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/raid1/www/Hosts/bankrupt/TCR_Public/060113.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, January 13, 2006, Vol. 10, No. 11 Headlines ACCESS PHARMA: AMEX to Consider Stock Listing on Jan. 19 Hearing ACCESS WORLDWIDE: Commences Operations in the Philippines AES CORP: Gets Non-Compliance Notice Following Reporting Delay ALEXANDRA KRUMSZYN: Case Summary & 7 Largest Unsecured Creditors AMC ENT: Discloses Non-Public Material Info Regarding Loews Merger AMERICAN REMANUFACTURERS: Black Diamond to Buy Selected Assets AMERICHIP INTERNATIONAL: Appoints Thomas P. Schwanitz as CFO ANCHOR GLASS: Court Authorizes Assumption of Unimin Contract ANCHOR GLASS: Court OKs Stichter as Committee's Counsel ANDROSCOGGIN ENERGY: Confirmation Hearing Set for Valentine's Day ATA AIRLINES: Ambassadair Asks Court to Set Admin. Claim Bar Date ATA AIRLINES: Can Use ATSB Lenders' Cash Collateral Until Feb. 1 BANK OF NEW ENGLAND: Bondholders Reach Partial Settlement BBI ENTERPRISES: Court Orders Debtors' Appearance on January 25 CAROLINA TOBACCO: Wants to Employ Parks Bauer as Special Counsel COLLINS & AIKMAN: Has Until Plan Confirmation to Decide on Leases COLLINS & AIKMAN: Court Expands Scope of Davis Polk's Services COLLINS & AIKMAN: GECC Wants Lear to Pay Prepetition Receivables CONSTELLATION BRANDS: Fitch Rates $2.9 Billion Debts at Low-B CORNERSTONE PRODUCTS: Files Liquidating Chapter 11 Plan in Texas DANA CORP: Fitch Shaves Rating on Sr. Unsecured Debt to B from BB- DELTA AIR: Industry Analysts Ponder Merger With Northwest DOCTORS HOSPITAL: Court Sets Feb. 16 for Disclosure Hearing E.SPIRE COMMS: Settles Mastec Default Judgment Controversy EMPIRE FIN'L: Regains AMEX Listing Compliance with $4.53M Equity ENVIRONMENTAL ELEMENTS: Has Until Jan. 30 to File Chapter 11 Plan EXIDE TECH: VP & Controller P.A. Damaska Temporarily Sits as CFO EXTENWAY SOLUTIONS: Shareholder Deficit Disappears at Oct. 31 FEDERAL-MOGUL: Sees 10% Workforce Cuts & $125MM in Charges by 2008 FORD MOTOR: Moody's Lowers Corporate Family Rating to Ba3 from Ba1 FOSS MANUFACTURING: Ch. 11 Trustee Can Access $31.4-Mil DIP Loan FOSS MANUFACTURING: Trustee Hires Perkins Smith as Patent Counsel FREESTAR TECHNOLOGY: Hires Horizon Law Group as Securities Counsel FRIEDE GOLDMAN: Wants to File Suit to Recover Tax Refunds FRIENDLY ICE CREAM: Gets New $8.5M GE Capital Loan to Pay Old One GOLDSTAR EMERGENCY: Inks $900K Settlement Pact with C. Henderson GOLDSTAR EMERGENCY: Wants to Sell Excess Vehicles GOLDSTAR EMERGENCY: Taps Akin Doherty to Provide Tax Services GRAND AVENUE: Moody's Rates $9 Mil. Class E-1 & E-2 Notes at Ba2 HARDWOOD P-G: Case Summary & 59 Largest Unsecured Creditors HOST MARRIOTT: Exercises Option for Conversion Rights INTERACTIVE MOTORSPORTS: Sells Assets to Cut Debt by $571,000 KERR-MCGEE: Fitch Assigns BB Ratings to $3.85 Billion Debts LOEWS CINEPLEX: AMC Discloses Non-Public Material Info Re Merger LOEWS CINEPLEX: Gets Necessary Tenders for 9% Senior Notes LORETTO-UTICA: Court Sets July 22 as Claims Bar Date MARSH SUPERMARKETS: Completes $25 Million Two-Year Term Loan MEDICAL TECHNOLOGY: Confirmation Hearing Set for January 30 MIRANT CORP: New Shares Listed on the New York Stock Exchange MISSION INSURANCE: Claims Procedures Hearing Set on Jan. 24 MONTECITO BROADCAST: S&P Junks Rating on Proposed $48 Million Loan MUSICLAND HOLDING: Files Chapter 11 Protection in New York MUSICLAND HOLDING: Case Summary & 30 Largest Unsecured Creditors NETWORK PLUS: Dilks & Knopik Approved to Recover Unclaimed Funds NEVADA POWER: Prices Private Offering of $210 Mil. Mortgage Notes NEWAVE INC: Discloses Strategic Initiatives For 2006 NORTHWEST AIRLINES: Has Until July 13 to File a Chapter 11 Plan NORTHWEST AIRLINES: Industry Analysts Ponder Merger With Delta NORTHWESTERN CORP: Harbert Distressed Wants Directors Replaced O'SULLIVAN IND: Committee Supports Other Professionals' Retention O'SULLIVAN INDUSTRIES: Court Gives Final Okay to FTI's Retention ORIENTAL FINANCIAL: S&P Assigns BB+ Counterparty Credit Rating OWENS CORNING: Recording $140M++ Addt'l Expenses Under Credit Pact PINNACLE ENTERTAINMENT: Moody's Affirms Caa1 Sr. Sub. Debt Rating PLIANT CORP: Court Grants Interim Access to Cash Collateral PLIANT CORP: Has Interim Access to $37 Million Under DIP Loan POLAROID CORP: Administrator Has Until Jan. 16 to Object to Claims PORT BAILEY: Case Summary & 14 Largest Unsecured Creditors REFCO INC: Oracle & Cargill Object to Contract Assignments RESIDENTIAL ASSET: S&P Shaves Ratings on Class M-I-3 Certs. to B RH DONNELLEY: Fitch Junks Rating on Senior Unsecured Notes ROWE COMPANIES: Promotes Garry W. Angle to Vice Pres-Treasurer RUFUS INC: Exclusive Filing Deadline Stretched Through Feb. 10 RUFUS INC: Wants to Walk Away from Two Real Property Leases S-TRAN HOLDINGS: Wants Plan Filing Period Stretched to March 8 SAINT VINCENTS: Court Allows Harvey Krauss to Pursue PI Lawsuit SAINT VINCENT: Obtains $350 Million DIP Financing from GEHFS SAINT VINCENTS: Settles Barnard's Medical Malpractice Suit SAKS INC: Spin-Off Plans Prompt S&P to Review Ratings SCITECK: Case Summary & 16 Largest Unsecured Creditors SEASPECIALTIES INC: Trustee Taps Kapila & Company as Accountants SIERRA PACIFIC: Subsidiary Prices Private Offering Mortgage Notes SPANSION INC: Fitch Junks Rating on $175 Million Senior Sub. Notes TEC FOODS: Can Continue Using Wells Fargo's Cash Collateral TELOGY INC: Court Okays Heller Ehrman as Special Counsel TELOGY INC: Court Okays Pachulski Stang as Bankruptcy Counsel TELOGY INC: Files Schedules of Assets and Liabilities TERAYON COMMS: Faces Likely Default Due to Form 10-Q Filing Delay THREE-FIVE: Files Ch. 11 Plan & Disclosure Statement in Phoenix TOM'S FOODS: Greenberg Traurig Withdraws as Bankruptcy Counsel TOM'S FOODS: Scroggins & Williamson Approved as E. Davis' Counsel TOWER AUTOMOTIVE: Craig Corrington Joins as VP for North America TRUST ADVISORS: Section 341 Meeting Continued to Feb. 13 UAL CORP: Reaches Agreement with Creditors on Plan Issues VENTURE HOLDINGS: Court Converts Case into Chapter 7 Liquidation WATERMAN INDUSTRIES: GNI Waterman Acquires Operating Assets WESTERN WATER: Bankruptcy Court Approves Disclosure Statement WHITEHALL JEWELLERS: Boards Responds to Newcastles' Action WORLDCOM INC: Inks Stipulation Resolving Michigan's Tax Claims WORLDCOM INC: Settles Dispute Over Iowa's $1.6-Mil. Tax Claim WORLDWATER & POWER: Retains Counsel to Assist in Berlin Delisting * BOOK REVIEW: Merger: Takeover Conspiracy ********* ACCESS PHARMA: AMEX to Consider Stock Listing on Jan. 19 Hearing ---------------------------------------------------------------- Access Pharmaceuticals, Inc. (Amex: AKC) has been granted a hearing with the American Stock Exchange to maintain its listing on the exchange. This hearing relates to the notice received from the AMEX indicating that the company no longer complies with AMEX's continued listing standards: * due to losses from continuing operations and/or net losses in two of its most recent fiscal years with shareholders' equity of less than $2 million, as set forth in Section 1003(a)(i) of the AMEX "Company Guide"; * due to losses from continuing operations and/or net losses in three of its most recent fiscal years with shareholders' equity of less than $4 million, as set forth in Section 1003(a)(ii) of the Company Guide; and * due to losses from continuing operations and/or net losses in four of its most recent fiscal years with shareholders' equity of less than $6 million, as set forth in Section 1003(a)(iii) of the Company Guide. This hearing for this determination will take place before a committee of the AMEX on Jan. 19, 2006. There can be no assurance that the company's request for continued listing will be granted. The company also reiterated that it has engaged an investment- banking firm to assist it in evaluating its strategic alternatives regarding ongoing operations. The company has had discussions with several parties about a strategic transaction, but at this time has not entered into any agreement. Plans to initiate the European phase II trial of the Company's cytotoxic oncology product AP5346 have proceeded well, with IRB approval received at one site. The trial will not be initiated, however, until financing to complete the trial is secured. Access Pharmaceuticals, Inc. is an emerging pharmaceutical company focused on developing both novel low development risk product candidates and technologies with longer-term major product opportunities. Access markets Aphthasol(R) and is developing products for other oral indications. Access is also developing unique polymer platinates for use in the treatment of cancer and has an extensive portfolio of advanced drug delivery technologies including vitamin mediated targeted delivery, oral delivery, and nanoparticle aggregates. At June 30, 2005, Access Pharmaceuticals, Inc.'s balance sheet showed a $12,285,000 stockholders' deficit, compared to a $6,661,000 deficit at Dec. 31, 2004. ACCESS WORLDWIDE: Commences Operations in the Philippines --------------------------------------------------------- Access Worldwide Communications, Inc. (OTC Bulletin Board: AWWC), recently started operations in its 350-seat communication center based in Manila. Services conducted at the site will include, among other things, inbound and outbound customer service, customer recruitment, special promotions, and database maintenance. Access currently operates U.S. based communication centers in Arlington, Virginia, Hyattsville, Maryland, Augusta, Maine and Boca Raton, Florida. "We expect to have this facility at full capacity by the end of the 1st Quarter 2006 and plan to expand our presence in the Philippines during 2006," commented Shawkat Raslan, Chairman, President and Chief Executive Officer of Access Worldwide. "We can now support our clients with both on shore and off shore capability." Access Worldwide Communications, Inc. -- http://www.accessww.com/ -- is an established marketing company that provides a variety of sales, communication and medical education services. Its spectrum of services includes medical meetings management, medical publishing, editorial support, clinical trial recruitment, patient compliance, multilingual teleservices, product stocking and database management, among others. Headquartered in Boca Raton, Florida, Access Worldwide has about 1,000 employees in offices throughout the United States and the Philippines. At Sept. 30, 2005, Access Worldwide Communications, Inc.'s balance sheet showed a $3,625,027 stockholders' deficit compared to a $3,865,118 deficit at Dec. 31, 2004. AES CORP: Gets Non-Compliance Notice Following Reporting Delay -------------------------------------------------------------- The AES Corporation received notice from Wells Fargo Bank Minnesota, National Association, the trustee under indentures governing the Company's outstanding: * senior unsecured notes, * senior subordinated notes, and * junior subordinated convertible notes totaling approximately $2.8 billion aggregate principal amount. The notice states that the Company is not in compliance with the reporting covenant under the indentures due to the Company's failure to timely file its quarterly reports on Form 10-Q for the quarters ended June 30, 2005, and September 30, 2005, with the trustee and the Securities and Exchange Commission. As a result of the receipt of the notice, if the Company fails to file the reports by February 28, 2006, an Event of Default will occur under the indentures. If an Event of Default were to occur, either the trustee under any of the indentures or the holders of at least 25% of the outstanding principal amount of any series of notes would have the right to accelerate the maturity of that series of notes and declare them immediately due and payable, unless holders of a majority of such series of notes waive compliance with the filing requirement. As reported in the Troubled Company Reporter on Dec. 30, 2005, Citicorp USA, Inc., and Citibank N.A., the lenders under the Company's Amended and Restated Credit Agreement, have extended until Jan. 20, 2006, the waiver of default under the credit agreement, which may arise by virtue of the Company's failure to deliver to the lenders the Company's June 30, 2005, and Sept. 30, 2005, Form 10-Q financial statements. All of the Company's indentures, other than the indenture governing its junior subordinated convertible notes, contain a cross default provision, which provides that an event of default occurs when an event of default occurs under any other indebtedness in excess of $50 million and as a result of the default, the maturity of the debt has been accelerated and such acceleration has not been rescinded or annulled within 60 days. The Amended and Restated Credit Agreement also contains a cross-default provision that provides that the Company's default on indebtedness in amounts in excess of $50 million would constitute an event of default under the Amended and Restated Credit Agreement. As of December 31, 2005, the total amount of indebtedness outstanding under the Amended and Restated Credit Agreement was $200 million and $294 million of letters of credit were issued. The total amount of indebtedness under the Company's indentures with cross default provisions was $3.8 billion. The Company said that the receipt of the notice from the trustee will not have a material adverse effect on the Company because it expects to cure the default by filing all required periodic reports with the SEC, the trustee and the lenders under its credit facility no later than January 20, 2006. AES Corporation -- http://www.aes.com/-- is a leading global power company, with 2004 revenues of $9.5 billion. AES operates in 27 countries, generating 44,000 megawatts of electricity through 124 power facilities and delivers electricity through 15 distribution companies. AES Corp.'s 30,000 people are committed to operational excellence and meeting the world's growing power needs. * * * As reported in the Troubled Company Reporter on Jan. 11, 2006, Moody's affirmed the ratings of The AES Corporation, including its Ba3 Corporate Family Rating and the B1 rating on its senior unsecured debt. The rating outlook remains stable. As reported in the Troubled Company Reporter on June 23, 2005, Fitch Ratings has upgraded and removed the ratings of AES Corporation from Rating Watch Positive, where it was initially placed on Jan. 18, 2005 pending review of the company's year-end financial results. Fitch said the Rating Outlook is Stable. Following the completion of its review, Fitch's upgrade reflects the significant progress AES had made in retiring parent company recourse debt and improving liquidity. In addition, AES has refinanced several near term debt maturities and extended the company's debt maturity profile. The company has successfully accessed both the debt and equity markets in 2004 and 2003. ALEXANDRA KRUMSZYN: Case Summary & 7 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Alexandra Krumszyn 125 The Crossway Yonkers, New York 10701 Bankruptcy Case No.: 06-22004 Type of Business: The Debtor owns an apartment building located at 2427 Hoffman Street, in Bronx, New York. Chapter 11 Petition Date: January 11, 2006 Court: Southern District of New York (White Plains) Judge: Adlai S. Hardin, Jr. Debtor's Counsel: Robert S. Lewis, Esq. Law Offices Robert S. Lewis, P.C. 53 Burd Street Nyack, New York 10960 Tel: (845) 358-7100 Fax: (845) 353-6943 Total Assets: $2,000,800 Total Debts: $206,340 Debtor's 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ City of New York $200,000 66 John Street, 12th Floor New York, NY 10007 Genesis Financial Solution $1,834 8705 SW Nimbus Avenue, Suite 3 Beaverton, OR 97008 Macys/FDSB $1,118 9111 Duke Drive Mason, OH 45040 LVNV Funding $918 P.O. Box 10584 Greenville, SC 29603 Sherman Acquisitions $918 P.O. Box 740281 Houston, TX 77274 Capital 1 Bank $878 11013 W Broad Street Glen Allen, VA 23060 Capital 1 Bank $674 11013 W Broad Street Glen Allen, VA 23060 AMC ENT: Discloses Non-Public Material Info Regarding Loews Merger ------------------------------------------------------------------ AMC Entertainment Inc. disclosed non-public material information about the Company and Loews Cineplex Entertainment Corporation in relation to their planned merger. As reported in the Troubled Company Reporter on June 23, 2005, the Company and Loews Cineplex entered into a definitive merger agreement that would result in the combination of their businesses. The merger agreement also provides for the merger of their respective holding companies, Marquee Holdings Inc. and LCE Holdings, Inc., with Marquee Holdings Inc., which is controlled by affiliates of J.P. Morgan Partners, LLC and Apollo Management, L.P., continuing as the holding company for the merged businesses. The current stockholders of LCE Holdings, Inc., including affiliates of Bain Capital Partners, The Carlyle Group and Spectrum Equity Investors, would hold approximately 40% of the outstanding capital stock of the continuing holding company. The merged company, to be called AMC Entertainment Inc., will be headquartered in Kansas City, Missouri, and will own, manage or have interests in approximately 450 theatres with about 5,900 screens in 30 states and 13 countries. Peter C. Brown, AMC Chairman of the Board, Chief Executive Officer and President, will remain in this role in the merged company. When combined, the company will have approximately 24,000 associates serving more than 280 million guests annually. An integration committee will be formed in which Travis E. Reid, President and Chief Executive Officer of Loews Cineplex Entertainment Corporation, and Brown will serve as co-chairs. The integration committee also will include representatives of the two sponsor groups. Financing the Merger The Company intends to finance the Mergers and the refinancing of the Company and Loews' existing indebtedness: -- New senior secured credit facility, consisting of: * a $650 million senior secured term loan B facility; and * a $200 million secured revolving credit facility; and -- $325 million of new senior subordinated debt; Concurrently with the closing of the Facility and New Senior Subordinated Debt, the Company anticipates entering into these financing transactions: -- the repayment of all outstanding amounts under the Company's existing senior secured credit facility and Loews' existing senior secured credit facility and the termination of all commitments under those facilities; and -- the completion of the tender offer and consent solicitation for all $315 million aggregate principal amount of Loews' outstanding 9.0% senior subordinated notes due 2014. Unless otherwise stated, it is assumed that 100% of the Existing Loews Subordinated Notes will be tendered in connection with the Tender Offer. The Company intends to consummate the mergers concurrently with: (1) the closing of the facility; (2) the consummation of the new senior subordinated debt offering; (3) the repayment of all outstanding amounts under: -- the Company's existing senior secured credit facility; and -- Loews' existing senior credit facility; and (4) the consummation of the other financing transactions A full-text copy of the Disclosure is available for free at http://ResearchArchives.com/t/s?442 About Loews Cineplex Loews Cineplex Entertainment Corp operates motion picture theaters primarily in major cities throughout the United States, Canada, Spain, Hungary and Turkey. The company operates its theaters under the Loews, Sony and Cineplex Odeon names. About AMC Entertainment Headquartered in Kansas City, Missouri, AMC Entertainment Inc. http://www.amctheatres.com/-- is a subsidiary of Marquee Holdings Inc. Through its circuit of AMC Theatres, AMC Entertainment operates 229 theaters with 3,546 screens in the United States, Canada, France, Hong Kong, Japan, Portugal, Spain and the United Kingdom. * * * As reported in the Troubled Company Reporter on Jan. 10, 2006, Standard & Poor's Ratings Services assigned ratings to the senior secured credit facilities and the senior subordinated notes that will be issued by AMC Entertainment Inc. upon closing of its merger with Loews Cineplex Entertainment Corp. AMC Entertainment will be the surviving entity and retain its name over the merged entity. The company's parent will remain Marquee Holdings Inc. The senior secured credit facilities were rated 'B+', with a recovery rating of '1', indicating a high expectation of full recovery of principal in the event of a payment default. The senior subordinated notes were rated 'CCC+'. As reported in the Troubled Company Reporter on Jan. 6, 2006, Moody's Investors Service assigned a Ba3 rating to the proposed bank facilities of AMC Entertainment, Inc. (AMC) and a B3 rating to AMC's proposed senior subordinated notes issuance. AMC expects to close on its previously announced merger with Loews Cineplex Entertainment Corporation in the beginning of this year and will use proceeds from the bank credit facilities to repay existing bank debt at Loews Cineplex, as well as to provide liquidity for the combined entity. Ratings assigned: AMC Entertainment, Inc.: * Ba3 Assigned to $200 million Senior Secured Revolving Credit Facility matures 2012 * Ba3 Assigned to $650 million Senior Secured Term Loan matures 2013 * B3 Assigned to $325 million Senior Subordinated Notes due 2016 Ratings affirmed: AMC Entertainment, Inc.: * B2 rating on $205 million senior (floating rate) notes due 2010 affirmed * B2 rating on $250 million 8.625% senior notes due 2012 affirmed * B3 rating on $215 million 9.5% senior subordinated notes due 2011 affirmed * B3 rating on $175 million 9.875% senior subordinated notes due 2012 affirmed * B3 rating on $300 million 8% senior subordinated notes due 2014 affirmed Marquee Holdings, Inc.: * B1 Corporate Family Rating affirmed * Caa1 rating on Senior Discount Notes due 2014 ($304 million face value) affirmed Rating Withdrawn: AMC Entertainment, Inc.: * Ba3 $175 million Senior Secured Revolving Credit Facility matures 2009 Outlook changed to stable from negative. AMERICAN REMANUFACTURERS: Black Diamond to Buy Selected Assets -------------------------------------------------------------- Black Diamond Capital Management, L.L.C. reported that an entity it manages has executed an agreement to purchase select assets held by the Bankruptcy Estate of American Remanufacturers, Inc. These assets include American Remanufacturers' operations on the East and West Coasts. The transaction is scheduled to close by Jan. 17, 2006. Christopher Kipley, a Managing Director at Black Diamond Capital Management, stated, "Black Diamond intends to explore all options for these assets, including strategic alliances that could potentially result in restarting the business." About Black Diamond Capital Management L.L.C. Black Diamond Capital Management, L.L.C. is an alternative asset management firm with approximately $7 billion under management in a combination of private equity, hedge funds and structured vehicles. It was founded in 1995 by its managing partners, James Zenni and Stephen Deckoff. Its investors are largely comprised of leading institutional investors, including pension funds, endowments funds, and insurance companies. About American Remanufacturers Inc. Headquartered in Anaheim, California, American Remanufacturers, Inc., and its affiliates are privately held companies that produce remanufactured automotive components that include "half shaft" axles, brake calipers, and steering components. The Debtors are the second largest full-line manufacturer of undercar automotive parts in the United States. The Debtor with its nine affiliates filed for chapter 11 protection on November 7, 2005 (Bankr. D. Del. Case No. 05-20022). Kara S. Hammond, Esq., Pauline K. Morgan, Esq., Sean Matthew Beach, Esq., at Young Conaway Stargatt & Taylor LLP and Alan W. Kornberg, Esq., Kelley A. Cornish, Esq., Margaret A. Phillips, Esq., and Benjamin I. Finestone, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP represent the Debtors. The Court converted the Debtors' chapter 11 case to a chapter 7 liquidation proceeding on Nov. 18, 2005. Montague S. Claybrook is the chapter 7 Trustee for the Debtors' estates. When the Debtors filed for chapter 11 protection, they estimated assets between $10 million to $50 million and their debts at more than $100 million. AMERICHIP INTERNATIONAL: Appoints Thomas P. Schwanitz as CFO ------------------------------------------------------------ The Board of Directors of AmeriChip International Inc. (OTC BB: ACHI) appointed Thomas P. Schwanitz, CPA, to the position of Chief Financial Officer effective immediately. In addition, Mr. Schwanitz will be joining the Board of Advisors. The appointment of Mr. Schwanitz is commensurate with the company's action plan for the 2006 fiscal year during which the company will generate revenues and become profitable. This proactive appointment affords Mr. Walther, President and CEO, more time to concentrate on solidifying pending orders and finalizing the acquisition of KSI Machine & Engineering. Mr. Walther stated, "Tom will be an integral part of our developing into a major company that has a technology sought after by a number of different industries. I firmly believe he will be a valuable member of the AmeriChip team and we welcome him." In addition, the company is responding to its Tier One and OEM customers that require it to implement both financial and quality control standards in preparation for receiving orders. Mr. Schwanitz will assist Mr. Walther with the transition from a "going concern" to a revenue-producing technology company. Mr. Schwanitz will also be spearheading the implementation of our new Microsoft Great Plains software program which will help ensure that the Company will be in compliance with Sarbanes-Oxley standards for public companies. "Having watched AmeriChip develop from a time when their technology was a proven but unrecognized part of the machining world, to a point in time when AmeriChip has taken an impressive lead in redefining machining as we know it, I am proud and honored to join the Company at this most auspicious time in their growth," stated Thomas Schwanitz. Mr. Schwanitz is Managing Partner of Schwanitz, Hayden & Associates, P.L.C. of Detroit, Michigan, and has a Bachelor of Science - Accounting from Northern Michigan University. Mr. Schwanitz's professional affiliations include member of American Institute of Certified Public Accountants, Michigan Association of Certified Public Accountants, Consultant to the Association of Macomb County Life Underwriters and Financial & Estate Planning Councils of Detroit and Macomb County. Mr. Schwanitz is also a member of the Board of Directors for and is the Treasurer of the Mount Clemens General Hospital and on the Board of Trustees for Baker College, Mount Clemens. Headquartered in Plymouth, Michigan, AmeriChip International Inc. -- http://www.americhiplacc.com/-- holds a patented technology known as Laser Assisted Chip Control, the implementation of which results in efficient chip control management in industrial metal machining applications. This technology provides substantial savings in machining costs of certain automobile parts providing much more competitive pricing and more aggressive sales approaches within the industry. At Aug. 31, 2005, Americhip International, Inc.'s balance sheet showed a $1,435,882 stockholders' deficit compared to a $1,163,434 deficit at Nov. 30, 2004. ANCHOR GLASS: Court Authorizes Assumption of Unimin Contract ------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida approved Anchor Glass Container Corporation's request to assume an executory contract with Unimin Corp. Unimin has consented to the assumption of the contract. As reported in the Troubled Company Reporter on Dec. 14, 2005, the Debtor was party to an executory contract with Unimin pursuant to which the Debtor purchases silica and alumina. After reviewing the relevant market, the Debtor believes that it is best to assume its contract with Unimin because purchasing silica sand and alumina would result in prohibitively higher costs to it than that available under the Unimin contract. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Court OKs Stichter as Committee's Counsel ------------------------------------------------------- The Hon. Alexander L. Paskay of the U.S. Bankruptcy Court for the Middle District of Florida approved the retention of Stichter, Riedel, Blain & Prosser, PA, as counsel for the Official Committee of Unsecured Creditors of Anchor Glass Container Corporation, nunc pro tunc to Sept. 29, 2005. As reported in the Troubled Company Reporter on Nov. 11, 2005, Felicia S. Turner, the U.S. Trustee for Region 21, asked the Court to deny the Stichter's retention, effective as of Aug. 26, 2005, because the committee failed to demonstrate excusable neglect for its delay in filing the application. Judge Paskay reserves ruling on the U.S. Trustee's objection with respect to approval of the Application as of Aug. 26, 2005, and says he may consider the issue on the hearing of the firm's final fee application. Stichter Riedel will be paid in accordance with its customary hourly rate for certain professionals: Professional Hourly Rates ------------ ------------ Partners $250 - $350 Associates $135 - $210 Paraprofessionals $100 Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANDROSCOGGIN ENERGY: Confirmation Hearing Set for Valentine's Day ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maine approved the adequacy of information contained in Androscoggin Energy LLC's Second Amended Disclosure Statement explaining its Second Amended Chapter 11 Plan of Reorganization on Jan. 10, 2006. The Honorable Louis H. Kornreich determined that the Disclosure Statement contained adequate information -- the right amount of the right kind for creditors to make informed decisions when called to vote for the Plan. The Court will convene a hearing on Feb. 14, 2006, at 9:00 a.m., to discuss the merits of Androscoggin's Plan. The Plan calls for the payment of all valid claims via the distribution of the Debtor's existing cash and the issuance of 100% of new membership interests in the Reorganized Debtor to Calpine Northbrook Corporation of Maine, Inc. The Debtor's remaining principal assets consist of approximately $44.2 million in cash and the cogeneration facility. Pursuant to the Plan, a $2.5 million working capital reserve will be set up to pay operating expenses and other liabilities of the reorganized Debtor associated with the ownership and maintenance of the cogeneration facility after the effective date. Treatment of Claims All allowed secured claims of CSFB arising from the Credit Agreement will be paid in full on the earlier of the effective date of the Plan or March 30, 2006. The secured tax claims of the Town of Jay will be paid in full on the effective date. Holders of allowed unsecured claims not classified under the Plan will receive a pro rata share of the Plan Cash and a pro rata share of the amount, if any, by which the International Paper Reserve exceeds the International Paper cure amount. The International Paper Reserve means an amount equal to the greater of: a) the amount distributable on account of all claims of International Paper arising out of the rejection of any executory contract or unexpired lease, assuming that the ESA and the IP Lease are not assumed pursuant to the Plan; or b) $10 million payable on or before the effective date. Calpine Northbrook will receive new membership interests in the reorganized debtor in exchange for all of its allowed unsecured claims. Existing membership interests will be cancelled on the effective date and interest holders get nothing under the Plan. Headquartered in Boston, Massachusetts, Androscoggin Energy LLC, owns, operates, and maintains an approximately 150-megawatt, natural gas-fired cogeneration facility in Jay, Maine. The Company filed for chapter 11 protection on November 26, 2004 (Bankr. D. Me. Case No. 04-12221). Michael A. Fagone, Esq., at Bernstein, Shur, Sawyer & Nelson represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $207,000,000 and total debts of $157,000,000. ATA AIRLINES: Ambassadair Asks Court to Set Admin. Claim Bar Date ----------------------------------------------------------------- Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana, tells the U.S. Bankruptcy Court for the Southern District of Indiana that ATA Airlines, Inc., and its debtor-affiliates Ambassadair Travel Club, Inc., and Amber Travel, Inc., need to determine the amount and number of administrative expense claims filed against them to properly administer their estates. Ms. Hall recounts that substantially all of the Debtors' assets have been sold, and the Debtors remain as debtors-in-possession of their businesses pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. The Ambassadair Debtors ask the Court to establish a bar date for filing requests for the allowance or payment of administrative expense claims against their estates. Pursuant to Section 503(a) of the Bankruptcy Code, any entity may file a request for payment of an administrative expense. The Debtors propose that administrative expense claims arising between October 26, 2004, and January 1, 2006, and that remain unpaid, other than the claims of professionals for fees and reimbursement of expenses, be subject to an Administrative Claims Bar Date. Any creditor who fails to file a request for the allowance or payment of its Administrative Expense Claim on or before the Bar Date will be forever barred from asserting its claim against the Debtors. In addition, governmental entities will have a separate administrative claims bar date. The Ambassadair Debtors will serve an Administrative Claims Bar Date Notice and proof of claim forms to parties-in-interest. 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. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Can Use ATSB Lenders' Cash Collateral Until Feb. 1 ---------------------------------------------------------------- ATA Airlines, Inc., its debtor-affiliates and these ATSB Lenders: * Govco Incorporated, * Citibank, N.A., * AFS Investments XII, Inc., and * International Lease Finance Corporation stipulate that the Debtors may use the ATSB Lenders' cash collateral and other collateral through the earliest of: (i) the close of business on February 1, 2006; (ii) the occurrence of any event of default set forth in the Cash Collateral Order; or (iii) the time the Debtors' Settlement Agreement with the ATSB Lenders and the Official Committee of Unsecured Creditors will be materially breached or rendered null. The Debtors agree to pay, in advance, Sage-Popovich, Inc., to perform any work deemed advisable by the ATSB Lenders to update SPI's audit, valuation and inspection of the Debtors' inventory of rotables, repairables and expendables. The Debtors will also pay a $200,000 monthly fee plus reasonable expenses to Lazard Freres & Co. LLC, as financial advisor to the ATSB Lenders, until the earlier of: (i) the effective date of a plan of reorganization in the Debtors' Chapter 11 cases; or (ii) the time the ATSB Lenders have received relief from the stay imposed pursuant to Section 362 of the Bankruptcy Code with respect to half, in terms of value, of the Appraised Collateral and Pledged Equipment then in the possession of ATA Airlines, Inc. All the payments to Lazard will constitute adequate protection payments and will not be applied to reduce the principal amount of the ATSB Loan Obligations or the Claims of the ATSB Lenders. The Debtors and the ATSB Lenders also stipulate that any definitive documentation between the Debtors and MatlinPatterson must provide the Debtors: (x) no less than $30,000,000 of liquidity through the DIP Financing Transaction; (y) $20,000,000 in debt financing upon their emergence from their Chapter 11 cases; and (z) an investment of up to $50,000,000 in equity of the Debtors upon their emergence from their Chapter 11 cases pursuant to the Investment Agreement. The Debtors, the ATSB Lenders and the Committee stipulate 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" as defined in the Settlement Agreement will be extended to February 1. 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 covenant with the ATSB Lenders to maintain: (i) at least $35,000,000 in Available Cash during the Extension Period; and (ii) no less than the greater of the Available Cash amount or 90% of the Available Cash amount forecasted at each week end in the Debtors' cash forecast: Week Ending Available Cash 90% of Available Cash ----------- -------------- --------------------- 01/06/06 $60,125,349 $54,112,814 01/13/06 $52,530,024 $47,277,022 01/20/06 $44,454,353 $40,008,918 01/27/06 $47,001,763 $42,301,587 02/03/06 $38,888,889 $35,000,000 * * * The U.S. Bankruptcy Court for the Southern District of Indiana approves the parties' stipulation. 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. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) BANK OF NEW ENGLAND: Bondholders Reach Partial Settlement --------------------------------------------------------- Dr. Ben Branch, the chapter 7 trustee for the bankruptcy estate of Bank of New England Corporation, reported that as a result of a Court approved mediation session held on Nov. 22, 2005, an agreement in principle was reached between representatives of the holders of each of the senior debt securities and the junior debt securities of BNEC. Pursuant to the Agreement, a partial settlement of an ongoing dispute with respect to the distribution of the remaining estate funds to holders of debt securities will be funded by a distribution by the chapter 7 Trustee of the sum of $25 million, of which: -- 50% will be paid to the indenture trustees for the senior debt securities and -- 50% will be paid to the indenture trustees for the junior debt securities. Except for the payments mentioned, all remaining amounts in dispute between the senior debt securities and the junior debt securities will continue to be subject to the ongoing dispute and the partial settlement will have no effect or prejudice with respect to that dispute. The Agreement is subject to approval by the U.S. Bankruptcy Court for the District of Massachusetts. Bank of New England Corporation filed for chapter 7 liquidation on Jan. 1, 1991 (Bankr. D. Mass. Case No. 91-10126). BBI ENTERPRISES: Court Orders Debtors' Appearance on January 25 --------------------------------------------------------------- The Honorable Thomas J. Tucker of the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, ordered BBi Enterprises, L.P., and its debtor-affiliates to appear in Court on Jan. 25, 2006, at 11:00 a.m. to defend why their chapter 11 cases shouldn't be dismissed or converted. The Court's order was issued as a result of the Debtors' failure to submit a chapter 11 plan after the exclusive plan filing period expired on Dec. 5, 2005. Headquartered in Bloomfield Hills, Michigan, BBi Enterprises, L.P., designs, manufactures and supplies thermal and acoustic components to the North American OEM Automotive industry. The Company and its debtor-affiliates filed for chapter 11 protection on March 4, 2005 (Bankr. E.D. Mich. Case No. 05-46580). Joseph M. Fischer, Esq., Robert A. Weisberg, Esq., and Lawrence A. Lichtman, Esq., at Carson Fischer, P.L.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10 million to $50 million in assets and debts. CAROLINA TOBACCO: Wants to Employ Parks Bauer as Special Counsel ---------------------------------------------------------------- Carolina Tobacco Company asks the U.S. Bankruptcy Court for the District of Oregon for permission to employ Parks, Bauer, Sime, Winkler & Fernety, LLP, as its special counsel. The Debtor hired Parks Bauer to represent it in pending litigation involving the certification process to sell cigarettes in Oregon. Parks Bauer will: a) file all necessary documents; b) attend all court hearings; and c) take any other action deemed necessary or advisable depending on the actions taken by the defendant. The Debtor discloses the Firm's professionals bill: Attorney Designation Hourly Rate -------- ----------- ----------- J. Phillip Parks Attorney $185 Associate $140 J. Phillip Parks, Esq., a Parks Bauer partner, assures the Court that his Firm does not hold any interests adverse to the Debtor's estate. Headquartered in Portland, Oregon, Carolina Tobacco Company -- http://www.carolinatobacco.com/-- manufactures Roger-brand cigarettes. The Company filed for chapter 11 protection on April 18, 2005 (Bankr. D. Ore. Case No. 05-34156). Tara J. Schleicher, Esq., at Farleigh Wada & Witt P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $24,408,298 in assets and $14,929,169 in debts. COLLINS & AIKMAN: Has Until Plan Confirmation to Decide on Leases ----------------------------------------------------------------- With certain exceptions, Judge Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan extended Collins & Aikman Corporation and its debtor-affiliates deadline to decide on their unexpired leases until the date of confirmation of their plan of reorganization. Judge Rhodes directs the Debtors to decide on seven leases at these dates, provided that the decision is not later than the plan confirmation date: Lease Decision Lessor Leased Premises Deadline ------ --------------- -------------- Anchor Court, LLC West Anchor Court, Plymouth, Michigan July 15, 2006 Becker 150 Stephenson LLC 150 Stephenson Highway Troy, Michigan June 30, 2006 Becker 250 Stephenson LLC 250 Stephenson Highway Troy, Michigan June 30, 2006 Becker Properties LLC Wall Street, Sterling Heights, Michigan May 31, 2006 Becker Properties LLC East Fifteen Mile Rd, Sterling Heights, Michigan July 15, 2006 Becker Properties LLC 660 Massman, Davidson County, Tennessee Sept. 30, 2006 Mid America II LLC Mid American Business Park, Oklahoma City Jan. 24, 2006 Furthermore, Judge Rhodes requires the Debtors to timely pay rent to Fabric (DE) GP pursuant to their lease dated as of June 27, 2002. If the Debtors fail to pay rent, Fabric will have the right to compel the Debtors to assume or reject the Fabric Lease without further delay. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, points out that the Debtors are complying with their postpetition obligations related to remaining unexpired leases on a timely basis. With respect to rejected leases, the Debtors have complied with applicable Bankruptcy Code requirements. According to Mr. Schrock, the Debtors are currently using the Remaining Unexpired Lease properties in the ordinary course of their business operations. The use presents little, if any, physical risk to the properties going forward. Thus, Mr. Schrock assures the Court that lessors will not be harmed by an additional extension of the Lease Decision Period. Besides, Mr. Schrock explains, maintaining the Remaining Unexpired Leases is essential to the Debtors' ability to reorganize in a smooth and efficient manner. Relocation from the Remaining Unexpired Leased Properties would entail great expense and inconvenience, further complicating the Debtors' ability to reorganize effectively. The Remaining Unexpired Leases represent significant assets of the estates that require careful consideration in conjunction with the Debtors' development of a plan of reorganization, Mr. Schrock tells Judge Rhodes. Although the Debtors have filed a number of requests to reject certain unexpired leases since the Petition Date, the Debtors have not yet formed, and will not form by January 16, 2006, an informed business judgment as to decide on all of the Remaining Unexpired Leases. Mr. Schrock notes that not only must the Debtors examine the Remaining Unexpired Leases and analyze their terms and payments, in addition to negotiating with lessors for reductions in rent, the Debtors must also examine alternative locations. Examination of alternative locations requires an analysis of space available to accommodate the Debtors' businesses, negotiation of lease terms, and the planning of time periods for the relocation of the Debtors' facilities. The Debtors' decision is dependent on their future business plans, which they are still formulating with input and assistance from their advisors, the Official Committee of Unsecured Creditors and lenders. Objections (1) Mid America Mid America II, L.L.C. leased to the Debtors a 120,000-square foot space, consisting of a 5,339-square foot office space, and a 114,661-square foot manufacturing, assembly and storage space. The Lease is a triple net lease. Julie Beth Teicher, Esq., at Erman, Teicher, miller, Zucker & Freedman, P.C., in Southfield, Michigan, relates that the Debtors' operations at the Premises provide "just-in-time" inventory to a General Motors plant about a mile away. Mid America believes that General Motors will be closing their facility within the next few months. Accordingly, Ms. Teicher asserts that it is reasonable to conclude that the Debtors will no longer need their manufacturing plant at the Premises once General Motors closes its facility. Ms. Teicher points out that Mid America has the ability to mitigate its damages and to re-let 50,000 square feet of the Premises to a new tenant, at current market rates, which exceed the rates of the Lease with the Debtors. Mid America's prospective tenant is interested in negotiating a five-year lease with renewals. According to Ms. Teicher, Mid America needs to make special leasehold accommodations for its prospective tenant because the tenant: -- is affiliated with the Tinker Air Force Base as a national defense contractor; -- conducts business of a highly sensitive nature; and -- requires heightened security at its location. Ms. Teicher asserts that if the prospective tenant is not able to enter into a lease with Mid America at the Premises right away, Mid America will lose its business opportunity. The Debtors must immediately decide whether or not they need Mid America's facility, Ms. Teicher asserts. In light of the impending closure of the General Motors' plant, Mid America believes that the Debtors could intelligently appraise whether or not they should assume or reject the Lease by January 16, 2006. Mid America, therefore, asks the Court to: (a) deny the Debtors' request to extend their Lease Decision Period; and (b) compel the Debtors to decide on their lease with Mid America effective January 16, 2006. However, if the Court grants the Debtors' request, Mid America asks the Court to extend the lease decision deadline by no greater than 30 days, and condition the extension on the immediate payment of all 2005 ad valorem taxes, insurance and common area costs, estimated at $15,000. (2) Becker Properties, et al. Becker Properties, LLC, Anchor Court, LLC, Becker 150 Stephenson, LLC, and Becker 250 Stephenson, LLC, contends that the Debtors have not justified the grant of an open-ended extension nor the prejudice that Becker will suffer if the extension is granted. "An open-ended extension is contrary to the timetable provided in the Bankruptcy Code," Robert J. Diehl, Jr., Esq., at Bodman LLP, in Detroit, Michigan, asserts. Mr. Diehl informs the Court that Becker's prejudice is most severe in respect of leases for two office buildings in Troy, Michigan -- 150 Stephenson and 250 Stephenson. The two buildings, together with another previously rejected building lease -- 350 Stephenson -- comprise an office campus. Mr. Diehl relates that the Debtors have demanded concessions from Becker as a condition to their assumption of the 150 Stephen and 250 Stephenson leases and Becker has rejected those demands. Becker has a prospective tenant for the 350 Stephenson lease that has expressed interest in 150 and 250 Stephenson, as well. The Debtors should not be able to use an open-ended extension to hold Becker hostage to their demand for concessions on those leases, Mr. Diehl says. 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Court Expands Scope of Davis Polk's Services -------------------------------------------------------------- As previously reported, Collins & Aikman Corporation and its debtor-affiliates received a grand jury subpoena from the United States Attorney's Office for the Southern District of New York and a related inquiry from the United States Securities and Exchange Commission related to the their financial statements. In light of the U.S. government's inquiries, the Debtors sought and obtained permission from the U.S. Bankruptcy Court for the Eastern District of Michigan to expand the scope of Davis Polk & Wardwell's retention. Davis Polk serves as special counsel to the Debtors' Audit Committee. Davis Polk's additional legal services, in connection with government inquiries, are: (a) assisting current and former officers, directors, and employees of the Debtors, as necessary, in connection with requests for information from the Government; (b) coordinating and conducting: -- the retrieval, archival, and review of information, documents, and electronic mail from the Debtors, in both electronic and paper format; and -- the production of those materials to the Government; (c) acting, if necessary, as a liaison between the Audit Committee, on the one hand, and the Official Committee of Unsecured Creditors and the Government, on the other hand; and (d) performing other services in connection with the Government Inquiries as the Audit Committee may deem. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, says Davis Polk will work closely with the Debtors and their other professionals to clearly delineate their duties and prevent unnecessary duplication of services whenever possible. The Debtors will pay the fees and expenses charged and incurred by Davis Polk in connection with its expanded retention. 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: GECC Wants Lear to Pay Prepetition Receivables ---------------------------------------------------------------- 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, in turn, transferred all interests in the Receivables, Related Security, Collections and Proceeds to General Electric Capital Corporation pursuant to a receivables transfer agreement. Erin L. Toomey, Esq., at Foley & Lardner LLP, in Detroit, Michigan, tells Judge Rhodes 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. Lear Corporation is an account debtor and obligor to the Debtors with respect to certain unpaid Prepetition Receivables. GECC has made demand on the Debtors, in their capacity as collection agent under the RPA and RTA, to collect the Prepetition Receivables from Lear, and to forward all collections immediately to GECC. However, Lear has failed and refused to pay the Prepetition Receivables to the Debtors or to GECC. Ms. Toomey relates that as of December 22, 2005, GECC is owed about $29,000,000 under the RPA and RTA, plus accrued and accruing interest, attorneys' fees, costs and other charges. GECC believes that at least $1,750,000 of Prepetition Receivables was owed by Lear as of December 22, and remains unpaid. Lear asserts adverse claims or interests -- which it may characterize as set-offs, recoupment, or other alleged adverse claims or interests -- with respect to the Prepetition Receivables. GECC disputes the adverse claims or interests. GECC, therefore, asks the U.S. Bankruptcy Court for the Middle District of Florida to enter: (a) a declaratory judgment adjudicating and ranking GECC's interests in all of the Prepetition Receivables in controversy; (b) a declaratory judgment adjudicating the amount of the Prepetition Receivables owed by Lear; (c) a declaratory judgment adjudicating the amount of GECC's claim under the RPA and RTA and the amount of the Debtors' residual interest in the Prepetition Receivables and, judgments directing Lear to pay all Prepetition Receivables to GECC, until it has received full payment of its claim under the RPA and RTA, with any remaining amount of residual value in the Prepetition Receivables then being paid to the Debtors' estates; and (d) a judgment awarding and enabling GECC to recover its costs and attorneys' fees to the full extent that those charges are recoverable under the bankruptcy laws of the United States or applicable non-bankruptcy law. GECC also asks the Court to rank enforcement judgments entered in favor of GECC and the Debtors' estates to ensure its first and prior right to payment in full under the RPA and RTA. 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) CONSTELLATION BRANDS: Fitch Rates $2.9 Billion Debts at Low-B ------------------------------------------------------------- Fitch has initiated rating coverage of Constellation Brands, Inc. (NYSE: STZ): -- Issuer default rating 'BB'; -- Bank credit facility 'BB'; -- Senior unsecured notes 'BB'; -- Senior subordinated notes 'BB-'. The Rating Outlook is Stable. Approximately $2.9 billion of debt is covered by these actions. The ratings reflect STZ's leading market position and broad portfolio of wine, beer and spirits in diversified global markets. STZ has pursued a strategy of growth through acquisitions financed primarily through debt. Recent major acquisitions include BRL Hardy Ltd. for $1,400 million in 2003, Robert Mondavi Corp. for $1,355 million in 2004, and a 40% interest in Ruffino, an Italian wine company, for $89 million in December 2004. STZ also recently made an estimated $1.2 billion hostile bid to acquire Vincor International Inc., which was to be financed entirely with debt. But after a sweetened bid was rejected by Vincor, Constellation let its bid expire, arguably demonstrating certain financial discipline. STZ has an excellent track record of integrating acquisitions. STZ has applied cash flow to support capital spending and debt paydown. However, total debt has increased as a result of successive acquisitions financed primarily with debt, with a significant increase in interest expense. Over the long term, it is likely that STZ will continue to make acquisitions that could result in financial and operational stress. Even under its high debt burden (total debt at Nov. 30, 2005, was approximately $2.9 billion), STZ has generated significant free cash flow in each of the past three years, with approximately $183 million in the last nine months ended Nov. 30, 2005. The Stable Rating Outlook allows for the current leverage and the high likelihood for future debt financed acquisitions. Materially higher leverage due to the financing of such acquisitions could negatively impact STZ's ratings. In the past, STZ has been very successful at finding synergies and paying down debt with its strong cash flow generating assets. STZ's contract as an importer for Grupo Modelo S.A. de C.V.'s beers, including Corona, for the western United States is up for renewal at the end of 2006. Corona Extra is the No. 1 imported beer in the United States. The Grupo Modelo contract is the primary source of revenue for Constellation's beer segment and represents approximately one-quarter to one-third of consolidated operating income. The Gambrinus Company is currently the importer for the eastern United States. Grupo Modelo has informed Gambrinus that the importer agreement would not be renewed after Dec. 31, 2006. Gambrinus is currently in arbitration proceedings with Grupo Modelo, challenging the Dec. 31, 2006 termination clause in its contract with Grupo Modelo. If Grupo Modelo succeeds in the arbitration with Gambrinus, it is unknown whether Grupo Modelo would negotiate an agreement with another importer such as STZ for the eastern United States or create its own import company. Grupo Modelo is also part-owned by Anheuser-Busch Companies Inc. To date, Fitch believes STZ has performed adequately under its contract with Grupo Modelo. Historically this contract has been renewed, and there is no indication that this contract will not be renewed, nevertheless it is a risk. STZ's leverage, as defined by debt to Operating EBITDA and FFO Adjusted Leverage, was 3.6x and 4.0x, respectively, for the LTM ending Nov. 30, 2005, improving from 4.8x and 5.5x, respectively, for fiscal year 2005, but little changed from 3.3x and 4.3x, respectively, for fiscal year 2004. Interest coverage, as defined by Operating EBITDA/interest and FFO Interest Coverage was 4.3x and 4.1x for the 12 months ending Nov. 30, 2005, little changed from 4.9x and 4.5x, respectively, for fiscal year 2005, and from 4.2x and 3.5x, respectively, for fiscal year 2004. Constellation also has five year interest rate swap agreements on $1.2 billion of STZ's floating-rate bank debt totaling just under $2 billion, fixing LIBOR at an average rate of 4.1% effective March 1, 2006. The decline in leverage ratio from fiscal 2004 was driven by the effect of the debt issued to fund recent acquisitions, but with marked improvement from fiscal 2005 due to debt paydown. As of Nov. 30, 2005, STZ had a liquidity position of approximately $391 million, consisting primarily of $365 million in revolving loans available to be drawn. It should be noted that the existing $2.9 billion credit facility also has an expansion component for up to $300 million in uncommitted term loans subject to certain terms and conditions. STZ currently has $200 million of senior notes due in August 2006 and $33 million of required bank debt repayments through the fiscal year ending Feb. 28, 2007. With strong free cash flow expected to continue, STZ has adequate financial flexibility to meet these near-term maturities and its capital requirements. CORNERSTONE PRODUCTS: Files Liquidating Chapter 11 Plan in Texas ---------------------------------------------------------------- Cornerstone Products, Inc., unveiled its First Amended Plan of Liquidation and accompanying Disclosure Statement to the U.S. Bankruptcy Court for the Eastern District of Texas, Sherman Division. The Plan is co-proposed by the Official Committee of Unsecured Creditors. As previously reported, the Honorable Brenda T. Rhoades denied a request by certain creditors to dismiss or convert the Debtor's case. Judge Rhoades said that an orderly liquidation under chapter 11 is more beneficial to the estates' unsecured creditors. The judge also ordered the Debtors to file and confirm a plan by Mar. 31, 2006. The Debtor commenced an orderly wind down of its business operations and liquidation of its assets in November 2005. Under the Debtor's Plan of Liquidation, an Unsecured Creditors Trust will be established. Certain assets of the Debtor will be transferred to the Trust for the benefit of the unsecured creditors. The Plan also provides for the cancellation of all old stock and issuance of new stock to the Trust. The Trust's assets will consist of: -- cash received from the sale of the Debtor's unencumbered real estate; -- all causes of action; -- the Trust's interest in the Ohio Molds; -- the Trust's interest in excess collections; -- accounts/inventory payment; -- remaining cash, if any, in the professional fee account; -- Trust shares; and -- all unencumbered assets other than the unencumbered real estate. Treatment of Claims Priority wage claims under Section 507(a)(3) of the Bankruptcy Code including wages, salaries, commissions, vacation, severance, and sick leave pay incurred within 90 days before the petition date will be paid in full and at most $10,000 per individual. Secured claims of: -- the Bank of America, N.A. as successor to Fleet Capital Corp., -- Wells Fargo Equipment Finance, Inc., -- Rural Enterprises of Oklahoma, Inc., -- Key Equipment Finance, -- General Electric Capital Corporation, -- First United Bank & Trust Company, -- Citicorp Del-Lease, Inc., and -- CIT Group/Equipment Financing, Inc. will be satisfied through the sale of their collaterals. Contract molders' will each receive separate treatment. Each molder will be paid from the proceeds of the sale of its collateral after the Court will declare the amount, validity and priority of its lien. Exxon Mobil Chemical Company will retain the collateral securing its claim. Administrative convenience claims of $500 or less including any creditors with allowed unsecured claims in excess of $500 that claim can elect to reduce their claim to $500 and get paid in full. General unsecured claims will receive beneficial interest in the Trust entitling them to a pro rata share of the remaining net recoveries and net proceeds from the Trust's assets after payment of administrative and priority claims. Unsecured subordinated claims will get paid after general unsecured claims are paid. Equity security holders will get nothing under the Plan. Headquartered in Plano, Texas, Cornerstone Products, Inc. -- http://www.cornerstoneproducts.com/-- manufactures custom injection molded plastic products. The Company filed for chapter 11 protection on July 5, 2005 (Bankr. E.D. Tex. Case No. 05-43533). Frank J. Wright, Esq., at Hance Scarborough Wright Ginsberg & Brusilow, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $59,595,144 and total debts of $65,714,015. DANA CORP: Fitch Shaves Rating on Sr. Unsecured Debt to B from BB- ------------------------------------------------------------------ Fitch Ratings has downgraded the ratings of Dana Corporation: -- Issuer default rating to 'B' from 'BB-'; -- Senior unsecured debt to 'B' from 'BB-'. Fitch has also upgraded this bank facility rating since Dana's banks have taken limited security with the bank line. -- Senior secured bank facility to 'BB' from 'BB-'. The ratings for Dana remain on Rating Watch Negative by Fitch, focusing on: * the company's accounting practices, * the ability of Dana to file its third-quarter financial statements, and * the resolution of the reporting requirement violation under its existing bond indentures. The recovery rating on the $400 million senior secured bank facility is 'RR1', indicating that Fitch expects full recovery for bank lenders. The facility is secured by receivables, inventory, and certain equipment. Dana has received waivers from the banks for certain covenant defaults, and Fitch expects that this facility will be replaced by a substantially larger bank facility with an enhanced security package. The recovery rating on any new facility will be evaluated based on the size of the facility and the collateral package. Fitch has assigned a recovery rating of 'RR4'on the senior unsecured debt, indicating senior unsecured lenders may not receive full recovery in a stress scenario valuation due to their position in the capital structure. The unsecured recovery rating will also be re-evaluated upon the establishment of any new bank facility, based on the amount of secured bank debt placed in a superior position to unsecured lenders. The Rating Watch Negative is maintained. The rating action is based on Dana's deteriorating operating results, accounting and financial control issues, and sustained higher debt levels. Higher net debt levels are expected to result from negative cash flow from operations in 2005. In 2006, Dana could be challenged to reverse negative cash flow from operations due to: * continuing margin erosion, * persistently higher commodity costs, and * potential production cutbacks at major suppliers. In addition, Dana has experienced operating difficulties in its commercial vehicles segment, failing to capitalize on the very strong heavy-duty truck market. The heavy-duty truck market also faces a potentially sharp downturn in 2007, accelerating the need for Dana to address operating performance in this segment. During the first half of 2005, Dana produced negative free cash flow of $309 million due, in part, to a significant buildup of working capital. Balance sheet deterioration was limited through asset sales and partnership dividends totaling $201 million, and the receipt of an asbestos-related insurance recoverable. Dana reported that after absorbing $262 million in working capital in the first half of 2005, it expected to achieve working capital reductions of $362 million in the second half of 2005 due to seasonal unwinding of receivables and inventory reductions. Given the apparent inefficiencies in Dana's manufacturing operations, Fitch expects that working capital reductions may fall well short of Dana's original targets. Second-half cash flows will also be affected by restructuring-related outflows and a $55 million pension payment. Dana faces challenges in achieving stabilization of cash flows and margin enhancement. Commodity costs, particularly steel, have been a significant factor in reducing Dana's margins, but meaningful relief may not occur in 2006. Consolidated operating results had been expected to be supported by the very strong upswing in the heavy-duty truck market, providing the opportunity to improve the cost structure and address the stresses of its Automotive Systems Group. The inability to capitalize on the favorable heavy-duty truck cycle will further pressure the company to improve its cost structure and productivity to stabilize cash flows and expand margins. Also, the company's exposure to further sales and production cutbacks in the domestic automotive industry remains a key risk factor. Dana retains adequate liquidity with $666 million in cash at the end of the second quarter, although approximately 10% of this is restricted. The company has a $400 million revolver, of which $175 million was outstanding at June 30, 2005, and $275 million in receivables securitization, of which $110 million was outstanding at June 30, 2005. In addition, Dana Credit Corp., which is in the process of winding-down, faces a $275 million maturity in August 2007. Dana recently received amendments and waivers under its financial covenants. However, Fitch expects that the bank agreement will need to be expanded. Under the recent amendments, the banks took a limited amount of collateral, which Fitch believes will likely become a more traditional security package under an expanded agreement. The receivables facility contains rating triggers based on Dana's credit rating, and availability is also affected by the credit ratings of Dana's customers. The likelihood of negative 2005 and 2006 free cash flow, a challenging production environment for SUV products, and the deteriorating condition of the credit ratings of the company's customers are all factors leading Fitch to conclude that the establishment of a larger secured facility is required to replace the company's accounts receivable securitization and factoring programs. DELTA AIR: Industry Analysts Ponder Merger With Northwest --------------------------------------------------------- Lucy Hornby, at Reuters, reports that U.S. airline industry analysts note that some of Northwest Airlines Corp. and Delta Air Lines Inc.'s domestic routes overlap -- a factor that could make the prospect of a merger enticing. Additionally, in the International arena, Delta dominates the Atlantic routes while Northwest has more flights to the Pacific region. Even U.S. Transport Secretary Norman Mineta wondered at the possibility of a merger between the two airline giants, Ms. Horby relates. Delta and Northwest representatives declined to comment on the issue. The carriers said each is strictly focused on restructuring, Ms. Horny relates. Other analysts however, believe that Delta and Northwest may merged with other airlines, but not with each other. A merger between the two companies will be difficult given that the companies only common aircraft model is the Boeing 757, and the merger would require large amounts of financing and a creative management to make the merger work, Ms. Hornby reports. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. 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. 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. DOCTORS HOSPITAL: Court Sets Feb. 16 for Disclosure Hearing ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, will convene a hearing at 8:30 a.m. on February 16 to consider the adequacy of information contained in the Disclosure Statement explaining the chapter 11 Plan of Reorganization filed by Doctors Hospital 1997, L.P. As previously reported, the Plan provides that the $865,000 DIP financing facility provided by Bruckman, Rosser, Sherrill & Co., L.P., will be exchanged for equity interests in the Reorganized Debtor's New General Partner. The DIP financing facility provided by General Electric Capital Corporation will be repaid pursuant to the terms governing the loan. GE HFS Holdings, Inc., fka Heller Healthcare Finance, Inc.'s prepetition and postpetition claims amounting to $24,917,248 will be repaid using a portion of the GE Exit Financing facility. The balance of GE HFS's claims will be repaid as part of the GE Restructure Term Debt, which is discussed fully in the Plan. General unsecured creditors will receive pro rata shares of distributions from a Liquidating Trust. Subordinated claims won't receive anything under the Plan. On the effective date, all partnership interests in the Debtor will be cancelled and extinguished. A full-text copy of Doctors Hospital 1997, L.P.'s Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=051117031151 Headquartered in Houston, Texas, Doctors Hospital 1997 LP, dba Doctors Hospital Parkway-Tidwell, operates a 101-bed hospital located in Tidwell, Houston, and a 152-bed hospital located in West Parker Road, Houston. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. S.D. Tex. Case No. 05-35291). James M. Vaughn, Esq., at Porter & Hedges, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $41,643,252 and total debts of $66,306,939. E.SPIRE COMMS: Settles Mastec Default Judgment Controversy ---------------------------------------------------------- The Hon. Walter Shapero of the U.S. Bankruptcy Court for the District of Delaware approved the settlement and compromise agreement between Gary F. Seitz, the chapter 11 Trustee appointed in the bankruptcy cases of e.Spire Communications and its debtor- affiliates, and Mastec North America, Inc. The settlement compromises and settles a $250,000 default judgment originally imposed by the Bankruptcy Court against Mastec in exchange for a $6,250 payment to the Debtors' estate. Default Judgment The Bankruptcy Court entered a default judgment against Mastec on July 28, 2005, after it failed to respond to an adversary proceeding commenced by the Debtors in 2002. The default judgment granted the declaratory and injunctive relief sought in the Debtors' complaint and a $250,00 monetary judgment in favor of the chapter 11 Trustee. Upon receiving the judgment letter, Mastec informed the chapter 11 Trustee that it never received notice of the complaint, the default order or the default judgment. Mastec maintained that the service of the 2002 complaint was improper and invalid. Mastec also disputed claims that it had any debt or breached any contract with the Debtors. Following extensive negotiations, the chapter 11 Trustee agreed to amend the default judgment to remove any monetary damages levied against Mastec. Mastec will in turn pay the Debtors $6,250 and waive all claims against the Debtors' estates. Headquartered in Columbia, Maryland, e.Spire Communications is a facilities-based integrated communications provider, offering traditional local and long distance Internet access throughout the United States. The Company and its debtor-affiliates filed for chapter 11 protection on March 22, 2001 (Bankr. Del. Case No. 01-00974). Chad Joseph Toms, Esq., and Domenic E. Pacitti, Esq., at Saul Ewing LLP, and James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young & Jones, represent the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they listed $911.2 million in total assets and $1.4 billion in total debts. Gary F. Seitz, Esq., is the Court-appointed Chapter 11 Trustee in the Debtors' bankruptcy proceedings. Daniel K. Astin, Esq., and Anthony M. Saccullo, Esq., at The Bayard Firm; Erin Edwards, Esq., at Young Conaway Stargatt & Taylor LLP; and Deirdre M. Richards, Esq., at Obermayer Rebmann Maxwell & Hippel LLP, represent Mr. Seitz. EMPIRE FIN'L: Regains AMEX Listing Compliance with $4.53M Equity ---------------------------------------------------------------- Empire Financial Holding Company received notice from the American Stock Exchange that it had regained compliance with the American Stock Exchange's continued listing requirements. As reported in the Troubled Company Reporter on Nov. 29, 2005, the Company received notice AMEX staff, on November 15, 2005, indicating that Empire no longer complies with AMEX's continued listing standards due to having shareholders' equity of less than $4,000,000 and losses from continuing operations and net losses in three of its four most recent fiscal years, as set forth in Section 1003(a)(ii) of the AMEX Company Guide, and that its securities are, therefore, subject to being delisted from AMEX. Subsequent to that date, Empire increased its shareholders' equity through the sale of its discount brokerage operation. After giving effect to transactions subsequent to September 30, 2005, on a pro-forma basis as of that date, Empire's stockholders' equity had increased to $4,526,059, thus regaining compliance with the continued listing requirements of the American Stock Exchange. 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 of losses from continuing operations in 2004, 2003 and 2002, a stockholders' deficit at the end of 2004 and uncertainties relating to regulatory investigations. ENVIRONMENTAL ELEMENTS: Has Until Jan. 30 to File Chapter 11 Plan ----------------------------------------------------------------- Environmental Elements Corporation sought and obtained an extension from the U.S. Bankruptcy Court for the District of Maryland, Baltimore Division, of its time to file and solicit acceptances of a chapter 11 plan. The Debtor recently sold its assets to Clyde Bergemann US, Inc., and Clyde Bergemann Investments, Inc. With the sale out of the way, the Debtor says that it can now focus its attention in drafting the terms of a liquidation plan that is acceptable to the estate's secured creditors and the Official Committee of Unsecured Creditors. The Debtor believes that an extension until January 30 is sufficient for it to file a plan and until March 30 to solicit acceptances of that plan. Headquartered in Baltimore, Maryland, Environmental Elements Corporation -- http://www.eec1.com/-- provides innovations for plant maintenance services, air pollution control equipment and complementary products. The Company filed for chapter 11 protection on July 1, 2005 (Bank. D. Md. Case No. 05-25073). Lawrence Coppel, Esq., at Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC, represents the Debtor. When the Debtor filed for protection from its creditors, it listed $1 million to $10 million in assets and $10 million to $50 million in debts. EXIDE TECH: VP & Controller P.A. Damaska Temporarily Sits as CFO ---------------------------------------------------------------- Phillip A. Damaska, Exide Technologies' Vice President and Corporate Controller, has assumed J. Timothy Gargaro's responsibilities as Chief Financial Officer while the Company completes its efforts to appoint a new CFO. The Company expects to complete this process shortly. As reported in the Troubled Company Reporter on Nov. 11, 2005, Mr. Gargaro resigned as the Company's Chief Financial Officer effective December 31, 2005. Headquartered in Princeton, New Jersey, Exide Technologies -- http://www.exide.com/-- is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. * * * As reported in the Troubled Company Reporter on July 8, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'CCC+' from 'B-', and removed the rating from CreditWatch with negative implications, where it was placed on May 17, 2005. "The rating action reflects Exide's weak earnings and cash flow, which have resulted in very high debt leverage, thin liquidity, and poor credit statistics," said Standard & Poor's credit analyst Martin King. Lawrenceville, New Jersey-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $740 million, and underfunded post-employment benefit liabilities of $380 million. EXTENWAY SOLUTIONS: Shareholder Deficit Disappears at Oct. 31 ------------------------------------------------------------- Extenway Solutions Inc. (TSX-V: EY) reported the filing of the company's financial statements for the quarter ended Oct. 31, 2005, together with the related management discussion and analysis. In the three months ended Oct. 31, 2005 Extenway had sales of $13,732, and incurred a net loss of $843,053. In the three months ended October 31, 2004 the company had sales of $257,705, and reported a net loss of $829,758. Mr. John McAllister, President and CEO, stated, "Much effort during the quarter was devoted to our going public transaction which was completed on Sept. 13, 2005. This transaction provides additional resources for the commercialization of Extenway's technology. We are encouraged by the reaction of potential customers and the growing prospect pipeline." Extenway Solutions Inc. -- http://www.extenway.com/-- is a provider of guest-centric solutions for the Hospitality industry that help clients differentiate their properties and services by improving the quality of their guest experience. Extenway solutions allow hospitality organizations to intelligently manage and coordinate all in-room guest interactions with key sales and marketing initiatives. At Oct. 31, 2005, Extenway Solutions Inc.'s balance sheet showed $1,270,262 of positive shareholders' equity compared to a $2,141,385 shareholders' deficit at Apr. 30, 2005. FEDERAL-MOGUL: Sees 10% Workforce Cuts & $125MM in Charges by 2008 ------------------------------------------------------------------ Federal-Mogul Corporation (OTCBB:FDMLQ) disclosed a three-year restructuring plan. The restructuring could affect about 25 facilities and reduce the Company's workforce by approximately 10% by December 2008. Details of the plan have not been finalized. The Company anticipates recording charges for costs and expenses related to this restructuring plan in the current quarter and future periods. Costs likely to be incurred are generally expected to include certain severance costs, retention costs, benefits costs and impairment of the facilities and equipment involved. Preliminary cost estimates range from $125 million to $150 million. "Our focus for the future will be on improving our performance in mature markets and expanding in key growth markets to be better positioned to serve our customers with our leading technology and world-class portfolio of quality products and services," said Chairman, President and Chief Executive Officer Jose Maria Alapont. "While these decisions are difficult, our drive for global profitable growth is dependent on implementing strategies that continue to strengthen our competitiveness and profitability in this market environment." During the fourth quarter of 2005, Federal-Mogul continued to make significant advancement toward emergence from Chapter 11 in the U.S. and Administration in the UK. "We are pleased with the progress in our emergence proceedings and implementation of our global profitable growth strategy as we continue to develop best cost manufacturing, service and engineering operations," Mr. Alapont said. 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 Nov. 30, 2005, Federal-Mogul's balance sheet showed a US$1,450.4 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. FORD MOTOR: Moody's Lowers Corporate Family Rating to Ba3 from Ba1 ------------------------------------------------------------------ Moody's Investors Service lowered the ratings of Ford Motor Company (Corporate Family and long-term to Ba3 from Ba1) and Ford Motor Credit Company (long-term to Ba2 from Baa3, and short-term to Not Prime from Prime-3). Ford's SGL-1 Speculative Grade Liquidity rating is affirmed. The rating outlook for Ford and Ford Credit is negative. These rating actions conclude a review for possible downgrade that was initiated on November 22, 2005. Moody's said that the Ford downgrade incorporates the view that the company's financial and competitive position will remain under considerable stress through 2007 despite the potential longer-term benefits that may result from its pending restructuring initiatives. The rating agency said that Ford's performance, relative to the key drivers of credit quality described in Moody's Rating Methodology for the Global Automotive Industry, is likely to result in the company's risk profile remaining at the lower end of the 16-company automotive peer group rated by Moody's. Moreover, as Ford attempts to reestablish and strengthen its position in the benchmark areas described in the methodology, Moody's believes that leading Asian and European rivals will continue to make notable progress in these same areas, thereby further increasing the competitive and operating challenges faced by Ford. Areas in which Ford's performance will likely remain weak relative to the methodology benchmarks include: 1) sustaining profitable share in core markets; 2) building a competitive cost structure based on efficient capacity utilization, flexible labor costs, and a stable supplier base; 3) generating meaningful levels of free cash flow; and 4) achieving competitive returns on investment. Although Ford's restructuring plan will likely address each of these areas, material improvement in operating and financial performance is likely to take several years to achieve. Consequently, Ford's credit metrics will likely remain weak through 2007. The Ford Credit downgrade reflects the continuing close operational and financial ties with Ford, and the fact that challenges faced by Ford could have a negative impact on the operations of the finance subsidiary. Nevertheless, the downgrade continues to reflect a one-notch differential from Ford's rating, based upon Moody's view that, in a default scenario, Ford Credit creditors are likely to experience better asset recovery than are Ford creditors. The negative outlook reflects Moody's view that at the Ba3 rating level, Ford remains weakly positioned relative to the key automotive methodology rating criteria. Consequently, the company's rating could come under further pressure during the next six to twelve months as a result of a number of near-term events or developments. These include: * an acceleration in the shift in consumer preference away from trucks and SUVs; * any further erosion in Ford's US share position; or * an increase in incentives. In addition, constructive negotiations with the UAW in order to further reduce health care costs and lower employment levels will be critical to the success of Ford's restructuring program and its ability to establish a more competitive cost structure. The outcome of the current negotiations between the UAW, Delphi and GM could be an important indicator of the environment in which Ford may have to seek important labor concessions. Moody's said that it expects Ford's soon-to-be-announced North American restructuring initiative to establish aggressive long- term objectives for: * reducing material costs; * eliminating excess capacity; * consolidating platforms; * accelerating new product introductions; and * expanding the global profile of its manufacturing and supply footprint. Moreover, as the company initiates this program it will benefit from a strong liquidity position characterized by cash and equivalents of: * approximately $25 billion (including proceeds from the Hertz sale); * over $6 billion in available committed bank credit facilities; and * a 24-year average maturity for its $18 billion in debt (less than $1.5 billion matures during the next four years). Finally, Ford is benefiting from strong consumer acceptance of it new mid-size and full-size automobiles, which could help to moderate some of the pressure faced in the truck and SUV segments. Despite these strengths, Moody's said that Ford continues to face formidable challenges, the most significant of which will be stabilizing its US share position at 18% or higher. In addition, Ford's profitability remains highly dependent on the truck and SUV segments that are experiencing both a long-term decline in shipment levels as well as a contraction in profit margins. As Ford's share position in the US has fallen from 22.8% in 2001 to 18.3% in 2005, Moody's believes that its capacity utilization has also declined to about 80%. This erosion has contributed to two significant cost containment challenges that will likely require a degree of accommodation from the UAW as part of the 2007 contract renegotiation. First, lower capacity utilization has severely reduced Ford's ability to cover the large fixed cost burden associated with its high health care expenses. As a result, Ford must achieve health care cost reductions beyond the recently agreed upon cuts in UAW retiree medical benefits. Reductions may be needed for the active UAW work force. Second, as Ford attempts to reduce capacity it will likely have to implement a large employee separation payment program with the concurrence of the UAW. It is uncertain whether the company will be able to achieve the concessions necessary from the UAW to begin establishing a more globally competitive labor cost structure in its US operations. Moody's said that Ford's performance relative to important credit metrics identified in the automotive methodology have remained near the bottom of the automotive peer group largely due to losses in market share, capacity underutilization, and high fixed labor costs. For fiscal 2005 the operating margin of the industrial business (excluding any earnings or dividend contribution from Ford Credit) will be negative after having been below 1% for the previous two years, EBITA/average assets (including Ford Credit dividends) will be less than 3%, interest coverage (including Ford Credit dividends) will be less than 2 times, and the ratio of free cash flow to debt will remain well below 10%. These already-weak metrics (calculated using Moody's standard adjustments) will remain under considerable pressure and are unlikely to improve during 2006 due to continued declines in the shipment levels and the profit margins within the truck and SUV market. As noted in Moody's automotive methodology, liquidity is a key rating factor. In the case of Ford, exceptional liquidity continues to act as a mitigant against weak credit metrics, and also affords the company a critical financial cushion as it attempts to implement its restructuring initiatives. Moody's noted that there are a number of factors beyond Ford's control which could result in further pressure on the rating. These factors include: * an erosion in the UAW labor relations environment at Delphi; * greater consumer resistance to products in the truck and SUV segments; or * an acceleration in negative price realization. Moody's said that other key drivers of Ford's rating will relate primarily to the company's initiatives that could help to strengthen its business or financial position relative to the methodology benchmarks. Successfully implementing these initiatives and remaining on track for achieving the intended objectives could contribute to a stabilization of the rating. Conversely, a lack of success in any of these areas would contribute to further pressure on the rating. The key drivers that Moody's will focus on include Ford's ability to: 1) sustain US market share at 18% or higher; 2) maintain liquidity above $23 billion; 3) achieve strong market acceptance of new products; 4) avoid significantly increased warranty expense or product recall activity; and 5) achieve the various cost reduction and operational targets that will be part of the restructuring plan. Ford is expected to announce its restructuring program on January 23rd, and to publicly disclose details of the plan. Moody's anticipates that upon the disclosure of these details, the rating agency will publicly incorporate certain elements of the of the program into the list of key rating drivers that it will monitor for the purpose of determining whether the company's position in the Ba3 rating category is improving or deteriorating. Moody's said that the challenges Ford faces in its auto operations could negatively impact conditions at Ford Credit, due to the financial and operational ties between the two firms. Under greatest pressure is Ford Credit's liquidity position, due to an unfavorable pricing environment for new unsecured debt issuance. Ford Credit is increasingly turning to securitization and other forms of financing to provide funds necessary to support origination activity. Ford Credit continues to enjoy good receptivity among securitization investors and is expanding its reach in that arena. But Moody's believes Ford Credit's overall unused committed funding capacity may decline in 2006, potentially constraining its future financial flexibility. Ford Credit's shrinking base of earning assets helps to mitigate liquidity stresses, as portfolio runoff generates strong cash flows to support operating activities and dividends to the parent. The firm has additional liquidity insurance in the form of sizeable available cash balances of $19 billion at the end of the third quarter of 2005. Moody's believes Ford Credit has sufficient resources to manage through near-term liquidity stresses and that it will be disciplined in maintaining acceptable capital levels. Ford Credit's margins are also under pressure due to: * higher borrowing costs; * a mix shift toward higher quality but lower yielding loans; and * a competitive pricing environment for new loan and lease originations. Profitability has been sustained by improvements in credit quality that have provided Ford Credit the opportunity to significantly reduce loss provisions, but any further improvements in credit quality are likely to be quite modest compared to recent quarters. Ford Credit remains adequately reserved, but any meaningful pressure on credit quality caused by adverse economic news, a shift toward higher levels of riskier loan originations, or worsening used car values -- which could potentially be tied to parent issues -- could require higher provisioning, adding to pressure on profitability. Ford Credit has taken steps to adjust operating costs in proportion to declines in business scale, but this could become more challenging going forward and could further stress profit ratios. Deterioration of profitability or asset quality could have negative implications for Ford Credit's intrinsic credit profile. Ford Motor Company, headquartered in Dearborn, Michigan, is the world's third largest automobile manufacturer. Ford Motor Credit Company, also headquartered in Dearborn, Michigan, is the world's largest auto finance company. FOSS MANUFACTURING: Ch. 11 Trustee Can Access $31.4-Mil DIP Loan ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Hampshire authorized Patrick O'Malley, the Chapter 11 Trustee appointed in Foss Manufacturing Company, Inc.'s chapter 11 case, to obtain up to $31.4 million of postpetition financing from CapitalSource Finance LLC. Charles R. Bennett, Jr., Esq., at Hanify & King, P.C., tells the Court that the loan proceeds will provide Mr. O'Malley with cash sufficient to fund the Debtor's operations until a sale of substantially of the Debtor's assets can be completed. Mr. O'Malley wants to access the loan in order to meet projected cash flow shortages particularly from late January through February 2006. The loan, Mr. O'Malley notes, would also provide funds to retain an investment banker who will assist him in the marketing and sale of the Debtor's business as a going concern. The T.I.P. loan, which will mature on Apr. 21, 2006, bears interest at a prime rate plus 3.5% from the unpaid principal balance commencing on the date of the first advance and continuing until full repayment of the loan, payable on the maturity date. Other Prepetition Secured Obligations On Apr. 15, 2004, the Debtor secured up to $29 million of prepetition loan from CapitalSource under a revolving credit and security agreement. To secure its prepetition loan obligation, the Debtor allegedly granted the lender: -- a first priority security interest in certain of the Debtor's assets, primarily accounts, inventory and proceeds; and -- a limited security interest in an equipment. In addition to the lien asserted by CapitalSource, Coastal Economic Development Corporation and Business Finance Authority of the State of New Hampshire assert a security interest in the Debtor's equipment to secure a $3 million loan in April 2004. The State and CapitalSource entered into a prepetition agreement pursuant to which CapitalSource limited its senior lien on the equipment to $5 million. Also, the Pension Benefit Guaranty Corporation asserts an interest in the Debtor's assets to secure a $1.2 million claim. The Trustee believes that the debts secured by these liens have been paid and the lien should have been discharged. The Debtor's obligations to CapitalSource will be secured by a DIP lien on the collateral consisting of the Debtor's real and personal property. The lien will be senior to the lien asserted by the PBGC, the scheduled lien holders and the State. Headquartered in Hampton, New Hampshire, Foss Manufacturing Company, Inc. -- http://www.fossmfg.com/-- is a producer of engineered, non-woven fabrics and specialty synthetic fibers, for a variety of applications and markets. The Company filed for chapter 11 protection on Sept. 16, 2005 (Bankr. D.N.H. Case No. 05-13724). Andrew Z. Schwartz, Esq., at Foley Hoag LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million. FOSS MANUFACTURING: Trustee Hires Perkins Smith as Patent Counsel ----------------------------------------------------------------- The Honorable Mark W. Vaughn of the U.S. Bankruptcy Court for the District of New Hampshire gave Patrick J. O'Malley, the chapter 11 trustee for Foss Manufacturing Company, Inc., authority to employ Perkins, Smith & Cohen LLP as his special patent counsel. As previously reported in the Troubled Company Reporter on Dec. 14, 2005, Jerry Cohen, Esq., shareholder at Perkins Smith, discloses that he will bill $475 per hour for his services. Mr. Cohen further discloses that the Firm's partners bill between $275 to $375 per hour. Headquartered in Hampton, New Hampshire, Foss Manufacturing Company, Inc. -- http://www.fossmfg.com/-- is a producer of engineered, non-woven fabrics and specialty synthetic fibers, for a variety of applications and markets. The Company filed for chapter 11 protection on Sept. 16, 2005 (Bankr. D.N.H. Case No. 05-13724). Andrew Z. Schwartz, Esq., at Foley Hoag LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $49,846,456 in assets and $53,419,673 in debts. FREESTAR TECHNOLOGY: Hires Horizon Law Group as Securities Counsel ------------------------------------------------------------------ FreeStar Technology Corporation (OTC Bulletin Board: FSRT) has engaged the services of Horizon Law Group LLP to serve as legal counsel for all of the Company's securities matters in the United States, including U.S. Securities and Exchange Commission reports and filings. Horizon Law Group, based in Irvine, California, focuses its practice on securities law, corporate finance, mergers and acquisitions and general business litigation. FreeStar President and CEO Paul Egan said, "In addition to the various business goals we have set, one of our priorities for the coming year is to focus on making timely SEC filings. I believe our engagement of Horizon Law Group will improve our reporting process and allow us to complete our '34 Act reports in a more expeditious manner. We look forward to working with Horizon." About Horizon Law Horizon Law Group LLP -- http://www.HorizonLawGroup.com/-- is a full-service law firm, with specific expertise in securities law, corporate finance, mergers and acquisitions and general business litigation. Horizon Law Group was founded in Irvine, California by lawyers with experience at American Lawyer Top 150 law firms. About FreeStar Technology FreeStar Technology Corporation -- http://www.freestartech.com/-- is a payment processing company. Its wholly owned subsidiary Rahaxi Processing Oy., based in Helsinki, is a robust Northern European BASE24 credit card processing platform. Rahaxi currently processes in excess of 1 million card payments per month for such companies as Finnair, Ikea, and Stockman. FreeStar is focused on exploiting a first-to-market advantage for its Enhanced Transactional Secure Software (ETSS), which is a software package that empowers consumers to consummate e-commerce transactions with a high level of security using credit, debit, ATM (with PIN), electronic cash or smart cards. The company, based in Dublin, maintains satellite offices in Helsinki, Santo Domingo, Dominican Republic, and Geneva. * * * Going Concern Doubt Russell Bedford Stefanou Mirchandani LLP raised substantial doubt about FreeStar Technology's ability to continue as a going concern after it audited the company's financial statements for the year ended June 30, 2005. The auditors cited the company's difficulty in generating sufficient cash flow to meet its obligations and sustain operations. As of Sept. 30, 2005, the company had total current assets of $2.1 million and total current debts of $6.4 million, resulting in a working capital deficit of $4.3 million. The Company had cash and cash equivalents of $1.7 million at September 30, 2005. At September 30, 2005, the company had an accumulated deficit of $45,050,971. These factors raise substantial doubt as to the Company's ability to continue as a going concern. FRIEDE GOLDMAN: Wants to File Suit to Recover Tax Refunds --------------------------------------------------------- Oakridge Consulting, Inc., and Ocean Ridge Capital Advisors LLC, as Trustees for the Consolidated FGH Liquidating Trust created pursuant to Friede Goldman Halter, Inc., and its debtor- affiliates' confirmed Joint Plan of Reorganization, want to commence a lawsuit against the Internal Revenue Service in order to claim tax refunds due to the estate. The Trustees will file the lawsuit on behalf of Trinity Industries, Inc. Adversary Proceeding In an adversary proceeding filed in April 2004, the Trustees asserted that the Debtors are entitled to a tax refund on account of research and development credits allegedly incurred in the tax years ended March 31, 1994 to March 31, 1996. During this period, the Debtors were subsidiaries of Trinity Industries, Inc. The government sought to dismiss the adversary proceeding on the grounds that the Bankruptcy Court did not have jurisdiction over the alleged tax refunds since only Trinity Industries, as the parent company, may seek recovery of the tax refunds. In April 2005, the Bankruptcy Court dismissed the adversary proceeding against the IRS. However, in its order, the Bankruptcy Court noted that the order does not bar Trinity Industries from pursuing a lawsuit to protect the Debtors' interest. The Court also affirmed that the R&D tax refunds are property of the estate. Agreement With Trinity Industries To recover and protect the Debtors' property, the Trustees inked an agreement allowing them to pursue a lawsuit in behalf of Trinity Industries. The agreement with Trinity Industries, apart from permitting the Trustees to commence the lawsuit, also stipulates the manner in which any recoveries are to be distributed. Pursuant to the agreement, tax refunds will be applied for the payment: 1) of all litigation costs; and 2) of 60%, or approximately $551,153, of Trinity Industries' claim against the Debtors. Remaining amounts will be distributed between the Liquidating Trust and Trinity Industries in accordance with a Tax Sharing Agreement. A copy of the agreement with Trinity Industries is available for a fee at: http://www.researcharchives.com/bin/download?id=060112022335 Headquartered in Gulfport, Mississippi, Friede Goldman Halter, Inc., was a world leader in the design and manufacture of equipment for the maritime and offshore energy industries. Friede Goldman and its debtor-affiliates filed for chapter 11 protection on Apr 19, 2001 (Bankr. D. Ms. Case No. 01-52173). When the Debtors filed for chapter 11 protection, they listed assets totaling $802 million and liabilities totaling $704 million. The Bankruptcy Court confirmed the Debtors' Fourth Amended Joint Plan or Reorganization on Dec. 30, 2003. The Plan became effective on Jan. 13, 2004. FRIENDLY ICE CREAM: Gets New $8.5M GE Capital Loan to Pay Old One ----------------------------------------------------------------- Friendly Ice Cream Corporation completed a refinancing of existing variable rate mortgage indebtedness to GE Capital Franchise Finance Corporation. Under the terms of the loan agreement, Friendly's Realty I, LLC, the Company's wholly owned subsidiary, borrowed an aggregate sum of $8.5 million at a variable interest rate equal to the sum of the 90-day LIBOR rate in effect (4.54 % at December 30, 2005) plus 4% on an annual basis. Changes in the interest rate are calculated monthly and recognized annually when the monthly payment amount is adjusted. Changes in the monthly payment amounts owed due to interest rate changes are reflected in the principal balances, which are re-amortized over the remaining life of the mortgages. The loans have a maturity date of January 1, 2020, and are being amortized over 14 years. The loans are secured by a first lien deed of trust or mortgage on eleven properties of the Borrower located in Connecticut, Massachusetts, New Jersey, Ohio and Virginia. Pursuant to the loan agreement, Friendly's Realty is required to maintain an aggregate fixed charge coverage ratio at all of the properties subject to the loan of at least 1.20:1, as determined on the last day of each fiscal year. The loan agreement contains customary default provisions and the loans are cross-collaterized with all loans to Friendly's Realty from GE or its affiliates. GE will have the right to accelerate the maturity of the debt or otherwise realize the value of the collateral in the event of a default by Friendly's Realty. The primary purposes of the transaction were to refinance the existing mortgage indebtedness of 11 properties totaling approximately $8.3 million, to: (1) reduce the variable interest rate debt from LIBOR plus 6% on an annual basis to LIBOR plus 4% on an annual basis; (2) enable the partial prepayment of the loans, subject to applicable prepayment premiums during the first three years and an agreed upon release value for properties released in connection with partial prepayments; and (3) permit partial lien releases on the properties subject to the loans upon partial prepayments. In addition, in connection with the transaction, the Borrower prepaid two additional mortgage loans from GE of approximately $965,000 from existing cash. Friendly's Realty may prepay the entire loan amount, subject to applicable prepayment premiums during the first three years. The amount of the loans was fully advanced at closing and the proceeds were used to retire the existing variable rate mortgage indebtedness to GE in the amount of approximately $8.3 million (which includes a prepayment premium of approximately $81,000). An additional $210,000 for loan, escrow, title and recording fees and expenses were incurred in connection with the refinancing. Friendly Ice Cream Corporation -- http://www.friendlys.com/-- is a vertically integrated restaurant company serving signature sandwiches, entrees and ice cream desserts in a friendly, family environment in 530 company and franchised restaurants throughout the Northeast. The company also manufactures ice cream, which is distributed through more than 4,500 supermarkets and other retail locations. With a 70-year operating history, Friendly's enjoys strong brand recognition and is currently remodeling its restaurants and introducing new products to grow its customer base. As of October 2, 2005, Friendly Ice Cream's equity deficit narrowed to $100,954,000 from a $105,026,000 deficit at January 2, 2005. GOLDSTAR EMERGENCY: Inks $900K Settlement Pact with C. Henderson ---------------------------------------------------------------- Goldstar Emergency Medical Services, Inc., and its debtor- affiliates ask the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, to approve a settlement agreement with C. Henderson Consulting, Inc. The Debtors entered into an agreement with C. Henderson in order to provide certain equipment and services required by the Federal Emergency Management Agency in connection with the hurricane Katrina relief efforts. Having provided the necessary services and equipment, Goldstar demanded payment from C. Henderson and for payment of net profits in accordance with their agreement. C. Henderson made payments to Goldstar but the amount and the calculation of the net profits were in dispute. Goldstar asserted that C. Henderson owed the Debtors $1.8 million under their agreement. Henderson disputed that amount. To settle their dispute and avoid a lengthy and costly litigation, Goldstar and C. Henderson have agreed to a compromise. Under the terms of proposed settlement, C. Henderson will pay Goldstar $900,000 in exchange for a full release of all actions held by both parties. Headquartered in Houston, Texas, Goldstar Emergency Medical Services, Inc., aka Goldstar EMS -- http://www.goldstarems.com/ -- is one of the largest providers of emergency medical services in Texas with over 120,000 ambulance responses annually. Goldstar Emergency and its debtor-affiliates filed for chapter 11 protection on April 25, 2005 (Bankr. S.D. Tex. Lead Case No. 05- 36446). Goldstar staffs Mobile Intensive Care capable ambulances, which are supplied and stocked with the most technologically advanced equipment available such as automatic vehicle locators, electronic data collection devices, Zoll Biphasic M series monitors and a host of other premier medical products. Edward L. Rothberg, Esq., and Melissa Anne Haselden, Esq., at Weycer Kaplan Pulaski & Zuber represent the Debtors in their restructuring efforts. When the Debtors filed for chapter 11 protection, they estimated between $10 million to $50 million in assets and debts. GOLDSTAR EMERGENCY: Wants to Sell Excess Vehicles ------------------------------------------------- Goldstar Emergency Medical Services, Inc., aka Goldstar EMS, and its debtor affiliates ask the U.S. Bankruptcy Court for the Southern District of Texas in Houston for authority to sell seven vehicles for an aggregate price of $68,125. The Debtors want to sell their excess vehicles to avoid depreciation that would ultimately reduce the vehicles' selling prices and, consequently, the amounts recoverable by the estate. The vehicles are currently encumbered by liens held by Avalon Finance LLC, as successor in interest to Wachovia Bank. The Debtors ask to sell the vehicles free and clear of any liens or restrictions. The proceeds from the sale will be turned over to Avalon. A list of the vehicles intended for sale and their respective buyers are available for free at http://researcharchives.com/t/s?443 Headquartered in Houston, Texas, Goldstar Emergency Medical Services, Inc., aka Goldstar EMS -- http://www.goldstarems.com/ -- is one of the largest providers of emergency medical services in Texas with over 120,000 ambulance responses annually. Goldstar Emergency and its debtor-affiliates filed for chapter 11 protection on April 25, 2005 (Bankr. S.D. Tex. Lead Case No. 05- 36446). Goldstar staffs Mobile Intensive Care capable ambulances, which are supplied and stocked with the most technologically advanced equipment available such as automatic vehicle locators, electronic data collection devices, Zoll Biphasic M series monitors and a host of other premier medical products. Edward L Rothberg, Esq., and Melissa Anne Haselden, Esq., at Weycer Kaplan Pulaski & Zuber represent the Debtors in their restructuring efforts. When the Debtors filed for chapter 11 protection, they estimated between $10 million to $50 million in assets and debts. GOLDSTAR EMERGENCY: Taps Akin Doherty to Provide Tax Services ------------------------------------------------------------- Goldstar Emergency Medical Services, Inc., and its debtor- affiliates ask the U.S. Bankruptcy Court for the Southern District of Texas in Houston for permission to employ Akin Doherty Klein & Feuge, P.C., as their accountant. The application is limited to the preparation of the Debtors' 2004 corporate tax returns and associated filings. Howard Klein, Jr., a shareholder at Akin Doherty, leads the engagement. Mr. Klein will charge a $10,000 flat fee for his services to be paid upon completion and submission of the tax returns to the Debtors. Akin Doherty holds $53,750 in general unsecured claims against the Debtors for prepetition services rendered. However, Mr. Klein disclose that the Firm is not seeking payment of this amount as a prerequisite to perform in this retention. Mr. Klein assures the Court that he and his Firm does not hold any interest materially adverse to the Trustee, the Debtors or related parties-in-interest. The Hon. Jeffrey Bohm will convene a hearing on Jan. 18, at 11:00 a.m., to consider the Debtors' request. Headquartered in Houston, Texas, Goldstar Emergency Medical Services, Inc., aka Goldstar EMS -- http://www.goldstarems.com/ -- is one of the largest providers of emergency medical services in Texas with over 120,000 ambulance responses annually. Goldstar Emergency and its debtor-affiliates filed for chapter 11 protection on April 25, 2005 (Bankr. S.D. Tex. Lead Case No. 05- 36446). Goldstar staffs Mobile Intensive Care capable ambulances, which are supplied and stocked with the most technologically advanced equipment available such as automatic vehicle locators, electronic data collection devices, Zoll Biphasic M series monitors and a host of other premier medical products. Edward L Rothberg, Esq., and Melissa Anne Haselden, Esq., at Weycer Kaplan Pulaski & Zuber represent the Debtors in their restructuring efforts. When the Debtors filed for chapter 11 protection, they estimated between $10 million to $50 million in assets and debts. GRAND AVENUE: Moody's Rates $9 Mil. Class E-1 & E-2 Notes at Ba2 ---------------------------------------------------------------- Moody's Investors Service assigned ratings to eight classes of notes issued by Grand Avenue CDO I, Ltd. The Moody's ratings assigned to the respective tranches are: 1) The U.S. $638,000,000 Class A-1A Floating Rate Notes Due 2046 rated Aaa. 2) The U.S. $372,000,000 Class A-1B Floating Rate Delayed Draw Notes Due 2046 rated Aaa. 3) The U.S. $54,000,000 Class A-2 Floating Rate Notes Due 2046 rated Aaa. 4) The U.S. $50,000,000 Class B Floating Rate Notes Due 2046 rated Aa2. 5) The U.S. $47,000,000 Class C Deferrable Floating Rate Notes Due 2046 rated A2. 6) The U.S. $20,000,000 Class D Deferrable Floating Rate Notes Due 2046 rated Baa2. 7) The U.S. $5,000,000 Class E-1 Deferrable Floating Rate Notes Due 2046 rated Ba2. 8) The U.S. $4,000,000 Class E-2 Deferrable Fixed Rate Notes Due 2046 rated Ba2. Moody's noted that its ratings address the ultimate cash receipt of all required interest and principal payments, as provided by the Notes' governing documents, and are based on the expected loss posed to Noteholders, relative to the promise of receiving the present value of such payments. The ratings reflect the risks due to diminishment of cash flow from the underlying assets, which consist primarily of structured finance securities, including: * residential mortgage-backed securities, * commercial mortgage-backed securities, * collateralized debt obligations, and * asset-backed securities due to defaults as well as the credit enhancement for the notes inherent in the Issuer's capital structure and the transaction's legal structure. TCW Asset Management Company will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. HARDWOOD P-G: Case Summary & 59 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Hardwood P-G, Inc. aka Custom Forest Products 1400 Currency San Antonio, Texas 78219 Bankruptcy Case No.: 06-50057 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Custom Forest Products, Ltd. 06-50059 Custom Forest Transportation, Inc. 06-50060 Type of Business: The Debtors sell and deliver local and exotic hardwoods. See http://www.customforestonline.com/ Chapter 11 Petition Date: January 9, 2006 Court: Western District of Texas (San Antonio) Judge: Leif M. Clark Debtors' Counsel: David S. Gragg, Esq. Langley & Banack, Inc. 745 East Mulberry, Suite 900 San Antonio, Texas 78212 Tel: (210) 736-6600 Fax: (210) 735-6889 Total Assets Total Debts ------------ ----------- Hardwood P-G, Inc. $18,500,000 $34,385,271 Custom Forest Products, Ltd. $18,500,000 $30,955,928 Custom Forest Transportation, Inc. $0 $15,076,257 A. Hardwood P-G, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Donald R. Vann Note $2,617,692 c/o Cooper G. Dibrell 8620 North New Braunfels, Suite 315 San Antonio, TX 78217 Gutchess Lumber Co. Inc. Trade debt $1,558,663 Mike Weider 150 McLean Road Cortland, NY 13045 Columbia Forest Products Trade debt $1,185,888 P.O. Box 404257 Atlanta, GA 30384 Robert Adams Note $814,000 Signature Mouldings & Millworks 9560 Ball Street San Antonio, TX 78217 Wood Products, Inc. Trade debt/supplier $566,054 P.O. Box 64745 Baltimore, MD 21264 Interstate Hardwoods, Inc. Trade debt/supplier $534,672 P.O. Box 7 Bartow, WV 24920 Northwest Hardwoods, Inc. Trade debt/supplier $499,304 P.O. Box 843568 Dallas, TX 75284 Kitchen Brothers Manufacturing Trade debt $400,827 P.O. Box 553 Mobile, AL 36601 Penn-Sylvan International Inc. Trade debt $314,742 21792 State Highway 8 Centerville, PA 16404 Besse Forest Products Trade debt $305,542 P.O. Box 352 Gladstone, MI 49837 JKW Lumber Company Trade debt/supplier $300,041 1925 Belmont Loop, Suite 110 Woodland, WA 98674 Digby Truck Line, Inc. Trade debt $287,904 P.O. Box 306002 Nashville, TN 37230 Bennett Hardwoods, Inc. Trade debt $264,924 Attn: Katreen Abendroth P.O. Box 1364 Wausua, WI 54402 Columbia Forest Products Trade Debt $254,850 MS-80 Import Division P.O. Box 4300 Portland, OR 97208 Clear Lake Lumber, Inc. Trade debt $246,480 P.O. Box 129 Spartansburg, PA 16434 Temple-Inland, Inc. Trade debt $242,717 P.O. Box 843276 Dallas, TX 75284 Facemyer Lumber Company, Inc. Trade debt $241,284 P.O. Box 227 Middleport, OH 45760 Mann & Parker Lumber Co. LLC Trade debt $240,547 c/o The Mann & Parker Lumber Co. 335 North Constitution New Freedom, PA 17349 Hermitage Hardwood Lumber Trade debt/supplier $235,207 P.O. Box 698 105 Ridgedale Drive Cookeville, TN 38503 Concannon Hardwoods Trade debt $226,888 P.O. Box 5037-84 Portland, OR 97208 B. Custom Forest Products, Ltd.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Gutchess Lumber Co. Inc. Trade debt $1,558,663 Mike Weider 150 McLean Road Cortland, NY 13045 Columbia Forest Products Trade debt $1,185,888 P.O. Box 404257 Atlanta, GA 30384 Wood Products, Inc. Trade debt/supplier $566,054 P.O. Box 64745 Baltimore, MD 21264 Interstate Hardwoods, Inc. Trade debt/supplier $534,672 P.O. Box 7 Bartow, WV 24920 Northwest Hardwoods, Inc. Trade debt/supplier $499,304 P.O. Box 843568 Dallas, TX 75284 Kitchen Brothers Manufacturing Trade debt $400,827 P.O. Box 553 Mobile, AL 36601 Penn-Sylvan International Inc. Trade debt $314,742 21792 State Hwy 8 Centerville, PA 16404 Besse Forest Products Trade debt $305,542 P.O. Box 352 Gladstone, MI 49837 JKW Lumber Company Trade debt/supplier $300,041 1925 Belmont Loop Suite 110 Woodland, WA 98674 Digby Truck Line, Inc. Trade debt $287,904 P.O. Box 306002 Nashville, TN 37230 Bennett Hardwoods, Inc. Trade debt $264,924 Attn: Katreen Abendroth P.O. Box 1364 Wausua, WI 54402 Columbia Forest Products Trade Debt $254,850 MS-80 Import Division P.O. Box 4300 Portland, OR 97208 Clear Lake Lumber, Inc. Trade debt $246,480 P.O. Box 129 Spartansburg, PA 16434 Temple-Inland, Inc. Trade debt $242,717 P.O. Box 843276 Dallas, TX 75284 Facemyer Lumber Company, Inc. Trade debt $241,284 P.O. Box 227 Middleport, OH 45760 Mann & Parker Lumber Co. LLC Trade debt $240,547 c/o The Mann & Parker Lumber Co. 335 North Constitution New Freedom, PA 17349 Hermitage Hardwood Lumber Trade debt/supplier $235,207 P.O. Box 698 105 Ridgedale Drive Cookeville, TN 38503 Concannon Hardwoods Trade debt $226,888 P.O. Box 5037-84 Portland, OR 97208 Wolverine Hardwoods Trade debt/supplier $209,406 2810 113th Avenue Allegan, MI 49010 Red River Hardwoods, Inc. Trade debt $203,128 P.O. Box 696 Clay City, KY 40312 C. Custom Forest Transportation, Inc.'s 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Idealease of San Antonio, Inc. Trade debt/services $27,570 P.O. Box 2000007 San Antonio, TX 78220-0007 Classic Carriers Trade debt $13,688 1625 FM 664 Ferris, TX 75125 Riverview International Trucks Trade debt $6,766 2445 Evergreen Avenue West Sacramento, CA 95691 Southwest International Trade debt $6,241 Ramos Oil Company Trade debt $4,396 Simply Staffing Employee staffing $3,647 All-Rite Staffing, Ltd. Temporary staffing $3,315 Idealease of Houston Trade debt/services $2,436 Warren Fleet Service, Inc. Trade debt $2,349 McCandless International Trade debt $2,244 Prodrivers Trade debt $1,238 Lynda's Tire Service, Inc. Services $883 Xtralease Services $655 Blue Beacon International, Inc. Trade debt $288 Fas Track Trade debt $186 Labor Ready Central, Inc. Trade debt $176 Fleetwash, Inc. Services $85 Occupational Health Centers Services $65 of the Southwest Fleetpride Trade debt $22 HOST MARRIOTT: Exercises Option for Conversion Rights ----------------------------------------------------- Host Marriott Corporation (NYSE: HMT) will exercise its option to cause the conversion rights of its 6.75% convertible subordinated debentures and the corresponding conversion rights of the holders of the 6.75% Convertible Quarterly Income Preferred Securities (CUSIP# 441079407) issued by the Host Marriott Financial Trust to expire. The company is exercising this option since the market price of its common stock has exceeded 120% of the adjusted conversion price of the QUIPS for 20 out of the last 30 trading days. The last reported sale price of the Company's common stock as of Jan. 10, 2005 was $19.50. The QUIPS currently are convertible into 3.2537 shares of Host Marriott common stock per $50 liquidation amount of preferred security, which equates to an adjusted conversion price of $15.367. The conversion rights of the QUIPS holders will expire at 5:00 p.m. (Eastern Standard Time) on Feb. 10, 2006. Additionally, on Dec. 12, 2005 the company gave notice to QUIPS holders of a partial redemption of $100 million of QUIPS to occur on Jan. 11, 2006 and, in response to the notice, many holders elected to convert their QUIPS securities that were subject to redemption. If all of the QUIPS holders elect to convert their remaining securities to Host Marriott common shares prior to the expiration of their conversion rights, the aggregate conversions (after taking into account conversions in response to the partial redemption) will result in the issuance of approximately 30.9 million shares of Host Marriott common stock as well as a $492 million reduction of the company's debt and the elimination of approximately $32 million of related annual fixed charges. The company's 2006 full year guidance for Funds from Operations per diluted share will not be affected since QUIPS were already reflected on a converted basis, and the Company's forecasted 2006 Net Income will increase approximately $30 million. Host Marriott -- http://www.hostmarriott.com/-- is a Fortune 500 lodging real estate company that owns or holds controlling interests in upscale and luxury hotel properties primarily operated under premium brands, such as Marriott(R), Ritz- Carlton(R), Hyatt(R), Four Seasons(R), Fairmont(R), Hilton(R) and Westin(R). * * * As reported in the Troubled Company Reporter on Nov. 21, 2005, Moody's Investors Service affirmed the ratings of Host Marriott's senior unsecured debt of Ba2, with a positive outlook. The ratings affirmation follows the announcement by Host Marriott that it has agreed to acquire 38 luxury and upper upscale hotels from Starwood Hotels and Resorts for approximately $4 billion. Moody's expects Host Marriott will issue approximately $2.3 billion of common equity to Starwood stockholders, and assume $700 million in debt, with the balance to be funded with cash provided by, perhaps initially, a bridge facility. INTERACTIVE MOTORSPORTS: Sells Assets to Cut Debt by $571,000 ------------------------------------------------------------- Interactive Motorsports and Entertainment Corporation's (OTCBB:IMTS) wholly owned subsidiary, Perfect Line, sold assets in exchange for $571,000 in debt reduction and release of past, current and future lease obligations at three Mills Corporation malls. Perfect Line entered into an Asset Purchase Agreement on Dec. 31, 2005, pursuant to which it sold 28 of its race car simulators to Checker Flag Lightning, LLC, a Michigan limited liability corporation. The simulators are currently operating and located in three Mills Corporation malls, specifically Concord Mills (12 simulators), Opry Mills, (10 simulators) and Gurnee Mills (6 simulators). As part of the transaction, CFL and Mills Corporation agreed in separate Assignment, Assumption and Consent Agreements that CFL will be assigned the leases and will assume all of Perfect Line's outstanding obligations to The Mills Corporation and it affiliates under the Perfect Line's lease agreements for Concord Mills, Katy Mills and Opry Mills. As part of that agreement, Mills released Perfect Line from all past, current and future monetary obligations under those leases. In addition, CFL agreed to a $400,000 note and security agreement for CFL's outstanding financial obligations to Perfect Line related to the Mills sites, with a term of 68 months and the 6 simulators at Gurnee Mills as security for the note. "We are fortunate to have a strong asset base that allows us to both generate cash and reduce debt," commented William R. Donaldson, the Company's Chairman and CEO. "Such transactions emphasize the wide variance between the book value of our simulator assets and their market value." Headquartered in Indianapolis, Indiana, Interactive Motorsports and Entertainment Corp., through its wholly owned subsidiary, Perfect Line, Inc., is a world leader in race simulation that owns and operates racing centers, leases or revenue shares with third party operators and sells race car simulators. NASCAR Silicon Motor Speedway customers experience driving in a NASCAR racecar that simulates the motion, sights and sounds of an actual NASCAR event. Located in high profile, high traffic locations, the company's racing centers range from 2 to 12 race car simulators per location and many sites offer what the Company believes to be the best selling NASCAR driver merchandise available to the market. As of Sept.30, 2005, Interactive Motorsports' equity deficit widened to $1,968,050 from a $1,741,431 deficit at Dec. 31, 2004. KERR-MCGEE: Fitch Assigns BB Ratings to $3.85 Billion Debts ----------------------------------------------------------- Fitch Ratings has raised the issuer default rating of Kerr-McGee Corporation to 'BB' from 'BB-' and assigned a rating of 'BB' to the company's new $1.25 billion senior unsecured credit facility. Fitch has also assigned the senior unsecured rating of 'BB' to the company's $2.6 billion of public notes (excluding the $550 million of debt at Tronox Inc.), which became unsecured with the new credit facility. With the removal of the security, Fitch is withdrawing Kerr-McGee's secured rating of 'BB'. Fitch is also withdrawing the company's commercial paper rating of 'B', which has been inactive since the company's ratings were downgraded below investment grade in 2005. The Rating Outlook remains Positive. The debt ratings of Kerr-McGee are: -- IDR upgraded to 'BB' from 'BB-'; -- Senior unsecured credit facility assigned 'BB'; -- Senior unsecured notes assigned 'BB'; and -- Senior secured rating and commercial paper rating withdrawn. Fitch also rates the debt of the Tronox Inc. subsidiaries: -- Tronox IDR 'B'; -- Tronox Worldwide LLC's and Tronox Finance's $350 million senior unsecured notes 'B+/RR3'; -- Tronox $250 million senior secured revolving credit facility and $200 million senior secured term loan rating of 'BB/RR1'. The Rating Outlook for Tronox is Stable. The rating action reflects the continued improvement in the credit profile of Kerr-McGee as the company continues to reduce its balance sheet debt through the proceeds from asset sales. The company has completed all of the major divestments with the exception of the Gulf of Mexico shelf properties. Bids for the shelf properties were received in late 2005 with a sale expected in the first quarter of 2006. With the announcement of the tender offer for the company's 7% debentures due 2011, the expected distribution of Tronox in 2006 and the maturity of the $300 million of 5.875% notes in September 2006, balance sheet debt is expected to be down to $2.1 billion at year-end 2006. Kerr-McGee's credit profile will also continue to benefit from the strong commodity price environment, the significant hedges in place through 2007 at prices well above historical levels, the 90% reduction in dividend payments, as well as the size and diversity of its reserve base. Fitch also expects Kerr-McGee to significantly reduce its environmental exposure with the distribution of Tronox. The rating action also takes into consideration the initiation of a $1 billion share repurchase program with the target of reducing outstanding shares by 9% or approximately 10 million shares. Fitch expects Kerr-McGee will fund the program, as well as the tender of the 2011 debentures, with the significant level of cash on hand following the asset sales as well as free cash flow generation. The new program follows the 'Dutch Auction' tender in 2005, in which the company sold a significant portion of its assets, including approximately 30% of year-end 2004 reserves, to buy back approximately $4 billion of stock. The ratings also continue to reflect the abrupt change to the company's financial and operational strategy in 2005. The positive outlook reflects the rapid improvement in the company's credit metrics towards investment grade levels. Fitch will continue to review Kerr-McGee over the next several months to evaluate the company's results following the asset sales. The transition in the company has dramatically changed the company's asset base and production profile. Fitch's forecasts, however, reflect strong performance for Kerr-McGee, particularly given the hedges the company has in place and the reduction in the dividend. LOEWS CINEPLEX: AMC Discloses Non-Public Material Info Re Merger ---------------------------------------------------------------- AMC Entertainment Inc. disclosed non-public material information about the Company and Loews Cineplex Entertainment Corporation in relation to their planned merger. As reported in the Troubled Company Reporter on June 23, 2005, the Company and Loews Cineplex entered into a definitive merger agreement that would result in the combination of their businesses. The merger agreement also provides for the merger of their respective holding companies, Marquee Holdings Inc. and LCE Holdings, Inc., with Marquee Holdings Inc., which is controlled by affiliates of J.P. Morgan Partners, LLC and Apollo Management, L.P., continuing as the holding company for the merged businesses. The current stockholders of LCE Holdings, Inc., including affiliates of Bain Capital Partners, The Carlyle Group and Spectrum Equity Investors, would hold approximately 40% of the outstanding capital stock of the continuing holding company. The merged company, to be called AMC Entertainment Inc., will be headquartered in Kansas City, Missouri, and will own, manage or have interests in approximately 450 theatres with about 5,900 screens in 30 states and 13 countries. Peter C. Brown, AMC Chairman of the Board, Chief Executive Officer and President, will remain in this role in the merged company. When combined, the company will have approximately 24,000 associates serving more than 280 million guests annually. An integration committee will be formed in which Travis E. Reid, President and Chief Executive Officer of Loews Cineplex Entertainment Corporation, and Brown will serve as co-chairs. The integration committee also will include representatives of the two sponsor groups. Financing the Merger The Company intends to finance the Mergers and the refinancing of the Company's and Loews' existing indebtedness: -- New senior secured credit facility, consisting of: * a $650 million senior secured term loan B facility; and * a $200 million secured revolving credit facility; and -- $325 million of new senior subordinated debt; Concurrently with the closing of the Facility and New Senior Subordinated Debt, the Company anticipates entering into these financing transactions: -- the repayment of all outstanding amounts under the Company's existing senior secured credit facility and Loews' existing senior secured credit facility and the termination of all commitments under those facilities; and -- the completion of the tender offer and consent solicitation for all $315 million aggregate principal amount of Loews' outstanding 9.0% senior subordinated notes due 2014. Unless otherwise stated, it is assumed that 100% of the Existing Loews Subordinated Notes will be tendered in connection with the Tender Offer. The Company intends to consummate the mergers concurrently with: (1) the closing of the facility; (2) the consummation of the new senior subordinated debt offering; (3) the repayment of all outstanding amounts under: -- the Company's existing senior secured credit facility; and -- Loews' existing senior credit facility; and (4) the consummation of the other financing transactions A full-text copy of the Disclosure is available for free at http://ResearchArchives.com/t/s?442 About AMC Entertainment Headquartered in Kansas City, Missouri, AMC Entertainment Inc. http://www.amctheatres.com/-- is a subsidiary of Marquee Holdings Inc. Through its circuit of AMC Theatres, AMC Entertainment operates 229 theaters with 3,546 screens in the United States, Canada, France, Hong Kong, Japan, Portugal, Spain and the United Kingdom. About Loews Cineplex Loews Cineplex Entertainment Corp operates motion picture theaters primarily in major cities throughout the United States, Canada, Spain, Hungary and Turkey. The company operates its theaters under the Loews, Sony and Cineplex Odeon names. * * * As reported in the Troubled Company Reporter on Sept. 8, 2005, Standard & Poor's Ratings Services, in light of a steep drop in movie theater attendance in the current year, revised its outlook on Loews Cineplex Entertainment Corp. (B/Negative/--) to negative from positive. LOEWS CINEPLEX: Gets Necessary Tenders for 9% Senior Notes ---------------------------------------------------------- Loews Cineplex Entertainment Corporation reported that in connection with the tender offer and consent solicitation for its outstanding 9% Senior Subordinated Notes due 2014, it had received the requisite consents from registered holders of the Notes to amend the indenture governing the Notes. As of 5:00 p.m., New York City time, on Jan. 10, 2006, tenders and consents had been received with respect to approximately 99.8% of the outstanding principal amount of the Notes. The consents received are sufficient to amend the Indenture governing the Notes. The Consent Date was 5:00 p.m., New York City time, on Jan. 10, 2006, and any Notes that have been tendered prior to, or that are tendered after, the Consent Date may not be withdrawn and the related consents may not be revoked. Loews, certain of its subsidiaries that are guarantors under the Indenture, and U.S. Bank National Association, the trustee under the Indenture, plan to execute a supplemental indenture to the Indenture in order to effect the proposed amendments to the Notes and the Indenture, as provided in Loews' Offer to Purchase and Consent Solicitation Statement, dated Dec. 21, 2005. However, the amendments will not become operative with respect to the Notes until Loews purchases the validly tendered Notes pursuant to the Offer to Purchase. In addition, Loews expects that payment for the Notes, including Notes tendered on or prior to the Consent Date, will be made promptly after the Expiration Date. The Notes are being tendered pursuant to the Offer to Purchase, which more fully sets forth the terms and conditions of the cash tender offer to purchase any and all of the outstanding principal amount of the Notes as well as the consent solicitation to eliminate substantially all of the restrictive covenants, certain events of default and certain other provisions contained in the Indenture. The tender offer is subject to the satisfaction or waiver of certain conditions, including, among other things, the satisfaction or waiver of all conditions precedent to the consummation of the merger of LCE Holdings, Inc., the parent company of Loews, and Marquee Holdings Inc., the parent company of AMC Entertainment Inc., and the merger of Loews and AMCE, with AMCE continuing as the surviving corporation after the merger, and the receipt of funds by the Combined Company sufficient to pay the aggregate Total Consideration from the anticipated proceeds of a contemplated placement of new senior subordinated debt. In the event that the tender offer and consent solicitation are withdrawn or otherwise not completed, neither the tender consideration nor the consent payment will be paid or become payable to holders of the Notes who have tendered their Notes and delivered consents. The Dealer Managers and Solicitation Agents for the tender offer are Credit Suisse First Boston LLC, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. Questions regarding the tender offer and consent solicitation may be directed to any Dealer Manager and Solicitation Agent: Credit Suisse First Boston LLC, Liability Management Group, at (800) 820-1653 (US toll-free) and (212) 325-7596 (collect); Citigroup Global Markets Inc., Liability Management Group, at (800) 558-3745 (US toll-free) and (212) 723- 6106 (collect); and J.P. Morgan Securities Inc., Liability Management Group, at (866) 834-4666 (US toll-free) and (212) 834- 3424 (collect). Copies of the Offer to Purchase and Consent Solicitation Statement may be obtained from the Information Agent for the tender offer and consent solicitation, D.F. King & Co., Inc., at (888) 628-1041 (US toll-free) and (212) 269-5550 (collect). Loews Cineplex Entertainment Corp operates motion picture theaters primarily in major cities throughout the United States, Canada, Spain, Hungary and Turkey. The company operates its theaters under the Loews, Sony and Cineplex Odeon names. * * * As reported in the Troubled Company Reporter on Sept. 8, 2005, Standard & Poor's Ratings Services, in light of a steep drop in movie theater attendance in the current year, revised its outlook on Loews Cineplex Entertainment Corp. (B/Negative/--) to negative from positive. LORETTO-UTICA: Court Sets July 22 as Claims Bar Date ---------------------------------------------------- The United States Bankruptcy Court for the Northern District of New York, set July 22, 2006, as the deadline for all creditors owed money by Loretto-Utica Properties Corporation on account of claims arising prior to Dec. 15, 2005, to file their proofs of claim. Creditors must file written proofs of claim on or before the July 22 Claims Bar Date and those forms must be delivered to: Clerk of the Bankruptcy Court United States Courthouse Alexander Pirnie Federal Building 10 Broad Street Utica, NY 13501-1233 Headquartered in Syracuse, New York, Loretto-Utica Properties Corporation filed for chapter 11 protection on Dec. 15, 2005 (Bankr. N.D.N.Y. Case No. 05-73473). Jeffrey A. Dove, Esq., at Menter, Rudin & Trivelpiece, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $1 million to $10 million in assets and estimated $10 million to $50 million in debts. MARSH SUPERMARKETS: Completes $25 Million Two-Year Term Loan ------------------------------------------------------------ Marsh Supermarkets, Inc. (Nasdaq: MARSA and MARSB) reported that on Jan. 6, 2006, the company received the proceeds of a $25 million two-year term loan. The proceeds of the loan were used to reduce the outstanding borrowings under the company's revolving credit facility, increasing the company's available borrowings to approximately $55 million as of Jan. 10, 2006. Don E. Marsh, Chairman and Chief Executive Officer, stated, "The term loan enhances the company's liquidity position and continued commitment to further progress on the previously announced process of identifying and considering strategic alternatives for the company." The company also said that on Jan. 6, 2006, Douglas W. Dougherty was appointed to the newly-created position of Executive Vice President - Finance and Administration. Mr. Dougherty will retain his responsibilities of Chief Financial Officer in addition to assuming additional administrative duties with the goal of improving cash flow and reducing debt. Marsh is a leading regional chain, operating 70 Marsh(R) supermarkets, 38 LoBill(R) Foods stores, 8 O'Malia(R) Food Markets, 160 Village Pantry(R) convenience stores, 2 Arthur's Fresh Market(R) stores, and 1 Savin*$(SM), in Indiana, western Ohio, and Illinois. The company also operates Crystal Food Services(SM), which provides upscale catering, cafeteria management, office coffee, coffee roasting, vending and concessions, and restaurant management, and Primo Banquet Catering and Conference Centers; Floral Fashions(R), McNamara(R) Florist and Enflora(R) - Flowers for Business. * * * As reported in the Troubled Company Reporter on Dec. 14, 2005, Moody's Investors Service lowered the ratings of Marsh Supermarkets, Inc. including the corporate family rating to B2 from B1, and assigned a developing outlook. The downgrade reflects the deterioration in Marsh's operating performance and credit metrics as the company and other traditional supermarkets have lost share to Wal-Mart in its core markets, as well as the weak returns from significant expenditures in recent years to expand its store base. The developing outlook reflects the uncertainty about Marsh's future financial and operating profile given the company's recent announcement that it is exploring strategic alternatives to enhance shareholder value, including a possible sale of the company. The rating action concludes the review for possible downgrade begun on August 15, 2005. Ratings lowered: * Corporate Family Rating to B2 from B1 * 8.875% senior subordinated notes due in 2007, guaranteed by operating subsidiaries, to Caa1 from B3 MEDICAL TECHNOLOGY: Confirmation Hearing Set for January 30 ----------------------------------------------------------- The Honorable Russell F. Nelms of the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division, will convene a hearing on Jan. 30, 2006, at 9:00 a.m., to consider the merits of Medical Technology, Inc., dba Bledsoe Brace Systems' Second Amended Plan of Reorganization. Judge Russell approved the Debtor's Disclosure Statement on Dec. 14, 2005. Objections to the Plan, if any, must be filed with the Clerk of Court by 5:00 p.m. today. Creditors' ballots must be received or faxed by 5:00 p.m. on January 17 to the Debtor's counsel: Forshey & Prostok, LLP Attn: J. Robert Forshey 777 Main Street, Suite 1290 Fort Worth, Texas 76102 Fax: 817-877-4151 As previously reported, the relevant components of the Debtor's Plan include: -- the full payment of unsecured creditors; -- a restructuring and extension of secured debts; and -- the full payment, of Orthodontics Inc. and Generation II USA Inc.'s over $6.8 million in claims from a judgment awarded by the U.S. District Court for the Western District of Washington, Seattle Division, if the Debtor's pending appeal is denied. Payments due under the Plan will be funded from the Reorganized Debtor's income and other sources of funds, including future borrowing or sale of stock. The Reorganized Debtor will be responsible for making all distributions or payments on account of allowed claims as contemplated in the Plan. Treatment of Claims Convenience claims, consisting of any allowed claim of $2,000 or less and any allowed claim for which the holder elects to reduce its claim to $2,000, will be paid in full within two months from the effective date of the Plan. Convenience claims total approximately $30,777. Tax Claims totaling approximately $86,800 will be paid in full on the effective date. Allowed critical vendor claims, totaling approximately $367,714, will be paid within 30 days after the effective date. The approximately $1.6-million secured claim of North MARQ on account of two prepetition building loans will be treated in accordance with section 1124(2) of the Bankruptcy Code. The Plan provides that: a) the Debtor will cure any default existing on these loans on or prior to the effective date of the Plan; b) the maturity of the two loans will be reinstated as it existed prior to any default; and c) the holder of the building notes will be compensated for any damages incurred as a result of any reasonable reliance on contractual provision in accordance with section 1124(2)(c) of the Bankruptcy Code. Chase Bank's secured claim, totaling approximately $1.3 million, will be paid according to these terms: a) The Chase Receivable Line will be paid in 36 equal monthly installments. The receivable line will continue to be secured by a first lien and security interest in the chase collateral and will continue to bear interest at the non-default rare. The Reorganized Debtor will maintain a borrowing base at least $200,000 over the unpaid balance of the receivable line and will provide Chase with a Borrowing Base Certificate on a monthly basis. b) The Chase Equipment Line and the Chase Advancing Note will be paid in 36 equal monthly installments. The Equipment Line and Advancing Note will continue to be secured by a first lien and security interest in the chase collateral and will continue to bear interest at the non-default rate. The Reorganized Debtor will execute and deliver to Chase Bank documents renewing and extending the Advancing Note, Receivable Line and Equipment Line. Ford's secured claim will be paid in accordance with the terms of applicable agreements governing the loan. The Debtor can elect to pay other secured claims, totaling approximately $47,406, either: a) through the return of the collateral securing the claim; b) in installments over a period of six years at the prime rate of interest; or c) by allowing the claim holder to offset in satisfaction of its secured claim. General unsecured claims, totaling approximately $1,709,783, will be paid according to these terms: a) unsecured claim holders can elect to reduce their claim to $2,000 and will be treated as a convenience claim; or b) receive full payment of their claims in 60 equal installments, plus interest, beginning on the initial distribution date. Disputed Litigation Claims The Debtor continues to dispute any liability in the patent infringement lawsuit filed by the Generation II companies and has appealed the judgment awarded by the Seattle District Court. The Debtor also contests its liability on various other lawsuits seeking damages for breach of contract, breach of implied warranty and negligence. All claims resulting from these lawsuits are classified as contested claims. Any allowed claim of the Generation II companies, totaling approximately $6.8 million, will be paid in 120 equal monthly installments, plus interest, beginning on the initial distribution date. Pending the District Court's decision on the appeal, the Debtor will make monthly deposits of interest accrued on the judgment amount into an escrow account. Any judgment awarding damages to David. N. Pinkus and Brandon Joel Bailey will be paid solely through applicable insurance policies. The claim of Frank R. Noyes, MD, will be adjudicated and allowed as apart of the litigation pending before the U.S. District Court for the Southern District of Ohio. Claims arising from this litigation, if any, will be paid in 120 equal monthly installments, plus interest, beginning on the initial distribution date. Any allowed claim of dj Orthopedics, LLC, will be paid in 120 equal monthly installments, plus interest, beginning on the initial distribution date. Equity interest holders will retain their interest in the Reorganized debtor. Headquartered in Grand Prairie, Texas, Medical Technology, Inc., dba Bledsoe Brace Systems -- http://www.bledsoebrace.com/-- manufactures and distributes orthopedic knee braces, ankle braces, ankle supports, knee immobilizers, arm braces, sport braces, boots, and walkers. The Debtor filed chapter 11 protection on July 25, 2005 (Bankr. N.D. Tex. Case No. 05-47377). J. Robert Forshey, Esq., Jeff P. Prostok, Esq., and Julie C. McGrath, Esq., at Forshey & Prostok, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million to $50 million. MIRANT CORP: New Shares Listed on the New York Stock Exchange ------------------------------------------------------------- Mirant Corp. (NYSE: MIR) reported that the company's common stock began trading on the New York Stock Exchange on Jan. 11, 2006. To mark the occasion, Edward R. Muller, Mirant's chairman and chief executive officer, rang the opening bell to initiate trading on the exchange. "We look forward to creating tremendous value for our shareholders in the coming years through discipline, excellence and creativity," said Muller on the occasion. As previously reported in the Troubled Company Reporter, the company successfully emerged from Chapter 11 bankruptcy protection on Jan. 3, 2006. The company has completed the steps necessary to cause its Plan of Reorganization to become effective, including securing $2.35 billion in exit financing. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. MISSION INSURANCE: Claims Procedures Hearing Set on Jan. 24 ----------------------------------------------------------- John Garamendi, the Insurance Commissioner of the State of California and Trustee of Mission Insurance Company, Mission Insurance Company Trust and Mission National Insurance Company Trust, asks the Honorable John Shephard Wiley, Jr., of the Superior Court of California for the County of Los Angeles for approval of uniform claims procedures and to: (a) settle and approve the accounting of the Insurance Commissioner; (b) affirm the distribution of Covanta shares pro rata to all unpaid creditors, on such schedules as may be devised in connection with the hearing; (c) settle the final accounts of the Insurance Commissioner and discharges the Insurance Commissioner as Trustee and as Liquidator of the Debtors; (d) authorize the closing of the Mission Insurance Company case, subject to the Court's continuing jurisdiction should further unanticipated collections be received after the date of closing, which will necessitate a further distribution; (e) authorize the Insurance Commissioner to take steps that are necessary and appropriate to close the proceedings by the final date set by the Court; (f) discharge the Liquidator and Trustee and the Insurance Commissioner as well as the Conservation and Liquidation Office, its employees and agents, and the Liquidator and Trustee's agents, employees, attorneys and deputies; (g) authorize the Trustee to maintain the records of the Debtors for three years, after which those records may be destroyed in the Trustee's discretion; (h) enter an order that the Trustee and Liquidator, the Conservation and Liquidation Office, the California Department of Insurance and their officers, employees, deputies, agents and attorneys, will have no liability of any kind or nature arising from the activities prior to or during the liquidation of the Debtors; (i) authorize the Insurance Commissioner to immediately destroy a group of old computer data tapes no longer used by the trusts but kept in storage at trust expense; (j) implement document retention policies, which permit the eventual destruction of those other records as the Insurance Commissioner may determine appropriate; and (k) make other related orders regarding the closing of the cases as the Court may determine appropriate, including any instructions as to closing matters like those relating to Covanta. Judge Wiley will hear the requests of the Insurance Commissioner on Jan. 24, 2006, at 8:30 a.m. Full-text copies of the relevant court filings are available at http://www.caclo.org Mission Insurance Company and its affiliates have pending cases in Department 50 of the Los Angeles Superior Court (Case No. 05-572724). MONTECITO BROADCAST: S&P Junks Rating on Proposed $48 Million Loan ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' long-term corporate credit rating to the Montecito Broadcast Group, LLC. Standard & Poor's also assigned a 'B' rating and a recovery rating of '2' to Montecito's proposed $115 million secured first-lien credit facilities, indicating an expectation of substantial recovery of principal in the event of a payment default. At the same time, a 'CCC+' rating and a recovery rating of '4' were assigned to Montecito's proposed $48 million secured second-lien loan facility, indicating an expectation of marginal recovery of principal in the event of a payment default. Proposed borrowings are expected to be used to help fund the purchase of four TV stations from Emmis Communications Corp. TV station owner and operator Montecito will have approximately $143 million of debt outstanding pro forma for the proposed transaction. The outlook is negative. "The rating on Montecito," said Standard & Poor's credit analyst Alyse Michaelson Kelly, "reflects the company's heavy debt burden compared to its narrow cash flow base, a small portfolio of TV assets, vulnerability to economic and election downturns, and competition from other major network-affiliated television stations whose parent companies have larger financial resources." These factors are only partially offset by the competitive positions of Montecito's four network-affiliated television stations, broadcasting's good margin and free cash flow conversion potential, and station asset values. "The 'B' rating assumes that Montecito will generate discretionary cash flow in fiscal 2007, benefiting from cost savings and political advertising, and use it to reduce leverage to around 5x in fiscal 2007," added Ms. Kelly. MUSICLAND HOLDING: Files Chapter 11 Protection in New York ---------------------------------------------------------- Musicland Holding Corp and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of New York on Jan. 12, 2006. The company believes the move is necessary to complete its restructuring initiatives and refine its business model. DIP Financing The company has received commitments for up to $75 million in debtor-in-possession financing from its existing bank group, led by Wachovia as agent, which will enable it to continue to operate during the restructuring period. "We have been exploring various options for cutting costs, such as the impending closure of the Media Play chain," Musicland President and CEO Michael J. Madden said. "We believe that the decisive action we are taking provides the Company with the most effective means to restructure our operations, strengthen our balance sheet and position us to compete more effectively in the current music and movies industry environment." The company attributes their financial difficulties to a diminishing music and movies marketplace, growing competition from big box retailers and the increase of music downloading. "Musicland has a solid management team, enthusiastic employees and loyal customers. We have funding in place to continue our normal business operations during the restructuring. We will continue our plans to launch innovative new business initiatives in 2006 and continue to build our highly valued vendor relationships," Mr. Madden concluded. During the restructuring process vendors will be paid for post- petition purchases of goods and services in the ordinary course of business. The company has asked the Court for permission to continue to honor its current customer policies regarding merchandise returns and to honor outstanding gift cards and loyalty programs, so that there will be limited impact on customers. Courts typically grant these requests and Musicland expects that the court will do so here. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06- 10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. MUSICLAND HOLDING: Case Summary & 30 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: Musicland Holding Corp. c/o James H.M. Sprayregen Kirkland & Ellis LLP 153 East 53rd Street New York, New York 10022 Bankruptcy Case No.: 06-10064 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Musicland Purchasing Corp. 06-10060 Media Play, Inc. 06-10061 MG Financial Services, Inc. 06-10062 MLG Internet, Inc. 06-10063 Musicland Retail, Inc. 06-10065 Request Media, Inc. 06-10066 Sam Goody Holding Corp. 06-10067 Suncoast Group, Inc. 06-10068 Suncoast Holding Corp. 06-10069 Suncoast Motion Picture Company, Inc. 06-10070 Suncoast Retail, Inc. 06-10071 The Musicland Group, Inc. 06-10072 TMG Caribbean, Inc. 06-10073 TMG - Virgin Islands, Inc. 06-10074 Type of Business: Musicland Holding Corp. -- http://www.musicland.com/-- is a leading national specialty retailer of music, movies and entertainment-related products. Musicland operates more than 800 retail stores and online under the names Sam Goody -- http://SamGoody.com/, Suncoast Motion Picture Company -- http://Suncoast.com/ and MediaPlay.com. In June 2003, Musicland was acquired by an affiliate of Sun Capital Partners, Inc. Chapter 11 Petition Date: January 12, 2006 Court: Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Debtors' Counsel: James H.M. Sprayregen, Esq. Kirkland & Ellis 200 East Randolph Drive Chicago, Illinois 60601 Tel: (312) 861-2481 Fax: (312) 861-2200 Debtors' Conflicts Counsel: Curtis, Mallet-Prevost, Colt & Mosle LLP Debtors' Claims & Noticing Agent: The BMC Group, Inc. Total Assets: $ Total Debts: $ Consolidated List of Debtors' 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Deluxe Media Services Trade $7,984,233 568 Atrium Drive Vernon Hills, IL 60061 Attn: Tom Vale Tel: (847) 990-4100 Fax: (847) 549-8354 NBC Universal/Universal Trade $6,882,962 Studios Home Entertainment 100 Universal City Plaza Universal City, CA 91608 Attn: John Roussey Tel: (818) 777-7601 Fax: (818) 866-2401 Navarre Corporation Trade $6,690,554 7400 49th Avenue North New Hope, MN 55428 Attn: Eric Paulson Tel: (763) 535-8333 Fax: (763) 533-2156 Ventura Distribution, Inc. Trade $5,845,002 2590 Conejo Spectrum Street Thousand Oaks, CA 91320 Attn: Larry Hayes Tel: (805) 498-7800 Fax: (805) 498-6945 AEC One Stop Group Inc. Trade $3,792,143 4250 Coral Ridge Drive Coral Springs, FL 33065-7616 Attn: Alan Tuchman Tel: (954) 255-4000 Fax: (954) 255-4078 Funimation Products Ltd. Trade $3,086,590 6851 NE Loop 820, Suite 247 Fort Worth, TX 76180 Attn: Gen Fukumaga Tel: (817) 788-0627 Fax: (817) 788-0628 Electronic Arts Trade $2,800,374 209 Redwood Shores Parkway Redwood City, CA 94065 Attn: Norna Cash Tel: (650) 628-1500 Fax: (650) 628-1415 Fender Musical Instrument Trade $2,469,669 8860 E. Chaparral Road, Suite 100 Scottsdale, AZ 85250 Attn: Matthew Janopaul Tel: (480) 596-9690 Fax: (480) 596-1384 Zimmerman Partners Advertising Trade $2,435,706 2200 W. Commercial Blvd., 3rd Fl. Fort Lauderdale, FL 33909 Attn: Jordan Zimmerman Tel: (954) 731-2900 Fax: (954) 731-2977 A D Vision Inc. Trade $2,344,716 5750 Bintliff Drive Houston, TX 77036-2123 Attn: John Ledford Tel: (713) 977-9181 Fax: (713) 341-7195 Virgin Mobile USA Trade $2,279,786 10 Independence Boulevard Warren, NJ 07059 Attn: Dan Schulman Tel: (908) 607-4000 Fax: (908) 607-4124 Image Entertainment Inc. Trade $2,255,070 20525 Nordoff Street, Suite 200 Chatsworth, CA 91311 Attn: Martin Greenwald Tel: (818) 407-9100 Fax: (818) 407-9151 Activision Trade $2,046,080 3100 Ocean Park Boulevard Santa Monica, CA 90405 Attn: Lewis Shiro Tel: (310) 255-2000 Fax: (310) 479-4005 Media Blasters Inc. Trade $1,794,965 519 8th Avenue, 15th Floor New York, NY 10018 Attn: Andrew Vidal Tel: (212) 944-9224 Fax: (212) 944-9288 Trianna Trade $1,748,124 9860 Raspberry Hill Chaska, MN 55318 Attn: John Makela Tel: (952) 934-4759 Fax: (952) 934-0148 Geneson Entertainment USA Inc. Trade $1,572,437 2265 East 220th Street Long Beach, CA 90810-1639 Attn: Yosuke "James" Kobayashi Tel: (310) 952-2000 Fax: (910) 952-2791 Koch International Corporation Trade $1,463,512 22 Harbor Park Drive Port Washington, NY 11050 Attn: Michael Rosenberg Tel: (516) 484-1000 Fax: (516) 484-4746 BCI Eclipse Trade $1,378,825 810 Lawrence Drive, Suite 100 Newbury Park, CA 91320 Attn: Eric Paulson Tel: (805) 375-9998 Fax: (805) 375-9908 US Music Corporation Trade $1,330,505 444 East Courtland Mundelein, IL 60060 Attn: Garry Gryczan Tel: (847) 949-0444 Fax: (847) 949-8444 Diversified Distribution Systems Trade $1,284,779 2828 10th Avenue South Minneapolis, MN 55407-5514 Attn: Peter Courtney Tel: (612) 813-5200 Fax: (612) 813-5205 Baker & Taylor Entertainment Trade $1,261,572 2550 West Tyvola Road, Suite 300 Charlotte, NC 28217 Attn: Robert E. Agres Tel: (704) 998-3100 Fax: (704) 998-3316 Graphic Communications Trade $1,197,347 P.O. Box 933233 Atlanta, GA 31193-3233 Attn: Matt Dawley UBI Soft Inc. Trade $1,186,282 625 Third Street San Francisco, CA 94107 Attn: Marshall Calkins Marjack Trade $999,966 1900 Clarkson Way Landover, MD 20785 Davitt and Hanser Music Trade $990,345 4940 Delhi Pike Cincinnati, OH 45238 TMP International Trade $972,645 1711 West Greentree Drive Tempe, AZ 85284 UAV Corporation Trade $930,035 2200 Carolina Place Fort Mill, SC 29716 IPD Trade $903,374 Accounts Receivable Department 27500 Riverview Center Boulevard Suite 300 Bonita Springs, FL 34134 BMI Beaux Merzon Inc. Trade $839,257 1050 Valley Brook Avenue Lyndhurst, NJ 07071 Cingular Wireless LLC Trade $834,664 5565 Glenridge Connector Glenridge Highlands Two Atlanta, GA 30342 NETWORK PLUS: Dilks & Knopik Approved to Recover Unclaimed Funds ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Michael B. Joseph, the Chapter 7 Trustee overseeing the liquidation of Network Plus, Inc., and its debtor-affiliates' estates, to employ Dilks & Knopik, LLC, as a professional funds locator. The Trustee needs Dilks to identify unclaimed funds, which Mr. Joseph can't do on his own. The Trustee said Dilks has extensive knowledge and expertise in collecting unclaimed funds. The Trustee will pay Dilks a one-third contingency fee of any unclaimed funds recovered for its services. Jeffrey Hudspeth, an associate at Dilks & Knopik, assured the Court of the firm's "disinterestedness" as that term is defined in Section 101(14) of the Bankruptcy Code. Network Plus Corp., a network-based integrated communications provider, which offers broadband data and telecommunications services, filed for chapter 11 protection on February 04, 2002 (Bankr. Del. Case No. 02-10341). On June 11, 2003, the Debtors' cases were converted into chapter 7 liquidation proceedings. Michael B. Joseph was appointed chapter 7 trustee. Jonathan M. Stemerman, Esq., of Wilmington, Del., represents the chapter 7 trustee. Edward J. Kosmowski, Esq., Joel A. White, Esq., and Maureen D. Like, Esq., at Young Conaway Stargatt & Taylor represents the Debtors. As of Sep 30, 2001, the Debtors post $433,239,000 in total assets and $371,300,000 in total debts. NEVADA POWER: Prices Private Offering of $210 Mil. Mortgage Notes ----------------------------------------------------------------- Nevada Power Company, a wholly-owned subsidiary of Sierra Pacific Resources (NYSE: SRP), priced a private offering of $210 million principal amount of its 5.95% General and Refunding Mortgage Notes, Series M, due 2016. The notes are expected to be delivered on or about Jan. 18, 2006. Proceeds from the offering, together with available cash, will be utilized to repay $210 million outstanding under the Company's $500 million revolving credit facility, which amount was borrowed to finance a portion of the purchase price of a 75% ownership interest in the Silverhawk Power Station. The notes will be secured by the lien of the company's General and Refunding Mortgage Indenture, which constitutes a lien on substantially all of the company's real property and tangible personal property located in the State of Nevada. The offering will be made only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended, and outside the United States in compliance with Regulation S under the Securities Act. The notes will not be registered under the Securities Act and may not be offered or sold by holders thereof without registration unless an exemption from such registration is available. About Nevada Power Company Nevada Power Company is a regulated public utility engaged in the distribution, transmission, generation, purchase and sale of electric energy in the southern Nevada communities of Las Vegas, North Las Vegas, Henderson, Searchlight, Laughlin and their adjoining areas. The company also provides electricity to Nellis Air Force Base, the Department of Energy at Mercury and Jackass Flats at the Nevada Test Site. Nevada Power Company provides electricity to approximately 725,000 residential and business customers in a 4,500 square mile service area. About Sierra Pacific Resources Headquartered in Nevada, Sierra Pacific Resources is a holding company whose principal subsidiaries are Nevada Power Company, the electric utility for most of southern Nevada, and Sierra Pacific Power Company, the electric utility for most of northern Nevada and the Lake Tahoe area of California. Sierra Pacific Power Company also distributes natural gas in the Reno-Sparks area of northern Nevada. Other subsidiaries include the Tuscarora Gas Pipeline Company, which owns 50 percent interest in an interstate natural gas transmission partnership and several unregulated energy services companies. * * * As reported in the Troubled Company Reporter on Nov. 21, 2005, Fitch will not change the ratings or Stable Rating Outlook of Sierra Pacific Resources Co. and its operating utility subsidiaries Nevada Power Co. and Sierra Pacific Power Company following the announcement that the company has agreed to settle pending litigation with creditors of Enron Corp. The settlement is a favorable development for the company in that it removes a major source of uncertainty and is consistent with the current Stable Rating Outlook. SRP, NVP, and SPPC's ratings are rated by Fitch with a Stable Rating Outlook: Sierra Pacific Resources -- Senior unsecured debt 'B+'. Nevada Power Company -- First mortgage bonds 'BB+'; -- General and refunding mortgage bonds 'BB+'; -- Secured revolving bank facility 'BB+'; -- Senior unsecured debt 'BB-'; -- Trust preferred securities 'B+'. Sierra Pacific Power Company -- First mortgage bonds 'BB+'; -- General and refunding mortgage bonds 'BB+'; -- Secured revolving bank facility 'BB+'; -- Preferred stock 'B+'. NEWAVE INC: Discloses Strategic Initiatives For 2006 ---------------------------------------------------- NeWave, Inc. (OTC Bulletin Board: NWWV) summarized its key achievements of the past year and outlined its strategic initiatives for 2006. NeWave CEO Michael Hill stated, "2005 was a year of transition for NeWave. Whereby in 2004, our first full calendar year in business, we posted $6.7 million in revenue, we spent a good part of 2005 monitoring our progress and evaluating our model. While we did find some areas in need of improvement, we also found many considerable strengths, and made a conscious decision to spend some time repositioning our assets in response to our assessment." Mr. Hill added, "Clearly the programs we've implemented, are beginning to have a profound positive effect on our business. Our optimism for continued growth with an eye on the bottom line is fueled by our recent internal adjustments as well as the record pace of growth of e-commerce." Key achievements and events during 2005 include: -- Surpassed over 300,000 paid members for onlinesupplier.com -- Posted a record $5 million in revenue for the 9 month period ended Sept. 30, 2005. -- The arrival of several key executives including the Company's first CFO. -- Test marketing of the Company's first TV infomercial. -- The initial launch of new e-commerce consumer loyalty website http://www.buydiscount.com. Strategic initiatives and goals for 2006: -- To organically increase revenue by 50%. -- Achieve corporate wide profitability within the year. -- Reduce debt by 50%. -- The full scale roll-out of http://www.buydiscount.com -- Pursue a potential acquisition which is scalable and accretive. NeWave, Inc. is a leading online auction and e-commerce company which through its wholly-owned subsidiary "onlinesupplier.com", is engaged in providing online solutions and tools to its customers for monthly membership fees. NeWave provides its members with a commercial website, hosting, a merchant account (PayPal, Visa & Mastercard) and access to thousands of high value products and value-added services. Since inception in August of 2003, "onlinesupplier.com" has serviced over 235,000 paid members. At Sept. 30, 2005, NeWave, Inc.'s balance sheet showed a $2,150,021 stockholders' deficit compared to a $224,074 positive equity at Dec. 31, 2004. NORTHWEST AIRLINES: Has Until July 13 to File a Chapter 11 Plan --------------------------------------------------------------- Section 1121(b) of the Bankruptcy Code provides for an initial period of 120 days after the commencement of a chapter 11 case during which a debtor has the exclusive right to file a chapter 11 plan. Section 1121(c)(3) provides that if the debtor proposes a plan within the 120-day exclusive period, the debtor has a period of 180 days after the petition date to obtain acceptances of that plan. Bruce R. Zirinsky, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, relates that in the first few months of their bankruptcy cases, the Debtors have: (a) obtained important first day orders authorizing them to continue existing cash management systems, pay certain prepetition claims of lienholders and foreign vendors, maintain existing customer programs and protect their valuable net operating loss tax attributes; (b) negotiated arrangements on terms favorable to their estates to maintain important relationships with their credit card processors to enable customers to continue charging flights on AMEX, Mastercard and Visa credit cards; (c) resolved numerous disputes with vendors asserting liens against their aircraft and engines; (d) taken action where appropriate to enforce the automatic stay both in the United States and in Canada; (e) initiated the process of restructuring their aircraft fleet to rationalize their cost structure and match their fleet to anticipated future needs by rejecting the leases for or abandoning 37 aircraft, entering into agreements under Section 1110(a) or Section 1110(b) of the Bankruptcy Code for 396 aircraft and entering into adequate protection stipulations for an additional 42 aircraft; (f) begun to modernize their fleet by negotiating the continued purchase and delivery of new Airbus aircraft on terms favorable to the estate; (g) initiated a process to obtain DIP financing; (h) commenced a review of numerous airport and maintenance facility leases and financings to determine whether those arrangements are subject to recharacterization; (i) obtained interim relief for wage reductions with the Airline Pilots Association, Professional Flight Attendants Association and The International Association of Machinists and Aerospace Workers; (j) filed a requests to reject nine collective bargaining agreements, which requests are set to be heard starting on January 17, 2006; (k) initiated the process of addressing retiree benefit costs by requesting and obtaining the formation of the Official Committee of Retired Employees, and filing a request to modify retiree benefits; and (l) established regular and frequent communications with numerous parties-in-interest, including the Official Committee of Unsecured Creditors, numerous aircraft vendors and lessors, and an Ad Hoc Committee of Enhanced Equipment Trust Certificate Holders. Mr. Zirinsky says that although much has already been accomplished in a few short months, much also remains to be done before the Debtors can proceed with confidence to propose a plan of reorganization. To a large extent, Mr. Zirinsky explains, the shape of the Debtors' business on emergence will be driven by the amount of cost savings that can be realized from labor, aircraft financiers, and pension and retiree obligations. Until there is greater clarity on the cost savings issues, it is not possible for the Debtors to make firm decisions regarding a number of other matters, including: * which markets they will serve; * the aircraft needed; * the leases to assume or reject; and * other fundamental decisions. As a consequence, the Debtor needs sufficient time to resolve these fundamental issues, and in turn formulate a plan. Accordingly, the Debtors ask the Court to extend: -- their Exclusive Plan Proposal Period to July 13, 2006; and -- their Exclusive Solicitation Period to Sept. 12, 2006. Mr. Zirinsky assures the Court that the Debtors have been, and will remain, focused on their need to deal with all of the disparate parties-in-interest in their Chapter 11 cases, including their various creditors, employees, labor unions and aircraft lessors and lenders. Moreover, Mr. Zirinsky asserts that the Debtors' request for an extension of the Exclusive Periods is not a negotiation tactic, but a realistic reflection of the fact that their cases are complex and will require substantial time to complete. Mr. Zirinsky contends that the Debtors are fully committed to exiting Chapter 11 at the earliest practicable time. He says that the initial extension will give the Debtors an opportunity to progress towards resolving the issues necessary to reach that goal. The Debtors have met postpetition obligations as they become due, and the extension will not result in the accrual of significant administrative liabilities, Mr. Zirinsky attests. Mr. Zirinsky tells Judge Gropper that the Creditors Committee agrees to and supports the Debtors' request with the understanding that they are likely to require a further extension. * * * Judge Gropper grants the Debtors' request. 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHWEST AIRLINES: Industry Analysts Ponder Merger With Delta -------------------------------------------------------------- Lucy Hornby, at Reuters, reports that U.S. airline industry analysts note that some of Northwest Airlines Corp. and Delta Air Lines Inc.'s domestic routes overlap -- a factor that could make the prospect of a merger enticing. Additionally, in the International arena, Delta dominates the Atlantic routes while Northwest has more flights to the Pacific region. Even U.S. Transport Secretary Norman Mineta wondered at the possibility of a merger between the two airline giants, Ms. Horby relates. Delta and Northwest representatives declined to comment on the issue. The carriers said each is strictly focused on restructuring, Ms. Horny relates. Other analysts however, believe that Delta and Northwest may merged with other airlines, but not with each other. A merger between the two companies will be difficult given that the companies only common aircraft model is the Boeing 757, and the merger would require large amounts of financing and a creative management to make the merger work, Ms. Hornby reports. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. 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. 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. NORTHWESTERN CORP: Harbert Distressed Wants Directors Replaced -------------------------------------------------------------- Harbert Distressed Investment Master Fund, Ltd., plans to propose a slate of directors for Northwestern Corporation and solicit stockholders to vote for their slate with the goal of removing the current Board at the Company's next annual meeting. Harbert Distressed Investment Master Fund, Ltd., HMC Distressed Investment Offshore Manager, L.L.C., HMC Investors, L.L.C., Philip Falcone, Raymond J. Harbert, and Michael D. Luce, hold approximately 20% of the Company's common stock and approximately 33% of the Company's warrants. As reported in the Troubled Company Reporter on December 22, 2005, Harbert Distressed retained MacKenzie Partners, Inc., as proxy solicitors to encourage other shareholders to share their views on various issues regarding the Board's refusal to merge with other companies. Harbert Distressed believes the Company's Board and management have pursued a policy of rejecting bona fide offers to merge or sell the company regardless of the impact on shareholder value and the well being of the company. Past Merger Offers In spring 2005, the Board rejected a confidential $32.50 cash offer made by Montana Public Power, a nonprofit corporation comprised of the cities of Bozeman, Great Falls, Helena and Missoula. The Company also rebuffed multiple invitations from another suitor, Black Hills Corporation, to discuss a proposed business combination. On November 17, immediately after rejecting the Black Hills offer but before the existence of that offer was made public, Mr. Hanson extended a formal written offer to Harbert Distressed and two other large shareholders. In this proposal, NorthWestern would induce Harbert Distressed to sell its shares in a public offering by agreeing to pay Harbert Distressed a "top up fee" to guarantee an above market floor price for its shares. Search for Board Directors Over the past several months the Harbert entities have purportedly been contacted by many of the Company's stockholders that share Harbert's dissatisfaction with the Board. The Harbert entities are asking other stockholders to provide them with the names of suitable candidates for election as directors. The are looking for strong candidates who will have broad stockholder support and will be "committed to enhancing value for all stockholders through a fair sales process." The recently adopted Poison Pill contains a provision that may prevent stockholders who collectively own more than 15% of the Company's stock from joining together to replace the Board. Mr. Falcone said it is difficult for them to understand what could possibly justify the Management Protection Provision. Nevertheless, the presence of the Management Protection Provision raises questions about Harbert's ability to talk to other stockholders without triggering the Poison Pill. Although the Management Protection Provision seems to be a clear manipulation of the corporate machinery for the purpose of entrenchment in what we believe is a violation of Delaware law, Mr. Falcone said they need to know whether the Board will claim that Harbert's seeking the names of potential nominees from other stockholders would trigger it. Annual Meeting Annual meetings are traditionally held in the utility industry in April or May. Mr. Falcone said the Company is likely to lose in a proxy war during the meeting. However, at least one Board member and Credit Suisse First Boston, the Board's financial advisor, purportedly warned the Harbert entities that the Board might try to stay in power by delaying the annual stockholder's meeting until August. The Harbert entities strongly urge the Company to hold the annual meeting by the end of March or as soon as possible after the Company's annual report has been finalized. M. Douglas Dunn and John T. O'Connor at Milbank, Tweed, Hadley & McCloy, LLP, represent Harbert Distressed. NorthWestern Corporation, d/b/a NorthWestern Energy -- http://www.northwesternenergy.com/-- is one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving more than 617,000 customers in Montana, South Dakota and Nebraska. * * * As reported in the Troubled Company Reporter on Nov. 30, 2005, Fitch Ratings has affirmed NorthWestern Corp.'s outstanding senior secured debt obligations at 'BBB-' and the senior unsecured revolving credit facility at 'BB+'. The Rating Outlook has been revised to Evolving from Positive. The rating action follows the disclosure by NOR on Nov. 23, 2005 that it is evaluating a merger proposal received from Black Hills Corporation, Inc. O'SULLIVAN IND: Committee Supports Other Professionals' Retention ----------------------------------------------------------------- As previously reported in the Troubled Company Reporter on January 6, 2006, the Official Committee of Unsecured Creditors objected to O'Sullivan Industries Holdings, Inc., and its debtor- affiliates' employment of certain Ordinary Course Professionals because the disclosure statements filed by and on behalf of the Professionals were inadequate to support the employment of each Professional. After intensive discussions with the Debtors, the Creditors Committee agrees to withdraw its objection with respect to the Debtors' retention of Executive Search Partners L.L.C. Executive Search Partners is to provide Richard R. Lefebvre as its temporary informational officer. The Creditors Committee's counsel also had discussions with Stacy Jernigan, Esq., at Haynes and Boone LLP, who agreed that the firm would cap their monthly fees at $10,000 -- lower than the $13,000 monthly cap requested by the Debtors Hence, the Committee does not oppose the Debtors' retention of Haynes and Boone, provided that the firm's monthly fees are capped at $10,000 per month. The Committee supports the retention of the other Ordinary Course Professionals, on the revised terms and conditions, including the limitations on their monthly fees. 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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) O'SULLIVAN INDUSTRIES: Court Gives Final Okay to FTI's Retention ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia gave O'Sullivan Industries Holdings, Inc., and its debtor- affiliates authority to retain FTI Consulting, Inc., as their restructuring advisor on a final basis. As reported in the Troubled Company Reporter on Oct. 28, 2005, the Debtors has engaged FTI Consulting, Inc., in August 2005 to serve as their restructuring officer and to provide them certain financial advisory and other consulting services. The Debtors sought the Court's authority to continue the firm's engagement during the course of their Chapter 11 cases. The Debtors told the Court that FTI has a wealth of experience in providing financial advisory services in restructurings and reorganizations and enjoys an excellent reputation for services it has rendered in large and complex Chapter 11 cases on behalf of debtors and creditors throughout the United States. The Debtors are convinced that an experienced restructuring advisor like FTI fulfills a critical service that complements other management, as well as the services provided by their other professionals. 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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) ORIENTAL FINANCIAL: S&P Assigns BB+ Counterparty Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' long-term counterparty credit rating to Oriental Financial Group (Oriental; NYSE:OFG). At the same time, Standard & Poor's assigned its 'BBB-' counterparty rating to Oriental's principal operating subsidiary, Oriental Bank & Trust. The outlook for both entities is negative. "The rating on Oriental reflects its heavy reliance on wholesale funding that is pressuring profitability in the current rate environment, high levels of nonperforming assets, and its geographically concentrated business in Puerto Rico," said Standard & Poor's credit analyst Michael Driscoll. "The rating also takes into account Oriental's low credit risk profile, diversified business mix, and strong capital metrics." The flattening of the yield curve continues to hurt Oriental's profitability as its heavy reliance on short-term wholesale funding makes the bank naturally liability sensitive. Before short-term rates started increasing and the yield curve flattened, Oriental was able to benefit from a lucrative carry trade that pushed ROA into the very strong 180 basis point range the past several years. However with the curve flattening, its net interest margin has steadily declined to 1.66% from 2.96% eight quarters ago. The interest rate environment should continue to pressure profitability going forward. In addition, the available-for-sale portfolio was down by $17.3 million, which could limit financial flexibility. Although there is significant interest rate risk, Oriental has minimal credit risk. At 75% of assets, the securities portfolio is invested in highly rated securities and the loan portfolio predominantly consists of residential mortgages, which tend to be a lower risk loan class. Although lower risk, nonperforming assets including delinquencies are very high at 3.61% of loans plus other real estate. However, high NPAs have not translated into high net charge-offs, which were 0.29% at the end of the quarter. With an appreciating housing market due to housing shortages and lack of developable land, NCOs within the residential mortgage sector are minimal. With noninterest income constituting 30.55% of revenues, Oriental is not totally dependent on spread income. Oriental's trust, brokerage, investment banking, and insurance businesses provide some revenue diversification. Oriental conducts almost all of its business in Puerto Rico, which represents geographic concentration risk. The 2003 purchase of Caribbean Pension Consultants, a third-party administrator of trust assets, has given Oriental its first access, albeit small, to the U.S. market in Florida. To date, CPC has not performed as well as expected, but Oriental is currently looking at ways to improve the business. In the future, Oriental may look to expand not only its TPA business in the U.S., but its traditional banking business as well. With a common equity offering in 2004 and a preferred stock offering in 2003, Oriental's capital metrics have increased and are very strong. Adjusted common equity to adjusted assets is 7.01% and Oriental's regulatory capital metrics far exceeds those of similarly rated peers. The negative outlook reflects Standard & Poor's expectation that Oriental's profitability will continue to be adversely impacted by the current shape of the yield curve, which is expected to continue flattening or even invert. Although the rating category has some room for deterioration in earnings, any prolonged slump or a lost quarter could result in a downgrade. Conversely, if the yield curve steepens and provides Oriental some net interest margin relief, the outlook could be revised to stable. OWENS CORNING: Recording $140M++ Addt'l Expenses Under Credit Pact ------------------------------------------------------------------ Owens Corning disclosed in a Form 8-K filed with the Securities and Exchange Commission that it would record, for the quarterly period ended December 31, 2005, additional expenses under its 1997 Credit Agreement. The additional expenses are estimated to be in the range of approximately $140 million to $160 million. The expenses will accrue reflecting postpetition interest on a compounding basis and postpetition fees, including facility fees. As reported in the Troubled Company Reporter on Oct. 27, 2005, the Company recorded $538 million in expenses relating to the prepetition credit facility, for the period from Oct. 5, 2000 (the day it filed for bankruptcy protection) to Sept. 30, 2005. The $538 million of expenses include: * $531 million on account of postpetition interest; and * $7 million on account of postpetition fees. The expense recording is a result of the August 1, 2005, reversal by the United States Court of Appeals for the Third Circuit of the U.S. District Court for the District of Delaware's order for substantive consolidation. In the Substantive Consolidation Order, the District Court granted the motion of Owens Corning and certain of its subsidiaries for substantive consolidation. Treatment Under Fifth Amended Plan As reported in the Troubled Company Reporter on Jan. 2, 2006, lenders under the prepetition facility, holding claims aggregating around $1.467 billion, will receive 150.3% of their claims if their class is deemed unimpaired. If the class is deemed impaired and bank lenders vote to accept the plan, they will get the same recovery. If the class is deemed impaired and the bank lenders vote to reject the plan, they will receive an amount as determined by the Bankruptcy Court, in cash and senior notes. Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. Headquartered in Toledo, Ohio, 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. PINNACLE ENTERTAINMENT: Moody's Affirms Caa1 Sr. Sub. Debt Rating ----------------------------------------------------------------- Moody's Investors Service revised Pinnacle Entertainment Inc.'s ratings outlook to positive from stable based on the company's recent announcement that it plans to offer 6 million shares of its common stock, with an option granted to the underwriters for an additional 900,000 shares. Estimated net proceeds from the offering are expected to be about $163 million. Pinnacle's B2 corporate family rating, B1 bank loan rating and Caa1 senior subordinated debt rating were affirmed. Net proceeds from the proposed common stock offering are expected to be used for one or more expansion projects including new hotel towers at three of Pinnacle's existing properties: * Belterra; * L'Auberge du Lac in Lake Charles, Louisiana; and/or * Boomtown New Orleans. Proceeds may also be used to fund a portion of Pinnacle's St. Louis, Missouri development projects and/or general corporate purposes. The outlook revision to positive anticipates that the stock offering will occur as currently planned, and that any material incremental equity-type investment applied to any of the above-mentioned casino properties or development projects will likely have a long-term positive impact on the overall profitability of these assets. The positive ratings outlook also anticipates: * further improvement in Belterra's operating results; * continued strong ramp-up at L'Auberge; and * better than expected operating results at Boomtown New Orleans. Despite disruptions from the weather catastrophes that occurred in the third quarter of 2005, L'Auberge and Boomtown New Orleans are expected to continue to perform at or above previous expectations. L'Auberge, a relatively new and high quality casino, is performing well as a result of its high level of initial acceptance and popularity. At the same time, both L'Auberge and Boomtown New Orleans appear to be benefiting from the loss of gaming supply in the New Orleans and Mississippi Gulf Coast markets. Although this may be a temporary situation, Moody's expects that this will continue over the intermediate term and have a positive effect on Pinnacle's overall credit profile. Pinnacle's B2 corporate family rating reflects the risks associated with the company's high leverage and significant upcoming development activity related to two casino projects in St. Louis, Missouri. Additionally, the rating takes into account the continuing uncertainty regarding the amount and timing of any insurance coverage related to Hurricane Katrina. Although significant, the St. Louis development opportunities are viewed as positive credit considerations in that they would provide Pinnacle with an increased level of diversification, a key factor with respect to longer-term ratings improvement. Higher ratings require further improvement in overall operating results as well as a higher degree of comfort that insurance matters will eventually be resolved in a manner that does not have a material negative impact on the company's overall financial profile. Although Pinnacle believes the damages sustained at its properties as a result of Hurricanes Katrina and Rita are covered under its policies, and intends to vigorously oppose any effort by any of its insurance carriers to limit their obligations under the policies, there is still a significant degree of uncertainty regarding the amount and timing of any insurance proceeds. Headquartered in Las Vegas, Nevada, Pinnacle Entertainment, Inc. (NYSE: PNK) owns and operates casinos in: * Nevada, * Mississippi, * Louisiana, * Indiana, and * Argentina, and receives lease income from two card club casinos in California. The company has also been selected for two casino projects in Missouri. PLIANT CORP: Court Grants Interim Access to Cash Collateral ----------------------------------------------------------- As of the Petition Date, Pliant Corporation and its debtor- affiliates owed $658,006,000 under: (a) a $140 million Prepetition Credit Facility, dated November 21, 2005, entered into by the Debtors, Morgan Stanley Senior Funding, Inc., General Electric Capital Corporation, and other lender parties; (b) an Amended and Restated Indenture, dated May 6, 2005, between the Debtors and Wilmington Trust, as Trustee, pursuant to which the Debtors issued 11-5/8% and 11-1/8% Senior Secured Notes due 2009; (c) an Indenture, dated as of May 30, 2003, pursuant to which the Debtors issued 11-1/8% Senior Secured Notes due 2010. To secure repayment of their obligations, the Debtors granted the Lenders liens and security interests on inventory, receivables, deposit accounts, capital stock of or other equity interests in subsidiaries, investment property, real property, fixtures, equipment, intellectual property, among others. An Intercreditor Agreement delineates and rights and obligations of the parties with respect to the liens. A full-text copy of the Intercreditor Agreement is available for free at: http://bankrupt.com/misc/pliant_intercred_accord.pdf Because the Debtors filed for bankruptcy, absent court authority pursuant to Section 363(c) of the Bankruptcy Code, the Debtors have no right to use their Lenders' cash collateral. The Debtors believe that their Lenders consented to the use of the Cash Collateral as long as adequate protection is provided. If the Debtors can't use their Lenders' Cash Collateral, the Debtors would have no ability to meet their ongoing obligations to suppliers, vendors, employees and other creditors, Larry J. Nyhan, Esq., at Sidley Austin LLP, in Chicago, Illinois, tells the Court. In contrast, Mr. Nyhan says, the Debtors' continued use of cash collateral will ensure that the going concern value of their assets are preserved. The Debtors ask the Hon. Mary F. Walrath for permission to use their Lenders' Cash Collateral. According to Mr. Nyhan, even if the Prepetition Lenders did not consent to the use of their Cash Collateral, their interests are adequately protected. The Debtors propose to grant their Prepetition Lenders, among other things: (i) dollar-for-dollar replacement liens on the collateral; (ii) administrative claims under Section 507(b) of the Bankruptcy Code; and (iii) in some instances, provisional payment of certain interest fees and expenses. As an additional measure of adequate protection, the funds to be advanced under the incremental working capital facility under the DIP Facility and the proceeds of those funds will become additional assets of the Debtors' estates. The Debtors have prepared a budget showing their projected costs and expenses from the Petition Date through February 15, 2006. A full-text copy of the Budget is available for free at: http://bankrupt.com/misc/6_pliant_budget.pdf Interim Approval Judge Walrath permits the Debtors to use the Cash Collateral to pay their ordinary and necessary business expenses based on the Budget. The Court will convene a final hearing on Feb. 2, 2006, at 11:30 a.m. in Wilmington. Headquartered in Schaumburg, Illinois, Pliant Corporation -- http://www.pliantcorp.com/-- produces value-added film and flexible packaging products for personal care, medical, food, industrial and agricultural markets. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. (Pliant Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLIANT CORP: Has Interim Access to $37 Million Under DIP Loan ------------------------------------------------------------- According to Harold C. Bevis, chief executive officer of Pliant Corporation, without access to fresh financing, the Debtors could be compelled to terminate their business operations. "The Debtors do not have sufficient liquidity available to ensure the continued operation of their businesses." The Debtors need to obtain debtor-in-possession financing to maintain business relationships with vendors, suppliers and customers; to make payroll; to make capital expenditures; and to satisfy other working capital and operational needs. In view of the steady deterioration of their liquidity position, the Debtors asked General Electric Capital Corporation and two other nationally recognized financial institutions to provide proposals for a DIP Facility that would afford the Debtors additional liquidity. Following negotiations and due diligence, GE Capital provided a proposal that most closely complied with the Debtors' requested structure, Larry J. Nyhan, Esq., at Sidley Austin LLP, in Chicago, Illinois, relates. Pursuant to Section 364 of the Bankruptcy Code, the Debtors seek the Court's permission to obtain DIP financing from GE Capital in accordance with the terms of a Senior Secured, Super-Priority, Priming DIP Credit Agreement, dated January 3, 2006. A full-text copy of the DIP Agreement is available for free at http://ResearchArchives.com/t/s?445 Terms of the Agreement The Agreement provides for a $200,000,000 commitment of DIP financing to fund the Debtors' working capital requirements during the pendency of their Chapter 11 cases. The salient terms of the DIP Agreement are: A. Borrowers: Pliant Corporation, Uniplast Holdings, Inc., and Uniplast U.S., Inc. B. Guarantors: Pliant Corporation International, Pliant Solutions Corporation, Pliant Film Products of Mexico, Inc., Pliant Packaging of Canada, LLC, Pliant Investment, Inc., Alliant Company LLC, Uniplast Industries Co., and Pliant Corporation of Canada Ltd. C. Agents: GE Capital, in its capacities as Administrative Agent and Collateral Agent. D. Lenders: GE Capital, Morgan Stanley Senior Funding, Inc., and other lenders that may become party to the DIP Facility Agreement from time to time. E. Arranger: GE Capital Markets, Inc., is Sole Lead Arranger & Sole Bookrunner. F. Commitment Amount: The lesser of (i) $200 million, or (ii) the Borrowing Base, including, in each case, a $25 million letter of credit subfacility. The DIP Facility also includes a swingline subfacility of up to $10 million. Advances under the DIP Facility may be borrowed, repaid and reborrowed on and after the date of the closing of the DIP Facility. G. Borrowing Base: Amounts available under the DIP Facility will be subject to a Borrowing Base. H. L/C Subfacility: The Borrowers are entitled to request the issuance of letters of credit in an aggregate amount not to exceed $25 million at any one time outstanding. I. Maturity: The earliest of (a) January 4, 2008, or (b) other customary events that would trigger an earlier "Maturity Date." J. Use of Proceeds: Loans under the DIP Facility will be used for postpetition operating expenses of the Loan Parties incurred in the ordinary course of business and other costs and expenses of administration of the Chapter 11 cases. K. Interest: The Loans will bear interest, at the Borrowers' option, at a floating rate equal to either (i) absent a default, at the LIBO Rate plus 2.75%, or (ii) the Alternate Base Rate plus 1.50%. Each Protective Advance will bear interest at the Alternate Base Rate plus 1.50% plus 2%. L. Default Rates: During the existence of any payment event of default, or any other event of default at the election of the Administrative Agent, (a) interest on the Loans will be increased 2.00% above the rate otherwise applicable and (b) other amounts will bear interest at the Alternate Base Rate plus 1.50% plus 2.00%. M. Fees: The Borrowers will pay a commitment fee, a participation fee, a fronting fee, and additional fees agreed upon between Pliant and the Administrative Agent or the Collateral Agent, as applicable. N. Security/Collateral: The Borrowers' obligations under the DIP Facility, will be secured by the DIP Facility Liens. O. Priority of Payments: All amounts owing by the Borrowers under the DIP Facility and in respect thereof will, at all times, constitute allowed superpriority administrative expense claims pursuant to Section 364(c)(1) of the Bankruptcy Code, subject only to the Carve-Out and any other amount expressly provided for by order of the Bankruptcy Court or the Canadian Court. P. Carve-Out $5,000,000, plus U.S. Trustee fees. Q. Events of Default (a) nonpayment (b) misrepresentation (c) breach of covenants (d) cross-defaults (e) unstayed judgments (f) ERISA Events (g) change of control (h) appointment of trustee (i) other customary events of default The Fixed Charge Coverage Ratio for the 12-month period then ended: Minimum Fixed Charge Fiscal Month Ending Coverage Ratio ------------------- -------------------- January 31, 2006 0.77:1.00 February 28, 2006 0.77:1.00 March 31, 2006 0.88:1.00 April 30, 2006 0.88:1.00 May 31, 2006 0.90:1.00 June 30, 2006 1.09:1.00 July 31, 2006 1.10:1.00 August 31, 2006 1.10:1.00 each fiscal month thereafter 1.20:1.00 Mr. Nyhan notes that no more than $100,000 of the proceeds of the DIP Facility or any proceeds of the DIP Facility Collateral may be used to fund an investigation of any claims, causes of action, adversary proceedings, or other type of litigation against the Lending Entities. The Debtors anticipate that during the period ending February 15, 2006, the aggregate principal balance outstanding under the DIP Facility will peak at $167.8 million. The aggregate priming of First Lien Noteholder Liens by the DIP Facility Liens is limited to $68,785,804. According to Mr. Nyhan, the Debtors could not have obtained postpetition financing on an unsecured basis, without offering terms largely similar to those contained in the DIP Facility. "The DIP Facility is [also] on market terms." GE Capital is represented by Jesse H. Austin, III, Esq., Leslie A. Plaskon, Esq., Kristine M. Shyrock, Esq., at Paul Hastings Janofsky & Walker, LLP, and Victoria W. Counihan, Esq., at Greenberg Traurig LLP. Interim Financing On an interim basis, the Court authorizes the Debtors to borrow up to $37,000,000 under the DIP Facility. A full-text copy of the Interim DIP Financing Order is available for free at http://bankrupt.com/misc/pliant_interimDIP.pdf Among others, the Hon. Mary F. Walrath rules that: (1) The adequate protection payments in connection with the First Lien Noteholder Facility will include the reasonable fees and expenses, including legal fees, of the First Lien Indenture Trustee; (2) The Second Lien Noteholders will be granted an administrative claim against the Debtors' estates to the extent that the Second Lien Noteholder Replacement Liens do not adequately protect the decrease in the value of the Second Lien Noteholder Liens as a result of the priming DIP Facility and use of Cash Collateral, which First Lien Noteholder Administrative Claim, if any, will be junior and subordinate to the DIP Facility Superpriority Claims and the First Noteholder Administrative Claims; (3) Channin Capital Partners will receive a $125,000 monthly fee; and (4) The adequate protection furnished to the First Lien Noteholders and the Second Lien Noteholders will be subject to review and adjustment by the Court at the final hearing on the DIP Financing. The Final Hearing is scheduled for February 2, 2006. Objections are due on January 26, 2006. Headquartered in Schaumburg, Illinois, Pliant Corporation -- http://www.pliantcorp.com/-- produces value-added film and flexible packaging products for personal care, medical, food, industrial and agricultural markets. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. (Pliant Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) POLAROID CORP: Administrator Has Until Jan. 16 to Object to Claims ------------------------------------------------------------------ The Hon. Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware gave Wind Down Associates LLC, the Plan Administrator appointed under the confirmed Third Amended Joint Plan of Reorganization of Primary PDC, Inc., fka Polaroid Corporation, and its debtor affiliates, until Jan. 16, 2006 to object to claims filed against the Debtors' estates. The Plan Administrator asked for the extension to secure more time to complete the claims objection and reconciliation process. The extension will also give the Plan administrator a greater opportunity to consensually resolve various disputed claims. Headquartered in Cambridge, Massachusetts, Primary PDC, Inc., (f/k/a Polaroid Corporation), -- http://www.primarypdc.com-- is responsible for settling claims and for administering business matters related to the former Polaroid Corporation. Substantially all of the assets of Polaroid Corporation were sold to OEP Imaging Operating Corporation on July 31, 2002. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 12, 2001 (Bankr. D. Del. Case No. 01-10864). The Court confirmed the Debtors' chapter 11 Plan on Nov. 18, 2003, and the Plan took effect on Dec. 17, 2003. Wind Down Associates LLC is the Plan Administrator under the confirmed Plan. Joseph A. Malfitano, Esq., at Young, Conaway, Stargatt & Taylor and Phil Dublin, Esq., at Akin, Gump, Strauss, Hauer & Feld, L.L.P., represents the Plan Administrator. PORT BAILEY: Case Summary & 14 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Port Bailey Wild Enterprises, LLC c/o Walter W. Mason 605 First Avenue, Suite 350 Seattle, Washington 98104 Bankruptcy Case No.: 06-10045 Chapter 11 Petition Date: January 9, 2006 Court: Western District of Washington (Seattle) Judge: Thomas T. Glover Debtor's Counsel: Francois L. Fischer, Esq. Fischer Law Offices 9520 Northeast Daniel Court Bainbridge Island, Washington 98110-1319 Tel: (206) 780-8555 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Robert S. Shane, II Loan $769,957 P.O. Box KPY Kodiak, AK 99697 Troy Lozano Loan $30,000 4152 Merdian, Suite 105-42 Belling-ham, WA 98226 Penny Page Loan $15,000 58 Wahelani Street Kula, HI 96979 Wyatt Refrigeration Services/supplies $15,000 Bruce Johnston, Esq. Loan $10,000 Kodiak Computer Services/supplies $5,000 Randall & Richards/Arc-N Services $3,287 Spark-Breakwater Plumbing Thomas Wisher Loan $2,000 John A. Marta, CPA Services $1,900 Anita L. Adams Loan $1,500 State of Alaska Taxes/charges $1,262 Robert L. Adams, Jr. Loan $1,000 State of Alaska Taxes/charges $400 Jamin, Ebell, Schmitt & Services $87 Mason, P.C. REFCO INC: Oracle & Cargill Object to Contract Assignments ---------------------------------------------------------- As previously reported, Refco Inc., and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the Southern District of New York a revised notice of executory contracts and unexpired leases proposed to be assumed and assigned to Man Financial Inc. in connection with the Court-approved sale of substantially all of the assets of Refco's regulated commodities futures business to Man Financial. A full-text copy of the Revised Notice of Assignment and the List of Contracts and Leases is available for free at: http://bankrupt.com/misc/refco_revisedassumptionnotice.pdf * * * Objections Oracle & Cargill to Assignment of Contracts (A) Oracle USA Oracle USA, Inc., successor to both Oracle Corporation and PeopleSoft, Inc., opposes the proposed assumption and assignment of its executory contracts to Man Financial, Inc., because: (1) neither the Debtors nor Man Financial can provide adequate assurance of future performance; and (2) the Debtors have failed to tender cure amounts due under the subject agreements. Debtor Refco Group Limited is a party to various contracts with Oracle Corp. and PeopleSoft: * On October 13, 1997, Refco Group entered into a Software License and Services Agreement with PeopleSoft. Oracle's records indicate the Refco Group owes $42,168 under the PeopleSoft Agreement, pertaining to unpaid maintenance and support fees. * On February 25, 2005, Oracle Corp. and Refco Group entered into an Oracle License and Service Agreement, where Oracle Corp. granted Refco Group various non-exclusive software licenses. The Agreements expressly prohibit Oracle's licenses from being used by, or transferred to, a third party, Amish R. Doshi, Esq., at Pitney Hardin LLP, in New York, tells the Court. By transferring their Oracle licenses and related software to Man Financial, the Debtors commit a material and ongoing breach of the Agreements' use and transfer provisions, Mr. Doshi contends. "It goes without saying that the Debtors cannot, under any stretch of the imagination, provide "adequate assurance of future performance' under the Agreements when they materially breach the Agreements by permitting infringement of Oracle's intellectual property rights," Mr. Doshi says. Furthermore, there is no indication that either PeopleSoft or Oracle Corp. received proper notice of the Assignment Notice, Mr. Doshi states. (B) Cargill Cargill Incorporated objects to the assignment of its Exclusivity Agreement with Refco Group Ltd., LLC, dated as of August 31, 2005. The Exclusivity Agreement is one of several integrated agreements executed in conjunction Refco Group's purchase of Cargill's future commission merchant business. Garry M. Graber, Esq., at Hodgson Russ LLP, in New York, tells the Court that Refco Group seeks to assume and assign Cargill's contractual obligation to do business exclusively with Refco Group and its affiliated entities over the next five years to Man Financial, Inc., without assuming and assigning certain of Refco Group's obligations under the Purchase and Sale Agreement, including the obligation to pay the remaining $67,000,000 to $192,000,000 due as the "Post Closing Payment Amount." Refco Group and Cargill intended and expressly stated in the Integrated Agreements that the obligations are co-dependent. Under Section 365 of the Bankruptcy Code and applicable state law, Refco Group cannot assume and assign only one of the Integrated Agreements without assuming and assigning all of the Agreements, Mr. Garber asserts. Cargill objects to the cure amount relating to the Exclusivity Agreement. According to Mr. Garber, as of November 18, 2005, Refco Group owes Cargill $33,263,464 relating to the business transacted pursuant to the Exclusivity Agreement. The failure of Refco Group to complete the transaction constitutes a material breach of the Exclusivity Agreement, Mr. Garber adds. Mr. Garber contends that to the extent Refco Group seeks to assume and assign all of the Integrated Agreements, it must: -- cure the $59,480,016 in payment defaults under the Integrated Agreements; and -- provide adequate assurance of future performance of the $67,000,000 to $192,000,000 Post Closing Payment Amount due under the Purchase and Sale Agreement. Cargill also objects to the proposed effective date of any assumption and assignment. The effective date of any assignment of the Integrated Agreements must be no earlier than the date that the Court enters an order authorizing the assumption and assignment of the Agreements, Mr. Garber avers. Unless and until the Integrated Agreements are assumed and assigned, Cargill expressly reserves any and all of its rights to conduct futures clearance services as is necessary to maintain and protect its business interests. 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 in debts to the Bankruptcy Court on the first day of its chapter 11 cases. (Refco Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) RESIDENTIAL ASSET: S&P Shaves Ratings on Class M-I-3 Certs. to B ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the M-I-3 classes from Residential Asset Securities Corp.'s series 2001-KS2 and 2001-KS3 to 'B' from 'BB' and 'BBB', respectively. Concurrently, the ratings are placed on CreditWatch with negative implications. At the same time, the ratings on 16 other classes from these transactions are affirmed. The M-I-3 classes are backed by the fixed-rate loan groups from RASC's series 2001-KS2 and 2001-KS3. The lowered ratings and CreditWatch placements reflect a decrease in credit support due to realized losses from the fixed loan groups, resulting in an erosion of the available credit support for these classes. Realized losses in these pools have regularly exceeded excess interest, which has led to overcollateralization levels that are about half of their targeted amounts. As of the December 2005 distribution date, cumulative losses for series 2001-KS2 and 2001-KS3 were 4.43% and 4.23% of the original pool balances, respectively. Total delinquencies for these transactions represented 31.10% and 31.03% of the current pool balances, respectively. Standard & Poor's will continue to closely monitor the performance of these transactions. If losses decline to a point where they no longer outpace excess interest, and the level of overcollateralization has not been further eroded, the ratings on the M-I-3 classes will be affirmed and removed from CreditWatch. Conversely, if losses continue to outpace excess interest, further downgrades can be expected. Despite collateral performance that is worse than originally expected, there is sufficient credit support for the remaining classes at their current ratings. These RASC transactions are made up of two groups of subprime mortgage loans. Loan group I consists of 30-year fixed-rate, first lien mortgage loans secured by one- to four-family residential properties. Loan group II consists of 30-year adjustable-rate mortgage loans secured by one- to four-family residential properties. Residential Funding Corp. acquired the loans in accordance with its AlterNet program. Residential Funding established this program primarily for the purchase of mortgage loans that are either made to borrowers with less-than-perfect credit histories, higher debt-to-income ratios, or present certain other risks to investors. Ratings Lowered And Placed On Creditwatch Negative RASC Series Trust Rating ------ Series Class To From ------ ----- -- ---- 2001-KS2 M-I-3 B/Watch Neg BB 2001-KS3 M-I-3 B/Watch Neg BBB Ratings Affirmed RASC Series Trust Series Class Rating ------ ----- ------ 2001-KS2 A-I-5, A-I-6, A-II AAA 2001-KS2 M-I-1, M-II-1 AA 2001-KS2 M-I-2, M-II-2 A 2001-KS2 M-II-3 BBB 2001-KS3 A-I-5, A-I-6, A-II AAA 2001-KS3 M-I-1, M-II-1 AA 2001-KS3 M-I-2, M-II-2 A 2001-KS3 M-II-3 BBB RH DONNELLEY: Fitch Junks Rating on Senior Unsecured Notes ---------------------------------------------------------- Fitch Ratings has initiated rating coverage on R.H. Donnelley Corp. by assigning a 'B+' Issuer Default Rating and a 'CCC+' rating to RHD's senior unsecured notes. Fitch has also assigned specific issue ratings to R.H. Donnelley Inc. and has revised ratings on Dex Media Inc. and its wholly owned subsidiaries, Dex Media West and Dex Media East. All Dex ratings are removed from Rating Watch Negative where they were placed Oct. 3, 2005. The 'B+' IDR applies to each of the five issuing entities. The rating action affects approximately $8.5 billion of debt outstanding at Sept. 30, 2005. The Rating Outlook is Stable. The rating actions reflect: * the significant pro forma respective and consolidated debt loads of the holding and operating companies of RHD and Dex, * the intense competition from independent directories, * increased usage of online (and threat of wireless) search, * the risk of further debt financed acquisitions, * limited tangible asset value, * recovery prospects in distress and * the structural subordination present within the capital structure. These risks are balanced somewhat by: * strong and historically stable free cash flow generation (supported by healthy operating EBITDA margins and strong free cash flow conversion), * management's track record at reducing debt levels (at both RHD and Dex), and * solid geographic and client diversity. The ratings also incorporate the combined company's enhanced scale and strong market position as the incumbent directory publisher within its service territories. Fitch recognizes the historical stability of the combined company's revenue base and cash flow has been supported by the combined company's high advertiser retention rate, the contractual nature of the combined company's revenues, low ongoing capital expenditures and a business model that is less sensitive to advertising revenue cyclicality than other media. The combined company will have more broad geographic diversity, as there is very little overlap of operations, improving its capacity to withstand a downturn in one of its regions. The new RHD will have more than 600 directories, a circulation of over 73 million, 660,000 advertisers and over 1,800 sales reps. The combined company will operate in 28 states. Fitch believes that management's exclusive focus on the yellow pages business has helped it grow faster and be more proactive about addressing competitive threats than regional bell operating company subsidiary incumbents. However, in Fitch's view, revenue growth and EBITDA margins will continue to face pressure from the significant competition represented by independent print directories and online players. As print usage has been flat to slightly down the past several years, the number of print yellow pages advertisers has declined slightly and advertising revenue although increasing, has increased at a declining rate in the United States, reflecting the reduced capacity of incumbent players to increase advertising rates. Independents like Yellow Book have experienced swift growth and represented 20% of the yellow pages market in 2004 compared with less than a 5% share ten years ago. However, Fitch believes that in some cases this competition leads to higher costs for advertisers as many of them choose to be in both directories as the opportunity cost on the part of advertisers leads to a level of 'stickiness' for many of the 660,000 unique advertisers. Fitch believes RHD and Dex advertiser revenue is less susceptible to potentially swift and widespread pressures felt by other traditional print media under a downturn scenario or against the backdrop of a secular shift. In addition to print competition, the growth of online advertising has been dramatic and poses a threat to all traditional media companies. Internet revenues make up only a 4% sub-segment of yellow pages industry advertising, but online yellow pages advertising overall is experiencing dramatic growth of 15-25%. RHD, and to a greater degree, Dex, have been active in addressing the threats posed by online players and currently have online local search capabilities in all of their markets. Fitch believes that the combined company's sales force and advertiser relationships make it a valuable and complementary strategic partner for online search engines over the intermediate term. Fitch recognizes that while there could be margin compression during the shift toward online usage, there could also be longer-term pricing and margin expansion in the online advertising offering as ROI becomes clearer and as the internet becomes a more significant outlet for media advertising. Fitch believes that the five issuing entities bear the same risk of default and thus share the same IDR. Fitch believes that cash flows of all three operating subsidiaries are meaningful to the pro forma debt service capability of RHD Corp. and if available, that support would be offered to any of the three subsidiaries in financial distress because they are each strategically important and material contributors to the consolidated entity. RHD Corp is structurally subordinated to RHD Inc and Dex Media Inc., and is dependent on dividends of RHD Inc and Dex Media Inc. to support its sizeable debt load. Consistent with the granularity of Fitch's Recovery Methodology, the individual security ratings reflect the determination and application of prospective recovery in a stressed scenario and are notched accordingly. Pro forma consolidated leverage is 7x, slightly below its leverage covenant maximum of 7.25x. Fitch expects the combined company to focus over the next 12-18 months on integration and on paying down debt. Management's stated leverage comfort range and operating target is 5.0x-5.5x Debt to Adjusted EBITDA. With significant free cash flow generation the combined company has significant capacity to service its debt load and make accelerated principal repayments to reduce leverage approximately 0.5x per year. Fitch notes that the predecessor companies have individually demonstrated a willingness and ability to de-leverage in the past. However, Fitch believes debt repayment over the intermediate term will be constrained by acquisitions and that the effective leverage operating range over the next five years could likely fall between 5.5x-7.0x for most of that period. Fitch also recognizes that these highly leveraged cash flows have limited support from tangible assets in a downturn. The consolidated liquidity position is supported by free cash flow of over $650 million, and undrawn bank credit availability at its various secured credit facilities of $320 million at Sept. 30, 2005. The debt maturity schedule is manageable with a significant portion of debt due in 2009 or thereafter. These issuer default and recovery ratings have been assigned by Fitch: R.H. Donnelley Corp -- IDR 'B+'; -- Senior unsecured 'CCC+'; 'RR6'. R. H. Donnelley Inc. -- IDR 'B+'; -- Secured credit facility 'BB'; 'RR2'; -- Secured term loan 'BB'; 'RR2'; -- Senior unsecured 'B-'; 'RR6'; -- Senior subordinated 'B-'; 'RR6'. These issuer default and recovery ratings have been revised and removed from Rating Watch Negative by Fitch: Dex Media Inc. -- IDR to 'B+' from 'B'; -- Senior Unsecured to 'CCC+' from 'CCC'; 'RR6'. Dex Media West. -- IDR to 'B+' from 'B'; -- Secured credit facility to 'BB+' from 'BB'; 'RR1'; -- Senior unsecured to 'B-' from 'B'; to 'RR6' from 'RR4'; -- Senior subordinated to 'B-' from 'CCC+'; 'RR6'. Dex Media East -- IDR to 'B+' from 'B'; -- Secured credit facility to 'BB+' from 'BB'; 'RR1'; -- Senior unsecured to 'BB' from 'BB-'; to 'RR1' from 'RR2'; -- Senior subordinated 'B-'; to 'RR6' from 'RR5'. ROWE COMPANIES: Promotes Garry W. Angle to Vice Pres-Treasurer -------------------------------------------------------------- The Rowe Companies (Amex: ROW) reported that effective Jan. 9, 2006, Gene S. Morphis, its Chief Financial Officer, Secretary- Treasurer has left the Company. Garry W. Angle was promoted to Vice President-Treasurer and will serve as the Company's principal financial and accounting officer. Deborah C. Jacks was promoted to Secretary. "We want to thank Gene for his dedication and wish him the best in his future endeavors," said Gerald M. Birnbach, Chairman of the Board and President. Additional organizational changes include: * Bruce M. Birnbach, who was serving as President of Rowe Furniture, Inc., has been named President of a newly-formed division, Rowe Sourcing, which will focus on the acquisition of vital raw materials and imported products. * Gerald M. Birnbach, the Company's Chairman and President, will serve as President of Rowe Furniture, Inc. * Timothy J. Fortune has been named Senior Vice President of Operations for Rowe Furniture, Inc. and will oversee human resources, information technology, finance, process improvement and manufacturing. Additionally, three consultants from The Carl Marks Advisory Group, LLC, which recently completed an organizational review of the Company, will assume full-time interim responsibilities with Rowe Furniture, Inc.: * Edward Spinelli will serve as Interim Vice President of Manufacturing, * Melvin Henson will serve as Interim Vice President of Finance and * Tyler Montague will serve as Interim Process Improvement Manager. These interim officers will report to Mr. Fortune. The Rowe Companies operates two subsidiaries in the home furnishings industry: Rowe Furniture, Inc., a major manufacturer of quality upholstered furniture serving the middle and upper middle market throughout the U.S.; and Storehouse, Inc., a multi- channel, lifestyle home furnishings business including 69 retail home furnishings stores. Storehouse makes good design accessible by selling an edited assortment of casual, contemporary home furnishings through its stores located in the Southeast, Southwest and Mid-Atlantic markets, its catalog and over the internet. * * * Default As reported on Oct. 13, 2005, the company has been negotiating with its lenders, namely the Bank of America, N.A. and The CIT Group/Commercial Services, Inc., to modify the terms of the agreement governing the company's working capital revolving credit facility and term loan, and the agreement governing the capital lease of the company's Elliston, Virginia manufacturing facility, so that the company would be in compliance with certain covenants under these agreements as of Aug. 28, 2005, and based upon projected revenues and expenses, for the next twelve months. The company has not been able to successfully complete these negotiations. As a result, the company is in default under these agreements, and the lenders have the right to accelerate the company's obligation to repay this debt. RUFUS INC: Exclusive Filing Deadline Stretched Through Feb. 10 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware further extended until Feb. 10, 2006, the period within which Rufus, Inc., can file a chapter 11 plan. The Debtor has until April 7, 2006, to solicit acceptances of that plan. The Debtor filed its chapter 11 plan of reorganization and accompanying disclosure statement on Nov. 18, 2005. The Debtor sought the extension in order to provide more time to solicit acceptance of the plan or an amended plan, if necessary. Furthermore, the extension will afford the parties the opportunity to pursue the beneficial objectives of a confirmable plan. Headquartered in Meriden, Connecticut, Rufus, Inc., sells dogs, dog food, supplies and accessories. The Debtor also operates a chain of six retail stores in the Northeastern United States. The Company filed for chapter 11 protection on Aug. 10, 2005 (Bankr. D. Del. Case No. 05-12218). Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its bankruptcy proceeding. When the Debtor filed for protection from its creditors, it listed $1.8 million in total assets and $12.7 million in total debts. RUFUS INC: Wants to Walk Away from Two Real Property Leases ----------------------------------------------------------- Rufus, Inc., asks the U.S. Bankruptcy Court for the District of Delaware for permission to reject nonresidential real property leases effective January 31, 2006. The properties are identified as: * Space 2 within The Orchard Mall in New Hartford, New York; and * Space No. B14 within the Fingerlakes Mall in Auburn, New York. The Debtor also want to abandon all personal property, including, fixtures and equipment, located within the properties. By rejecting theses leases, the Debtor will avoid incurring unnecessary administrative expenses. In addition, the Debtor believes that the leases don't have any marketable value beneficial to the Debtor or its estate. Headquartered in Meriden, Connecticut, Rufus, Inc., sells dogs, dog food, supplies and accessories. The Debtor also operates a chain of six retail stores in the Northeastern United States. The Company filed for chapter 11 protection on Aug. 10, 2005 (Bankr. D. Del. Case No. 05-12218). Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its bankruptcy proceeding. When the Debtor filed for protection from its creditors, it listed $1.8 million in total assets and $12.7 million in total debts. S-TRAN HOLDINGS: Wants Plan Filing Period Stretched to March 8 -------------------------------------------------------------- S-Tran Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend, until March 8, 2006, the time within which they alone can file a chapter 11 plan. The Debtors also ask the Court for more time to solicit acceptances of that plan from their creditors, until May 8, 2006. The Debtors give the Court three reasons supporting the extension: 1) the Debtors are currently addressing the issue of the numerous freight claims filed against their estates and are analyzing information relevant to the potential asset recoveries for their estates; 2) the Debtors have paid their debts as they become due and they have acted in good faith to maximize the value of their estates for the benefit of creditors; and 3) the requested extension will not harm the Debtors' creditors and other parties-in-interest but will give the Debtors more opportunity to negotiate with those creditors for a consensual chapter 11 plan. The Court will convene a hearing at 2:30 p.m., on Jan. 23, 2006, to consider the Debtors' request. Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc., provides common carrier services and specialized in less-than- truckload shipments and also supplies overnight and second day service to shippers in 11 states in the Southeast and Midwestern United States. The Company and its debtor-affiliates filed for chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No. 05- 11391). Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $22,508,000 and total debts of $30,891,000. SAINT VINCENTS: Court Allows Harvey Krauss to Pursue PI Lawsuit --------------------------------------------------------------- In a Court-approved stipulation, Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates agree that the automatic stay may be modified to permit Harvey Krauss, as administrator for the Estate of Mitchell Krauss, to pursue his injury action pending in the New York State Court to judgment or settlement, and collection from the Debtors' third-party commercial professional liability insurance. As reported in the Troubled Company Reporter on Dec. 30, 2005, the Krauss lawsuit arises from an incident that occurred on Dec. 17, 2003, at St. Vincent's Hospital in the County of Richmond, New York. Through the medical and general negligence of the defendants, Mitchell Krauss was permitted to jump off the roof of the hospital and kill himself. Terms of the Stipulation Mr. Krauss agrees to limit his Malpractice Claim against the Debtors or against practitioners who are covered by the Debtors' Primary Insurance to the available proceeds from the Primary Insurance, if any. Mr. Krauss waives his right, if any, to collect any amount with respect to the Medical Malpractice Claim against the Debtors' estates and any practitioner covered by the Debtors' Primary Insurance. Mr. Krauss will not file a further proof of claim in the Debtors' cases, or otherwise seek to recover from the Debtors' estates in any manner with respect to any claim arising from, or related to, the Malpractice Claim or Medical Malpractice Action. To the extent that a proof of claim already has been filed in the Debtors' Chapter 11 cases, the claim will be disallowed. The Primary Insurance will pay defense costs and other related fees and expenses in connection with the Medical Malpractice Action. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENT: Obtains $350 Million DIP Financing from GEHFS ------------------------------------------------------------ Saint Vincent Catholic Medical Centers put in place a $350 million debtor-in-possession secured credit facility with GE Healthcare Financial Services as the Administrative Agent and Sole Arranger. GE is syndicating the loan to a variety of institutions. In an innovative move by a healthcare provider in New York State, Saint Vincent's will use a portion of the financing to retire all of the publicly held bonds issued by the Dormitory Authority of the State of New York. The new financing is at lower effective rates than the financing previously in place. The new financing also relies solely on private lenders that will give Saint Vincent's greater flexibility to transfer and use its assets throughout the reorganization. Included under the DIP covenants is the ability to upgrade physical plants in the restructured system. "The DIP financing agreement gives Saint Vincent Catholic Medical Centers sufficient liquidity while we restructure and allows us to continue to provide high quality services throughout the process," said Guy Sansone, CEO and Chief Restructuring Officer for Saint Vincent's. "We are extremely encouraged that GE Healthcare Financial Services has partnered with Saint Vincent's giving us the flexibility to move the organization forward as an innovative and fiscally sound healthcare provider in the New York market." About GE Healthcare Financial Services GE Healthcare Financial Services - http://www.gehealthcarefinance.com/-- provides capital, financial solutions, and related services for the global healthcare market. With over $13 billion of capital committed to the healthcare industry, GE Healthcare Financial Services offers a full range of capabilities from equipment financing and real estate financing to working capital lending, vendor programs, and practice acquisition financing. With its knowledge of all aspects of healthcare from hospitals and long-term care facilities to physicians' practices and life sciences, GE Healthcare Financial Services works with customers to create tailored financial solutions that help them improve their productivity and profitability. About Saint Vincents Catholic Medical Centers of New York 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 VINCENTS: Settles Barnard's Medical Malpractice Suit ---------------------------------------------------------- Joann Barnard, Individually and as administrator of the Estate of Aubrey Barnard, commenced a wrongful death action in the Supreme court of the State of New York, County of New York, against several defendants, including Saint Vincents Catholic Medical Centers of New York, alleging, among other things, that medical malpractice at Saint Vincent Catholic Medical Centers' Manhattan hospital caused the death of Aubrey Barnard. Prior to trial in the State Court Action, counsel for Ms. Barnard agreed to settle the claim directly with the Debtors' insurance carrier, Medical Liability Mutual Insurance Company, for $360,000. Pursuant to a stipulation, the Debtors and Ms. Barnard agree to the modification of the automatic stay solely to permit: (a) Ms. Barnard to present a wrongful death compromise order to a court with competent jurisdiction for approval of the Settlement; and (b) the Parties to consummate the Settlement through the distribution of the insurance proceeds amounting to $360,000. The Parties also agree that Ms. Barnard will not have an allowed claim under Section 502 of the Bankruptcy Code and will have no right to share in any distribution from any of the Debtors' estates. Ms. Barnard, her agents and attorneys agree to discharge the Debtors and their officers from any and all claims. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAKS INC: Spin-Off Plans Prompt S&P to Review Ratings ----------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on Birmingham, Alabama-based Saks Inc., including its 'B+' corporate credit rating, will remain on CreditWatch with developing implications. This decision follows the company's announcement that it is exploring strategic alternatives for its Parisian specialty department store chain. This follows an October 2005 announcement that the company is selling its Northern Department Store Group to The Bon-Ton Stores Inc. for $1.19 billion and the July sale of the Proffitt's/McRae's business for $623 million. Based on Parisian's 2005 revenue of approximately $700 million, S&P estimates that this 40-store business could be worth $550-$750 million. Management has already indicated that a substantial portion of the proceeds from the sale of the Northern Department Store Group will be returned to shareholders through share repurchases, a special cash dividend, or a combination of the two. "Although use of proceeds from a sale of Parisian is uncertain," said Standard & Poor's credit analyst Gerald A. Hirschberg, "it is likely that shareholders will again benefit. Depending on our assessment of the company's business profile, which will take into account prospects for the ongoing Saks Fifth Avenue Enterprise operations, and an understanding of Saks' future financial policy, which will include a determination as to whether the remaining luxury retail business will continue as a public company or be sold privately, ratings could be raised, lowered, or affirmed." If the Parisian business is sold, the remaining Saks Fifth Avenue Enterprises business will consist of 55 Saks Fifth Avenue stores, 50 Saks Off 5th stores, and saks.com, with 2005 revenues of approximately $2.7 billion. SCITECK: Case Summary & 16 Largest Unsecured Creditors ------------------------------------------------------ Debtor: Sciteck, Inc. P.O. Box 562 Arden, North Carolina 28704 Bankruptcy Case No.: 06-10013 Type of Business: The Debtor is the holding company for Sciteck Occupational Medicine, Inc. and Sciteck Research Laboratories, Inc. See http://www.sciteck.org/ Chapter 11 Petition Date: January 9, 2006 Court: Western District of North Carolina (Asheville) Judge: George R. Hodges Debtor's Counsel: David G. Gray, Esq. Westall, Gray, Connolly & Davis, P.A. 81 Central Avenue Asheville, North Carolina 28801 Tel: (828) 254-6315 Fax: (828) 255-0305 Total Assets: $33,000 Total Debts: $4,389,826 Debtor's 16 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ First Citizens Bank $500,000 P.O. Box 29507 Raleigh, NC 27626 First Citizens Bank $100,000 P.O. Box 1580 Roanoke, VA 24007-1589 First Citizens Bank $50,000 P.O. Box 1580 Roanoke, VA 24007-1589 Askounis & Borst, P.C. $17,979 Steve Combs $16,000 Clark Communications $7,000 First Citizens Bank $3,932 Yellow Book $3,869 Bell South Advertising $3,441 Erie Insurance Exchange $1,261 Banker Leasing $1,128 Wachovia Bank $1,088 First Citizens Bank $457 Pitney Bowes $360 First Citizens Bank $279 Medical Business Associates $192 SEASPECIALTIES INC: Trustee Taps Kapila & Company as Accountants ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida gave Soneet R. Kapila, the Chapter 7 Trustee for SeaSpecialties Inc., authority to employ Kapila & Company as his accountants, nunc pro tunc to November 21, 2005. Kapila & Co. will: a) review all financial information prepared by the Debtor or its accountants, including but not limited to a review of the Debtor's financial information as of the chapter 11 filing, its assets and liabilities, and its secured and unsecured creditors; b) review and analyze organizational structure of and financial interrelationships among the Debtor, its affiliates and insiders, including a review of the books of such companies or persons as may be requested; c) review and analyze transfers to and from the Debtor to third parties, both pre-petition and post-petition; d) attend the meetings with the Debtor, its creditors, the attorneys of such parties, and with federal, state, and local tax authorities, if requested; e) review the Debtor's books and records for potential preference payments, fraudulent transfers, or any other matters that the Trustee may request; f) render assistance in the nature of accounting services, financial consulting, valuation issues, or other financial projects as the Trustee may deem necessary; and g) prepare estate tax returns. The papers filed with the bankruptcy court don't disclose how much Kapila & Co. will be paid for its work. To the best of the Trustee's knowledge, the Firm does not hold or represent interest adverse to the Debtor's estate and is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. Headquartered in Miami, Florida, SeaSpecialties Inc. distributes more than 200 seafood and smoked fish products under several different product names, including Florida Smoked Fish, Homarus, Marshall's Best, and Mama's Brand. SeaSpecialties offers both consumer products and bulk products for cruise lines, deli's, fish markets, foodservice distributors, grocery retailers, hotels, and restaurants. The Company and its subsidiary, Homarus/Marshall Smoked Fish Inc., filed for chapter 11 protection on Sept. 1, 2005 (Bankr. S.D. Fla. Case Nos. 05-25584 through 05-25585). Brian K. Gart, Esq., in Fort Lauderdale, Florida represents the Debtors in their chapter 11 proceedings. SIERRA PACIFIC: Subsidiary Prices Private Offering Mortgage Notes ----------------------------------------------------------------- Nevada Power Company, a wholly-owned subsidiary of Sierra Pacific Resources (NYSE: SRP), priced a private offering of $210 million principal amount of its 5.95% General and Refunding Mortgage Notes, Series M, due 2016. The notes are expected to be delivered on or about Jan. 18, 2006. Proceeds from the offering, together with available cash, will be utilized to repay $210 million outstanding under the Company's $500 million revolving credit facility, which amount was borrowed to finance a portion of the purchase price of a 75% ownership interest in the Silverhawk Power Station. The notes will be secured by the lien of the company's General and Refunding Mortgage Indenture, which constitutes a lien on substantially all of the company's real property and tangible personal property located in the State of Nevada. The offering will be made only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended, and outside the United States in compliance with Regulation S under the Securities Act. The notes will not be registered under the Securities Act and may not be offered or sold by holders thereof without registration unless an exemption from such registration is available. About Nevada Power Company Nevada Power Company is a regulated public utility engaged in the distribution, transmission, generation, purchase and sale of electric energy in the southern Nevada communities of Las Vegas, North Las Vegas, Henderson, Searchlight, Laughlin and their adjoining areas. The company also provides electricity to Nellis Air Force Base, the Department of Energy at Mercury and Jackass Flats at the Nevada Test Site. Nevada Power Company provides electricity to approximately 725,000 residential and business customers in a 4,500 square mile service area. About Sierra Pacific Resources Headquartered in Nevada, Sierra Pacific Resources is a holding company whose principal subsidiaries are Nevada Power Company, the electric utility for most of southern Nevada, and Sierra Pacific Power Company, the electric utility for most of northern Nevada and the Lake Tahoe area of California. Sierra Pacific Power Company also distributes natural gas in the Reno-Sparks area of northern Nevada. Other subsidiaries include the Tuscarora Gas Pipeline Company, which owns 50 percent interest in an interstate natural gas transmission partnership and several unregulated energy services companies. * * * As reported in the Troubled Company Reporter on Nov. 21, 2005, Fitch will not change the ratings or Stable Rating Outlook of Sierra Pacific Resources Co. and its operating utility subsidiaries Nevada Power Co. and Sierra Pacific Power Company following the announcement that the company has agreed to settle pending litigation with creditors of Enron Corp. The settlement is a favorable development for the company in that it removes a major source of uncertainty and is consistent with the current Stable Rating Outlook. SRP, NVP, and SPPC's ratings are rated by Fitch with a Stable Rating Outlook: Sierra Pacific Resources -- Senior unsecured debt 'B+'. Nevada Power Company -- First mortgage bonds 'BB+'; -- General and refunding mortgage bonds 'BB+'; -- Secured revolving bank facility 'BB+'; -- Senior unsecured debt 'BB-'; -- Trust preferred securities 'B+'. Sierra Pacific Power Company -- First mortgage bonds 'BB+'; -- General and refunding mortgage bonds 'BB+'; -- Secured revolving bank facility 'BB+'; -- Preferred stock 'B+'. SPANSION INC: Fitch Junks Rating on $175 Million Senior Sub. Notes ------------------------------------------------------------------ Following the completion of Spansion Inc.'s (Spansion) initial public offering and concurrent debt offerings, Fitch Ratings has assigned these ratings: -- Issuer default rating 'B-'; -- $250 million 11.25% senior unsecured notes due 2016 'B-/RR4'; -- $175 million 12.75% senior subordinated notes due 2016 'CCC+/RR5'; -- $175 million senior secured revolving credit facility due 2010 'BB-/RR1'. The Rating Outlook is Negative. The ratings and Outlook reflect Fitch's expectation that Spansion's: * free cash flow will be negative for the intermediate term due to necessary and significant capital spending plans; * financial flexibility will be limited, despite an adequate pro forma liquidity position; and * debt levels will remain high compared to competitors and likely increase over the intermediate term. The ratings also reflect Spansion's: * lack of diversification and size relative to its key competitors, which are better positioned to absorb ongoing flash memory market price volatility and fund capital expenditures; * limited ability to withstand technology road map and manufacturing technology missteps; and * comparatively mature growth rates for NOR type flash memory, Spansion's primary market historically. Supporting the ratings are Spansion's adequate liquidity sources, established relationships with a diverse customer base including leading wireless handset and embedded products original equipment manufacturers, and leading market positions in the NOR flash memory market, which Fitch believes are more defensible due to increasing barriers to entry. Additionally, Fitch believes Spansion's proprietary technology (MirrorBit architecture) could expand the company's addressable market, command higher average selling prices, and mitigate some expected operating performance volatility. Fitch believes Spansion will burn significant cash over the next few years due to onerous but essential capital spending. Capital expenditures are expected to be $800 million to $950 million for fiscal year 2006 and Fitch believes they will likely remain at similar levels through 2008, primarily to fund the construction of Spansion's first and only 300 millimeter wafer fabrication facility and to upgrade existing capacity. Spansion burned approximately $250 million of cash from 2003 through its most recent quarter-ended Sept. 25, 2005. While Spansion could curtail or delay capital spending depending on market demand, Fitch believes meaningfully doing so would materially weaken its cost competitiveness over the intermediate term. Furthermore, Intel, Spansion's main competitor, has leveraged its cost advantage from an already substantial 300mm wafer manufacturing footprint to price NOR flash memory products aggressively, pressuring Spansion's recent operating performance. Increased capital spending requirements should be partially offset by higher profitability over the intermediate term due to expectations for continued strong unit growth and higher gross margins, partly from the continued transition to MirrorBit. Unit growth is expected to remain strong over the next few years, driven by strong wireless handset demand, particularly for products with more memory intensive features, and flash memory's increased content in embedded products. At the same time, Fitch believes that increased adoption of products based upon Spansion's MirrorBit architecture, which represents a relatively small but growing portion of total sales, should support higher and somewhat less volatile ASPs. Spansion historically addressed only the NOR flash memory market, which is expected to grow at approximately 3%-4% over the next few years. A substitute technology for certain data applications, NAND, is expected to have unit growth in the mid-double digits over the same time period, thereby increasing its share of the flash memory market. Fitch believes Spansion's MirrorBit architecture has made the company's NOR-based products more cost competitive against NAND and could increase Spansion's addressable market. Fitch expects Spansion's negative free cash flow for the next few years will be funded with cash and additional debt, resulting in minimal opportunity to meaningful improve credit protection measures. For the past four quarters ending Sept. 25, 2005, credit protection measures have weakened due to lower profitability as total debt to operating EBITDA was 3.2 times, versus 1.4x at the end of 2004. For the same time periods, operating EBITDA to gross interest expense declined to 5.6x from 13.4x. As of Sept. 25, 2005, and pro forma for the equity and debt offerings, liquidity was supported by cash and cash equivalents of approximately $1 billion and an undrawn $175 million senior secured revolving credit facility due September 2010. Pro forma total debt was approximately $1.2 billion, consisting primarily of $250 million 11.25% unsecured senior notes due 2016, $175 million 12.75% senior subordinated notes due 2016, and approximately $780 million of various secured credit facilities and capital leases. Spansion intends to use a portion of the approximately $380 million of net proceeds from the note offerings to repay indebtedness owed to Advanced Micro Devices, Inc. (rated 'B/Stable Outlook by Fitch). TEC FOODS: Can Continue Using Wells Fargo's Cash Collateral ----------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan extended until April 12, 2006, the expiration date of TEC Foods, Inc.'s authority to continue using cash collateral securing repayment of pre-petition obligations to Wells Fargo Bank, N.A. Pre-Petition Debt, Cash Collateral Use & Adequate Protection The Debtor owes Wells Fargo pre-petition loans of approximately $5,088,880. The loans are secured by substantially all of the Debtor's assets as evidenced by various mortgages, security agreements, promissory notes and other instruments and documents. The Debtor's continued use of Well's Fargo's cash collateral will be used for operating expenses, including payments for payroll and vendors, continuation of its retail operations and to maintain the value of its estate. The Court authorizes the Debtor to use Wells Fargo's cash collateral until April 12, 2006, pursuant to the same terms and conditions of its final order authorizing use of cash collateral dated Dec. 13, 2005. The Debtor's use of the cash collateral is in compliance with the projections of a Court-approved 4-month Extended Budget, covering the period from Jan. 18, to April 12, 2006. A full-text copy of the Budget is available for free at: http://bankrupt.com/misc/TECFoodsExtendedBudget.pdf As adequate protection for any diminution in the value of the pre- petition collateral, Wells Fargo is granted post-petition replacement liens in the Debtor's property and the Debtor will continue to invest the cash collateral to maintain its operations. Headquartered in Pontiac, Michigan, TEC Foods, Inc., filed for chapter 11 protection on Nov. 3, 2005 (Bankr. E.D. Mich. case No. 05-89154). Paula A. Hall, Esq., at Butzel Long, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection form its creditors, it listed estimated assets and debts of $10 million to $50 million. TELOGY INC: Court Okays Heller Ehrman as Special Counsel -------------------------------------------------------- Telogy, Inc. and its debtor-affiliate sought and obtained authority from the U.S. Bankruptcy Court for the Northern District of California to employ Heller Ehrman LLP as their special counsel. Heller Ehrman is expected to: a. advise the Debtors with respect to the litigation risk presented by the George Lawsuit; b. assist, advise and represent the Debtors and Romersa in defense of the George Lawsuit, to any extent that proceeding in the George Lawsuit are not stayed; and c. assist, advise and represent the Debtors with respect to general corporate matters. The Debtors disclose that Robert W. Bell, Jr., Esq., bills $510 per hour and Andrea Musicant, Esq., bills $375 per hour. The Debtors further disclose that the Firm holds a $19,281 prepetition retainer. To the best of the Debtor's knowledge, Heller Ehrman does not represent any interest materially adverse to the Debtor and is a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Union City, California, Telogy, Inc. -- http://www.tecentral.com/-- rents, sells, leases electronic test equipment including oscilloscopes, spectrum, network, logic analyzers, power meters, OTDRs, and optical, from manufacturers like Tektronix, Rohde & Schwarz. Telogy, Inc. and its debtor- affiliate, e-Cycle, LLC, filed for chapter 11 protection on Nov. 29, 2005 (Bankr. N.D. Calif. Case No. 05-49371). Ramon M. Naguiat, Esq., at Pachulski, Stang, Ziehl, Young Jones & Weintraub P.C. represents the Debtor in its restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. TELOGY INC: Court Okays Pachulski Stang as Bankruptcy Counsel ------------------------------------------------------------- Telogy Inc. and debtor-affiliate sought and obtained authority from the U.S. Bankruptcy Court for the Northern District of California to employ Pachulski, Stang, Ziehl, Young, Jones & Wientraub P.C. as their general bankruptcy counsel. Pachulski Stang is expected to: a. assist, advise, and represent the Debtors in their consultations with creditors regarding the administration of these cases; b. assist, advise, and represent the Debtors in any manner relevant to a review of the Debtors' leases and other contractual obligations, and asset dispositions; c. assist, advise, and represent the Debtors in any issues associated with the acts, conduct, assets, liabilities, and financial condition of the Debtors, and any other matters relevant to these cases; d. assist, advise, and represent the Debtors in the negotiation, formulation, and drafting of any plan of reorganization and disclosure statement; e. assist, advise, and represent the Debtors in the performance of their duties and the exercise of their powers under the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules and the Region 17 United States Trustee Guidelines; and in the performance of such other services as are in the interests of the Debtors; and f. provide such other necessary advice and services as the Debtors may require in connection with these chapter 11 cases. The Debtors disclose that the Firm's attorneys and paralegal bill: Professionals Hourly Rate ------------- ----------- Richard M Pachulski, Esq. $675 Ira D. Kharasch, Esq. $525 David J. Barton, Esq. $475 Robert M. Saunders, Esq. $395 Joseph S. Bolnick, Esq. $275 Ramon M. Naguiat, Esq. $265 Patricia J. Jefries $160 To the best of the Debtors' knowledge, the Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Union City, California, Telogy, Inc. -- http://www.tecentral.com/-- rents, sells, leases electronic test equipment including oscilloscopes, spectrum, network, logic analyzers, power meters, OTDRs, and optical, from manufacturers like Tektronix, Rohde & Schwarz. Telogy, Inc. and its debtor- affiliate, e-Cycle, LLC, filed for chapter 11 protection on Nov. 29, 2005 (Bankr. N.D. Calif. Case No. 05-49371). Ramon M. Naguiat, Esq., at Pachulski, Stang, Ziehl, Young Jones & Weintraub P.C. represents the Debtor in its restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. TELOGY INC: Files Schedules of Assets and Liabilities ----------------------------------------------------- Telogy, Inc., delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Northern District of California, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $123,765,884 C. Property Claimed as Exempt D. Creditors Holding $173,332,000 Secured Claims E. Creditors Holding $627,821 Unsecured Priority Claims F. Creditors Holding $75,709,418 Unsecured Nonpriority Claims ------------ ------------ Total $123,765,884 $249,669,240 Headquartered in Union City, California, Telogy, Inc. -- http://www.tecentral.com/-- rents, sells, leases electronic test equipment including oscilloscopes, spectrum, network, logic analyzers, power meters, OTDRs, and optical, from manufacturers like Tektronix, Rohde & Schwarz. Telogy, Inc. and its debtor-affiliate, e-Cycle, LLC, filed for chapter 11 protection on Nov. 29, 2005 (Bankr. N.D. Calif. Case No. 05-49371). Ramon M. Naguiat, Esq., at Pachulski, Stang, Ziehl, Young Jones & Weintraub P.C. represents the Debtor in its restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. TERAYON COMMS: Faces Likely Default Due to Form 10-Q Filing Delay ----------------------------------------------------------------- Terayon Communication Systems, Inc. (Nasdaq: TERNE) will delay the filing of its Form 10-Q for the third quarter of 2005 would be delayed and that it had commenced an accounting review after determining that certain revenues recognized in the second half of fiscal year 2004 may have been recorded in incorrect periods. The delayed filing of Terayon's Form 10-Q for the third quarter of 2005 caused Terayon to be in violation of NASDAQ Marketplace Rule 4310(c)(14), which requires the timely filing of periodic reports with the U.S. Securities and Exchange Commission. While steady progress has been made, Terayon cannot determine at this time when the accounting review will be completed. The company intends to file its Form 10-Q for the third quarter of 2005 as soon as practicable following the conclusion of the accounting review. SEC Non-Compliance In addition, as a result of the delay in the filing of its Form 10-Q for the quarterly period ended Sept. 30, 2005, Terayon is not in compliance with its obligation under the Indenture with respect to Terayon's 5% Convertible Subordinated Notes due 2007 to file with the SEC and the trustee of the Notes all reports, information and other documents required pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934. If holders of at least 25% in aggregate principal amount of the Notes outstanding provide written notice to the Trustee or to Terayon and the Trustee of a default based on Terayon's failure to file its Form 10-Q Report for the quarterly period ended Sept. 30, 2005 and such default is not cured within 60 days of such notice, an event of default will occur and the Trustee or holders of at least 25% in aggregate principal amount of the Notes then outstanding may accelerate the maturity of the Notes and declare the entire principal amount of the Notes, together with all accrued and unpaid interest thereon, to be due and payable immediately. The Notes currently outstanding have an aggregate principal amount of $65 million. The company ended 2005 with $101 million of Cash and cash equivalents plus Short-term investments. NASDAQ Update Terayon received a letter from The Nasdaq Stock Market, dated Jan. 4, 2006, notifying the company that its common stock is subject to delisting based on its failure to satisfy NASDAQ Marketplace Rules 4350(e) and 4350(g), which required the company to solicit proxies and hold an annual meeting of shareholders before Dec. 31, 2005. Terayon held its 2004 annual shareholder meeting in December 2004 and the company's 2005 annual shareholder meeting was originally planned for December 2005. However, Terayon was unable to hold its 2005 annual shareholder meeting due in part to its ongoing accounting review. As previously disclosed on Nov. 22, 2005, Terayon received a letter from NASDAQ, dated Nov. 17, 2005, stating that as a result of Terayon's failure to timely file its Form 10-Q for the third quarter of 2005 with the SEC, Terayon's common stock is subject to delisting from the NASDAQ National Market. In response to the Nov. 17, 2005 letter, Terayon requested a hearing with a NASDAQ Listing Qualifications Panel, which automatically stayed the delisting action pending the issuance of a written decision from the Panel. Terayon presented its plan to evidence compliance with all NASDAQ listing criteria at a hearing before the Panel on Dec. 15, 2005. Terayon has not yet received a determination from the Panel as a result of the hearing. In NASDAQ's Jan. 4, 2006 letter, Terayon was informed that the Panel would consider the company's failure to comply with NASDAQ's proxy solicitation and annual meeting requirements in rendering its decision regarding the continued listing of Terayon's common stock. Terayon discussed the proxy solicitation and annual meeting deficiencies with the Panel at the hearing on Dec. 15, 2005 and plans to submit additional materials for the Panel's review with respect to those issues by the Jan. 11, 2006 deadline. There can be no assurance that the Panel will grant the company's request for the continued listing of its common stock on the NASDAQ. Headquartered in Santa Clara, California, Terayon Communication Systems, Inc. -- http://www.terayon.com/-- provides digital video networking applications and home access solutions that enable the delivery of advanced digital video, voice and data services. Service providers worldwide have deployed more than 6,000 of Terayon's digital video systems to brand their programming, insert millions of digital ads, offer HDTV and other digital video services. More than five million Terayon cable modems and other home access solutions have been deployed by cable operators globally to provide broadband Internet access and VoIP telephony. THREE-FIVE: Files Ch. 11 Plan & Disclosure Statement in Phoenix --------------------------------------------------------------- Three-Five Systems, Inc. and its debtor-affiliate, TFS-DI, Inc., delivered their Joint Plan of Reorganization and an accompanying Disclosure Statement to the U.S. Bankruptcy Court for the District of Arizona, Phoenix Division, on Jan. 6, 2006. Summary of Joint Plan The Plan provides for the substantive consolidation of the liabilities and properties of both Debtors. Cash payments for all allowed administrative claims, allowed priority tax claims, allowed priority claims, allowed miscellaneous secured claims and allowed secured tax claims will come from the Gross Assets, which constitute the entirety of Reorganized TFS's assets on the effective date of the Plan. The assets remaining after payment of all those claims will constitute the Net Assets. Funds from the Net Assets will be used for cash distributions to allowed general unsecured claims, allowed equity interests and allowed equity related claims. After the effective date, Reorganized TFS must use all efforts to liquidate or convert all non-Cash Net Assets into cash. Treatment of Claims and Interests 1) Allowed priority claims, other than priority tax claims will receive cash equal to the allowed amount of their claims after the effective date or 30 days after a priority claim becomes allowed; unless the holder of those claims and Reorganized TFS agree in writing to a different date. 2) Allowed secured tax claims will receive cash equal to the allowed of their claims either: a) on the Effective Date or any date the Bankruptcy Court may fix, or b) 30 days after the secured tax claim becomes allowed and the date on which that claim is scheduled to be paid in the ordinary course of business; unless the holder of the claim and Reorganized TFS agree in writing to a different date. 3) Allowed miscellaneous secured claims will receive cash equal to the allowed amount of their claims either: a) on the Effective Date or any date the Bankruptcy Court may fix, or b) 30 days after the miscellaneous secured claim becomes allowed and the date on which that claim is scheduled to be paid in the ordinary course of business; unless the holder of the claim and Reorganized TFS agree in writing to a different date. 4) Allowed general unsecured claims will receive cash equal to the allowed amount of their claims with interest accruing from the petition date through the confirmation date at the legal interest rate. Distributions for allowed general unsecured claims will begin after the effective date or 30 days after a general unsecured claim becomes allowed. 5) Equity interests and equity related claims are subordinated to all claims and will receive their pro rata share of the Net Assets after distributions to holders of all allowed general unsecured claims under Section 5.04.b(i) of the Plan are complete. A full-text copy of the Disclosure Statement and Joint Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=060112012631 Headquartered in Tempe, Arizona, Three-Five Systems, Inc. -- http://tfsc.com/-- provides specialized electronics manufacturing services to original equipment manufacturers. TFS offers a broad range of engineering and manufacturing capabilities. The Company filed for chapter 11 protection on Sept. 8, 2005 (Bankr. D. Ariz. Case No. 05-17104). Thomas J. Salerno, Esq., at Squire, Sander & Dempsey, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,694,467 in total assets and $2,880,377 in total debts. TOM'S FOODS: Greenberg Traurig Withdraws as Bankruptcy Counsel -------------------------------------------------------------- Greenberg Traurig, LLP, sought and obtained approval from the U.S. Bankruptcy Court for the Middle District of Georgia to withdraw as Tom's Foods Inc.'s general bankruptcy counsel subject to the Court's retention of jurisdiction over the award of fees and expenses and all other issues relating to the Firm's representation of the Debtor. On April 7, 2005, the Court authorized the retention of Greenberg Traurig as the Debtor's counsel. Greenberg Traurig submits that its withdrawal as the Debtor's counsel will not prejudice its estate because the Firm has already completed most of the Debtor's post-petition proceedings, including the closing of the sale of substantially all of the Debtor's assets and settling a claims dispute with the Bank of New York. The Debtor has consented to Greenburg's request because the Court has already approved Eugene I. Davis's request to employ Scroggins & Williamson as his counsel. Mr. Davis is the Responsible Officer for the Debtor's estate. Greenberg will also render all assistance to the Debtor for an orderly transition of its bankruptcy case to Scroggins & Williamson. Headquartered in Columbus, Georgia, Tom's Foods Inc. manufactures and distributes snack foods. Its product categories include chips, sandwich crackers, baked goods, nuts, and candies. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. M.D. Ga. Case No. 05-40683). David B. Kurzweil, Esq., at Greenberg Traurig, LLP, represents the Debtor in its restructuring efforts. Eugene I. Davis is the Court-approved Responsible Officer for the Debtor's estate. J. Robert Williamson, Esq., at Scroggins & Williamson represents the Responsible Officer. When the Debtor filed for protection from its creditors, it listed total assets of $93,100,000 and total debts of $79,091,000. TOM'S FOODS: Scroggins & Williamson Approved as E. Davis' Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Georgia gave Eugene I. Davis, the Responsible Officer for Tom's Foods Inc.'s estate, permission to employ Scroggins & Williamson as his counsel. Scroggins & Williamson will: 1) assist in preparing pleadings and applications and in conducting examinations; 2) advise Mr. Davis of his rights, duties and obligations under the federal bankruptcy rules; 3) consult and represent Mr. Davis with respect to the liquidation of the Debtor's remaining assets, the administration of its estate and winding down of its affairs; 4) take all other actions necessary for the proper administration and preservation of the Debtor's estate and perform necessary legal services, including institution and prosecution of necessary legal proceedings and general business and corporate legal advice; and 5) render all other legal services to Mr. Davis that are necessary in the Debtor's bankruptcy case. J. Robert Williamson, Esq., a principal of Scroggins & Williamson, is one of the lead attorneys to Mr. Davis. Mr. Willimans reports Scroggins & Williamson's professionals bill: Designation Hourly Rate ----------- ----------- Counsel $225 - $315 Legal Assistants $75 Scroggins & Williamson assures the Court that it does not represent any interest materially adverse to the Responsible Officer and the Debtor and is a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Columbus, Georgia, Tom's Foods Inc. manufactures and distributes snack foods. Its product categories include chips, sandwich crackers, baked goods, nuts, and candies. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. M.D. Ga. Case No. 05-40683). David B. Kurzweil, Esq., at Greenberg Traurig, LLP, represents the Debtor in its restructuring efforts. Eugene I. Davis is the Court-approved Responsible Officer for the Debtor's estate. When the Debtor filed for protection from its creditors, it listed total assets of $93,100,000 and total debts of $79,091,000. TOWER AUTOMOTIVE: Craig Corrington Joins as VP for North America ---------------------------------------------------------------- Tower Automotive, Inc. (Pink Sheets: TWRAQ) reported that Craig Corrington has joined the company as vice president of operations for North America. Mr. Corrington will report to Bill Pumphrey, president, North America. Mr. Corrington, who recently retired from DaimlerChrysler Corporation, will develop and implement manufacturing strategies to enhance Tower's North American product portfolio. Mr. Corrington also will improve manufacturing processes and help execute the company's restructuring plans in North America. "As a key industry leader, Craig brings a wealth of knowledge and expertise to support and lead Tower's turnaround plans," said Mr. Pumphrey. "He is a results-driven executive with the ability to integrate key manufacturing principles with strategic business planning. His leadership will be key in Tower's ongoing commitment to produce high-quality, cost-competitive metal structures and assemblies." Mr. Corrington has 32 years of experience in automotive manufacturing with DaimlerChrysler. Mr. Corrington was most recently vice president in charge of assembly and stamping operations and advanced stamping engineering. In that role Mr. Corrington incorporated lean manufacturing principles into future product and process planning, which significantly reduced capital expenditures. Prior to assuming that position, Mr. Corrington was vice president of the Jeep/Truck Assembly Division and Stamping and Component Operations. Mr. Corrington also served as vice president in charge of stamping and components operations and vice president of stamping and general manager of lean manufacturing. During his career at DaimlerChrysler, Mr. Corrington held several other leadership positions including plant manager of DaimlerChrysler's Sterling Stamping and Warren Stamping plants. Mr. Corrington earned a bachelor's degree in sociology from the University of Kentucky and a master's degree in business administration from Central Michigan University. Mr. Corrington also attended the Executive Development Program at Harvard University. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. TRUST ADVISORS: Section 341 Meeting Continued to Feb. 13 -------------------------------------------------------- The U.S. Trustee for Region 2 will continue the meeting of Trust Advisors Stable Value Plus Fund's creditors at 1:00 p.m., on Feb. 13, 2006, at the Bankruptcy Meeting Room located at One Century Tower, 265 Church Street, Suite 1104 in New Haven, Connecticut. The first meeting of creditors for the Debtor's chapter 11 proceedings, which is required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases, was held on Nov. 7, and continued to Dec. 12. 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 Darien, Connecticut, Trust Advisors Stable Value Plus Fund filed for chapter 11 protection on Sept. 30, 2005 (Bankr. D. Conn. Case No. 05-51353). Scott D. Rosen, Esq., at Cohn Birnbaum & Shea P.C. represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. UAL CORP: Reaches Agreement with Creditors on Plan Issues --------------------------------------------------------- UAL Corporation (OTC Bulletin Board: UALAQ) and the Official Committee of Unsecured Creditors reached a consensual agreement to resolve all of the issues between the Company and the committee, including the Committee's objections to United's Plan of Reorganization. The final agreement will be reflected in an amended Plan of Reorganization, to be filed with the U.S. Bankruptcy Court for the Northern District of Illinois ahead of the Plan Confirmation Hearing on or before Jan. 18. "Being able to reach a global, consensual agreement with the creditor's committee prior to confirmation is the goal in any restructuring, and is an enormous accomplishment. [Yester]day's agreement with the Creditors' Committee, which represents the new owners of United, is a major step forward in concluding our restructuring, and continues our strong momentum going into next week's POR Confirmation Hearing," said Jake Brace, chief financial officer and executive vice president. "We appreciate the hard work of the Creditors' Committee in reaching this agreement, as well as the Committee's support throughout United's extremely complex and difficult restructuring. We look forward to confirming the Plan next week and exiting bankruptcy next month ready to compete with the strongest carriers." "We're very pleased to have worked closely with United management and to have reached an agreement that brings our issues to an end, to the benefit of creditors and company alike," said Dana Lockhart, chair of the Official Committee of Unsecured Creditors and chief financial officer, Airbus of North America. "This has been an extraordinarily complicated restructuring, and we look forward to United's successful exit from bankruptcy as the vital competitor it is." Among the issues resolved in the agreement are those relating to the proposed Management Equity Incentive Plan, the amount of the claim by the Pension Benefit Guarantee Corporation, stock and note distributions for salaried and management employees, and certain corporate governance matters. 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. VENTURE HOLDINGS: Court Converts Case into Chapter 7 Liquidation ---------------------------------------------------------------- At a hearing on Jan. 11, 2006, the Honorable Thomas J. Tucker of the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, converted the chapter 11 case of Venture Holdings Co. LLC into a chapter 7 liquidation proceeding. The Debtor has sold substantially all of its operating assets to New Venture Holdings, LLC, on May 2, 2005. The Debtor's period to file a plan of liquidation expired on Dec. 19, 2005. Judge Tucker converted the Debtor's case after it failed to file a plan or sought an extension of the plan-filing deadline. The Debtor's main problem in developing a plan is the lack of funding necessary to satisfy Section 1129(a)(9)(A) of the Bankruptcy Code. That section of the bankruptcy code requires that a chapter 11 plan pay all administrative priority claims in full. The Official Committee of Unsecured Creditors supported the conversion of the case. Headquartered in Fraser, Michigan, Venture Holdings Company, LLC, nka NM Holdings Company, LLC, and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. Mich. Case No. 03-48939) on March 28, 2003. Deluxe Pattern Corporation and its debtor- affiliates filed for chapter 11 protection on May 24, 2004 (Bankr. E.D. Mich. Case No. 04-54977). As of March 31, 2002, the Debtors had total assets of $1,459,834,000 and total debts of $1,382,369,000. Venture's prepetition lenders acquired Venture's assets during the chapter 11 proceeding. John A. Simon, Esq., at Foley & Lardner LLP represent the Debtors. John A. Karaczynski, Esq., and Robert M. Aronson, Esq., at Akin Gump Strauss Hauer & Feld LLP, and Joel D. Applebaum, Esq., at Clark Hill PLC represent the Creditors' Committee. WATERMAN INDUSTRIES: GNI Waterman Acquires Operating Assets ----------------------------------------------------------- GNI Waterman LLC reported that on Jan. 3, 2006, it acquired the vast majority of the operating assets of Waterman Industries, Inc. located in Exeter, California and Lubbock, Texas. GNI Waterman LLC is owned by Galena National Investment LLC which is affiliated with two New York-based investment firms with over $20 billion of assets under management. The new company will operate under the name of Waterman Industries and through the leadership of newly appointed CEO Birch Brown (formerly COO during the reorganization), and with their dedicated workforce, will continue to offer the same worldwide quality services and products that Waterman has been known for since 1912. With a strong positive cash flow and a profitable year behind them, combined with their solid team of employees and management, the future of the company is very promising. "We are pleased to have accomplished so much in the reorganization phase," said Birch Brown, chief executive officer. "Our management team has streamlined operations and built a foundation for a 'go forward' strong financial performance." To support its focus on the irrigation, water delivery and water treatment industries, Waterman has reorganized into a stronger, faster and more flexible operation and announced that it will concentrate on strengthening consumer and customer relationships. "We've streamlined everything to reduce cost; from our product offerings to our supply chain," Birch Brown said. "We are developing sophisticated insights into the needs of the consumer, which has led to the development of new and higher quality products versus the competition and will meet the needs of a much broader range of customers, both domestic and international." The company has refined its product offering and regained its "best in class" status based on its on-time deliveries to its customers. In order to secure this "best in class" status, Waterman's strategic plan includes opening distribution centers previously located in Boise, Idaho; Garden City, Kansas; Grand Island, Nebraska; and Memphis, Tennessee. Headquartered in Exeter, California, Waterman Industries, Inc. -- http://www.watermanusa.com/-- provides water and irrigation control services. The Company filed for chapter 11 protection on February 10, 2004 (Bankr. E.D. Calif. Case No. 04-11065). Riley C. Walter, Esq., at Walter Law Group, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed more than $10 million in estimated assets and debts. WESTERN WATER: Bankruptcy Court Approves Disclosure Statement ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California, Oakland Division, conditionally approved the adequacy of the disclosure statement explaining Western Water Company's First Amended Plan of Reorganization on Jan. 4, 2006. Terms of the Plan The Plan provides for the reorganization of the Debtor as a private company. The plan contemplates the full cash payment of all allowed claims with postpetition interest at 3.32%. Under the Plan, these claims will be fully paid in cash: * administrative claims, * priority tax claims, * priority wage claims, * other secured claims, * $72,000 general unsecured claims, * $8.8 million debenture claims, and * $1.1 million promissory note claims. Shareholders holding an allowed $2.5 million liquidation preference claim of the Series F Preferred Stock can elect to receive new common stock or a $260,000 cash payment on the effective date. Shareholders holding an allowed $7.7 million liquidation preference claim of the Series C Preferred Stock will receive new common stock. All existing equity interests in the Debtor will be cancelled, and all or some of the current holders of the Debtor's preferred stock will become the new common shareholders of the Debtor. The Debtor anticipates emerging from chapter 11 protection in February 2006. Plan Funding The Debtor will use the net proceeds of the recent sale of its Cherry Creek Project to fund cash distributions under the Plan. The Debtor sold the water rights for $14 million in cash to Cherry Creek Project Water Authority in November 2005. The Court will convene a hearing on Feb. 6, 2006, at 2:00 p.m., to consider confirmation of the Debtor's Plan. A full-text copy of the Court-approved Disclosure Statement for the Debtor's First Amended Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=060112012224 Headquartered in Point Richmond, California, Western Water Company manages, develops, sells and leases water and water rights in the western United States. The Company filed for chapter 11 protection on May 24, 2005 (Bankr. N.D. Calif. Case No. 05-42839). Adam A. Lewis, Esq., at the Law Offices of Morrison and Foerster, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated between $10 million and $50 million in assets and debts. WHITEHALL JEWELLERS: Boards Responds to Newcastles' Action ---------------------------------------------------------- The Board of Directors of Whitehall Jewellers, Inc. (OTC:JWLR.PK) reported that Newcastle Capital Management, L.P. finally has made an offer that does not have a financing contingency. Newcastle has initiated an unsolicited tender offer for Whitehall stock. To consider whether the Newcastle proposal is a superior offer, the Board requires that Newcastle provide conclusive evidence that it has the cash to complete a transaction as well as evidence of its ability and commitment to promptly complete a transaction. The Board hopes that Newcastle will quickly provide the requested evidence as the Board and the Company can no longer afford delays. Specifically, the company's bank line expires on Jan. 31, 2006, as does the company's bridge loan and its vendors can terminate their agreement to accept payment of their past due invoices over time. Bankruptcy Warning Without a firm deal, such as one the company currently has in place with Prentice Capital Management, L.P., the company will likely be forced to pursue a restructuring or bankruptcy, which may severely impact the Company's stockholders as well as the Company's other constituencies. The Board is dedicated to seeing that this does not occur. The Board is hopeful that Newcastle will understand and provide the Board with the needed information in the extremely short period available. The company once again reiterates its recommendation that stockholders vote for the management/Prentice proposals and nominees at the Jan. 19, 2005, shareholders meeting. Whitehall Jewellers, Inc. is a national specialty retailer of fine jewelry, operating 387 stores in 38 states. The Company has announced that it intends to close a number of stores in the near term. The Company operates stores in regional and super regional shopping malls under the names Whitehall Co. Jewellers, Lundstrom Jewelers and Marks Bros. Jewelers WORLDCOM INC: Inks Stipulation Resolving Michigan's Tax Claims -------------------------------------------------------------- The State of Michigan's Department of Treasury filed Claim No. 16576 for $110,738 against MCI WorldCom Network Services. On March 4, 2003, Michigan sought to amend Claim No. 16576 to: -- include an audit liability for taxes and tax periods; and -- increase the claim amount to $9,269,342. In a Court-approved stipulation dated May 2003, Claim No. 16576 was reduced and allowed as a priority tax claim for $6,250,000. In July 2003, Michigan filed Claim No. 35961 for $8,564,708, but later withdrew the claim. Notwithstanding the Original Stipulation, Michigan amended (i) Claim No. 16576 by Claim No. 38068; and (ii) Claim No. 38068 by Claim 38524 to include in each claim, periods covered by the Original Stipulation and additional periods. The Parties now believe that the Later Claims should not have included amounts for periods covered by the Original Stipulation. Thus, the Parties seek to settle the amounts included in the Later Claims that are related to the amounts and periods in the Original Stipulation. On March 31, 2004, Michigan filed Claim No. 38071, amending Claim No. 12881, to include additional amounts and additional periods pursuant to the Additional Claims Bar Date Order. The Parties now determined that the amounts originally in Claim No. 12881 should not have been included in Claim No. 38071. Furthermore, Michigan consented to the expungement of Claim Nos. 16576, 38068, 38524, 12881, and 38071, in connection with the Settlement Agreement and Release settling all royalty claims. Michigan also filed Claim Nos. 35895, 35526, 1183, all of which are allowed claims. However, Michigan seeks to settle each of the three claims for a re-determined amount. WorldCom, Inc., and its debtor-affiliates agree. In this regard, Michigan asked the Reorganized Debtors not to pay the amounts in the Original Stipulation or the Allowed Claims until after the Royalty Settlement was final. Given the finalization of the Royalty Settlement, the Parties now seek to revise the amounts due pursuant to the Original Stipulation, which are the amounts included in Claim No. 38071 and the Allowed Claims. In a Court-approved Stipulation, the Parties agree that: 1. The Priority Tax Claim in the Original Stipulation is withdrawn; 2. The portion of Claim No. 38524 that is related to the amounts and periods in the Original Stipulation will be reduced and allowed as a priority tax claim for $4,818,105; 3. The portion of Claim No. 38071 that is related to the amounts originally set out in Claim No. 12881 will be reduced and allowed as a Class 4 Convenience Claim for $12,215. The amount includes tax and interest only. Michigan agrees to waive the penalties asserted in Claim No. 38071 associated with the amounts originally in Claim No. 12881; 4. Claim No. 35895 will be reduced and allowed as a priority tax claim for $67,480; 5. Claim No. 35526 will be reduced and allowed as a priority tax claim for $2,165; and 6. Claim No. 1183 will be reduced and allowed as a Class 4 Convenience Claim for $95. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 111; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM INC: Settles Dispute Over Iowa's $1.6-Mil. Tax Claim ------------------------------------------------------------- On March 24, 2004, the Iowa Department of Revenue filed Proof of Claim No. 38042 for unpaid 2003 Iowa corporation income taxes owed by WorldCom, Inc., and its debtor-affiliates, aggregating $1,600,000. The IDR asserted that its claim is entitled to priority as an administrative expense under Section 503(b) of the Bankruptcy Code. The Debtors objected to the Claim. Subsequently, the Debtors withdrew their Objection to the Claim pursuant to a settlement agreement they entered into the taxing authorities of 16 States, which resolved disputes relating to the claims filed by each state. Under the Agreement, the Royalty Claims are completely and finally settled, including certain provisions related to tax year 2003. The WorldCom entities intend to file an amended 2003 Iowa corporation income tax return and pay the amount due. Accordingly, in a Court-approved stipulation, the Parties agree that: 1. Claim No. 38042 is withdrawn, without prejudice; 2. The IDR will retain all rights to assert any claims for 2003 corporation income tax liabilities, including penalty and interest, against the WorldCom entities or their successors and assignees; 3. If the IDR believes that the Debtors have an unpaid Iowa corporation income tax liability for 2003, it may assess and collect those taxes, including penalty and interest, in the manner and within the time frame provided by Code of Iowa and the Iowa Administrative Code; 4. Any right to assert a claim for 2003 and any assessment for 2003 are subject to the provisions of the Agreement; and 5. In making any assessment for 2003, the IDR will not be required to file a proof of claim or a request for payment of administrative expense with the Bankruptcy Court concerning 2003 Iowa corporation income tax liabilities. Neither the WorldCom entities nor their successors and assignees will assert that either the Stipulation or the Debtors' bankruptcy case provides a defense in any future action concerning 2003 Iowa corporation income tax liabilities. The Parties further agree that any remaining disputes concerning the 2003 Iowa income tax liabilities, including penalty and interest, be resolved outside of the pending bankruptcy case and consistent with the provisions of the Agreement. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 111; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDWATER & POWER: Retains Counsel to Assist in Berlin Delisting ----------------------------------------------------------------- WorldWater & Power Corp. (OTCBB:WWAT) engaged legal counsel to seek delisting of the Company's stock on the Berlin Stock Exchange. "We believe that the listing of WorldWater & Power Corp. stock on the Berlin Exchange does not benefit the Company or its shareholders, and are therefore taking the necessary steps to remove the Company from this exchange," stated Quentin T. Kelly, Chairman and Chief Executive Office of WorldWater & Power. "There are so many positive things occurring at WorldWater," Kelly continued, "including strong demand for our product and services as demonstrated by our current backlog, the expectation of 2006 revenue between $25 million and $35 million, and the acquisition of Quantum Energy Group to better position the Company to handle the emerging implementation volume." The Company's common stock will continue to trade on the Frankfurt Stock Exchange, Mr. Kelly said. WorldWater & Power Corporation - http://www.worldwater.com/-- is a full-service, international solar electric engineering and water management company with unique, high-powered and patented solar technology that provides solutions to a broad spectrum of the world's electricity and water supply problems. At Sept. 30, 2005, WorldWater & Power Corp.'s balance sheet showed a $1,762,285 stockholders' deficit compared to a $4,273,641 deficit at Dec. 31, 2004. * BOOK REVIEW: Merger: Takeover Conspiracy ------------------------------------------ Authors: David J. Thomsen Publisher: Beard Books Hardcover: 384 pages List Price: $34.95 Order your personal copy today at: http://www.amazon.com/exec/obidos/ASIN/1587982366/internetbankrupt Although fiction, Merger Takeover Conspiracy has the feel of actual events. The realism is quickly established with introductory material that includes a map of the United States showing the routes of western railroads and a financial statement with notes that looks like an authentic corporate report. Above all, however, Merger Takeover Conspiracy is a compelling narrative with aspects of a murder mystery within a modern-day business story of greed, ruthlessness, and duplicity. The book begins with Richard Smith, manager of corporate security of Arrow Corporation, destroying company documents in a "materials shredder" with diamond-tipped mechanical gears that can pulverize typewriters, file cabinets, and tape spools; thus ridding Arrow of office equipment that could be linked to incriminating documents. While musing on how his task of destroying office equipment secures his place in the corporation by binding him to certain ambitious, underhanded top corporate personnel with their shared involvement in criminal acts, Smith is knocked unconscious and stuffed into the shredder himself. From such suspenseful beginnings the story continues to follow the maze of feigns and dirty tricks, the betrayals and ignorance, the concerns and ruthlessness, the coolly-done crimes and desperate measures of many individuals connected in varying degrees to Arrow Corporation's ambitious goal of acquiring the three largest railroads in the Western United States and merging them into one colossal system under Arrow's aegis. Business executives, housewives, the corporate jet pilot, an outside attorney, an investment banker, and an executive assistant are among the cast of characters helping to shed light on the many facets of the plot. Thomsen writes about events, situations, and primary and peripheral characters in the business world as convincingly and dramatically as John Grisham does about those in the legal world. Though Merger Takeover Conspiracy has some sensationalistic touches, the novel is not generic, popular entertainment. Thomsen's novel can be read on many levels: as a gripping crime story about brutal crimes; as a narrative of the unfolding of a master plan for a complex, high-stakes merger; as a portrayal of corporate society; and as a cautionary tale about the personal tragedies caused by systematic illegal activity in large businesses. Although Merger Takeover Conspiracy was first published in 1985, it reflects major stories in today's news media. The crimes of top executives of Tyco, Worldcom, Adelphia, and others cannot but come into the reader's mind. Thomsen goes well beyond the content and personalities of any news stories, however, to shed a critical light on how such events could occur in the business world. In the convention of good mystery writing, Thomsen keeps the reader guessing until the end. In the end, the guilty are exposed, but, in the larger perspective, there is no single culprit. Instead, the entire corporate culture is indicted. Some of the characters can hardly be blamed since they were simply acting according to the principles and the goals of the environment they were in. David J. Thomsen has a background in management, entrepreneurship, executive positions and consulting. Much of his work has involved research and he is the author of hundreds of articles. ********* 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 A. Soriano-Baaclo, Marjorie C. Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, Tara Marie A. Martin and Peter A. Chapman, Editors. Copyright 2006. 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 $725 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 ***