component Parts; and purchased, or committed to pay for the Debtors' purchase, of goods and services from the Debtors' vendors. DaimlerChrysler tells the Court that it has incurred, or will incur, damages resulting from the Debtors' rejection of purchase orders. DaimlerChrysler estimated its damages at $25,400,000 for payment of the Debtors' operational expenses and payment to the Debtors' vendors. It further expects to incur rejection damages. On the other hand, DaimlerChrysler estimates that it owes the Debtors $24,100,000 for amounts earned prepetition by the Debtors from the sale and supply of Component Parts to DaimlerChrysler. DaimlerChrysler has placed an administrative freeze on the Prepetition Payables to protect its rights to recoupment and setoff of the Damages. Mr. Plemmons notes that under the doctrines of recoupment and setoff, a party is entitled to offset a claim it has against a debtor against the debt owing to the party by the debtor. In order to exercise the right of recoupment, the claim and the debt must arise from the same transaction. To exercise the right of setoff, the party seeking setoff must show that: (a) the debt owing to the Debtors and the debt owing from the Debtors arose prepetition; and (b) the debts are mutual. Mr. Plemmons asserts that DaimlerChrysler satisfies these requirements. Moreover, Mr. Plemmons says, DaimlerChrysler should be adequately protected for its security interest. This can only be done through the allowance of the setoff. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: GECC Asks Court to Enforce Right to Payment ------------------------------------------------------------- Pursuant to a Receivables Purchase Agreement, Collins & Aikman Corporation and its debtor-affiliates sold to Carcorp, Inc., their interests in certain receivables, related security, collections and proceeds. Carcorp transferred to General Electric Capital Corporation all interests in the Receivables, Related Security, Collections and Proceeds pursuant to a Receivables Transfer Agreement. Joseph S. Athanas, Esq., at Latham & Watkins LLP, in Chicago, Illinois, tells Judge Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan that under the RPA and RTA, GECC owns the Prepetition Receivables. The Debtors' estates, through their 100% equity ownership of Carcorp, have a residual interest in the Prepetition Receivables after GECC has been paid in full. GECC, as collection agent under the Securitization Documents, has made a demand on the Debtors to collect the Prepetition Receivables from Visteon Corporation and to forward all collections to GECC. Visteon has failed or refused to pay the Prepetition Receivables. Visteon is an automotive parts manufacturer that is a supplier and customer of the Debtors. According to Mr. Athanas, Visteon asserts adverse claims or interest with respect to the Prepetition Receivables. GECC disputes them. Mr. Athanas asserts that as of September 2, 2005, GECC is owed about $35,700,000 under the Securitization Documents plus interests and attorneys' fees and other charges. GECC believes that Visteon owes it $403,668 of the Prepetition Receivables. In this regard, GECC asks the Court to: a. enter a declaratory judgment adjudicating and ranking its interests in the Prepetition Receivables; b. enter a declaratory judgment adjudicating the amount of the Prepetition Receivables owed by Visteon; c. enter a declaratory judgment adjudicating GECC's claim under the Securitization Documents and the amount of the Debtors' residual interest in the Prepetition Receivables, and direct Visteon to pay all Prepetition Receivables to GECC until it is paid in full; d. award and enable GECC to recover its cots and attorneys' fees to the full extent recoverable; and e. enforce judgment in favor of GECC and the Debtors' estates to ensure GECC's first and prior right to payment in full under the Securitization Documents. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLONIAL ADVISORY: Fitch Retains Junk Ratings on $168.56M Notes --------------------------------------------------------------- Fitch upgrades the rating of one class of notes issued by Colonial Advisory Services CBO I, Ltd, which closed March 31, 1998. These rating actions are effective immediately: --$7,823,959 class A notes upgraded to 'AAA' from 'AA'; --$68,686,181 class B notes remain at 'CC'; --$99,870,533 class C notes remain at 'C'. Colonial CBO is a collateralized bond obligation managed by Colonial Management Associates. The collateral of Colonial CBO is composed of high-yield corporate bonds and emerging markets sovereign debt. Included in this review, Fitch discussed the current state of the portfolio with the collateral manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates. The upgrade of the class A notes is based on improved credit enhancement caused by significant principal redemptions. On the Sept. 20, 2005 payment date approximately $29.2 million of principal proceeds was used to redeem a portion of the class A notes, leaving 2.4% of the original balance of the outstanding. The class B notes received only a portion of their scheduled interest distribution on the most recent payment date, and the class C notes have not received any distributions for several payment periods. Unpaid interest to these notes is capitalized, leading to increased principal balances. The current outstanding balance of the classes B and C notes includes approximately $4.6 million and $33.9 million, respectively, of capitalized interest. The class B notes could receive a modest portion of their original principal balance by maturity, while the class C notes are unlikely to receive future cash flows. The rating of the class A notes addresses the likelihood that investors will receive full and timely payments of interest, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the classes B and C notes address the likelihood that investors will receive ultimate interest, as well as the aggregate outstanding amount of principal by the stated maturity date. COMMERCIAL MORTGAGE: S&P Assigns Low-B Ratings to 6 Cert. Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to CD 2005-C1 Commercial Mortgage Trust's $3.88 billion commercial mortgage pass-through certificates series 2005-C1. The preliminary ratings are based on information as of Oct. 24, 2005. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-2FL, A-2FX, A-3, A-SB, A-4, A-1A, A-MFL, A-MFX, A-J, B, C, D, E, and XP are currently being offered publicly. The remaining classes will be offered privately. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.49x, a beginning LTV of 98.7%, and an ending LTV of 89.3%. Preliminary Ratings Assigned CD 2005-C1 Commercial Mortgage Trust Recommended Class Rating Amount ($) credit support (%) ----- ------ ---------- ------------------ A-1 AAA 174,000,000 30.000 A-2FL AAA 200,000,000 30.000 A-2FX AAA 70,000,000 30.000 A-3 AAA 112,000,000 30.000 A-SB AAA 198,275,000 30.000 A-4 AAA 1,563,032,000 30.000 A-1A AAA 397,464,000 30.000 A-MFL AAA 100,000,000 20.000 A-MFX AAA 287,824,000 20.000 A-J AAA 305,412,000 12.125 B AA+ 29,087,000 11.375 C AA 43,630,000 10.250 D AA- 43,630,000 9.125 E A 58,174,000 7.625 XP* AAA 3,787,751,000 N/A XC* AAA 3,878,244,727 N/A F A- 38,783,000 6.625 G BBB+ 43,630,000 5.500 H BBB 43,630,000 4.375 J BBB- 48,478,000 3.125 K BB+ 29,087,000 2.375 L BB 9,696,000 2.125 M BB- 14,543,000 1.750 N B+ 9,696,000 1.500 O B 9,695,000 1.250 P B- 9,696,000 1.000 Q N.R. 38,782,727 N/A OCS** N.R. 25,000,000 N/A * Interest-only class with a notional dollar amount ** These certificates will represent interests solely in the loan that is secured by the One Court Square loan. The portion of the One Court Square loan that is represented by these classes is considered the non-pooled portion of the subject loan. N.R. -- Not rated N/A -- Not applicable COMPOSITE TECH: Plan Confirmation Hearing to Continue on Oct. 28 ---------------------------------------------------------------- Composite Technology Corporation (OTC Bulletin Board: CPTCQ) reported that confirmation hearing of its Chapter 11 plan of reorganization commenced on Oct. 24, 2005, in front of the Honorable Judge Ryan of the U.S. Bankruptcy Court for the Central District of California. Since there was insufficient time to hear all of the testimony of witnesses addressing plan confirmation issues the case will continue on Friday, Oct. 28, 2005 at 9:00 am and if necessary, possibly on Monday, Oct. 31, 2005. Headquartered in Irvine, California, Composite Technology Corporation -- http://www.compositetechcorp.com/-- provides high performance advanced composite core conductor cables for electric transmission and distribution lines. The proprietary new ACCC cable transmits two times more power than comparably sized conventional cables in use today. ACCC can solve high-temperature line sag problems, can create energy savings through less line losses, and can easily be retrofitted on existing towers to upgrade energy throughput. ACCC cables allow transmission owners, utility companies, and power producers to easily replace transmission lines without modification to the towers using standard installation techniques and equipment, thereby avoiding the deployment of new towers and establishment of new rights-of- way that are costly, time consuming, controversial and may impact the environment. The Company filed for chapter 11 protection on May 5, 2005 (Bankr. C.D. Calif. Case No. 05-13107). Leonard M. Shulman, Esq., at Shulman Hodges & Bastian LLP, represents the Debtor in its restructuring efforts. As of March 31, 2005, the Debtors reported $13,440,720 in total assets and $13,645,199 in total liabilities. CREDIT SUISSE: Moody's Junks Series 2001-HE 17 Class B Certs. ------------------------------------------------------------- Moody's Investors Service downgraded one subordinated tranche from one deal and withdrawn the ratings from six certificates from one deal, issued by Credit Suisse First Boston Mortgage Securities Corp. in 2001. The pools are subprime first lien adjustable-rate and fixed-rate loans. The 2001-HE17 securitization that is being downgraded suffers primarily from the performance of the underlying loans with cumulative losses exceeding our original expectations. Current credit enhancement levels, including excess spread, are low compared to the current projected loss numbers for the current rating level. Higher cumulative losses are attributable to higher than anticipated severities. The complete rating actions are: Issuer: Credit Suisse First Boston Mortgage Securities Corp. Downgrade: * Series 2001-HE 17; Class B, downgraded to Caa3 from B3 In the 2001-HE12 transaction, six certificates are being withdrawn following its redemption in full. CREDIT SUISSE: S&P Downgrades Cert. Class I-B-3 to BB from BBB- --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class I-B-3 mortgage pass-through certificates from Credit Suisse First Boston Mortgage Securities Corp.'s series 2002-9 loan group I to 'BB' from 'BBB-'. Concurrently, ratings are affirmed on the remaining seven classes from the same transaction. The lowered rating on class I-B-3 from loan group I reflects a decrease in credit support due to adverse collateral pool performance. As of the September 2005 remittance period, credit support for class I-B-3 was provided by subordination of $1,121,879 from class I-B-4. The loan group has been realizing net losses averaging approximately $73,000 per month during the most recent 12 months. As of the September 2005 distribution period, cumulative realized losses to date totaled $1,731,931, or 0.31% of the original pool balance. During the most recent 12 months, loan group I has incurred $853,607 in losses, which represents 49% of the lifetime losses to date. The poor collateral performance of this loan group has led to actual and projected credit support levels that do not support the former 'BBB-' rating. As of the September 2005 distribution date, total delinquencies for loan group 1 were 22.11%, while serious delinquencies were 16.36%. While loan group I has paid down to approximately 12.95% of its original balance, substantial losses continue to erode available credit support percentages. Given the performance trends exhibited by loan group I, Standard & Poor's will continue to monitor the transaction accordingly. The affirmed ratings on the remaining seven classes reflect adequate actual and projected credit support percentages provided by subordination. Rating Lowered Credit Suisse First Boston Mortgage Securities Corp. Series 2002-9 Mortgage Pass-Through Certificates Class To From ----- -- ---- I-B-3 BB BBB- Ratings Affirmed Credit Suisse First Boston Mortgage Securities Corp. Series 2002-9 Mortgage Pass-Through Certificates Class Rating ----- ------ I-A-1, I-A-2, I-A-3, I-X, I-P AAA I-B-1 AA I-B-2 A DALRADA FINANCIAL: Pohl Mcnabola Raises Going Concern Doubt ----------------------------------------------------------- Pohl, Mcnabola, Berg & Company, LLP, expressed substantial doubt about Dalrada Financial Corporation'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: -- $4,218,000 net loss from continuing operations for the year ended June 30, 2005; -- $$26,780,000 negative working capital deficit at June 30, 2005; and -- $24,695,000 negative stockholders' deficit at June 30, 2005. In addition, the auditing firm cited the Company's default on certain note payable obligations, lawsuits from numerous trade creditors as well as a deficiency in payroll tax liability payments. Fiscal 2005 Results In its Form 10-KSB submitted with the Securities and Exchange Commission, Dalrada Financial reports a $4,218,000 net loss in fiscal 2005 compared to a $102,000 net income in fiscal 2004. The Company's balance sheet showed $6,715,000 of assets at June 30, 2004, and liabilities totaling $31,410,000, resulting in a stockholders' deficit of $24,695,000. At June 30, 2005, the Company had a negative working capital deficit of $26,780,000. Defaults As of June 30, 2005, Dalrada Financial owed Export-Import Bank $1,730,000, plus interest, under a Working Capital Guarantee Facility. ExIm has made a demand for immediate payment and the note is currently in default. The Company is in default on the terms of these convertible debentures after failing to register the shares underlying the conversions on a registration statement. Certain of these notes are also currently past due: -- convertible promissory notes totaling $850,000, bearing 8% interest per annum, due Dec. 12, 2003, sold to Amro International, SA, Balmore Funds, SA, and Celeste Trust. -- convertible debentures in the aggregate principal amount of $1 million, bearing 8% interest per annum, due July 26, 2004, convertible into shares of the Company's common stock. -- convertible promissory notes in the aggregate principal amount of $300,000 bearing interest at 8% per annum, due Sept. 21, 2004, convertible into shares of the Company's common stock. -- convertible promissory notes in the aggregate principal amount of $200,000, bearing interest at 8% per annum, due Nov. 7, 2004, convertible into shares of the Company's common stock. -- convertible promissory note in the aggregate principal amount of $500,000 bearing interest at 8% per annum, due Jan. 22, 2003, convertible into shares of the Company's common stock. -- convertible notes in the aggregate principal amount of $100,000, bearing interest at 8% per annum, due Aug. 5, 2005, convertible into shares of the Company's common stock. -- convertible promissory notes in the aggregate principal amount of $150,000, bearing interest at 8% per annum, due Jan. 31, 2005, convertible into shares of the Company's common stock -- convertible promissory notes in the aggregate principal amount of $390,000 bearing interest at 8% per annum, due April 1, 2005, convertible into shares of the Company's common stock. -- convertible promissory notes in the aggregate principal amount of $800,000, bearing interest at 8% per annum, due Dec. 17, 2006, convertible into shares of the Company's common stock. The Company is late on filing payroll tax returns and owes approximately $8.8 million in past due payroll taxes. Material Weakness Pohl Mcnabola identified and orally reported to Dalrada Financial's management several material weaknesses identified during the auditing firm's review of the Company's financial Statements for fiscal 2005. These material weaknesses are: a) planning and implementation of the Company's accounting system; b) financial statement closing process; c) ineffective Information Technology control environment, including the design of the Company's information security and data protection controls; d) untimely detection and assessment of impairment of intangible assets; e) inadequate review of the valuation of certain payroll tax liabilities that resulted in post-closing journal entries to properly reflect the Company's payroll tax liabilities; f) proper recording of conversion of debt into shares of common stock, including the ability of certain managers to record journal entries without adequate review or supporting documentation and an inability by management to adequately review the issuance of common stock; and, g) Lack of the necessary depth of personnel with sufficient technical accounting experience with U.S. GAAP to perform an adequate and effective secondary review of technical accounting matters. Dalrada Financial says it will continue to evaluate the material weaknesses and will take necessary action to correct the internal control deficiencies. The Company will also further develop and enhance its internal control policies, procedures, systems and staff to allow it to mitigate the risk that material accounting errors might go undetected and be included in its consolidated financial statements. About Dalrada Financial Headquartered in San Diego, California, Dalrada Financial Corporation - http://www.itec.net/-- provides a variety of professional services related to human resources to businesses. In addition to its temporary staffing business, Dalrada provides a variety of innovative financial services to businesses, including comprehensive human resource administration and employee benefits such as health insurance, HSA savings plans, and 401(k) plans. Dalrada also offers debit card payroll accounts and payroll advances. These services enable small employers to offer benefits and services to their employees that are generally available only to large companies. DANA CORP: Board Approves Operational & Strategic Initiatives ------------------------------------------------------------- The Board of Directors for Dana Corporation (NYSE: DCN) approved a number of operational and strategic initiatives to enhance financial performance, from which the company expects to benefit in 2006 and beyond. This program consists of five steps: -- Focusing on Dana's light- and heavy-vehicle drivetrain products, associated structures, sealing, and thermal products, and divesting three non-core businesses with annual revenues of $1.3 billion; -- Operational restructuring in Dana's Automotive Systems and Heavy Vehicle -- Technologies and Systems groups; -- Enhanced business efficiency, including workforce reductions; and -- Benefit cost reductions. "These actions will position Dana to be more profitable moving forward," said Dana Chairman and CEO Michael J. Burns. "These are unprecedented times for Dana and the automotive industry. While a number of the actions we are taking are painful, they are vital to refocusing our company, accelerating cost and process efficiencies, and driving improved performance across our global organization. "At the same time, these moves support our longer-term objective of fully capitalizing on the deep capability in our remaining businesses and growing our presence in key global markets," he added. "Execution of this strategy will deliver improved performance for Dana and its shareholders." Divestiture of Non-Core Businesses In order to more fully leverage its strengths and to secure acceptable profit levels, Dana intends to narrow the breadth of its product line through the divestiture of three businesses: engine hard parts, fluid products, and pump products. Collectively, these businesses employ approximately 9,800 people worldwide and represent 2004 sales of approximately $1.3 billion. The engine hard parts business consists of 26 operations which primarily manufacture piston rings, camshafts, and engine bearings under the Perfect Circle(R), Clevite(R), and Glacier Vandervell(TM) brands. Sales for the business totaled approximately $720 million in 2004. The engine hard parts operations to be divested employ approximately 5,300 people in 10 countries. The fluid products business consists of 16 operations which manufacture fluid products for braking, power steering, HVAC, and fuel applications. Combined sales for this business totaled approximately $470 million in 2004. The fluid products operations to be divested employ a total of approximately 3,850 people in 6 countries. The pump products business consists primarily of an original equipment fluid transfer pump operation in Diadema, Brazil, and an aftermarket pumps operation in Santa Marina, Brazil. Sales for the business totaled approximately $80 million in 2004. The pump products operations to be divested employ approximately 650 people. Dana expects to incur non-cash charges in 2005 of approximately $315 million before tax to reduce the net assets of these businesses to realizable value. "While no longer central to Dana's future direction, these operations and the people associated with them have great potential for owners that are more strategically focused on these market segments," Mr. Burns said. "We expect to use the proceeds from these divestitures to reduce debt and reinvest in those businesses that will be key to profitable growth in the future." Operational Restructuring Dana will close two facilities in its Automotive Systems Group and shift production in several other operations to balance capacity and take advantage of lower cost locations: -- The Buena Vista, Va., axle facility will be closed and its production consolidated into an existing facility in Dry Ridge, Ky. The Buena Vista facility employs approximately 275 people. -- The Bristol, Va., driveshaft facility will be closed and its production consolidated into Dana operations in Mexico. The Bristol facility employs approximately 270 people. -- The assembly and component lines that support the steering shaft business in the Lima, Ohio, driveshaft facility will also be moved to Dana operations in Mexico. Approximately 100 of the 385 people at Lima will be impacted by this move. Dana is also moving aggressively to enhance efficiency, logistics, and throughput in its Commercial Vehicle business. To this end, Dana will undertake the following actions to balance capacity and enhance manufacturing efficiencies in this business: -- Service parts activities at Dana's principal commercial vehicle parts assembly facility in Henderson, Ky., will be moved to a Dana service parts operation in Crossville, Tenn. -- Assembly activity will be increased at the Dana facility in Monterrey, Mexico, to improve throughput at the Henderson plant. -- Gear production will be increased at the Dana operation in Toluca, Mexico, to relieve constraints at the company's principal commercial vehicle gear plant in Glasgow, Ky. Dana expects to incur a charge of $9 million before tax during the fourth quarter of 2005, and additional charges in 2006 and 2007 in association with these operational restructuring actions totaling $21 million before tax. The company expects the impact of these actions in 2006 to be a net expense of approximately $8 million due to both the time required to complete the moves and the recognition of additional expenses related to separation costs and equipment transfers. However, starting in the second half of 2007, the company expects to begin realizing the full annualized savings of more than $20 million before tax. "Collectively, these operational actions will result in a Dana Corporation that is even more focused on its light- and heavy- vehicle drivetrain products, associated structures, sealing, and thermal products businesses," Mr. Burns said. "This refocused product array will help us better support our global automotive, commercial vehicle, and off-highway markets and, along with our extensive global footprint and diverse customer base, will contribute to making Dana increasingly competitive moving forward." Enhanced Business Efficiency Dana expects to realize increased benefits from its programs in lean manufacturing, value engineering, customer quality and delivery, and other processes. Many of these programs are already underway and the incremental results are expected to further improve the company's efficiency and profitability. In addition, Dana has targeted a five-percent salaried workforce reduction (in addition to the operations to be divested or closed) through 2006. This reduction will be accomplished primarily through attrition. Through this reduction, the company expects to realize cost savings of more than $15 million before tax in 2006. Benefit Cost Reductions Dana is initiating changes to a number of its benefit programs. The company will eliminate the Employees' Stock Purchase Plan, reduce the company's share of the costs of its U.S. medical benefit plans, suspend matching contributions to its U.S. and Canadian long-term savings programs, and take additional actions to reduce benefit costs. These changes are expected to generate cost savings of more than $25 million before tax in 2006. Additionally, Dana has suspended wage and salary increases globally, subject to local law and contractual requirements. "While these are difficult steps for Dana people, they are essential if we are to maintain and grow our presence in a global market that has seen competitive realities forever changed," Mr. Burns said. Cash and Tax Impacts In addition to the $324 million of 2005 charges referred to above, costs to complete the restructuring actions in 2006 and 2007 are estimated at $21 million. Of the $345 million of total expected expenses from these actions, the total cash outlays are expected to be $27 million. Due to the company's recent decision to write off its U.S. deferred tax assets, Dana does not currently expect to record taxes on the U.S. portion of any charges or savings associated with these actions. Dana is currently unable to determine the non-U.S. tax effects as the structure of the divestitures and the allocation of proceeds among the taxing jurisdictions are currently unknown. The 2005 charges associated with the divestitures discussed in this announcement, coupled with the deferred tax write-off announced previously, although both non-cash, will cause Dana to report a significant loss for the full year 2005. 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 Oct. 25, 2005, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Dana Corp. to 'BB' from 'BB+', and kept the ratings on CreditWatch with negative implications. Total outstanding debt at June 30, 2005, was about $2.2 billion, accounting for finance subsidiary Dana Credit Corp. by the equity method. DCC is undergoing an orderly liquidation. DPAC TECH: Incurs $1.3MM Net Loss in Quarter Ended August 31 ------------------------------------------------------------ DPAC Technologies Corporation delivered its financial results for the quarter ended Aug. 31, 2005, to the Securities and Exchange Commission on Oct. 14, 2005. DPAC Technologies reports a $1,280,162 net loss on $539,717 of net sales for the quarter ended Aug. 31, 2005, compared to a $1,718,381 net loss on $222,696 of net sales for the same period in 2004. The Company has incurred losses from continuing operations during the first six months of fiscal year 2006 and for each of the last three fiscal years. The Company's balance sheet showed $1,804,315 of asset at Aug. 31, 2005, and liabilities totaling $2,550,323, resulting in a 746,008 stockholders' deficit. At Aug. 31, 2005, the Company had negative working capital of $117,000 and a current ratio of 0.9 to 1. This compares to a working capital of $1.5 million and a current ratio of 1.8 to 1 at February 28, 2005. Based on a projected cash consumption rate, DPAC Technologies' management anticipates that the Company's $787,000 cash balance Aug. 31, 2005 and cash from operations will not be sufficient to finance operations through fiscal year 2006. The Company is required to repay $500,000 to Development Capital Ventures LP under a secured, convertible bridge loan agreement entered into on August 5, 2005. The Company expects to obtain additional capital through the proposed merger with QuaTech, Inc. The terms of the proposed merger require QuaTech to raise approximately $4 million in new financing to complete the transaction. Going Concern Doubt Moss Adams, LLP, expressed substantial doubt about DPAC Technologies' ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Feb. 28, 2005. The auditing firm points to the Company's continuing losses from operations and negative operating cash flow. The Company's former independent auditor, Deloitte & Touche, LLP, had issued a clean and unqualified opinion after auditing the Company's financial statements for the fiscal years ended June 30, 2004 and 2003. About DPAC Technologies DPAC Technologies Corp., fka Dense-Pac Microsystems, Inc., -- http://www.dpactech.com/-- provides wireless connectivity products for industrial, transportation, medical and other commercial applications. The Airborne(TM) wireless Local Area Network Node Module was introduced in September 2003 after an initial year of research and development. The product is designed to enable OEM equipment designers to incorporate 802.11 wireless LAN connectivity into their device, instrument or equipment through the inclusion of the Company's Wireless LAN Node Module in their system design. The Company also sells Airborne(TM) Direct plug-and-play wireless products that add 802.11 wireless connectivity to legacy instruments and equipment that have a pre-existing serial or Ethernet data port. DPAC TECH: Amends QuaTech Reorganization and License Agreement -------------------------------------------------------------- DPAC Technologies Corp. (OTCBB:DPAC), Development Capital Ventures LP and QuaTech, Inc., amended their agreement and plan of reorganization for the second time and, for the first time, amended their license agreement. The reorganization agreement, originally signed in April 2005, provides for DPAC to acquire all of the stock and options of QuaTech in exchange for issuing previously unissued shares of DPAC's common stock. The amendment to the agreement between DPAC and QuaTech establishes a new exchange ratio. The new exchange ratio was informally based on DPAC's shareholders as of immediately before the merger continuing to hold, immediately after the merger, 30% of the outstanding common stock of DPAC, before the potential dilutive effects of conversion of an outstanding bridge loan, which would result in current DPAC shareholders owning approximately 25.5% of the issued and outstanding shares immediately following the consummation of the merger. The merger is contingent on QuaTech consummating approximately $3.1 million in debt financing in accordance with the terms of nonbinding proposals it has obtained from lenders; however, it is no longer a condition that QuaTech repay its outstanding subordinated note in the original principal amount of $3 million. The amendment also extends the termination date of the reorganization agreement to March 31, 2006. License Agreement The parties have also amended the license agreement between DPAC, DCV and QuaTech that was originally entered into on Aug. 5, 2005. The amendment provides an option for QuaTech to elect to prepay all exclusive license fees for a one-time cash payment of $2.4 million, which the parties have agreed is the fair market value of the exclusive license. The exclusive license remains subject to DPAC shareholder approval. If QuaTech exercises its option to prepay the license fees, the cash will be held in escrow pending DPAC shareholder approval. If DPAC's shareholders approve the license agreement, and if the merger agreement is terminated for any reason, QuaTech has the option of rescinding its election to prepay and allow the license to convert to a non-exclusive license with the obligation to pay ongoing license fees to DPAC based on quantities shipped. In that event, the cash payment in escrow will be returned to QuaTech. If DPAC's shareholders do not approve the license agreement, and the merger agreement is terminated, the license shall automatically be converted to a non-exclusive license, with royalties payable in the normal course, and any prepaid license fees shall be returned. DPAC intends to file an S-4 registration statement with the Securities and Exchange Commission as soon as possible. The S-4 will seek DPAC shareholders approval of the proposed merger and exclusive license agreement, as well as certain other proposals, including a proposal to increase the number of authorized shares and a proposal to approve a reverse split of the company's common stock upon or after consummation of the merger with QuaTech. The Board of Directors has determined that shareholders of record as of Dec. 15, 2005 shall be entitled to notice of and to vote on these matters at a DPAC annual shareholders' meeting to be held on February 3, 2006. Going Concern Doubt Moss Adams, LLP, expressed substantial doubt about DPAC Technologies' ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Feb. 28, 2005. The auditing firm points to the Company's continuing losses from operations and negative operating cash flow. The Company's former independent auditor, Deloitte & Touche, LLP, had issued a clean and unqualified opinion after auditing the Company's financial statements for the fiscal years ended June 30, 2004 and 2003. About QuaTech headquartered in Hudson, Ohio, QuaTech provides device networking and connectivity solutions. The Company supplies data connectivity products to financial institutions, serving five of the top 10 U.S. banks. QuaTech sells and supports its solutions both directly and through a global network of resellers and distributors. About Development Capital Ventures Headquartered in Chantilly, Virginia, Development Capital Ventures is a Small Business Investment Company licensed and regulated by the Small Business Administration under the Small Business Act of 1958 as amended. Development Capital Ventures provides financing to manufacturing, distribution, and business-to-business service companies. About DPAC Technologies DPAC Technologies Corp., fka Dense-Pac Microsystems, Inc., -- http://www.dpactech.com/-- provides wireless connectivity products for industrial, transportation, medical and other commercial applications. The Airborne(TM) wireless Local Area Network Node Module was introduced in September 2003 after an initial year of research and development. The product is designed to enable OEM equipment designers to incorporate 802.11 wireless LAN connectivity into their device, instrument or equipment through the inclusion of the Company's Wireless LAN Node Module in their system design. The Company also sells Airborne(TM) Direct plug-and-play wireless products that add 802.11 wireless connectivity to legacy instruments and equipment that have a pre- existing serial or Ethernet data port. * * * Going Concern Doubt Moss Adams, LLP, expressed substantial doubt about DPAC Technologies' ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Feb. 28, 2005. The auditing firm points to the Company's continuing losses from operations and negative operating cash flow. The Company's former independent auditor, Deloitte & Touche, LLP, had issued a clean and unqualified opinion after auditing the Company's financial statements for the fiscal years ended June 30, 2004 and 2003. DURANGO GEORGIA: Heightened Interest Prompts Change of Bid Venue ---------------------------------------------------------------- Bridge Associates, LLC, through Anthony Schnelling, a member of the firm acting as the Trustee for the Durango Georgia Paper bankruptcy estate, said that the auction of the assets held by the Bankruptcy Estate of Durango Georgia Paper Company is being moved from the Amelia Island Plantation to the Westin Savannah Harbor, One Resort Drive, Savannah, Georgia. The auction will still be conducted on December 6, 2005, at 10:00 a.m. "We are making the move to the Westin Savannah Harbor because the overwhelming response to the assets to be auctioned has prompted the need for additional space," Mr. Schnelling explained. "In view of the heightened interest in the auction, it also makes sense to hold it in Savannah, since that's where the bankruptcy court is located," he added. Mr. Schnelling said that based upon the number of inquiries that have already been received, he expects a very vigorous and active auction in which all bids, whether from paper mill restarters or from real estate developers, will be judged solely on their merits. "We have no preference among potential outcomes nor hidden agenda to accomplish, other than to deliver the maximum return to the creditors, consistent with our fiduciary obligations. That was certainly the case in the selection of the stalking horse bidder, and will be the case when the winning bid is submitted to the Bankruptcy Court for approval." Mr. Schnelling said that he was concerned that recent published reports in the media may have a chilling effect on the bidding process by overemphasizing environmental considerations. "We believe that it does a disservice to the creditors, many of whom are former employees of the paper mill, and to the members of the local community for a potential bidder to use scare tactics and unsubstantiated reports in order to discourage others from participating in the auction," Mr. Schnelling stated. Along with the change in venue, the time for submitting pre-auction bids has been changed, and they shall be now submitted to the Trustee, so as to be received on or before Wednesday, November 23, 2005, 5 p.m. Eastern time. Further details on the auction process will be provided to qualified bidders closer to the actual time of the auction. The Durango bankruptcy estate includes a "moth-balled" paper mill situated upon approximately 750 acres of marsh and river-front land that make up the property of Durango Georgia Paper of St. Marys, Georgia, along with the plant and equipment formerly operated as the paper mill and approximately 2700 acres of timber tracts located near or abutting I-95 in Southeast Georgia, approximately 35 minutes north of Jacksonville, Florida. On September 19, 2005, St. Marys Redevelopment Group, LLC, a sister company of RealtiCorp, a Greenville, South Carolina commercial real estate development firm, submitted a "stalking horse bid" indicating an intent to redevelop the mill property as a mixed-use development, that offers the bankruptcy estate $15 million in cash at closing, plus 18.5% of all future gross revenues from development sales and from sale of the equipment out of the closed paper mill. The Durango estate has been represented in connection with this transaction by Bridge Associates, LLC, as Trustee, Hilco Real Estate, LLC of Northbrook, Illinois, as exclusive real estate advisor, and by Ward Stone, Jr. of Stone & Baxter, LLP, a law firm based in Macon, Georgia, as counsel. Headquartered in St. Mary's, Georgia, Durango Georgia -- http://www.durangopaper.com/-- was a nationally recognized bleached board and kraft paper producer in the U.S. offering coast-to-coast and international service. On Oct. 29. 2002, Durango's creditors filed an involuntary chapter 7 petition against it and the Company consented to the petition. The Company filed for chapter 11 relief on Nov. 20, 2002 (Bankr. S.D. Ga. Case No. 02-21669). George H. Mccallum, Esq., at Stone & Baxter, LLP, Kate D. Strain, Esq., at Hunter, Maclean, Exley & Dunn, PC, and Neil P. Olack, Esq., at Duane Morris LLP, represent the Debtor in its restructuring efforts. Bridge Associates, LLC, was appointed as Trustee in the Case under the terms of a Plan of Liquidation approved by creditors and confirmed by the Bankruptcy Court in June 2004. EMPIRE FINANCIAL: Miller Ellin Replaces Sweeney Gates as Auditor ---------------------------------------------------------------- Empire Financial Holding Company engaged Miller, Ellin & Company, LLP as its principal independent accountant and dismissed Sweeney, Gates & Co., its former principal independent accountant. Sweeney's reports for the years ended December 31, 2004, and 2003 did not contain an adverse opinion or disclaimer of opinion and were not modified as to uncertainty, audit scope or accounting principles. However, the opinion did include an explanatory paragraph relating to the company's ability to continue as a going concern and uncertainties in connection with pending federal and state investigations relating to the Company's involvement in trading in mutual fund shares by its customers. The decision to change accountants was approved by the Company's Audit Committee. Empire Financial Holding Company, through its wholly owned subsidiary, Empire Financial Group, Inc., provides full-service retail brokerage services through its network of independently owned and operated offices and discount retail securities brokerage via both the telephone and the Internet. Through its market-making and trading division, the Company offers securities order execution services for unaffiliated broker dealers and makes markets in domestic and international securities. Empire Financial also provides turn-key fee based investment advisory and registered investment advisor custodial services through its wholly owned subsidiary, Empire Investment Advisors, Inc. * * * Going Concern Doubt The audit report contained in its Annual Report on Form 10-KSB for the year ended Dec. 31, 2004, contains an explanatory paragraph that raises doubt about the Company's ability to continue as going concern because the Company has had net losses from continuing operations in 2004, 2003 and 2002, a stockholders' deficit and has uncertainties relating to regulatory investigations. ENRON CORP: Bankruptcy Court Okays JPMorgan Bilat L/C Agreement --------------------------------------------------------------- As previously reported, JPMorgan Chase Bank N.A. agreed to issue letters of credit to various parties and Enron Corp., agreed to reimburse JPMorgan in the event of any draw upon any of the L/Cs under a Master Letter of Credit and Reimbursement Agreement, dated as of June 16, 1995. Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that JPMorgan issued seven L/Cs: Beneficiary Applicant Draw Amount ----------- --------- ----------- Green Country Energy LLC NEPCO $14,020,000 AES Wolf Hollow, L.P. NEPCO $25,021,770 AES Frontier, L.P. NEPCO $4,745,130 Williams Energy Marketing EPMI $17,000,000 Bco Amazonas/Empresa Estatal Peroleos Del Ecuador ELFI $1,000,000 CMP London/Manx Elect. Authority Enron GBP10,200,000 Banque Indosuez/Interfert S.A. Enron EUR139,749 JPMorgan filed 11 claims in the Debtors' Chapter 11 cases in connection with the L/Cs: Claim No. Debtor Basis For Claim Amount --------- ------ --------------- ------ 11136 Enron Reimbursement at least $62,350,097 11228 Enron Subrogation Unliquidated 11229 NEPCO Subrogation Unliquidated 11230 EPMI Subrogation Unliquidated 11231 ELFI Subrogation Unliquidated 11232 EES Subrogation Unliquidated 22139 NEPCO Subrogation Unliquidated 22140 NEPCO Pow. Subrogation Unliquidated 22141 Enron Pow. Subrogation Unliquidated 22142 NEPCO Ser. Subrogation Unliquidated 24514 EEPC Subrogation $14,020,000 On December 26, 2002, JPMorgan filed a complaint against EEPC in the United States District Court for the Southern District of New York to recover the $14,020,000 owed under the Green Country L/Cs plus interest, costs and expenses. On December 24, 2002, JPMorgan filed a complaint in the Bankruptcy Court to recover from Enron an amount equal to the amounts drawn pursuant to the Green Country, the AES EPC, and the AES Services L/Cs, plus interest, costs and expenses. Each of JPMorgan, Enron, NEPCO, EEPC, and NEPCO Power contend that: (1) Green Country drew amounts on the Green Country L/C exceeded the amounts to which Green Country was entitled under the Engineering and Construction Agreement, dated as of November 1, 1999, between NEPCO and Green Country and under the Equipment Procurement Agreement, dated as of November 1, 1999, between NEPCO Procurement and Green Country, and (2) if the amounts drawn were proper at the time of each drawing, Green Country has since retained an amount in excess of that portion, if any, that it is entitled to retain. Each of JPMorgan, Enron, NEPCO, EEPC, and NEPCO Power also contends that Green Country, Cogentrix, and Cogentrix of Oklahoma, Inc., have wrongfully retained and are wrongfully retaining the Green Country Overdraws. On February 24, 2003, JPMorgan filed an amended complaint in the Bankruptcy Court against Green Country, Cogentrix of Oklahoma, and Cogentrix Energy to recover the amount of the Green Country Overdraws. By Cross-Complaint dated December 1, 2003, entitled Bayerische Hypo-Und Vereinsbank AG v. Banca Nazionale Del Lavoro S.p.A., certain of the Enron Entities sought to recover the amount of the Green Country Overdraws from Green Country, Cogentrix and Cogentrix Oklahoma. On January 9, 2004, the Debtors filed an avoidance action against various parties, including JPMorgan. In the complaint, the Debtors objected to claims filed by JPMorgan in connection with the Bilat L/C Agreement. The Reorganized Debtors and JPMorgan have reached a settlement agreement that resolves their disputes. The salient terms of the Bilat L/C Settlement Agreement are: (1) Assignment of Causes of Action. JPMorgan will assign, without recourse, to Enron, any and all claims and causes of action that JPMorgan has or may have against Green Country, AES Wolf Hollow, AES Frontier, Cogentrix and Cogentrix Oklahoma or any of their affiliates based upon the Green Country, the AES EPC, and the AES Services L/Cs and the Green Country Project. (2) Assigned Actions Representations. JPMorgan will make the assignment of the Assigned Actions without any representation or warranty that any of the Assigned Actions are valid or meritorious, and Enron acknowledges that any or all of the Assigned Actions may be diminished, in whole or in part, by legal and factual defenses, claims of offset, claims of avoidance, and similar matters. (3) Assistance in Assigned Actions Litigation. JPMorgan will use its reasonable best efforts to cooperate in Enron's efforts to pursue the Assigned Actions. Enron agrees that it will use its reasonable best efforts to minimize any inconvenience to JPMorgan, or any current or former officer, director, employee, or agent thereof, which may result from Enron's efforts to pursue the Assigned Actions. (4) Litigation Costs and Expenses. * In the event that Enron determines to pursue one or more of the Assigned Actions, Enron will thereafter bear the costs of prosecuting the Actions. Enron will also thereafter bear the costs of defense of claims that are brought by a defendant in the Assigned Actions against JPMorgan, subject to certain conditions. * In the event that Enron determines not to pursue one or more of the Assigned Actions, the Enron Entities will not be responsible for any costs of defending against any claim brought against JPMorgan by any third party. * JPMorgan will have no responsibility or any liability arising from or relating to any claim brought against any of the Enron Entities by any third party. (5) Recovery and Distribution of Proceeds. In the event that Enron recovers monies associated with the Assigned Actions, the proceeds will be allocated and distributed between the parties on these terms: (a) Green Country L/C. About 74% of the proceeds attributable to the L/C will be distributed to Enron while 26% will be distributed to JPMorgan. The Enron Entities will be entitled to deduct from the JPMorgan Proceeds: (y) 30% of the JPMorgan Proceeds in favor of Enron; and (z) an amount equal to 26% of the fees and expenses incurred by Enron in connection with the collection of the proceeds. (b) AES EPC L/C. The proceeds attributable to the L/C will be distributable in this order and amounts: (1) 30% of the proceeds, to Enron; (2) 100% of the fees and expenses incurred by Enron in connection with the collection of the proceeds; and (3) the balance of the proceeds, to JPMorgan. (c) AES Services L/C. The proceeds attributable to the L/C will be distributable in this order and amounts: (x) 30% of the proceeds, to Enron; (y) 100% of the fees and expenses incurred by Enron in connection with the collection of the proceeds; and (z) the balance of the proceeds, to JPMorgan. (6) Dismissal of Actions. The parties will file stipulations dismissing the EEPC Action and the JPMorgan LC Adversary with prejudice. (7) Allowance/Disallowance of Claims. Claim Nos. 11228, 11229, 11232, 22140, 22141 and 22142, will be deemed disallowed and expunged in their entirety. The remaining claims will be will be deemed allowed as Joint Liability Claims in these amounts and Classes: Claim No. Debtor Amount Class --------- ------ ------ ----- 11136 Enron $79,166,176 4 22139 NEPCO 46,821,300 67 24514 EEPC 14,020,000 180 11230 EPMI 17,000,000 6 11231 ELFI 1,000,000 39 The Allowed Claims will be reduced, on a dollar-for-dollar basis, to the extent of any monies recovered by the Enron Entities from AES Wolf Hollow, AES Frontier, Cogentrix, Green Country or Cogentrix Oklahoma in connection with the Assigned Actions and paid or deemed paid by the Enron Entities to JPMorgan. (8) Distributions on Allowed Claims. The Allowed Claims will constitute Litigation Trust Claims and no distributions will be made pursuant to the Plan with respect thereto until entry of a Final Order in the Recovery Action with respect to the claims and causes of action asserted against JPMorgan and its affiliates. The amounts received by JPMorgan under the Allowed Claim with respect to the L/Cs will be capped: Letter of Credit Maximum Amount ---------------- -------------- Green Country $43,786,900 AES EPC AES Services Williams $17,000,000 Empressa $1,000,000 JPMorgan will return any excess amounts to the Enron Entities, pro rata, based on the amounts received from those entities. (9) Delivery of Funds. If and to the extent that JPMorgan recovers any amounts from any third party with respect to the Green Country Overdraws, whether on the Assigned Actions, the claims made in the Cogentrix Lawsuit, or otherwise, JPMorgan will notify Enron, NEPCO and EEPC of the recovery and deliver all the monies to Enron. (10) Releases. JPMorgan will be deemed to have irrevocably and unconditionally forever released the Enron Entities from claims and causes of action connected with the Bilat L/C Agreement and the JPMorgan L/C Adversary. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Debtors asked the Court to approve the Bilat L/C Settlement. The Court approves the stipulation. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 160; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Coyote Springs Holds $90 Mil. Allowed Unsecured Claim ----------------------------------------------------------------- EPC Estate Services, Inc., formerly known as National Energy Production Corporation, and Coyote Springs 2, LLC, are parties to a Turnkey Engineering Procurement and Construction Agreement, dated July 21, 2000. The agreement provides for NEPCO's design, engineering, procurement, construction and commissioning of a 280-MW combined cycle gas-fired electric power generation facility owned by CS2 and located in Morrow County, Oregon. Enron Corp. guaranteed NEPCO's obligations under the Construction Agreement pursuant to a Guaranty dated July 21, 2000. NEPCO was unable to complete construction of the Coyote Springs Facility and, in April of 2002, NEPCO was removed as the contractor. On October 15, 2002, CS2 filed Claim Nos. 13030 and 13040 against NEPCO and Enron in connection with non-completion of the Facility. The Reorganized Debtors objected to the claims. To avoid unnecessary expenses and litigation, the parties stipulate that: (1) Claim No. 13030 will be allowed as a Class 67 general unsecured claim against NEPCO for $45 million; (2) Claim No. 13040 will be allowed as a Class 185 Enron guaranty claim for $45 million; (3) the Allowed Claims include delay liquidated damages to the limit provided for by Section 20.3 of the Construction Agreement; (4) the Allowed Claims cannot be disallowed under Section 502(d) of the Bankruptcy Code; (5) the Objection is withdrawn with prejudice; and (6) they will exchange mutual releases of claims in connection with the Construction Agreement. The Court approves the stipulation. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 159; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Court Allows ECP Estate Unsec. Claims for $12.3-Mil. ---------------------------------------------------------------- As previously reported, East Coast Power, LLC, filed Claim Nos. 22089 and 22090, each for $6,606,357 on Nov. 25, 2002, against Enron Corp. and EPC Estate Services, Inc., formerly known as National Energy Production Corporation. On March 9, 2005, Enron filed an Estimation Objection with respect to the ECP Claims. ECP was an appellant in an appeal before the Superior Court of New Jersey, Appellate Division, pursuant to which, among other things, ECP sought to retain up to $2,196,000 from a New Jersey lien pool. Pursuant to a stipulation, the parties agree that: (1) Claim No. 22089 will be allowed as a Class 185 Enron guaranty claim for $6,139,00; (2) Claim No. 22090 will also be allowed as a Class 67 general unsecured claim against NEPCO for $6,139,000; (3) ECP represents and warrants that: (a) the NJ Appellate Court has rendered a final decision against ECP in the NJ Lien Pool Appeal, and (b) ECP has not received and is not party to any agreement or understanding pursuant to which it will receive any portion of the Lien Pool Amount; (4) If ECP receives any amount from the Lien Pool prior to receiving distributions on the Allowed Claims, the amount of each of the Allowed Claims will be reduced by the amount of the Lien Pool Refund. If ECP receives a Refund after receiving the claim distributions, ECP will promptly pay to Enron an amount equal to the difference between: (x) the distribution received by ECP under the Plan on account of the Allowed Claims, and (y) the distribution ECP would have received under the Plan on account of Allowed Claims if the Allowed Claims had been reduced by the amount of the Lien Pool Refund; (5) The Objection will be withdrawn; and (6) They will mutually release each other from any obligations under the ECP Claims. The Court approves the stipulation. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 160; Bankruptcy Creditors' Service, Inc., 15/945-7000) FEDERAL-MOGUL: Wants Court Nod to Perform Under U.K. Settlement --------------------------------------------------------------- On September 26, 2005, Federal-Mogul Corporation and several of its constituencies in their Chapter 11 bankruptcy proceedings reached an agreement with the administrators of Federal-Mogul's U.K. affiliates, which would allow Federal-Mogul to retain the businesses and other assets of its UK affiliates in exchange for certain monetary amounts and reserves. The U.K. Global Settlement Agreement The U.K. Global Settlement Agreement, according to James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, in Wilmington, Delaware, is a comprehensive resolution of disputes between the Plan Proponents and the Administrators as to the reorganization of the U.K. Debtors. Those disputes, which have centered on the valuation of and the law applicable to asbestos personal injury claims and pensions-related claims against the U.K. Debtors, have been a primary obstacle to confirmation of the Plan and the successful conclusion of cross- border plenary insolvency proceedings. As a result of those disputes, the Administrators have for some time been engaged in efforts to market and sell the assets and businesses of the U.K. Debtors pursuant to U.K. insolvency laws. In the view of all parties, the non-consensual liquidation of the U.K. Debtors was less desirable than a coordinated and consensual reorganization of the U.K. Debtors pursuant to the U.S. and U.K. insolvency laws. The U.K. Global Settlement Agreement resolves the parties' disputes and thereby avoids the liquidation of the U.K. Debtors and a clash of U.S. and U.K. jurisdictions, Mr. O'Neill says. The U.K. Global Settlement Agreement thus removes a principal obstacle to confirmation of the Plan and opens the path towards the successful conclusion of the cross-border insolvency proceedings. The U.K. Global Settlement Agreement, in sum, provides for the prompt and coordinated resolution of the U.K. administration proceedings. Specifically, the Administrators have agreed to propose and recommend schemes of arrangement or company voluntary arrangements for the U.K. Debtors in accordance with the terms of the U.K. Global Settlement Agreement. The CVAs or Schemes, if approved by the requisite vote of creditors in accordance with U.K. insolvency laws, will provide for the resolution and treatment of most claims against the U.K. Debtors with the notable exception of U.S., Canadian and certain other "rest of world" current and future asbestos personal injury claims against the U.K. Debtors and Intercompany Claims. The resolution and treatment of the U.S. APICs will instead be dealt with pursuant to the Plan and, specifically, the Section 524(g) asbestos trust to be created pursuant to the Plan, Mr. O'Neill explains. For all other claimants against the U.K. Debtors, the U.K. Global Settlement Agreement provides that they will be entitled to the distributions they are to receive pursuant to the CVAs or Schemes. The U.K. Global Settlement Agreement provides for certain reserves and payments to be established and made pursuant to the CVAs or Schemes. These reserves and payments will be funded by: (a) the substantial cash owned by the U.K. Debtors and controlled, under the laws of the United Kingdom, by the Administrators; and (b) the proceeds of certain intercompany loan notes held by T&N Limited. Funds Maximum Required Maximum Value of For Value of Non-U.K. Clause 8(e) Section 75 Intercompany Company Reserve Claim Claim ------- ----------- ---------- ------------ F-M Friction GBP52,060,000 GBP32,890,000 - F-M Eurofriction 930,000 110,000 - F-M Sealing 2,730,000 1,410,000 - F-M Sintered 7,480,000 5,150,000 - F-M Aftermarket 7,150,000 4,390,000 - F-M Sealing 3,000,000 9,180,000 GBP80,000 F-M Bradford 3,600,000 19,260,000 970,000 F-M Camshaft 5,300,000 4,140,000 - F-M Camshafts 4,500,000 2,900,000 - F-M Powertrain 1,800,000 3,810,000 10,000 F-M Systems 940,000 150,000 - TBA Industrial 6,450,000 11,580,000 - F-M Engineering 500,000 - - F-M Technology 3,460,000 3,290,000 - F-M Bridgwater 4,840,000 4,120,000 50,000 F-M RPB Shoreham 990,000 - - F-M Ignition 7,000,000 - 36,500,000 F-M Sealing (Cardiff) 3,000,000 - 18,610,000 F-M Sealing Systems 240,000 - - ----------- ------------ ------------ GBP115,970,000 GBP102,380,000 GBP56,220,000 Other noteworthy provisions of the U.K. Global Settlement Agreement include: a. A U.K. Asbestos Trust or Trusts will be established for the purpose of making payments to holders of current and future asbestos-related personal injury claims against the U.K. Debtors by persons domiciled in the United Kingdom and Australia, as well as so-called Cape claims against T&N. b. In consideration for the treatment of the claims of the Pension Protection Fund under the U.K. Global Settlement Agreement, which claims will arise once the Administrators have summoned meetings of the members and creditors of the U.K. Debtors to consider and vote on CVAs for those companies, the Pension Protection Fund agrees that it will not seek to recover pension shortfalls from any of the Debtors or their affiliates and certain parties associated with the Debtors, and will release the Debtors, their affiliates, and those associated entities from any claims relating to the pension schemes. c. Federal-Mogul will grant certain indemnities under the U.K. Global Settlement Agreement, which will be entitled to administrative expense status in the U.S. Chapter 11 cases. d. The Plan Proponents will support approval of the CVAs or Schemes for the U.K. Debtors consistent with the U.K. Global Settlement Agreement, and the Administrators and the Pension Protection Fund will support the Plan. The U.K. Effective Date is required to occur no later than February 28, 2006, although the date may also be extended. The U.K. Effective Date, importantly, is not conditioned on the prior or concurrent effectiveness of the Plan. A full-text copy of the U.K. Global Settlement is available at no cost at http://bankrupt.com/misc/UKGlobalSettlement.pdf Federal-Mogul and its affiliated U.S. Debtors and the Administrators for the U.K. Debtors ask Judge Lyons to: (a) authorize, but not require, the Debtors to enter into and perform their obligations under the U.K. Global Settlement Agreement; and (b) recognize and defer to the insolvency laws and procedures in the United Kingdom by authorizing: (1) the U.K. Debtors to take any and all actions necessary and appropriate to give effect to the CVAs or Schemes to be proposed and recommended by the Administrators in the United Kingdom in respect of the U.K. Debtors, in accordance with the provisions of the Companies Act 1985 and the Insolvency Act 1986, should those CVAs or Schemes become effective in accordance with U.K. law; and (2) the claims of all creditors of the U.K. Debtors, except holders of U.S. APICs and Intercompany Claims, to be satisfied under the CVAs or Schemes, after a process of proving or allowing those claims in accordance with U.K. law and procedure, provided that those CVAs or Schemes become effective in accordance with U.K. law. Progress Made Mr. O'Neill relates that on September 30, 2005, the Pensions Regulator in the United Kingdom granted a clearance, which states in effect that the Pensions Regulator will not pursue claims against the Debtors or the reorganized Debtors on account of the U.K. Debtors' two largest pension schemes. That clearance, together with the agreement of the Pension Protection Fund in the United Kingdom to the U.K. Global Settlement Agreement, constitute the agreement of the pension- related parties in the United Kingdom to the U.K. Global Settlement Agreement, whose approbation is an essential element of a successful resolution of the U.K. Debtors' administration proceedings. Additionally, the Administrators have filed applications in the U.K. Court seeking directions that: (1) the Administrators may, or are at liberty to, propose the CVAs or Schemes to give effect to the terms of the U.K. Global Settlement Agreement; and (2) the holders of future asbestos personal injury claims against the U.K. Debtors are both capable of being bound and having their claims compromised by the CVAs or Schemes and may prove their claims in a U.K. liquidation proceeding. The U.K. Court has scheduled a hearing on those applications for directions, Mr. O'Neill says. Mr. O'Neill adds that the Plan Proponents and the Administrators have negotiated, agreed upon, and executed a Cooperation Agreement on tax-related matters contemplated under the Settlement Agreement. Moreover, the Debtors are in well-advanced discussions with Citicorp USA, Inc., as Administrative Agent for the Debtors' DIP financing facility, concerning the amendment to the DIP Facility necessary to enable the Debtors to fund an offer for certain intercompany loan notes, Mr. O'Neill relates. Actions to be Taken The Plan will be amended to provide that creditors of the U.K. Debtors, other than U.S. APICs and Intercompany Claims, will have their claims satisfied from the distributions they have received or will receive under the CVAs or Schemes. Claims against the U.K. Debtors will not be treated under the Plan absent consensual arrangements between the Plan Proponents and applicable parties. Instead, the treatment provided by the CVAs or Schemes will be granted comity under the Plan. Proceedings Envisioned According to Mr. O'Neill, the Administrators will, after receipt of appropriate directions from the U.K. Court, propose CVAs or Schemes to, among other things, establish reserves and make the payments to creditors called for in the U.K. Global Settlement Agreement. The CVAs or Schemes are the mechanisms by which the U.K. Debtors will exit from their U.K. administration proceedings and function much like a plan of reorganization does in a U.S. chapter 11 proceeding, Mr. O'Neill explains. The CVAs or Schemes will specify the mechanisms, among others, for proving and allowing claims and how the dividends, which creditors are to receive on account of their claims, will be calculated. The CVAs, Mr. O'Neill says, will contain a short explanation why, in the opinion of the Administrators, the CVA is desirable and why the companies' creditors may be expected to concur with the CVA. The creditors will vote as a single class to approve the CVA, with approval requiring a majority vote in excess of three- fourths in value of creditors voting on the resolution. In addition, more than one-half in value of the shareholders voting at the shareholders' meeting for each company must vote to approve the proposed CVA. If the votes are obtained, the CVA will become effective and binding upon all creditors, whether or not they voted in favor of the CVA, without further action from the U.K. court, provided that no challenge is made to the CVA under Section 6 of the Insolvency Act 1986. If Schemes for the U.K. Debtors are proposed, in accordance with the provisions of Sections 425 and 426 of the Companies Act 1985, the Schemes will be prepared and distributed to creditors along with an explanatory statement and a notice of a meeting of creditors to consider the Schemes. Under the Schemes, the creditors of each of the U.K. Debtors for whom Schemes are proposed will be divided into classes. Each class of creditors will separately vote on the Scheme for the relevant U.K. Debtors, with a majority in number representing three-fourths in value of those voting at each meeting needing to accept the Scheme. Assuming the votes are obtained, Mr. O'Neill explains, the Schemes will be presented to the U.K. Court for sanction. If that sanction is granted, the Schemes will become effective upon filing with the U.K. Companies Registry and will bind all creditors of the U.K. Debtors to whom the Schemes are applicable, whether or not they voted at the meetings. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a US$2.048 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. (Federal-Mogul Bankruptcy News, Issue No. 96; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Resolving Owens-Illinois Dispute for $4.8 Million ---------------------------------------------------------------- In June 1999, Owens-Illinois, Inc., filed a complaint against T&N Limited seeking over $1.6 billion in damages on account of its historical expenditures in defending and resolving asbestos cases since the 1970s. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, in Wilmington, Delaware, relates that among other things, Owens-Illinois asserted that T&N conspired for more than three decades with: -- Cape Asbestos Co. Ltd., now known as Cape PLC, a U.K. asbestos company not affiliated with the Debtors; and -- Johns-Manville Corp., in the sale of asbestos fiber, allegedly hiding the hazards of asbestos to asbestos product end-users. Owens-Illinois further represented that had it known about these hazards, it never would have entered the asbestos insulation product business, Mr. O'Neill says. T&N disputed Owens-Illinois' allegations and asserted numerous defenses. Owens-Illinois subsequently amended the complaint to add Federal- Mogul as a defendant in the Litigation, alleging various causes of action against Federal-Mogul. Federal-Mogul disputed each of those allegations. In December 2000, Owens-Illinois, T&N and Federal-Mogul entered into a Confidential Settlement and General Mutual Release to settle the Litigation for a $10 million payment. The 2000 Agreement required payment of the first half of the settlement proceeds by mid-October 2001, with the remaining $5 million due and payable by mid-October 2002. Due to the filing of Federal- Mogul's Chapter 11 cases, neither installment was paid. Although the only parties executing the 2000 Agreement were Owens-Illinois, T&N and Federal-Mogul, the 2000 Agreement defined T&N and Federal-Mogul to include their affiliates, divisions, related companies, subsidiaries, predecessors, successors and assigns, Mr. O'Neill points out. Hence, Owens-Illinois has asserted that the 2000 Agreement evidences assent by Federal- Mogul, T&N and their affiliates to be jointly and severally liable to Owens-Illinois for the $10 million settlement amount. Consequently, Owens-Illinois asserted 23 claims for $10 million against each of the U.S. Debtors. Owens-Illinois also notified the Administrators for the U.K. Debtors that it asserted claims for $10 million against T&N and 13 of its subsidiaries in their U.K. administration proceedings. Based on the nature of Owens-Illinois' Claims, the Debtors classified the Claims as Indirect Asbestos Personal Injury Claims under the Third Amended Joint Plan of Reorganization. On September 29, 2004, Owens-Illinois filed a preliminary objection to the Plan, opposing the classification of its Claims as Indirect APIC. Consequently, Owens-Illinois served a First Set of Requests for Admission, Interrogatories and Requests for Production of Documents on the Debtors, seeking discovery of information relating to the Plan. Since the filing of the Preliminary Objection and service of the Discovery Requests, the parties have engaged in arm's-length negotiations discussions to resolve the issues between them that recently culminated in the execution of a settlement agreement. On October 13, 2005, the Debtors, the Official Committee of Unsecured Creditors, the Official Committee of Asbestos Claimants Committee, the Legal Representative for Future Asbestos Claimants, the Official Committee of Equity Security Holders and the Agent for the Prepetition Bank Lenders entered into a Stipulation and Settlement Agreement with Owens-Illinois, Inc., which provides for these terms: A. Effectiveness The terms and conditions of the Settlement Agreement will apply if the Ultimate Plan -- the Plan, any modification of the Plan that does not require re-solicitation of Owens- Illinois or an alternative plan of reorganization proposed by any or all of the Plan Proponents -- leaves intact the treatment of the Claims substantially as provided in the Settlement Agreement. B. Settlement Amount On the Effective Date of the Ultimate Plan, Owens-Illinois will receive a distribution of not less than $4.8 million cash, payable by Federal-Mogul in full satisfaction of the Claims. C. Releases On the Effective Date of the Ultimate Plan, these Claims are deemed satisfied, waived or withdrawn, with prejudice: a. Claims against T&N, Federal-Mogul, any other Debtor and any non-Debtor affiliate in relation to the 2000 Agreement or those that otherwise could have asserted in the Litigation; and b. Proofs of claim, scheduled claims, motions or requests for payment made by Owens-Illinois in the Debtors' cases, with the exception of the C&I Claims. D. Plan Issues Owens-Illinois will: a. withdraw its Preliminary Objection to the Plan; and b. except with respect to the C&I Claims: * vote in favor of the Plan or Modified Plan; * support the Ultimate Plan; * not vote in favor of or support a competing plan while either a Plan or Modified Plan is pending; * support the Ultimate Plan; and * waive any objection to confirmation of the Ultimate Plan. Federal-Mogul will advance the payment of the Settlement Amount, on behalf of certain other Debtors and non-Debtor affiliates who have or may bear some of the responsibility for a portion of the Settlement Amount other than that portion for which Federal-Mogul has agreed to be responsible. Accordingly, the Debtors ask the Court to: a. approve their settlement agreement with Owens-Illinois; and b. direct the other Debtors and certain non-Debtor affiliates to reimburse Federal-Mogul for their appropriate share in the Settlement Amount. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a US$2.048 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. (Federal-Mogul Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIRST BANCORP: Fitch Pares Rating to BB After SEC Audit Inquiry --------------------------------------------------------------- Fitch has lowered the ratings of First BanCorp and its subsidiary, FirstBank Puerto Rico, to 'BB' from 'BBB-' and to 'B' from 'F3'. In addition, the Individual Rating has been downgraded to 'C/D' from 'C'. The ratings have all been removed from Rating Watch Negative. The Rating Outlook is Negative. This rating action follows the announcement that the Securities and Exchange Commission has issued a formal order of investigation into FBP. FBP has disclosed that its Audit Committee concluded that mortgages reported as being purchased from R&G Mortgage were improperly classified as mortgage loans rather than treated as commercial loans. The reclassification stems from the underlying transactions failing to meet all the tests of a true sale for financial reporting purposes. The review, which remains ongoing, will also be covering similar contracts made with other financial institutions including Doral Financial Corporation. Fitch believes the mortgage purchase activity conducted by FBP is the focal point of the SEC investigation, and that Fitch believes it is likely that the review of such transactions will necessitate that FBP restate its previously released financial statements. Management has indicated such restatements, if required, could reach back to 2000. The timing and magnitude of such restatements are uncertain at this time. Fitch's rating action also recognizes that the financial restatement process likely could result in pressure on capital ratios as well as the need for increased loan loss reserves and changes in previously reported levels of net income. The potential disruption in funding is an equally important factor in Fitch's rating action. Mortgage loans serve as a key piece of collateral in FBP's funding arrangements. If the mortgage loans in question are deemed to have not been purchased by FBP, its available collateral pool for funding could be reduced. FBP's funding profile also shows a heavy reliance on brokered deposits, a source of funds that the regulators may restrict FBP's use of until greater certainty on the financial restatement process is achieved. Further pressuring capitalization and increasing the risk related to uncertain funding plans, FBP has undergone significant growth in its commercial loan portfolio during the first half of 2005, exclusive of the above-mentioned reclassification. Growth in the first half of 2005 reduced the total risk-based capital ratio by nearly 200 basis points based on FBP's regulatory report filing. Management will need to revisit growth plans and likely seek ways to restrain asset growth until greater certainty can be achieved regarding available sources of funds. Fitch's expectation considers the likelihood that capital ratios would not fall below the technical regulatory parameters of a well-capitalized institution. Looking forward, FBP's return to normal growth will likely necessitate increased levels of overall capital, with attention paid to ensure there is appropriate balance between common equity and more expensive forms of preferred and hybrid instruments. Resolution of the Negative Outlook will focus on the near-term challenges related to management's ability to effectively balance growth with potential near-term funding issues. A return to a Stable Rating Outlook will not likely precede the conclusion of the accounting, financial, and SEC investigation, release of audited financial statements, and a period of steady-state performance at FBP. The Negative Outlook also considers the possibility that the ongoing investigation may produce additional findings, and operational and regulatory challenges. These ratings are downgraded: First BanCorp -- Long-term issuer to 'BB' from 'BBB-'; -- Short-term to 'B' from 'F3'; -- Individual to 'C/D' from 'C'. FirstBank Puerto Rico -- Long-term issuer to 'BB' from 'BBB-'; -- Subordinated debt to 'BB-' from 'BB+'; -- Long-term deposit obligations to 'BB+' from 'BBB'; -- Short-term issuer to 'B' from F3'; -- Individual to 'C/D' from 'C'. Fitch also rates First BanCorp and FirstBank Puerto Rico as follows: -- Support '5'. FOAMEX INT'L: Court Sets December 8 as General Claims Bar Date --------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Oct. 17, 2005, Foamex International Inc., and its debtor- affiliates asked the U.S. Bankruptcy Court for the District of Delaware to establish a deadline by which all entities holding prepetition claims, other than governmental units, must file proofs of claim. December 8 Deadline The Honorable Peter J. Walsh of the District of Delaware Bankruptcy Court set December 8, 2005, as the deadline for all entities holding a prepetition claim against the Debtors to file a proof of claim. That date is 45 days after the Bar Date Notice Package were mailed. Bar Date Notice Packages were mailed to the Debtors' creditors on Oct. 24, 2005. Judge Walsh permits any entity asserting claims against the Debtors for personal or bodily injury and wrongful death arising out of the 2003 Station Fire to file: (a) a consolidated proof of claim with other entities asserting claims, provided that the consolidated claim identifies all the entities asserting claims through the consolidated claim and the amounts asserted by each claimant; (b) a proof of claim asserting unliquidated claims; (c) a proof of claim asserting claims against the Debtors provided that the claim identifies the particular Debtors against whom the claims are asserted; and (d) a proof of claim by and through any authorized agent. The Court does not require ACE American Insurance Company to file any proofs of claim in the Debtors' bankruptcy cases. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) FREEDOM RINGS: Can Use Up to $500K of Krispy Kreme Cash Collateral ------------------------------------------------------------------ The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware gave Freedom Rings, LLC, access to $500,000 of Krispy Kreme Doughnuts Corporation's cash collateral. Prepetition Debt The Debtor is a subsidiary guarantor under a First Lien Credit Agreement among Krispy Kreme Doughnuts Corporation, Krispy Kreme Doughnuts, Inc., and other subsidiary guarantors. The Debtor is also a subsidiary guarantor under a Second Lien Agreement. The Debtor estimates that the amount still outstanding under the Agreements is $24.1 million. These loans are secured by first and second priority liens on all or substantially all of its assets. The Debtor also owes Krispy Kreme $22.5 million from a Promissory Note. This note is unsecured and matured on Oct. 15, 2005. The Debtor will use the cash collateral to fund its operations, payroll, and other operating expenses that are necessary to maintain the value of the estate. To provide Krispy Kreme with adequate protection required under Section 363 of the U.S. Bankruptcy Code for any dimunition in the value of its collateral, the Debtor will grant Krispy Kreme a superpriority administrative lien on all unencumbered prepetition assets and all postpetition assets and a junior lien on all encumbered assets. Headquartered in Winston-Salem, North Carolina, Freedom Rings LLC is a majority-owned subsidiary and franchisee partner of Krispy Kreme Doughnuts, Inc., in the Philadelphia region. The Debtor operates six out of the approximately 360 Krispy Kreme stores and 50 satellites located worldwide. The Company filed for chapter 11 protection on Oct. 16, 2005 (Bankr. D. Del. Case No. 05-14268). M. Blake Cleary, Esq., Margaret B. Whiteman, Esq., and Matthew Barry Lunn, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated between $10 million to $50 million in assets and debts. FREEDOM RINGS: Wants to Walk Away from Two Lease Agreements ----------------------------------------------------------- Freedom Rings, LLC, asks the Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware for permission to reject some unexpired nonresidential real property leases and abandon some personal properties, effective as of Oct. 31, 2005. A. Tilton Properties, Co. The Debtor wants to reject a lease agreement with Tilton Properties, Co., for the premises located at 331 Tilton Road in Northfield, Pennsylvania. This is the Debtor's former retail store. The monthly rental is $6,250 for the first 60 months and will be increased to $6,875 for the remaining five years. B. High Properties The Debtor wants to reject a lease agreement with High Properties for the premises located at 197D Greenfield Road, Suite 102 in Lancaster, Pennsylvania. This is the Debtor's former warehouse distribution facility. The monthly rental is $3,737.20 for the first year and will be increased to $3,849.37 for another year. The Debtor contends that these leases are not necessary to its ongoing business operations. The Debtor says its rental payments to the lessors are substantial and will drain its cash resources. The Debtor also want the lessors to return security deposits and prepaid rent under the terms of its lease. The Debtor is currently removing necessary and valuable personal property from the two locations. The Debtor wants to abandon the personal property left behind, which includes fixtures and other miscellaneous equipment. The Debtor contends that it has no more use for the abandoned property and is not necessary for its ongoing business. The Court will convene a hearing on the Debtor's request on Nov. 8, 2005, at 9:30 a.m. Objections, if any, must be in writing and served to the Court on Nov. 1, 2005, at 4:00 p.m. Headquartered in Winston-Salem, North Carolina, Freedom Rings LLC is a majority-owned subsidiary and franchisee partner of Krispy Kreme Doughnuts, Inc., in the Philadelphia region. The Debtor operates six out of the approximately 360 Krispy Kreme stores and 50 satellites located worldwide. The Company filed for chapter 11 protection on Oct. 16, 2005 (Bankr. D. Del. Case No. 05-14268). M. Blake Cleary, Esq., Margaret B. Whiteman, Esq., and Matthew Barry Lunn, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated between $10 million to $50 million in assets and debts. GARDENBURGER INC: CapitalSource Forebears Default Until Dec. 15 --------------------------------------------------------------- Gardenburger, Inc., entered into a Ratification and Amendment Agreement with CapitalSource Finance LLC as of October 17, 2005. The Ratification and Amendment Agreement amends the Revolving Credit and Term Loan Agreement, as amended, and requires the Company to deliver budgets with respect to its expenditure needs while it reorganizes under Chapter 11. CapitalSource agrees to continue to provide advances to the Company under the Loan Agreement, which advances will be used to finance the Company's working capital needs in accordance with the expenditure limits set forth in the budgets delivered to CapitalSource. Pursuant to the Amendment, the Company acknowledges that it has defaulted on its obligations under the Loan Agreement and is unconditionally liable, as of October 14, 2005, for an aggregate unpaid principal amount of $8,026,345.15, accrued and unpaid interest of $31,656.14, and accrued and unpaid fees in the amount of $1,009.87, plus accruing interest, fees and expenses incurred by CapitalSource. CapitalSource agrees to make loans and other financial accommodations to the Company, as well as forbear from exercising its rights and remedies under the Loan Agreement, until the earliest of: (1) the date that the Court terminates the interim financing order pursuant to which the Amendment was entered into; (2) the date that the chapter 11 case is converted to one under Chapter 7 of the United States Bankruptcy Code; (3) the date that the chapter 11 case is dismissed; (4) the date that a trustee or examiner is appointed without the consent of CapitalSource; (5) the date that the arrangements between the Company and any of Wells Fargo Bank, National Association acting through its operating division, Wells Fargo Business Credit, and GB Retail Funding, LLC, which will refinance the loans made by CapitalSource to the Company, are terminated or materially modified such that there exists a material risk that the obligations owed by the Company to CapitalSource under the Loan Agreement and the Amendment will not be paid in full to CapitalSource on or before December 15, 2005; (6) the date that any indebtedness or obligation of the Company to any of the Replacement Lenders or any other lender has priority superior or pari passu to any of the obligations owed by the Company to CapitalSource; (7) the date that there is a filing by the Company of a plan of reorganization that is adverse to CapitalSource in its sole discretion; (8) December 15, 2005; (9) the date that there is a new default by the Company; or (10) the date that any of the Replacement Lenders or Annex Holdings I L.P., a subordinated lender of the Company, challenges or contests the validity of the Amendment, the Loan Agreement, any of the Company's obligations under the Amendment or the Loan Agreement, or the priority of any lien granted by the Company to CapitalSource. A full-text copy of the Ratification and Amendment Agreement is available for free at http://ResearchArchives.com/t/s?27f Headquartered in Los Angeles, California, Gardenburger, Inc. -- http://www.gardenburger.com/-- makes original veggie burgers and innovates in meatless, 100% natural, low-fat food products. The company distributes its meatless products to more than 35,000 foodservice outlets throughout the United States and Canada. Retail customers include more than 30,000 grocery, natural food and club stores. The company filed for chapter 11 protection on Oct. 14, 2005 (Bankr. C.D. Calif. Case No. 05-19539). David S. Kupetz, Esq., at SulmeyerKupetz represent the Debtor in its restructuring efforts. As of June 30, 2005, the Company reports $20.2 million in total assets and $40.2 million in total liabilities. GLYCOGENESYS INC: Inks $20-Million Stock Deal with Fusion Capital ----------------------------------------------------------------- GlycoGenesys, Inc. (Nasdaq: GLGS - News) has entered into a common stock purchase agreement with Fusion Capital Fund II, LLC, a Chicago-based institutional investor, whereby Fusion Capital has agreed to purchase up to $20 million of GlycoGenesys' common stock over a 25-month period. GlycoGenesys has the right to control the timing and the amount of stock sold to Fusion Capital. John W. Burns, GlycoGenesys' Sr. VP. and Chief Financial Officer stated, "We are very pleased to enter into this flexible, long-term funding agreement that has the potential to fund a large portion of our operations through 2007. We will continue to pursue additional funding opportunities to supplement this agreement and to help us commercialize GCS-100." Bradley J. Carver, further commented, "In our commitment to consummate a strategic transaction we have met with many pharmaceutical and large biotechnology companies. Several have expressed interest in a potential strategic relationship and want to review the interim data from our bloodborne cancer trials expected in April 2006 before negotiating an alliance. Today's funding is an important step toward having the resources to achieve this goal." A full-text copy of the Common Stock Purchase Agreement is available for free at http://ResearchArchives.com/t/s?282 About Fusion Capital Fusion Capital Fund II, LLC is a broad based institutional investment fund based in Chicago, Illinois. Fusion Capital makes a wide range of investments ranging from special situation financing to long-term strategic capital. About GlycoGenesys GlycoGenesys, Inc. -- http://www.glycogenesys.com/-- is a biotechnology company focused on carbohydrate-based drug development. The Company currently is conducting a Phase I dose escalation trial of GCS-100LE, a unique compound to treat cancer, in patients with solid tumors at Sharp Memorial Hospital, Clinical Oncology Research in San Diego, California and the Arizona Cancer Center at Tucson and at Scottsdale, Arizona. In addition, the Company is conducting a Phase I/II dose escalation trial of GCS- 100LE in multiple myeloma at the Dana-Farber Cancer Institute in Boston, Massachusetts. Further clinical trials are planned for 2005. The Company's headquarters are located in Boston, Massachusetts with a laboratory in Cambridge, Massachusetts. * * * Going Concern Doubt Deloitte & Touche LLP said in its March 29, 2005, report that there is substantial doubt in the Company's ability to continue as a going concern pointing to: * the Company's recurring losses from operations, * $94.5 million accumulated deficit as of Dec. 31, 2004, and * the Company's expectation that it will incur substantial additional operating costs for the foreseeable future, including costs related to ongoing research and development activities, preclinical studies and clinical trials. The Company received a similar opinion from its independent auditors for the past four years. The Company incurred a $4,592,482 net loss for the six-month ended June 30, 2005. GMAC COMMERCIAL: Principal Loss Cues S&P to Rate Class F at BB -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on four classes of GMAC Commercial Mortgage Securities Inc.'s mortgage pass-through certificates from series 2003-FL1. Concurrently, the rating on class F is placed on CreditWatch with negative implications. The raised ratings reflect the strong performance of the underlying collateral as well as the payoff of 85% of the transaction. The CreditWatch placement on class F reflects an expected principal loss to the class due to a workout fee on the third-largest loan in the pool. The loss is expected to be approximately 1% of class F's outstanding principal balance when the loan refinances, which should occur at the loan's March 1, 2006, maturity. A downgrade of class F may result from the loss. As of the remittance report dated Oct. 12, 2005, the trust's principal balance was $62.1 million, down from $411.4 million at issuance. Four loans remain in the trust, down from 16 at issuance. The loans are all senior participations with floating rates based on a margin over the one-month LIBOR rate. The junior participations are held outside the trust and are not part of the trust collateral. Principal payments are now allocated to the certificates sequentially, as opposed to the original pro rata allocation, because the transaction has paid down to less than 30% of the original principal balance and six or fewer loans are outstanding. The transaction has not experienced a loss to date. The Hartman portfolio secures the largest loan in the transaction, which has a junior participation of $2.3 million. Eighteen properties in Houston, Texas, with 1.3 million total sq. ft. secure this loan. The properties include eight industrial buildings, eight retail properties that consist of two anchored and six unanchored buildings, and two office properties. Because of a fire at one of the properties, this loan is on the watchlist provided by GMAC Commercial Mortgage Corp., the master and special servicer. The fire damage will be repaired by Feb. 1, 2006. Hurricane Rita did not damage any of the 18 properties. Net cash flow for the portfolio had increased 20% since issuance for the year ended Dec. 31, 2004, while occupancy was 88% as of March 31, 2005, as compared to 94% occupancy at issuance. The loan is scheduled to mature Jan. 1, 2006, with one two-year extension available. The Upstate New York portfolio secures the second-largest loan, which has a junior participation of $9.5 million. Eight office properties with 343,270 total sq. ft. secure this loan. Four of the properties are located in and around Albany, three are in the Syracuse area, and one is outside of Rochester, New York. This loan is on the watchlist provided by GMACCM because of the loan's upcoming maturity. Debt service coverage had declined to 2.26x for the year ended Dec. 31, 2004, from 5.75x for the year ended Dec. 31, 2003 and 4.59x at issuance. The decline in DSC occurred because of expenses associated with new leases as well as an error interpreting the consolidated portfolio's financial performance. An accurate consolidation of the financial performance for the eight properties through June 30, 2005, reflects a 21% increase in NCF over issuance levels. Occupancy was 82% as of Dec. 31, 2004, compared with 81% at Dec. 31, 2003, and 77% at issuance. The loan is scheduled to mature Jan. 1, 2006, with one two-year extension available. The Greenspoint Technology Center, a 300,705-sq.-ft. office building in Houston, Texas, secures the third-largest loan. A junior participation of $11.5 million is held outside the trust. The loan was modified in August 2004 to extend its maturity to March 1, 2006, from March 1, 2004; to increase the margin over LIBOR to 3.75% from 2.75%; and to apply any excess cash flow to the principal balance. Hurricane Rita did not damage the collateral property. The NCF for the year ended Dec. 31, 2004, was up 41% compared with the level at issuance, while occupancy was 88% as of Dec. 31, 2004, down from 95% at issuance. The underlying deal documents require that a workout fee of 1% of all cash flow received on the loan be paid to the special servicer. The fee will cause the aforementioned principal loss to class F when the balloon balance is repaid. The Panavision Office Building in Woodland Hills, California, secures the smallest loan in the transaction. This loan also has a junior participation of $7 million. The collateral consists of a 152,454-sq.-ft. office building occupied entirely by Panavision Inc. under a lease expiring May 31, 2012. The NCF for the year ended Dec. 31, 2004, was up 14% from the level at issuance. The loan is scheduled to mature March 1, 2006, with one two-year extension available. Ratings Raised GMAC Commercial Mortgage Securities Inc. Mortgage Pass-Through Certificates Series 2003-FL1 Rating Credit enhancement (%) Class To From (pooled interests) ----- -- ---- ---------------------- B AAA AA 99.87 C AAA A 67.71 D AAA BBB 31.32 E AA BBB- 16.50 Rating Placed on CreditWatch Negative GMAC Commercial Mortgage Securities Inc. Mortgage Pass-Through Certificates Series 2003-FL1 Rating Credit enhancement (%) Class To From (pooled interests) ----- -- ---- ---------------------- F BB/Watch Neg BB 0.00 HARRIS CORP: Leitch's Shareholders Approve $14 Per Share Buy-Out ---------------------------------------------------------------- Leitch Technology Corporation's (TSX: LTV) shareholders approved the acquisition of the outstanding common shares of the Company by Harris Corporation at its Special Meeting of Shareholders held on October 24, 2005. Over 77% of the votes cast by Leitch shareholders were in favour of the arrangement transaction involving Leitch and Harris. Under the terms of the Arrangement, Leitch shareholders will receive $14 in cash for each common share of Leitch. The Arrangement is expected to be completed following the receipt of a final order of the Ontario Superior Court of Justice. About Leitch Technology Leitch Technology Corporation -- http://www.leitch.com/-- provides software for professional digital video. Located in Melbourne, Florida, Harris Corporation provides communication equipment and services to government and commercial markets. The company expects $3 billion in revenue in fiscal 2005. * * * As reported in the Troubled Company Reporter on Sept. 6, 2005, Moody's Investors Service affirmed the Baa2 senior unsecured debt rating for Harris Corporation following the company's announcement that it intends to acquire Leitch Technology Corporation, a Canadian provider of video and high definition systems for the broadcast industry, for approximately $450 million in cash. The outlook is stable. Ratings affirmed include: -- Senior Unsecured rating at Baa2 -- Senior Unsecured MTN program at Baa2 -- Senior Unsecured Shelf at (P)Baa2 -- Subordinated Shelf (P)Baa3 -- Preferred Shelf (P)Ba1 -- Commercial Paper rating at P-2 HEILIG-MEYERS: Asks Court to Disallow Five Indiana Tax Claims ------------------------------------------------------------- Heilig-Meyers Company and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division, to disallow five claims filed by the State of Indiana Department of Revenue. Indiana DOR has filed seven claims against the Debtors: Claim No. Claim Amount --------- ------------ 000652 $17,460 004579 $49,070 007222 $71,070 010515 $155,817 010782 $119,093 010866 $72,160 010870 $236,434 The Debtors explain that claim no. 010515 has already been disallowed pursuant to the Debtors' First omnibus objection to certain administrative claims order entered on July 31, 2003. They want claim nos. 000652, 004579, 007222 and 010782 disallowed because each of these claims is amended by subsequently filed claims. Furthermore, they ask the Court to disallow claim no. 010870 because: * it amends claim number 010515, a previously filed claim that was disallowed by the Court's order dated July 31, 2003, and * the claim is based on estimated amounts, relates to filed returns for which no tax is due, or relates to an audit finalized on September 11, 2001 for which all liability has been satisfied. One Allowed Claim The Debtors seek the allowance of claim no. 010866 in the priority unsecured amount of $68,164, secured amount of $55, and general unsecured amount of $3,942. Heilig-Meyers Company filed for chapter 11 protection on Aug. 16, 2000 (Bankr. E.D. Va. Case No. 00-34533), reporting $1.3 billion in assets and $839 million in liabilities. When the Company filed for bankruptcy protection it operated hundreds of retail stores in more than half of the 50 states. In April 2001, the company shut down its Heilig-Meyers business format. In June 2001, the Debtors sold its Homemakers chain to Rhodes, Inc. GOB sales have been concluded and the Debtors are liquidating their remaining Heilig- Meyers assets. Bruce H. Matson, Esq., Vernon E. Inge, Jr., Esq., Katherine Macaulay Mueller, Esq., at LeClair Ryan, represent the Debtors. HEWETT'S ISLAND: Fitch Affirms BB Rating on $4.74MM Secured Notes ----------------------------------------------------------------- Fitch Ratings affirms six classes of notes issued by Hewett's Island CDO, Ltd./Corp. These affirmations are the result of Fitch's review process and are effective immediately: -- $188,000,000 class A senior secured notes at 'AAA'; -- $25,000,000 class B senior secured notes at 'AA'; -- $5,209,756 class X deferrable amortizing senior secured notes at 'A+'; -- $7,000,000 class C deferrable senior secured notes at 'A+'; -- $15,000,000 class D senior secured notes at 'BBB'; -- $4,738,473 class E subordinated secured notes at 'BB'. Hewett's Island is a collateralized debt obligation, which closed on Nov. 13, 2002 and is managed by CypressTree Investment Management Company, Inc. Hewett's Island is composed of bank loans and bonds. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. These affirmations are the result of stable collateral performance. The weighted average rating factor has stayed the same, at 'BB-/B+' and remains in compliance with the required minimum credit quality 'BB-/B+'. As of the most recent trustee report available, Hewett's Island had no defaulted assets. Assets rated 'CCC+' or lower represented approximately 0.8%, excluding defaults. Hewett's Island remains in its revolving period until Nov. 15, 2007. Class X notes are amortizing senior secured notes where payments of interest and payments are made simultaneously at each distribution date according to a fixed schedule of payments. Class E Notes receive 50% of the interest proceeds remaining after all senior priority payments are made, as per the governing documents. As of the last distribution date of Aug. 15, 2005, Class X notes have been paid down to $5,209,756 from the original notional of $7,525,000 and Class E Notes have been paid down to $4,738,473 from the original notional of $10,000,000. The ratings of the classes A and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the classes X, C, D, and E notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. HEXCEL CORPORATION: Sept. 30 Balance Sheet Upside-Down by $8 Mil. ----------------------------------------------------------------- Hexcel Corporation (NYSE/PCX: HXL) reported results for the third quarter of 2005. Net sales for the quarter were $276.6 million, 5.1% higher than the $263.1 million reported for the third quarter of 2004. Quarterly operating income was $8.7 million, after reflecting: * a litigation settlement expense of $15.8 million, * $1.9 million in related legal costs, and * $1.0 million in transaction costs related to the secondary offering of common shares. Reflecting the impact of these special items, net income for the quarter was $1.1 million compared to net income of $4.3 million in the third quarter of 2004. The non-cash expense related to deemed preferred dividends and accretion was $11.8 million compared to $3.2 million in the third quarter of 2004 and included a $10.1 million charge related to the August 2005 conversion of mandatorily redeemable convertible preferred stock in connection with the secondary offering of common stock. The resulting net loss available to common shareholders for the quarter was $10.7 million compared to net income of $1.1 million for the third quarter of 2004. "Despite a Boeing strike and the push-out in the A380 production schedule, we managed to deliver top line growth over the prior year for the 11th quarter in a row. With the strike resolved, A380 production soon to pick up and the official launch of the new Airbus A350, we expect our growth trend to continue well into the future." said Chairman, President and CEO, David E. Berges. "Despite high oil and energy prices, this was the best third quarter gross margin in 7 years as we solved many of our second quarter ramp-up problems by September. The quarter did have two significant special items. First, with rising legal costs, we decided to settle two previously disclosed carbon fiber litigation matters during the quarter, subject to final review and approval by the Department of Justice (Civil Division) and the U.S. District Court. Second, the Company incurred expenses related to the secondary offering and conversion of the mandatorily convertible preferred stock. Excluding these special items, we again delivered great leverage to the bottom line as the Company would have reported net income of $19.8 million for the quarter, up $11.7 million on $13.5 million of incremental sales." Hexcel Corporation develops, manufactures and markets lightweight, high-performance reinforcement products, composite materials and composite structures for use in commercial aerospace, space and defense, electronics, and industrial applications. At Sept. 30, 2005, Hexcel Corp.'s balance sheet showed an $8 million stockholders' deficit, compared to a $44.2 million stockholders' deficit at June 30, 2005. ICOS CORP: Lilly ICOS Venture Earns $19.8 Million in 3rd Quarter ---------------------------------------------------------------- Lilly ICOS LLC (NYSE: LLY and Nasdaq: ICOS), ICOS Corporation's 50/50 joint venture with Eli Lilly and Company, reported its financial results for the quarter ended September 30, 2005. Lilly ICOS LLC reported net income of $19.8 million, compared to a net loss of $21.4 million in the 2004 third quarter. Worldwide sales of its products Cialis(R) in the third quarter of 2005 totaled $195.1 million, an increase of 27% compared to $154.1 million in the third quarter of 2004. "Lilly ICOS has been steadily approaching profitability as a result of sustained top-line growth and planned reductions in marketing and selling expenses," stated Paul Clark, ICOS Chairman, President and Chief Executive Officer. "We are delighted to have achieved this important milestone and look forward to growing Lilly ICOS profitability in the years ahead." John Bamforth, Lilly Global Marketing Director, added "Cialis continues to perform well, achieving solid market share across the Lilly ICOS territories. In the U.S., market share of total prescriptions of Cialis reached 24.8% in September 2005, an increase of 150 basis points from June 2005. Across Europe, Canada and Mexico, Cialis captured 32.4% of aggregate market share in August 2005." Tadalafil, the active ingredient in Cialis, is also being evaluated for medical conditions other than erectile dysfunction. During the third quarter of 2005, a clinical study was completed in benign prostatic hyperplasia, a condition which can cause a number of troublesome urinary tract symptoms as a man ages. Also, studies were initiated in hypertension and pulmonary arterial hypertension. The recently completed study in BPH demonstrated a clinically meaningful and statistically significant improvement in the primary endpoint, a reduction in lower urinary tract symptoms, as measured by the International Prostate Symptom Score. Results from the study will be presented at an upcoming medical congress. Planning is underway for a Phase 3 clinical program in BPH. Financial Results For the three months ended September 30, 2005, Lilly ICOS reported net income of $19.8 million, compared to a net loss of $21.4 million for the three months ended September 30, 2004. The shift to profitability results from an increase of $33.1 million in total revenue and a reduction of $8.0 million in expenses. Total revenue for the third quarter of 2005 was $162.3 million. Revenue for the 2005 period includes $8.2 million in royalties on sales reported by Lilly, compared to $6.2 million in royalty revenue for the third quarter of 2004. The increase in total revenue reflects the continued growth of Cialis in the Lilly ICOS territories since its 2003 introduction, as well as its global expansion in countries where Cialis is sold by Lilly. On a sequential basis, excluding the impact of changes in foreign exchange rates, third quarter 2005 European revenues increased approximately six percent over the 2005 second quarter amount. Selling, general and administrative expenses were $112.2 million in the third quarter of 2005, down from $123.2 million in the third quarter of 2004. Research and development expenses were $18 million in the third quarter of 2005, compared to $17.2 million in the third quarter of 2004. For the nine months ended September 30, 2005, Lilly ICOS reported a net loss of $23.6 million, compared to a net loss of $230.6 million for the nine months ended September 30, 2004. The decrease is primarily due to $113.9 million of increased revenues and a $100.7 million reduction of selling, general and administrative expenses. About Lilly ICOS Lilly ICOS LLC, a joint venture equally owned by ICOS Corporation and Eli Lilly and Company, is marketing Cialis, in North America and Europe, for the treatment of erectile dysfunction. About Eli Lilly Headquartered in Indianapolis, Indiana, Eli Lilly and Company develops a portfolio of pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. About ICOS ICOS Corporation, a biotechnology company headquartered in Bothell, Washington, is dedicated to bringing innovative therapeutics to patients. Through Lilly ICOS LLC, ICOS is marketing its first product, Cialis (tadalafil), for the treatment of erectile dysfunction. ICOS is working to develop treatments for serious unmet medical conditions such as benign prostatic hyperplasia, pulmonary arterial hypertension, cancer and inflammatory diseases. As of June 30, 2005, ICOS Corp.'s balance sheet reflected a $57,343,000 equity deficit at June 30, 2005, compared to $6,528,000 of positive equity at Dec. 31, 2004. IMPAC SECURED: Moody's Lowers Class B Certificates' Rating to B1 ---------------------------------------------------------------- Moody's Investors Service upgraded and downgraded three certificates from two transactions issued by Impac Secured Asset Corp. The Class M-1 and M-2 certificates from Series 2002-1 are being upgraded based on the strong performance of the mortgage pool as well as the level of credit enhancement provided by the subordinated classes and overcollateralization. The Class B certificate from Series 2002-3 is being downgraded based on the weak performance of the mortgage pool and the reduced credit enhancement level relative to the current projected losses of the mortgage loan collateral. Complete rating actions are: Issuer: Impac Secured Asset Corp. Upgrade: * Series 2002-1; Class M-1, Upgraded to Aaa from Aa2 * Series 2002-1; Class M-2, Upgraded to Aa3 from A2 Downgrade: * Series 2002-3; Class B, Downgraded to B1 from Baa2 INTERSTATE BAKERIES: Creditors Panel Hires Shughart as Co-Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Missouri gave the Official Committee of Unsecured Creditors appointed in Interstate Bakeries Corporation and its debtor-affiliates' cases permission to retain Shughart Thomson & Kilroy, P.C., as co-counsel, effective as of Sept. 1, 2005. Shughart Thomson will replace Kutak Rock, LLP. Committee Co-Chairperson Laura L. Moran of U.S. Bank, National Association, Indenture Trustee, explains that Paul D. Sinclair has transferred from Kutak Rock to Shughart Thomson. The Committee has approved Mr. Sinclair's transfer of the Interstate Bakeries Corporation matter on September 8, 2005, effective September 1. The Committee seeks to retain Shughart Thomson as its attorneys because of the firm's (i) experience and expertise in the field of business reorganizations under Chapter 11 of the Bankruptcy Code, (ii) experience practicing before Western District of Missouri Bankruptcy Court, and (iii) ability to respond quickly to legal issues that may arise in the Debtors' cases. The Committee is familiar with Shughart Thomson's qualifications because of Mr. Sinclair's role to date representing it in this case. Accordingly, the Committee believes the firm is well- qualified to represent it in these Chapter 11 cases in an efficient and timely manner. As co-counsel, Shughart Thomson will: (a) advise the Committee with respect to its powers and duties under Section 1103 of the Bankruptcy Code; (b) take all necessary action to preserve, protect and maximize the value of the Debtors' estate for the benefit of the Debtors' unsecured creditors, including, but not limited to, investigating the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' businesses and the desirability of the continuance of such businesses, and any other matters relevant to the bankruptcy cases or to the formulation of a plan; (c) prepare on behalf of the Committee motions, applications, answers, orders, reports and papers that may be necessary to the Committee's interests in these Chapter 11 cases; (d) participate in the formulation of a plan as may be in the best interests of the Committee and the unsecured creditors of the Debtors' estates; (e) advise the Committee in connection with any sales or proposed sales of the Debtors' assets; (f) appear before this Court, any appellate courts, and the United States Trustee to protect the interests of the Committee and the value of the Debtors' estates before the courts and the United States Trustee; (g) consult with the Debtors' counsel on behalf of the Committee regarding tax, intellectual property, labor and employment, real estate, corporate and litigation matters, and general business operational issues; and (h) perform any and all necessary legal services and provide any and all other necessary legal advice to the Committee in connection with these Chapter 11 cases. Shughart Thomson will be compensated at these hourly rates: Professional Range ------------ ----- Shareholders and Of Counsel $220 - $350 Associates $135 - $225 Paralegals $80 - $125 Mr. Sinclair discloses that prior to 2004, Shughart Thomson represented the Debtors on matters generally involving employment issues. The firm has not received any fees from the Debtors since January 2004. During 2005, the firm also performed work at the request of IBC serving as counsel in a juvenile court appointment, in lieu of service by an internal attorney with IBC. That representation is being transferred to another law firm, Mr. Sinclair says. Shughart Thomson will withdraw as ordinary course counsel. The firm has not handled any other matters for the Debtors during the bankruptcy. Mr. Sinclair further discloses that before the Petition Date, Cereal Food Processors, Inc. asked him while he was at Kutak Rock, to serve as its counsel in the anticipated bankruptcies of the Debtors. Subsequent to the Petition Date, Kutak Rock filed a notice of appearance on behalf of Cereal Food in these cases, reviewed pleadings, attended first day hearings, and monitored the cases. However, with Cereal Food's consent, neither Mr. Sinclair nor Kutak Rock any longer represents Cereal Food with regard to the Debtors or the Chapter 11 cases. Mr. Sinclair assures the Court that Shughart Thomson is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 215/945-7000) JOHN Q. HAMMONS: S&P Withdraws B Rating on Senior Secured Notes --------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B' corporate credit and senior secured debt ratings on Springfield, Missouri-based hotel owner and operator John Q. Hammons Hotels L.P. These ratings were placed on CreditWatch with developing implications on Oct. 18, 2004. The rating withdrawal reflects: -- The completion of the merger of JQH LP's sole general partner, John Q. Hammons Hotels Inc., with JQH Merger Corp., an affiliate of JQH Acquisition LLC, an entity formed by investor Jonathan Eilian for the purpose of effecting the merger, on Sept. 16, 2005; and -- JQH Inc.'s purchase, in late September 2005, of all of its outstanding 8.875% first-mortgage notes due 2012. JQH Inc. is the sole general partner of JQH LP and exercises control over all partnership decisions. JQH Inc. owns and manages 66 hotels under the brands of Embassy Suites, Holiday Inns, and Marriott. KMART CORP: Judge Martin Named Mediator for Critical Vendor Suits ----------------------------------------------------------------- At the September 28, 2005, status conference regarding the adversary cases commenced by Kmart Corporation and its debtor-affiliates against their critical vendors, the U.S. Bankruptcy Court for the Northern District of Illinois appointed Judge Robert Martin of the United States Bankruptcy Court for the Western District of Wisconsin as settlement judge to preside over the Critical Vendor Mediations. Bangor and Northeast Oppose The Bangor Publishing Company and Northeast Publishing Co., as defendants to separate "critical vendor" proceedings, object to Judge Martin's appointment because, as Kmart Corporation's counsel recently disclosed, Judge Martin has close personal and family ties to Gillian Munitz, one of the attorneys representing Kmart in the Adversary Cases. David M. Madden, Esq., at Freeborn & Peters LLP, in Chicago, Illinois, believes that Judge Martin's ties to Ms. Munitz will compromise the judge's ability to act objectively and impartially in the CV Mediations, and may result in the CV Defendants receiving unfair treatment. The CV Defendants understand that the settlement judge will merely facilitate settlement negotiations between the parties and will not have binding authority. Nonetheless, the settlement judge will presumably have an important role in guiding the settlement negotiations. The CV Defendants recognize Judge Martin's superior qualifications as a bankruptcy judge. However, due to the conflict of interest in the present circumstances, they ask Judge Sonderby to appoint another qualified judge in Judge Martin's stead who may serve without the appearance of partiality. Kmart Proposes to Exclude Objectors William J. Barrett, Esq., at Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP, in Chicago, Illinois, points out that Judge Martin will only serve in the role of a settlement judge, and will not be asked to make any rulings or even recommendations back to the Court as to the disposition of the cases. Mr. Barrett contends that Judge Martin's personal association with Ms. Munitz does not pose a problem. He also states that Ms. Munitz will not participate in the settlement conferences. Because the CV Defendants have raised concerns in connection with the selection of Judge Martin, Mr. Barrett proposes to exclude them from any settlement proceedings set before Judge Martin. Mr. Barrett tells the Court that most defendants do not view Judge Martin's association with Ms. Munitz as an issue and that most defendants look forward to the opportunity, through a court- sanctioned settlement process, to resolve the claims against them. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) LAND O'LAKES: Earns $80.4 Million of Net Income in Third Quarter ---------------------------------------------------------------- Land O'Lakes, Inc., reported its third-quarter and year-to-date financial results. Year-to-date, sales are $5.6 billion with net earnings of $130.6 million, compared to sales of $5.8 billion and net earnings of $32 million in the first nine months of 2004. Third-quarter and year-to-date results include a positive net earnings impact of $82.6 million due to the gain from the sale of the company's 38-percent ownership in CF Industries, Inc. Year-to-date results reflect improved earnings in Dairy Foods, Feed and Seed. These gains were offset somewhat by losses in the eggs business, the result of depressed markets in that segment. Year-to-date financial results also include $8.6 million in unrealized pretax hedging gains, versus unrealized pretax hedging losses of $28.3 million over the first nine months of 2004. For the third quarter, Land O'Lakes is reporting $1.7 billion in sales and net earnings of $80.4 million, compared to $1.8 billion in sales and a net loss of $29.9 million in 2004. Third-quarter results include unrealized pretax hedging gains of approximately $0.7 million, as compared to unrealized pretax hedging losses of $19.9 million for the third quarter of 2004. Both the year-to- date and third-quarter sales declines are due primarily to weak egg markets, with average egg prices over the first three quarters down 27% from one year ago. Company officials have indicated in the past that the third quarter is historically the company's weakest, falling after the spring Agronomy and Seed season and before the strong holiday season for Dairy Foods. Historically, the fourth quarter is typically the company's strongest. Bank EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, as defined in the company's senior credit agreement) in the third quarter was $92.1 million, versus $47.8 million in the third quarter of 2004. For the first nine months of 2005, Bank EBITDA was $187.3 million, versus $135.5 million last year. EBIDTA for 2005 was significantly affected by the sale of the company's ownership in CF Industries. Excluding the CF industries sale, year-to-date Bank EBIDTA was $131.5 million. Land O'Lakes indicated that it was increasing its full-year Bank EBITDA forecast from $240 million to $300 million, which includes the impact of the CF industries sale. Land O'Lakes, Inc. -- http://www.landolakesinc.com/-- is a national farmer-owned food and agricultural cooperative with annual sales of more than $7 billion. Land O'Lakes does business in all fifty states and more than fifty countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the United States; serves its international customers with a variety of food and animal feed ingredients; and provides farmers and ranchers with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services. * * * As reported in the Troubled Company Reporter on Sept. 19, 2005, Moody's Investors Service placed under review for possible upgrade Land O'Lakes, Inc.'s B1 rated senior secured bank facility, its B2 rated second lien notes, its B3 rated senior unsecured notes, and its B2 corporate family rating. Moody's also placed under review for possible upgrade the capital securities of Land O'Lakes Capital Trust I. Land O'Lakes' speculative grade liquidity rating was upgraded to SGL-2 from SGL-3. As reported in the Troubled Company Reporter on Aug. 29, 2005, Standard & Poor's Ratings Services raised its corporate credit rating on agricultural cooperative, Land O'Lakes Inc., to 'B+' from 'B' and removed the ratings from CreditWatch where they were placed on Aug. 17, 2005, with positive implications. At the same time, Standard & Poor's raised its rating on Land O'Lakes' $200 million senior secured credit facility to 'BB+' from 'B+' and its recovery rating to '1+' from '1', indicating Standard & Poor's highest expectation for full recovery in the event of a payment default. Standard & Poor's also raised its rating on Land O'Lakes' $175 million 9% senior secured (second lien) notes due 2010 to 'BB-' from 'B' and its recovery rating to '1' from '3', indicating Standard & Poor's high expectation for full recovery in the event of a payment default. The outlook is positive. LAND O'LAKES: Buying Back $150MM of Senior Notes in Dutch Auction ----------------------------------------------------------------- Land O'Lakes, Inc., commenced a "modified Dutch auction" tender offer to purchase for cash up to $150 million aggregate principal amount of its 8-3/4% Senior Securities due 2011. The funds required for Land O'Lakes to consummate the Offer will come from excess liquidity. The Offer will expire at 12:00 midnight, New York City time, on Monday, November 21, 2005, unless extended or terminated earlier. Tendered Securities may be withdrawn at any time prior to the expiration date. Land O'Lakes will use a "modified Dutch auction" procedure to determine the price for the Securities it purchases in the Offer. Under that procedure, each holder of Securities will specify a price at which the holder is willing to sell its securities. That price cannot be less than $1,040 per $1,000 principal amount nor greater than $1,070 per $1,000 principal amount. After the Offer expires, Land O'Lakes will accept Securities validly tendered (and not withdrawn) in the order of the lowest to the highest tender prices specified or deemed to have been specified by tendering holders within the price range for the Securities, and will determine the single lowest price so specified that will enable Land O'Lakes to purchase the Target Amount. Land O'Lakes will pay the same Purchase Price per $1,000 principal amount for all Securities validly tendered at or below the Purchase Price, plus accrued and unpaid interest thereon to but excluding the date of purchase. If the aggregate principal amount of Securities validly tendered at or below the Purchase Price exceeds the Offer Amount, then Land O'Lakes will purchase a prorated amount of all Securities validly tendered at or below the Purchase Price. Land O'Lakes intends to pay the Purchase Price for any Securities it purchases in same-day funds on the second New York Stock Exchange trading day after the expiration date, or as soon thereafter as practicable. Land O'Lakes will return all Securities that are not purchased in the Offer promptly after the Offer is completed. As of October 24, 2005, there was $346,234,000 aggregate principal amount of Securities outstanding. The CUSIP number for the Securities is 514666 AE6. J.P. Morgan Securities Inc. is acting as dealer manager, MacKenzie Partners, Inc. is the information agent, and U.S. Bank National Association is the depositary in connection with the Offer. Copies of the Offer to Purchase, Letter of Transmittal and related documents may be obtained from the Information Agent at (800) 322 2885 (toll free) or (212) 929-5500 (call collect). Additional information concerning the terms of the Offer, including all questions relating to the mechanics of the Offer, may be obtained by contacting J.P. Morgan Securities Inc. at 1-866-834-4666 (toll free) or (212) 834-3424 (call collect). Land O'Lakes, Inc. -- http://www.landolakesinc.com/-- is a national farmer-owned food and agricultural cooperative with annual sales of more than $7 billion. Land O'Lakes does business in all fifty states and more than fifty countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the United States; serves its international customers with a variety of food and animal feed ingredients; and provides farmers and ranchers with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services. * * * As reported in the Troubled Company Reporter on Sept. 19, 2005, Moody's Investors Service placed under review for possible upgrade Land O'Lakes, Inc.'s B1 rated senior secured bank facility, its B2 rated second lien notes, its B3 rated senior unsecured notes, and its B2 corporate family rating. Moody's also placed under review for possible upgrade the capital securities of Land O'Lakes Capital Trust I. Land O'Lakes' speculative grade liquidity rating was upgraded to SGL-2 from SGL-3. As reported in the Troubled Company Reporter on Aug. 29, 2005, Standard & Poor's Ratings Services raised its corporate credit rating on agricultural cooperative, Land O'Lakes Inc., to 'B+' from 'B' and removed the ratings from CreditWatch where they were placed on Aug. 17, 2005, with positive implications. At the same time, Standard & Poor's raised its rating on Land O'Lakes' $200 million senior secured credit facility to 'BB+' from 'B+' and its recovery rating to '1+' from '1', indicating Standard & Poor's highest expectation for full recovery in the event of a payment default. Standard & Poor's also raised its rating on Land O'Lakes' $175 million 9% senior secured (second lien) notes due 2010 to 'BB-' from 'B' and its recovery rating to '1' from '3', indicating Standard & Poor's high expectation for full recovery in the event of a payment default. The outlook is positive. METRIS COMPANIES: Earns $53.7 Million of Net Income in 3rd Quarter ------------------------------------------------------------------ Metris Companies Inc. (NYSE:MXT) reported net income of $53.7 million for the quarter ended September 30, 2005. This compares to net income of $61.8 million for the quarter ended September 30, 2004. The Company also reported net income of $113.7 million for the nine-month period ended September 30, 2005. This compares to net income of $33.0 million for the nine-month period ended September 30, 2004. "Our third quarter reflects the improved operating performance we have seen over the last two years," said Metris Chairman and Chief Executive Officer David Wesselink. "These results demonstrate the improvements in the year to date excess spread, asset quality and our cash flows, which have allowed us to eliminate all of our corporate debt and invest more heavily in new marketing programs." HSBC Merger Update On Aug. 4, 2005, the Company announced a definitive agreement for HSBC Finance Corporation to acquire Metris in an all-cash transaction. Metris will become a wholly owned subsidiary of HSBC Finance Corporation upon completion of the transaction. The acquisition is subject to certain conditions, including resolution of the potential civil injunctive action of the SEC against Metris that was disclosed by the Company on July 12, 2005, approval by the stockholders of Metris, and various regulatory consents. Metris and HSBC have made all regulatory filings required to date and continue to expect the merger will be completed in the fourth quarter. Operating Data New account originations for the three-month period ended Sept. 30, 2005 was 249,000 while new account originations for the nine-month period ended Sept. 30, 2005 was 577,000. Gross active accounts were 2.2 million as of September 30, 2005, consistent with 2.2 million as of December 31, 2004, and September 30, 2004. The Company's managed credit card loans were $5.8 billion as of September 30, 2005, compared to $6.6 billion as of December 31, 2004, and $6.8 billion as of September 30, 2004. The managed two-cycle plus delinquency rate was 8.0% as of September 30, 2005, compared to 9.1% as of December 31, 2004, and 9.7% as of September 30, 2004. The managed net charge-off rate was 12.0% for the third quarter of 2005, compared to 13.5% in the previous quarter and 14.6% for the third quarter of 2004. Metris Master Trust Data The three-month average excess spread in the Metris Master Trust was 8.49% for the quarter ended September 30, 2005, compared to 6.83% for the prior quarter and 5.58% for the quarter ended September 30, 2004. The reported two-cycle plus delinquency rate in the Metris Master Trust was 8.1% as of September 30, 2005, compared to 9.2% as of December 31, 2004, and 9.7% as of September 30, 2004. The three-month average gross default rate of the Metris Master Trust was 13.9% for the quarter ended September 30, 2005, compared to 15.5% for the prior quarter and 16.8% for the quarter ended September 30, 2004. Liquidity and Funding Consolidated total liquid assets were $167.1 million as of September 30, 2005, representing a $230.0 million decrease from $397.1 million as of December 31, 2004. The amount of total liquid assets held by the parent company and its non-bank subsidiaries was $92.5 million as of September 30, 2005, compared to $229.6 million as of December 31, 2004. The liquidity reserve deposit held by the Company's bank subsidiary, which is not included in total liquid assets, was $86.3 million as of September 30, 2005, compared to $79.7 million as of December 31, 2004. The Company had no corporate debt as of September 30, 2005, representing a decrease of $373.6 million from December 31, 2004. The Company made optional prepayments totaling approximately $79.1 million on its Senior Notes due July 2006 in the third quarter of 2005. Asset-backed funding was $4.7 billion, with $160 million in unused conduit capacity as of September 30, 2005, compared to $5.3 billion of asset-backed funding, with $840 million in unused conduit capacity as of December 31, 2004. Headquartered in Minnetonka, Minn., Metris Companies Inc. -- http://www.metriscompanies.com/-- is one of the largest bankcard issuers in the United States. The company issues credit cards through Direct Merchants Credit Card Bank, N.A., a wholly owned subsidiary headquartered in Phoenix, Ariz. * * * As reported in the Troubled Company Reporter on Aug. 8, 2005, Moody's Investors Service put on review for possible upgrade the ratings of Metris Companies, Inc. (senior unsecured at B3) and its bank subsidiary Direct Merchants Credit Card Bank NA (issuer at Ba3). The rating action was in response to the announcement that Metris has agreed to be acquired by HSBC Finance Corporation (senior unsecured at A1) in an all-cash transaction valued at $1.6 billion. The ratings of HSBC Finance Corporation were affirmed; the outlook remains positive. MSGI SECURITY: Working Capital Deficit Spurs Going Concern Doubt ---------------------------------------------------------------- Amper, Politzner & Mattia P.C. expressed substantial doubt about MSGI Security Solutions, 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 from operations; * negative cash flow from operations; and * significant deficit in working capital. In its Form 10-KSB for the fiscal year 2005 submitted to the Securities and Exchange Commission on Oct. 14, 2005, the Company reported a $6,756,284 net loss compared to a $3,311,145 net loss in fiscal 2004. Capital Resources and Liquidity The Company reports that it has funded its operations, capital expenditures and acquisitions primarily through private placements of equity and debt transactions, and its credit facilities. At June 30, 2005, the Company had cash and cash equivalents of $118,465. On July 14, 2005, the Company completed and closed on a $3 million Private Placement with a NY-based investor group. The Company believes that this financing, combined with funds on hand and projected sales will meet their current working capital requirements and enable the Company to meet interest and debt obligations including those of the Callable Secured Notes and payments due to acquire the Company's interest in AONet International Srl for the next twelve months. A significant amount of funds have been invested in new and emerging companies, and the Company believes it will require an integration period before their operations generate sufficient cash flows to pay their obligations. The AONet facility was principally acquired as a base of operations and data center for the Company's newly established legal interception business; and the financial benefit of this activity is expected to occur in the beginning of 2006. The Company realized a loss from continuing operations of approximately $6.6 million for the year ended June 30, 2005. Cash used in operating activities from continuing operations was approximately $4 million. Net cash used in operating activities principally resulted from the loss from continuing operations in addition to increases in accounts receivables and inventories offset by an increase trade accounts payable and accrued liabilities for the year ended June 30, 2005, resulting from the growth of the business and cash flow constraints. The Company realized a loss from continuing operations of approximately $2.1 million for the year ended June 30, 2004. Cash used in operating activities from continuing operations was approximately $2.6 million. Net cash used in operating activities principally resulted from the loss from continuing operations in addition to decreases in accrued liabilities offset by an increase trade accounts payable and decrease to other current assets for the year ended June 30, 2005. AONet International On June 1, 2005, the Company acquired a 51% interest in AONet International Srl, a provider of application hosting, data redundancy and disaster recovery services based in Milan, Italy. AONet International was originally created in 2004 from the acquisition of the original business assets of AONet SpA, a company placed in liquidation. Reconta Ernst & Young S.p.A. expressed about AONet International Srl'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 operating losses and working capital deficit. MSGI Security Solutions, Inc. -- http://www.msgisecurity.com/-- is a provider of proprietary security products and services to commercial and governmental organizations worldwide, including the U.S. Department of Homeland Security, with a focus on cutting-edge encryption technologies for surveillance, intelligence monitoring, and data protection. From its offices in the U.S. and Europe, the company serves the needs of counter-terrorism, public safety, and law enforcement agencies. NOBLE DREW: Wants More Time to File & Solicit Plan Acceptances -------------------------------------------------------------- Noble Drew Ali Plaza Housing Corp. asks the U.S. Bankruptcy Court for the Southern District of New York for an extension of its time to file and solicit acceptances of a chapter 11 plan. The Debtor wants until Feb. 20, 2006, to file a plan and until April 21, 2006, to solicit acceptances of that plan. The Debtor and the Noble Drew Ali Plaza Tenants' Association are engaged in settlement negotiations to resolve rent issues between them. The Debtor needs the extension to reach an agreement with the Tenants' Association. An agreement with the tenants will serve as the basis for whatever plan of reorganization the Debtor's will draft. The Court will convene a hearing on Nov. 22, 2005, to consider the Debtor's request. Headquartered in Brooklyn, New York, Noble Drew Ali Plaza Housing Corp., filed for chapter 11 protection on March 25, 2005 (Bankr. S.D.N.Y. Case No. 05-11915). Gerard R. Luckman, Esq., at Silverman Perlstein & Acampora, LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $43,500,000 and total debts of $18,639,981. NORTHWEST AIRLINES: Fifth Third Objects to Bank Account Use ----------------------------------------------------------- As previously reported, Northwest Airlines Corp. and its debtor-affiliates sought and obtained interim approval from the U.S. Bankruptcy Court for the Southern District of New York to maintain their existing bank accounts. Fifth Third Objects Ronald S. Beacher, Esq., at Pitney Hardin LLP, New York, tells the Court that Fifth Third Bank maintains a perfected security interest in certain funds of Northwest Airlines on deposit at Fifth Third. The funds constitute Fifth Third's cash collateral under Section 363 of the Bankruptcy Code. Pursuant to Section 363, the Debtors are not authorized to use Fifth Third's cash collateral without the written consent of Fifth Third or the Court's Order. As of September 30, 2005, the Debtors have not obtained Fifth Third's consent or the Court's approval to use Fifth Third's cash collateral, Mr. Beacher says. The Interim Order provides that the Debtors are authorized to deposit funds in and withdraw funds from their bank accounts by usual means. Fifth Third objects to this provision as it applies to the Fifth Third Accounts, unless: (a) a satisfactory adequate protection agreement is negotiated with respect to Fifth Third's cash collateral; or (b) the Court authorizes the Debtors' usage of Fifth Third's cash collateral. 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. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHWEST AIRLINES: Lessors Balk at Aircraft Lease Rejection Pitch ------------------------------------------------------------------ As previously reported, Northwest Airlines Corp. and its debtor-affiliates told the U.S. Bankruptcy Court for the Southern District of New York they need to adjust the fleet size and mix in light of current market conditions for aircraft, projected demand for air travel, current and projected flight schedules, maintenance requirements, labor costs, and other business and economic factors. The Debtors estimated that more than 100 aircraft in the aggregate will be designated for deletion from the fleet. As of September 14, 2005, the Debtors have determined that it is not in the best interest of their estates to retain 13 Excess Aircraft. A list of the 13 Excess Aircraft is available for free at http://ResearchArchives.com/t/s?233 Objections to the Rejection A. Bank of America, et al. Bank of America, MBIA Insurance Company, Goldman Sachs Credit Partners, Halifax Bank plc, Sumitomo Bank and Transamerica Aviation LLC are lessors, loan participants or other parties-in- interest with respect to some of the airframes and engines that the Debtors intend to return to the lessors or abandon. The Lessors oppose to the Debtors' proposal that the rejection of the Aircraft Equipment be effective on the Petition Date. John I. Karesh, Esq., at Vedder, Price, Kaufman & Kammholz, P.C., in New York, asserts that the Debtors must comply with the "surrender and return" requirements under Section 1110(c) of the Bankruptcy Code before the rejection is declared effective. Mr. Karesh asserts that the Debtors must: (a) reinstall the engines on the original airframes; (b) return all equipment covered by Section 1110(a)(3) in one location agreed by the parties; (c) ensure that none of the Equipment is subject to any other entity's dominion or control; and (d) ensure that the Equipment is free and clear of any liens or claims from any other party. The Lessors reserve their rights to assert: (i) rejection damage claims; (ii) claims arising from the Debtors' failure to satisfy their contractual return or turnover obligations, or an administrative expense claim with respect to rent or supplemental rent, if any, or as required under the Bankruptcy Code; and (iii) claims for the Debtors' failure to comply with their obligations under Section 1110. B. Wachovia Bank Wachovia Bank, National Association, as successor-in-interest to Meridian Trust Company, is the holder of legal title for security purposes of two Boeing 747-451 aircraft leased by the Debtors pursuant to two separate lease agreements. Jason H. Watson, Esq., at Alston & Bird LLP, in Atlanta, Georgia, tells the Court that the Debtors failed to provide a delivery mechanism for leases subject to the rejection. Wachovia asks the Court to condition the rejection of the Aircraft on the Debtors' compliance with the "surrender and return" requirements of Section 1110(c)(1). If the Debtors fail to satisfy their Section 1110(c)(1) obligations, Wachovia requests that it be allowed to assert administrative expense claims and other types of claims against the Debtors' estates. Wachovia also requests relief from the automatic stay to enforce its rights or remedies under the leases of the Aircraft. C. SMBC Capital Markets, Inc. SMBC Capital Markets, Inc., is the owner participant with respect to the leases of four British Aerospace Avro 146-RJ85A aircraft that the Debtors have identified for rejection or abandonment. The secured lenders hold security over the Aircraft and related equipment under related loan agreements. According to Evan C. Hollander, Esq., at White & Case LLP, in New York, SMBC is entitled to receive the excess of rental payments over debt service together with the proceeds of any sale of the Aircraft Equipment at the end of each Lease term after payment of the amounts owing to the secured lenders. Hence, SMBC's ability to receive Equity Free Cash and realize any residual value of the Aircraft Equipment is directly affected by the rejection of the Leases to the Aircraft Equipment. Accordingly, SMBC wants the Debtors to clarify that the Rejection and Abandonment Motion will not alter the Debtors' return obligations whether under the applicable leases or financing documents or under Section 1110(c)(1) of the Bankruptcy Code. D. Public Service Resources Corporation Public Service Resources Corporation is the owner participant of owner trusts that own four Boeing 757-200 aircraft each containing two Pratt & Whitney PW2037 engines. PSRC objects to the Rejection and Abandonment Motion on grounds that the Debtors have not complied with the "return and surrender" requirements of Section 1110. PSRC also requests that the Debtors return the relevant books and records together with the airframes and engines. PSRC asks the Court to declare the rejection effective upon the Debtors' compliance of the Section 1110 requirements. Leo T. Crowley, Esq., at Pillsbury Winthrop Shaw Pittman LLP, in New York, says the Debtors' proposal -- that the insurance coverage continue until the earlier of 30 days after the Petition Date or the date on which the lessor takes possession of the Rejected Aircraft -- is inequitable. He points out that even if the Debtors fail to return an engine or the relevant books and records of the aircraft, the Aircraft Equipment will still be left without insurance coverage and will not be maintained in accordance with the Debtors' approved maintenance plan. PSRC wants the Court to condition the rejection of the Aircraft on the continuance of insurance and maintenance until the earlier of: (a) 30 days from the date of an order authorizing rejection of the Rejection Aircraft; or (b) the date on which the lessor takes possession of the Rejected Aircraft. E. U.S. Bank U.S. Bank National Association and U.S. Bank Trust National Association are Trustees in more than 300 separate aircraft financing transactions, representing obligations of one or more of the Debtors in excess of $8 billion. Allison H. Weiss, Esq., at LeBoeuf, Lamb, Greene & MacRae, LLP, in New York, relates that included among the Excess Aircraft identified by the Debtors are seven aircraft that the Trustee have an interest, as either owner trustee or mortgagee and, as applicable, assignee of the lessors' interest in the lease of the aircraft to the Debtors. In addition, the Trustees have an interest in 92 aircraft listed in the Potential Excess Aircraft. Ms. Weiss contends that the effective date of any rejection of leases, or abandonment, of aircraft cannot be established retroactively. In accordance with prevailing case law, the effective date of rejection or abandonment cannot be before the date of entry of its approval, and there is no justification for some retroactive effective date chosen by the Debtors. Moreover, Ms. Weiss asserts that rejection should only become effective in accordance with applicable provisions of the Bankruptcy Code and on surrender of the aircraft to the appropriate party at the location designated in the operative documents, including: (i) the return of all collateral engines; (ii) the delivery of all necessary aircraft maintenance records operating logs; and (iii) the execution and delivery of all appropriate lease termination statements or other necessary transfer documents to be properly recorded with the U.S. Federal Aviation Authority, at the Debtors' own expense. With respect to the Potential Excess Aircraft, Ms. Weis argues that it is inappropriate to permit anticipatory rejection or abandonment in the Debtors' sole discretion, based simply on the Debtors' ability -- or inability -- to successfully negotiate reduced rates with their aircraft lessors and financiers without regard to the progress of negotiations. Should the Court grant the Debtors' request, Ms. Weis suggests that as many as 99 of the Trustees' aircraft may be rejected or abandoned by October 29, 2005, or within 45 days of the Petition Date. The Trustees also want to be provided with a clear process for surrender of all aircraft the Debtors seek to reject or abandon. 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. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) O'SULLIVAN INDUSTRIES: Court Okays $35 Million DIP Facility ----------------------------------------------------------- O'Sullivan Industries Holdings, Inc. (OTC: OSULP - News) gets U.S. Bankruptcy Court for the Northern District of Georgia's interim authorization to draw on a $35 million debtor-in-possession credit facility provided by CIT Group/Business Credit, Inc., and other lenders. The company will use the new facility to pay off its prepetition credit agreement and to support ongoing operations. "With the new credit facility in place, vendors and customers should feel confident about doing business with O'Sullivan Industries," said Robert S. Parker, president and chief executive officer of O'Sullivan Industries. "The new credit line, combined with cash from operations, will enable us to maintain the inventories and supplies we need to continue to serve our customers and generate revenues. This authorization represents an important step in our progress toward a final capital restructuring." The court earlier approved other typical "first-day" motions, including authorizing the company to continue to pay employee salaries, wages and benefits and honor prepetition employee obligations. Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05-83049). On September 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. O'SULLIVAN INDUSTRIES: Gets OK to Pay Prepetition Tax Obligations ----------------------------------------------------------------- O'Sullivan Industries Holdings, Inc., accrue sales, use, excise, and other related taxes, including certain custom duties from their customers and other parties, which they then pay either on a monthly, quarterly, or annual basis to taxing authorities in the United States, Canada, and the United Kingdom. In the United States, taxes are paid either via ACH transfer from the Debtors' main operating account or by check from the Debtors' disbursement account. In Canada, taxes are paid by check from the Royal Bank of Canada operating account, and in the United Kingdom, they are paid from the Barclays Bank operating account. The Debtors sought and obtained the U.S. Bankruptcy Court for the Northern District of Georgia's authority to pay taxes due and owing to all federal, state, and local taxing authorities by postpetition checks, ACH transfer, or otherwise, as and when payments become due. The Debtors estimate that they owe taxing authorities these amounts as of the Petition Date: Tax Obligation as Taxing Authority of the Petition Date ---------------- -------------------- Missouri $12,000 Virginia $160 Georgia $42 United Kingdom GBP48,000 Canada CND3,000 James C. Cifelli, Esq., at Lamberth, Cifelli, Stokes & Stout, P.A., in Atlanta, Georgia, explains that it is necessary for the Debtors to pay their prepetition sales, use, excise, and other related taxes when they become due. "If they fail to do so, they could potentially be restricted from doing business in certain states or countries, with dire effects on their ability to reorganize," he says. Mr. Cifelli points out that the taxes collected by the Debtors constitute a "trust fund." Thus, the taxes do not constitute the Debtors' property under Section 541(d) of the Bankruptcy Code and the Debtors do not have any equitable interest in these sales, use, excise, or other taxes. Mr. Cifelli ascertains that the payment will not prejudice the Debtors' creditors, estates, or other parties-in-interest because: (a) the Taxes are most likely entitled to priority status pursuant to Section 507(a)(8) of the Bankruptcy Code. (b) they would be paid ahead of all general unsecured claims, thus, the payment only affects the timing of payment and does not alter the rights of other creditors; and (c) certain officers and directors of the Debtors may be held personally liable for failure of payment, resulting to potential claims or lawsuits that would prove extremely distracting. Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). On September 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) O'SULLIVAN IND: Can Honor Prepetition Customer Obligations ---------------------------------------------------------- James C. Cifelli, Esq., at Lamberth, Cifelli, Stokes & Stout, P.A., in Atlanta, Georgia, states that continuing customer relationships are crucial to O'Sullivan Industries Holdings, Inc. and its debtor-affiliates' business. "It is beyond question that one of the Debtors' most valuable assets is their business relationships with their customers. These business relationships developed, in part, through customer- service policies aimed at guaranteeing customer satisfaction and fostering customer loyalty," Mr. Cifelli explains. To maintain the relationships, Mr. Cifelli relates that the Debtors have established certain formal and informal policies, programs, and practices regarding the issuance of, among other things, various warranties, allowances, mark-downs, rebates, and credits to their customers. The Prepetition Customer Policies vary depending on the particular customer and may be governed by written agreement, oral agreement, custom, or practice. They may include the Debtors' participation in: -- advertising allowance programs; -- market development programs; -- rebate programs; -- minimum advertising price programs; -- key vendor programs; -- distribution programs; -- store service programs; and -- co-op allowance programs. Pursuant to the Prepetition Customer Policies, the Debtors issue about $3,000,000 in allowances, mark-downs, rebates, and credits per month, representing 13% to 14% of the Debtors' gross monthly sales. The Debtors review each allowance, mark-down, rebate, and credit claimed by their customers and frequently contest the claims. Mr. Cifelli discloses that the Debtors currently are contesting about $1,400,000 of the claims. The Debtors estimate that, as of September 30, 2005, about $15,500,000 had accrued but not yet been issued, credited, or deducted under the Prepetition Customer Policies. Mr. Cifelli relates that under Section 105 of the Bankruptcy Code, a court can permit pre-plan payment of prepetition obligations when essential to the continued operation of the debtor. "Upon the filing of these cases, any allowances, mark-downs, rebates, credits, and other rights and claims that arose under the Pre-Petition Customer Policies would technically constitute general unsecured pre-petition claims, although some such claims may at least arguably be subject to recoupment or set-off rights or other defenses," he says. Mr. Cifelli notes that many customers are likely evaluating whether the Debtors' Chapter 11 filing should cause them to adjust their business relationships with the Debtors. Hence, to assuage the customers' fears, the Debtors sought and obtained the U.S. Bankruptcy Court for the Northern District of Georgia's authority, on an interim basis, to continue to honor the Prepetition Customer Policies in accordance with their policies, practices, and programs in existence prior to the Petition Date. Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). On September 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) OWENS CORNING: Banks Want Exclusivity Terminated to File Own Plan ----------------------------------------------------------------- Credit Suisse, formerly known as Credit Suisse First Boston, as Agent for the prepetition institutional lenders to Owens Corning and certain of its affiliates, tells the U.S. Bankruptcy Court for the District of Delaware that the banks it represents are ready to present a feasible and confirmable plan. Credit Suisse wants the Court to terminate the Debtors exclusive periods. Rebecca L. Butcher, Esq., at Landis Rath & Cobb LLP, in Wilmington, Delaware, appeared before the Court on behalf of Credit Suisse As reported in the Troubled Company Reporter on Oct. 12, 2005, Judge Fitzgerald directed the Debtors to file an amended disclosure statement and plan of reorganization before the end of 2005. To comply with that direction, the Debtors asked 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. Ms. Butcher asserted that after over five years and nine extensions of the Exclusive Periods, the Debtors have failed to meet their stringent burden for yet another extension. "After repeated Exclusivity extensions, a debtor must show more than simply the size and complexity that justified the initial extension of Exclusivity," Ms. Butcher points out. In addition, the debtor must show that: (a) it is likely that extending the Exclusive Periods will lead to agreement on a consensual plan; (b) there are no other creditor plans that would be filed but for the debtor's exclusive right to propose and confirm a plan; and (c) the debtor is not using its Exclusive Periods to force on its creditors its view of an appropriate plan. Extending Exclusivity would be counterproductive and would not help foster a consensual plan, Ms. Butcher says. But allowing Exclusivity to expire at year-end or earlier should the Debtors file a nonconsensual plan will provide each stakeholder an additional incentive to negotiate in good faith to reach consensus on the terms of a chapter 11 plan. But for the Exclusive Periods, Ms. Butcher tells Judge Fitzgerald that the Banks are ready to file a feasible and confirmable plan today. "The Debtors have been aware of that fact since August, when the Banks' attorneys outlined the terms of such plan for the Debtors' attorneys." Ms. Butcher also notes that the Debtors cannot show that Exclusivity is not being used coercively. "As noted by the Third Circuit, the Debtors have misused the Exclusive Periods for years in their attempts to force the Banks to accept the Plan that vitiated the value of their bargained-for guarantees and redistributed such value to the Debtors' favored creditors," Ms. Butcher says. For these reasons, Credit Suisse asks the Court to deny extension of the Exclusivity Period. Instead, Credit Suisse asks the Court to allow the Banks or any party-in-interest to file a plan contemporaneously with the Debtors at the end of 2005 if the Debtors do not file a plan that any party supports. The objectives of the Banks' Plan, according to Ms. Butcher, are: * A beneficial organizational restructuring of the Debtors, including the creation of a new holding company parent; * A restructuring of IPM, Inc., the non-debtor Guarantor Subsidiary that owns the Debtors' foreign operations, which operations generate 25% to 30% of the enterprise's EBITDA, without the need to commence a chapter 11 case for IPM; * A transfer, free and clear of successor liability, of the assets of Exterior Systems, Inc., a wholly owned subsidiary of Fibreboard Corporation engaged in the vinyl siding business, to a wholly owned subsidiary of Owens Corning, thus preserving the business and the synergistic cross- selling opportunities that the business represents; * A tax "reorganization" of Owens Corning under the Internal Revenue Code, thereby maximizing the creation and use of net operating losses; * Satisfaction of the absolute priority rule as to each Debtor Guarantor Subsidiary; and * Payment to all creditors of their full legal entitlements, including the payment in full to the non-insider creditors of the Guarantor Subsidiaries, except for the Banks; Far from an attempt to strip the Debtors bare and leave them unprepared to operate post-emergence, Ms. Butcher asserts that the Banks' Plan: -- is a bona fide effort that provides a fair result for all parties-in-interest; -- is confirmable; and -- resolves all of the nettlesome issues that have kept Debtors' cases in bankruptcy for so long. 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. 118; Bankruptcy Creditors' Service, Inc., 215/945-7000) PAUL CIVETTI: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Paul F. Civetti General Contractors, Inc. a/k/a P.F. Civetti General Contractors, Inc. 41 Chapin Street West Springfield, Massachusetts 01089 Bankruptcy Case No.: 05-50428 Chapter 11 Petition Date: October 15, 2005 Court: District of Massachusetts (Worcester) Judge: Henry J. Boroff Debtor's Counsel: Michael B. Katz, Esq. Bacon & Wilson, P.C. 33 State Street Springfield, Massachusetts 01103 Tel: (413) 781-0560 Fax: (413) 739-7740 Total Assets: $1,229,564 Total Debts: $1,350,372 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Paul & Ann Marie Civetti Personal Loan to $121,600 41 Chapin Street Company West Springfield, MA 01089 Galasso Materials Services Rendered or $83,460 60 South Main Street Goods Purchased East Granby, CT 06026 International Union of Services Rendered or $73,965 Operating Eng. Goods Purchased Local 98-Two Center Square P.O. Box 217 East Longmeadow, MA 01028 Rocky Mountain Wood Co., Inc. Services Rendered or $63,724 Goods Purchased International Union of Services Rendered or $50,527 Operating Eng. Goods Purchased Milton Rental of Equipment $46,992 Tyler Equipment Services Rendered or $46,798 Goods Purchased Mass Laborers' Benefit Fund Services Rendered $34,735 CT Laborers Services Rendered $29,240 MD Drilling and Blasting, Services Rendered or $28,229 Inc. Goods Purchased Ferguson Waterworks-EPPCO Services Rendered or $21,000 Goods Purchased Palmer Paving Corp Services Rendered or $19,732 Goods Purchased WFS Earth Materials Services Rendered or $19,051 Goods Purchased Ferguson Waterworks-EPPCO Services Rendered or $17,140 Goods Purchased Ted Ondrick Company/Ondrick Services Rendered or $15,333 Construction Goods Purchased Aaron-Smith, P.C. Services Rendered or $13,100 Goods Purchased United Concrete Products, Inc Services Rendered or $12,375 Goods Purchased Haynes Materials Services Rendered or $12,048 Goods Purchased Fiore Concrete Products, Inc Services Rendered or $9,053 Goods Purchased Morin Logging, Inc. Services Rendered or $9,000 Goods Purchased PREMIER PROPERTIES: LaSalle Bank Objects to Plan Confirmation ------------------------------------------------------------- LaSalle Bank National Association, as trustee for GMAC Commercial Mortgage Securities, Inc., Mortgage Pass-Through Certificates, Series 2000-C3, asks the U.S. Bankruptcy Court for the Central District of Illinois, Peoria Division, to reject Alan C. Kendall, dba Premier Properties, and its debtor-affiliates' First Amended Plan of Reorganization. The Bi-State Properties Case In July 2000, Bi-State Properties, Ltd., a debtor-affiliate of Alan C. Kendall, borrowed $3,450,000 from GMAC Commercial Mortgage Corporation. The loan was secured by mortgages on six of Bi-State's parcels of real estate in Illinois and Iowa. Prior to Bi-State's bankruptcy filing, it defaulted on its obligations under the loan agreement. GMAC filed a foreclosure petitions in the Circuit Court of the Fourteenth Judicial Circuit, Rock Island, Illinois and in the Circuit Court of the Seventh Judicial District, Scott County, Iowa. GMAC was awarded a $4,579,301 judgment in both Illinois and Iowa. The prepetition judgment is final, nonappealable order and can't be collaterally attacked. As of the petition date, GMAC held a valid, first-priority, fully perfected senior lien on Bi-State's properties, cash and rents. On Aug. 25, 2000, Bi-State filed its Amended Plan of Reorganization, which proposes to obtain a loan to pay its loan to GMAC, but in an unsufficient amount to pay the lender in full. GMAC contends that Bi-State's Plan is completely infeasible. Even if the Plan is confirmed, it is likely to fail. The Sapphire Case On Feb. 25, 2005, GMAC Commercial and the lender in Sapphire Properties, Ltd., another debtor-affiliate of the Debtor, filed their Motions for Relief from the Automatic stay Consensual Resolution GMAC has attempted to negotiate for the consensual resolution of its claim against Bi-State and Sapphire Properties Inc. A Term Sheet was reached after a meeting on May 24, 2005. However, the Debtors failed to properly serve the notice of hearing resulting to the dismissal of the compromise motion. In addition, related debtors refused to confirm whether they still abide by the terms stipulated in the Term Sheet. A second Term Sheet was drafted on Aug. 15, 2005, which calls for the lifting of the automatic stay against the lenders. However, the Lender contends that some items in the Term Sheet were violated by the Debtors. Objections to the Amended Plan The Debtors filed a First Amended Plan of Reorganization on Aug. 25, 2005. LaSalle Bank cites three objections to the Debtor's Amended Plan A. The Plan Unfairly Discriminates in Violation of Sections 1123(a)(4) or 1129(b)(1) of the Bankruptcy Code. In order to induce GMAC to originate the loan to Bi-State on July 17, 2000, the Debtor executed a Guaranty Recourse Obligations of Borrower, which absolutely and unconditionally guarantees the prompt and unconditional payment of the Guaranteed Recourse Obligations of Borrower, as defined in the Guaranty. The Debtor places GMAC's claim into the indirect category because the debt is based on a guaranty and there is no real, legal distinction between claims deemed direct and indirect by the Debtor. The Guaranty created an absolute obligation that makes the Debtor primarily liable to pay GMAC. GMAC stands in no different position than any other unsecured creditor. B. The Plan is Not Feasible as Required Under Section 1129(a)(11) of the Bankruptcy Code. The Amended Plan is virtually devoid of feasibility analysis, and is riddled with inaccurate information, including the Debtor's failure to accurately assess the likelihood that it will have a substantial obligation to GMAC and other lenders. The Debtor's argument that that the source of payment to creditors will be the operation or sale of its properties that are the subject of a bankruptcy proceeding is ambiguous and unclear because those properties have yet to be marketed and no projections about those properties are included in the Plan. C. The Plan is Not Fair and Equitable. The Plan does not provide for full payment to GMAC Commercial based on two grounds. First, the Plan, while describing a payout over a period of two years, does not provide for interest. Second, the does not provide treatment that demonstrates both an intent and ability to pay GMAC in full. The Court has continued the confirmation hearing for the Amended Plan from Oct. 24, 2005, to Nov. 30, 2005, at 9:00 a.m. Headquartered in Moline, Illinois, Alan C. Kendall, dba Premier Properties, filed for chapter 11 protection on December 9, 2004 (Bankr. C.D. Ill. Case No. 04-85449). Barry M. Barash, Esq., at Barash & Everett, LLC, and Charles R. Gibbs, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets of $1 million to $10 million and estimated debts of $10 million to $50 million. PRESTWICK CHASE: Files Plan & Disclosure Statement in New York --------------------------------------------------------------- Prestwick Chase Inc. filed a Plan of Reorganization and an accompanying Disclosure Statement explaining the Plan with the U.S. Bankruptcy Court for the Northern District of New York on Oct. 20, 2005. The Debtor tells the Court that it has determined that reorganizing its financial affairs and not liquidating its assets is in the best interest of the creditors. The Debtor says that the principal vehicle of the reorganization is to refinance its secured debt. The Debtor says that all property of the estate will be utilized as security for a new loan totaling $12,680,000. Plan Funding The net proceeds of the refinancing will be used to pay the secured claim of M&T Real Estate Trust and the secured claim, if any, of APC Partners II, LLC, to the extent proceeds are available. The Debtor tells the Court that on the Effective Date, Frederick McNeary, Jr. will infuse into Prestwick new capital totaling $400,000. The new capital infused shall be used first to pay any balance remaining on the secured claim of APC. If any surplus cash remains after full payment of APC's secured claim, the Debtor says that the surplus cash shall be used to augment payments due to priority claimholders on the Effective Date. Refinancing The Debtor discloses that Community Preservation Corp. has agreed to commit to a mortgage loan in the amount of $12,680,000. The Debtor says that the loan shall bear an interest of 6.655% per annum, payable in 30 years. The Debtor says that the loan is secured by the Debtor's real property consisting of 186 residential units and 2 commercial units. The Debtor further says that the loan has mortgage insurance from SONYMA in the amount of 100% of the Community Preservation loan amount. The Debtor says it expects the loan to close on or before Mar. 15, 2006. Terms of the Plan The Debtor groups its two secured claims into classes II and III. Class II: M&T Secured Claim The Debtor owes M&T $13 million. The debt is secured by a first priority mortgage covering the Debtor's real property and by an assignment of the rents in connection with that property. The Debtor further says that M&T has additional collateral security for its loan and believes that M&T will be owed or will accept, in full satisfaction of its claim, a fixed sum totaling $11.7 million. Class III: APC Secured Claim The Debtor tells the Court that APC claims it is a secured creditor and holds a priority mortgage against the Debtor's real property and assignment of rents. The Debtor says that it disputes the validity of APC's liens and alleges that any claim APC might have is a general unsecured claim. The Debtor reminds the Court that it has commenced an adversary proceeding (Adv. Proc. No. 05-90188-1) seeking a determination that APC's claim is unsecured. The Debtor says that the adversary proceeding could result in: * a determination that APC's claim is fully unsecured or * a bifurcation of the claim into secured and unsecured components. The Debtor tells the Court that only the secured claim of APC will receive treatment under Class II of the Plan. General Unsecured Claims will be paid an amount equal to 10% of their allowed amount in deferred cash payments beginning on the 15th day of the first calendar month after the final payment of priority tax claims. The corporate principals Frederick McNeary, Sr. and Frederick McNeary, Jr. are the sole equity interest holders of the Debtor. The Debtor discloses that the stocks of Messrs. McNeary, Sr. and McNeary Jr. will be cancelled and they will be issued new stock in the reorganized Debtor. Competing Plan As reported in the Troubled Company Reporter on Oct. 7, 2005, APC Partners II, LLC, a secured creditor of Prestwick Chase and Frederick J. McNeary, Sr., delivered a Joint Chapter 11 Plan of Reorganization to the Court. Plan Funding On the Effective Date, APC will make a $1,800,000 capital contribution to Reorganized Prestwick to: a) fund the payments to be made pursuant to the terms of the Plan; b) provide the Reorganized Prestwick with adequate working capital; c) fund repairs, rehabilitation and deferred maintenance of the senior living facility and real property; and d) resolve and cure any non-compliance with the Army Corps of Engineers' wetlands rules and regulations, building codes and any necessary or desirable improvements to ensure the health, safety and welfare of its residents. Plan Structure APC's Plan provides for: a) a comprehensive restructuring of Prestwick Chase's debt; b) an injection of fresh working capital into Prestwick Chase to restore residents' security deposits; c) rehabilitation of the senior living facility to ensure the health, safety and welfare of the residents; and d) the sale of substantially all of Frederick McNeary, Sr.'s non-exempt assets. Headquartered in Saratoga Springs, New York, Prestwick Chase, Inc. -- http://www.prestwickchase.com/-- offers senior housing and independent living as an alternative to home ownership. The Company filed for chapter 11 protection on March 11, 2005 (Bankr. N.D.N.Y. Case No. 05-11456). Robert J. Rock, Esq., at Albany, New York, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. QUIGLEY CO: Geritz Objects to 3rd Amended Disclosure Statement -------------------------------------------------------------- William F. Geritz objected to the Third Amended Disclosure Statement explaining Quigley Company, Inc.'s Third Amended Plan of Reorganization filed with the U.S. Bankruptcy Court for the Southern District of New York. Mr. Geritz says Quigley's Plan is facially unconfirmable. Mr. Geritz says Quigley's voting and solicitation procedure -- assigning a $1 value, for voting and ballot tabulation purposes, to each asbestos claim, notwithstanding the legal status of the claim or the severity of the underlying illness giving rise to the claim -- is flawed. Mr. Geritz holds a liquidated, non-contingent, undisputed, claim. Mr. Geritz says there is no reason to estimate the amount of the claim for voting purposes. Quigley's $1-per-claim scheme, when applied to allowed, undisputed and liquidated claims, Mr. Geritz complains, runs afoul of Section 502(2)(l) of the Bankruptcy Code. The voting requirements of Bankruptcy Code Sections 1126, 502, and 1111(a) provide that only two kinds of creditors may vote on a plan: (a) a claimant that filed a proof of claim, which has no pending objection, or (b) a claimant that is listed on a schedule that is not recorded as disputed, contingent or unliquidated. Section 502(c)(l) of the bankruptcy Code sets forth the practical solution of allowing the estimation of contingent or unliquidated claims, if the Court finds that the fixing of the claims will unduly delay the administration of a case. Quigley's proposal to artificially "estimate" all Asbestos PI Claims at $1 is motivated not by a sense of fairness or even expediency, Joel I. Sher, Esq., at Shapiro Sher Guinot & Sandler in Baltimore, Maryland, argues. Rather, Mr. Sher continues, Quigley wants to give less seriously injured claimants undue voting power because many of these claimants committed to vote for Quigley's plan of reorganization as part of a prepetition settlement. Mr. Geritz asserts that the voting procedures and approved ballots should conform to these guidelines: (a) any holder of a claims listed in Quigley's schedules as non-contingent, undisputed and liquidated should not be estimated and should be permitted to vote its claim in the amount of the claim as scheduled; (b) any holder of a claim listed in Quigley's schedules as unliquidated, contingent or disputed should be permitted to vote its claim in accordance with Section 502(c) estimation procedures, for voting purposes only, that assign a specified dollar amount based on the severity of the disease level suffered by the claimant; and (c) any holder of a claim based on a filed proof of claim, where the claim is not scheduled by Quigley as unliquidated, contingent, or disputed should be permitted to vote and its claim estimated in accordance with the above guideline. Joel I. Sher, Esq., and Kimberly M. Stoker, Esq., at Shapiro Sher Guinot & Sandler and Louis A. Scarcella, Esq., at Farrell Fritz, P.C., represent William F. Geritz. 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. RASC SERIES 2005-EMX3: Moody's Rates Class M-10 Sub. Certs. at Ba1 ------------------------------------------------------------------ Moody's Investors Service assigned a Aaa rating to the senior certificates issued by RASC Series 2005-EMX3 Trust, and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The ratings are based primarily on: * the credit quality of the loans backing the certificates; and * on the credit enhancement provided by: -- subordination, -- overcollateralization, -- excess spread, and -- a yield maintenance agreement. Moody's expects collateral losses to range from 5.65% to 6.15%. All of the mortgage loans were originated by Mortgage Lenders Network USA, Inc. In addition, Mortgage Lenders Network USA, Inc. will be the primary servicer of the mortgage loans. Residential Funding Corporation, the transaction's master servicer, is rated SQ1, Moody's highest master servicer rating. The complete rating actions are: RASC Series 2005-EMX3 Trust Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2005-EMX3 * Class A-I-1, rated Aaa * Class A-I-2, rated Aaa * Class A-I-3, rated Aaa * Class A-I-4, rated Aaa * Class A-II, rated Aaa * Class M-1, rated Aa1 * Class M-2, rated Aa2 * Class M-3, rated Aa3 * Class M-4, rated A1 * Class M-5, rated A2 * Class M-6, rated A3 * Class M-7, rated Baa1 * Class M-8, rated Baa2 * Class M-9, rated Baa3 * Class M-10 , rated Ba1 REFCO INC: Files Consolidated List of 100 Largest Unsec. Creditors ------------------------------------------------------------------ Refco Inc. and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the Southern District of New York their consolidated list of 100 largest unsecured creditors. J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP in New York tells the Court that this list supercedes the consolidated list of unsecured creditors holding the 50 largest unsecured claims attached to the chapter 11 petition of Refco Inc. The Consolidated List of Debtors' 100 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ VR Global Partners, LP $620,000,000 Avrora Business Park 77 Sadovnicheskayanab Building 1 Moscow, Russia 115035 Attn: Richard Deitz Wells Fargo Bond Debt $390,000,000 Corporate Trust Services Mac N9303-120 Sixth & Marquette Minneapolis, MN 55497 Tel: (612) 316-47727 Attn: Julie J. Becker Rogers Raw Materials Fund $287,558,736 c/o Beeland Management 141 West Jackson Boulevard Suite 1340 Chicago, IL 60604 Tel: (312) 264-4375 Bawag International Finance $234,038,383 BAWAG P.S.K. Fleishmarkt A-1010 Vienna, Austria Bancafe International Bank Ltd. $203,996,127 AV Reforma 9-30 Zona 9 Guatemala, Guatemala Premier Trust Custody $194,163,075 Abraham De Veerstraat 7-A, Curacao, Netherlands Antilles Inter Financial Services Ltd. $138,000,000 Graigmuir Chambers Roadtown, Tortola British Virgin Islands Markwood Investments $135,037,546 Via Lovanio, #19 00198 Rome, Italy VR Argentina Recovery Fund $130,000,000 Avrora Business Park 77 Sadovnicheskayanab Building 1 Moscow, Russia 115035 Attn: Richard Deitz Leuthold Funds Inc. $120,379,039 Leuthold Industrial Metals, LP 100 North 6th Street Suite 412A Minneapolis, MN, 55403 Tel: (612) 332-9141 Fax: (612) 332-0797 Attn: David Cragg Betio Asset Investments, Ltd. $116,357,256 The Law Building P.O. Box 687 The Valley, Anguilla, British Virgin Islands Capital Management Select $109,549,283 Fund Ltd. Lynford Manor, Lynford Cay Nassau, Bahamas Chaco City Investments, Ltd. $100,709,321 The Law Building P.O. Box 687 The Valley, Anguilla British Virgin Islands Cosmorex Ltd. $96,229,324 CP 8057 28080 Madrid, Spain Tel: +34-607-745-555 Fax: +34-667-706-622 Rabaul Holdings Ltd. $92,830,682 The Law Building P.O. Box 687 The Valley, Anguilla British Virgin Islands Tecka Asset Holdings Ltd. $78,193,026 The Law Building P.O. Box 687 The Valley, Anguilla British Virgin Islands Tuvalu Holding Company, Ltd. $77,579,816 The Law Building P.O. Box 687 The Valley, Anguilla British Virgin Islands Catamarca Asset, Series I, Ltd. $77,571,504 The Law Building P.O. Box 687 The Valley, Anguilla British Virgin Islands Rogers International $75,241,712 Raw Materials c/o Beeland Management 141 West Jackson Boulevard Suite 1340 Chicago, IL 60604 Tel: (312) 264-4375 Cargill Related to $67,000,000 P.O. Box 9300 Purchase Minneapolis, MN 55440-9300 Agreement, not Tel: (952) 742-7575 yet due and Fax: (952) 742-7393 payable Creative Finance Limited $65,111,071 Marcy Building, Purcell Estate P.O. Box 2416 Road Town, British Virgin Islands Tel: + 3491-527-9620 RB Securities Limited $62,859,707 54 Brivibas Street LV-1011 Riga, Latvia Tel: + 371 702-52-84 Fax: + 371 702-52-26 Banesco Banco Universal C.A. $51,039,302 Panama Branch AV Samuel Lewis Torre HSBC Bank, 1st Floor Panama City, Panama Banesco International $50,831,139 (Panama) S.A. AV. Samuel Lewis Torre HSBC Bank, 1st Floor Panama City, Panama Rietumu Banka $50,125,384 JSC Rietumu Banka Reg. No. 40003074497 VAT No. LV40003074497 54 Brivibas Street Riga, LV-1011 LATVIA Tel: +371-7025555 Fax: +371-7025588 Stilton International $46,820,416 Holdings, Trident Chambers Wickhams Cay P.O. Box 146, Road Town, Tortolla British Virgin Islands Attn: Julian McPike Tel: +242-363-1182 RR Investment Company Ltd. $41,815,113 c/o London & Amsterdam Trust Company PO Box 10459 APO, 3rd Floor Century Yard Cricket Square, Elgin Avenue Georgetown, Grand Cayman Cayman Island Tel: +345-914-7471 Federal Portfolio $36,068,185 AV Venezuela, El Rosal Torre Cremerca Piso 2, Ofic B2 Caracas, DTTO. Federal 1060 Venezuela Global Management Worldwide $34,294,491 Trident Corp. Service Floor 1 Kings Court Bay Street P.O. Box 3944 Nassau, Bahamas Josefina Franco Siller $32,440,119 Carretera Mexico-Toluca No. 4000 Col. Cuajimalpa D.R. 0500 Mexico SBP-Custody I $30,741,288 PO Box 0267075 Northwest 87 Ave 13 Off 133-C Miami, FL 33172 Rovida Holding $30,741,288 c/o London & Amsterdam Trust Company P.O. Box 10459 APO, 3rd Floor Century Yard, Cricket Square Elgin Avenue Georgetown, Grand Cayman Cayman Island Caja De Seguros, S.A. $30,950,115 Fitzroy #957 Capital Federal Argentina 1414 Filare Limited $28,777,327 Shirley Street P.O. Box N 3933 Nassau, Bahamas Attn: Linda Williams Pioneer Futures, Inc. $25,932,001 One North End Avenue, Suite 1251 New York, NY 10282 Daichi Commodities Co., Ltd. $24,727,015 10-10 Shinsen, Cho Shibuya-Ku Tokyo, 150-0045 Attn: Mr. Airmura GS Grinham Portfolio, LLC $24,631,959 c/o GS Hedge Fund Strategies 701 Mt Lucas, CN 850 Princeton, NJ 08542-0850 Tel: (609) 497-5500 Monte Brook Corporate $24,122,000 Associates, Ltd. The Law Building P.O. Box 687 The Valley, Anguilla British Virgin Islands Winchester Preservation $23,349,765 c/o Joseph D. Freney Christiana Bank & Trust Co. 3801 Kennett Pike, Suite 200 Greenville, DE 19807 Patton Holdings $22,000,000 Avrora Business Park 77 Sadovnicheskayanab Building 1 Moscow, Russia 115035 Cargill Financial Services Corp. $21,679,435 12700 Whitewater Drive Minnetonka, MN 55343-9439 Attn: Shawn McMerty Miura Financial Services $21,521,491 AV. Francisco De Miranda TORRE LA PRIMERA PISO 3 CARACAS, VENEZUALA AQR Absolute Return $19,700,296 c/o Caledonian Bank & Trust Ltd. P.O. Box 1043 GT Caledonian House, Grand Cayman Cayman Islands Arbat Equity Arbitrage Fund $18,830,655 Trident Corporate Services 1st Floor Kings Court Bay Street P.O. Box N3944 Nassau Bahamas, Nassau Geshoa Fund $17,328,511 Corporate Center West Bay Road P.O. Box 31106 SMB Grand Cayman North Hills Management, LLC $17,187,504 10 Gracie Square, Suite 126S New York, NY 10028 Attn: Mark Bloom Renaissance Securities $16,304,009 (Cyprus) Ltd. 2-4 Arch Makarios 111 Avenue Capital Center, 9th Floor 1505 Nicosia Cyprus VR Capital Group Ltd. $16,215,628 Avrora Business Park 77 Sadovnicheskayanab Building 1 Moscow, Russia 115035 Abadi & Co. Securities $15,135,445 375 Park Avenue, Suite 3301 New York, NY 10152 Tel: (212) 319-4135 Reserve Invest(Cypress) Limited $14,186,714 Maximos Plaza 3301 Block 3 3035 Limassol, Cyprus Peak Partners Offshore $13,865,562 Master Fund Limited P.O. Box 2199 GT Grand Pavilion Commercial Center 802 West Bay Road Grand Cayman, Cayman Islands Robeco Multi Market SPC-SEG PO $13,806,080 P.O. Box 1093 GT Grand Cayman, Cayman Islands Tel: (345) 945-7099 Fax: (345) 945-7100 Attn: Guy Major BANCO AGRI $13,701,226 BANCO AGRICOLA, S.A, 1RA CAKKE PTE. Y 67 AV. NORTE FINAL BLVD CONSTITUCION #100 SAN SALVADOR, ES GTC Bank, INC. $12,971,439 CALLE 55 ESTE TORRE WORLD TRADE CENTER PISO 7 PANAMA, GUATEMALA Tel: (507) 265-7371 Fax: (507) 265-7396 Tokyo Forex Financial Inc. $11,689,345 Shinjyuku Oak Tower 35th Floor, 6-8-1 Nishishinjyuku, Shinjyuku-Ku Tokyo 163-6035 Japan Birmingham Merchant S.A. $11,601,749 AV. ARGENTINA 4793 PISO 3 CALLAO PERU Latina De Seguros $11,536,182 Lima Peru Banco Reformador S.A. $11,235,394 7 Avenida 7-24 Zona 9 Guatemala, Guatemala NKB Investments Ltd. $11,157,779 199 Arch. Makarios Avenue Neocleouse House Limassol BAC International $10,831,854 Calle 43 QnQuillo De Lauar Panama, Panama Sphinx Managed Futures $10,368,186 P.O. Box 2199 Genesis Building, 4th Floor Grand Cayman, Cayman Islands Premier Bank International N.V. $9,724,941 Abraham De Veerstraat 7-A Willemstad Curacao, Netherlands, Antilles Geshoa Structured Finance Ltd. $9,510,064 Corporate Centere West Bax Road P.O. Box 31106 SMB Grand Cayman, Cayman Islands Davos International Bank, Ltd. $9,389,332 Woods Centere Friars Hill Road, Suite 18A St John's, Antigua & Barbuda Russian Investors Securities Ltd. $9,076,430 Commonwealth Trust Ltd P.O. Box 3321 Road Town Tortola, Virgin Islands Rogers International $8,441,532 Raw Materials Fund LP c/o Beeland Management 141 West Jackson Blvd, Suite 1340 Chicago, IL 60604 Tel: (312) 264-4400 Attn: Allen Goodman AQR Global Asset Allocation $8,833,968 c/o Caledonian Bank & Trust Ltd. P.O. Box 1043 GT Caledonian House, Grand Cayman Cayman Islands IDS Managed Futures, LP $7,989,433 c/o CIS Investments Inc 233 South Wacker Dr., Suite 2300 Chicago, IL 60606 Tel: (312) 460-4933 Attn: Ruth Gogerty TotalBank Curacao N.V $7,576,454 Calle Guaicaipuro Entre AV Principal De Las Mercedes Torre Alizanza Piso 9 El Rosal Caracas, Venezuela Uno Valores Ltd. $7,497,412 Av. Fc. De Milanda Torre Cavendes, Piso 16, 16A Caracas Venezuela KPC Corporation $7,445,822 c/o Priore Asset Management 1-1-11 Nihombashi-Ningyo Chuo-Ku, Tokyo 103 Japan Fax: 011-813-3639-9406 Attn: Masahiko Ishida Quantum Partners LDC/Discovery $7,386,849 c/o Soros Fund Mgmt 888 7th Avenue New York, NY 10106 Banesco Banco Internacional $7,219,704 De Puerto Rico Avenida Ponce De Leon No. 165 Oficina 302 Hato Rey, Puerto Rico Denali Master Fund, LP $7,119,112 c/o Admiral Administration 2 Anchorage Centre, 2nd FL Grand Cayman, Cayman Islands Tel: (340) 778-7744 Attn: Scott Ramsey Peak Partners LP $6,694,485 47 Hulfish Street, Suite 510 Princeton, NJ 08542 Arcadia Hill Inc. $6,374,548 c/o Dorella Investment Inc. 1942 NE 148th Street, Suite 28153 Miami, FL 33181-1137 Prism Limited $6,137,174 c/o Racine Trading Co. 1100 Highridge Lombard, IL 60148 Attn: Mike Racine Trans-Europa Translations $6,058,691 ASL House 12-14 DVID Place St. Helier Jersey, JE24TD Channel Island, JE ICIS Trading Inc (Unvolores) $5,968,943 AV Tamanaco Con Calle Moedano EDIF Atlantic PISO 8 Off-8-A Caracas, Venezuela Garden Ring Fund Ltd. $5,943,182 Trident Corporate Services 1st Floor, P.O. Box N3944 Kings Court, Bay Street Nassau, Bahamas Tel: (095) 514-0810 Attn: Mike Boudan SAAD Investments Company Limited $5,716,657 Ugland House, South Church Street Georgetown, Grand Cayman Attn: Mike Wetherall Yutaka Shoji Co. Ltd. $5,641,752 Refco (S) Ptd. Ltd. 8, Shenton Way #11-02, Temasek Tower Singapore 068811 Tel: (813) 366-75222 Fax: (813) 366-78239 Colt Global Futures Fund $5,524,101 25 Eden Quay Co Dublin, Ireland Attn: Bruce Flippin Premium Capital Appreciation Fund $5,500,901 P.O. Box 6050 Curacao, Netherlands Antilles Tel: (571) 312-1177 Fax: (571) 348-4961 New Castle Business Holding Inc. $5,309,260 Torre Banco Continental, Piso 20 Calle 50 Ciudad De Panama The Everest Fund, LP $5,308,830 1100 North 4th St, Suite 143 Fairfield, IA 52556 Tel: (641) 472-5500 Fax: (641) 472-7320 Attn: Janet Mullen Quercus FX Fund Class B $5,251,008 Anderson Square Building 3rd Floor, Shedden Road Georgetown, Grand Cayman Invesdex Capital Ltd. $5,117,125 P.O. Box HM 1186 Hamilton HM11 Bermuda Lyxor/Estlander & Ronnlund Fund $5,029,269 Tour Sociate Generale 17 Cours Valny Paris, La Defence Cedex 92987, France Fax: 33-1-42-13-01-25 Attn: Raphael Faure BCO Hipotecario Inv. Turistica $4,902,384 (Fideicomiso Federal Forex) Torre Cremerca Piso 2 Ofic, B2 El Rosal Caracas 1060 Caracas Venezuela Attn: Aleg Benarroch Transcom Bank (Barbados) Ltd. $4,730,827 7A Avenida 7-24, Zona 9 Edificio Banco Reformador 5TO Nivel Guatemala Wayland Investment Fund II, LLC $4,568,101 c/o Wayzata Inv Partn LLC 701 East Lake Street, Suite 300 Wayzata, MN 55391 Tel: (952) 345-0716 Attn: Susan Peterson Multi Credit Bank Inc. $4,505,181 Via Espana #127 Edificio Prospeidad Panama City, Panama Alpen Fund Ltd. $4,482,732 VRG 855 PMB 295 208 East 51st Street New York, NY 10022-6500 Sphinx Special Solutions $4,312,945 [Address Not Provided] Miroo Ltd. $4,212,818 Palm Chambers #3 P.O. Box 3152 Road Town British Virgin Islands TAU 28 Fund Ltd. Roll Up $4,215,406 c/o Merit Wickhams Cay P.O. Box 662 Road Town, Tortola British Virgin Islands Attn: Fritz Kirdadi Platinum Capital Fund BV $4,207,113 Pareraweg 45 PO Box 4914 Curacao, Netherlands Antilles Garden Ring Fund Limited $4,045,473 Trident Corp. Services, 1st Floor P.O. Box N3944 Kings Court, Bay Street Nassau, BF Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., and Sally McDonald Henry, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Refco reported $16.5 billion in assets and $16.8 billion to the Bankruptcy Court on the first day of its chapter 11 cases. REFCO INC: Bidding War Continues After JC Flowers Drop $768M Bid ---------------------------------------------------------------- An investor group led by former Goldman Sachs Group Inc. banker Christopher Flowers withdrew its bid for all of the capital stock and operations of Refco, LLC, Refco Overseas Limited, and Refco Singapore, from Refco, Inc., and Refco Global Futures LLC on Monday, Oct. 24. Refco Overseas and Refco Singapore, which are engaged in the regulated futures and commodities trading activities, are not included in Refco Inc. and its debtor-affiliates' chapter 11 filing, but its sale is being governed by the U.S. Bankruptcy Court for the Southern District of New York. J.C. Flowers withdrew its $768 million bid after the Hon. Robert D. Drain ruled that he would only approve a $5 million break-up fee. J.C. Flowers had previously agreed to a fee of 2.8% of the purchase price. "We are disappointed by certain aspects of the Bankruptcy Court's decision [Mon]day, but we respect the Court's view," Mr. Flowers said. "Under the circumstances, we are not prepared to commit at this time to purchase Refco LLC and related assets, as we would have been had the Court granted Refco's Bid Procedures motion. We have not made a decision whether we will participate in the bankruptcy auction, but we continue to think Refco is a great business, and we wish the employees and customers of Refco the best." New Bidders Interactive Brokers Group LLC has currently topped the bidding war with its new $858 million offer, followed by an $828 million offer from DIGL Inc., formed by Dubai Investment Group LLC and Burkle's Yucaipa Cos, Tom Becker writes for Bloomberg News. Other potential bidders, Peter A. McKay of The Wall Street Journal reports, include: -- Man Financial; -- Apollo Capital Management LLC; -- Warburg Pincus LLC -- Marathon Asset Management LLC; and -- a partnership of Merrill Lynch & Co. Headquartered in New York, New York, 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. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Refco reported $16.5 billion in assets and $16.8 billion to the Bankruptcy Court on the first day of its chapter 11 cases. REFCO INC: Organizational Meeting of Creditors Set on October 28 ---------------------------------------------------------------- The United States Trustee for Region 2, Deirdre A. Martini, will convene an organizational meeting for unsecured creditors in the Debtors' cases at 10:00 a.m. on October 28, 2005, at the Marriott Marquis New York Hotel, Astor Ballroom, Times Square, 1535 Broadway, in New York. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' bankruptcy cases. This is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a Debtor's representative will attend and provide background information regarding the cases. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Refco reported $16.5 billion in assets and $16.8 billion to the Bankruptcy Court on the first day of its chapter 11 cases. (Refco Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) REVLON CONSUMER: Exchanging $80M Senior Notes for Registered Bonds ------------------------------------------------------------------ Revlon Consumer Products Corporation is offering to exchange $80 million aggregate principal amount of 9-1/2% Senior Notes Due 2011 for registered bonds with the same amount and terms. The terms of the new notes are substantially identical to those of the old notes, except that certain transfer restrictions, registration rights and penalty interest rate provisions relating to the old notes will not apply to the new notes. Terms of the Notes The Notes mature on April 1, 2011. The Company will pay interest on the Notes on April 1 and October 1 of each year, which began October 1, 2005. The notes are senior unsecured debt. The noteholders' right to payment under the notes will be equal in right of payment with any of the Company's present and future senior indebtedness including, without limitation, trade payables and other liabilities which are not by their terms specifically subordinated to the notes. The notes rank senior to all of our present and future subordinated indebtedness. The notes are structurally subordinated to all present and future indebtedness and other liabilities of our subsidiaries. As of June 30, 2005, the total indebtedness and other liabilities of the Company's subsidiaries was approximately $183.4 million excluding intercompany payables and receivables and subsidiary guarantees of the 2004 credit agreement. On a pro forma basis, after giving effect to the Company's transactions in August 2005, as of June 30, 2005, the Company's total indebtedness would have been $1.451 billion. As of June 30, 2005, the Company had secured indebtedness of $737.5 million. In the event that the secured creditors exercise their rights with respect to the assets pledged as collateral for our secured obligations, the proceeds of the liquidation of these assets will first be applied to repay obligations secured by any liens, including under the 2004 credit agreement, before any unsecured indebtedness, including the notes, is repaid. The Company may redeem the notes at its option in whole or in part at any time on or after April 1, 2008. In addition, at any time prior to April 1, 2008, the Company will be entitled to redeem up to 35% of the aggregate principal amount of the notes at a redemption price of 109.5% of the principal amount thereof, plus accrued and unpaid interest. A full-text copy of the Registration Statement is available for free at http://ResearchArchives.com/t/s?280 Revlon Consumer Products Corporation is a wholly owned subsidiary of Revlon, Inc., a worldwide cosmetics, skin care, fragrance, and personal care products company. The Company's vision is to become the world's most dynamic leader in global beauty and skin care. The Company's brands, which are sold worldwide, include Revlon(R), Almay(R), Ultima(R), Charlie(R), Flex(R), and Mitchum(R). * * * As reported in the Troubled Company Reporter on March 10, 2005, Moody's Investors Service assigned a Caa2 rating to the proposed $205 million senior notes offering by Revlon Consumer Products Corporation. In addition, Moody's affirmed Revlon's existing ratings and its negative rating outlook. The affirmation and assignment of long-term ratings reflect the company's continued operational and financial progress, including the prospective improvement in Revlon Consumer's near-term liquidity profile as proceeds from the notes are used to refinance bonds maturing as early as February 2006. However, the continuation of a SGL-4 speculative grade liquidity rating and a negative long-term rating outlook reflect the company's ongoing negative free cash flow profile and ongoing liquidity concerns beyond the near term. The ratings affected by this action are: * New $205 million senior notes due 2011, assigned at Caa2; * Senior implied rating, affirmed at B3; * $160 million senior secured revolving credit facility due 2009, affirmed at B2; * $800 million senior secured term loan facility due 2010, affirmed at B3; * $116 million 8.125% senior notes due 2006, affirmed at Caa2; * $76 million 9% senior notes due 2006, affirmed at Caa2; * $327 million 8.625% senior subordinated notes due 2008, affirmed at Caa3; * Speculative grade liquidity rating, affirmed at SGL-4; * Senior unsecured issuer rating, affirmed at Caa2. At the same time, Standard & Poor's Ratings Services affirmed its ratings on Manhattan-based cosmetics manufacturer Revlon Consumer Products Corp., including its 'B-' corporate credit rating. At the same time, Standard & Poor's assigned a 'CCC' senior unsecured debt rating to Revlon's planned $205 million senior unsecured note offering due 2011. S&P says the outlook is negative. RHODES COS: S&P Assigns Low-B Ratings to $600 Million Loans ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to The Rhodes Cos. LLC and its affiliates or co-borrowers -- Heritage Land Co. LLC and Rhodes General Partnership. At the same time, a preliminary 'B+' rating with a recovery rating of '1' is assigned to the company's pending $450 million first lien term loan and a preliminary 'B-' rating with a recovery rating of '4' is assigned to the company's pending $150 million second lien secured term loan. Roughly half of the expected proceeds from these financings will repay existing secured debt and fund a sizeable dividend, with the remainder being made available for general working capital purposes and future land acquisitions. The outlook is stable. "The 'B' corporate credit rating primarily reflects the company's smaller size, very significant single market exposure, and a highly leveraged pro forma financial profile," said credit analyst Lisa Sarajian. "Offsetting credit considerations include an established, profitable track record and favorable land positions in one of the fastest growing housing markets in the country." While Rhodes' balance sheet recapitalization is potentially being pursued at this housing cycle's peak, the company's well-positioned master planned communities should prove fairly resilient in the event of a material market softening. RHODES INC: Files Joint Plan of Liquidation in Georgia ------------------------------------------------------ Rhodes, Inc., and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division, their First Amended and Restated Joint Plan of Liquidation and accompanying Disclosure Statement. The Debtors filed a Plan of Reorganization on June 20, 2005, which provided for the distribution of 30,000,000 shares of New Common Stock to Unsecured Creditors in exchange for $59.5 million of debt against the Rhodes entities. The Liquidation Plan classifies all claims against the Debtors into eight separate groups. Unsecured creditors will receive their pro rata distributions of any liquidation proceeds that remains in the estates after paying administrative, priority tax, DIP lenders, other secured claims, priority claims and convenience claims. The Disclosure Statement does not attempt to quantify how much recovery will the unsecured creditors get. Equity Interest holders will receive no distribution. Joel Dugan, the Debtors CEO, President and CFO, will serve as the Liquidating Agent. After the Effective Date, Mr. Dugan will take all necessary and appropriate actions to direct and oversee the orderly, expeditious and efficient liquidation and distribution of the sale proceeds of the estates' assets to creditors. On the Effective Date, Rhodes Inc. will operate as a separate corporate entity. Rhodes Holdings and Rhodes Holdings II will be dissolved. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=051024224835 The Court will convene a hearing on Nov. 17, 2005, at 10:00 a.m. to consider approval of the Disclosure Statement. Headquartered in Atlanta, Georgia, Rhodes, Inc., will continue to offer brand-name residential furniture to middle- and upper- middle-income customers through 63 stores located in 11 southern and midwestern states (after disposing of the locations listed above). The Company and two of its debtor-affiliates filed for chapter 11 protection on Nov. 4, 2004 (Bankr. N.D. Ga. Case No. 04-78434). Paul K. Ferdinands, Esq., and Sarah Robinson Borders, Esq., at King & Spalding represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated less than $50,000 in assets and more than $50 million in total debts. RHODES INC: Has Until December 31 to Solicit Plan Acceptances ------------------------------------------------------------- Rhodes, Inc., and its debtor-affiliates has until December 31, 2005, to solicit acceptances of its First Amended and Restated Joint Plan of Liquidation. The Debtors filed the Liquidating Plan on October 18. Rhodes told the U.S. Bankruptcy Court for the Northern District of Georgia that a competing plan at this stage will present a direct impediment to their ability to successfully wind-down their business operations. The Debtors assured the Court that their Official Committee of Unsecured Creditors are up-to-date with all the developments in these cases. Headquartered in Atlanta, Georgia, Rhodes, Inc., will continue to offer brand-name residential furniture to middle- and upper- middle-income customers through 63 stores located in 11 southern and mid-western states (after disposing of the locations listed above). The Company and two of its debtor-affiliates filed for chapter 11 protection on Nov. 4, 2004 (Bankr. N.D. Ga. Case No. 04-78434). Paul K. Ferdinands, Esq., and Sarah Robinson Borders, Esq., at King & Spalding represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated less than $50,000 in assets and more than $50 million in total debts. ROUNDY'S SUPERMARKETS: S&P Lifts Ratings on Proposed $1-Bil Debts ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Milwaukee, Wisconsin-based Roundy's Supermarkets Inc. to 'B+' from 'B'. The outlook is negative. At the same time, the rating on the company's proposed $175 million floating-rate notes due 2012 was raised to 'B-' from 'CCC+', and the rating on a proposed $825 million bank facility was raised to 'B+' from 'B'. The recovery rating of '3' on the bank facility is unchanged, indicating a meaningful recovery of principal in the event of a default. "The rating action reflects Roundy's revised capital structure, which results in a $150 million reduction in debt issued," said Standard & Poor's credit analyst Stella Kapur. The debt amount was reduced by $150 million because the company has lowered its debt-financed dividend to $400 million, from $550 million. The negative outlook reflects credit metrics that initially will be weak for current ratings levels. Pro forma for the revised refinancing and dividend payout, Roundy's will have $938 million of debt. Based on 12-month EBITDA of $197 million at July 2, 2005, lease-adjusted debt to EBITDA will be 6.6x and lease-adjusted EBITDA interest coverage will be 2x. While credit metrics are currently weak for the ratings, Standard & Poor's anticipates that they will improve to the mid-5x area by the end of 2006. Furthermore, Roundy's business profile and adequate liquidity levels provide support for the rating and would partially offset a weaker financial profile. The proposed $175 million senior unsecured floating-rate notes are rated 'B-', or two notches below the corporate credit rating. This reflects the substantial priority debt in relation to the company's asset base, ahead of the unsecured notes. The corporate credit rating reflects Roundy's aggressive financial policy, given the sizable $485 million in total dividends that will be paid this year in two payments, and leveraged balance sheet. Additionally, the supermarket industry has been under significant pricing pressure, particularly due to the expansion of Wal-Mart Stores Inc. and Target Corp. While these companies are not significant players in Roundy's key markets, there is a risk that these companies will more aggressively enter those markets. Higher fuel prices and or a weaker economy also present potential margin pressure concerns. RUSSELL-STANLEY: Court Approves Prepackaged Plan of Reorganization ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware confirmed the prepackaged plan of reorganization of Russell-Stanley Holdings, Inc. and certain of its subsidiaries, on Oct. 24, 2005. The Plan provides, among other things, for the sale of substantially all of the assets of Russell-Stanley and certain of its subsidiaries to an affiliate of Mauser-Werke GmbH & Co. KG and One Equity Partners. The Plan is expected to become effective, and the asset sale is expected to close, within the next ten days after satisfaction or waiver of various conditions to closing. On or shortly after the effective date of the Plan, Russell-Stanley's subordinated notes and equity securities will be cancelled, and holders of secured and general unsecured claims (other than claims on account of the Notes) will be paid in full. On or shortly after the effective date of the Plan, all trade and vendor claims not already paid when due will be paid in full by Russell-Stanley under the Plan, or by Mauser in accordance with the terms of the asset purchase agreement that is a part of the Plan. Holders of the Notes will receive their pro rata share of the asset sale proceeds that remain after secured claims, general unsecured claims, and Chapter 11 expenses have been paid or otherwise reserved. Plan distributions will be made by a plan administrator that was appointed under the Plan. Prior to filing under Chapter 11 to effect the terms of the asset sale, Russell-Stanley obtained unanimous acceptance of its Plan from creditors entitled to vote on the Plan, which allowed the Plan to be confirmed after only approximately two months in Chapter 11. "T[he] announcement and our combination with Mauser would not have been possible without the strong support of our creditors, vendors, customers and employees. We are very appreciative of their continued confidence during this process," said Ronald M. Litchkowski, President and Chief Executive Officer of Russell- Stanley. "We are now looking forward to a new era in our business as we become part of an organization that is a global leader in industrial packaging." Prepackaged Plan As reported in the Troubled Company Reporter on Aug. 22, 2005, Russell-Stanley Holdings, Inc., entered into a definitive asset purchase agreement with an affiliate of Mauser-Werke GmbH & Co. KG and One Equity Partners. Pursuant to that agreement, Russell- Stanley and certain of its subsidiaries will sell substantially all of their assets to Mauser. To effectuate the asset sale under the Purchase Agreement, Russell-Stanley and certain of its subsidiaries filed for reorganization under Chapter 11 of the Bankruptcy Code with a prepackaged Plan of Reorganization. The filings were made in the U.S. Bankruptcy Court for the District of Delaware. Prior to the filings, Russell-Stanley obtained 100% acceptance of the Plan from voting creditors. This unanimous support is expected to minimize the duration of the Chapter 11 cases. The Chapter 11 filing is a condition of the asset sale and was not due to operational concerns. The Company believes that its underlying business is sound and that it will be strengthened by a combination with the financially strong Mauser organization. Russell-Stanley's senior management is expected to continue in their current capacity both during the Chapter 11 cases and with Mauser after the sale is completed. Under the proposed plan, Russell-Stanley's existing subordinated debt and equity will be cancelled, and bondholders will receive their pro rata share of the sale proceeds that remain after secured claims, unsecured claims other than bond claims, and Chapter 11 expenses have been paid or reserved. Russell-Stanley's relationships with its vendors should not be adversely affected by this transaction or the Chapter 11 cases. The Company will pay vendors for post-petition goods and services provided on or after the filing date in the normal course of business, which obligations are entitled to priority in payment in the Chapter 11 cases. All outstanding purchase orders for delivery of goods and services should be processed and shipped as usual. The proposed plan of reorganization contemplates the payment in full of any allowed pre-petition vendor claims that remain unpaid upon consummation of the Plan. Moreover, as part of the transaction, Mauser has agreed, upon the closing, to assume and pay valid and accrued trade payables that are not otherwise paid when due as a result of the filing and that are reflected on the Company's books. Headquartered in Bridgewater, New Jersey, Russell-Stanley Holdings, Inc. -- http://www.russell-stanley.com/-- is North America's largest plastic drum manufacturer, second largest steel drum manufacturer, and a leading industrial container supply chain management company. The Company and its affiliates filed for chapter 11 protection on Aug. 19, 2005 (Bankr. D. Del. Case No. 05-12339). Mark S. Chehi, Esq., and Sarah E. Pierce, Esq., Kayalyn A. Marafioti, Esq., Frederick D. Morris, Esq., and Bennett S. Silverberg, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. As of Aug. 24, 2005, the Debtors estimated total assets of $293,388,432 and total debts of $669,100,295. SAINT VINCENTS: Clarifies Nature of Queensbrook Capitalization -------------------------------------------------------------- As reported in the Troubled Company Reporter on Aug. 26, 2005, Saint Vincents Catholic Medical Centers of New York and its debtor affiliates asks the U.S. Bankruptcy Court for the Southern District of New York for authority to incorporate, capitalize and operate a wholly owned insurance subsidiary to be licensed by the State of New York and provisionally named Queensbrook New York, Inc. The Debtors intend to incorporate and capitalize Queensbrook New York, Inc., with $275,000 in cash and equivalents on or before November 1, 2005. The Debtors admit that the $275,000 cash they seek to contribute to their proposed wholly owned, "captive" New York insurance subsidiary will be subject to attachment as security for or to satisfy the claims of the NY Subsidiary's creditors. This is generally the case in connection with any unrestricted cash in a corporation, whether that cash represents invested capital or revenue, Andrew Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, tells Judge Beatty. The Debtors made the clarification in response to a question Judge Beatty posed at the hearing on the Debtors' request. Judge Beatty asked the Debtors to make clear whether: "Would the creditors of the NY Insurance Subsidiary (including policy holders) be able to attach the $275,000 effectively cash capital contribution that SVCMC would intend to make to the NY Insurance Subsidiary to satisfy their claims?" The Debtors intend the NY Insurance Subsidiary to provide primary malpractice insurance coverage to physicians who practice within the SVCMC healthcare system. Mr. Troop, however, explains that $250,000 of the capital contribution is required under New York Insurance law, and the balance is intended to cover various start-up and other expenses of the NY Insurance Subsidiary. The Debtors have not located a case law or statutory exception to these general legal principles for an insurance company, Mr. Troop says. Mr. Troop insists that the Court should still allow the Debtors' request. He explains that the benefits of being able to have the NY Insurance Subsidiary far outweigh the low risk that SVCMC's $275,000 capital contribution may be used to satisfy the claims of, or attached by, creditors of the NY Insurance Subsidiary in the future. Mr. Troop cites the reasons why the Motion should be allowed: (a) The third-party insurance carriers that currently provide the Insured Physicians with primary medical malpractice insurance will not extend coverage beyond November 1, 2005. This coverage, in the amounts of $1,300,000 per occurrence and $3,900,000 in the aggregate, would be the same level of coverage to be provided by the NY Insurance Subsidiary; (b) The Non-Captive Insurance Carriers have decided not to extend coverage even though the policies that they issue to the Insured Physicians are reinsured by the Debtors' offshore captive insurance company, Queensbrook Insurance Limited, and in some cases by unrelated third parties. Queensbrook Insurance has assets of over [$60] million; (c) Without malpractice insurance issued by a New York licensed insurance company, the Insured Physicians cannot participate in a New York State program that provides each Insured Physician with excess insurance coverage of $1,000,000 per occurrence and $3,000,000 in the aggregate at no cost to the physician or the Debtors; (d) Having primary coverage and No Cost Excess Coverage is critically important both to the Insured Physicians and the Debtors. This combination provides the Debtors with: * physicians who otherwise might not attend to the Debtors' patients by providing a more comprehensive insurance program than would otherwise be available; and * protection against having to satisfy from its resources claims that otherwise should be and could be satisfied from insurance carried by their physicians; (e) The policies to be issued by the NY Insurance Subsidiary will be reinsured by Queensbrook Insurance and, in some cases, unrelated third parties. Queensbrook's position in this insurance program will remain unchanged; and (f) The Debtors estimate that establishing the NY Insurance Subsidiary will save $269,000 per year in third-party costs, an amount in the first year alone nearly equal to the required $275,000 capital contribution to form the NY Insurance Subsidiary. Mr. Troop maintains that the $275,000 capital contribution is low, even though as a legal matter that possibility exists. The NY Insurance Subsidiary's insurance policies will be reinsured and the Debtors believe that those reinsurance sources are viable. The likelihood that the capital contribution will be required to pay claims of the NY Insurance Subsidiary, therefore, is small. In addition, the savings to be achieved by using the NY Insurance Subsidiary in only the first year nearly equal the amount of the capital contribution required to be made. The net impact on the Debtors' operations from pursuing a program that provides both primary coverage and access to No Cost Excess Coverage is clearly and substantially positive. Mr. Troop notes that it is unquestionably important to the success of the hospital system that its doctors have insurance coverage and that every effort is taken to minimize the expenses incurred in obtaining coverage. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945- 7000) SEARS HOLDINGS: Appoints Germano and Rogers to Executive Positions ------------------------------------------------------------------ Kmart Holding Corporation, a wholly owned subsidiary of Sears Holdings Corporation (Nasdaq: SHLD), reported Donald J. Germano, as senior vice president and general manager for Kmart's more than 1,400 stores and Dene L. Rogers as executive vice president, restructuring and business improvement. In his new position, Mr. Germano is responsible for the financial performance, operations and management of all of Kmart's stores and reports directly to Aylwin B. Lewis, chief executive officer and president of Sears Holdings. Mr. Germano previously served as vice president of inventory management and replenishment. Rogers will report to and work closely with William C. Crowley, executive vice president, and chief financial and administrative officer. Rogers previously served as executive vice president of Kmart stores. "Don's leadership roles within our supply chain organization over the last four years position him well for his new expanded, operations responsibilities," Mr. Lewis said. "I'm confident his exceptional coaching skills, leadership ability, drive for results and customer advocacy will help deliver a dynamic, relevant customer shopping experience for our Kmart customers." Mr. Lewis added, "Dene has made substantial progress in improving the performance and the efficiency of the stores. We have asked him to apply his considerable change management skills more broadly across Sears Holdings. We believe these changes will allow the company to benefit from these two skilled executives." Mr. Germano joined Kmart in 2001 as divisional vice president, supply chain, and has held increasingly responsible positions within Kmart's supply chain organization. Earlier in his career, he held senior management and logistics positions with Kozmo.com, Nabisco, North American Van Lines and United Parcel Service. Germano holds a B.S. degree from the United States Naval Academy. Mr. Rogers joined Kmart in 2003 and served in a variety of roles before assuming the position of senior vice president, stores in 2004. Before joining Kmart, Rogers was senior vice president, planning, development and new products for Starwood Hotels & Resorts Worldwide Inc. He also served as senior vice president, business development at General Electric Capital. Sears Holdings Corporation -- http://www.searshc.com/-- is the nation's third largest broadline retailer, with approximately $55 billion in annual revenues, and with approximately 3,800 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. * * * As reported in the Troubled Company Reporter on March 31, 2005, Moody's Investors Service affirmed the Ba1 senior implied rating of Sears Holding Corporation. Moody's said the rating outlook is stable. Ratings assigned: Sears Holdings Corporation * Senior implied rating at Ba1; * Senior unsecured issuer rating at Ba1; and * $4 billion senior secured revolving credit facility at Baa3. As reported in the Troubled Company Reporter on March 30, 2005, Fitch Ratings assigned a 'BB' rating to Sears Holdings senior unsecured debt, with a negative outlook. At the same time, Standard & Poor's assigned its 'BB+' corporate credit rating to Sears Holdings, with a negative outlook. SEGA GAMEWORKS: Court Confirms Amended Plan of Reorganization ------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California confirmed SEGA Gameworks LLC's Second Amended Plan of Reorganization on Oct. 20, 2005. The Bankruptcy Court determined that the Plan satisfies the 13 standards for confirmation required under Section 1129(a) of the Bankruptcy Code. Pursuant to the Debtor's Plan, the Debtor will establish: -- a $250,000 professional fee reserve; and -- a $100,000 expense reserve. All undisputed portions of a priority tax claim will be paid on the effective date; disputed portions of that claim will be paid upon the later of the effective date or the entry of an order allowing such claim. The Plan Administrator will make interim cash distributions to General Unsecured creditors, not covered by any insurance policy, on a pro rata basis. These creditors are owed approximately $6 million to $7 million. Unsecured creditors are expected to recover 24% to 31% of their claims. Equity interest holders will receive no distribution under the Plan. Headquartered in Glendale, California, SEGA Gameworks LLC -- http://www.gameworks.com/-- operates 16 video arcades in 11 US states, Canada, Guam, and Kuwait. The Company filed for chapter 11 protection on March 9, 2004 (Bankr. C.D. Calif. Case No. 04-15404). Ron Bender, Esq., at Levene Neale Bender Rankin & Brill represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of $50 million. SENSE TECHNOLOGIES: Balance Sheet Upside-Down by $757K at Aug. 30 ----------------------------------------------------------------- Sense Technologies, Inc., delivered its quarterly report on Form 10-QSB for the quarter ending August 31, 2005, to the Securities and Exchange Commission on October 21, 2005. The Company reported a $114,552 net loss on $10,225 of net revenues for the quarter ending August 31, 2005. At August 30, 2005, the Company's balance sheet shows $940,634 in total assets and $1,697,926 in total debts. At August 30, 2005, the Company's equity deficit narrowed to $757,292 from a $786,455 deficit at February 28, 2005. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?27e Sense Technologies, Inc., holds an exclusive license to manufacture, distribute, market and sublicense world-wide, a patented technology which is used to produce the Guardian Alert backing awareness system for motor vehicles utilizing microwave radar technology, as well as a patented technology which is used to produce the ScopeOut adjustable mirrors system for improved backing awareness. The Company manufactures the Guardian Alert product in Charlotte, NC through an outsourced vendor with extensive experience producing products for auto dealerships, and OEMs. The manufacturer of the ScopeOut products will be approved soon. The Company has established relationships with multiple large dealership groups and after market product distributors. The Company plans to complete development of its next-generation microwave product and continue to increase sales through continued development of new marketing relationships, as well as develop marketing opportunities for the recently-added ScopeOut product line. SHOPKO STORES: Buy-Out Agreement Cues S&P to Retain Low-B Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services said its ratings on Shopko Stores Inc., including the 'BB-' corporate credit rating, remain on CreditWatch with negative implications, where they were placed April 8, 2005, based on its leveraged buyout agreement. On Oct. 18, 2005, Ashwaubenon, Wisconsin-based Shopko signed a new merger agreement with an affiliate of Sun Capital Partners Inc. and terminated its former agreement with an affiliate of Goldner Hawn Johnson & Morrison Inc. The new agreement specifies a purchase price of $29 per share plus the assumption of Shopko's debt, which totaled $275 million at July 30, 2005. Commitment letters have been obtained for all necessary debt financing from Wachovia Bank, National Association, Wachovia Capital Markets LLC, and Ableco Finance LLC and an equity commitment letter has been delivered by Sun Capital Partners IV LP. These financing sources have committed to provide debt and/or equity financing in connection with the merger in an aggregate amount equal to $1.625 billion. This amount, together with Shopko's cash, should be sufficient to fund the acquisition, any amounts due under the existing credit facility, and Shopko's tender offer for its senior notes. "Although the specifics of the new capital structure are not clear at this time, the company is expected to add incremental debt to finance the buyout," said Standard & Poor's credit analyst Mary Lou Burde. Accordingly, debt leverage is expected to rise from its level of 2.1x at January 2005. Meanwhile, Shopko has extended its tender offer to purchase its outstanding $100 million 9.25% senior notes due 2022 to Nov. 10, 2005. As of Oct. 28, 2005, about 94% of the principal amount of the notes had been tendered. The notes indenture was amended Aug. 16, 2005, eliminating substantially all restrictive covenants, including those related to the incurrence of liens and the ability to enter into a merger, consolidation, or asset sale. Consummation of the tender offer is contingent upon completion of the merger, expected to close in December 2005 or January 2006. The transaction is subject to approval by Shopko's shareholders and other customary conditions, including regulatory approvals. If the tender is completed, Standard & Poor's will withdraw its 'B+' senior unsecured note and 'BB-' corporate credit ratings on Shopko. SOUTHWEST HOSPITAL: Confirmation Hearing Set for November 29 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division, approved, on October 19, 2005, Southwest Hospital and Medical Center, Inc.'s First Amended Disclosure Statement explaining its First Amended Joint Liquidating Chapter 11 Plan. The Plan is co-proposed by the Official Committee of Unsecured Creditors. The Debtors' assets were sold on July 5 to Southwest Doctors Group, LLC, for $14,750,000. Part of the sale proceeds was used to pay the DIP lender, DVI Business Credit Corporation and Citizens Trust Bank. Under the Plan, these claims are paid in full: Creditor/Class Claim Amount -------------- ------------ Administrative Expense $1.5M to $4.5M Priority Tax $1.8M to $3.5M Priority Claims $100,000 Medical Capital Holdings $1,000,000 Capitol City $530,000 Fulton County $19,000 Unsecured creditors, owed at least $18 million, are expected to recover not more than 15% of their claims. Convenience claim holders are expected to recover 15% of their claims totaling $165,000. J. Michael Weathers, appointed in August 2005 as estate consultant, will become liquidating agent on the Effective Date. Mr. Weathers will be responsible for liquidating the Debtor's remaining assets for distribution to creditors. He will also be authorized to invest funds, pay taxes and engage and compensate professionals. A hundred and twenty days after the final distribution date, the Liquidating Agent will file a request for the dissolution of the Debtor under the laws of the State of Georgia. A Distribution Reserve will be set up to hold cash for distribution to creditors. The Debtor will fund the Reserve with a) cash in an amount sufficient to pay in full all unimpaired claims; b) cash in an amount sufficient to pay a fraction of the allowed convenience claims; and c) remaining available cash. An Oversight Committee will also be established, on the Effective Date, to provide the Liquidating Agent advice on: a) the timing and amount of distributions under the Plan; b) retention and compensation of professionals; c) pursuit and settlement of claim objections and causes of action. The Oversight Committee members will be: * Fulton Emergency Physicians, LLC, * Productivity Network Innovations, LLC, * RLS Med-Support, Inc. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=051025024445 The Court will convene a hearing on Nov. 29, 2005, to discuss the merits of the Plan. Objections to the Plan, if any, must be filed by Nov. 22. Headquartered in Atlanta, Georgia, Southwest Hospital and Medical Center, Inc., operates a hospital. The Company filed for chapter 11 protection on September 9, 2004 (Bankr. N.D. Ga. Case No. 04-74967). G. Frank Nason, IV, Esq., at Lamberth, Cifelli, Stokes & Stout, PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed both estimated assets and debts of $10 million to $50 million. SOUTHERN INVESTORS: Judge Bohm Confirms Amended Chapter 11 Plan ---------------------------------------------------------------- The Honorable Jeff Bohm of the U.S. Bankruptcy Court for the Southern District of Texas confirmed the First Amended Plan of Reorganization filed by Southern Investors Service Company, Inc. Judge Bohm confirmed the Amended Plan on Oct. 13, 2005. Summary of the Amended Plan On the Effective Date of the Plan, all of the existing prepetition Interests in the Debtor will be cancelled. The Liquidating Debtor will be authorized to issue only 1,000 shares of its common stock at $1.00 par value, to the Plan Agent. The Plan Agent will be the record owner of the New Common Stock of the Liquidating Debtor, which will constitute 100% of the issued and outstanding shares of capital stock of the Liquidating Debtor. The Plan Agent will hold the New Common Stock of the Liquidating Debtor for the benefit of holders of Allowed Claims against the Debtor. The Plan Agent will vote those shares at all appropriate times to elect himself as the sole director and officer of the Liquidating Debtor and to implement the terms and provisions of the Plan. Pursuant to Section 6.2.1 of the Plan, Eric Schumann was approved as the Plan Agent under the Plan. Pursuant to the Plan, Mr. Schumann will receive no compensation for performing the services of the Plan Agent. Treatment of Claims and Interests A) Unimpaired Claims consist of allowed priority unsecured non-tax claims, allowed secured claims of Harris County and other allowed secured Claims. 1) each Allowed Priority Unsecured Non-Tax Claim will be paid in full, in cash from the Available Cash. All Allowed Priority Unsecured Non-Tax Claims that are not due and payable on or before the Effective Date will be paid in the ordinary course of business pursuant to the terms of the Plan; 2) Harris County, Houston, Houston Independent School District, and Cypress-Fairbanks Independent School District claims, collectively called the Harris County Unsecured Claims, will retain their liens, if any, upon the Debtor's real property not abandoned under the Plan. If any property in which Harris County retains liens is sold pursuant to the Plan for an amount greater than the amount of Harris County's claim, Harris County will be entitled to receive, to the extent of its oversecurity, a postpetition interest of 10% per annum on its claim; and 3) Other Allowed Secured Claims, will receive either: 1) Cash in an amount equal to the Allowed Secured Claim, or deferred Cash payments totaling at least the allowed amount of the Allowed Secured Claim, of a value of at least the value of that holder's interest in the Estate's interest in the Collateral securing the Allowed Secured Claim, or 3) all or a portion of the Collateral securing those holder's Allowed Secured Claim, or 4) receive payments or Liens amounting to the indubitable equivalent of the value of those holder's interest in the Estate's interest in the Collateral securing the Allowed Secured Claim, or receive other treatment as that holder will agree upon in writing. B) Impaired Claims consist of General Unsecured Claims and Interests in the Debtor. 1) each holder of an Allowed General Unsecured Claim will receive its Pro Rata share of Available Cash on the Distribution Date; and 2) all Interests will be cancelled on the Effective Date pursuant to Section 6.3.1 of the Plan, and holders of those Interests will not be entitled to receive any Distribution under the Plan. A full-text copy of the First Amended Plan is available for free at http://ResearchArchives.com/t/s?278 The Debtor submitted certain modifications to the Amended Plan on Oct. 12, 2005. The Court ruled that the modifications are immaterial or do not adversely affect any party who has accepted the Plan and the confirmed Amended Plan as modified still meets the requirements of 11 U.S.C. Sections 1122 and 1123. A full-text copy of the modifications to the Amended Plan is available for free at http://ResearchArchives.com/t/s?279 Headquartered in Houston, Texas, Southern Investors Service Company, Inc., manages residential developments and office buildings that are owned by others. The Company filed for chapter 11 protection on April 8, 2005. (Bankr. S.D. Tx. Case No. 05- 35538). Basil A. Umari, Esq., at Andrews & Kurth LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported assets of $2,377,000 and debts totaling $8,607,000. STERLING FINANCIAL: Earns $13.9 Million of Net Income in 3rd Qtr. ----------------------------------------------------------------- Sterling Financial Corporation (Nasdaq: STSA) reported earnings of $13.9 million for the third quarter of 2005. This represented a 9% decrease from earnings of $15.3 million for the prior year's comparable quarter. The decrease was due to the slower than expected growth in loan balances, the impact of the continued flattening of the yield curve, and an increase in operating expenses. Earnings for the nine months ended September 30, 2005 were $45.8 million compared with $40.8 million for the same period in 2004, reflecting a 12% increase year-over-year. The increase for the year-to-date results over the prior year reflects growth in net interest income. Harold B. Gilkey, Sterling's chairman and chief executive officer, said, "During the third quarter, we experienced market pressures that were affecting the financial institutions industry, including the flattening of the yield curve and tighter spreads on loans. Additionally, our earning assets were lower than anticipated, in part because loan pay-offs in the third quarter were much higher than anticipated, primarily in the permanent real estate segments." "Part of the reason for the lower earning assets this quarter relates to Sterling's repositioning the mix of assets in its loan portfolio near the end of the second quarter, when the Bank took advantage of market conditions and sold $336 million in lower yielding residential and commercial loans. Reducing the level of these loans helped avoid a reduction in interest margin and increased our mortgage banking operations income for the second quarter. However, replacement of these earning assets has been slower than anticipated. While loan originations have been strong, draw-downs on construction and commercial lines are well below Sterling's historical levels and pay-offs, as mentioned, have been higher than expected." "While market conditions, and our portfolio repositioning, impacted earnings for the third quarter, Sterling's overall performance, reflects strength in a number of sectors, including percentage growth in deposits and transaction account fee income. The current pipeline of pending loans in business, corporate and construction lending provides confidence for better earning asset growth for the remainder of the year." Mr. Gilkey went on to further comment, "Sterling's employees have been focused on our customers' needs, which is reflected in record loan originations. The 28% annual growth in loan originations indicates that lending opportunities in the Pacific Northwest region continue to be robust, and Sterling's increasing pipeline of loan applications reflects the positive economies throughout our four-state footprint. I am confident, based on conversations with customers and our division managers, that loan draw-downs and loan growth will continue to improve. The improving economy encourages management to expect that draw-downs will return to more normal levels, and at the same time we expect that rising interest rates will slow pre-payments." Lending As of Sept. 30, 2005, Sterling's loans receivable were $4.29 billion, up $106.4 million from the preceding quarter, primarily from strength in construction lending. Sterling's capacity in commercial and industrial lending, as well as construction and consumer lending, is ideally suited for opportunities inherent in the region's improving economies. Credit Quality As of Sept. 30, 2005, total nonperforming assets were $11.6 million, or 0.17% of total assets. This compares favorably with the third quarter 2004 level of $16.9 million, or 0.25% of total assets. The improvement in nonperforming assets reflects strength in the regional economy and Sterling's continued high lending standards. Balance Sheet and Capital Management At Sept. 30, 2005, Sterling's total assets were $6.80 billion, an increase from the preceding quarter's total assets of $6.74 billion, primarily reflecting loan growth. Equity to assets was 7.35% and tangible shareholders' equity to tangible assets was 5.54% at September 30, 2005, reflecting year-over-year asset growth. As of Sept. 30, 2005, Sterling's book value per share was $14.39 compared to $14.54 at June 30, 2005. This decrease in book value reflects an increase in the unrealized loss on our investment portfolio. The Bank's risk- based capital ratios continued to exceed the "well-capitalized" requirements. Goodwill Litigation In May 1990, Sterling sued the U.S. Government with respect to the loss of the goodwill treatment and other matters relating to Sterling's past acquisitions of troubled thrift institutions. In the Goodwill Litigation, Sterling seeks damages for, among other things, breach of contract and deprivation of property without just compensation. In September 2002, the U.S. Court of Federal Claims granted Sterling Savings Bank's motion for summary judgment as to liability on its contract claim, holding that the U.S. Government owed contractual obligations to Sterling with respect to the company's acquisition of three failing regional thrifts during the 1980s and had breached its contracts with Sterling. On Mar. 31, 2005, a hearing was held in the U.S. Court of Federal Claims on the U.S. Government's motion to reconsider part of the September 2002 liability judgment. Sterling opposed the motion. Sterling is waiting for a decision on the motion and for a trial date to be set to determine what amount, if any, the U.S. Government must pay in damages for its breach. The timing and ultimate outcome of the motion for reconsideration and the Goodwill Litigation cannot be predicted with certainty. Because of the effort required to bring the case to conclusion, Sterling will likely continue to incur legal expenses as the case progresses. Outlook Commenting on the third quarter of 2005, Mr. Gilkey stated, "Although earnings growth for the second half of 2005 has been under pressure, I believe in the systems we have in place and in the ability of our employees to rise to challenges, and I am encouraged by the fact that many segments of our business plan are on track as we continue to develop Sterling's commercial bank capabilities. While I remain confident in Sterling's ability to perform well, in the near term, we are likely to continue to be somewhat impacted by market conditions." Mr. Gilkey continued, "Those segments of Sterling's business that are within our control are meeting or exceeding our expectations. For example, I am pleased to see our loan originations at record levels, strong growth in deposit balances and continued success in meeting our customers' needs, while at the same time providing opportunities for generation of fee income. The strength in these key fundamentals, in addition to the backlog of business in our lending portfolio, reflects that Sterling remains a leader in regional community banking." Sterling Financial Corporation of Spokane, Washington is a bank holding company, which owns Sterling Savings Bank. Sterling Savings Bank is a Washington State-chartered, federally insured commercial bank, which opened in April 1983 as a stock savings and loan association. Sterling Savings Bank, based in Spokane, Washington, has financial service centers throughout Washington, Oregon, Idaho and Montana. Through Sterling Saving Bank's wholly owned subsidiaries, Action Mortgage Company and INTERVEST-Mortgage Investment Company, it operates loan production offices in Washington, Oregon, Idaho, Montana, Arizona and California. Sterling Savings Bank's subsidiary Harbor Financial Services provides non-bank investments, including mutual funds, variable annuities and tax-deferred annuities and other investment products through regional representatives throughout Sterling Savings Bank's branch network. * * * As reported in the Troubled Company Reporter on June 22, 2005, Fitch Ratings has revised the Rating Outlook for Sterling Financial Corporation and Sterling Savings Bank to Positive from Stable. The Outlook change reflects the continued progress that STSA has made improving both its franchise as well as its balance sheet structure. Through acquisitions, as well as organic growth, STSA has created a Pacific Northwest franchise with approximately $7.0 billion in assets and 138 branches in four states. Additionally, the company has been transforming itself from a thrift to a more community banking oriented entity and, highlighting this transformation, has recently applied to change to a Washington state-chartered commercial bank charter. An improving level of earnings, strong asset quality, and stable levels of capitalization are the drivers of Fitch's Outlook revision. The successful continuation of these trends and the additional accumulation of capital, specifically tangible common equity, remains an opportunity for a change in ratings. These ratings are affirmed by Fitch: Sterling Financial Corporation -- Long-term issuer 'BB+'; -- Short-term issuer 'B'; -- Individual rating 'C'; -- Support '5'; -- Outlook to Positive. Sterling Savings Bank -- Long-term deposit 'BBB-'; -- Short-term deposit 'F3'; -- Long-term issuer 'BB+'; -- Short-term issuer 'B'; -- Individual 'C'; -- Support '5'; -- Outlook to Positive. STEWART ENTERPRISES: Files Partially Completed Financials --------------------------------------------------------- Stewart Enterprises, Inc. (Nasdaq NMS: STEI) filed with the Securities and Exchange Commission a partially complete Form 10-Q for the quarter ended July 31, 2005 and a partially complete Form 10-K/A for the year ended Oct. 31, 2004. As reported in the Troubled Company Reporter on Oct. 20, 2005, the Company considered filing with the SEC by Oct. 24, 2005, its Form 10-K/A for the year ended Oct. 31, 2004, and its Form 10-Q for the quarter ended July 31, 2005, without the effects of any potential adjustments that may result from the completion of the deferred revenue project, and accordingly, these documents would be filed without the auditor's opinion, and without the auditor's review being completed. Partial Filings The Company filed a Form 10-Q for the quarter ended July 31, 2005, which is not complete because it is being filed without the effects of any potential adjustments that may result from the completion of its deferred revenue project and without the effects of specified immaterial adjustments described in the filing. Accordingly, it is also being filed without the independent registered public accounting firm's review being completed and without the certifications of the Company's Chief Executive Officer and Chief Financial Officer. The Company also filed a Form 10-K/A Amendment No. 2 for the year ended Oct. 31, 2004, which is also not complete because it is being filed without the effects of any potential adjustments that may result from the completion of the deferred revenue project, without the effects of specified immaterial adjustments described in the filing and without a cumulative restatement of shareholders' equity in fiscal year 2000 of approximately $500,000 related to the accounting for certain leases for periods prior to 2000. Accordingly, it is also being filed without the opinion of the Company's independent registered public accounting firm and without the certifications of the Company's Chief Executive Officer and Chief Financial Officer. The Company believes that, except for the results of the deferred revenue project, there should be no material outstanding issues on these reports. The Company has decided to make these filings now because it believes that the information in these reports would be meaningful to its security holders. Form 10-K/A Amendment No. 2 The Form 10-K/A Amendment No. 2 for the year ended Oct. 31, 2004 is being filed to show the effect of the amendment and restatement of the financial statements included in the Company's original Form 10-K filing, as previously amended, for the fiscal year ended October 31, 2004, and to make related changes in the disclosures throughout the 2004 Form 10-K, primarily in order to: (1) reflect an increase in the number of the Company's operating and reportable segments, and (2) to reflect a non-cash goodwill impairment charge in fiscal year 2002 and eliminate the goodwill impairment charge in fiscal year 2003. These changes are being made in response to comments raised by the Staff of the Securities and Exchange Commission during their review of the 2004 Form 10-K and subsequent filings. Possible NASDAQ Delisting Due to the deferred revenue project and other immaterial adjustments described in the filings, the Company has been unable to file its complete Form 10-Q for the quarter ended July 31, 2005. The Company has been in discussions with NASDAQ, where its Class A common stock is traded, and believes NASDAQ may find that the Company's inability to timely file a complete Form 10-Q for the quarter ended July 31, 2005 constitutes a failure to comply with the requirements for continued listing. If the Company receives a notice of delisting proceedings from NASDAQ, it plans to seek a hearing before NASDAQ's Listing Qualifications Panel to request an extension of time to complete the filing and thereby regain compliance with the listing standards; the delisting would be stayed pending a final determination by NASDAQ. The Company is optimistic that its request would be granted, although no assurances can be given. Delisting of the Company's Class A common stock from NASDAQ could have a material adverse effect on the trading price of and market for the Class A common stock and on the Company's ability to raise capital. In addition, during any period when the Company is not current with its SEC reports, neither its affiliates nor any person that purchased shares in a private offering during the preceding two years will be able to sell their shares in public markets pursuant to Rule 144 under the Securities Act of 1933. Also, the Company's registration statements on Form S-8 regarding sales of its securities through its employee benefit plans will not be available and the Company will be suspending sales under these registration statements until it is current in its SEC filings. Deferred Revenue Project In connection with the Company's internal control assessment under Section 404 of Sarbanes-Oxley, the Company undertook a project earlier this year to verify the balances in deferred preneed cemetery revenue and deferred preneed funeral revenue by physically reviewing certain of the preneed cemetery and funeral service and merchandise contracts. While the Company has made significant progress, it has not completed its overall review and reconciliation. The Company had anticipated completing its review prior to filing its Annual Report on Form 10-K for fiscal year 2005. Although the progress of the project has been disrupted by Hurricane Katrina, the Company still plans to try to complete the project in time to file its Annual Report on Form 10-K for fiscal year 2005 by its due date. Management believes that the deferred revenue project could result in a restatement of the Company's prior period financial statements. Management believes that to the extent there is an adjustment, a significant portion of that adjustment would relate to the cumulative effect of adopting Staff Accounting Bulletin 101 on Nov. 1, 2000 and could impact reported earnings for periods subsequent to the implementation of SAB No. 101. Management believes that the adjustment, if any, would result in a non-cash adjustment to deferred revenue and to shareholders' equity in an amount that should not exceed $60 million and could be materially less than that amount. In connection with the deferred revenue project, the Company is also evaluating whether there could be a material weakness in internal control related to deferred preneed revenue. Once the deferred revenue project is completed and the Company's independent registered public accounting firm has completed its audit of the Form 10-K/A and its review of the Form 10-Q, the Company will amend these filings to include the report of its independent registered public accounting firm in its Form 10-K/A, to note the completion of the Form 10-Q, to include the certifications of the Company's Chief Executive Officer and Chief Financial Officer, and to make any necessary adjustments as a result of the deferred revenue project. Management's estimate of the results of the deferred revenue project is a forward-looking statement that is subject to uncertainties. Important factors that could cause actual results to differ materially from the estimate include whether the Company uncovers unanticipated issues during its review of the remaining preneed contracts. In connection with the Company's internal control assessment under Section 404 of Sarbanes-Oxley, the Company undertook a project earlier this year to verify the balances in deferred preneed cemetery revenue and deferred preneed funeral revenue by physically reviewing certain of the preneed cemetery and funeral service and merchandise contracts. Founded in 1910, Stewart Enterprises is the third largest provider of products and services in the death care industry in the United States, currently owning and operating 231 funeral homes and 144 cemeteries. Through its subsidiaries, the Company provides a complete range of funeral merchandise and services, along with cemetery property, merchandise and services, both at the time of need and on a preneed basis. * * * Waiver Talks with Lenders & Bondholders As reported in the Troubled Company Reporter on Sept. 14, 2005, the Company has initiated contact with its lead lenders under the credit facility and expects to seek, and receive, waivers of any defaults in the near future. Additionally, the indenture governing the Company's 6-1/4% senior notes due 2013 requires the Company to furnish to the trustee the information required by Form 10-Q within the time periods required by the SEC's rules and regulations, and an event of default would occur under the indenture if the Company failed to provide that information within 30 days after receipt of written notice by the trustee or the holders of at least 25% of the principal amount outstanding. SUBURBAN PROPANE: S&P Pares Senior Unsecured Rating to B- from B ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on retail propane and fuel oil distributor Suburban Propane Partners L.P. to 'B+' from 'BB-' and removed the company's ratings from CreditWatch with negative implications, where they were placed on Sept. 19, 2005. The outlook is stable. Standard & Poor's also lowered its senior unsecured rating on Suburban to 'B-' from 'B'. Whippany, New Jersey-based Suburban had $563.7 million of debt as of June 25, 2005. The rating action reflects Suburban's weak operating and financial performance in fiscal 2005 at the partnership's fuel oil segment, primarily due to spikes in commodity prices and an ineffective hedging strategy for the partnership's fuel oil customer ceiling program. Although this price cap program has since been terminated and financial performance in the fuel oil segment could return to the more profitable levels realized in 2004, concerns remain regarding the company's ability to fully bounce back from the challenges faced last winter. Of particular concern is that financial performance could suffer during this year's winter heating season, given extraordinarily high commodity prices and the possibility of atypical weather. "The stable outlook on Suburban reflects the expectation of improved financial performance during this winter heating season," said Standard & Poor's credit analyst Kevin L. Beicke. "Ratings stability is also dependent on the company establishing a good operating record with its riskier fuel oil segment, and if credit metrics continue to deteriorate, an outlook revision to negative could occur," he continued. SYSTEMS EVOLUTION: Independent Auditor Raises Going Concern Doubt ----------------------------------------------------------------- Malone & Bailey, PC, expressed substantial doubt about Systems Evolution Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended May 31, 2005, 2004 and 2003. The auditing firm points to the Company's successive losses in the last three fiscal years. The Company's previous independent auditor, Blevins, Bork & Associates, LLP, also expressed substantial doubt about the Company's ability to continue as a going concern based on the Company's losses and $269,966 working capital deficiency at May 31, 2004. Fiscal 2005 Results Systems Evolution has had minimal revenues and has not been profitable in the last three fiscal years. In its Form 10-KSB submitted with the Securities and Exchange Commission, the Company reports a $3,824,091 net loss in fiscal 2005 compared to a $2,733,687 net loss in fiscal 2004. Management says the sharp increase in the net loss was due to the costs associated with paying financial consultants for raising capital and the costs associated with the acquisition of CMS Technology Services LP, Next Hire Consultants Inc., and Duration Software Inc. The Company's balance sheet showed $8,200,254 of assets at May 31, 2005, and liabilities totaling $1,523,358. The Company estimates that it requires approximately $1 million in additional capital over the next 15 months. About Systems Evolution Based in Houston, Texas, Systems Evolution Inc. (OTC:SEVI) -- http://www.systemsevolution.com/-- is a professional service organization providing computer software development services, computer network support, and contract staff for its clients. The Company's largest client is the State of Texas government. TARGUS GROUP: S&P Junks $150 Million Senior Subordinated Notes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to laptop case and computer accessory provider Targus Group International Inc. At the same time, Standard & Poor's assigned its 'B' rating and its '2' recovery rating to the company's proposed $205 million senior secured credit facility, indicating that lenders can expect substantial recovery of principal in the event of a payment default or bankruptcy. Standard & Poor's also assigned a 'CCC+' rating to Targus' proposed $150 million senior subordinated note offering due 2013. All ratings are based on preliminary offering statements and are subject to review upon final documentation. The outlook is stable. Standard & Poor's estimates that Anaheim, California-based Targus will have about $315 million of total debt outstanding -- excluding operating leases -- upon closing of the transaction. Fenway Partners, the financial sponsor, will acquire Targus for $422 million, including fees and expenses. Proceeds from the new credit facility and subordinated note issuance will be used to finance the acquisition of the company. Fenway will also make a $106.7 million common equity contribution to help fund the transaction. TKO SPORTS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: TKO Sports Group USA Limited aka TKO Sports Group, Inc. 6100 West By Northwest Boulevard, Suite 160 Houston, Texas 77040 Bankruptcy Case No.: 05-48509 Type of Business: The Debtor manufactures sporting goods and fitness equipment. See http://www.strengthtko.com/ Chapter 11 Petition Date: October 11, 2005 Court: Southern District of Texas (Houston) Judge: Marvin Isgur Debtor's Counsel: Edward L. Rothberg, Esq. Weycer, Kaplan, Pulaski & Zuber, P.C. 11 East Greenway Plaza, Ste 1400 Houston, Texas 77046 Tel: (713) 961-9045 Fax: (713) 961-5341 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Qingdao Inred Sport Goods Trade $435,286 Liu Ting Xin Xing Jian Cai Ind. Cheng Yang District Qingdao, Shangdong 266108 CHINA Olympic International Limited Trade $353,490 Suite 1505-6, Albion Plaza Granville Road Tsimshatsui, Kowloon HONG KONG Orbiter International Trade $340,042 39, Lane 357 Yhi Ming Road Sec. 2 Tai-Li City, Taichung, TAIWAN Sakurai-Sports K-Pro Ltd. Trade $321,884 Hangzhou Amir Sports Goods Co. Trade $275,089 C&M Holdings Ltd. Trade $122,028 Sunex Sports Co., Ltd. Trade $121,779 TIAA Trade $86,720 Starpak Martial Arts Pvt. Ltd. Trade $80,850 Central Transport Int'l. Inc. Trade $59,969 Bayou City Packaging Corp. Trade $54,390 Geeng Wei Tech (Suzhou) Co. Ltd. Trade $51,510 Iron Body International Ltd. Trade $39,158 Taffeta Inc. Trade $38,168 Hendee Enterprises Trade $37,442 Universal Sports Industries Trade $36,103 Landstar Ligon Trade $35,808 Jinwei Plastic Mold Hardware Trade $33,887 Bro-Tex, Inc. Trade $31,891 Malin NJ & Associates LP Trade $30,767 TRUDY DEVELOPMENT: Has to Make Land Purchase Decision by Nov. 15 ---------------------------------------------------------------- The Honorable Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York denied Voyager Boulevard Investments, LLC, and South Boulevard Investments, Inc.'s pitch for the dismissal of Trudy Development LLC's chapter 11 case. Voyager and South Boulevard entered into two identical Purchase Agreements with the Debtor on Nov. 23, 2004. Those agreements, containing time of the essence provisions, require the Debtor to buy a contiguous and undeveloped 55-acre parcel of property in Clark County, Nevada, for a purchase price of approximately $83 million. The two Purchase Agreements originally provided for a closing date of May 15, 2005, which by later amendments was extended to Sept. 16, 2005 -- the date the Debtor filed for bankruptcy. To protect the Sellers' interests, the Court ordered the Debtor to: a) pay $110,000 to the sellers which will be held in escrow by their counsel; and b) decide whether to assume or reject the purchase agreements before 10:00 a.m. of November 15. Headquartered in New York City, New York, Trudy Development LLC, aka Roxanne Development LLC, filed for chapter 11 protection on Sept. 16, 2005 (Bankr. S.D.N.Y Case No. 05-18135). Robert R. Leinwand, Esq., at Robinson Brog Leinwand Greene Genovese represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $83,402,206 and total debts of $3,175,000. UAL CORP: Files First Amended Plan & Disclosure Statement --------------------------------------------------------- UAL Corporation and its debtor-affiliates delivered their First Amended Plan and Disclosure Statement to the Court on Oct. 20, 2005, following approval of its disclosure statement by the U.S. Bankruptcy Court for the Northern District of Illinois. According to Frederic F. Brace, UAL Corporation executive vice president and chief financial officer, these classes of claims are estimated to recover 4% to 8% of face value under the Amended Plan: Class Description ----- ----------- 1D Unsecured Convenience Class Claims 1E-1 Unsecured Retained Aircraft Claims 1E-2 Unsecured Rejected Aircraft Claims 1E-3 Other Unsecured Claims 2D-1 Unsecured Convenience Class Claims 2D-2 Unsecured Retiree Convenience Class Claims 2E-1 Unsecured Retained Aircraft Claims 2E-2 Unsecured Rejected Aircraft Claims 2E-3 Unsecured PBGC Claims 2E-4 Unsecured Chicago Municipal Bond Claims 2E-5 Unsecured Public Debt Aircraft Claims 2E-6 Other Unsecured Claims 3D Unsecured Convenience Class Claims 3E-1 Unsecured Retained Aircraft Claims 3E-2 Unsecured Rejected Aircraft Claims 3E-3 Other Unsecured Claims 4D through 28D Unsecured Convenience Class Claims 4E through 28E Unsecured Claims The 4% to 8% estimated recovery range for most of the Unsecured Claim Holders is based on various assumptions, including: (a) Unsecured Claims of $20,000,000,000 to $35,000,000,000; and (b) an equity value of the Debtors of $1,900,000,000. New UAL Securities On the Effective Date, Reorganized UAL will issue up to 125,000,000 shares of New UAL Common Stock, to be divided in this manner: (1) 106,250,000 shares as the Unsecured Distribution and the Employee Distribution; (2) 10,00,000 shares, or equivalent options, pursuant to the Management Equity Incentive Plan and the Director Equity Incentive Plan; and (3) 8,750,000 shares reserved for future distribution pursuant to the Management Equity Incentive Plan and the Director Equity Incentive Plan. In addition, Reorganized UAL will issue: * one share of Class Pilot MEC Junior Preferred Stock to the Air Line Pilots Association; and * one share of Class IAM Junior Preferred Stock to the International Association of Machinists and Aerospace Workers. Chicago Municipal Bond Claims Under the First Amended Plan, Reorganized UAL will issue New UAL ORD Settlement Bonds for distribution to Holders of Unsecured Chicago Municipal Bond Claims in the amounts, and pursuant to the terms, set forth in the Chicago Municipal Bond Settlement Order and the Chicago Municipal Bond Settlement Agreement. The New UAL ORD Settlement Bond documents will be reasonably acceptable to Stark Investment LP, and will be distributed to the Trustees for the Chicago Municipal Bonds, for sale and distribution to the Holders of Unsecured Chicago Municipal Bond Claims, in accordance with the elections made by the Holders on their Ballots and in accordance with the terms of the Chicago Municipal Bond Settlement Agreement. The Trustees will receive for distribution to the Holders that portion of the New UAL ORD Settlement Bonds having a principal amount of $144,453,000, in accordance with Sections 3(a)(ii), b(ii), and (c)(ii) of the Chicago Municipal Bond Settlement Agreement, in these amounts: (a) The Trustees for the Series 2001A-1 Bonds and the Series 2001A-2 Bonds will receive $48,666,000 in principal amount; (b) The Trustees for the Series 2000A Bonds will receive $9,216,000 in principal amount; and (c) The Trustees for the Series 2001B Bonds, the Series 2001C Bonds, the Series 1999A Bonds, and the Series 1999B Bonds will receive $86,570,000 in principal amount. The electing Holders of the Unsecured Chicago Municipal Bond Claims will purchase the remaining portion of the New UAL ORD Settlement Bonds for a cash purchase price equal to $5,193,114 pursuant to a certain "Note Purchase," as defined in the Chicago Municipal Bond Settlement Agreement. New UAL Convertible Employee Notes Reorganized UAL will issue New UAL Convertible Employee Notes for distribution to the trusts or other entities designated by ALPA, Professional Airline Flight Control Association, Transport Workers Union of America, AFL-CIO, Aircraft Mechanics Fraternal Association, and IAM, in these amounts and pursuant to the terms set forth in the ALPA Restructuring Agreement, the PAFCA Restructuring Agreement, the TWU Restructuring Agreement, the AMFA Restructuring Agreement, and the IAM Restructuring Agreement: (a) $550,000,000 in principal amount will be distributed to the ALPA designee; (b) $24,000 in principal amount will be distributed to the TWU designee; (c) $400,000 in principal amount will be distributed to the PAFCA designee; (d) $40,000,000 in principal amount will be distributed to the AMFA designee; (e) $60,000,000 in principal amount will be distributed to the IAM designee; and (f) $56,000,000 in principal amount will be distributed to the SAM designee. Mr. Brace says the New UAL Convertible Employee Notes will be issued in denominations of $1,000 and will be issued no later than 180 days following the Effective Date. New UAL PBGC Securities Pursuant to the Debtors' Settlement Agreement with the Pension Benefit Guaranty Corporation, Reorganized UAL will distribute the New UAL PBGC Securities to the PBGC. Reorganized UAL will issue the New UAL Senior Notes and the New UAL Convertible Preferred Stock no later than the first Distribution Date. The New UAL Contingent Senior Notes will be issued no later than 45 days following the end of any given fiscal year, starting with the fiscal year ending December 31, 2009, and ending with the fiscal year ending December 31, 2017, in which there is a "Trigger Date," as defined in the PBGC Settlement Agreement. Retiree Medical Benefits The Debtors' First Amended Plan states that the Debtors and all of the Debtors' Unions negotiated and reached two agreements, the "Retiree Coalition Agreement" and the "AMFA Retiree Agreement." The Agreements explain how retiree medical benefits would be changed for the Debtors' retirees retiring prior to July 1, 2003. The Retiree Coalition Agreement covers all retirees except those who retired from classifications currently represented by AMFA. The AMFA Retiree Agreement covers AMFA retirees only. The Court approved both Agreements on June 14, 2004. According to Mr. Brace, copies of the Agreements are found in the Plan Supplement filed by the Debtors. Retirees also have previously received descriptions of the changes made by the two Agreements in the open enrollment materials distributed by the Debtors after the agreements were executed. The First Amended Plan proposes that the Debtors will provide retiree benefits post-Confirmation in accordance with the Retiree Coalition Agreement and the AMFA Retiree Agreement. As a result of the changes to the retiree benefits, each Affected Retiree -- those individuals who retired prior to July 1, 2003 -- holds an Unsecured Claim against the Debtors, which the Debtors have defined as the "Section 1114 Claims." Section 1114 Claims are, in turn, a subset of Unsecured Retiree Convenience Class Claims. Affected Retirees who hold Section 1114 Claims are entitled to vote to accept or reject the Plan and have two options prior to the Voting Deadline on how their retiree benefit Claims will be treated under the Plan: Affected Retirees will receive Unsecured Retiree Convenience Class treatment for their Section 1114 Claims unless they elect on their Ballots to opt out of that Class in favor of Class 2E-6 Other Unsecured Claims. If Affected Retirees do not check the box on the Ballot opting out of the Unsecured Retiree Convenience Class, their Section 1114 Claims will be deemed to be Allowed in the amount reflected on the Debtors' books and records, regardless of whether or not the Affected Retirees filed a timely Proof of Claim for the benefits. Section 1114 Claims The Debtors have computed the Section 1114 Claims by calculating the estimated decrease in the present value of retiree benefits due to the Retiree Coalition Agreement and the AMFA Retiree Agreement, as of October 1, 2004. The Debtors applied a 6.25% discount rate. The aggregate Section 1114 Claim amounts that the Debtors have calculated for each of the Unions and SAM compared to the aggregate Section 1114 Claim amounts for each employee group filed in a Proof of Claim by its authorized representative are: Debtors' Authorized Group Calculations Representative's Calculations ----- -------------- ----------------------------- AFA $99,478,325 $74,392,000 AMFA 199,910,313 No Claim Filed IAM 143,785,890 155,177,000 PAFCA 930,786 1,571,000 Retired Pilots 131,376,775 98,248,000 SAM 73,417,959 72,524,000 TWU 101,508 94,000 Other Provisions The First Amended Plan notes that the 2005 ALPA Restructuring Agreement provides that "[d]istribution mechanics, eligibility and allocation among such pilots [will] be reasonably determined by [ALPA]." At present, Mr. Brace says, ALPA has not informed the Debtors on how it will allocate the consideration received under the 2005 ALPA Restructuring Agreement. Mr. Brace further asserts that none of the Plan provisions violate the PBGC Settlement Agreement, and the Debtors reserve their rights in this regard. A full-text copy of the Debtors' First Amended Plan is available for free at: http://bankrupt.com/misc/UAL_1stAmended_Plan.pdf A full-text copy of the Debtors' First Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/UAL_1stAmended_Disc_Stmt.pdf 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. 105; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Gets Court Authority to Enter Into $3-Bil Exit Financing ------------------------------------------------------------------ As reported in the Troubled Company Reporter on Oct. 12, 2005, UAL Corporation and its debtor-affiliates asked the U.S. Bankruptcy Court for the Northern District of Illinois for authority to enter into a commitment letter provided by JPMorgan Chase Bank, N.A. and Citicorp USA, Inc., for a $3,000,000,000 exit financing facility. Chicago Objects The City of Chicago objects to the $3,000,000,000 Exit Financing Facility to the extent that it modifies Chicago's rights to the airport premises, facilities and operations at O'Hare International Airport and Midway Airport. Chicago wants to make sure that the Exit Facility does not encumber or transfer any assets without its consent. Mara S. Georges, Esq., the chief attorney for the City of Chicago, notes that Chicago and United Air Lines, Inc., are parties to Airport Agreements related to O'Hare and Midway. Since the Airport Agreements require Chicago's consent to encumbrances and transfers relating to the airport premises, the Court should not allow the Exit Facility to modify Chicago's rights in this regard, Ms. Georges asserts. Debtors Respond David A. Agay, Esq., at Kirkland & Ellis, in Chicago, Illinois, argues that Chicago's concerns are "premature and unfounded." The terms of the Exit Facility are not before the Court. The Debtors want to enter into the Commitment Letter and effectuate the Exit Facility upon confirmation of the Reorganization Plan, and emergence from Chapter 11. Thus, Chicago can raise its objections at the Confirmation Hearing. Mr. Agay recounts that Chicago raised a similar objection to the DIP Financing Facility. The DIP Financing Objection was resolved by insulating certain collateral from the relevant lien. Likewise, the Debtors and the Exit Lenders intend to similarly exclude certain collateral from the Exit Facility. If the Debtors are precluded from transferring or granting a lien on certain assets, and no agreement with Chicago is reached, the Debtors will create the requisite carve-out in the Exit Facility. Mr. Agay asserts that the Commitment Letter addresses Chicago's concerns by insulating the relevant collateral from the Exit Lenders. Judge Wedoff authorizes the Debtors to enter into the Commitment Letter and Exit Facility and pay related fees. The Debtors have resolved the City of Chicago's objection. 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. 105; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Judge Wedoff Approves Plan Solicitation Procedures ------------------------------------------------------------ The Hon. Eugene Wedoff of the U.S. Bankruptcy Court for the Northern District of Illinois approved UAL Corporation and its debtor-affiliates' solicitation procedures designed and tailored to effectively solicit acceptances or rejections of the Plan of Reorganization. Solicitation Agent According to James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, the Debtors' Solicitation Agent, Poorman- Douglas Corporation, will assist the Debtors in: (1) distributing Solicitation Documents; (2) receiving, tabulating and reporting on Ballots; (3) responding to inquiries relating to the Plan, the Disclosure Statement, the Ballots, the Master Ballots, the Solicitation Procedures and all other Solicitation Documents and related matters; (4) soliciting votes on the Plan; and (5) if required, contacting creditors and equity holders regarding the Plan. Record Date The Debtors ask the Court to establish October 11, 2005, as the Record Date for determining: (a) the creditors and interest holders that are entitled to receive the Solicitation Documents; (b) the creditors and interest holders entitled to vote on the Plan; and (c) whether claims or interests have been properly transferred so that the assignee can vote as the holder of the claim or equity interest. Mr. Sprayregen explains that when the Record Date is established, the Debtors and Poorman-Douglas will contact the registrars of the Debtors' public debentures and other securities and the applicable Indenture Trustees, to construct an ownership list of holders of the Debtors' Securities, as of the Record Date. Voting Deadline For votes to be counted, all Ballots and Master Ballots must be properly executed, completed and delivered by December 1, 2005, 4:00 p.m., Pacific time. Solicitation Documents Within six to eight days after approval of the Disclosure Statement, the Debtors will distribute the Solicitation Documents to parties entitled to vote on the Plan. The Debtors will serve the Solicitation Documents on the Core Group and all parties-in- interest on the 2002 List as of the Record Date. The Debtors will not serve the Plan Supplement, which may be obtained from the Debtors' Web site or Poorman-Douglas. For creditors with more than one claim in a Class, the Debtors intend to send only one set of Solicitation Documents and one Ballot for each Class, to avoid duplication and reduce expenses. Mr. Sprayregen notes that the Plan, Disclosure Statement and related documents comprise over 1,000 pages. As a result, the Debtors will make all materials available on the Internet. Use of alternative methods of distribution is projected to save the Debtors' estates over $500,000. Ballot Form Votes to accept or reject the Plan must be cast by appropriate Ballot or Master Ballot. The Debtors will prepare and customize Ballots for all classes of claims and interests entitled to vote on the Plan. The Ballots and Master Ballots comply with Rule 3018(c) of the Federal Rules of Bankruptcy Procedure, but have been modified for the Debtors' Chapter 11 Cases. The Debtors seek Court permission to distribute the Ballots and Master Ballots to the impaired classes that are entitled to vote on the Plan. Approvals (1) Plan Summary As an aid to voting creditors, the Debtors will distribute a Plan Summary. The Plan Summary may be modified to track and incorporate material changes to the Plan prior to the distribution of the Solicitation Documents. (2) Solicitation Notice The Solicitation Documents include the notice to creditors and equity holders of the Objection Deadline and the Confirmation Hearing. The Debtors request approval of the Solicitation Notice, which includes: (a) the Plan Objection Deadline; (b) the Plan Confirmation Hearing date and time; (c) the Voting Deadline; (d) the Record Date; (e) the temporary allowance of Claims procedures; and (f) a disclosure on the injunction and third-party release provisions in the Plan. The Solicitation Notice will instruct creditors and interested parties on how they may view or obtain the Disclosure Statement, Plan, Plan Supplement, Solicitation Procedures Order and other Solicitation Documents. (3) Non-Voting Status Notices The Debtors ask the Court to waive the requirement to send Solicitation Documents to creditors and equity holders who are not entitled to vote on the Plan unless they also have impaired claims or equity interests pending against the Debtors on the Record Date. These creditors and equity holders are deemed to either accept or reject the Plan. The Debtors will send these creditors and equity holders both a Solicitation Notice and one of these notices: -- a notice of non-voting status with respect to unimpaired classes deemed to accept the Plan, and unclassified classes; or -- a notice of non-voting status with respect to impaired classes deemed to reject the Plan. (4) Causes of Action Notice and Counterparties to Executory Contracts and Unexpired Leases Notice. The parties related to "Retained Causes of Action" and counterparties to the Debtors' executory contracts and unexpired leases will receive the Solicitation Notice and one or both of these notices: -- a notice to parties to "Retained Causes of Action"; or -- a notice to counterparties to executory contracts and unexpired leases. If the parties have claims or equity interests pending against the Debtors as of the Record Date, they will receive the Solicitation Documents. Voting and Tabulation Procedures (1) Aircraft Debt Tabulation Procedures The Debtors ask the Court to approve voting and tabulation procedures for impaired classes that will vote on the Plan. With respect to both public and private Aircraft Debt, the relevant Indenture Trustees acting on behalf of Beneficial Holders, will: (a) cast a Ballot voting on the Plan as directed by the requisite Beneficial Holders; or (b) if a vote is not cast, opt to accept or reject the releases in the Plan as directed by the requisite Beneficial Holders; If the Court orders the Beneficial Holders to vote instead of the Aircraft Indenture Trustees, the Beneficial Holders will vote pursuant to the Solicitation Procedures for public securities or other procedures established by the Debtors. Since the Debtors' Aircraft Debt is disparate and complex, it may be difficult to obtain information that will enable the Beneficial Holders to vote directly, Mr. Sprayregen says. The Debtors will create a procedure for all Aircraft Debt whereby the relevant Aircraft Indenture Trustee will vote the Allowed Claims after obtaining necessary consents. (2) Beneficial Holder Tabulation Procedures Certain Beneficial Holders of claims or equity interests derived from publicly traded Securities, which have not been satisfied prior to the Record Date, will vote on the Plan. These types of claims and interests require additional tabulation rules, says Mr. Sprayregen. The records of the Indenture Trustees may reflect brokers, dealers, commercial banks, trust companies or other Nominees rather than the Beneficial Holders. Accordingly, the Tabulation Procedures for holders of Aircraft Debt should also apply to Beneficial Holders. Nominees will disseminate Solicitation Documents and other notices to their Beneficial Holders. Temporary Allowance of Claims for Voting If an objection to a Claim or Interest is pending on the Record Date, the Holder will receive a Solicitation Notice and a notice of non-voting status with respect to disputed claims, in lieu of a Ballot. The Disputed Claim Notice will inform the recipient that its Claim or Interest has been objected to and is not entitled to vote, absent: (1) a Court order temporarily allowing the Disputed Claim or Interest for voting purposes, after notice and a hearing; (2) a resolution between the Holder and the Debtors of the objection that allows the Holder to vote its claim or interest in an agreed amount; or (3) a withdrawal of the pending objection to the Disputed Claim or Disputed Interest by the Debtors. Within two business days after resolution, Poorman-Douglas will send a Ballot and a pre-addressed, postage pre-paid envelope to the Holder of the Disputed Claim or Disputed Interest. The Ballot must be returned by the Voting Deadline, unless the Deadline is extended for the creditor. If the Debtors file an objection to a Claim or Interest after the Record Date, the Ballot for the Claim or Interest holder will not be counted unless a resolution is reached by the Confirmation Hearing. Mr. Sprayregen maintains that the solicitation and tabulation procedures, as proposed: * are cost-effective; * provide adequate notice and an opportunity to be heard; and * are in the best interests of the Debtors' estates, their creditors and other parties-in-interest. 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. 105; Bankruptcy Creditors' Service, Inc., 215/945-7000) USGEN NEW: Wants Court to Compel Ocean State to Pay $593,000 ------------------------------------------------------------ On June 28, 2002, USGen New England, Inc., and Ocean State Power and Ocean State Power II entered into an Equalization Agreement that governs the terms of payments to be made by Ocean State to USGen relating to certain negotiated rate agreements between USGen and the Tennessee Gas Pipeline Company. The Equalization Agreement provides, among other things, that under USGen's negotiated rate agreement with Tennessee, USGen would convert its existing transportation contracts under Rate Schedule NET-284 to a Rate Schedule FT-A contract. Ocean State had also entered into a negotiated rate agreement with Tennessee under which it would convert its transportation contracts to Rate Schedule FT-A contracts. USGen executed the USGen Tennessee Agreements in part based on Ocean State's commitment to equalize the economic benefit conferred on them by the USGen Tennessee Agreements by adjusting USGen's fixed transportation costs in the form of a payment by Defendants to USGen, defined in the Equalization Agreement as the "Equalization Payment" and totaling $1,615,636. The Equalization Agreement requires Ocean State to pay the Equalization Payment to USGen in equal monthly installments of $31,235 for 60 months, and to fund a security deposit to USGen of $187,409. The only conditions to Ocean State's obligation to pay the Equalization Payment to USGen were: (1) issuance by the Federal Energy Regulatory Commission of an order approving the USGen Tennessee Agreements; and (2) issuance by the FERC of an order approving the OSP Tennessee Agreements. Leslie J. Polt, Esq., at Blank Rome LLP, in Washington, D.C., relates that both conditions were satisfied and hence the Monthly Installment became due and payable on the first business day of the first month after issuance of the FERC Order. In full acknowledgement of their obligations under the Equalization Agreement, Ocean State paid the Security Deposit to USGen, which USGen was required to hold and apply against the final six Monthly Installments, with any interest earned accruing to the benefit of USGen. USGen was also permitted to use the Security Deposit at any time to satisfy delinquent Monthly Installments and Defendants were required to replenish the Security Deposit to the extent so used by USGen. The Equalization Agreement states that it will not terminate until all Monthly Installments have been paid. Mr. Polt argues that Ocean State has breached its obligations to USGen by refusing to pay Monthly Installments since September 2004 and by refusing to replenish the Security Deposit. USGen has made a demand for payment but Ocean State has refused to make the required Monthly Installment payments or otherwise to abide by its obligations. As a direct and proximate result of the breaches by Ocean State, USGen has suffered and will continue to suffer damages, Mr. Polt says. Mr. Polt points out that the Defendants are in possession, custody and control of amounts owed to USGen's estate under the Equalization Agreement to which USGen is entitled for use in connection with estate administration, future distributions to creditors and the winding down of its affairs. The amounts being held by Ocean State, Mr. Polt asserts, constitute property of USGen's estate and Ocean State's obligation is matured, payable on demand or payable on order and Ocean State should immediately pay those amounts over to USGen. Pursuant to Section 542 of the Bankruptcy Code, Mr. Polt argues that the Defendants should immediately account for and turn over to USGen all amounts currently in their possession, custody and control owed under the Equalization Agreement. Accordingly, USGen asks the Court to compel Ocean State to: a. pay compensatory damages for at least $593,000, plus interest, attorneys' fees, costs and expenses, plus incidental and consequential damages, as may be permitted by law; b. specifically perform all of its obligations under the Equalization Agreement; and c. immediately turn over to USGen all amounts owed under the Equalization Agreement. Headquartered in Bethesda, Maryland, USGen New England, Inc., an affiliate of PG&E Generating Energy Group, LLC, owns and operates several electric generating facilities in New England and purchases and sells electricity and other energy-related products at wholesale. The Debtor filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30465). John E. Lucian, Esq., Marc E. Richards, Esq., Edward J. LoBello, Esq., and Craig A. Damast, Esq., at Blank Rome, LLP, represent the Debtor in its restructuring efforts. When it sought chapter 11 protection, the Debtor reported assets amounting to $2,337,446,332 and debts amounting to $1,249,960,731. The Debtor filed its Second Amended Plan of Liquidation and Disclosure Statement on March 24, 2005 (PG&E National Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 215/945-7000) USN CORPORATION: Appoints Mark Miller Chief Executive Officer ------------------------------------------------------------- USN Corporation (OTC PINK SHEETS: USN) has appointed retailing veteran, Mark Miller, as Chief Executive Officer. Mr. Miller, 53, brings to USN seventeen years of senior management experience in national retail sales and closeouts. From 1992 to 1997, Mr. Miller served as Executive Vice-President of Merchandising, Marketing and Store Operations at Pic "N" Save Closeouts, Inc. Subsequently, he was President of Consolidated Stores $2.8 Billion Closeout Business - a 1,300-store retail company based in Columbus, Ohio that included BigLots, Pic "N" Save and MacFrugals retail chains (now known as Big lots, Inc. - NYSE: BLI). He also served in leading executive positions at The Walt Disney Company, Value City Department Stores and Red Tag Biz. Most recently, Miller served as Chief Operating Officer at Genius Products. He received a Master of Business Administration from Miami University in 1979. Commenting on the appointment, Mr. Miller stated, "I am excited about the prospect of helping take USN's business to another level. I believe the Company is poised to offer a unique and innovative television home shopping experience. There is a significant opportunity to expand upon the Ultimate Shopping Network's current product offerings by adding luxury and upscale consumer products at closeout prices to its existing line of diamonds, jewelry, watches and rare coins. USN's ability to directly market value branded bargains to millions of potential consumers through both television and the Internet provides us with considerable operating and earnings leverage. The USN team has done an admirable job in creating the existing business platform - I plan on utilizing my nearly twenty years of retailing experience and contacts to capitalize on this platform." Terry Washburn, Director of USN, stated, "We are thrilled that Mark has decided to join the Company as our Chief Executive Officer. He is a retail pioneer who was instrumental in building one of the nation's most innovative retailers, Pic "N" Save, to over $2 billion dollars in annual sales." Mr. Washburn continued, "Mark intimately understands the key elements needed to make USN a large scale and successful transactional television business - from sourcing and logistics to merchandising and marketing. We are confident that under his leadership, USN will continue to grow its position in the media and electronic retailing arenas." USN Corporation retails consumer products through interactive electronic media using broadcast, cable and satellite television and the Internet. * * * Going Concern Doubt At June 30, 2005, the Company had working capital of $110,230. The Company had a net loss of $2,296,825 for the three months ended June 30, 2005, and a net loss of $5,804,666 for the fiscal year ended March 31, 2005. The Company does not have sufficient cash flows from its operations to meet its obligations currently due within the next 12 months. The Company's management said these conditions raise substantial doubt about the Company's ability to continue as a going concern. VARELA ENTERPRISES: Court Okays Amended Ballot Report Filing ------------------------------------------------------------ On a hearing on October 14, 2005, Varela Enterprises Inc. requested the U.S. Bankruptcy Court for the District of Arizona for leave to file an amended ballot report. The Court granted the Debtor's request but record doesn't state when will the confirmation hearing be continued. The confirmation hearing was commenced on Sept. 9, 2005. As previously reported, the Plan proposes to pay all creditors in full from the Debtor's contract with Grupo Constructor Industrial e Inmobiliario, S.A., and an on-going bid for a government project in Mexico. The Debtor further expects to receive payment for more than $81,000 in account receivables from completed construction work. The Plan will also be funded from the proceeds of a lawsuit to be filed against the Debtor's former landlord for breach of contract and damages. The Debtor says it defaulted on existing commitments and consequently filed for bankruptcy protection after its landlord locked it out of its leased building and shut down operations. Treatment of Claims Allowed priority deposit claims of up to $2,225, of individuals for the purchase, lease, or rental of property or service will be paid in full, without interest, within three months from the effective date of the Plan. GMAC's claims, secured by a 2003 Cadillac Escalade and a 2002 Cadillac Escalade, will be paid according to the lease contract. GMAC will retain its security interest in the vehicles. All general unsecured residential construction and vendor claims against the Debtor will be paid in full within three years from the effective date of the Plan. J. P. Sandoval, M.P. Sandoval, and Henry Varela 11's unsecured claims against the Debtor, totaling $967,695, will be paid in full after all other unsecured claims have been satisfied. Headquartered in Moorpark, California, Varela Enterprises Inc., a subcontractor for Varela Manufacturing Company, LLC, holds a license to use the patented "E systems" construction process for producing prefabricated buildings. The Debtor filed for Chapter 11 protection on May 21, 2004 (Bankr. D. Ariz. Case No. 04-00725). Robert M. Cook, Esq. at the Law Offices of Robert M. Cook, represent the Debtor in its restructuring efforts. When it sought chapter 11 protection, the Debtor reported between $10 million to $50 million and debts between $1 million to $10 million. W.R. GRACE: Asks Court to OK BofA Multi-Million Settlement Accord ----------------------------------------------------------------- Before W.R. Grace & Co. and its debtor-affiliates filed for bankruptcy protection, Bank of America, N.A., issued three standby letters of credit for the account of W.R. Grace & Co.-Conn. as collateral for certain insurance transactions and surety bonds issued in the Debtors' favor: L/C No. Face Amount Issuance Date Expiry Date ------- ----------- ------------- ----------- 7404289 $10,439,830 10/17/00 10/17/05 7404163 6,000,000 09/15/00 09/15/05 7403968 2,190,000 07/30/00 07/31/06 On June 6, 2002, National Union Fire Insurance Company of Pittsburgh, Pennsylvania, as beneficiary under L/C No. 7404289, drew down that L/C for $9,729,720. Subsequently, on February 10, 2003, National Union, also as beneficiary under L/C No. 7403968, drew it down for $250,000. By order dated October 24, 2002, the Court authorized BofA to set off $200,000 in a depository account against the amounts due to BofA as a result of National Union's draw on the First L/C. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, tells the Court that except as to the Drawn Amounts, each L/C remains outstanding in its full amount as of October 10, 2005. On March 27, 2003, National Union filed Claim Nos. 9553 and 9554 against W.R. Grace & Co. and Grace-Conn. The National Union Claims each assert a claim secured by the First L/C and the Second L/C, aggregating $46,971,764, plus unliquidated amounts. In addition, National Union filed Claim Nos. 13925 to 13930 against Grace and five other Debtors, asserting claims secured by the Second L/C for $75,623, plus unliquidated amounts. Mr. O'Neill clarifies that the National Union Claims do not reflect the application of the amounts drawn under the First L/C and the Second L/C. As a result of National Union's draw on the First and Second L/Cs, Mr. O'Neill explains, BofA holds a liquidated claim against Grace-Conn. in the Drawn Amounts less the $9,779,720 Set-off Amount, which claim is neither contingent, unliquidated nor disputed. Moreover, BofA holds a claim against Grace-Conn. with respect to the undrawn amount of each L/C, which claim is contingent and unliquidated, but not disputed. Following extensive arm's-length negotiations, the parties have agreed that: (1) BofA will have an allowed, unsecured, non-priority claim against Grace-Conn. for $9,779,720, representing the Drawn Amounts under the First L/C and the Second L/C, less the Set-off Amount. (2) BofA will have a contingent, unsecured, non-priority claim against Grace-Conn. for $8,850,110, representing the undrawn amounts under the Outstanding L/Cs. In the event that BofA is required to satisfy the claim of any beneficiary under any of the Outstanding L/Cs subsequent to the date of the Settlement, that portion of the BofA Contingent Claim representing the total amount drawn under the Outstanding L/Cs will become an allowed, unsecured, non-priority claim against Grace-Conn. Without further action by any party. The outstanding amount of the BofA Contingent Claim will be reduced in an amount equal to BofA's Further Allowed Claim. (3) In the event BofA incurs fees, commissions or other expenses subsequent to the date of the Settlement in connection with its satisfaction of any claim under any of the Outstanding L/Cs, BofA will have 30 days from the payment date under the Outstanding L/C to file a proof of claim. (4) The Debtors reserve their rights to object to the National Union Claims on any basis whatsoever, including the grounds that those claims are duplicative of the BofA Allowed Claims or any BofA Further Allowed Claim. Accordingly, the Debtors ask the Court to approve the BofA Claims Settlement Agreement pursuant to Sections 105 and 363 of the Bankruptcy Code and Rule 9019(a) of the Federal Rules of Bankruptcy Procedure. Mr. O'Neill contends that the Settlement Agreement liquidates and minimizes the estate funds that the Debtors must expend to satisfy any claims asserted by BofA, to the benefit of all parties-in-interest. Moreover, the amounts and priority of the BofA Allowed Claim and the BofA Further Allowed Claim are not in dispute, such that the Settlement does not afford BofA more than it would otherwise receive through the claims resolution process. Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) WILLIAMS CONTROLS: American Industrial Divests Equity Stake ----------------------------------------------------------- Williams Controls, Inc. (OTC: WMCO) bought 2,500,000 shares of stock from American Industrial Partners at a purchase price of $1.28 per share, for a total purchase price of $3,200,000. Dolphin Offshore Partners L.P. purchased 2,132,523 shares from AIP and investors led by Taglich Brothers purchased a total of 2,132,522 shares. With the completion of these sales, AIP no longer has any financial position in Williams. With the purchase, Dolphin increased its ownership to approximately 10,876,000 shares, or 24% of the Company's stock. Peter E. Salas, a director of Williams Controls, manages Dolphin and Carlos P. Salas, also a director of Williams, is a Partner with its affiliate, Dolphin Direct Equity Partners, LP. Kirk R. Ferguson and William I. Morris resigned from the Company's Board of Directors. Mr. Ferguson is a former partner and managing director of AIP and Mr. Morris is a vice president of that firm. With these resignations, the Williams board will be reduced to seven members. Williams Controls -- http://www.wmco.com/-- is a leading designer and manufacturer of Electronic Throttle Control Systems for the heavy truck and off-road markets. As of June 30, 2005, Williams Controls' equity deficit narrowed to $1,817,000 from a $7,035,000 deficit at Sept. 30, 2004. WILLIAMS INDUSTRIES: Accelerated Debt Prompts Going Concern Doubt ----------------------------------------------------------------- McGladrey & Pullen LLP expressed about Williams Industries, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended July 31, 2005. The auditing firm points to the Company's recurring losses from operations and working capital deficit. The auditing firm also says that the Company has entered into a Forbearance Agreement with one of its primary lenders, which has accelerated certain debt. In its Form 10-KSB for the fiscal year 2005 submitted to the Securities and Exchange Commission on Oct. 17, 2005, the Company reported an $11,374,000 net loss compared to a $780,000 net loss in fiscal 2004. Revenues decreases approxiamtely 10% and gross profit decreased 53% due to: (a) increased material costs in the Company's manufacturing segment; (b) operational inefficiencies related particularly to one major contract; and (c) increased workers' compensation costs for the previous year's policy claims. Liquidity and Capital Resources The Company reports that it is facing a liquidity and business crisis, after: * suffering operating losses for several quarters, * tapping its available sources of operating cash, and * borrowing in excess of $2 million from its largest shareholder. A Sea of Defaults The Company is operating under a Forbearance Agreement with its major lender pursuant to which approximately $4.4 million is scheduled to be repaid by March 6, 2006. In addition, the Company is in default of nearly all of its other debts and leases by virtue of failing to make scheduled payments in a timely fashion. Because of the Company's financial condition and poor market conditions in its areas of operation, there is a significant risk that the Company may not be able to book additional work to maintain its level of operations. The Company says that it operates in an industry where such problems are common, and where there are large risks related to estimating and performing work and collecting amounts earned. It is likely that the Company may continue to suffer operating losses and have difficulty meeting its obligations. Management is pursuing a number of contingency plans to address these issues and increase the chances that the Company will survive. These plans include: * negotiations with lenders and customers, * sale of equipment and real property, * asset- and stock-based credit facilities, and * the sale, shut-down reorganization or liquidation of one or more subsidiaries. Management has not ruled out any measure that may be necessary to protect the Company's assets and preserve shareholder value. The Company requires significant working capital to procure materials for contracts to be performed over relatively long periods, and for purchases and modifications of specialized equipment. Furthermore, in accordance with normal payment terms, the Company's customers often retain a portion of amounts otherwise payable to the Company as a guarantee of project completion. To the extent the Company is unable to receive progress payments in the early stages of a project, the Company's cash flow could be adversely affected. The Company says that collecting progress payments is a common problem in the construction industry as are short-term cash considerations. Alabama Plant Shutdown During the year ended July 31, 2005, the Company negotiated a short-term extension of its lease on its Bessemer, Alabama facility to allow for an orderly shutdown and liquidation. The Company is required by the lease to purchase the plant equipment, owned by the landlord, for $500,000. The Company has a guaranteed price contract with an auction company to sell the equipment and pay the proceeds totaling $410,000, to the landlord under the terms of the lease. The remaining balance due the landlord has been accrued by the Company. The operations at the plant were terminated and once the auction is completed and the equipment moved, the lease will be terminated. United Bank Forbearance Agreement The Company's line of credit with United Bank of approximately $2.5 million matured on May 5, 2005. The Company subsequently received a Notice of Loan Defaults dated May 12, 2005. As a result of the Notice, the debts to United Bank, aggregating approximately $5.5 million, were accelerated and became due and payable in full. The Company entered into a Forbearance Agreement on June 30, 2005. Under the agreement, United Bank agreed to forbear from enforcing the original terms of its Loan and Security Agreement until February 28, 2006, on the these conditions: 1. All amounts owing through June 30, 2005, be paid at closing. This included approximately $200,000 of principal and $100,000 of interest and fees. Approximately $200,000 was generated through the sale of property, located in Bedford, Virginia, to the City of Bedford, under an option granted in July 2004. 2. The Company granted United Bank a First Mortgage in its Wilmington, Delaware property, valued at $750,000, to be Recorded not later than July 15, 2005. Within 60 days, the Lender will obtain a fair market value appraisal, and to the extent the appraisal is lower than $750,000, this would constitute an event of default under the Forbearance Agreement. The Lender agreed that such default could be cured if Frank E. Williams, Jr. agrees personally to guarantee the shortfall. 3. The Williams Family Limited Partnership, an affiliated entity controlled by Frank E. Williams, Jr. and beneficially owned by Williams family members, including Mr. Williams, Jr. and his sons, Company President and CEO Frank E. Williams, III and Vice President H. Arthur Williams, agreed to pledge an additional $1 million of the value of property leased by WFLP to the Company adjoining the Company's facility near Manassas, Virginia, to the Lender as additional collateral. The property, assessed for tax purposes in excess of $1.4 million (the Wellington Parcel), is leased by the Company with an option to buy 10 of the 17 acres. The Wellington Parcel is subject to a mortgage in favor of the Lender on which $400,000 is owed by Williams Family. The Williams Family has agreed to the increase of the Deed of Trust to $1.4 million, such instrument to be recorded not later than July 15, 2005. Within 60 days, the Lender will obtain a fair value appraisal, and to the extent the appraisal is lower than $1.4 million, that would constitute an event of default under the Forbearance Agreement. The Lender Agreed that such default could be cured if Frank E. Williams, Jr. agrees personally to guarantee the shortfall. Asset Sale Subsequent to July 31, 2005, the Company sold its Richmond, Virginia property to the Company's founder and largest shareholder, and leased it back with an option to buy it back for the same price for which it was sold. The sale will be treated as a financing activity and the gain on sale of approximately $1.7 million will be treated as a liability of the Company. The proceeds from the sale of $2.75 million were used to pay: * approximately $835,000 on the first mortgage note to Wachovia Bank; * $750,000 to United Bank under the First Amendment to Forbearance Agreement extending the Company's Forbearance Period to March 6, 2006; and * $688,000 for related party notes payable due to the purchaser of the property. The remaining $477,000 was used to pay related closing costs and fund the operations of the Company. CitiCapital Default As a result of payment and other alleged defaults, CitiCapital threatened foreclosure and sale of their collateral on two heavy lift cranes, one owned and one leased by the Company. The Company entered into a forbearance agreement providing for settlement of: * late charges and personal property taxes, * monthly payments, and * reimbursement of legal fees, providing that the Company pay off the accounts by Nov. 1, 2005, without penalty, and Dec. 1, 2005, with a 1% penalty. The crane that is owned has a book value of approximately $970,000 and a note payable of $870,000. There may be additional liability to the Company on the leased crane should it be returned to the lessor. HSBC Suit HSBC Business Credit has a suit pending for approximately $900,000 for non-payment on a lease for a heavy lift crane and a specialized trailer with a value of approximately $200,000 less than the amount claimed by the lessor. The Company is attempting to settle this account with the lessor on the best terms available. Provident Leasing Default As a result of payment and other alleged defaults, Provident Leasing threatened foreclosure and sale of a heavy lift crane leased by the Company. The Company entered into a forbearance agreement providing for monthly payments until January 15, 2006, when the account is due in full. In the event the lessor pursues its remedies, the Company expects that there may be an additional liability of up to $100,000 The Company intends to settle this account with the lessor on the best terms available. The Company's plan is to find alternate financing to replace the United Bank Debt. This may include conventional, asset-based and equity-based instruments. The Company is discussing some of these alternatives with several lenders. If necessary, the Company may sell assets including heavy lift cranes and land to raise the capital needed to meet the debt obligation. Due to the acceleration of the Company's debt with United Bank on its line of credit, and other lenders with whom the Company is in default, the Company had a working capital deficit of approximately $3.2 million at July 31, 2005. Williams Industries, Incorporated is in the construction services market, providing specialized services to customers in the commercial, industrial, institutional, and governmental markets. The Company's operating subsidiaries provide these services in two segments, manufacturing and construction. WILLIAMS INDUSTRIES: Applying for NASDAQ Capital Market Listing --------------------------------------------------------------- Williams Industries, Inc. (NASDAQ: WMSI) reported that the company will apply to have its stock transferred from the NASDAQ National Market to the NASDAQ Capital Market, formerly known as the "Small Cap" Market. The Company says that the decision is based on the these reasons: * the Company's recently reported losses, the Company temporarily does not meet the listing criteria for the NASDAQ National Market; * the company's auditors, McGladrey and Pullen, issued a "going concern" opinion on the recent results; and * the company believes that it meets or exceeds the requirements for inclusion in the NASDAQ Capital Market. The Company says that its formal application for transfer is being processed and will be submitted to NASDAQ not later than Nov. 2, 2005. NASDAQ Notification On Oct. 18, 2005 the Company received notification from NASDAQ that the company was not in compliance with certain continued listing criteria for the NASDAQ National Market. Specifically, the notice stated that the stockholder's equity at July 31, 2005, as published in the Company's Form 10-K filed October 14, 2005, was less than the required $10 million, and also that the market value of public float was less than $5 million. The notice requested that the Company provide NASDAQ with a plan by Nov. 2, 2005, of the actions that the Company proposes to take to come into compliance with the referenced listing criteria. Williams Industries, Incorporated is in the construction services market, providing specialized services to customers in the commercial, industrial, institutional, and governmental markets. The Company's operating subsidiaries provide these services in two segments, manufacturing and construction. * * * Going Concern Doubt McGladrey & Pullen LLP expressed about Williams Industries, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended July 31, 2005. The auditing firm points to the Company's recurring losses from operations and working capital deficit. The auditing firm also says that the Company has entered into a Forbearance Agreement with one of its primary lenders, which has accelerated certain debt. WINN-DIXIE: Can Reject Seven Kentucky Real Property Leases ---------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida gave Winn-Dixie Stores, Inc., and its debtor-affiliates authority to reject seven unexpired non-residential real property leases and the related subleases under them: Store No. Location Landlord Subtenant --------- -------- -------- --------- 1617 Leitchfield, KY Kentucky Teachers E.W. James, Inc. Retirement System 1630 Hopkinsville, KY Wiggs Realty Co. E.W. James, Inc. of Kentucky 1632 Lexington, KY Kentucky Teachers E.W. James, Inc. Retirement System 1652 Lexington, KY Webb/Lexington E.W. James, Inc. Ventures No. 108 1657 Glasgow, KY RP Baren River, LLC E.W. James, Inc. 1665 Princeton, KY Bennett M. Lifter, E.W. James, Inc. Trustee 1698 Bowling Green, KY PAJ E.W. James, Inc. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000). XYBERNAUT CORP: Taps Szabo Zelnick as Special Corporate Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Virginia gave Xybernaut Corporation and its debtor-affiliate permission to employ Szabo, Zelnick & Erickson, P.C., as their special corporate counsel. Szabo Zelnick will: 1) advise the Debtors with respect to various corporate matters, including without limitation, contractual relationships between the Debtors and its various customers and vendors; 2) assist and advise the Debtors' in their day-to-day corporate responsibilities, internal corporate procedures, corporate governance and employee issues; and 3) render all other corporate legal services to the Debtors that are necessary in their chapter 11 cases and not duplicative from the services rendered by the Debtors' lead bankruptcy counsel, McGuireWoods LLP. H. Jan Roltsch-Anoll, Esq., a Principal of Szabo Zelnick, is one of the lead professional from the Firm performing services to the Debtors. Mr. Roltsch-Anoll disclosed that his Firm received a $50,277 retainer. Mr. Roltsch-Anoll charges $200 per hour for his services. Szabo Zelnick assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Fairfax, Virginia, Xybernaut Corporation, develops and markets small, wearable, mobile computing and communications devices and a variety of other innovative products and services all over the world. The corporation never turned a profit in its 15-year history. The Company and its affiliate, Xybernaut Solutions, Inc., filed for chapter 11 protection on July 25, 2005 (Bankr. E.D. Va. Case Nos. 05-12801 and 05-12802). John H. Maddock III, Esq., at McGuireWoods LLP, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they listed $40 million in total assets and $3.2 million in total debts. XYBERNAUT CORP: Arch Wants Rule 2004 Exam to Get Insurance Info --------------------------------------------------------------- Arch Specialty Insurance Company asks the U.S. Bankruptcy Court for the Eastern District of Virginia to enter an order, pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure, requiring Xybernaut Corporation and its debtor-affiliates to produce documents relating to the claims for insurance coverage. Arch Specialty previously issued to the Debtor an Excess Directors and Officers Liability Policy No. 12DOX5053901 for the policy period of March 8, 2004 to March 8, 2005, which was subsequently extended to April 15, 2004 to April 15, 2005. Under the terms of the Excess Policy, the Debtor has a contractual obligation to cooperate with Arch and provide it with information and cooperation as the Excess Insurer may reasonably require. In April 2005, the Debtor began tendering to Arch claims for insurance coverage under the Excess Policy for a variety of lawsuits and other matters. Based on the information made available to Arch, Arch advised the Debtor of its initial views regarding coverage under the Excess Policy and requested information and reserved its rights. By letter dated April 20, 2005, Arch requested certain materials and information for the purpose of investigating and evaluating the Debtor's claims for insurance coverage and whether material misrepresentations were made in the application process for the Excess Policy and Excess Policy Extension, which would void the Excess Policy and the Excess Policy Extension ab initio. By letter dated June 8, 2005, Arch requested additional materials and information based on an SEC filing made by the Debtor on June 7, 2005. Since then, Arch has repeatedly requested the materials and information in a series of telephone calls with the Debtor's counsel. Arch needs the requested materials and information so that it can properly investigate the claims, determine whether coverage is available under the Excess Policy for the claims tendered by the Debtor, and determine whether material misrepresentations were made in the application process for the Excess Policy and the Excess Policy Extension. Until Arch receives the requested materials and information, uncertainty remains concerning whether insurance coverage may be available under the Excess Policy for the claims or whether the estate will face potential exposure with respect to the claims. Arch requests the Court that it direct the Debtor to provide documents relating to the claims for insurance coverage, as outlined in the List of Documents that Arch submitted to the Court. A copy of the two-page List of Documents Arch wants is available for free at http://ResearchArchives.com/t/s?284 The Court will convene a hearing at 11:00 a.m., on Nov. 29, 2005, to consider Arch Specialty's request. Headquartered in Fairfax, Virginia, Xybernaut Corporation, develops and markets small, wearable, mobile computing and communications devices and a variety of other innovative products and services all over the world. The corporation never turned a profit in its 15-year history. The Company and its affiliate, Xybernaut Solutions, Inc., filed for chapter 11 protection on July 25, 2005 (Bankr. E.D. Va. Case Nos. 05-12801 and 05-12802). John H. Maddock III, Esq., at McGuireWoods LLP, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they listed $40 million in total assets and $3.2 million in total debts. * LeBoeuf Lamb Names Ralph Ferrara as Washington Office Head ------------------------------------------------------------ The international law firm of LeBoeuf, Lamb, Greene & MacRae LLP is pleased to announce that Ralph C. Ferrara has been named to head the firm's Washington, D.C. office. "Ralph Ferrara's appointment is part of the firm's strategic growth plan for the office, which includes the addition of lawyers, the expansion of the firm's physical presence in D.C. and a focus on growing and adding to the core practice areas in the region," said LeBoeuf Lamb's Chairman, Steven H. Davis. Since Mr. Ferrara's arrival in January 2005, LeBoeuf Lamb's office in Washington, D.C. has grown by nearly 50% with the addition of 38 lawyers, including six transfers. "We believe Ralph will be a driving force in implementing our plans for this office," said Davis. "I look forward to the opportunity," said Mr. Ferrara. "The strength of the D.C. office will be the foundation for further expansion as we continue to attract attorneys of the highest caliber to this office." The firm's plans include a move to over 110,000 square feet of office space at 1101 New York Avenue, a Class-A office building that will be completed in 2006, underscoring its commitment to the region. Mr. Ferrara joined LeBoeuf Lamb after 23 years at Debevoise & Plimpton, where he served as managing partner of the Washington, D.C. office. One of the nation's leading experts on securities litigation, Mr. Ferrara advises corporations on a wide range of business regulatory and corporate governance matters; represents corporations and individuals in complex securities class and shareholder derivative actions; advises corporate clients on Securities and Exchange Commission reporting and disclosure requirements; represents corporations and individuals in government investigations and enforcement proceedings; conducts corporate internal investigations; and counsels corporate officers and boards on these matters. Mr. Ferrara formerly served as General Counsel of the U.S. Securities and Exchange Commission. Mr. Ferrara has advised many prominent companies in litigation before the SEC and the Department of Justice and has argued on five occasions before the United States Supreme Court. Mr. Ferrara is a prolific writer and lecturer and has written and co-authored numerous articles and professional treatises, including: * "Ferrara on Insider Trading and the Wall" (Law Journal Press, 2d ed., 2001), * "Takeovers: Strategic Guide to Mergers & Acquisitions" (Aspen Law and Business, 2001), * "Managing Marketeers: Supervisory Responsibilities of Broker-Dealers and Investment Advisers" (CCH, 2000), * "Shareholder Derivative Litigation: Besieging the Board," (Law Journal Seminars Press, 1995), and others. The Washington, D.C. office of LeBoeuf Lamb was one of the first to be opened by a New York law firm. Today, the office has preeminent practices in energy, insurance, securities and white collar litigation, tax, international law, '40 Act, project finance, antitrust, and federal legislation. The following are some recent highlights from the D.C. office by practice area: Energy Partner Brian D. O'Neill was recently identified by the Legal Times as a "Leading Lawyer" for Energy in Washington. Energy partners Samuel Behrends, IV, Elias G. Farrah, Catherine P. McCarthy and Brian D. O'Neill have represented MidAmerican Energy Holdings Company before the Federal Energy Regulation Commission as well as the Nuclear Regulatory Commission in connection with its proposed $9 billion acquisition of PacifiCorp; Berkshire Hathaway before the FERC in connection with a stock conversion proposal; Central Maine Power before the FERC in opposing a recent FERC initiative that could have cost New England consumers $15 billion; Interstate Power and Light Company before the FERC and the NRC for its sale of an interest in the Duane Arnold Energy Center nuclear facility to FPL Energy Duane Arnold, LLC; Lincoln National in the $7.5 billion merger of equals with Jefferson- Pilot; and Cinergy, providing advice and counsel in its proposed $9 billion merger with Duke Energy. Insurance Attorneys Christopher S. Petito, Richard Rubin and Robert W. Woody were on the deal team representing Lincoln National in its recently announced $7.5 billion merger of equals with Jefferson- Pilot. Securities and Litigation Stephen A. Best is engaged in a parallel USAO-DC and SEC investigation into issues concerning valuation of Allied Capital Corporation's assets. Mr. Best also represents an individual defendant who has pled guilty in the Southern District of New York to allegations in connection with what the government has called a "massive scheme" of bribery related to the privatization of the State Oil Company in Azerbaijan. Mr. Ferrara is currently representing Shell Oil against class action litigation and Global Crossing in securities and ERISA class actions against current and former company leaders. Litigators in the D.C. office also represent a leading European-based global insurance company -- utilizing numerous LeBoeuf Lamb attorneys from New York, Paris and London -- in various dealings with the U.S. Securities and Exchange Commission, the Department of Justice and the New York Attorney General's office relating to investigations into the use of finite reinsurance products. In addition, Fred Reinke is spearheading the defense of a European-based global insurance conglomerate against two related class actions filed in federal court in Los Angeles for alleged unpaid claims. Mr. Reinke also represents the interests of one of the world's leading reinsurance companies in proceedings pending in New York to determine the appraisal value of the property losses associated with the destruction of the World Trade Center complex on September 11, 2001. Antitrust D.C. partner David S. Turetsky was recently appointed by orders of the FCC and a federal district court in "U.S. v. Alltel Corp." and Western Wireless to be the independent Management Trustee of 16 wireless markets and the CellularOne Group, which were required to be divested in connection with the defendants' merger. The Antitrust Division of the U.S. Department of Justice nominated Mr. Turetsky for the post. Telecommunications Eric W. Cowan is currently acting as counsel for Cable & Wireless in negotiations with the government of Trinidad & Tobago. David Turetsky recently assisted AT&T in connection with the appearance of its CIO/CTO at a Senate Commerce Committee hearing on telecommunications infrastructure issues in light of Hurricane Katrina. Environmental Attorneys in D.C. have reached an innovative settlement with the USEPA that will help protect client PPL/Montana from future Superfund liability for its ownership of a FERC-licensed dam; Robert Anderson and D. Randall Benn were recently selected to join a team hired to evaluate the governance of the DC Water and Sewer Authority; Mr. Benn recently obtained $3 million in Congressional funding to support the work of the world's leading water quality research non-profit, the Water Environment Research Foundation. He has been asked to help Wynton Marsalis, the jazz trumpeter and New Orleans native, become a leading spokesman before Congress (with the blessing of the State of Louisiana) on post-Katrina reconstruction priorities. Transportation The office's rail practice, led by Michael F. McBride, was recently retained by BP Amoco Chemical Company to represent it in the first "small-shipment" rate case ever filed at the Surface Transportation Board, against Norfolk Southern Railway Company. Africa Partner, Derek C. Smith was recently engaged to represent the Ministry of Mines, Industry and Energy of Equatorial Guinea in a broad range of oil and gas matters. With the help of LeBoeuf Lamb attorneys, the Southern Africa Enterprise Development Fund "SAEDF" had its $100 million US AID grant extended another three years. The Fund's mission is to support business development in 11 countries in southern Africa by investing in start-up and medium- sized businesses owned by indigenous people; LeBoeuf Lamb partner, Elizabeth B. Sandza, serves as counsel to the SAEDF Board of Directors. LeBoeuf, Lamb, Greene & MacRae LLP has more than 650 lawyers practicing in 19 offices worldwide. Well known as one of the preeminent legal services providers to the insurance/financial services and energy and utilities industries, the firm has built upon these strengths to gain prominence in litigation, corporate, bankruptcy, taxation, environmental, real estate and technology/intellectual property practices. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- October 26, 2005 TURNAROUND MANAGEMENT ASSOCIATION Bankruptcy...The New Frontier McCormick & Schmick's, Las Vegas, Nevada Contact: http://www.turnaround.org/ October 27, 2005 TURNAROUND MANAGEMENT ASSOCIATION Informal Networking *FREE Reception for Members* The Davenport Press Restaurant, Mineola, New York Contact: 516-465-2356; http://www.turnaround.org/ November 1-2, 2005 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC 2005 Fall Conference San Antonio, Texas Contact: http://www.iwirc.com/ November 2, 2005 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS AIRA/NCBJ Dessert Reception Marriott Riverwalk Hotel, San Antonio, Texas Contact: 541-858-1665 or http://www.airacira.org/ November 2-4, 2005 PRACTISING LAW INSTITUTE Tax Strategies for Corporate Acquisitions, Dispositions, Spin-Offs, Joint Ventures, Financings, Reorganizations & Restructurings Beverly Hills, California Contact: http://www.pli.edu/ November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, Texas Contact: http://www.ncbj.org/ November 3-4, 2005 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Second Annual Conference on Physician Agreements and Ventures Successful Strategies for Negotiating Medical Transactions and Investments The Millennium Knickerbocker Hotel, Chicago, Illinois Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ November 7-8, 2005 STRATEGIC RESEARCH INSTITUTE Seventh Annual Distressed Debt Investing Forum West Venetian Resort Hotel Casino, Las Vegas, Nevada Contact: http://www.srinstitute.com/ November 9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting The Center Club, Baltimore, Maryland Contact: 703-912-3309; http://www.turnaround.org/ November 10, 2005 TURNAROUND MANAGEMENT ASSOCIATION Second Annual Australian TMA Conference Sebel Pier One, Sydney, Australia Contact: http://www.turnaround.org/ November 10, 2005 TURNAROUND MANAGEMENT ASSOCIATION Second Annual Australian TMA Conference Sydney, Australia Contact: 9299-8477; http://www.turnaround.org/ November 11, 2005 AMERICAN BANKRUPTCY INSTITUTE Detroit Consumer Bankruptcy Workshop Wayne State University, Detroit, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ November 11-13, 2005 AMERICAN BANKRUPTCY INSTITUTE Corporate Restructuring Competition Kellogg School of Management, NWU, Evanston, Illinois Contact: 1-703-739-0800; http://www.abiworld.org/ November 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Workout Workshop Long Island, New York Contact: 312-578-6900; http://www.turnaround.org/ November 14-15, 2005 AMERICAN CONFERENCE INSTITUTE Insurance Insolvency The Warwick, New York, New York Contact: http://www.americanconference.com/ November 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Bankruptcy Judges Panel Pittsburgh, Pennsylvania Contact: http://www.turnaround.org/ November 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Speaker/Dinner Event Fairmont Royal York Hotel, Toronto, ON Contact: http://www.turnaround.org/ November 16, 2005 STRATEGIC RESEARCH INSTITUTE The Bankruptcy Reform Act of 2005: Practical Business Implication for Creditors Doubletree Metropolitan Hotel, New York, New York Contact: http://www.srinstitute.com/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Buffalo, New York Contact: 716-440-6615; http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, Colorado Contact: 303-457-2119; http://www.turnaround.org/ November 17, 2005 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Networking Cocktail Reception New York, New York Contact: 541-858-1665 or http://www.airacira.org/ November 28-29, 2005 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Twelfth Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Essex House, New York, New York Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ November 29, 2005 TURNAROUND MANAGEMENT ASSOCIATION State of Banking 2006 and Beyond - Economy, Climate for Turnaround Industry, Banking Relationships Tournament Players Club at Jasna Polana, Princeton, New Jersey Contact: 312-578-6900; http://www.turnaround.org/ November 29, 2005 TURNAROUND MANAGEMENT ASSOCIATION Orlando Luncheon Citrus Club, Orlando, Florida Contact: http://www.turnaround.org/ December 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners Hyatt Grand Champions Resort, Indian Wells, California Contact: 1-703-739-0800; http://www.abiworld.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, California Contact: 1-703-739-0800; http://www.abiworld.org/ December 5-6, 2005 MEALEYS PUBLICATIONS Asbestos Bankruptcy Conference Ritz-Carlton, Battery Park, New York, New York Contact: http://www.mealeys.com/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION TMA/CFA Holiday Party J.W. Marriott, Atlanta, Georgia Contact: 678-795-8103 or http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Holiday Gathering & Help for the Needy *FREE to Members* Mack Hall at Hofstra University, Hempstead, New York Contact: 516-465-2356; http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Board of Directors Meeting Rochester, New York Contact: 716-440-6615; http://www.turnaround.org/ December 12-13, 2005 PRACTISING LAW INSTITUTE Understanding the Basics of Bankruptcy & Reorganization New York, New York Contact: http://www.pli.edu/ December 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, Virginia Contact: 703-912-3309; http://www.turnaround.org/ January 5, 2006 TURNAROUND MANAGEMENT ASSOCIATION NJTMA Holiday Party Iberia Tavern & Restaurant, Newark, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ January 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION PowerPlay - TMA Night at the Thrashers Philips Arena, Atlanta, Georgia Contact: 678-795-8103 or http://www.turnaround.org/ January 26-28, 2006 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, Colorado Contact: 1-703-739-0800; http://www.abiworld.org/ February 9-10, 2006 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium Eden Roc, Miami, Florida Contact: 1-703-739-0800; http://www.abiworld.org/ March 2-3, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Legal and Financial Perspectives on Business Valuations & Restructuring (VALCON) Four Seasons Hotel, Las Vegas, Nevada Contact: http://www.airacira.org/ March 2-5, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES 2006 NABT Spring Seminar Sheraton Crescent Hotel, Phoenix, Arizona Contact: http://www.pli.edu/ March 4-6, 2006 NORTON INSTITUTES ON BANKRUPTCY LAW Bankruptcy Law Institute Marriott, Park City, Utah Contact: 770-535-7722 or http://www2.nortoninstitutes.org/ 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 1-4, 2006 NORTON INSTITUTES ON BANKRUPTCY LAW Bankruptcy Law Institute The Flamingo, Las Vegas, Nevada Contact: 770-535-7722 or http://www2.nortoninstitutes.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 21-23, 2006 TURNAROUND MANAGEMENT ASSOCIATION Global Educational Symposium Hyatt Regency, Chicago, Illinois Contact: http://www.turnaround.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/ June 29 - July 2, 2006 NORTON INSTITUTES ON BANKRUPTCY LAW Bankruptcy Law Institute Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 770-535-7722 or http://www2.nortoninstitutes.org/ 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/ September 17-24, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES Optional Alaska Cruise Seattle, Washington Contact: 800-929-3598 or http://www.nabt.com/ 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/ March 29-31, 2007 ALI-ABA Chapter 11 Business Reorganizations Scottsdale, Arizona Contact: 1-800-CLE-NEWS; http://www.ali-aba.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/ March 25-29, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Ritz Carlton Grande Lakes, Orlando, Florida Contact: http://www.turnaround.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://www.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 Pinili, Jr., Tara Marie Martin, 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 ***