/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/060116.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, January 16, 2006, Vol. 10, No. 13 Headlines ACCEPTANCE INSURANCE: Wants Until June 9 to File Chapter 11 Plan AMC ENT: Fitch Junks Rating on $1 Billion Sr. Subordinated Notes ANCHOR GLASS: Court Authorizes Corporate Forensics' Retention ANCHOR GLASS: Florida Rock Seeks to Terminate Supply Agreement ANCHOR GLASS: Needs More Time to Assess Arkema Contract ANDROSCOGGIN ENERGY: U.S. Trustee Picks 3-Member Creditors Panel ANDROSCOGGIN ENERGY: Committee Taps Pepper Hamilton as Counsel ASHTON WOODS: Earns $24.8 Million of Net Income in Second Quarter B/E AEROSPACE: Debt Payment Cues Moody's to Upgrade Low-B Ratings BALLY TOTAL: Asks Shareholders to Support Board at Jan. 26 Meeting BF SAUL: S&P Puts Counterparty Credit Rating on Positive Watch BLACKROCK MORTGAGE: Fitch Holds Junk Rating on Class B-3 Certs. BSI HOLDING: Liquidating Trustee Issues Final Distribution CHASE FUNDING: Fitch Chips Rating on Class IB Certificates to BB- CHEVY CHASE: S&P Puts Counterparty Credit Rating on Positive Watch CHINESE OVERSEAS: Case Summary & 20 Largest Unsecured Creditors CHOICE COMMUNITIES: Files Amended Plan and Disclosure Statement CITY OF KLAMATH: Fitch Shaves Sr. Sec. Rev. Bonds to B- from BB+ COIN BUILDERS: Court Approves Wood County Bank Letter of Credit COLLINS & AIKMAN: Wants to Walk Away From Headquarter Leases COLLINS & AIKMAN: Agrees to Pay $259,876 as Adequate Protection COLLINS & AIKMAN: Moves to Reject 15 Contracts and Leases CREDIT BASED: Fitch Affirms BB Rating on Class B-2 Certificates CREDIT SUISSE: Fitch Affirms Junk Rating on $5.1MM Class N Certs. D & K STORES: Confirmation Hearing Set for January 26 DELPHI CORP: Court Approves Ernst & Young as Tax Consultants DELPHI CORP: UAW Wants to Join Unsecured Creditors Committee DELPHI CORP: Creditors Panel Hires Mesirow as Financial Advisors EAST HOT SPRINGS: Voluntary Chapter 11 Case Summary EATON FERRY: Case Summary & 44 Largest Unsecured Creditors EPOCH INVESTMENTS: Files Schedules of Assets and Liabilities FOAMEX INT'L: Wants Court to OK Solicitation and Voting Procedures FOAMEX INT'L: U.S. Trustee Amends Creditors Committee Membership FOAMEX INT'L: Creditors Panel Wants to Hire Kearney as Consultant FREEDOM RINGS: Gets Open-Ended Deadline to File Notices of Removal GMAC COMMERCIAL: Fitch Junks Rating on $2.7MM Class O Certificates GREYSTONE LOGISTICS: Amends Fiscal Year 2005 Annual Report HIGH SCHOOL: Case Summary & 14 Largest Unsecured Creditors HIRSH INDUSTRIES: Has Until April 3 to Remove Civil Actions HOME INTERIORS: Debtholders & Shareholders OK Debt Restructuring JACOB LAUFER: Case Summary & Largest Unsecured Creditor LEAR CORP: Moody's Affirms Ba2 Corporate Family & Notes' Ratings LB-UBS: S&P Assigns Low-B Ratings to $49 Million Cert. Classes LMM DEVELOPMENT: Case Summary & 6 Largest Unsecured Creditors MAAX HOLDINGS: Posts $12.98 Million Net Loss in Third Quarter MATERIAL SCIENCES: Earns $2.2 Million in 3rd Qtr. Ended Nov. 30 MATRIA HEALTHCARE: Moody's Affirms $485 Mil. Debts' Low-B Ratings MCI INC: 20 Officers Dispose of 2,559,020.478 Shares of MCI Stock MEDCARE TRANSPORT: Case Summary & 20 Largest Unsecured Creditors MILE HIGH: Case Summary & 20 Largest Unsecured Creditors MORGAN STANLEY: S&P Rates $24 Mil. Certificate Classes at Low-B MORGAN STANLEY: Fitch Lifts $21MM Class H Certs. to BBB- from BB+ MOULIN GLOBAL: Chapter 15 Petition Summary NORTHWEST AIRLINES: AMFA Members Reject Settlement Offer NORTHWEST AIRLINES: Faces Lawsuit for 2004 Flight 708 Plane Crash NORTHWEST AIRLINES: Wants to Reject 5 Contracts Effective Today NRG ENERGY: Fitch Rates Proposed $5.2 Billion Secured Debt at BB NOVASTAR MORTGAGE: S&P Lowers Rating on Class M-3 Certs. to BB PACIFIC SOUTHWEST: Fitch Affirms BB Rating on Class B-2 Certs. PARKER-I 94: Voluntary Chapter 11 Case Summary PENN NATIONAL: S&P Upgrades Issuer Credit Rating to BB from BB- PLIANT CORP: Can Continue Existing Cash Management System PLIANT CORP: Gets Court Nod to Maintain Existing Bank Accounts PHOTOCIRCUITS: Inks APA with Candlewood Partners for $37 Million QUEBECOR MEDIA: Prices Debt Tender Offers for Senior Notes QUEBECOR WORLD: Moody's Downgrades Sr. Sub. Rating to B2 from Ba3 RAMP CORP: Creditors Must File Proofs of Claim by January 31 RDR RESOLUTION: Confirmation Hearing Set for January 30 RELIANCE GROUP: Commonwealth Court OKs $15MM Securities Settlement ROYAL CARIBBEAN: S&P Lifts Corp. Credit Rating to BBB- from BB+ RYLAND GROUP: Enters Into $750M Bank Credit Facility with JPMorgan S-TRAN HOLDINGS: Wants Until March 13 to Decide on Leases SAINT VINCENTS: Daniels Defends Right to Pursue Malpractice Suit SAINT VINCENTS: Marziale Airs Side in Insurance Coverage Dispute SCIOTO NATIONAL: Voluntary Chapter 11 Case Summary SEASPECIALTIES INC: Trustee Needs Time to Contest LaSalle's Liens SHAWNE BRYANT: Case Summary & 20 Largest Unsecured Creditors STRATOS GLOBAL: Moody's Rates $150 Million Sr. Unsec. Notes at B2 TECHNEGLAS INC: Gets Court Nod to Assume 34 Contracts & Leases TELOGY INC: Court Establishes February 9 as Claims Bar Date TRUST ADVISORS: Hires Shipman & Goodwin as Gen. Bankruptcy Counsel TRUST ADVISORS: Murray Becker Approved as Financial Consultant UAL CORP: Wants Court to Bless Disney Settlement Accord UAL CORPORATION: Inks Pact Resolving American Air Dispute VOLT INFORMATION: Earns $8.4 Mil. of Net Income in Fourth Quarter WHITEHALL JEWELLERS: Might be Willing to Meet Newcastle Partners WORLDCOM INC: Inks Stipulation Resolving Underwriter Claims * Hede & Stogsdill Will Head Alvarez & Marsal's Creditor Advisory * BOND PRICING: For the week of Jan. 9 - Jan. 13, 2006 ********* ACCEPTANCE INSURANCE: Wants Until June 9 to File Chapter 11 Plan ---------------------------------------------------------------- Acceptance Insurance Companies Inc. asks the U.S. Bankruptcy Court for the District of Nebraska, to further extend until June 9, 2006, its exclusive period to file a chapter 11 plan. The Debtor also wants until Aug. 9, 2006, to solicit acceptances of that plan. The Debtor is in the process of managing and resolving claims with American Insurance Company in an effort to maximize the value of American Insurance for the benefit of the Debtor's creditors. According to the company, the claims resolution process within American Insurance is not yet at a stage that will allow the Debtor to structure a plan of reorganization. Furthermore, the extension is necessary to provide the Debtor sufficient time to complete its liquidation of its assets. Headquartered in Council Bluffs, Iowa, Acceptance Insurance Companies Inc. -- http://www.aicins.com/-- owns, either directly or indirectly, several companies, one of which is an insurance company that accounts for substantially all of the business operations and assets of the corporate groups. The Company filed for chapter 11 protection on Jan. 7, 2005 (Bankr. D. Nebr. Case No. 05-80059). The Debtor's affiliates -- Acceptance Insurance Services, Inc., and American Agrisurance, Inc. -- filed separate chapter 7 petitions (Bankr. D. Nebr. Case Nos. 05-80056 & 05- 80058) on Jan. 7, 2005. John J. Jolley, Esq., at Kutak Rock LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $33,069,446 in total assets and $137,120,541 in total debts. AMC ENT: Fitch Junks Rating on $1 Billion Sr. Subordinated Notes ---------------------------------------------------------------- Fitch has assigned initial ratings for theatrical exhibition company AMC Entertainment Inc. and its parent, Marquee Holdings Inc.: AMC -- Issuer Default Rating 'B'; -- $850 million of proposed new guaranteed senior secured credit facilities 'BB/RR1' consisting of these facilities: * $200 million revolving credit facility due January 2012; * $650 million term loan B facility due January 2013. -- $455 million of existing guaranteed senior unsecured notes 'B/RR4' consisting of these issues: * $250 million 8 5/8% senior unsecured notes due August 2012; * $205 million LIBOR + 4.25% floating-rate senior unsecured notes due August 2010. -- $1.013 billion of guaranteed senior subordinated notes 'CCC+/RR6' consisting of: * $325 million of proposed new senior subordinated notes due 2016; * $213 million remaining 9.5% existing senior subordinated notes due February 2011; * $175 million 9.875% existing senior subordinated notes due February 2012; * $300 million 8% existing senior subordinated notes due March 2014. Marquee -- Issuer Default Rating 'B'; -- $304 million ($194 million accreted balance) of existing unguaranteed 12% senior discount notes due August 2014 'CCC/RR6'. The ratings reflect the capital structure and operations of AMC, pro forma for the company's pending merger with Loews Cineplex Entertainment Corporation scheduled for completion during January 2006. The Rating Outlook is Stable. Approximately $2.5 billion of debt obligations have been rated. AMC is currently owned by affiliates of JP Morgan Partners, LLC, Apollo Management, LP and certain other investors, including management who acquired the company through a December 2004 leveraged buyout. Loews is currently owned by Bain Capital, The Carlyle Group, and Spectrum Equity, who teamed up to acquire the company in July 2004. The existing holders of Loews' stock will receive approximately 40% of AMC's stock in order to complete the merger of the two theatrical exhibition companies. All of the approximately $1.2 billion of cash equity that has been invested to date in the combined company by the financial sponsors and ongoing management will remain in place. Since the merger transaction will trigger the change of control provision within Loews' existing $315 million senior subordinated notes indenture due 2014, these notes have been tendered for at par plus a small consent payment of 12.5 basis points and accrued interest, in return for an agreement by the holders to eliminate certain restrictive covenants. AMC plans to use the proceeds of its proposed issuance of $325 million of new senior unsecured notes to refinance the Loews notes. No change of control will be triggered under any of the existing AMC indentures. The new $850 million senior secured credit agreement will be used to refinance outstandings under Loews existing credit agreement, as well as to provide ongoing liquidity for the combined company. Antitrust approval for the merger transaction has been received, subject to an agreement to promptly divest a total of 10 theatres, which have been specifically identified. The 'B' IDR rating reflects that AMC remains a highly leveraged company within the very competitive and rapidly consolidating theatrical exhibition industry. Pro forma leverage, including the present value of leases as debt, will exceed 7x upon closing the merger transaction. Pro forma EBITDA less capital expenditures will cover gross interest approximately 1x since current capital spending levels are running well below depreciation. Debt grew steadily over the past ten years due to significant modernization and divestiture programs aimed at converting the majority of AMC's theatres to state-of-the-art megaplexes. Debt levels were further affected by the 2004 LBOs, which took place at both predecessor companies. Fitch does not expect that material improvements in operating and free cash flow are realistic due to intense industry pressures. AMC is additionally characterized by a very high fixed cost structure, due in large part to the operating leases in effect for most of its theatre properties, which entail approximately $400 million in annual rent expense. Fitch believes that revenues and profitability of movie theatres are being increasingly challenged by factors that are largely out of management's ability to control. During 2005, domestic box office receipts were estimated to have declined year-over-year by more than 5% due to a series of factors including tough comparatives versus the prior year, the generally poorer quality of new release films, and increased competition from at-home entertainment. The theatrical exhibition industry in general suffers from limited long-term visibility and trend prediction due to the dependence upon an unknown inventory of new film product and the heavy reliance upon a limited number of film distribution companies associated with the major Hollywood film studios. Under the current industry structure, the ability to obtain desired film licenses and the associated cost of these licenses continues to be heavily negotiated on a film-by-film basis, adding to the degree of uncertainty. Theatre operators must also seek innovative ways to curb the negative effects on the industry of movie pirating, along with increasingly rude behavior by movie patrons. While the pending merger transaction will not be a leveraging event and AMC is confident in its ability to complete the integration process within 18 months, Fitch has some concern regarding AMC's potential ability after factoring in any restrictions in effect under its credit agreement to pursue additional material acquisitions without being subject to a waiting period. AMC's tangible asset base is notably limited due to the minimal levels of receivables and inventory and the predominance of operating leases. Fitch also believes that potential exists for AMC's private equity sponsorship to seek approval for amendments to permit significant dividend payments or other forms of capital recovery in the event that an exit strategy through the public equity markets does not prove feasible over the near-to-intermediate term. Recovery levels under a distress scenario would therefore be highly dependent upon the realization of enterprise value through going concern sales of the entire company or of individual business segments. Fitch more favorably notes that the merger of AMC and Loews will be an essentially leverage-neutral transaction that will enhance the combined company's critical mass, competitive positioning, and geographic diversity. Both AMC and Loews have strong presences in major larger urban markets known as 'designated market areas', and a very complementary business practices and corporate cultures. Loews additionally has a greater presence in several growing international markets through a wholly owned subsidiary in Mexico and several unconsolidated joint venture interests in other countries. While the merged AMC will remain the number two competitor, the company will now much more closely match up with industry leader Regal Entertainment. AMC and Loews have industry-leading asset quality in terms of the number of screens per theatre, revenues and cash flow per screen, and the number of modern and well-located theatres. The company also estimates that approximately $52 million of synergies will be readily achievable during the first 18 months post-merger primarily through headcount reductions, volume discounts, advertising savings, and elimination of other duplication. AMC has successfully integrated a series of prior acquisitions including Megastar in 2003, and Gulf States and General Cinema in 2002. AMC is actively seeking the best and most cost effective methods to achieve a conversion to digital cinema which Fitch believes will help optimize revenue generation, in addition to developing greater opportunities for ancillary revenue growth from on-screen advertising, special promotions, and other initiatives. This is the main focus of joint venture National CineMedia, LLC, which is co-owned by AMC with a 29% interest, along with Regal Entertainment Group and Cinemark USA, Inc. The Stable Outlook reflects Fitch's opinion that the merger of AMC and Loews will result in operating benefits that stand to partially counterbalance the impact of unfavorable industry trends. AMC and its competitors are also continually experimenting with innovative ways to increase revenues and margins -- both per patron and in the aggregate -- from traditional admission and concession sales, as well as from the development of new ancillary business lines. Pro forma for the merger and certain pending asset sales, AMC will additionally have satisfactory liquidity through a combination of cash, the ability to manage capital expenditures, and availability from external sources availability as described in more detail just below. Pro forma closing cash is estimated at about $173 million. AMC's proposed $200 million revolving credit facility will be additionally undrawn and fully available at closing, providing the primary external source of external liquidity. The debt maturity schedule is manageable, with only 1% of required term loan amortization each year until the facility's maturity in January 2013, and the first maturity date for AMC's notes offering not occurring until August 2010. In the event of a liquidity crunch, AMC would have the ability to meaningfully reduce the level of capital expenditures by temporarily curtailing investment in new theatre properties. Maintenance capital expenditures approximate $40-$45 million, out of an annual capital expenditures budget of approximately $200 million which is expected to then decline to about $120 million over the next few years. Additional near-term liquidity will be derived from the December 2005 agreement announced by Loews to sell its 50% stake in its South Korean joint venture Megabox for $79 million cash, and from the prompt divestiture of ten theatres following the merger as required by the antitrust regulators. To the extent that cash flow performance proves to be significantly positive, AMC will have the ability to prepay bank debt and/or call certain of its notes at preset premiums. The credit agreement will notably contain only one financial covenant, which is a requirement that the net senior secured leverage ratio not exceed 3.25x as long as any revolving credit commitment remains outstanding. However, the agreement will also contain most restrictive covenants typical for highly leveraged companies, including limitations on indebtedness, and restrictions on the creation of liens, sales of assets, permitted acquisitions, investments, and the payment of dividends and other restricted payments. The recovery ratings and notching among facilities for both AMC and Marquee reflect Fitch's recovery expectations under a distress scenario. Fitch has used an enterprise value analysis for these recovery ratings, given the limited tangible asset base, which exists in this company. The 'RR1' recovery rating assigned for AMC's proposed $850 million of guaranteed senior secured facilities reflects Fitch's expectation that 100% recovery of the fully drawn commitment would be achievable under this scenario, whereas the RR4 recovery rating assigned for AMC's $450 million guaranteed senior unsecured notes reflects Fitch's belief that approximately 30%-50% recovery is realistic, and the RR6 recovery rating for the approximately $1.3 billion balance of AMC subordinated notes and Marquee non-recourse senior discount notes reflects Fitch's estimate that negligible recovery would be achievable. ANCHOR GLASS: Court Authorizes Corporate Forensics' Retention ------------------------------------------------------------- Anchor Glass Container Corporation obtained permission from the U.S. Bankruptcy Court for the Middle District of Florida employ Corporate Forensics, LLC, to provide bankruptcy administrative services in its case, nunc pro tunc to August 15, 2005. As reported in the Troubled Company Reporter on Nov. 15, 2005, Corporate Forensics will implement a weekly Direct Method Cash Reporting System for distribution to the Debtor's DIP lenders, key customers and other selected parties of interest. The system will include a rolling 13-week forecast with actual results for the reporting week and a comparison to the prior week's activities. The Debtor will pay Corporate Forensics in accordance with its customary hourly rates and reimburse the firm's expenses incurred in connection with the services. Corporate Forensics' published hourly rates are: Professional Hourly Rates ------------ ------------ Principal $250 Senior Associate $150 Associate $65 Corporate Forensics President John W. Chapman's initial hourly payment will be at $150 for a period of less than 60 days from the commencement of work. After 60 days, Mr. Chapman and the Debtor have agreed that the hourly rates will be reassessed. Because of numerous exigencies that arose during the case, the Debtor informs the Court that it did not file the Employment Application until October 28, 2005, to the detriment of Corporate Forensics, who has to not been paid for the services it has rendered. Nevertheless, Corporate Forensics has been rendering services in accordance with the Agreement and should not be disadvantaged, Mr. Soriano says. Mr. Chapman makes it clear that Corporate Forensics will be employed purely to assist the Debtor with the administrative demands of its recent Chapter 11 filing. Corporate Forensics' engagement will not constitute an audit, review or compilation or any other type of financial statement reporting or consulting engagement that is subject to the rules of the American Institute of Certified Public Accountants, the Statement on Standards for Consulting Services or other state and national professional bodies. 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: Florida Rock Seeks to Terminate Supply Agreement -------------------------------------------------------------- On Feb. 5, 1997, Florida Rock Industries, Inc., and Anchor Glass Container Corporation entered into a supply agreement, by which Florida Rock agreed to supply 90% of the Debtor's sand requirements for the operation of the Jacksonville, Florida glass plant, and 50% of its sand requirements at the Warner Robbins, Georgia glass container plant, at favorable pricing. The Supply Agreement was subsequently modified and extended. Andrew M. Brumby, Esq., at Shutts & Bowen LLP, in Orlando, Florida, informs the U.S. Bankruptcy Court for the Middle District of Florida that the sand Florida Rock provided for manufacturing of glass products is of limited supply. In light of the current needs in the construction industry throughout the United States, particularly in the southeast, the sand is in high demand, Mr. Brumby adds. As of Petition Date, the Debtor owes Florida Rock $78,682. Pursuant to the Supply Agreement, non-payment by the Debtor would constitute grounds for termination for cause. During the period that the Debtor has neither assumed not rejected the Supply Agreement, Florida Rock continued to supply the Debtor with sand, Mr. Brumby relates. Mr. Brumby points out that the Debtor can have alternative sources of sand and these alternatives are in a position to fully perform and provide long term commitments for the Debtor's sand supply. Mr. Brumby admits that complying with the obligations under the Supply Agreement adversely impacts Florida Rock's ability to contract with, and otherwise supply, sand to other Construction Trades. Hence, Florida Rock asks the Court to lift the automatic stay to permit it to terminate its supply agreement with the Debtor, or otherwise, to excuse it from further performance. In the alternative, Florida Rock asks the Court to compel the Debtor to decide on the supply agreement without delay. 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: Needs More Time to Assess Arkema Contract ------------------------------------------------------- Anchor Glass Container Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida to extend the period within which it may assume or reject its CERTINCOAT System Agreement with Arkema, Inc., fka ATOFINA Chemicals, Inc., until the confirmation of a plan of reorganization. On Jan. 1, 2004, Arkema and the Debtor entered into a contract wherein Arkema agreed to impart on the Debtor the handling, processing and manufacturing techniques, abilities and capacities needed to utilize the CERTINCOAT System to apply a coating composition to glass containers. Arkema also agreed to sell to the Debtor the "Formulation" -- organotin chemicals used in the process of depositing a hot tin oxide on glass. "Sufficient cause exist to extend the time period in which Anchor may assume or reject this Agreement until confirmation," Kathleen S. McLeroy, Esq., at Carlton Fields, P.A., in Tampa, Florida, tells the Court. Ms. McLeroy relates that due to the complex issues of the Chapter 11 case, the Debtor has not yet completed its analysis of the Agreement. If contracts and lease are hastily assumed, Ms. McLeroy says, the estate will be exposed to unnecessary administrative claims. 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: U.S. Trustee Picks 3-Member Creditors Panel ---------------------------------------------------------------- The United States Trustee for Region 1 appointed three creditors to serve on the Official Committee of Unsecured Creditors in Androscoggin Energy LLC's chapter 11 case: 1. Alta Gas Ltd. Attn: James Bracken 1700, 355 - 4th Avenue S.W. Calgary, Alberta Canada, T2P 0J1 Phone: 403-961-7575, Fax: 403-691-7576 2. Siemens Power Generation Attn: Ron McNutt 4400 Alafay Trail Orlando, Florida 23826-2399 Phone: 407-736-5710 3. Central Maine Power Co. Attn: Steven E. Cope, Esq. Cope & Cope P.A. P.O. Box 1398 Portland, Maine 04104 Phone: 207-772-7491, Fax: 207-772-7428 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. 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. ANDROSCOGGIN ENERGY: Committee Taps Pepper Hamilton as Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors in Androscoggin Energy LLC's chapter 11 case asks the U.S. Bankruptcy Court for the District of Maine for permission to employ Pepper Hamilton LLP as its counsel. Pepper Hamilton will: 1) assist and advise the Committee of its rights, duties and powers in the Debtor's chapter 11 case and in consulting with the Debtor in the negotiation of a plan of reorganization; 2) assist the Committee in analyzing the claims of the Debtor's creditors and its capital structure and in negotiating with the holders of claims and equity interests; 3) assist and advise the Committee in communicating with the general creditor body recording significant matters in the Debtor's chapter 11 case; 4) represent the Committee at all hearing and other proceedings and assist in preparing pleadings and applications necessary to protect the Committee's interests and objectives; and 5) perform all other legal services to the Committee that are necessary for its interests and in accordance with its powers and duties pursuant to the Bankruptcy Code. Francis J. Lawall, Esq., a partner at Pepper Hamilton, is one of the lead attorneys for the Committee. Mr. Lawall reports Pepper Hamilton's professionals bill: Designation Hourly Rate ----------- ----------- Partners, Special Counsel $390 - $495 & Counsel Associates $315 - $335 Paraprofessionals $40 - $180 Pepper Hamilton assures the Court that it does not represent any interest materially adverse to the Committee and the Debtor and is a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. 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. ASHTON WOODS: Earns $24.8 Million of Net Income in Second Quarter ----------------------------------------------------------------- Ashton Woods Usa L.L.C., reported financial results for its second fiscal quarter ended Nov. 30, 2005. Home sales revenues for the quarter ended Nov. 30, 2005 of $134.6 million reflects a $30.9 million increase as compared to the same period during the prior fiscal year. This increase was primarily attributable to an increase in the number of homes closed and an increase in average sales price to $264,000 from $240,000 for the same period a year ago. Land sales revenue increased in the quarter ended Nov. 30, 2005, to $23.6 million, which represents an increase of $20.5 million compared to the same period of the prior fiscal year. The company's consolidated net income for the second quarter ended Nov. 30, 2005 was $24.8 million compared to $7.8 million for the second quarter ended Nov. 30, 2004. Net income for the six months ended Nov. 30, 2005, was $30.9 million, 3.3% higher than net income of $29.9 million for the same period in fiscal year 2005. Total revenues for the six months ended Nov. 30, 2005, reached a record $265.2 million, representing an increase of 11.6% from revenues of $237.6 million for the first six months of the prior fiscal year. "We are pleased with the continued growth in our net new home orders, home closings and net income," said Tom Krobot, President and Chief Executive Officer of Ashton Woods Usa L.L.C. "The success of our geographic, product and price point expansion efforts have been proven in the record results achieved during the quarter and the six months ended Nov. 30, 2005. We opened our first two communities in Tampa for sale during our second quarter, opened for sale in our third townhome community in Dallas and purchased the land for our third stacked-flat condominium community in Atlanta. We believe these efforts will assist in protecting Ashton Woods from any softening in the homebuilding industry in the coming months." Mr. Krobot continued, "We increased the number of our active communities to 52 and increased our lots under option to approximately 8,000 lots at the end of the quarter, which, along with our record quarter-end backlog of 1,649 homes, we believe has positioned us to generate strong revenues and earnings in fiscal 2006." Ashton Woods is one of the largest private homebuilders in the United States based on number of home closings and revenues. The company designs, builds and markets high-quality single-family detached homes, townhomes and stacked-flat condominiums under the Ashton Woods Homes brand name. The company currently operates in Atlanta, Dallas, Houston, Orlando and Phoenix and is establishing homebuilding operations in Tampa and Denver. * * * As reported in the Troubled Company Reporter on Sept. 15, 2005, Moody's Investors Service assigned first-time ratings to Ashton Woods USA L.L.C., including a B1 corporate family rating, a B3 rating on the proposed $125 million issue of senior subordinated notes, and a Speculative Grade Liquidity rating of SGL-3. The ratings outlook is stable. The stable ratings outlook is based on Moody's expectation that the company will maintain debt/capitalization ratios in the 50%- 60% range even as it attempts to take advantage of growth opportunities in new markets and as it fulfills the dividend expectations of its Canadian owners. B/E AEROSPACE: Debt Payment Cues Moody's to Upgrade Low-B Ratings ----------------------------------------------------------------- Moody's Investors Service raised the ratings of B/E Aerospace, Inc., Corporate Family Rating to B1 from B3, prompted by the recent repayment of a substantial amount of subordinated debt through proceeds from the company's December 2005 public equity offering during a period of continually-improving operating results. The ratings outlook is Stable. B/E has a Speculative Grade Liquidity Rating of SGL-2. This concludes the ratings review commenced on Nov. 30, 2005 following the announcement by the company of its plans to make a public offering of common stock, with the intention of using proceeds to redeem, at par, its $250 million 8% senior subordinated notes due 2008. The ratings upgrade reflects significantly improved credit metrics that will ensue from the repayment of a substantial level of subordinated debt as well as B/E's revenue growth and margin improvement over the past few years, 2005 in particular, in a robust international commercial aviation supplier sector. Ratings are still constrained, however, by: * relatively thin historical free cash flow levels; * concentration of sales in a relatively narrow product band; and * longer-term uncertainty surrounding conditions in the cyclical commercial aerospace sector. The stable ratings outlook reflects Moody's expectations for continued strengthening in operating results and cash flow generation through 2006, supported by the company's good liquidity profile. Ratings or their outlook may be subject to further upward revision if further improvement in B/E's operating results and cash flow capability were to support additional debt repayment, resulting in: * leverage (Debt/EBITDA, as measured per Moody's standard methodology) below 4 times; * EBIT coverage of interest expense greater than 2.5 times; and * free cash flow greater than 15% of total debt on a sustained basis. Conversely, ratings could be subject to downward revision: * if unexpected deterioration in industry conditions were to weaken B/Es' operating performance; or * if the company were to increase debt materially for any purpose, resulting in: -- leverage of greater than 5 times, -- EBIT/Interest coverage below 1.5 times, or -- free cash flow below 5% of total debt. Moody's views the use of the proceeds from the sale of equity to reduce debt as a significantly positive credit event, occurring at a point when the company has also exhibited generally improved operating results in the strengthening commercial aerospace sector. The repayment of about 37% of the company's debt will substantially lower leverage, which had already improved from a ratio of Debt/EBITDA of over 8 times as of FY 2004 to about 6.5 times as of LTM September 2005. With the redemption of the $250 million of public debt, Moody's estimates that pro forma leverage would fall to about 4.4 times, which is appropriate for the B1 rating. In addition, the redemption of the senior subordinated notes would substantially improve B/E's free cash flow, reducing interest expense by about $20 million annually. EBIT coverage of interest is estimated to improve from about 1.2 times, LTM September 2005, to about 1.7 times, which is somewhat low for this rating category. Although free cash flow similarly improves from almost breakeven during this period to pro forma 4% owing primarily to the reduction in interest expense, this level is also rather thin for the B1 rating category. However, Moody's notes that LTM September 2005 operating cash flows had been negatively affected by about $44 million due to an unusually large increases in inventory and accounts receivable relating to new programs. To the degree that this use of cash to fund working capital increases abates, higher levels of operating cash flows should be attainable on an on-going basis. Since 2003, B/E's financial results have exhibited both revenue growth and margin improvement, illustrative of the company's ability to take advantage of improving economic conditions in the commercial aviation sector. Sales have grown by about 30% in this period, to $811 million as of LTM September 2005. In achieving this level of growth, B/E has been able to expand its international customer base, becoming less reliant on domestic, particularly legacy, carriers. Gross margins, which are important to the company's ability to steadily generate strong, positive free cash flows, have improved from about 30% of sales in 2003 to 35% for the first nine months of 2005. In addition, B/E's backlog has recently grown at a greater pace than sales -- over $1 billion as of September 2005, up 63% from September 2004. The company's new orders obtained in 2005 also include a number of higher-margin first/business class seating products to major international airlines. Considering the backlog status and the make-up of new orders, Moody's believes B/E has the opportunity, assuming continued manufacturing efficiencies, to grow revenues through 2006 at approximately the same, if not somewhat higher, operating margins. Continued expected strong operating results should support moderate on-going investments in working capital and modest capital expenditures over the near term, which should result in higher levels of free cash flow through 2006 and stronger credit metrics over the next 12 months. B/E's Speculative Grade Liquidity Rating of SGL-2 continues to reflect the company's good liquidity profile, which should improve modestly over the next 12 months. The company reported $87 million of cash on its balance sheet as of September 2005, which should be marginally higher with net proceeds of the December 2005 common stock offering and after repayment of notes. Although free cash flow had been thin for the LTM September 2005 period, Moody's expects improvement in 2006, particularly in light of the estimated $20 million in cash interest expense savings owing to the repayment of 8% notes. As such, Moody's believes that B/E will be able to meet its planned CAPEX and working capital investments in 2006 as well as interest payments on existing debt through internally-generated cash sources without material reliance on its $50 million revolving credit facility. Moody's expects B/E to remain amply in compliance with covenants. The B1 rating on the 8.5% senior unsecured notes due 2010 remains the same as the Corporate Family Rating reflecting the preponderance of unsecured debt in the company's debt structure as well as this class of debt's position in claim senior to the remaining 8.875% subordinated notes but junior to $50 million of senior secured bank lines. The B3 rating on the company's remaining 8.875% senior subordinated notes due 2011, remains two notches below the Corporate Family Rating, and reflects the subordination in claim of this class of debt below all existing and potential future senior debt in B/E, including the 8.5% notes, as well as potential lack of full recovery provided to this class of debt in a liquidation scenario. B/E reported about $1.07 billion of assets as of September 2005, with approximately 47% represented by goodwill and intangibles while the balance was comprised primarily of: * inventory ($222 million); * accounts receivable ($122 million); and * a modest $95 million of fixed assets. Against $480 million of debt commitments, this suggests uncertainty as to adequacy of the company's assets to cover all debt obligations, subordinated notes in particular, in the event of a distressed sale scenario. These ratings have been upgraded: * Senior subordinated notes due 2011, to B3 from Caa2 * Senior unsecured notes due 2010, to B1 from B3 * Corporate Family Rating to B1 from B3 This rating has been withdrawn: * Senior subordinated notes due 2008, rated Caa2 The company's Speculative Grade Liquidity Rating of SGL-2 has been affirmed. Headquartered in Wellington, Florida, B/E Aerospace, Inc., is the world's largest manufacturer of commercial and general aviation cabin interior products and a major independent distributor of aerospace fasteners. The company had LTM September 2005 revenues of $811 million. BALLY TOTAL: Asks Shareholders to Support Board at Jan. 26 Meeting ------------------------------------------------------------------ Bally Total Fitness (NYSE:BFT) commented on the letter from Pardus Capital Management, its largest shareholder, and once again encouraged shareholders to support the Board and management as they consider their proxy vote before the Jan. 26, 2006, shareholders meeting. "We believe shareholders will recognize that Bally's extremely reasonable settlement offer clearly demonstrates the Company and its Board acted in good faith in responding to issues raised by our largest shareholder. The Board developed our proposal after our independent directors met with Pardus and listened carefully to their concerns," said John W. Rogers, Jr., Lead Director. "It's important to point out that we accommodated Pardus on the vast majority of their demands." Bally noted that its Board of Directors, over the past six weeks, made substantial efforts to address Pardus' concerns, and that it was in agreement on most of the terms cited in Pardus' letter to stockholders. However, the remaining differences between the parties represent critical issues for all stockholders. -- Board Composition -- With regard to Board composition, the company has agreed to three out of 10 members for Pardus, a number that is more than fair given their stake in the company. Bally's Board firmly urges shareholders to support the nomination of Eric Langshur, who heads the company's Audit Committee and has played such an important role in restoring credibility to Bally's financials. -- Special Committee -- Bally has already offered the very committee Pardus' letter seeks, fully empowered and constituted with independent directors, including Pardus' nominees. -- Equity Compensation -- The Company has amended its proposed 2006 Omnibus Equity Compensation Plan to reduce the number of shares available under the Plan by more than 40% from 2.5 million shares to 1.75 million shares. Until the conclusion of the strategic process, Bally has agreed to restrict the use of those shares to incentive and inducement awards to retain key middle and lower level employees, not senior management. -- Separation of Chairman and CEO -- Bally believes that the creation of the Lead Director position is an effective corporate governance tool that has been successfully used by many companies to strengthen Board oversight. Bally's Board believes that separating the positions of Chairman and CEO during this critical juncture -- while the company is in the midst of evaluating strategic alternatives regarding the possible sale, recapitalization or other potential transactions -- would damage, not create, value. -- Rights Plan -- In exercising its fiduciary responsibilities on behalf of all shareholders, the Board continues to believe that amending Bally's Shareholder Rights Plan (which will expire in July unless approved by shareholders) to enable a single investor group that already owns nearly 15% of the shares -- and whose ultimate agenda remains undisclosed -- to accumulate more stock would be unwise. Allowing Pardus and Liberation to together accumulate 35% of Bally's stock would effectively give them a blocking position in the Company's strategic process. "Despite the many similarities in the two proposals, we continue to urge shareholders to carefully examine the facts as we approach our annual meeting, since the choice is clear. We ask shareholders to carefully consider the motives of each side, and understand that this Board has made a good faith attempt to accommodate Pardus over an extended period of discussions. We strongly encourage shareholders to support this Board and management team so that we can continue to pursue a plan that is clearly working to create long-term value for shareholders," said Rogers. Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Dec. 6, 2005, Standard & Poor's Ratings Services revised its CreditWatch implications on Bally Total Fitness Holding Corp. to developing from negative. The corporate credit rating remains at 'CCC'. Bally's ratings were originally placed on CreditWatch on Aug. 8, 2005, following the commencement of a 10-day period after which an event of default would have occurred under the company's $275 million secured credit agreement's cross-default provision and the debt would have become immediately due and payable. Subsequently, Bally entered into a consent with lenders to extend the 10-day period until Aug. 31, 2005. Prior to Aug. 31, the company received consents from its bondholders extending its waiver of default to Nov. 30, 2005. BF SAUL: S&P Puts Counterparty Credit Rating on Positive Watch -------------------------------------------------------------- Standard & Poor's Ratings Services placed the ratings of 19 U.S. regional banks and four thrifts, as well as their related entities, on CreditWatch with positive implications. The CreditWatch placements relate to an ongoing industry review being conducted by Standard & Poor's. S&P's analysis of industry fundamentals, combined with the franchise-building initiatives and improved risk management practices of the identified companies, suggests that the likelihood of positive rating actions has increased. This placement identifies those companies that S&P believes have at least a one-in-two likelihood of a one-notch rating upgrade within 90 days. These actions are in line with the positive bias highlighted on the sector in the recently published U.S. Banking Outlook. S&P recently published industry outlook highlights the near-term cyclical challenges posed by a flattening yield curve and a credit cycle that may begin to weaken. Nonetheless, S&P believes most commercial banks and thrifts will be able to withstand a harsher environment in 2006 and beyond. S&P anticipates earnings momentum will moderate for most U.S. banks in 2006 relative to 2005, but S&P believes the identified companies stand to outperform peers even in the face of the emerging profit growth pressure. Standard & Poor's will now conduct a more detailed analysis of the companies placed on CreditWatch Positive in order to assess whether or not they can indeed attain a higher rating. The CreditWatch resolutions will be determined on a company-specific basis. Standard & Poor's will consider each company's financial profile, their risk management framework, the staying power of recent franchise-enhancing initiatives, and their trough-of-cycle earnings power as it relates to the expected performance of these companies relative to their current rating level and to that of their peers. These placements will not necessarily result in upgrades. The circumstances that would result in a one-notch rating upgrade will be particular to each situation, including a material positive structural change in a company's financial and franchise profiles, such that future financial performance can withstand a harsher environment at a higher rating. On the other hand, the ratings of companies whose financial outperformance relative to the current rating level and those of their peers is deemed to be cyclical and not structural in nature will be affirmed. In cases in which an upgrade is not warranted within three months, but an upgrade potential exists in the next two years, S&P would assign a positive outlook. The results of this review and any changes in the ratings are expected in the next three months. The CreditWatch placements apply the updated policy on the use of CreditWatch. Ratings Placed On CreditWatch With Positive Implications To From -- ---- AmSouth Bancorp. Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 AmSouth Bank, Birmingham, Alabama Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 Astoria Financial Corp. Counterparty credit BBB-/Watch Pos/-- BBB-/Positive/-- Astoria Federal Savings & Loan Counterparty credit BBB/Watch Pos/A-2* BBB/Positive/A-2 BancorpSouth Inc. Counterparty credit BBB/Watch Pos/A-2* BBB/Pos/A-2 BancorpSouth Bank Counterparty credit BBB+/Watch Pos/A-2* BBB+/Pos/A-2 Bank of Hawaii Corp. Counterparty credit BBB/Watch Pos/-- BBB/Pos/-- Bank of Hawaii, Honolulu Counterparty credit BBB+/Watch Pos/A-2* BBB+/Pos/A-2 BB&T Corp. Counterparty credit A/Watch Pos/A-1* A/Pos/A-1 Branch Banking & Trust Co. Counterparty credit A+/Watch Pos/A-1 A+/Pos/A-1 Branch Banking & Trust Co. of South Carolina Counterparty credit A+/Watch Pos/A-1 A+/Pos/A-1 Branch Banking & Trust Co. of Virginia Counterparty credit A+/Watch Pos/A-1 A+/Pos/A-1 Chevy Chase Bank FSB Counterparty credit BB+/Watch Pos/-- BB+/Pos/-- B.F. Saul Real Estate Investment Trust Counterparty credit B+/Watch Pos/-- B+/Pos/-- Chittenden Corp. Counterpary credit BBB/Watch Pos/-- BBB/Pos/-- Chittenden Trust Co. Counterparty credit BBB+/Watch Pos/-- BBB+/Pos/-- City National Corp. Counterparty credit BBB+/Watch Pos/A-2* BBB+/Stable/A-2 City National Bank Beverly Hills Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 Comerica Bank, Detroit, Michigan Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 Cullen/Frost Bankers Inc. Counterparty credit BBB+/Watch Pos/-- BBB+/Stable/-- Frost National Bank San Antonio Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 Downey Financial Corp. Counterparty credit BBB-/Watch Pos/A-3 BBB-/Stable/A-3 Downey S&L Assn. Counterparty credit BBB/Watch Pos/A-2* BBB/Stable/A-2 First Republic Bank Counterparty credit BBB-/Watch Pos/A-3 BBB-/Pos/A-3 KeyCorp Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 KeyBank N.A. Cleveland Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 Key Treasury Management Co. Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 National City Corp. Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 National City Bank Kentucky Counterparty credit A+/Watch Pos/A-1 A+/Stable/A-1 National City Bank of Pennsylvania Counterparty credit A+/Watch Pos/A-1 A+/Stable/A-1 National City Bank, Cleveland Counterparty credit A+/Watch Pos/A-1 A+/Stable/A-1 National City Bank, Indiana Counterparty credit A+/Watch Pos/A-1 A+/Stable/A-1 North Fork Bancorp Counterparty credit BBB+/Watch Pos/A-2* BBB+/Pos/A-2 North Fork Bank Counterparty credit A-/Watch Pos/A-2 A-/Pos/A-2 People's Bank Counterparty credit BBB/Watch Pos/A-2* BBB/Pos/A-2 PNC Financial Services Group Counterparty credit A-/Watch Pos/-- A-/Stable/-- PNC Bank N.A. Pittsburgh Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 PNC Bank, Delaware Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 PNC Funding Corp. Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 SVB Financial Group Counterparty credit BBB-/Watch Pos/-- BBB-/Stable/-- Silicon Valley Bank Counterparty credit BBB/Watch Pos/-- BBB/Stable/-- Sky Financial Group Inc. Counterparty credit BBB/Watch Pos/-- BBB/Stable/-- Sky Bank Counterparty credit BBB+/Watch Pos/A-2* BBB+/Stable/A-2 TCF Financial Corp. Counterparty credit BBB+/Watch Pos/A-2* BBB+/Stable/A-2 TCF National Bank Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 TD Banknorth Inc. Counterparty credit BBB/Watch Pos/-- BBB/Stable/-- TD Banknorth N.A. Counterparty credit BBB+/Watch Pos/A-2* BBB+/Stable/A-2 UnionBanCal Corp. Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 Union Bank of California N.A. Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 Webster Financial Corp. Counterparty credit BBB-/Watch Pos/-- BBB-/Stable/-- Webster Bank N.A. Counterparty credit BBB/Watch Pos/A-2* BBB/Stable/A-2 *Short-term ratings not on CreditWatch Positive. BLACKROCK MORTGAGE: Fitch Holds Junk Rating on Class B-3 Certs. --------------------------------------------------------------- Fitch Ratings affirms these Blackrock Mortgage pass-through certificates: Series 1997-R1 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'BB+'; -- Class B-3 at 'D'. Series 1997-R3 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'BB'; -- Class B-3 at 'D'. The mortgage loans in the pools consist of a mix of Housing Urban Development, Small Business Association, and Veterans Association collateral. As of the December 2005 distribution date, both transactions have pool factors that range from 12.4% to 16.2%, and are seasoned 96 to 105 months. The cumulative losses range from 13.5% to 14.6%. For both transactions, overcollateralization has been depleted and the B-3 class is absorbing all losses. The B-3 bond balance for 1997-R1 is approximately $3.7 million, which represents 13.23% of the pool. The B-3 bond balance for 1997-R3 is approximately $8.19 million, which represents 8.78% of the pool. The affirmations reflect the relationship between credit enhancement and collateral performance, which are consistent with expectations, and affects $127.08 million in outstanding certificates. For further information regarding credit enhancement, delinquencies, or other statistics, please visit the Fitch Ratings Website at http://www.fitchratings.com/ BSI HOLDING: Liquidating Trustee Issues Final Distribution ---------------------------------------------------------- Joseph Myers, a partner and managing director of Clear Thinking Group LLC and Liquidating Trustee for BSI Holding Co., Inc., fka Bob's Stores, reported that final disbursements of 13.5% have been sent to BSI's general unsecured creditors. This brings the total distribution to unsecured creditors to 98.5%, far higher than the anticipated 40% to 70% return. Mr. Myers credited the increased return rate and expedient distribution of claims to the work performed by Jay Indyke and his team at New York City-based Kronish Leib Weiner & Hellman LLP, counsel to the trustee and the creditors committee. Mr. Myers also acknowledged the cooperation of several other firms involved in the matter, including: * Boston-based Goodwin Proctor, which provided litigation and tax support; * the Wilmington, Delaware office of Pepper Hamilton, which served as local counsel to the trustee; * Deloitte & Touche LLP, financial advisor to the trustee; * The Bayard Firm, which served as Wilmington-based counsel to the creditors' committee; and * FTI Consulting, Inc, of Annapolis, Maryland, a provider of corporate finance/restructuring, forensic/litigation/ technology and economic consulting services for the debtor. "To see a return of 98.5% in a retail case such as this one is extraordinary," added Mr. Indyke. Mr. Indyke attributed the outcome of the case "to aggressive committee action" as well as to the efforts of Liquidating Trustee Myers in "clarifying all roles going forward, minimizing expenses and increasing cooperation among all parties involved." About Clear Thinking Group Clear Thinking Group -- http://www.clearthinkinggrp.com/-- provides a wide range of strategic consulting services to retail companies, consumer product manufacturers/distributors and industrial companies. The national advisory organization specializes in assisting small- to mid-sized companies during times of growth, opportunity, strategic change, acquisition, and crisis. About BSI Holding Co. Inc. Headquartered in Meriden, Connecticut, BSI Holding Co., Inc., formerly known as Bob's Stores, Inc., and its debtor-affiliates operated a retail clothing chain. The Debtors filed for chapter 11 protection on October 22, 2003 (Bankr. D. Del. Case No. 03- 13254). At the time of filing, the casual clothing and footwear chain operated 34 stores in six states throughout the Northeast. The majority of the merchant's assets were subsequently acquired by The TJX Companies, Framingham, Mass., for about $100 million less various adjustments. A liquidation trust was then established to reconcile all remaining claims and liquidate the retailer's estate. Adam Hiller, Esq., at Pepper Hamilton represents the Debtors. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP, and Charlene Davis, Esq., and Deirdre Richards, Esq., at The Bayard Firm represent the Creditors' Committee. When the Company filed for protection from its creditors, it listed debts and assets of more than $100 million. On Aug. 17, 2004, the Court confirmed the Modified Consolidated Joint Plan of Liquidation of the Debtors and that plan became effective on Sept. 15, 2004. CHASE FUNDING: Fitch Chips Rating on Class IB Certificates to BB- ----------------------------------------------------------------- Fitch Ratings has taken rating actions on these Chase Funding RMBS issues: Chase Funding Mortgage Loan Asset-Backed Certificates Series 2000-1 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB-'. Chase Funding Mortgage Loan Asset-Backed Certificates Series 2000-2 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB-'. Chase Funding Mortgage Loan Asset-Backed Certificates, Series 2000-3 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A-'; -- Class IB affirmed at 'BB'. Chase Funding Loan Acquisition Trust Mortgage Loan Asset-Backed Certificates, Series 2001-C2 Group 1 -- Class IA-4 affirmed at 'AAA'; -- Class IA-5 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 downgraded to 'A-'from 'A'; -- Class IB downgraded to 'BB-'from 'BBB-'. Chase Funding Loan Acquisition Trust Mortgage Loan Asset-Backed Certificates, Series 2001-AD1 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 upgraded to 'AA+' from 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB'. Chase Funding Loan Acquisition Trust Mortgage Loan Asset-Backed Certificates, Series 2001-AD1 Group 2 -- Class IIA-1 affirmed at 'AAA'; -- Class IIM-1 upgraded to 'AA+' from 'AA'; -- Class IIM-2 upgraded to 'AA-' from 'A'; -- Class IIB upgraded to 'A' from 'BBB'. Chase Funding Mortgage Loan Asset-Backed Certificates, Series 2001-4 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB'. Chase Funding Mortgage Loan Asset-Backed Certificates, Series 2001-4 Group 2 -- Class IIA-1 affirmed at 'AAA'; -- Class IIM-1 affirmed at 'AA'; -- Class IIM-2 affirmed at 'A'; -- Class IIB affirmed at 'BBB-'. All of the mortgage loans in the aforementioned transactions were either originated or acquired by: * Chase Manhattan Mortgage Corporation, * Chase Manhattan Bank USA, N.A., * The Chase Manhattan Bank, and * Chase Mortgage Holdings, Inc. The mortgage loans consist of fixed- and adjustable-rate subprime mortgage loans and are secured by first and second lien mortgages or deeds of trust on residential properties. As of the December 2005 distribution date, the transactions are seasoned from a range of 48 to 69 months, and the pool factors range from approximately 10% to 24%. Chase Home Finance, LLC, rated 'RPS1' by Fitch, is the servicer for all of the mortgage loans. The affirmations reflect a satisfactory relationship between credit enhancement and future loss expectations and affect approximately $336 million of outstanding certificates. The upgrades reflect an improvement in the relationship between CE and future loss expectations and affects approximately $19.7 million of outstanding certificates. Series 2001-AD1 group 1 and group 2 transactions have experienced stable loss and delinquency rates, and they have more excess spread than initially expected to cover losses. Both groups also benefit from cross-collateralization through the application of excess spread generated by one loan group to fund shortfalls in available funds and the required level of overcollateralization in the other loan group. As of the December 2005 distribution date, the CE levels for the upgraded classes have grown at least 2x their original CE levels since closing. In series 2001-AD1 group 1, class IM-1 currently benefits from 18.50% CE in the form of subordination and OC. In series 2001-AD1 group 2, class IIM-1 currently benefits from 24.00% CE in the form of subordination and OC; class IIM-2 currently benefits from 13.50% CE in the form of subordination and OC; and class IIB currently benefits from 5.50% CE in the form of OC. The negative rating actions, which affect approximately $5.85 million of outstanding certificates, reflect deterioration in the relationship between CE and future loss expectations. Although the performance of series 2001-C2 group 1 compares favorably to industry averages, this transaction has experienced monthly losses, which have exceeded the available excess spread, resulting in the deterioration of OC and preventing the OC from maintaining its target amount. Additionally, group 2 of the same transaction was called in June 2005, and thus group 1 no longer benefits from the cross-collateralized excess spread of group 2. As of the December 2005 distribution date, the OC amount for series 2001-C2 group 1 is $1,726,327, while the target OC amount is $2,150,043. The pool factor for this transaction is 17%, and this transaction has incurred cumulative losses to date of 2.39%. Approximately 15.81% of the remaining pool balance is more than 60 days delinquent including bankruptcies, foreclosures, and real estate owned. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings Web site at http://www.fitchratings.com/ CHEVY CHASE: S&P Puts Counterparty Credit Rating on Positive Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed the ratings of 19 U.S. regional banks and four thrifts, as well as their related entities, on CreditWatch with positive implications. The CreditWatch placements relate to an ongoing industry review being conducted by Standard & Poor's. S&P's analysis of industry fundamentals, combined with the franchise-building initiatives and improved risk management practices of the identified companies, suggests that the likelihood of positive rating actions has increased. This placement identifies those companies that S&P believes have at least a one-in-two likelihood of a one-notch rating upgrade within 90 days. These actions are in line with the positive bias highlighted on the sector in the recently published U.S. Banking Outlook. S&P recently published industry outlook highlights the near-term cyclical challenges posed by a flattening yield curve and a credit cycle that may begin to weaken. Nonetheless, S&P believes most commercial banks and thrifts will be able to withstand a harsher environment in 2006 and beyond. S&P anticipates earnings momentum will moderate for most U.S. banks in 2006 relative to 2005, but S&P believes the identified companies stand to outperform peers even in the face of the emerging profit growth pressure. Standard & Poor's will now conduct a more detailed analysis of the companies placed on CreditWatch Positive in order to assess whether or not they can indeed attain a higher rating. The CreditWatch resolutions will be determined on a company-specific basis. Standard & Poor's will consider each company's financial profile, their risk management framework, the staying power of recent franchise-enhancing initiatives, and their trough-of-cycle earnings power as it relates to the expected performance of these companies relative to their current rating level and to that of their peers. These placements will not necessarily result in upgrades. The circumstances that would result in a one-notch rating upgrade will be particular to each situation, including a material positive structural change in a company's financial and franchise profiles, such that future financial performance can withstand a harsher environment at a higher rating. On the other hand, the ratings of companies whose financial outperformance relative to the current rating level and those of their peers is deemed to be cyclical and not structural in nature will be affirmed. In cases in which an upgrade is not warranted within three months, but an upgrade potential exists in the next two years, S&P would assign a positive outlook. The results of this review and any changes in the ratings are expected in the next three months. The CreditWatch placements apply the updated policy on the use of CreditWatch. Ratings Placed On CreditWatch With Positive Implications To From -- ---- AmSouth Bancorp. Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 AmSouth Bank, Birmingham, Alabama Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 Astoria Financial Corp. Counterparty credit BBB-/Watch Pos/-- BBB-/Positive/-- Astoria Federal Savings & Loan Counterparty credit BBB/Watch Pos/A-2* BBB/Positive/A-2 BancorpSouth Inc. Counterparty credit BBB/Watch Pos/A-2* BBB/Pos/A-2 BancorpSouth Bank Counterparty credit BBB+/Watch Pos/A-2* BBB+/Pos/A-2 Bank of Hawaii Corp. Counterparty credit BBB/Watch Pos/-- BBB/Pos/-- Bank of Hawaii, Honolulu Counterparty credit BBB+/Watch Pos/A-2* BBB+/Pos/A-2 BB&T Corp. Counterparty credit A/Watch Pos/A-1* A/Pos/A-1 Branch Banking & Trust Co. Counterparty credit A+/Watch Pos/A-1 A+/Pos/A-1 Branch Banking & Trust Co. of South Carolina Counterparty credit A+/Watch Pos/A-1 A+/Pos/A-1 Branch Banking & Trust Co. of Virginia Counterparty credit A+/Watch Pos/A-1 A+/Pos/A-1 Chevy Chase Bank FSB Counterparty credit BB+/Watch Pos/-- BB+/Pos/-- B.F. Saul Real Estate Investment Trust Counterparty credit B+/Watch Pos/-- B+/Pos/-- Chittenden Corp. Counterpary credit BBB/Watch Pos/-- BBB/Pos/-- Chittenden Trust Co. Counterparty credit BBB+/Watch Pos/-- BBB+/Pos/-- City National Corp. Counterparty credit BBB+/Watch Pos/A-2* BBB+/Stable/A-2 City National Bank Beverly Hills Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 Comerica Bank, Detroit, Michigan Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 Cullen/Frost Bankers Inc. Counterparty credit BBB+/Watch Pos/-- BBB+/Stable/-- Frost National Bank San Antonio Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 Downey Financial Corp. Counterparty credit BBB-/Watch Pos/A-3 BBB-/Stable/A-3 Downey S&L Assn. Counterparty credit BBB/Watch Pos/A-2* BBB/Stable/A-2 First Republic Bank Counterparty credit BBB-/Watch Pos/A-3 BBB-/Pos/A-3 KeyCorp Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 KeyBank N.A. Cleveland Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 Key Treasury Management Co. Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 National City Corp. Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 National City Bank Kentucky Counterparty credit A+/Watch Pos/A-1 A+/Stable/A-1 National City Bank of Pennsylvania Counterparty credit A+/Watch Pos/A-1 A+/Stable/A-1 National City Bank, Cleveland Counterparty credit A+/Watch Pos/A-1 A+/Stable/A-1 National City Bank, Indiana Counterparty credit A+/Watch Pos/A-1 A+/Stable/A-1 North Fork Bancorp Counterparty credit BBB+/Watch Pos/A-2* BBB+/Pos/A-2 North Fork Bank Counterparty credit A-/Watch Pos/A-2 A-/Pos/A-2 People's Bank Counterparty credit BBB/Watch Pos/A-2* BBB/Pos/A-2 PNC Financial Services Group Counterparty credit A-/Watch Pos/-- A-/Stable/-- PNC Bank N.A. Pittsburgh Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 PNC Bank, Delaware Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 PNC Funding Corp. Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 SVB Financial Group Counterparty credit BBB-/Watch Pos/-- BBB-/Stable/-- Silicon Valley Bank Counterparty credit BBB/Watch Pos/-- BBB/Stable/-- Sky Financial Group Inc. Counterparty credit BBB/Watch Pos/-- BBB/Stable/-- Sky Bank Counterparty credit BBB+/Watch Pos/A-2* BBB+/Stable/A-2 TCF Financial Corp. Counterparty credit BBB+/Watch Pos/A-2* BBB+/Stable/A-2 TCF National Bank Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 TD Banknorth Inc. Counterparty credit BBB/Watch Pos/-- BBB/Stable/-- TD Banknorth N.A. Counterparty credit BBB+/Watch Pos/A-2* BBB+/Stable/A-2 UnionBanCal Corp. Counterparty credit A-/Watch Pos/A-2 A-/Stable/A-2 Union Bank of California N.A. Counterparty credit A/Watch Pos/A-1* A/Stable/A-1 Webster Financial Corp. Counterparty credit BBB-/Watch Pos/-- BBB-/Stable/-- Webster Bank N.A. Counterparty credit BBB/Watch Pos/A-2* BBB/Stable/A-2 *Short-term ratings not on CreditWatch Positive. CHINESE OVERSEAS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Chinese Overseas Marketing Service Corporation aka Chinese Consumer Yellow Pages 3940 Rosemead Boulevard Rosemead, California 91770 Bankruptcy Case No.: 06-10110 Chapter 11 Petition Date: January 13, 2006 Court: Central District of California (Los Angeles) Judge: Vincent P. Zurzolo Debtor's Counsel: Alan Tippie, Esq. SulmeyerKupetz 333 South Hope Street, 35th Floor Los Angeles, California 90071 Tel: (213) 626-2311 Fax: (213) 629-4520 Total Assets: $100,000 to $500,000 Total Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Chinese Yellow Pages, Inc. Judgment $4,250,000 9550 Flair Drive, Suite 200 El Monte, CA 91731 Lim, Ruger & Kim LLP Unpaid Invoices $250,000 1055 West 7th Street Los Angeles, CA 90017 EU-Vector, Inc. Unpaid Invoices $100,000 275 South 3rd Avenue, Suite 1B La Puente, CA 91746 Ching-Hsien Sun Unpaid Compensation $78,000 Lo Yuan Lee Unpaid Compensation $50,000 Ching-Hui Hsu Unpaid Compensation $50,000 Wonder Printing Unpaid Invoices $20,000 Richway Marketing Services Unpaid Invoices $10,000 Kho & Patel Unpaid Invoices $6,000 Jay J. Chang, Esq. Unpaid Invoices $6,000 Cal Marketing & Promotion Group Unpaid Invoices $6,000 Song W. Wang Unpaid Compensation $5,000 Chia Chi Tsai Unpaid Compensation $5,000 Charlie E. Shen Unpaid Compensation $5,000 Ching-Fang Liu Unpaid Compensation $5,000 Fan W. Fromberg Unpaid Compensation $5,000 Francis W. Chiao Unpaid Compensation $5,000 Di Chen Unpaid Compensation $5,000 Ping Chen Unpaid Compensation $5,000 Lamb & Michael Unpaid Invoices $1,200 CHOICE COMMUNITIES: Files Amended Plan and Disclosure Statement --------------------------------------------------------------- Choice Communities, Inc., delivered to the U.S. Bankruptcy Court for the District of Maryland, Baltimore Division, a First Amended Disclosure Statement for its First Amended Plan of Reorganization on Jan. 10, 2005. The Debtor amended its Plan to secure Judge E. Stephen Derby's approval. The amended Plan reflects a higher distribution for the estate's unsecured creditors, and has been negotiated and supported by the Indenture Trustee and the Official Committee of Unsecured Creditors. After confirmation of the Plan, the Debtor will continue to exist and operate as a nursing home in essentially its present form. Treatment of Claims Creditors holding Series 1998A Bonds and Series 1998B Bonds, for $10.09 million, will be replaced with two tranches of bonds consisting of: i) tax-exempt 7.12% $9,740,000 New Series A Bonds, and ii) taxable 7.12% $350,000 New Series B Bonds. The new bonds will be secured by a lien on all of the Reorganized Debtor's assets and will have the same extent and priority as the prepetition liens. Eastpoint Associate's claims in connection with: i) a non-negotiable $750,000 Subordinated Promissory Note dated April 30, 1998, ii) the Subordinated Deferred Purchase Money Deed of Trust, and iii) the Subordinated Agreement, will be treated as an unsecured claim. The Maryland Department of Health and Mental Hygiene's $579,813 claims with respect to: i) any settlements; and ii) any sums advanced to the Debtor from the Interim Working Capital Fund, will be paid in 60 equal monthly payments, with 3% simple interest. Senior Care Management extended a prepetition revolving loan to the Debtor. Under the Plan, Senior Care will have an allowed $71,000 claim and will be paid from an exit facility. General unsecured creditors, owed $2,500,000, will have pro rata shares in a $200,000 fund, to be paid as follows: i) $50,000 on the effective date; and ii) $150,000 Class Five Promissory Note. Exit Facility Senior Care has committed a $500,000 exit facility in substantially the same form and content as the Revolving Credit Note and the Revolving Loan and Security Agreement between the Debtor and Senior Care, each dated as of Jan. 1, 2004. A full-text copy of the Plan is available for a fee at: __________________ Headquartered in Baltimore, Maryland, Choice Communities, Inc., owns and operates a licensed 180-bed nursing facility. The Company filed for chapter 11 protection on Jan. 24, 2005 (Bankr. D. Md. Case No. 05-11536). Joel I. Sher, Esq., Richard M. Goldberg, Esq., and Paul V. Danielson, Esq., at Shapiro Sher Guinot & Sandler represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and estimated debts between $10 million to $50 million. CITY OF KLAMATH: Fitch Shaves Sr. Sec. Rev. Bonds to B- from BB+ ---------------------------------------------------------------- Fitch Ratings has downgraded the rating on the City of Klamath Falls, Oregon senior secured revenue bonds due 2025 to 'B-' from 'BB+' and removed the Rating Watch Negative. The bonds are secured solely by the revenues of the 484-megawatt natural gas-fired Klamath Cogeneration Project and other KCP assets. The rating action incorporates the expectation of continued depressed financial performance due to on going reduced plant utilization, attributed to high natural gas prices. Specifically, high natural gas prices have led KCP's primary off-takers to reduce their dispatch of the facility, as allowed under their respective purchase power agreements. KCP's capacity factor was 57% during the quarter ended Sept. 30, 2005, compared with 74% the same period in 2004, and averages 54% for the five-month period ending November 2005. As such, project revenues have been insufficient to fund KCP's major maintenance reserve account and meet the Jan. 1, 2006 debt service payments on its second lien electric revenue bonds. On Dec. 30, 2005, KCP drew on its credit facility with PacifiCorp Holdings to make up for the shortfall in the second lien debt payments. The rating action also reflects the uncertainty around the replacement of two contracts accounting for 150 MW, which are to expire in June 2006. Fitch believes that current capacity prices in similarly structured arrangements may be slightly lower than prices in the existing agreements. Therefore, replacement contracts could continue to be a source of cash flow pressure. A positive rating action could result if KCP is able to replace the two expiring contracts on terms that restore financial stability. Favorably, KCP continues to operate efficiently in excess of 95% availability over the past two years. In addition, the plant benefits from a favorable location and efficient generation technology. Project revenues have been sufficient to cover all operating expenses as well as service KCP's senior lien bonds. KCP is a natural gas-fired, combined cycle cogeneration plant with a nominal capacity of 484 MW, or 464 MW when exporting steam at 200,000 pounds per hour. The project is owned by the City of Klamath Falls, Oregon, as a separately secured enterprise and is built on land leased by the city from the steam purchaser. COIN BUILDERS: Court Approves Wood County Bank Letter of Credit --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Wisconsin approved Coin Builders, LLC's request to obtain a letter of credit from the Wood County National Bank to secure additional inventory from one of its suppliers, Upper Deck. The Debtor distributes and sells collectible items. These collectibles are purchased from various manufacturers, including, Upper Deck. Upper Deck can draw upon the letter of credit of up to $250,000 in case the Debtor defaults on its payment. The Bank's issuance of the letter of credit is secured by a first priority security interest in the Debtor's postpetition inventory, deposits and receivables. In addition, the Debtor will be paying $20,000 monthly adequate protection payments beginning March 3, 2006. Headquartered in Wisconsin Rapids, Wisconsin, Coin Builders, LLC -- http://www.coinbuilders.net/-- has four subsidiaries that operate in the merchandising, wholesale, restaurant, and aviation sectors. The Debtor filed for chapter 11 protection on September 26, 2005 (Bankr. W.D. Wis. Case No. 05-18109). George B. Goyke, Esq., at Goyke, Tillisch & Higgins LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets between $1 million to $10 million and debts between $10 million to $50 million. COLLINS & AIKMAN: Wants to Walk Away From Headquarter Leases ------------------------------------------------------------ Collins & Aikman Corporation and its debtor-affiliates say that two unexpired leases associated with their corporate headquarters in Troy, Michigan, are at substantially above-market rates. The Headquarter Leases are: -- Lease at 150 Stephenson Highway with Becker Ventures; and -- Lease at 250 Stephenson Highway with Becker Ventures. The Debtors have attempted to negotiate with Becker Ventures to adjust the lease terms. However, negotiations have been unsuccessful. As a result, the Debtors are simultaneously exploring several opportunities for alternative space with substantially lower rates. The Debtors also inform Judge Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan that in light of General Motors' recent announcement that it would be closing its Oklahoma City plant within the next few months, there's no reason for them to continue operating their Oklahoma City facility, and to continue their Oklahoma unexpired lease. The Debtors lease premises from Mid America II, LLC, at the Mid America Business Park, Building Two, 8121 Mid America Boulevard located in Oklahoma City. The Debtors seek the Court's authority to reject the Headquarters Leases effective June 30, 2006, and the Oklahoma Lease, effective July 15, 2006. 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: Agrees to Pay $259,876 as Adequate Protection --------------------------------------------------------------- In a stipulation approved by the U.S. Bankruptcy Court for the Eastern District of Michigan, Collins & Aikman Corporation, its debtor-affiliates and Heidel North America, Inc., agree that in satisfaction of all claims that Heidel may hold against the Debtors on account of certain tooling equipment, the Debtors will pay Heidel North $259,876 as adequate protection payment. Heidel withdraws its request to lift the automatic stay in its entirety. As reported in the Troubled Company Reporter on Nov. 29, 2005, Heidel asked the U.S. Bankruptcy Court for the Eastern District of Michigan to lift the automatic stay to allow it to regain possession of its tooling. Heidel has a properly perfected lien under the Michigan Special Tools Lien Act and a recorded UCC-1 financing statement. Heidel is owed no less than $259,876, says Robert Bassel, Esq., at Kemp, Klein, Umphrey, Endelman & May, PC. Mr. Bassel asserts that pursuant to Sections 361 and 362 of the Bankruptcy Code, Heidel is entitled to adequate protection of its interests, which the Debtors still have not provided. 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: Moves to Reject 15 Contracts and Leases --------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates have identified 15 contracts and leases that are no longer integral to their ongoing business operations, or present burdensome contingent liabilities. To reduce costs, the Debtors seek the Court's authority to reject these contracts and leases effective Jan. 5, 2006. The Rejected Contracts and Leases include 11 Service Agreements with IOS Capital, Inc., for rental of office equipment that the Debtors no longer need. In addition, the Debtors seek authority from the U.S. Bankruptcy Court for the Eastern District of Michigan to reject an Indian Design and Engineering Center Agreement with Satyam Venture Engineering Services Pvt. Ltd., and equipment leases with: -- Pitney Bowes Credit Corporation, dated September 24, 2004; -- The Perfect Water Co., LLC, dated January 31, 2003; and -- IKON Office Solutions, Inc., dated July 9, 2001. "If the Court grants the relief requested . . . the Debtors will save a significant amount per month in expenses. Furthermore, the Rejected Agreements may present contingent obligations that should be terminated to avoid future uncertainty," Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in New York, explains. Satyam Responds Steven A. Matta, Esq., at Garan, Lucow, Miller, P.C., in Troy, Michigan, argues that the services of Satyam Venture Engineering Services Pvt. Ltd. are essential to the Debtors' operations. For this reason, Satyam asks the Court to deny the Debtors' request as it relates to the Indian Design and Engineering Center Agreement. It is not clear if the Debtors have taken appropriate steps to analyze the potential problems if Satyam's services are not provided, Mr. Matta says. The Debtors are prohibited from soliciting or hiring any of Satyam's personnel for a specific duration as indicated in the contract, Mr. Matta adds. 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) CREDIT BASED: Fitch Affirms BB Rating on Class B-2 Certificates --------------------------------------------------------------- Fitch Ratings has upgraded four, affirmed five, and placed two classes on Rating Watch Negative from three Credit Based Asset Servicing and Securitization LLC issues: Series 2000-CB2 -- Class M-2 upgraded to 'AAA' from 'A'; -- Class B is upgraded to 'A' from 'BBB'. Series 2000-CB4 -- Class A1-A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B-1 rated 'BBB,' placed on Rating Watch Negative; -- Class B-2 rated 'BBB-,' placed on Rating Watch Negative. Series 2002-CB1 -- Class M-1 upgraded to 'AAA' from 'AA'; -- Class M-2 upgraded to 'AA-' from 'A'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 affirmed at 'BB'. The affirmations reflect adequate relationships of credit enhancement to future loss expectations and affect approximately $33.23 million of outstanding certificates. The upgrades reflect an improvement in the relationship of CE to future loss expectations and affect approximately $63.22 million in outstanding certificates. The classes placed on Rating Watch Negative reflect the deterioration in the relationship of CE to future loss expectations and affect approximately $1.95 million of outstanding certificates. The above transactions, with the exception of series 2000-CB4, have failed their respective loss triggers, which has prevented the trusts from paying principal to the subordinate bonds and has also prevented a step down of the OC target. Thus, CE has grown significantly on a percentage basis, benefiting the senior and mezzanine bonds on the trusts. The significant increase in the CE percentage due to the failed triggers has led to upgrades in some cases. By contrast, the targeted OC amount of series 2000-CB4 did step down on the stated date of December 2003. For the greater part of the last year, the transaction passed delinquency triggers and principal was allocated to the subordinate bonds. However, losses in the past few months have resulted in the OC depleting, reducing the CE to the most subordinate bonds. Fitch will closely monitor the relationship of excess spread to monthly losses in the coming months. Series 2000-CB2 consists of closed-end, fixed-rate and adjustable-rate mortgage loans. At origination, 15% of the mortgage loans were reperforming mortgage loans. C-BASS considers a loan to be reperforming only after the receipt of at least three monthly payments in the past three months, four monthly payments in the past four months, or five monthly payments in the past five months. Series 2000-CB4 consists of conventional fixed-rate and adjustable-rate mortgage loans extended primarily to subprime borrowers. At origination, approximately 10% of the mortgage loans were FHA insured or VA guaranteed. The mortgage loans in the trust were originated or acquired by various entities. Series 2002-CB1 consists of fixed- and adjustable-rate mortgage loans extended to subprime borrowers. At origination, 7.68% of the mortgage loans were FHA insured and VA guaranteed and approximately 52% were subperforming or reperforming mortgage loans. All the above transactions are being serviced by Litton Loan Servicing LP, which is rated 'RPS1' by Fitch. 'RPS1' is the highest servicer rating available from Fitch. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch ratings Web site at http://www.fitchratings.com/ CREDIT SUISSE: Fitch Affirms Junk Rating on $5.1MM Class N Certs. ----------------------------------------------------------------- Fitch Ratings upgrades Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2004-FL1: -- $15.8 million class C to 'AAA' from 'AA+'; -- $12.8 million class D to 'AAA' from 'A+'; -- $6.8 million class E to 'AA+' from 'A-'; -- $11.1 million class F to 'A+' from 'BBB+'; -- $13.2 million class G to 'BBB+' from 'BBB-'; -- $10.7 million class H to 'BB+' from 'BB'; -- $6 million class J to 'BB' from 'BB-'; -- $5.6 million class K to 'BB-' from 'B+'; -- $4.7 million class L to 'B+' from 'B'; -- $6.4 million class M to 'B' from 'B-'. In addition, Fitch affirms these classes: -- $84.9 million class A at 'AAA'; -- Interest-only class A-X at 'AAA'; -- Interest-only class A-Y-1 at 'AAA'; -- Interest-only class A-Y-2 at 'AAA'; -- Interest-only class A-Y-3 at 'AAA'; -- $26.3 million class B at 'AAA'; -- $5.1 million class N at 'CCC'. Fitch does not rate the $14.4 million class O or the $1 million class P certificates. The rating upgrades are due to the increase in subordination levels resulting from the payoff of four loans since Fitch's last ratings action. As of the December 2005 distribution date, the pool has paid down 34.2% to $224.9 million from $341.9 million at issuance. The remaining pool consists of 15 floating-rate loans, the majority of which are interest-only. The loans mature between May 2006 and April 2007, with the two loans maturing in May 2006 having single one-year extension options. One loan, secured by a multifamily property in Pasadena, Texas, was transferred to the special servicer after the borrower failed to make the required balloon payment in October 2005. The loan is performing under a forbearance agreement, whereby the borrower is required to pay monthly principal in addition to scheduled interest. Under the current agreement, the borrower has until February 2006 to obtain refinancing and pay off the loan. The largest loan in the transaction, the Alliance FH Portfolio, is collateralized by four multifamily properties located in Houston, Austin, Dallas, and Indianapolis. Annualized net cash flow for the portfolio as of the third quarter 2005 declined by 41.3% since issuance due to declines in occupancy and rental rates at the properties. Fitch is concerned with the overall decline in performance of the pool, as the total NCF of the 15 loans has dropped by 18.3% as of the most recent financial period available compared to issuance. However, due to the substantial paydown and subsequent increases in credit enhancement, upgrades are warranted. D & K STORES: Confirmation Hearing Set for January 26 ----------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey will convene a hearing on Jan. 26, 2006, at 11:00 a.m. to consider the merits of D & K Stores, Inc.'s Chapter 11 Plan of Liquidation. Objections to the Plan, if any, must be filed with the Court by January 19. As previously reported, the Debtor's management analyzed the possibilities of reorganizing through downsizing to a business model with fewer retail outlets. The Debtor ultimately concluded that no amount of downsizing would result in an economically viable business operation. Terms of the Plan The Debtor's only secured creditor, OceanFirst, was fully paid on July 29, 2005. General unsecured creditors, owed approximately $10,000,000, will share pro rata from proceeds of the sale of the Debtor's assets. Equity holders won't receive anything under the Plan. After confirmation of the Plan, Clear Thinking Group, LLC, will be appointed as Plan Administrator. Clear Thinking will be responsible to liquidate the Debtor's assets, litigate avoidance actions and make distributions to creditors. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=051214212025 Headquartered in Eatontown, New Jersey, D & K Stores, Inc., filed for chapter 11 protection on April 8, 2005 (Bankr. D. N.J. Case No. 05-21445). Timothy P. Neumann, Esq., at Broege, Neumann, Fischer & Shaver, LLC, represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts from $10 million to $50 million. DELPHI CORP: Court Approves Ernst & Young as Tax Consultants ------------------------------------------------------------ Delphi Corporation and its debtor-affiliates sought and obtained the U.S. Bankruptcy Court for the Southern District of New York's authorization to employ Ernst & Young LLP to provide Sarbanes- Oxley, valuation, and tax related services, effective October 8, 2005. John D. Sheehan, vice president and chief restructuring officer of Delphi Corp., relates that Ernst & Young is well experienced, and is well respected for services it has rendered in large, complex Chapter 11 cases on behalf of debtors and creditors throughout the United States. Pursuant to separate engagement letters, Ernst & Young will provide these services to the Debtors: I. Functional Testing * Assist the Debtors' management in the planning and execution of its functional testing of internal controls over financial reporting for the Debtors' significant accounts and processes, and to report any findings and recommendations for improvements in the controls the Firm may identify as a result of this assistance. II. IT SOX 404 Support and Segregation of Duties * Assist Delphi IT in assessing, testing and remediating the IT General Computer Controls environment for applications supporting financial processes in compliance with the Sarbanes Oxley Section 404 legislation. * Assist in the remediation of Segregation of Duties, which includes organizing and analyzing relevant end user security data against defined business conflicts, providing subject matter expertise on the required user access/profile clean-up, and supporting the design and implementation of preventive and detective processes/ tools. * Provide resources to support the Debtors with certain deliverables as required. III. Assistance with Delphi Corporate Accounting Policies * Assist the Debtors' management in the development of the organization, format and content update of its Delphi Corporate Accounting Policies manual, with primary emphasis on providing the Debtors with recommended updates to the DCAP to reflect references to, or descriptions of, current U.S. Generally Accepted Accounting Principles that may be applicable to the Debtors. IV. Certus Implementation Assistance * Assist the Debtors in the implementation of the Certus Sarbanes Compliance Tool, including assistance in identifying functional/technical requirements, and working with Certus and Management of the Debtors to implement the application in accordance with those requirements. * Assist in the completion of various activities, including (i) general project management responsibilities with direction from the Debtors; (ii) assistance in documenting the functional, technical, and system requirements; (iii) assistance in designing the tool functionality according to the Debtors' specifications; (iv) assistance in the design and execution of integrated testing; and (v) assistance in the development and deployment of user training. * Provide resources to support the Debtors with developing deliverables which the Debtors deem appropriate for the project. V. Loan Staff Assistance * Provide professional personnel for the purpose of assisting the Debtors with the documentation process related to specific projects as mutually agreed by the Debtors and Ernst & Young. VI. Valuation Services * Provide services relating to the Debtors' Financial Accounting Standard Board's Statement No. 142 Goodwill and Other Intangible Assets analysis. VII. Tax Services * Provide research, compilation of data, and analysis with respect to the application of Section 382 of the Internal Revenue Code. Ernst & Young will be paid at these customary hourly rates: -- For functional testing and assistance with the Delphi Corporate Accounting Policies: Partner/Principal $330 Senior Manager $285 Manager $260 Senior $145 Staff $116 -- For IT SOX 404 and SOD support and Certus implementation assistance: Partner/Principal $330 Senior Manager $285 Manager $260 Senior $215 Staff $155 -- For loan staffing services: Partner $330 Senior Manager $285 BRS Manager $260 Core Assurance Senior $180 BRS Senior $145 Staff $116 -- For valuation services: Partner/Principal $425 Senior Manager $350 Manager $275 Senior $225 Staff $175 -- For tax services: Partner/Principal $650 to $750 Senior Manager $550 to $650 Manager $500 to $600 Senior $400 to $500 Staff $200 to $300 Ernst & Young will also be reimbursed for actual expenses. Ernst & Young may subcontract a portion of its responsibilities to other member firms of Ernst & Young Global Limited. Before the Petition Date, Ernst & Young provided Sarbanes-Oxley services to the Debtors under the same subcontracting arrangement with the EYGL member firms and, at the Debtors' request, have continued this arrangement. Mr. Sheehan assures the Court that the subcontracting arrangement is beneficial to the Debtors' estate because: (i) through an integrated approach to the provision of professional services, Ernst & Young and the other EYGL member firms are able to provide a cohesive network worldwide of quality and efficiency to the Debtors; and (ii) having Ernst & Young act as the clearinghouse for invoices submitted by the EYGL member firms will be more convenient to the Debtors by allowing billing to be centralized through a single invoice that settles budgeting and foreign currency issues. The Debtors paid Ernst & Young $6,272,138 in the 90 days leading up to the Petition Date and $8,907,968 in the 12 months immediately preceding the Petition Date for Sarbanes-Oxley, valuation, and tax services. As of the Petition Date, Ernst & Young had a $72,302 outstanding balance due from the Debtors for prepetition Sarbanes-Oxley, valuation, and tax services rendered and expenses incurred. However, the Debtors made $66,746 in overpayments to the Firm on or before July 1, 2005. The overpayments when applied toward the Prepetition Balance would result in a $5,556 adjusted outstanding balance due from the Debtors for prepetition services and expenses rendered. Ernst & Young's employment by the Debtors was conditioned upon Ernst & Young waiving the Adjusted Prepetition Balance. On Nov. 1, 2005, Ernst & Young invoiced the Debtors for $649,714 on account of Sarbanes-Oxley and valuation services rendered between Oct. 8, 2005, and Oct. 31, 2005. The Firm has not received any postpetition payments from the Debtors. The Debtors and Ernst & Young agree to indemnify each other with respect to claims, causes of action, and liabilities in connection with the Engagement. However, neither party will be liable for consequential, punitive, or special damages. The total aggregate liability of Ernst & Young in connection with the services to be provided to the Debtors will be limited to three times the professional fees paid by the Debtors in respect of those services. Randall J. Miller, a partner at Ernst & Young, discloses that Latham & Watkins represented Ernst & Young in connection with its attempts to be retained in the Debtors' Chapter 11 cases prior to Latham's appointment as counsel to the Official Committee of Unsecured Creditors. Mr. Miller also informs the Court that Citigroup (Citibank, N.A.), Sun Trust Bank, Metropolitan Life Insurance Company, and Fidelity Investment Institutional Operations Company, Inc., which are parties-in-interest in the Debtors' Chapter 11 cases, are lenders to or 401(k) service providers for Ernst & Young. Ernst & Young and certain EYGL Member Firms have provided financial or tax due diligence to five entities in connection with the possible acquisitions of certain domestic and foreign affiliates of Delphi, Mr. Miller further discloses. He reports that an EYGL member firm in Belgium is currently providing certain due diligence services to an entity regarding a possible acquisition of a business segment of Delphi. Mr. Miller assures the Court that Ernst & Young and its professionals are "disinterested persons," as that term is used in Section 101(14) of the Bankruptcy Code, and are otherwise eligible to be employed under Section 327(a) of the Bankruptcy Code. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: UAW Wants to Join Unsecured Creditors Committee ------------------------------------------------------------ The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America asks the U.S. Bankruptcy Court for the Southern District of New York to direct the Office of the United States Trustee to appoint it to the Official Committee of Unsecured Creditors of Delphi Corporation and its debtor-affiliates. UAW Attorney Babette A. Ceccotti, Esq., at Cohen, Weiss and Simon LLP, in New York, relates that by letter dated October 20, 2005, the UAW asked the U.S. Trustee to reconsider its decision not to appoint the UAW to the Creditors Committee. However, the U.S. Trustee declined to change the composition of the Committee without offering any specific rationale for declining. The U.S. Trustee insisted that the UAW's claims are adequately represented by the Creditors Committee as constituted. Further efforts by the UAW to resolve the matter since December 14, 2005, have been unsuccessful. "It is perhaps understandable that the Committee is now accustomed to its current membership and does not wish [to] absorb new members," Ms. Ceccotti says. "But the Committee's collegial working relationship and its 'voting composition' do not satisfy the requirement that [it] adequately represent the diverse interests in the [Debtors' Chapter 11 cases]. Nor does the fact that the UAW may be 'well-represented' in the [Debtors' cases] bear upon whether the Committee meets the statutory requirement in the absence of UAW's participation." The UAW is the exclusive collective bargaining representative of 24,000 employees of Delphi, nearly half of the Debtors' domestic workforce, Ms. Ceccotti informs the Court. UAW-represented employees are employed in 21 facilities that manufacture and produce products ranging from automotive steering components, fuel systems, climate control systems, instrument panels, batteries and related battery components, valve trains, and electronic devices like audio systems and ignition and steering electronics. The UAW, Ms. Ceccotti adds, is the "authorized representative," as that term is defined in Section 1114(c) of the Bankruptcy Code, of approximately 9,800 retirees and their surviving spouses currently receiving collectively bargained retiree health benefits. The UAW asserts $30,025,000 in accrued vacation and other paid time off obligations, and $4,600,000,000 in retiree health insurance benefits against the Debtors. Thus, the UAW is one of the largest unsecured creditors in the Debtors' cases, Ms. Ceccotti maintains. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Creditors Panel Hires Mesirow as Financial Advisors ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in Delphi Corporation and its debtor-affiliates' chapter 11 cases requires financial advisory services. According to Terry Zale, co- chairperson of the Creditors Committee, the Committee has selected Mesirow Financial Consulting, LLC, because of its diverse experience and extensive knowledge in the field of bankruptcy. Mesirow is a wholly owned subsidiary of Mesirow Financial Holdings, Inc. By this application, the Creditors Committee sought and obtained the U.S. Bankruptcy Court for the Southern District of New York's authority to retain Mesirow, nunc pro tunc to October 19, 2005. Mesirow will: (i) assist in the review of reports or filings as required by the Bankruptcy Court or the Office of the United States Trustee, including, but not limited to, schedules of assets and liabilities, statements of financial affairs and monthly operating reports; (ii) review the Debtors' financial information, including, but not limited to, analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Bankruptcy Court approval is sought or may be sought; (iii) review and analyze the reporting regarding cash collateral and debtor-in-possession financing arrangements and budgets, including changes in the collateral base and impact on availability; (iv) assist with identifying, analyzing and evaluating potential cost containment and liquidity enhancement opportunities; (v) review and analyze the Debtors' proposed business plans and the business and financial condition of the Debtors generally, including but not limited to: (a) reviewing, analyzing and assessing the Debtors' global network in terms of operational viability and optimal utilization of assets; (b) reviewing and critiquing the Debtors' financial projections and assumptions; (c) assisting with identifying and analyzing potential operational improvement and facility utilization; (d) analyzing assumption and rejection issues regarding executory contracts and leases; (e) analyzing relationships with major customers; (f) analyzing labor and labor-related costs relative to Section 1113 and 1114 activities; (g) analyzing the impact of negotiations and potential resolution of issues with General Motors Corporation; (h) analyzing proposed plant closures and asset sales; and (i) analyzing the Debtors' financial results as compared to projected results; (vi) assist in evaluating the viability of reorganization strategies and alternatives available to the creditors; (vii) analyze enterprise, asset and liquidation values; (viii) advise and assist on tax related matters including, but not limited to, consequences of proposed plans of reorganization; (ix) assist with the claims resolution procedures, including, but not limited to, analyzing creditors' claims by type and entity; (x) assist with the review of any financial information provided in connection with the plan and disclosure statement; (xi) advise and assist the Committee and, where appropriate, participating in or attending negotiations and meetings with the Debtors and other parties-in-interest; (xii) provide litigation consulting services and expert witness testimony regarding confirmation issues, avoidance actions, claims issues or any other matters as deemed appropriate by the Committee; and (xiii) perform other functions as requested by the Committee or its counsel. Mesirow will endeavor when possible to work with the other retained professionals cases so as to avoid duplicating work or creating unnecessary work. Jefferies & Company will provide financial advisory services complementary to those provided by Mesirow. Mesirow will be paid at its customary hourly rates: Senior Managing Directors $590 to $650 Managing Directors $590 to $650 Senior Vice Presidents $480 to $570 Vice Presidents $390 to $450 Senior Associates $300 to $360 Associates $190 to $270 Paraprofessionals $140 Mesirow will also seek reimbursement for necessary expenses incurred, which will include travel, photocopying, delivery service, postage, vendor charges and other out-of-pocket expenses. The Debtors and their estates will indemnify Mesirow for any claims and liabilities in connection with the retention. Larry Lattig, senior managing director at Mesirow, discloses that Mesirow Financial Services, Inc., participated in the sale of 8.25% Cumulative Preferred Trust Securities of Delphi Trust I in 2003. Mr. Lattig, however, assures the Court that Mesirow is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mesirow Financial has established an "Ethical Wall" between Mesirow and other subsidiaries to prohibit Mesirow from sharing of confidential information concerning the Debtors with any other employees of Mesirow Financial, Mr. Lattig informs the Court. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) EAST HOT SPRINGS: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: East Hot Springs Multi-Purpose Municipal Owner's Improvement District 98-1 of Hot Springs, Arkansas c/o Alan C. King, Receiver Investment Specialties, Inc. One Innwood Circle, Suite 101 Little Rock, Arkansas 72202 Bankruptcy Case No.: 06-70041 Chapter 11 Petition Date: January 12, 2006 Court: Western District of Arkansas (Hot Springs) Debtor's Counsel: James E. Smith, Jr. Smith Akins, P.A. 400 West Capitol Avenue, Suite 1700 Little Rock, Arkansas 72201 Tel: (501) 537-5111 Fax: (501) 537-5113 Total Assets: $1,072,000 Total Debts: $2,613,322 The Debtor did not file a list of its 20 largest unsecured creditors. EATON FERRY: Case Summary & 44 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Eaton Ferry Sales & Service, Inc. 1865 Eaton Ferry Road Littleton, North Carolina 27850 Bankruptcy Case No.: 06-80033 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Eaton Ferry Too, LLC 06-80034 Eaton Ferry III, Inc. 06-80035 Type of Business: The Debtors sell boats. Eaton Ferry also offers boat servicing & storage. See http://www.eatonferry.com/ Chapter 11 Petition Date: January 10, 2006 Court: Middle District of North Carolina (Durham) Judge: William L. Stocks Debtors' Counsel: Richard M. Hutson, II, Esq. Hutson Hughes & Powell, P.A. P.O. Drawer 2252-A 300 West Morgan Street, Suite 1500 Durham, North Carolina 27702 Tel: (919) 683-1561 Fax: (919) 683-1276 Estimated Assets Estimated Debts ---------------- --------------- Eaton Ferry Sales & $1 Million to $10 Million to Service, Inc. $10 Million $50 Million Eaton Ferry Too, LLC $0 to $50,000 $1 Million to $10 Million Eaton Ferry III, Inc. $50,000 to $1 Million to $100,000 $10 Million A. Eaton Ferry Sales & Service, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Branch Banking & Trust Co. Inventory - boats $9,100,000 c/o Stephen L. Medlin & real property 1583 East 10th Street Value of security: Roanoke Rapids, NC 27870 $7,500,000 GE Commercial Distribution Inventory - boats $7,500,000 Finance Corp. Value of security: 5595 Trillium Boulevard $6,200,000 Schaumburg, IL 60192 Mercury Marine Value of security: $24,108 P.O. Box 96964 $12,000 Chicago, IL 60693 Yamaha Motor Corporation $13,237 C. E. Enterprises, Inc. $4,547 News & Observer $4,037 N.C. Dept. of Revenue $3,933 Bennington Marine Corporation $2,097 Prospect Electric $1,779 Ellett Brothers $887 Trader Web Services $630 Load Rite Trailer $578 MMAC $523 Fineline Industries $522 New Pig Corp. $457 DJ Canvas $445 American Honda Motor Co. $424 Bennett Marine $235 Jasper Engines $200 Womack Publishing Co. $103 B. Eaton Ferry Too, LLC's 9 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ GE Commercial Distribution Finance Corp. $7,500,000 5595 Trillium Boulevard Schaumburg, IL 60192 New South Communications $902 P.O. Box 580451 Charlotte, NC 282580451 Total Control Softward Corporation $500 12010 Watson Road North Little Rock, AR 721201594 BB&T $378 Bell South Advertising & Publishing $374 Cary Chamber of Commerce $340 Campbell Law Observer $160 Robalo Boats LLC $22 Chaparral Boats, Inc. $13 C. Eaton Ferry III, Inc.'s 15 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ GE Commercial Distribution Finance Corp. $7,500,000 5595 Trillium Boulevard Schaumburg, IL 60192 Eaton Ferry Sales & Service, Inc. $11,362 1895 Eaton Ferry Road Littleton, NC 27850 Chaparral Boats, Inc. $7,697 P.O. Drawer928 Nashville, GA 31639 Mercury Marine $2,337 Paradise Inn, Inc. $1,122 Smith Mountain Laker.Com Magazine $572 BB&T Bankcard Corporation $403 Total Control Software Corp. $400 Asphalt Solutions $384 Xerox $363 Eaton Ferry II $278 Campers Paradise $137 Verizon $118 R. H. Donnelley $49 BSW, Inc. $28 EPOCH INVESTMENTS: Files Schedules of Assets and Liabilities ------------------------------------------------------------ Epoch Investments, L.P., fka Empyrean Investment, L.P., delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Southern District of New York, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $7,671,360 C. Property Claimed as Exempt D. Creditors Holding $3,000,000 Secured Claims E. Creditors Holding $7,985,000 Unsecured Priority Claims F. Creditors Holding Unsecured Nonpriority Claims ------------ ------------ Total $7,671,360 $10,985,000 Headquartered in New York, Epoch Investments, L.P., fka Empyrean Investment, L.P.'s creditor, MarketXT Holdings, Inc., filed an involuntary chapter 11 petition against the company on May 12, 2005 (Bankr. S.D.N.Y. Case No. 05-13470). Alan Nisselson, Esq., at Brauner Baron Rosenzweig & Klein, LLP, is the chapter 11 Trustee of MarketXT Holdings. Gabriel Del Virginia, Esq., of New York, represents Epoch. Leslie S. Barr, Esq., at Brauner Baron Rosenzweig & Klein, LLP, represents Mr. Nisselson. MarketXT Holdings asserts a $2.5 million claim against Epoch. FOAMEX INT'L: Wants Court to OK Solicitation and Voting Procedures ------------------------------------------------------------------ As previously reported, Foamex International Inc., and its debtor- affiliates filed their Plan of Reorganization on Dec. 23, 2005, and a hearing to consider the adequacy of their Disclosure Statement explaining the Plan is scheduled for Jan. 26, 2006. Concurrent with the recent filing of their Chapter 11 Plan and the Disclosure Statement Hearing, the Debtors ask the Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware to approve a set of uniform noticing, balloting, voting and tabulation procedures to be used in connection with asking creditors to vote to accept the Plan. Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, reminds Judge Walsh that Bankruptcy Services LLC is the Debtors' notice and claims agent in their Chapter 11 cases. In that capacity, Bankruptcy Services will inspect, monitor and supervise the solicitation process, serve as the tabulator of the ballots and certify to the Court the voting results. Pursuant to Rule 3017(d) of the Federal Rules of Bankruptcy Procedure, the Debtors propose that the date the Court enters an order approving their Disclosure Statement be established as the record date for determining which creditors are entitled to vote on the plan and receive the solicitation forms and the ballots. No later than 10 days after the Disclosure Statement Approval Order is entered, the Debtors will transmit by first-class mail to creditors entitled to vote on the Plan a solicitation package containing copies of: (a) a written notice of: -- the Court's approval of the Disclosure Statement; -- the deadline for voting on the Plan; -- the date of the hearing to consider confirmation of the Plan; and -- the deadline and procedures for filing objections to the confirmation of the Plan; (b) the Plan and the Disclosure Statement; (c) a ballot, together with a self-addressed return envelope; (d) the Court's order approving the Disclosure Statement and the Solicitation Procedures Request; and (e) a letter on behalf of the Steering Committee of the Ad Hoc Committee of Senior Secured Noteholders in support of the Plan. According to Ms. Morgan, on or before February 7, 2006, the Debtors will publish the Solicitation Notice in: * The Wall Street Journal; * New York Times; or * USA Today. The Debtors will distribute to voting creditors one or more ballots in the form of Official Form No. 14, which has been modified to address the particular aspects of the Debtors' Chapter 11 cases and which include certain additional information that they believe to be relevant and appropriate for each class of claims. The Ballots will be distributed to holders of Claims in Classes 3 to 5: Ballot No. 1 Ballot for holders of Class 3 Claims that are beneficial owners but not record holders. Ballot No. 2 Master Ballot for holders of Class 3 Claims that are beneficial owners but not record holders. Ballot No. 3 Ballot for holders of Class 3 Claims that are both beneficial owners and record holders. Ballot No. 4 Ballot for holders of Class 4 Claims that are beneficial owners but not record holders. Ballot No. 5 Master ballot for holders of Class 4 Claims that are beneficial owners but not record holders. Ballot No. 6 Ballot for holders of Class 4 Claims that are both beneficial owners and record holders. Ballot No. 7 Ballot for holders for Class 4 Claims that are beneficial owners but not record holders. Ballot No. 8 Master ballot for holders of Class 4 Claims that are beneficial owners but not record holders. Ballot No. 9 Ballot for holders of Class 4 Claims that are both beneficial owners and record holders. Ballot No. 10 Ballot for holders of Class 5 Claims. The Debtors ask the Court to direct the banks, brokerage firms or agents through which beneficial owners hold notes to forward the Solicitation Packages to the beneficial owners for voting. The bank, brokerage firm or agent will then summarize the individual votes of its beneficial owners from their individual ballots on a master ballot. Ms. Morgan relates that this procedure adequately recognizes the complex structure of the securities industry, enables the Debtors to transmit materials to the Noteholders and affords beneficial owners a fair and reasonable opportunity to vote. The Debtors will no longer transmit ballots to the known holders of Administrative Claims, Priority Tax Claims, DIP Financing Claims, Other Priority Claims (Class 1), Other Secured Claims (Class 2), Intercompany Claims (Class 6) and Equity Interests in Surviving Debtor Subsidiaries (Class 7) since these claimants and equity interest holders are unimpaired. Similarly, no ballots will be sent to holders of Old Preferred Stock (Class 8), Subordinated Claims (Class 9A), and Old Common Stock and Other Equity Interests (Class 9B) since they are not entitled to receive any distributions and are presumed to have rejected the Plan. Ms. Morgan says that any Unimpaired Party is entitled to receive a copy of the Plan and Disclosure Statement on written request to Bankruptcy Services or through the voting agent's Web site at http://www.bsillc.com/ For the Ballots to be counted, they must be completed, properly executed, and transmitted to Bankruptcy Services so as to be received no later than March 23, 2006, at 4:00 p.m. Solely for the purpose of voting to accept or reject the Plan, and not for the purpose of allowance or distribution on account of a claim, the Debtors propose that the amount of a claim used to tabulate a vote should either be: (i) the claim amount listed in the Debtors' Schedules of Liabilities, provided that the claim is not contingent, unliquidated or disputed, and that no inconsistent proof of claim has been timely filed; (ii) the non-contingent and liquidated amount specified in a timely filed proof of claim, to the extent that claim is not subject to an objection; or (iii) the amount temporarily allowed by the Court for voting purposes, pursuant to Bankruptcy Rule 3018(a), after a request is brought and a hearing is held prior to the Confirmation Hearing. Ms. Morgan explains that if a creditor casts a Ballot and the relevant claim is the subject of an objection or a request for estimation, the Debtors propose, in accordance with Rule 3018 that the creditor's Ballot will not be counted unless temporarily allowed by the Court for voting purposes. However, if the Debtors' objection to a claim seeks a reclassification or reduction, the claimant's Ballot will be counted. Ballots cast by alleged creditors whose claims are not listed on the Debtors' Schedules or are listed as disputed, contingent or unliquidated, but are timely filed, will have their Ballots counted toward satisfying Section 1126(c) of the Bankruptcy Code. Creditors whose claims are listed in the Debtors' Schedules, but who have not timely filed their proofs of claim, will not be entitled to a Ballot, Ms. Morgan points out. In addition, the Debtors propose that these voting procedures and standard assumptions be used in tabulating the Ballots: 1. Separate claims held by a single creditor in a particular class will be aggregated as if the creditor held one claim against the Debtors in such class, and the votes related to the claims will be treated as a single vote; 2. A Ballot that partially rejects and partially accepts the Plan will not be counted; 3. Ballots that fail to indicate an acceptance or rejection of the Plan or that indicate both acceptance and rejection of the Plan will not be counted; 4. Only Ballots that are timely received with original signatures will be counted; 5. Ballots sent through facsimile or e-mail will not be counted unless there is written consent from the Debtors; 6. If a creditor casts more than one Ballot voting the same claim, the last Ballot received by Bankruptcy Services will be deemed to reflect the voter's intent and will supersede all prior Ballots; 7. Ballots received after the Voting Deadline will not be counted unless there is an extension of the Voting Deadline with respect to that Ballot; 8. The Debtors may, but are not required to, accept corrected Ballots to cure any defect after the Voting Deadline; and 9. Beneficial Owner Ballots delivered directly to Bankruptcy Services and not included in the summary contained in Master Ballots will not be counted. Banks and brokerage firms are required to retain for inspection purposes the original individual Beneficial Owner Ballots for one year following the effective date of the Plan. The Debtors ask the Court to schedule the Confirmation Hearing on April 7, 2006, at 10:00 a.m. The Debtors propose that any objections to the confirmation of the Plan must: -- be in writing; -- specify in detail the name and address of the objector, all grounds for the objection, and the amount of the claims or other interests held by the objector; and -- be filed so as to be received by the Court and the parties requesting to receive notice before March 23, 2006, at 4:00 p.m. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945- 7000) FOAMEX INT'L: U.S. Trustee Amends Creditors Committee Membership ---------------------------------------------------------------- Kelly Beaudin Stapleton, the United States Trustee for Region 3, appoints Steel Partners II, LP, to the Official Committee of Unsecured Creditors in Foamex International Inc., and its debtor- affiliates' Chapter 11 cases after Core Wealth Management -- represented by Andy Mitchell -- resigned as member. The Creditors Committee is now composed of: 1. Stuart Kratter Bank of New York 101 Barclay Street, 8W New York, New York 10286 Tel No.: (212) 815-5466 Fax No.: (212) 815-5131 2. Dana Cann Financial Analyst Pension Benefit Guaranty Corporation 1200 K. Street, NW-Ste 340 Washington, DC 20005-4026 Tel No.: (202) 326-4020x3062 Fax No.: (202) 326-4112 3. Mark E. Schwarz Newscastle Partners, LP 300 Crescent Court, Ste. 1110 Dallas, TX 75201 Tel No.: (214) 661-7474 Fax No.: (214) 661-7475 4. J. Donald Hamilton Lyondell Chemical Corporation 1221 McKinney Street One Houston Center, Ste. 700 Houston, TX 77010 Tel No.: (713) 309-4980 Fax No.: (713) 652-4542 5. Candida Wolfram Shell Chemical LP 910 Louisiana Street, 1454B Houston, TX 77002 Tel No.: (713) 241-4181 Fax No.: (713) 241-0372 6. Donovan Williams 439 Fairview Avenue Coventry, RI 02816 Tel No.: (401) 615-2861 7. Jack Howard Steel Partners II, LP 590 Madison Avenue, 32nd Floor New York, NY 10022 Tel No.: (212) 520-2308 Fax No.: (212) 758-5789 Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INT'L: Creditors Panel Wants to Hire Kearney as Consultant ----------------------------------------------------------------- The Official Committee of Unsecured Creditors and its advisors in Foamex International Inc., and its debtor-affiliates' chapter 11 cases are focused on determining the true cash flow generation capability of the Debtors' business and in assessing the degree of reasonableness and reliability of the Debtors' projected financial results which are central to their assumed enterprise valuation. The Creditors Committee aims to complete a comprehensive operational improvement assessment of the Debtors' Dec. 1, 2005, business plan. The Creditors Committee relates that this project is intended to last five to six weeks and will provide highly valuable deliverables to the Committee, the Debtors and other creditors of the bankruptcy estates. Thus, Donald J. Detweiler, Esq., at Saul Ewing LLP, in Wilmington, Delaware, tells the U.S. Bankruptcy Court for the District of Delaware that the Creditors Committee needs a consultant to assist it in time-critical tasks associated with analyzing and assessing the Debtors' business, including quantifying the savings and improvement potential available to them. By this application, the Creditors Committee seeks the Court's authority to retain A.T. Kearney, Inc., as its business operational consultant. Mr. Detweiler informs the Honorable Peter J. Walsh of the District of Delaware Bankruptcy Court that A.T. Kearney is a leading global management consulting firm, which provides assessments and analyses across strategic, organizational, operational and technological boundaries and has expertise in numerous fields including consumer products and retail, process industries and automotive and transportation. The Creditors Committee expects A.T. Kearney to focus on assessing improvement opportunities and quantifying savings in three areas: supply chain, manufacturing and selling, general and administrative. Specifically, pursuant to an engagement letter between the parties, the firm will: (a) conduct a comprehensive review of the Business Plan; (b) identify specific initiatives and opportunities that could improve the Debtors' operating performance; (c) quantify potential benefits associated with the new initiatives and validate anticipated benefits associated with existing initiatives; (d) assess the impact of new initiatives on the Debtors' ability to maintain and grow their customer base; and (e) prioritize initiatives with respect to estimated economic benefit, time to realize benefits and cost of implementation. Mr. Detweiler says that A.T. Kearney's engagement with the Creditors Committee will be complete in six weeks provided that the Debtors cooperate and no unexpected events occur. Under the Engagement Letter, A.T. Kearney will be paid a $500,000 flat fee. The firm will also be reimbursed for actual out-of- pocket expenses not exceeding 10% of the Flat Fee. Doug Harvey, Vice President of A.T. Kearney, assures the Court that the firm does not represent any interests adverse to the Debtors or their estates and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. However, Mr. Harvey discloses that A.T. Kearney is a subsidiary of EDS, a creditor of the Debtors. In the fourth quarter of 2005, EDS disclosed its intent to sell A.T. Kearney to a group led by A.T. Kearney officers. The close of the transaction is expected to take place within January 2006. Mr. Harvey attests that A.T. Kearney does not and will not represent EDS. Mr. Detweiler informs the Court that some portions of the factual information attached to the Retention Application are confidential. Hence, the Creditors Committee also seeks the Court's authority to file some exhibits under seal. In addition, the Creditors Committee asks the Court to schedule a hearing on the Retention Application on January 26, 2006, as the results of the project to be led by A.T. Kearney are critical at the confirmation hearing. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) FREEDOM RINGS: Gets Open-Ended Deadline to File Notices of Removal ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware gave Freedom Rings, LLC, until May 15, 2006, or 30 days after the entry of an order terminating the automatic stay, the time within which it can file notices of removal with respect to pre-petition civil actions pursuant to 28 U.S.C. Section 1452 and Rules 9006(b) and 9027 of the Federal Rules of Bankruptcy Procedure. The Debtor gave the Court three reasons supporting the extension: 1) since the petition date, the Debtor's time and efforts was focused on stabilizing its post-petition operations, assessing the viability of its franchise locations and determining whether to assume or reject leases for certain franchise locations, business equipment and vehicles; 2) it will give the Debtor more opportunity to make fully- informed decisions about the removal of the civil actions and assure it does not forfeit valuable rights under 28 U.S.C. Section 1452; and 3) the Debtor's adversaries in the pre-petition civil actions will not be prejudiced because any party to a civil action that is removed may seek to have it remanded to the state court pursuant to 28 U.S.C. Section 1452(b). Headquartered in Winston-Salem, North Carolina, Freedom Rings LLC is a majority-owned subsidiary and franchisee partner of Krispy Kreme Doughnuts, Inc., in the Philadelphia region. The Debtor operates six out of the approximately 360 Krispy Kreme stores and 50 satellites located worldwide. The Company filed for chapter 11 protection on Oct. 16, 2005 (Bankr. D. Del. Case No. 05-14268). M. Blake Cleary, Esq., Margaret B. Whiteman, Esq., and Matthew Barry Lunn, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $10 million to $50 million in assets and debts. GMAC COMMERCIAL: Fitch Junks Rating on $2.7MM Class O Certificates ------------------------------------------------------------------ GMAC Commercial Mortgage Securities, Inc.'s mortgage pass-through certificates, series 2001-C1 are downgraded by Fitch Ratings: -- $4.3 million class M to 'B-' from 'B'; -- $4.3 million class N to 'CC' from 'B-'; -- $2.7 million class O to 'C' from 'CC'. In addition, Fitch affirms the following classes: -- $25 million class A-1 at 'AAA'; -- $546.8 million class A-2 at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- $41 million class B at 'AA+'; -- $32.4 million class C at 'A+'; -- $13 million class D at 'A'; -- $17.3 million class E at 'BBB+'; -- $13 million class F at 'BBB'; -- $13 million class G at 'BBB-'; -- $25.9 million class H at 'BB+'; -- $6.5 million class J at 'BB'; -- $6.5 million class K at 'BB-'; -- $13 million class L at 'B+'. Class P has been fully depleted by realized losses. The downgrades of classes M through O reflect decreased subordination levels due to expected losses from the specially serviced assets and the 10.2% increase in Fitch Loans of Concern since Fitch's last rating action. Fitch expects losses to continue to erode the principal balance of class O. As of the December 2005 distribution date, the pool's aggregate principal balance has been reduced 11.5%, to $764.7 million from $864.1 million at issuance. Seven loans have already defeased. Realized losses total $14.5 million to date. Fitch has identified 20 loans as Fitch Loans of Concern, which include the specially serviced assets and loans exhibiting low debt service coverage ratios or low occupancy. Currently, two assets are in special servicing. The largest specially serviced loan is secured by a 162-unit multifamily property in Charlotte, North Carolina and is 90+ days delinquent. The loan transferred to the special servicer in July 2005 due to monetary default. The borrower has requested debt service relief due to negative cash flow at the property. The second largest specially serviced asset is a 142-unit multifamily property located in Irving, Texas and is real estate-owned. The special servicer is marketing the asset for sale. Based on the most recent appraisal value, losses are expected upon liquidation. GREYSTONE LOGISTICS: Amends Fiscal Year 2005 Annual Report ---------------------------------------------------------- On Aug. 26, 2005, Greystone Logistics, Inc.'s Board of Directors concluded that the accounting treatment for the acquisition of the assets of Greystone Plastics, Inc., as of Sept. 8, 2003, should have provided for an allocation of a portion of the purchase price to place a value on a customer contract in effect at the time of the acquisition. Greystone calculated this value to be $2,855,332 based on the estimated present value of the future profits to be derived from sales to such customer. Further, the accounting treatment for the value of the customer contract should provide for the amortization of such cost over the estimated life based on unit sales. Restated Fiscal 2005 Results In its restated financial results for the fiscal year ended May 31, 2005, Greystone reported a $10,421,825 net loss on $9,305,534 of sales, as compared to a $3,854,853 net loss on $6,964,943 of sales for the same period in the prior year. The Company's balance sheet showed $9,476,103 in total assets at May 31, 2005 and liabilities of $13,761,638, resulting in a stockholders' deficit of approximately $4,285,535. Going Concern Doubt Murrell, Hall, Mcintosh & Co., PLLP, expressed substantial doubt about Greystone's ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended May 31, 2005 and 2004. The auditing firm pointed to the Company's significant losses from operations, lack of adequate funding to maintain working capital and stockholders' deficits at May 31, 2005. Headquartered in Tulsa, Oklahoma, Greystone Logistics, Inc., through its wholly owned subsidiaries Greystone Manufacturing, LLC, and Plastic Pallet Production, Inc. -- http://www.palweb- plwb.com/ -- is engaged in the manufacture and marketing of plastic pallets. HIGH SCHOOL: Case Summary & 14 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: High School Sports Publications, Inc. P.O. Box 1557 Crown Point, Indiana 46308 Bankruptcy Case No.: 06-60060 Type of Business: The Debtor specializes in news covering high school athletics. See http://www.hssp.cc/ Chapter 11 Petition Date: January 13, 2006 Court: Northern District of Indiana (Hammond Division) Judge: J. Philip Klingeberger Debtor's Counsel: Lambert C. Genetos, Esq. Kopko Genetos & Retson LLP 8585 Broadway, Suite 480 Merrillville, Indiana 46410 Tel: (219) 755-0400 Fax: (219) 755-0410 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Daniel J. Swift Guarantor of Debtor $381,220 939 High Meadows Drive Crown Point, IN 46307 Janice K. Swift Guarantor of Debtor $381,220 939 High Meadows Drive Crown Point, IN 46307 HFS Bank Loan $310,281 P.O. Box 487 555 East 3rd Street Hobart, IN 46342 Premier Print Trade Debt $117,310 118 South Clinton Street Chicago, IL 60661 Bank Calumet Loan $91,200 Paul R. Condry Guarantor of Debtor $91,220 Tonja E. Condry Guarantor of Debtor $91,220 Migone Communications Trade Debt $57,704 Dickmyer & Company Trade Debt $48,000 PBCC Rejected Lease $32,220 Pitney Bowes Trade Debt $18,885 Office Depot Trade Debt $10,927 Chase Corporate Services Credit Card $6,126 Sam's Club Trade Debt $4,977 HIRSH INDUSTRIES: Has Until April 3 to Remove Civil Actions ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana extended Hirsh Industries, Inc., and its debtor-affiliates' period, until April 3, 2006, within which they can remove prepetition civil actions. The Debtors told the Court that they have concentrated on the preparation of a chapter 11 plan and related negotiations. Thus, they were unable to determine which prepetition actions to remove. The extension will give the Debtors more time to make fully- informed decisions concerning removal of each action and will assure that they don't forfeit valuable rights under section 1452 of the Bankruptcy Code. Headquartered in Des Moines, Iowa, Hirsh Industries, Inc., manufactures storage and organizational products. Hirsh Industries' products include metal filing cabinets, metal shelving, wooden ready-to-assemble organizers and workshop accessories and retail store fixtures. The Company and two affiliates filed for chapter 11 protection on July 6, 2005 (Bankr. S.D. Ind. Case Nos. 05-12743 through 05-12745). Paul V. Possinger, Esq., at Jenner & Block LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated between $1 million to $10 million in assets and between $50 million to $100 million in debts. HOME INTERIORS: Debtholders & Shareholders OK Debt Restructuring ---------------------------------------------------------------- Home Interiors & Gifts, Inc., reached an agreement in principle with Highland Capital Management, L.P., which controls the majority of Home Interiors' outstanding senior and senior subordinated indebtedness and its principal shareholders with regard to the terms of a comprehensive debt restructuring that would, if successful, reduce the level of its outstanding indebtedness and provide for near term operating flexibility under its senior credit facility. Any restructuring remains subject to various closing conditions. "With the support of our largest creditor and our principal shareholders, I believe this agreement in principle enables us to move to a restructuring that will allow the company to execute on our long-term business plan and support our Decorating Consultants and Employees," stated Mike Lohner, CEO of Home Interiors. In connection with the execution of the agreement in principle, Home Interiors obtained the requisite consent of affiliates of Highland, as the holder of a majority of Home Interiors' outstanding 10-1/8% senior subordinated Notes due 2008 to amend the indenture governing the Notes to delete the requirement that Home Interiors continue to file certain reports with the Securities and Exchange Commission, including Forms 10-K, 10-Q and 8-K. Accordingly, after determining that it had fewer than 300 holders of Notes, Home Interiors today filed with the SEC a Form 15 suspending its obligation to continue to file periodic and other reports with the SEC. Home Interiors expects to achieve ongoing cost savings by terminating its reporting obligations. Home Interiors & Gifts, Inc. -- http://www.homeinteriors.com/-- is a member of the Direct Selling Association, and markets exclusive home decorative products through non-employee, independent decorating consultants in the United States, Puerto Rico, Mexico and Canada. Home Interiors & Gifts' premium brands include Thomas Kinkade(R), Boehm at Home(TM) and the Better Homes and Gardens Collection(R). * * * Moody's Investors Service's rated the company's 10-1/8% Senior Subordinated Notes due 2008 at Ca. JACOB LAUFER: Case Summary & Largest Unsecured Creditor ------------------------------------------------------- Debtor: Jacob Laufer 86-03 66th Avenue Rego Park, New York 11374 Bankruptcy Case No.: 06-40070 Chapter 11 Petition Date: January 11, 2006 Court: Eastern District of New York (Brooklyn) Debtor's Counsel: M. David Graubard, Esq. Kera & Graubard 240 Madison Avenue, 7th Floor New York, New York 10016 Tel: (212) 681-1600 Fax: (212) 681-1601 Total Assets: $2,002,038 Total Debts: $1,643,500 Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ New York City Transit Authority $500 Transit Adjudication Bureau 130 Livingston Street Brooklyn, NY 11201 LEAR CORP: Moody's Affirms Ba2 Corporate Family & Notes' Ratings ---------------------------------------------------------------- Moody's Investors Service affirmed the long term debt ratings of Lear Corporation, Corporate Family and Senior Unsecured at Ba2, and revised the company's rating outlook to negative from stable. The action flows from lowered expectations and limited visibility of North American production volumes from its two largest customers, GM and Ford, beyond what was contemplated in the existing rating as well as ongoing challenges to the company's profitability and cash flows. In addition to uncertain production volumes, pressure on the company's debt protection measures is anticipated to develop from: * the mix of vehicles which are produced; * margin pressure from elevated raw material costs and agreed customer price-downs; and * disbursements associated with the company's previously announced restructuring plans. Ratings affirmed: * Corporate Family, Ba2 * Senior Unsecured Notes, Ba2 * Shelf registration for senior unsecured, subordinated, and preferred at (P)Ba2, (P)Ba3, and (P)B1 respectively Lear filed a Form 8-K with the SEC on Jan. 11, 2006 covering: * an additional impairment charge to the carrying value of goodwill related to its Interior segment; * initiation of an analysis to determine a potential need for a valuation allowance against its U.S. deferred tax assets; and * certain income statement effects of consolidating two domestic joint ventures into its consolidated 2005 results. The incremental goodwill impairment charge reflects a deterioration of the commercial outlook for the interiors segment. The potential need for a valuation allowance against the U.S. deferred tax assets similarly arises from the company's operating performance and current industry conditions. While neither charge will involve cash disbursements, they are emblematic of the very challenging environment facing Lear's North American operations. These conditions have deteriorated beyond those envisaged in July 2005 when the company's Corporate Family rating was lowered to Ba2 from Baa3. Visibility of results for 2006 and beyond is also hindered by uncertainties and elevated risks at GM and Ford whose North American operations collectively represented 43% of 2004 revenues. The ratings outlook for both GM and Ford is currently negative, which, in part, incorporates pressure on their respective performance from lower volumes in their truck and SUV product offerings. The latter segments continue to be important contributors to Lear's revenue and operating profitability. On balance, the rating agency expects the combination of these factors to negatively impact Lear's credit metrics over the intermediate term. Developments that could result in lower ratings include: * evidence of delays in achieving free cash flow generation; * debt/EBITDA deteriorating beyond 3.5 times; or * EBIT/Interest coverage consistently below 2 times. Factors that could lead to a stable outlook include: * achieving and sustaining free cash flow to debt greater than 8%; and * EBIT/Interest coverage maintained at 3 times or higher. Lear Corporation, headquartered in Southfield, Michigan, is an integrator of automotive interiors, including: * seat systems, * interior trim, and * electrical systems. The company had revenues of $17 billion in 2004 and has more than 110,000 employees in 34 countries. LB-UBS: S&P Assigns Low-B Ratings to $49 Million Cert. Classes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to LB-UBS Commercial Mortgage Trust 2006-C1's $2.46 billion commercial mortgage pass-through certificates series 2006-C1. The preliminary ratings are based on information as of Jan. 12, 2006. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying mortgage loans, and the geographic and property type diversity of the loans. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.48x, a beginning LTV of 97.9%, and an ending LTV of 90.2%. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web-based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on Standard & Poor's Web site at http://www.standardandpoors.com/ Select Credit Ratings, and then find the article under Presale Credit Reports. Preliminary Ratings Assigned LB-UBS Commercial Mortgage Trust 2006-C1 Recommended Class Rating Amount credit support ----- ------ ------ -------------- A-1 AAA $64,000,000 30.000% A-2 AAA $326,000,000 30.000% A-3 AAA $92,000,000 30.000% A-AB AAA $94,000,000 30.000% A-4 AAA $1,143,176,000 30.000% A-M AAA $245,597,000 20.000% A-J AAA $221,037,000 11.000% B AA+ $15,350,000 10.375% C AA $27,630,000 9.250% D AA- $24,559,000 8.250% E A+ $18,420,000 7.500% F A $21,490,000 6.625% G A- $21,489,000 5.750% H BBB+ $24,560,000 4.750% J BBB $18,420,000 4.000% K BBB- $24,560,000 3.000% L BB+ $12,279,000 2.500% M BB $9,210,000 2.125% N BB- $9,210,000 1.750% P B+ $6,140,000 1.500% Q B $6,140,000 1.250% S B- $6,140,000 1.000% T NR $24,560,106 N/A IUU-1 NR $7,200,282 N/A IUU-2 NR $2,578,126 N/A IUU-3 NR $3,551,311 N/A IUU-4 NR $1,866,194 N/A IUU-5 NR $1,276,095 N/A IUU-6 NR $908,999 N/A IUU-7 NR $960,210 N/A IUU-8 NR $1,015,875 N/A IUU-9 NR $1,076,524 N/A IUU-10 NR $6,859,925 N/A R-I NR N/A N/A R-II NR N/A N/A R-III NR N/A N/A X-CP* AAA $2,250,748,000 N/A X-CL* AAA $2,455,967,106 N/A * Interest-only class with a notional dollar amount. NR -- Not rated. N/A -- Not applicable. LMM DEVELOPMENT: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: LMM Development, Inc. 12054 South Shannel Circle Riverton, Utah 84065 Bankruptcy Case No.: 06-20068 Chapter 11 Petition Date: January 11, 2006 Court: District of Utah (Salt Lake City) Judge: Judith A. Boulden Debtor's Counsel: Gregory J. Adams, Esq. McKay, Burton & Thurman 170 South Main Street, Suite 800 Salt Lake City, Utah 84101 Tel: (801) 521-4135 Fax: (801) 521-4252 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Leonard M. McKneely Loan $18,000 1024 Bell Canyon Drive Sandy, UT 84070 Marilyn S. Gilmore Loan $15,000 12054 South Shannel Circle Riverton, UT 84065 Spectrum Newspaper Advertising $6,387 275 East Street, George Boulevard Saint George, UT 84770 Closet Concepts, Inc. Closet components $5,300 292 North 2230 East Saint George, UT 84790 Riverwoods Mill Hardware $3,760 316 East 1400 South, Suite A1 Saint George, UT 84790 Titan Stairs & Trim Staircase $3,371 2013 East Middleton Saint George, UT 84770 MAAX HOLDINGS: Posts $12.98 Million Net Loss in Third Quarter ------------------------------------------------------------- MAAX Holdings, Inc. reported earnings for the third quarter ended Nov. 30, 2005. Net sales for the third quarter of fiscal 2006 remained flat against the same period last year at $131.5 million. Net sales in the company's bathroom sector increased by 2.2% against last year to $107 million, but this increase has been offset by a similar reduction in the combined net sales of our cabinetry and spa sectors. Operating income for the third quarter of fiscal 2006 decreased $9.3 million, from $13.6 million for the three months ended Nov. 30, 2004, to $4.3 million for the three months ended Nov. 30, 2005. For the three months ended Nov. 30, 2005, the company incurred a net loss of $12,983,000 compared to net income of $1,910,000 for the three months ended Nov. 30, 2004. Net sales for the nine months ended Nov. 30, 2005, increased 1.7% to $406.9 million from net sales of $400.1 million for the nine months ended Nov. 30, 2004. Operating income for the nine months ended Nov. 30, 2005 decreased $24.5 million, from $45 million for the nine months ended Nov. 30, 2004, to $20.5 for the nine months ended Nov. 30, 2005. Lower consolidated operating income results from a significant increase in the cost of certain raw material, from negative variance in the change in fair market value of foreign exchange contracts and from lower profitability in our kitchen and spa sectors. Free cash flow -- cash flow related to operating activities minus capital spending net of asset disposal -- for the third quarter of fiscal year 2006 was $13.7 million and $37.6 million for the nine months ended Nov. 30, 2005. This is a significant improvement over the previous year and results from a reduction of investment in the company's working capital year over year. Total net debt (long term debt less cash and cash equivalents of $12.6 million as of November 30, 2005) amounted to $447.5 million as of Nov. 30, 2005 compared to $467.8 million as of Feb. 28, 2005, a $20.3 million reduction. MAAX Holdings, Inc. -- http://www.maax.com/-- is a leading North American manufacturer of award-winning bathroom products, kitchen cabinets and spas for the residential housing market. The Corporation is committed to offering its customers an enjoyable experience: distinctive, stylish and innovative products and the best customer service practices in the industry. MAAX offerings are available through plumbing wholesalers, bath, kitchen and spa specialty boutiques and home improvement centers. The Corporation currently employs more than 3,250 people in 24 manufacturing facilities and distribution centers throughout North America and Europe. MAAX Corporation is a subsidiary of Beauceland Corporation, itself a wholly owned subsidiary of MAAX Holdings, Inc. * * * As reported in the Troubled Company Reporter on Dec. 27, 2005, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Quebec-based, bathroom fixtures manufacturer MAAX Holdings Inc. to 'B-' from 'B'. At the same time, Standard & Poor's lowered the rating on the company's senior discount notes to 'CCC'. In addition, the ratings on subsidiary, MAAX Corp., including the secured bank facility were lowered to 'B-' from 'B', and its senior subordinated debt rating to 'CCC' from 'CCC+'. The outlook was revised to negative. MATERIAL SCIENCES: Earns $2.2 Million in 3rd Qtr. Ended Nov. 30 --------------------------------------------------------------- Material Sciences Corporation (NYSE: MSC) reported results for the third quarter and first nine months of fiscal 2006, ended Nov. 30, 2005. Results from continuing operations exclude the results of the company's Electronic Materials and Devices Group, which was divested on June 20, 2005, and is reported as a discontinued operation in the third quarter and year-to-date fiscal 2006 financial statements. The same periods for the prior year results of operations have been reclassified to reflect EMD as a discontinued operation. Net sales for the third quarter of fiscal 2006 were $74.8 million, up 11.7% compared to sales of $67 million for the third quarter of fiscal 2005. In the third quarter, gross profit declined by 11.9% to $13.1 million, or 17.5% of sales, from $14.9 million, or 22.2% of sales in fiscal 2005. Income from continuing operations for the three months was $2.3 million, compared with income from continuing operations of $3.4 million, last year. Net income for the three months was $2.2 million, compared with net income of $2.4 million, in the same period last year. "The double digit increase in sales during the quarter reflected strength in our Quiet Steel business, which grew more than 30 percent as an increasing number of automotive models using our products came to market, but was partially offset by reduced volumes in our coil coating business," Clifford D. Nastas, chief executive officer for Material Sciences, said. "While our gross profit declined due to a combination of operating factors and rising energy costs, we continued to implement supply chain management, Six Sigma and lean manufacturing improvement programs that are designed to reduce operating costs and improve margins." Nine-month Results For the first nine months of fiscal 2006, net sales were $222.2 million, up 11.5% from $199.4 million for the same period last year. Income from continuing operations for the nine months was $7.9 million, compared with $4.4 million, in the comparable period of a year-ago. Net income for the nine months ended Nov. 30, 2005, was $5.9 million, compared with $1.6 million for the same period last year. Adjustment to Preliminary Second Quarter Fiscal 2006 Results As the result of an update received in late December 2005 regarding an increase in the projected costs of remediation work at a Superfund site in Gary, Indiana, the company recorded an additional charge of $500,000 in the second quarter of fiscal 2006 from the preliminary results reported on Dec. 5, 2005. The updated report indicated that the projected remediation costs would increase due primarily to an expected increase in the duration of the remediation project, higher energy costs associated with certain remediation techniques, and increased oversight costs of the United States Environmental Protection Agency. Material Sciences Corporation - http://www.matsci.com/-- is a leading provider of material-based solutions for acoustical and coated metal applications. MSC uses its expertise in materials, which it leverages through relationships and a network of partners, to solve customer-specific problems, overcoming technical barriers and enhancing performance. MSC differentiates itself on the basis of its strong customer orientation, knowledge of materials combined with the offer of specific value propositions that define how it will create and share economic value with its customers. The company's stock is traded on the New York Stock Exchange under the symbol MSC. * * * As reported in the Troubled Company Reporter, Material Sciences Corp. identified a material weakness in internal controls over accounting for income taxes as a result of the evaluation and testing the company undertook as required under Section 404 of the Sarbanes Oxley Act. In effect, Material Sciences Corp. restated prior period financial statements on Form 10-K/A to correct its accounting for income taxes. MATRIA HEALTHCARE: Moody's Affirms $485 Mil. Debts' Low-B Ratings ----------------------------------------------------------------- Moody's Investors Service affirmed Matria Healthcare, Inc.'s B1 corporate family rating and assigned ratings to the company's proposed first and second lien credit facilities. Despite the significant increase to financial leverage as a result of Matria's pending $445 million acquisition of CorSolutions Medical, Inc., a privately-held provider of disease management solutions, the ratings affirmation reflects an expectation of relatively low integration risk and rapid debt reduction in the near term. The ratings also acknowledge: * solid organic growth; * improving margins and scale; and * sharper focus on its core business pro forma for the intended acquisition and the company-announced plan for divesting Matria's Facet and Dia Real businesses. The change in the ratings outlook to negative from stable reflects the immediate need to reduce financial leverage and to improve free cash flow generation. Pro forma credit statistics are stretched for the rating category, and there is little cushion to absorb any shortfalls under Moody's expectations. Rating affirmed: * Corporate Family Rating -- B1 Ratings assigned: * $30 million senior secured first lien revolver due 2011, B1 * $245 million senior secured first lien Term Loan B due 2012, B1 * $125 million senior secured first lien Term Loan C due 2007, B1 * $85 million senior secured second lien Term loan due 2012, B3 * The ratings outlook has been changed to negative from stable. The ratings are subject to review of final documentation. The affirmation of the B1 corporate family rating incorporates Moody's expectation that Matria will continue to report organic, pro forma annual sales growth of at least 15% and stable EBIT margins over the near to medium term while improving operating cash flow generation. The rating also reflects the expectation that Matria will maintain adequate liquidity and positive free cash flow on a quarterly basis pro forma for the acquisition. Positive factors reflected in the ratings include: * strong growth in the disease management business; * the company's intended divestiture of its non-core; * lower margin, slow growth diabetes businesses; and * Matria's improved scale as one of the U.S.'s largest disease management and wellness businesses. The recent announcement that the company had reached a verbal agreement on a $10 million settlement related to the qui tam action filed against the company, which alleged improper claims practices for Medicare payments by the company's divested Diabetes Self Care, Inc. subsidiary, also supports the rating. The ratings remain constrained by nominal near-term cash flow generation relative to the total debt burden, high initial financial leverage, and potentially increasing competition in the disease management business. The ratings incorporate concerns about: * the company's ability to sustain growth; * integration risk associated with CorSolutions, Matria's largest acquisition to date; * Matria's comparatively small size (consolidated pro forma revenue of approximately $300 million); and * negative long term trends in the Women's and Children's Health segment, which over the past several years has experienced falling reimbursement rates and a decreasing patient census. Moody's notes that Matria's near-term free cash flow generation will be constrained by: * the recently announced $10 million qui tam claim settlement; * cash payments related to headcount reductions as part of the CorSolutions acquisitions; and * expected earnout payments related to Matria's previous Miavita and Winning Habits acquisitions. The CorSolutions acquisition and subsequent asset divestiture are expected to transform Matria into a pure-play disease management company with significant scale, and dramatically transform the company's capital structure (the company currently has nominal debt). While leverage is initially high for the B1 rating category, Moody's believes this condition is temporary. The company has publicly stated its immediate intent to deleverage by divesting two, non-core, diabetes supply businesses: * Facet (U.K.), and * Dia Real (Germany). Additionally, Moody's believes that robust organic growth, margin improvement and acquisition synergies should support the company's ability to deleverage. Moody's expects that the net proceeds from the sale of Facet and Dia Real will be sufficient to paydown all if not most of the Term C bridge loan. The rating agency understands that the credit agreement will require 100% of the net proceeds from asset sales be used to prepay the Term C loan before being applied to prepayment of the Term B loan. Presuming these asset sales occur as planned, which Moody's expects to occur in Q1'06, the rating agency estimates that Matria's pro forma leverage (adjusted debt/EBIT) would have been 6.1x at the end of 2005 (4.7x on an adjusted debt/EBITDA basis). Moody's anticipates that Matria/CorSolutions will generate significant merger synergies given the similarities between the two businesses, which should facilitate reducing leverage (adjusted debt/EBIT) to roughly 4.4x (3.6x on an adjusted debt/EBITDA basis) by the end of 2006. The change of outlook to negative from stable reflects the immediacy for Matria's to reduce financial leverage and to realize acquisition synergies. Stabilizing the outlook would require the company to: * successfully execute the planned divestitures; * realize expected acquisition synergies; and * demonstrate and sustain expected top line growth, margin improvement and cash flow generation. Matria's inability: * to reduce leverage, * to realize synergies, * to generate top line growth in excess of 20% coupled with margin improvement, or * otherwise grow cash flow could trigger a rating downgrade. The B1 rating assigned to the proposed first lien credit facility reflects its priority position within Matria's capital structure and Moody's view that Matria's enterprise value should provide full coverage, under a distress scenario. The preponderance of first lien debt in the pro forma capital structure (i.e. 82% of total debt at closing assuming the $30 million revolver to be fully drawn -- 76% if assuming that the Term C bridge loan is paid down shortly after the transaction closes with proceeds from the aforementioned asset sales) precludes notching above the B1 corporate family rating. All equity and assets of Matria and its domestic subsidiaries secure the first lien credit facilities. The facilities have upstream guarantees from the company's domestic subsidiaries. The B3 rating assigned to the proposed second lien bank debt reflects the subordination to a sizable amount of first lien debt. Given the absence of tangible equity and no expectation of additional junior debt in the pro forma capital structure going forward, the second lien loan would assume the bulk of loss absorption in a default scenario. A second priority perfected interest in the collateral of the first lien facilities secures the second lien term loan. The second lien debt has the same guarantee structure as the first lien facility. Matria Healthcare, Inc., headquartered in Marietta, Georgia, is a leading provider of disease management programs to health plans and employers. The company also: * manufactures and distributes products for the diabetes market through Facet Technologies; and * provides diabetes products, supplies and certain value-added services to patients in Germany. The company has announced its intent to divest its diabetes businesses. For the twelve months ended Sept. 30, 2005, Matria's revenues were $325 million. CorSolutions, with revenues expected to be over $120 million in 2005, is a privately-held disease management company located in Rosemont, Illinois. MCI INC: 20 Officers Dispose of 2,559,020.478 Shares of MCI Stock ----------------------------------------------------------------- In separate filings with the Securities and Exchange Commission on Jan. 9, 2006, 20 officers and directors of MCI, Inc., disclose that they recently sold or otherwise disposed of their shares of common stock in the Company: Amount of Number of Securities Officer Designation Shares Disposed Now Owned -------- ----------- --------------- ---------- Beresford, Director 7,796.612 0 Dennis R. Blakely, Executive V.P. 251,585.000 0 Robert T. and C.F.O. Briggs, Pres. for 156,799.000 0 Fred M. Operations & Tech Capellas, President 1,010,786.000 0 Michael D. and CEO Casaccia, Executive VP, 131,485.000 0 Daniel L. Human Resources Crane, EVP of Strategy 159,850.000 0 Jonathan C. & Corp. Dev. Crawford, President for 80,026.000 0 Daniel E. Int'l & Wholesale Davenport, Director 475.888 0 Robert R. Grant, Director 6,309.012 0 Gregory W. Haberkorn, Director 6,309.012 0 Judith R. Hackenson, EVP, CIO 78,086.000 0 Elizabeth Harris, Director 5,933.517 0 Laurence E. Higgins, EVP of Ethics 120,345.000 0 Nancy M. & Bus. Conduct Holder, Director 5,506.989 0 Eric H. Huyard, President, US 230,865.000 0 Wayne Sales & Service Katzenbach, Director 8,227.706 0 Nicholas Deb Kelly, Exec. VP & 184,723.000 0 Anastasia D. General Counsel Neporent, Director 5,655.525 0 Mark A. Rogers, Jr. Director 7,509.217 0 Clarence B. Trent, SVP Comm. & Chief 100,747.000 0 Grace Chen of Staff 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) * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. MEDCARE TRANSPORT: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: MedCare Transport, Inc. dba MedCare Ambulance P.O. Box 265 Chillicothe, Ohio 45601-0265 Bankruptcy Case No.: 06-50098 Type of Business: The Debtor provides ambulance transportation services. Chapter 11 Petition Date: January 11, 2006 Court: Southern District of Ohio (Columbus) Judge: C. Kathryn Preston Debtor's Counsel: Grady L. Pettigrew, Jr., Esq. Cox, Stein & Pettigrew Co., LPA 115 West Main Street, Suite 400 Columbus, Ohio 43215-5099 Tel: (614) 224-1113 Fax: (614) 228-0701 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ IRS-Special Procedures Tax obligation $500,000 District Director, Insolvency Section P.O. Box 1579 Cincinnati, OH 45201 Medical Capital $327,740 2100 South State College Boulevard Anaheim, CA 92806 Wells Fargo SBA Lending MN $265,000 MAC T5601012 P.O. Box 659700 San Antonio, TX 782860700 Ohio Bureau of Worker's $159,281 Compensation David Morrow $127,584 Wells Fargo SBA Lending MN $100,000 American Express Credit card charges $70,512 Oak Hill Banks $53,011 Bank One $44,097 American Express Credit card charges $32,096 Nationwide Credit Inc. $28,415 Medical Claims Assistance, $18,350 Inc. Key Banks $16,520 U.S. Dept. of Labor $8,559 Dayton Power & Light $7,811 Well Fargo $5,733 Ford Credit $5,716 United Health Care $4,552 Central Auto Parts $4,537 The Dispatch Printing Co. $4,525 MILE HIGH: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Mile High Capital Group, Ltd. 9780 Mount Pyramid Court, Suite 300 Englewood, Colorado 80112 Bankruptcy Case No.: 06-10106 Type of Business: The Debtor is a real estate developer. Chapter 11 Petition Date: January 13, 2006 Court: District of Colorado (Denver) Judge: Elizabeth E. Brown Debtor's Counsel: Joli A. Lofstedt, Esq. Connolly, Rosania & Lofstedt, P.C. 390 Interlocken Crescent, Suite 490 Broomfield, Colorado 80021 Tel: (303) 661-9292 Fax: (303) 661-9555 Total Assets: $5,990,000 Total Debts: $13,879,059 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Argent Company Noteholder $2,900,000 540 North Cascade, Suite 102 Colorado Springs, CO 80903 Replacement Property Debt $1,352,420 Solutions, Inc. 7300 East Arapahoe Road Englewood, CO 80112 Lori Fuller Debt $700,000 10263 Mica Way Parker, CO 80134 B&G Excavating Debt $698,730 2482 Commerce Boulevard Grand Junction, CO 81505-1214 Daniel and Kim Silverman Debt $375,000 10808 Figtree Court San Diego, CA 92131 Investment Property Funding Debt $332,389 9780 Mt. Pyramid Court, Suite 300 Englewood, CO 80112 Sam Noel Noteholder $360,000 6335 Oberon Road Arvada, CO 80004 Replacement Property Solutions $240,216 Jeff and Adele Talmadge Debt $218,494 Mountain View Electric Debt $216,844 Woodmen Hills Debt $201,420 The Moore Group, Inc. Debt $147,663 Shannon and Currey Debt $134,500 Kathleen Kilkenny Andrew McFaul Debt $127,930 Sam Noel Debt $126,283 Grand Valley Power Debt $122,871 CG&M Concrete, Inc. Debt $102,423 Superior Homes, Inc. Debt $75,013 Harold Heckman Debt $70,000 Little John Engineering Debt $65,854 Association MORGAN STANLEY: S&P Rates $24 Mil. Certificate Classes at Low-B --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Morgan Stanley Capital I Trust 2006-TOP21's $1.3 billion commercial mortgage pass-through certificates series 2006-TOP21. The preliminary ratings are based on information as of Jan. 12, 2006. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, A-3, A-AB, A-4, A-M, and A-J are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.92x, a beginning LTV of 83.8%, and an ending LTV of 76.1%. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web-based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on Standard & Poor's Web site at http://www.standardandpoors.com/ Select Credit Ratings, and then find the article under Presale Credit Reports. Preliminary Ratings Assigned Morgan Stanley Capital I Trust 2006-TOP21 Recommended Class Rating Amount credit support ----- ------ ------ -------------- A-1 AAA $84,000,000 27.000% A-2 AAA $251,300,000 27.000% A-3 AAA $94,000,000 27.000% A-AB AAA $75,000,000 27.000% A-4 AAA $500,174,000 27.000% A-M AAA $137,599,000 17.000% A-J AAA $92,880,000 10.250% B AA $25,800,000 8.375% C AA- $15,480,000 7.250% D A $20,639,000 5.750% E A- $10,320,000 5.000% F BBB+ $13,760,000 4.000% G BBB $10,320,000 3.250% H BBB- $12,040,000 2.375% J BB+ $8,600,000 1.750% K BB $3,440,000 1.500% L BB- $5,160,000 1.125% M B+ $1,720,000 1.000% N B $1,720,000 0.875% O B- $3,440,000 0.625% P NR $8,600,558 N/A X* AAA $1,375,992,558 N/A * Interest-only class with a notional dollar amount. NR -- Not rated. N/A -- Not applicable. MORGAN STANLEY: Fitch Lifts $21MM Class H Certs. to BBB- from BB+ ----------------------------------------------------------------- Fitch Ratings upgrades Morgan Stanley Capital I, Inc.'s commercial mortgage pass-through certificates, series 1997-C1: -- $19.2 million class F to 'AAA' from 'AA'; -- $11.2 million class G to 'AA-' from 'A'; -- $20.8 million class H to 'BBB-' from 'BB+'. In addition, Fitch affirms these certificates: -- Interest only class IO-1 at 'AAA'; -- $41.9 million class B at 'AAA'; -- $38.4 million class C at 'AAA'; -- $35.2 million class D at 'AAA'. The $6.4 million class E and the $20.4 million class J certificates are not rated by Fitch. The upgrades are primarily the result of increased credit enhancement levels due to loan payoffs and amortization. As of the December 2005 distribution date, the pool's collateral balance has been reduced by 70% to $193.7 million from $640.7 million at issuance. No loans are currently specially serviced or delinquent. Fitch remains concerned with the increasing concentration of healthcare loans. However, these loans continue to perform, and Fitch analyzed the concentration in the context of the entire pool. Given the increased credit enhancement and the limited number of Fitch loans of concern, the upgrades to classes F, G, and H are warranted. MOULIN GLOBAL: Chapter 15 Petition Summary ------------------------------------------ Petitioner: Roderick J. Sutton Debtor: Moulin Global Eyecare Holdings, Ltd. Hong Kong Club Building, 14th Floor 3A Chater Road Central, Hong Kong China Case No.: 06-30018 Type of Business: The Debtor designs, manufactures, distributes and retails quality eyewear products to customers worldwide. of optical frames, sunglasses, optical parts and accessories. It is the largest eyewear manufacturer in Asia and the third largest worldwide, with annual production volume exceeding 15 million frames. Moulin is headquartered in Hong Kong and is one of the constituent stocks on the Hang Seng HK SmallCap Index and Hang Seng Consumer Goods Index under the Hang Seng Composite Index. See http://www.moulin.com.hk/ Chapter 15 Petition Date: January 13, 2006 Court: Northern District of California (San Francisco) Judge: Thomas E. Carlson Petitioner's Counsel: Patricia S. Mar, Esq. Morrison and Foerster LLP 425 Market Street San Francisco, California 94105-2482 Tel: (415) 268-7000 Financial Condition as of June 30, 2004: Total Assets: HK$3,626,433,000 Total Debts: HK$1,548,291,000 NORTHWEST AIRLINES: AMFA Members Reject Settlement Offer -------------------------------------------------------- Striking members of the Aircraft Mechanics Fraternal Association rejected Northwest Airlines' settlement offer on Dec. 30, 2005, by a vote of 1258 no votes (57 percent) to 965 yes votes (43 percent). AMFA National Director O.V. Delle-Femine commented on the outcome: "This is a victory for AMFA members and for unionism. Our striking members refused to bow down to Northwest's arrogant, self-enriching management and will continue the strike against this renegade, union-busting airline. AMFA members approved recent agreements with Alaska Airlines, Horizon Air and even United Airlines in bankruptcy. Only Northwest's management is out to deny all its employees a living wage while awarding themselves millions in frivolous bonuses. "ALPA, IAM and the flight attendants should take note that their failure to support AMFA encouraged Northwest to come after them in the same way and did not weaken our resolve to fight for our rights with dignity and professionalism. "Unions outside of Northwest, especially the UAW and others who have lent us financial and moral support, can take pride in the fact that the vast majority of AMFA members have never faltered even in the face of extraordinary economic pressure. Many of our Northwest members have gone on to better things than working for the unreformed Scrooges on this airline's management team, but continue to support our brave strikers in person or in other ways. I could not be prouder." AMFA's craft union is the largest labor organization in the airline industry representing aircraft maintenance technicians and related support personnel with over 18,000 members at carriers including Alaska Airlines, United Airlines, Southwest Airlines, Northwest Airlines, ATA, Independence, Horizon and Mesaba Airlines. AMFA's credo is "Safety in the air begins with Quality Maintenance on the Ground". 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: Faces Lawsuit for 2004 Flight 708 Plane Crash ----------------------------------------------------------------- One of the largest aviation litigation firms in the U.S., Motley Rice LLC, announced that it has filed two major lawsuits against Canada-based Bombardier Inc., as well as U.S. companies General Electric, Honeywell, Northwest Airlines and KGS Electronics, and others, on behalf of the families of captain Jesse Rhodes and first officer Richard Peter Cesarz, victims of the crash of Pinnacle Airways Flight 708, a Canadair Regional Jet (CRJ-200), which took place on October 14, 2004 outside of Jefferson City, Mo. The flight, a regularly scheduled repositioning flight, had originated in Little Rock, Ark., and was enroute to Minneapolis- St. Paul for use in commercial flights. No other passengers were on board at the time of the incident. Prior to the incident, the flight had already been postponed once on the morning of October 14th, due to maintenance issues. On-site technicians could not locate the problem, and subsequently two Pinnacle mechanics flew in from Memphis, Tennessee to identify and fix the aircraft. The mechanics verified a fault in the right air duct sensing loop. The loop was removed and replaced in the right engine. At approximately 9:21 p.m., the plane took off. During flight, the crew took the aircraft to the manufacturer's authorized altitude ceiling of 41,000 feet. Flight at this altitude offers significantly better fuel economy. Once at 41,000 feet, the aircraft was unable to hold altitude. The crew immediately asked air traffic control for permission to descend. While waiting for permission, the plane experienced double engine failure. They repeatedly tried to re-start the engines using the manufacturer's instructions, but all attempts failed. The plane dropped at a rate of 2500 to 5000 feet per minute and was headed directly for a residential area. In the final seconds of their lives, the pilots steered the plane clear of homes sparing lives on the ground, but losing their own. A post crash investigation revealed that the Flight Data Recorder (FDR) recovered from the scene recorded that the engine core rotors (known as N2) did not begin to rotate with the opening of pneumatic valves used for engine restarts. This phenomenon is known as "core-lock." The post crash investigation also revealed the GE CF-34-3B engines' oil pump malfunctioned and that other components of the engines suffered from extensive heat damage consistent with exposure to extreme high temperatures during operation, resulting in the rotor blades failing to rotate and suffering from the aforementioned core-lock, causing both engines to fail all restart efforts by the crew after numerous attempts to do so. According to a March 2003 Boston Globe article regarding a similar incident involving a Bombardier aircraft, GE had been aware of the high-altitude, low oil pressure problem with the engine but hid the information from Bombardier. "Our clients, Mr. Rhodes and Mr. Cesarz, were operating under approved guidelines at legal altitudes and did everything in their power to restart the engines," stated Motley Rice attorney and former U.S. Inspector General for the Department of Transportation in Washington, D.C., Mary Schiavo "However, this proved impossible because of core lock, oil pump malfunction, faulty re-start instructions and other problems with the aircraft. It is a horrible tragedy that they had to die because of these known engine problems. With this litigation, we intend to further the safety of our regional carriers, and safeguard pilots and crew to enable the provision of safer flights for their passengers." Unfortunately, this crash is not an isolated incident for our country's regional carriers. Regional carriers, while operating under the names of the larger airlines, often employ foreign-built jets that may not receive the same level of scrutiny as a major carrier aircraft. "Examining all the problems on this aircraft and these engines is very important not only to regional carriers, but also to operators of private jets. The engines and other parts and equipment on the CRJ are identical to the Challenger CL 600, a very popular corporate jet," said Marlon Kimpson, another of Motley Rice's aviation attorneys. "In recent years, several Challengers have been involved in crashes." "We want to bring to light systemic difficulties so problems can be fixed and lives can be saved," added Motley Rice attorney J.B. Harris. "We hope the manufacturers of both the plane and engines will be forthcoming and responsive to the problems, so more fine pilots like Rhodes and Cesarz do not have to die trying to do the impossible; start an engine in corelock." Both cases were filed in Circuit Court in Broward County, Florida and included the following defendants: Bombardier, Inc., Bombardier Aerospace Corporation, General Electric Company, Honeywell International, Inc., Parker Hannafin Corporation, Northwest Airlines, Inc., and KSG Electronics. Motley Rice attorneys working on this case are Marlon Kimpson, Esq., J.B. Harris, Esq., and Mary Schiavo, Esq. About Motley Rice LLC Motley Rice LLC -- http://www.motleyrice.com/-- is one of the United States largest plaintiffs' litigation and aviation disaster firms. Motley Rice attorneys have gained global recognition for their pioneering work on behalf of asbestos victims, the State Attorneys General in their landmark litigation against Big Tobacco, and the 9/11 families in their groundbreaking lawsuit against terrorist financiers. Motley Rice attorneys continue to seek justice in the areas of: aviation disasters, catastrophic injury; complex case resolution; consumer and commercial fraud; environmental hazards and contamination; medical negligence and defects; occupational disease and toxic torts; and transportation defects and mass disasters. 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: Wants to Reject 5 Contracts Effective Today --------------------------------------------------------------- Pursuant to the Court-approved procedures for the rejection of certain unexpired non-residential real property leases and unexpired equipment leases, as well as other executory contracts, Northwest Airlines Corp. and its debtor-affiliates notify the U.S. Bankruptcy Court for the Southern District of New York that these leases and contracts will be deemed rejected as of January 16, 2006: (1) Lease Agreement, dated as of June 1, 1997, between New York City Industrial Development Agency and Northwest Airlines, Inc.; (2) Company Sublease Agreement, dated as of June 1, 1997, between Northwest Airlines and the New York City Industrial Development Agency; (3) Agreement of Lease (Lease No. AYA-850), dated as of October 1, 1974, as amended, between The Port Authority of New York and New Jersey, and Northwest Airlines; (4) Tax Regulatory Agreement, dated June 30, 1997, among the New York City Industrial Development Agency, Northwest Airlines, and the United States Trust Company of New York, as trustee; (5) Continuing Disclosure Agreement, dated June 1, 1997, between Northwest Airlines, Northwest Airlines Corporation, and the United States Trust Company of New York, as trustee. The Port Authority Responds In response to the Debtors' Rejection Notice, the Port Authority of New York and New Jersey asks the Court to: (a) direct Northwest Airlines to continue to pay rent and any other expenses it incurs at the cargo facilities covered by Lease No. AYA-850, up to the date it actually vacates the premises; (b) direct Northwest Airlines to remove all its equipment, trade fixtures and personal property from the premises covered by Lease No. AYA-850 by January 16,2006, 12:00 a.m., and leave the premises in a "broom clean" condition; and (c) extend the Port Authority's time to submit its claims arising out of the rejection of Lease No. AYA-850, including claims based on the physical and environmental condition of the leased property, to at least 60 days from the later of the effective rejection date or the date set by the Court for governmental entities to file proof of claims. BNY Reserves Rights The Bank of New York is successor to United States Trust Company of New York under: (a) an Indenture Trust, dated June 1, 1997, with the New York City Industrial Development Agency, pursuant to which the New York City Industrial Development Agency Special Facility Revenue Bonds were issued; and (b) the Guaranty Agreement of the same date with Northwest Airlines Corporation and Northwest Airlines. The principal amount of the outstanding Bonds is $32,795,000. James Gadsden, Esq., at Carter Ledyard & Milburn LLP, in New York, clarifies that BNY takes no position in the Debtors' rejection of the June 1 Leases. BNY, however, reserves all of its rights and claims under the June 1 Leases and Contracts, the Indenture and other agreements to which the Debtors are parties and under the Guaranty Agreement pursuant to which BNY will assert claims against Northwest Airlines and Northwest Airlines Corporation for the full amount of the Guaranteed Obligations, including the principal of the Bonds and the interest, rental payments under the Leases and all other obligations of the Lease under the terms of the Lease Agreement and the Tax Regulatory Agreement. 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) NRG ENERGY: Fitch Rates Proposed $5.2 Billion Secured Debt at BB ---------------------------------------------------------------- Fitch Ratings has initiated rating coverage of NRG Energy, Inc. by assigning a 'BB' rating to NRG's proposed $5.2 billion secured credit facility, consisting of: * a $3.2 billion secured term loan B and $2 billion of revolving credit/synthetic letter of credit facilities, * a 'B' rating to NRG's proposed $3.6 billion issuance of senior unsecured notes, and * a 'CCC+' rating to NRG's proposed issuance of $500 million mandatory convertible preferred stock. In addition, Fitch has assigned NRG a 'B' issuer default rating, as well as recovery ratings for the proposed debt instruments. The Rating Outlook is Stable. The ratings have been initiated by Fitch as a service to investors. Recovery ratings by Fitch are: NRG Energy, Inc. -- $3.2 billion secured term loan 'RR1'; -- $1 billion secured revolving credit line 'RR1'; -- $1 billion secured synthetic letter of credit 'RR1'; -- $3.2 billion senior unsecured notes 'RR4'; -- $500 million mandatory convertible preferred stock 'RR6' The ratings assignment follows Fitch's analysis of NRG's pending acquisition of Texas Genco LLC in a transaction initially valued at approximately $8.3 billion, which includes $2.5 billion of existing TGN net debt. Proceeds from the pending term loan B and senior note transactions along with the planned issuance of $1 billion of common stock and $500 million of mandatory convertible securities will be utilized by NRG to fund the $4 billion cash component of the acquisition and refinance substantially all of the existing corporate debt of both NRG and TGN. Consequently, NRG will emerge with a relatively flat capital structure with all debt residing at the parent holding company level with the exception of approximately $800 million of outstanding project level debt. The acquisition financing structure also includes the issuance of approximately $2 billion of equity issued directly to TGN's sellers, a private equity consortium consisting of The Blackstone Group, Hellman & Friedman, Kohlberg Kravis Roberts & Co., and Texas Pacific Group. In assigning the ratings for NRG, Fitch considered the initial leveraging impact of the pending TGN purchase, the company's operating profile and future cash flow prospects, and the structural protections provided under the proposed secured credit facilities. Key credit strengths include: * NRG's attractive mix of low cost and efficient coal and nuclear baseload capacity, * the near-term cash flow certainty provided by NRG/TGN's portfolio of medium-term power sales agreements and fuel price hedges, * the anticipation that future capital spending related to potential environmental regulations will be manageable, and * the transaction structure, which requires free cash flow to be offered to the lenders for term-loan reduction. Primary risk factors include: * the greater susceptibility of consolidated cash flows to changes in natural gas prices in 2009 and beyond, * high initial leverage relative to the potential volatility embedded in NRG's earnings and cash flow, and * a relatively aggressive corporate strategy, which could focus on further acquisitions and/or shareholder oriented activities. Of NRG's approximately 23,000 megawatts of pro forma U.S. installed net generating capacity, about 38% or 8,800 megawatts consists of coal and nuclear baseload capacity sited in Texas and the Northeast and Southeast regions. In each of these regions, natural gas prices are expected to be the primary determinant of market clearing prices for power, most profoundly in Texas where natural gas will continue to be on the margin for most hours of the day. Given that baseload fuel and transportation costs are largely fixed for the next several years, future returns derived from the uncontracted portion of NRG's generating fleet will largely be influenced by the future direction of natural gas prices. Mitigating factors include the cash flow certainty provided by NRG's hedge position, which covers greater than 50% of NRG's pro forma consolidated net revenues through 2008. In addition, NRG's Northeast peaking fleet, which includes a number of older vintage gas- and oil-fired plants, should continue to benefit from ongoing installed capacity payments and reliability must-run contracts in transmission constrained regions such as New York City and southwestern Connecticut. Near-term consolidated credit protection measures are expected to remain in line with the assigned ratings. Upon acquisition closing, NRG's consolidated debt leverage, as measured by total debt/EBITDA is expected to approximate 5x. Under management's base-case scenario, which assumes current forward strip prices for natural gas and the dedication of all free cash flow to early debt retirement, credit ratios gradually strengthen with debt/EBITDA and EBITDA/interest approximating 4.5x and 2.6x, respectively, by year-end 2006. As part of its analysis, Fitch prepared a series of alternative projection scenarios to gauge TGN's performance in a less robust natural gas price environment. Specifically, Fitch's model incorporates an outlook for natural gas prices declining to $4.60 per mmBtu in 2010 compared with management's assumption in 2010 of approximately $7.50 per mmBtu. While the lower gas price model results in weaker cash flow results, particularly in the outer years when NRG's portfolio is less hedged, revised credit ratios under the alternative case remain within parameters for the current ratings. The underlying ratings for NRG's individual debt instruments incorporate a recovery analysis under which Fitch utilized an independent power market model to derive individual values for NRG's domestic fossil fuel and nuclear plants based on the net present value of projected merchant net revenue streams. In addition, Fitch considered the value embedded in NRG's foreign generating assets and domestic thermal activities as well as potential liabilities stemming from environmental compliance spending across NRG's coal-generating fleet. The 'BB/RR1' rating for NRG's $5.2 billion secured credit package, which benefits from a first lien on most domestic generating assets, is three notches above the IDR and reflects the strong recovery prospects for these debt obligations, which exceeds 100% even under a low valuation scenario. The 'B/RR4' rating assigned to NRG's proposed $3.6 billion senior unsecured notes is equal to the IDR and reflects Fitch's expectation that these securities would receive average principal recovery under a hypothetical restructuring scenario. Under a hypothetical default scenario, a major variable influencing ongoing recovery prospects for senior unsecured creditors would be the ultimate level of junior lien collateral granted to NRG's trading counterparties on a post-acquisition basis. This arrangement has been in place at TGN throughout 2005 and covered net credit exposure of $2.16 billion as of Sept. 30, 2005. Fitch notes that this amount should naturally decline as power is delivered and TGN's below market hedges roll off or its natural gas prices decline. The Stable Rating Outlook reflects NRG's substantially hedged baseload generation fleet, which should ensure a relatively predictable earnings and cash flow stream thus enabling a meaningful reduction in leverage and strengthening in credit ratios over the next few years. Factors leading to potential rating improvement over time would include deleveraging in line with management's near-term expectations and further forward sales and/or hedging of NRG's 2008-2010 uncontracted generating position. In addition, a reduction in current collateral postings combined with a reduction in second lien collateral arrangements granted to certain trading counterparties could result in an uplift to NRG's existing 'B' senior unsecured rating given the improved recovery implications for these securities. At the same time, a sustained drop in natural gas prices, the pursuit of further leveraged growth activities, and more stringent than anticipated environmental regulations would likely place downward pressure on NRG's ratings and/or Outlook. NOVASTAR MORTGAGE: S&P Lowers Rating on Class M-3 Certs. to BB -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class M-3 from NovaStar Mortgage Funding Trust Series 2001-1 to 'BB' from 'BBB' and placed it on CreditWatch with negative implications. At the same time, the ratings on four other classes from this transaction are affirmed. The downgrade and CreditWatch placement are based upon pool performance that has allowed losses to erode credit support, as well as the expectation that loans in the foreclosure and delinquency buckets could further erode support. As of the December 2005 distribution date, cumulative losses totaled 1.14% of the original pool balance, which is 75.90% of the original credit support for class M-3. In addition, the mortgage loans in the REO and foreclosure buckets total $3.09 million, which is approximately four times the remaining amount of support for class M-3. Standard & Poor's will closely monitor the performance of this transaction. If the amount of loans in the REO and foreclosure buckets declines and credit support is not further compromised, the rating on the M-3 class will be affirmed and removed from CreditWatch. Conversely, if losses continue to erode credit support, further negative rating actions can be expected. The rating affirmations are based on the shifting interest structure of this transaction, which has allowed subordination levels to grow to a point where the current ratings are sufficiently supported. Projected credit support is at least 1.05x the amount associated with the current ratings. The certificates represent ownership interest in a trust consisting of a pool of adjustable- and fixed-rate residential mortgage loans on one- to four-family properties. Rating Lowered And Placed On Creditwatch Negative NovaStar Mortgage Funding Trust Series 2001-1 Class To From ----- -- ---- M-3 BB/Watch Neg BBB Ratings Affirmed NovaStar Mortgage Funding Trust Series 2001-1 Class Rating ----- ------ A-1 AAA A-IO AAA M-1 AAA M-2 A PACIFIC SOUTHWEST: Fitch Affirms BB Rating on Class B-2 Certs. -------------------------------------------------------------- Fitch Ratings has affirmed these Pacific Southwest Bank Lending Home Loan Owner Trust issues: Series 1997-2 -- Class A-5 'AAA'; -- Class M-1 'AA'; -- Class M-2 'A'; -- Class Certs 'BBB'. Series 1997-4 -- Class A-5 'AAA'; -- Class M-1 'AA'; -- Class M-2 'A'; -- Class B-1 'BBB'; -- Class B-2 'BB'. The loans were originated or purchased by PSB Lending. The mortgage pools consist primarily of junior-lien position loans with loan-to-values initially over 100%. In 2004, Coastal Capital acquired the servicing rights and is currently the primary servicer. The affirmations on the above classes, which affect approximately $8.26 million of certificates, reflect adequate relationships of credit enhancement to future loss expectations. The overcollateralization of both transactions has been at the target amount for the past 12 months, and the excess spread has generally been able to cover most losses to the trusts. Since the targeted OC of both transactions has reached their respective floor amounts, the OC has been able to increase significantly as a percentage of the declining pool balance. Fitch expects the OC to continually be on target in the future. As of the December 2005 distribution date, series 1997-2 is 102 months seasoned while series 1997-4 is seasoned for 96 months. The pool factors are 2% and 3% for series 1997-2 and series 1997-4, respectively. Cumulative loss for series 1997-2 is 16.68% and series 1997-4 is 14.84%. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings Web site at http://www.fitchratings.com/ PARKER-I 94: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Parker-I 94 Woods, LLC 7970 West Liberty Ann Arbor, Michigan 48103 Bankruptcy Case No.: 06-40364 Chapter 11 Petition Date: January 11, 2006 Court: Eastern District of Michigan (Detroit) Judge: Phillip J. Shefferly Debtor's Counsel: Samuel Firebaugh, Esq. Firebaugh & Andrews, P.L.L.C. 38545 Ford Road, Suite 104 Westland, Michigan 48185 Tel: (734) 722-2999 Fax: (734) 710-9974 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million The Debtor does not have unsecured creditors who are not insiders. PENN NATIONAL: S&P Upgrades Issuer Credit Rating to BB from BB- --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on casino owner and operator Penn National Gaming Inc., including its issuer credit rating to 'BB' from 'BB-'. The outlook is stable. Pro forma for the acquisition of Argosy Gaming Co., which closed in early October 2005, consolidated debt outstanding approximates $2.7 billion. The upgrade reflects Penn's pro forma financial profile that exceeds previous expectations, which were made following the company's late 2004 announcement to acquire Argosy. "In addition, we expect that the good operating environment will enable the company to accomplish its previously outlined near-term growth objectives while maintaining credit measures around pro forma levels, which Standard & Poor's considers to be in line with the higher rating given Penn's business profile," said Standard & Poor's credit analyst Michael Scerbo. The upgrade also assumes that as ongoing capital spending projects are completed over the next few years, the company's consolidated financial profile will significantly improve and provide cushion within the rating to accommodate the company's relatively aggressive growth strategy. PLIANT CORP: Can Continue Existing Cash Management System --------------------------------------------------------- Pliant Corporation and its debtor-affiliates sought and obtained the U.S. Bankruptcy Court for the District of Delaware's permission to continue using their existing cash management systems. The Debtors utilize centralized cash management systems for their U.S. and Canadian Operations. The Debtors' financial personnel located at the headquarters in Schaumburg, Illinois, control the cash management systems. The Debtors' foreign non-Debtor affiliates generally utilize separate, stand-alone cash management systems and their own bank accounts. Although the Canadian Debtors and foreign non-Debtors generally do not participate in the U.S. Cash Management System, certain intercompany receipts and payables are funneled through the U.S. Cash Management System, which are reflected on the Debtors' and non-Debtors' intercompany schedules. According to Harold C. Bevis, chief executive officer of Pliant Corporation, the Cash Management Systems provide significant benefits to the Debtors, including the ability to: (a) closely track, and thus control, all corporate funds through the provision of near-continuous status reports on the location and amount of all the funds; (b) ensure cash availability; and (c) reduce administrative expenses by facilitating the movement of funds and the development of timely and accurate account balance and presentment information. Mr. Bevis says it is critical that the Debtors are able to consolidate management of cash and centrally coordinate transfers of funds in order to efficiently and effectively operate their large and complex business operations. Substantially disrupting their current cash management procedures would impair the Debtors' ability to preserve and enhance their going concern value and to successfully reorganize. U.S. Cash Management System The U.S. Cash Management System is operated through bank accounts at LaSalle Bank NA and Wachovia Bank. Wachovia was the Debtors' primary cash management bank. However, on July 5, 2005, Pliant began the process of transitioning its U.S. Cash Management System from Wachovia to LaSalle. As of the Petition Date, this process was substantially complete with the exception of collection accounts with limited receivables and disbursements accounts that fund payroll for all U.S. employees. The Debtors anticipate that the transition process from Wachovia to LaSalle will be complete by the end of January 2006. (A) LaSalle Accounts Pliant maintains eight bank accounts at LaSalle. Three accounts are lockbox collection accounts, which receive checks directly from Pliant's customers in the United States. The lockbox accounts are zero balance accounts with the deposited funds swept daily into a blocked concentration account. The blocked concentration account is swept into a collateral proceeds account that is maintained by General Electric Capital Corporation, the Collateral Agent under the DIP Credit Facility, and the deposited funds will be applied to reduce the Debtors' obligations under the DIP Facility. Due to the daily sweep of the collection accounts, the Debtors must borrow from the DIP Facility to fund their daily operations. The funds from the DIP Facility will be deposited into a separate concentration account maintained at LaSalle. Funds are disbursed from the LaSalle Concentration Account through two zero balance controlled disbursement accounts that fund Pliant's accounts payable. The CDAs only make payments on checks presented prior to 10:30 AM prevailing central time each business day, and checks presented for payment after that time are funded the following day. The final account maintained at LaSalle is a collection account for non-trade receivables. The account is open but not in use at this time. (B) Wachovia Accounts Pliant maintains six accounts at Wachovia. The Wachovia accounts are centered around one primary concentration account, which collects funds from two zero balance lockbox accounts. The lockbox accounts receive checks directly from a small number of Pliant's customers whose payments have not yet been transitioned to the LaSalle lockbox accounts. Each morning GE Capital sweeps the Wachovia Concentration Account into its collateral proceeds account. Funds in GE Capital's collateral proceeds account will be applied to reduce the Debtors' obligations under the DIP Facility. In the afternoon, the Debtors will fund the Wachovia Concentration Account with borrowings from their DIP Facility. Funds are disbursed from the Wachovia Concentration Account through four zero balance CDAs. Two of these accounts are general accounts payable accounts. Due to the LaSalle transition, the Debtors are no longer writing checks on these accounts; however, there remain some checks outstanding. The Debtors use two zero balance CDAs to fund Pliant's payroll obligations. The first payroll CDA funds regular payroll through check and ACH wire transfers, and the second payroll CDA funds payroll obligations, such as overtime and lost checks, through manual check writing. Commencing in January 2006, a third-party payroll services provider will begin processing payroll. Accordingly, Pliant intends to maintain the Wachovia payroll accounts only until the final payroll processed internally by Pliant has cleared the payroll accounts. Canadian Cash Management System The Canadian Cash Management System is operated through accounts at Bank of Nova Scotia and Bank of Montreal. The accounts at Bank of Nova Scotia are primarily used for collections and disbursements related to the Canadian operations of Debtors Pliant Packaging of Canada, LLC, and Uniplast Industries Co., while the accounts at Bank of Montreal are used for Pliant Corporation of Canada Ltd.'s collections and disbursements. (1) Bank of Nova Scotia Pliant Packaging and Uniplast Industries use four primary accounts at the Bank of Nova Scotia. Two accounts are lockbox accounts -- one of which receives payments from the customers in Canadian dollars and the other of which receives payments from the customers in U.S. dollars. These lockbox accounts also receive some limited customer payments on behalf of Pliant Canada, which are reflected on the Debtors' intercompany schedules. The Canadian dollar lockbox account directly funds two disbursement accounts that are used to make payroll and accounts payable payments for the operations of Pliant Packaging and Uniplast Industries. The excess funds in the Canadian dollar lockbox as well as all funds in the U.S. dollar lockbox accounts are manually funded by the Debtors' financial personnel into the LaSalle Concentration Account approximately every one to two weeks. In addition, U.S. dollar payments are made from the LaSalle disbursement accounts on behalf of Pliant Packaging and Uniplast Industries. The credits to and disbursements from the LaSalle Concentration Account and LaSalle disbursement accounts are reflected on the Debtors' intercompany schedules as intercompany credits and obligations between Pliant and Pliant Packaging and Uniplast Industries. (2) Bank of Montreal Pliant Canada utilizes six accounts at Bank of Montreal for its operating facilities located in Toronto and Barrie, in Canada. With respect to the Toronto facility, Pliant Canada utilizes one account that serves as a collection and concentration account, which funds into three disbursement accounts -- one for general accounts payable, one for payroll, and one for manual check writing at the Toronto facility. The Barrie facility utilizes two accounts, one of which receives and makes Canadian dollar denominated payments and other of which makes U.S. dollar denominated payments. In addition, to the extent there is a shortfall in the Toronto accounts to fund payroll or accounts payable for that facility, the Barrie Canadian dollar account funds the Toronto collection and concentration account. The accounts at Bank of Montreal are controlled by the Debtors' financial personnel in Schaumburg, although the Toronto facility is able to write checks on one of the disbursement accounts to cover certain limited daily expenses. 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: Gets Court Nod to Maintain Existing Bank Accounts -------------------------------------------------------------- The United States Trustee for Region 3, who administers bankruptcy cases filed in the District of Delaware, has issued certain Chapter 11 operating guidelines pursuant to 28 U.S.C. Section 586. These guidelines require that Chapter 11 debtors, among other things: (a) close all existing bank accounts upon fling of their petitions and open new "debtor-in-possession" accounts in certain financial institutions designated as authorized depositories by the U.S. Trustee; (b) establish one debtor-in-possession account for all estate monies required for the payment of taxes; and (c) maintain a separate debtor-in-possession account for cash collateral. If enforced in Pliant Corporation and its debtor-affiliates' chapter 11 cases, the requirements would cause enormous disruption in the Debtors' businesses and would impair the Debtors' efforts to successfully reorganize, Harold C. Bevis, chief executive officer of Pliant Corporation, tells Judge Walrath. Requiring the Debtors to open new accounts will be disruptive, time consuming and expensive. According to Mr. Bevis, the Debtors will implement appropriate mechanisms to ensure that no payments will be made on any debts incurred by them prior to the Petition Date, other than those authorized by the Court. To prevent the possible inadvertent payment of prepetition claims, except those otherwise authorized by the Court, the Debtors will immediately advise the banks participating in their Cash Management Systems not to honor checks issued prior to the Petition Date. The Debtors will work closely with the Cash Management Banks to ensure appropriate procedures are in place to prevent checks issued prepetition from being honored absent the Court's approval. At the Debtors' behest, the Court waives the strict enforcement of the requirement that the Debtors open new bank accounts. The Court authorizes the Debtors to maintain and continue using their existing accounts in the same manner and with the same account numbers, styles and document forms as those employed during the prepetition period. 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) PHOTOCIRCUITS: Inks APA with Candlewood Partners for $37 Million ---------------------------------------------------------------- Photocircuits Corporation asks the U.S. Bankruptcy Court for the Eastern District of New York for authority to sell substantially all of its assets to Candlewood Partners LLC for $37 million in cash plus a $4 million contingent promissory notes and assumption of $5.25 million debts. The Debtor says that the only way it can preserve the going concern value of the estate is by selling its assets. Candlewood states that it intends to honor the Debtor's existing contracts with its customers and suppliers. A copy of the sale procedure is available free of charge at http://ResearchArchives.com/t/s?447 The Debtor urges the Court to approve the sale as soon as possible because the company's access to its lender's cash collateral will expire on January 31 and it doesn't have any funds to continue its operations. Headquartered in Glen Cove, New York, Photocircuits Corporation -- http://www.photocircuits.com/-- was the first independent printed circuit board fabricator in the world. Its worldwide reach comprises facilities in Peachtree City, Georgia; Monterrey, Mexico; Heredia, Costa Rica; and Batangas, Philippines. The Company filed for chapter 11 protection on Oct. 14, 2005 (Bankr. E.D.N.Y. Case No. 05-89022). Gerard R Luckman, Esq., at Silverman Perlstein & Acampora LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. QUEBECOR MEDIA: Prices Debt Tender Offers for Senior Notes ---------------------------------------------------------- Quebecor Media Inc. set the pricing for its previously announced tender offers and consent solicitations in respect of its outstanding 11-1/8% Senior Notes due July 15, 2011 and 13-3/4% Senior Discount Notes due July 15, 2011. The tender offers are being made upon the terms, and subject to the conditions, set forth in the Offer to Purchase and Consent Solicitation Statement, dated Dec. 16, 2005, and the related Letter of Transmittal, which more fully set forth the terms of the tender offers and consent solicitations. The total consideration for the Notes was determined as of 2:00 P.M., New York City time, on Jan. 12, 2006, by reference to a fixed spread of 50 basis points over the yield on the 7.0% U.S. Treasury Note due July 15, 2006. The total consideration for each $1,000 principal amount of Senior Notes (CUSIP number 74819RAB2 and ISIN US74819RAB24) validly tendered and accepted for payment, which includes a consent payment of $30.00 per $1,000 principal amount of Senior Notes tendered on or prior to the Consent Deadline is US$1,083.49. In addition, holders of Senior Notes accepted for purchase will receive accrued and unpaid interest to, but not including, the applicable settlement date, in respect of such Senior Notes. The total consideration for each $1,000 principal amount at maturity of Discount Notes (CUSIP number 74819RAD8 and ISIN US74819RAD89) validly tendered and accepted for payment, which includes a consent payment of $30.00 per $1,000 principal amount at maturity of Discount Notes tendered on or prior to the Consent Deadline is $1,042.64. Holders who validly tendered at or before 5:00 p.m. on Dec. 30, 2005 and who did not validly withdraw their Notes prior to the Withdrawal Deadline on Dec. 30, 2005, will be entitled to receive the total consideration described above, which includes a consent payment of $30.00 per $1,000 principal amount of Senior Notes and $30.00 per $1,000 principal amount at maturity of Discount Notes validly tendered and accepted for purchase. The Withdrawal Deadline prior to which Notes tendered may be validly withdrawn has passed, and Notes tendered through the expiration of the tender offers may not be withdrawn, except as set forth in the Offer to Purchase. The settlement of the Notes tendered prior to Tuesday, Jan. 17, 2006 and accepted for payment by Quebecor Media is expected to be on the Early Settlement Date. Each tender offer is scheduled to expire at 12:01 a.m. New York City time on Jan. 18, 2006, unless extended or terminated. The completion of the tender offers and consent solicitations is subject to the conditions set forth in the Offer to Purchase, including Quebecor Media obtaining the financing necessary to fund the tender offers. In respect of each of the consent solicitations, Quebecor Media has received consents in excess of the majority consent requirement. Quebecor Media has engaged Citigroup Corporate and Investment Banking as dealer manager for the tender offers and solicitation agent for the consent solicitations. Questions regarding the tender offers and consent solicitations may be directed to Citigroup at (800) 558-3745 or (212) 723-6106. Requests for documentation should be directed to Global Bondholder Services Corporation, the Information Agent and the Depositary for the tender offers and consent solicitations, at (866) 470-4300 (toll free) or at (212) 430-3774 (collect). Quebecor Media Inc., a company incorporated in Canada under the Companies Act (Quebec), is one of Canada's largest media companies. Its principal lines of business are cable, newspaper publishing, television broadcasting, business telecommunications, book, magazine and video retailing and publishing, distribution and music recording, and new media services. * * * As reported in the Troubled Company Reporter on Jan. 12, 2006, Moody's Investors Service affirmed the Corporate Family Rating of Quebecor Media Inc. ("QMI"), all ratings at Videotron Ltee and Sun Media Corporation, assigned a B2 Senior Unsecured rating to QMI's new US$525 million Note issue, and upgraded QMI's existing Senior Secured rating to B1 from B2. The outlook for all ratings remains stable. QUEBECOR WORLD: Moody's Downgrades Sr. Sub. Rating to B2 from Ba3 ----------------------------------------------------------------- Moody's Investors Service lowered the Corporate Family and Senior Unsecured rating of subsidiaries of Quebecor World Inc. to Ba3 from Ba2, and lowered the Senior Subordinated rating of Quebecor World (USA) Inc. to B2 from Ba3. The Corporate Family rating has been moved to QWUSA as it is now the senior-most entity within the group for which Moody's rates debt. The outlook for all ratings remains negative. This action is prompted by: * Moody's belief that results at the company will not improve sufficiently over the next two years to maintain previously assigned ratings given recent company results; * a continuation of a challenging industry environment in both North America and Europe; * an apparent loss of market share by QWI; and * the likelihood that the company will undertake material capital expenditures in Europe which will strain credit metrics. The ratings are supported by: * QWI's large scale end product; * geographic diversity; and * a focus on cost reduction. The ratings are however constrained by: * continuing poor industry conditions which has put pressure on revenue and margins; * high leverage (after Moody's standard adjustments); and * increasing capital expenditures which will limit the company's ability to reduce debt. Moody's believes that QWI's new offset presses will result in cost efficiencies over the next two years, but there remains a real risk that industry conditions will nevertheless prevent the company from improving its cash flow and repay debt. The outlook remains negative because Moody's current expectations for QWI's credit metrics in 2007 are not sufficient to maintain existing ratings. Moody's will monitor results over the next 6-12 months to determine if results of the new press investments and a broader restructuring and cost reduction effort that has been underway for some time will actually result in improved margins and cash flow. Moody's current credit metric expectations for 2007 include minimal free cash flow, retained cash flow to debt of approximately 10%, debt/EBITDA of 5X and EBITDA-Capex/interest of well less than 2X. The ratings could be lowered if QWI is unable to improve on Moody's current expectations. Free cash flow/debt would need to exceed 5%, retained cash flow/debt would need to be in the mid- teens, debt/EBITDA would need to be close to 4X, and EBITDA- Capex/interest would need to exceed 2X. Moody's does not expect QWI's ratings to increase over the ratings horizon. The Senior Subordinated rating has been lowered two notches from the Ba2 Corporate Family Rating, consistent with normal notching practices. Downgrades: Issuer: Quebecor World (USA) Inc. * Senior Subordinated Conv./Exch. Bond/Debenture, Downgraded to B2 from Ba3 Issuer: Quebecor World Capital Corporation * Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3 from Ba2 Assignments: Issuer: Quebecor World (USA) Inc. * Corporate Family Rating, Assigned Ba3 Withdrawals: Issuer: Quebecor World, Inc. * Corporate Family Rating, Withdrawn, previously rated Ba2 Quebecor World Inc. is one of the world's largest commercial printers, headquartered in Montreal, Quebec, Canada. RAMP CORP: Creditors Must File Proofs of Claim by January 31 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York set Jan. 31, 2006, as the deadline for all creditors owed money by Ramp Corporation on account of claims arising prior to June 2, 2005, and for Health Ramp Inc., on account of claims arising prior to Sept. 26, 2005, to file their proofs of claim. Creditors must file their written proofs of claim on or before the January 31 Claims Bar Date, and those forms must be filed with: The Clerk of the U.S. Bankruptcy Court Southern District of New York One Bowling Green, Room 534 New York City, New York 10004-1408 Headquartered in New York City, New York, Ramp Corporation -- http://www.Ramp.com/-- through its wholly owned HealthRamp subsidiary, develops and markets the CareGiver and CarePoint suite of technologies. CareGiver enables long term care facility staff to easily place orders for drugs, treatments and supplies from a wireless handheld PDA or desktop web browser. CarePoint enables electronic prescribing, lab orders and results, Internet-based communication, data integration, and transaction processing over a handheld device or browser, at the point-of-care. HealthRamp's products enable communication of value-added healthcare information among physician offices, pharmacies, hospitals, pharmacy benefit managers, health management organizations, pharmaceutical companies and health insurance companies. The Company and its debtor-affiliate filed for chapter 11 protection on June 2, 2005 (Bankr. S.D.N.Y. Case No. 05-14006). Howard Karasik, Esq., at Sherman, Citron & Karasik, P.C., represents the Debtors in their restructuring efforts. As of May 31, 2005, Ramp Corp. reported $6 million in total assets and $13 million in total debts. RDR RESOLUTION: Confirmation Hearing Set for January 30 ------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California, San Francisco Division, will commence a hearing at 11:00 a.m. on Jan. 30, 2006, to consider the merits of RDR Resolution LLC's Plan of Reorganization. The Court approved the Debtor's Disclosure Statement on Dec. 20, 2005. Objections to the Plan, if any, must be filed with the Court and served on the Debtor by 5:00 p.m. on Jan. 23, 2006. Plan Overview Asset Sale The Debtor owns 20 parcels of unimproved land located between Santa Clarita and Palmdale, California. Under the Plan, the Debtor will sell 19 of the 20 parcels to its parent, SYCG for $1,000,000 in cash and bonds. The sale is subject to better and higher offers. Out of the sale proceeds, the Debtor will establish a $40,000 unsecured creditors' fund for the benefit of its unsecured creditors and pay allowed administrative claims, priority tax claims and priority claims. The remaining parcel of land will be abandoned if the Debtor can't sell it off. Plan Distributions The Rio Dulce District, holding a $10,442,918 and a $2,911,197 bonds, will receive its pro rata share of the proceeds from the sale of the Debtor's property. If the purchase price for the property includes a tender of bonds, the Rio Dulce District will receive all of the bonds tendered before receiving any cash payment. The County of Los Angeles, asserting a $1,047,797 property tax claim, will share pro rata in the proceeds from the sale of the Debtor's property. General unsecured creditors, owed $442,500, will be paid from: a) any proceeds from the sale of the property remaining after the payment of the Rio Dulce District's and the County of Los Angeles' claims; and b) the $40,000 unsecured creditors' fund. Equity interest holders will retain their interests in the Reorganized Debtor. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=051215032634 Headquartered in San Francisco, California, RDR Resolution, LLC, filed for chapter 11 protection on August 4, 2005 (Bankr. N.D. Calif. Case No. 05-32481). Roberto J. Kampfner, Esq., at the Law Offices of White and Case represents the Debtor in its restructuring efforts. 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 liabilities. RELIANCE GROUP: Commonwealth Court OKs $15MM Securities Settlement ------------------------------------------------------------------ At the request of M. Diane Koken, Insurance Commissioner of the Commonwealth of Pennsylvania, in her capacity as Liquidator of Reliance Insurance Company, the Hon. James Gardner Colins approves an agreement entered into by the parties to securities class actions commenced against Reliance Group Holdings, Inc., and certain individual defendants. The Agreement settles the Securities Class Action for $15,000,000. The Commonwealth Court authorizes the Liquidator to perform actions necessary to effectuate the terms of the Settlement Agreement. The Agreement was also approved by the U.S. Bankruptcy Court for the Southern District of New York, in RGH's case. Securities Litigation In 2000, 15 class actions alleging violations of federal securities laws were filed in the U.S. District Court for the Southern District of New York against RGH and these individual defendants: * Saul P. Steinberg, * Robert M. Steinberg, and * Lowell C. Freiberg. The securities class actions were subsequently consolidated. The lead plaintiffs in the Consolidated Securities Class Action are: * Paul Minish, * Verde Investments, Inc., * Verde Reinsurance Co., Ltd., * Donald and Bonnie Lee Siok, and * Gary Kimmel. A derivative action titled "Glen Leibowitz and Harvey Greenfiled v. Saul P. Steinberg, et al." was also commenced in the Supreme Court of the State of New York in and for Westchester County. RGH subsequently removed the Derivative Action to the Bankruptcy Court as an adversary proceeding. The Memorandum of Understanding In May 2001, the Lead Plaintiffs and the Defendants entered into a memorandum of understanding to settle the claims alleged in the Securities Class Action. The Defendants agreed to cause their insurance carriers to pay $17,400,000 to the Plaintiffs in exchange for releases. The Defendants and the Underwriters entered into a Settlement Funding and Release Agreement. The Underwriters consented to the MOU and agreed to fund the entire $17,400,000 settlement in exchange for obtaining a release from liability under certain insurance policies. Liquidator Blocks MOU After Reliance Insurance Company was placed in rehabilitation, the Liquidator filed an emergency petition to block the MOU and Funding Agreement. In April 2003, the Official Unsecured Creditors' Committee and the Official Unsecured Bank Committee appointed in RGH's case and the RIC Liquidator entered into a global settlement agreement resolving various pending lawsuits and claims involving the Liquidator, RGH and Reliance Financial Services Corporation, and providing for the allocation of assets between RGH and RFSC on the one hand, and RIC on the other. Both Bankruptcy Court and Commonwealth Court approved the PA Settlement Agreement. In July 2004, the Southern District of New York Court granted the Plaintiffs' request to enforce the MOU and the Funding Agreement. The Liquidator then filed an appeal to the Order in the U.S. Court of Appeals for the Second Circuit Court. Plaintiffs and Liquidator Execute LOA The Plaintiffs and the Liquidator executed a letter agreement in September 2004, wherein the Plaintiffs agreed to reduce the settlement amount to $15,000,000, in exchange for the Liquidator's withdrawal of the appeal. The Koken Settlement In April 2005, the Bankruptcy Court granted the Creditors Committee's request to approve the settlement of "Koken v. Steinberg, et al.," which was filed by the Liquidator in the Commonwealth Court against 18 former directors and officers of RIC. The Commonwealth Court also approved the Koken Settlement on May 10, 2005. Under the Koken Settlement, the Liquidator is to receive not less than $85,000,000: -- 40% of which will be allocated among RGH and RFSC according to the PA Settlement Agreement; and -- which will then be divided between RGH and RFSC according to the terms of a court-approved settlement term sheet dated January 29, 2004, concerning the division of assets between them. In accordance with the Koken Settlement, the Underwriters funded into escrow the settlement amount in the Securities Class Action, up to a $15,000,000 cap. One of the conditions precedent to the effectiveness of the Koken Settlement is the final resolution of the Securities Class Action. The parties to the Koken Settlement are also to execute or have executed in escrow a mutual release. The Settlement Agreement The Settlement Agreement provides that: (a) the $15,000,000 escrowed cash will be released to fund the Settlement, subject to reduction for payment of certain costs; (b) the Lead Plaintiffs and the members of the Class will release and forever discharge all claims or liabilities arising from matters involved in the complaint and relating to the purchase of the relevant securities of the Debtor during the period between February 8, 1999, and December 6, 2000; (c) the Defendants will release any and all claims or liabilities against the Lead Plaintiffs relating to the institution, prosecution or settlement of the Securities Class Action; (d) the release of claims relating to the Derivative Action will become effective; and (e) The Defendants will release the Underwriters from all claims or liabilities for coverage under the insurance policies issued by the Underwriters for the Settled Claims. The Liquidator notes that the Settlement Agreement will result in substantial benefit to the Reliance estate. The Agreement will result in the resolution of costly and contentious litigation arising from the claims asserted in the Securities Class Action and the Derivative Action. Moreover, the resolution of the Class Action and the effectiveness of the Settlement Agreement is a condition precedent to the Koken Settlement. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. On Nov. 7, 2005, the Hon. Eugene Gonzalez issued an order confirming the Creditors Committee's First Amended Plan for RGH. (Reliance Bankruptcy News, Issue No. 87; Bankruptcy Creditors' Service, Inc., 215/945- 7000) ROYAL CARIBBEAN: S&P Lifts Corp. Credit Rating to BBB- from BB+ --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Royal Caribbean Cruises Ltd., including its corporate credit rating to 'BBB-' from 'BB+'. In addition, the ratings on the Miami, Florida-based company were removed from CreditWatch with positive implications. The outlook is stable. About $4.2 billion in debt was outstanding as of Sept. 30, 2005. "The upgrade reflects a significant improvement in credit measures during 2005, and our expectation that industry conditions will support credit measures in line with the new ratings during the intermediate term," said Standard & Poor's credit analyst Craig Parmelee. RCL's debt has declined by nearly $1.6 billion during the nine months ended Sept. 30, 2005. This figure includes the conversion of nearly $440 million in convertible securities to common equity. In addition, as a result of the healthy operating environment, EBITDA grew by 11% during the nine-month period. RCL will make significant payments related to new ship deliveries in the next three years. As a result, the company could need to borrow modestly in each of 2006 and 2007, and more significantly in 2008. Despite this spending, S&P expects that the company will maintain credit measures in line with the higher ratings throughout this period, even if the operating environment weakens and yields are modestly negative in 2007 and 2008. RYLAND GROUP: Enters Into $750M Bank Credit Facility with JPMorgan ------------------------------------------------------------------ The Ryland Group, Inc. (NYSE: RYL) entered into a $750 million unsecured revolving credit facility. The facility, which matures in 2011, has an accordion feature under which the aggregate commitment may be increased up to $1.5 billion, subject to the availability of additional commitments. The facility replaces the company's existing $500 million revolving credit facility. J.P. Morgan Securities Inc. acted as Lead Arranger and Sole Bookrunner for the new facility with JPMorgan Chase Bank, N.A. as Administrative Agent; Bank of America, N.A. and Wachovia Bank, National Association as Syndication Agents; SunTrust Bank and The Royal Bank of Scotland plc as Documentation Agents; Barclays Bank PLC, Citicorp North America, Inc., Guaranty Bank, PNC Bank, National Association, UBS Loan Finance LLC, and Washington Mutual Bank, FA as Managing Agents; and seven other lenders as Co-Agents or Participants in the facility. Headquartered in Southern California, The Ryland Group, Inc. -- http://www.ryland.com/-- is one of the United States' largest homebuilders and a leading mortgage-finance company. The company currently operates in 27 markets across the country and has built more than 245,000 homes and financed more than 205,000 mortgages since its founding in 1967. Ryland is a Fortune 500 company listed on the New York Stock Exchange under the symbol "RYL." * * * Standard & Poor's Ratings Services rated the company's 9-1/8% Senior Subordinated Notes at BB+. S-TRAN HOLDINGS: Wants Until March 13 to Decide on Leases --------------------------------------------------------- S-Tran Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend until March 13, 2006, the period within which they can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors are a party to one remaining lease located at 728 Jefferson Avenue, Cookeville, Tennessee 38501. Although the Debtors believe that there are no other remaining unexpired leases except the Cookeville lease, they are requesting the extension out of an abundance of caution on their part in the event that they may have inavertedly failed to identify any remaining unexpired leases. Additionally, the requested extension will ensure that any remaining unexpired leases are not inadvertedly deemed rejected by operation of law pursuant to Section 365(d)(4) of the Bankruptcy Code or that the Debtors will be forced to prematurely assume any of those leases. 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: Daniels Defends Right to Pursue Malpractice Suit ---------------------------------------------------------------- As reported in the Troubled Company Reporter on Nov. 28, 2005, Cherice Daniels, Irene Stubbs, Luis Mendoza and Aissatou Nian-Gaye asked the U.S. Bankruptcy Court for the Southern District of New York to vacate the automatic stay to pursue claims for medical malpractice that occurred at Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates' hospitals in Staten Island and Queens. The Debtors asked the Bankruptcy Court to deny the Lift-Stay requests because: (a) the requests seek to pursue claims based on alleged malpractice at their hospital in Brooklyn or Queens, because there is no commercial insurance for these claims and it could be detrimental to their estates to require them to incur litigation expenses at this time; and (b) any request seeks to enforce a judgment against the Debtors or to sever an action to allow a claim to proceed against an individual physician employed by the self- insured Brooklyn or Queens hospitals. Any liquidated claim against the Debtors will be paid as, when and to the extent provided by any confirmed plan of reorganization in their cases. Daniels Responds John M. Daly, Esq., at Fitzgerald & Fitzgerald, P.C., in New York, notes that the Debtors maintained a policy of insurance in effect at the time of the accident, which policy affords coverage for the medical malpractice claims filed by Cherice Daniels, on behalf of her infant son, Dante Daniels. Mr. Daly argues that the Debtors' objection to the Daniels request hinges on a misconstruction that Ms. Daniels did not seek to enforce a judgment against SVCMC except to the extent of available insurance coverage. Mr. Daly reminds the Court that Ms. Daniels seek relief: -- to continue prosecuting her State Court Action; -- to proceed to trial in the State Court Action with the proviso that any judgment against SVCMC not be enforced beyond the amount of its available insurance coverage; and -- to have the matter referred back to the Bankruptcy Court should there be any judgment sum against SVCMC in excess of the insurance coverage limits. Mr. Daly asserts that allowing the Daniels State Court Action to move forward will resolve Ms. Daniels' claims. Ms. Daniels does not rule out limiting her son's recovery, if any, to the amount of applicable medical liability policy and third-party excess policies. However, whether to do so is not an issue necessarily to the Court's determination whether to lift the stay. Moreover, the State Court Action will not interfere with the Debtors' bankruptcy proceedings and does not involve property necessary to the reorganization plan, Mr. Daly maintains. Also, the State Court Action does not involve SVCMC as a fiduciary. In addition, the State Court Action would not prejudice the interests of other creditors as the request is purely an issue of existing insurance coverage. Mr. Daly further contends that the primary insurance also covers defense costs to the extent suits have been commenced and coverage limits have not been exhausted. Accordingly, it is not an undue burden for SVCMC to defend the action. The State Court Action was commenced on November 8, 2002, and after three years, it hasn't been resolved yet, Mr. Daly tells Judge Beatty. In the interests of judicial economy and the expeditious and economical resolution or litigation, Ms. Daniels' Action should be allowed to move forward without further delay. Mr. Daly insists that SVCMC's objection to the Lift Stay Request should be disregarded on the basis that it is irrelevant. Debtors Seek Additional Time Saint Vincent Catholic Medical Centers has previously opposed the requests to lift the automatic stay filed by these four claimants: * Cherice Daniels, * Irene Stubbs, * Luis Mendoza, and * Aissatou Nian-Gaye. Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that the Debtors have presented to the Court a preliminary methodology to address requests to lift the bankruptcy stay and the universe of medical malpractice claims. To permit parties-in-interest the opportunity to consider the most effective and efficient means to liquidate malpractice claims and to provide medical malpractice claimants to comment on the Debtors' proposed methodology, the Debtors ask the Court to adjourn the hearing on the requests to January 17, 2006. 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. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Marziale Airs Side in Insurance Coverage Dispute ---------------------------------------------------------------- On behalf of Lynn Marziale, Bradley A. Sacks, Esq., asserts that Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates continue to confuse claims against the uninsured Brooklyn and Queens facilities with those of the fully insured Manhattan and Staten Island facilities during the periods of time in which the claims arose. Mr. Sacks insists that it is "unfair and prejudicial to lump claims together when the relevant consideration is how many claims are pending against the relevant policies by policy period." The Debtors do not assert that the Marziale claim affect policies for which a projected coverage shortfall may exist. As reported in the Troubled Company Reporter on July, 22, 2005, Ms. Marziale, administrator of the estate of Luke M. Parlatore, asked the Court to modify the automatic stay to allow her to continue with her personal injury action against the Debtors in the New York Supreme Court. The lawsuit seeks to recover for the wrongful death and pre-death pain and suffering of Mr. Parlatore allegedly caused by medical malpractice committed by agents and employees of Saint Vincent Catholic Medical Center of Richmond, in Staten Island, New York. Marziale's Argument Mr. Sacks argues that the information provided in the Debtors' Insurance Report merely confirms what was already known -- that the Manhattan and Staten Island claims are insured and covered by substantial trust funds, while the Brooklyn and Queens claims are not. Therefore, the claims against each stand on a totally different footing. The only reservation offered by the Debtors as to whether or not sufficient insurance exists for all Manhattan and Staten Island claims is made to very specific, very limited periods of time. According to Mr. Sacks, the Debtors, while indicating that they need additional time to evaluate the claims, have neither actively sought to reach out to Ms. Marziale nor established any sort of timetable to do so. Mr. Sacks also reminds Judge Beatty that Ms. Marziale has agreed to limit her recoveries to available insurance. Whatever turns out, she has agreed to forego any claim directly against the Debtors' assets. Moreover, the Medicare regulation cited in the Insurance Report mandates that the "self-insured" funds be segregated in an independently controlled trust and utilized only for payment of enumerated liabilities, none of which are general debts of the Debtors. Therefore, whatever the level of funding exists for Manhattan and Staten island claims, these designated self-insurance "trust funds" are not available to the general creditors of the Debtors. Accordingly, Ms. Marziale agreed to be bounded by the ultimate determination and that concession should be regarded as valuable to the Debtors. Mr. Sacks contends that Ms. Marziale is prejudiced by the further delay while the Debtors have offered no good cause. "Witnesses move, memories fade and documents become misplaced," Mr. Sacks tells the Court. Debtors Want Hearing Adjourned The Debtors have presented to the Court a preliminary methodology to address requests to lift the bankruptcy stay and the universe of medical malpractice claims. To permit parties-in-interest the opportunity to consider the most effective and efficient means to liquidate malpractice claims and to provide medical malpractice claimants to comment on the Debtors' proposed methodology, the Debtors ask the Court to adjourn the hearing on Ms. Marziale's request to January 17, 2006. 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. 17; Bankruptcy Creditors' Service, Inc., 215/945- 7000) SCIOTO NATIONAL: Voluntary Chapter 11 Case Summary -------------------------------------------------- Lead Debtor: Scioto National 6457 Reflections #200 Dublin, Ohio 43017 Bankruptcy Case No.: 06-50075 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Continental Midwest Financial 06-50076 Bancshare Investors Brokerage 06-50077 Type of Business: The Debtors offer financial services. Chapter 11 Petition Date: January 10, 2006 Court: Southern District of Ohio (Columbus) Judge: John E. Hoffman Debtors' Counsel: James D. Pohlman, Esq. Law Offices of James D. Pohlman 105 North Broadway Street Spencerville, Ohio 45887 Tel: (419) 647-6671 Estimated Assets Estimated Debts ---------------- --------------- Scioto National $500,000 to $1 Million to $1 Million $10 Million Continental Midwest $500,000 to $1 Million to Financial $1 Million $10 Million Bancshare Investors Unknown Unknown Brokerage The Debtors did not file a list of their 20 largest unsecured creditors. SEASPECIALTIES INC: Trustee Needs Time to Contest LaSalle's Liens ----------------------------------------------------------------- Soneet R. Kapila, the chapter 7 Trustee of SeaSpecialties, Inc., and its debtor-affiliates, asks the U.S. Bankruptcy Court for the Southern District of Florida for more time to challenge LaSalle Business Credit, LLC's security interests. The Trustee also wants to compel LaSalle to produce certain documents and witnesses related to its prepetition dealings with the Debtors. LaSalle Security Interests In November 2005, LaSalle sought permission from the Bankruptcy Court to lift the automatic stay so that it can liquidate collateral securing its claims against SeaSpecialties. LaSalle is the Debtors' primary secured lender and has been actively involve in the administration of their bankruptcy estates. The Bankruptcy Court granted LaSalle's request on Dec. 20, 2005. The order authorized LaSalle to exercise its state law remedies with respect to the Debtors' remaining assets subject to the Trustee being afforded 45-days to challenge LaSalle's security interests. That 45-day period ends today. The Trustee tells the Bankruptcy Court that she has been unable to research and challenge LaSalle's security interests since LaSalle has continued to withhold documents that could prove the validity of its liens. The Trustee asks the Bankruptcy Court to extend her deadline to challenge LaSalle's liens until at least 30 days following the delivery of the requested documents. Rule 2004 Inquiry The Bankruptcy Court had previously directed LaSalle to produce documents and witnesses in accordance with a request for examination pursuant to Rule 2004 of the Federal Rules of Bankruptcy filed by the Debtor's subsidiary, Homarus/Marshall Smoked Fish, Inc. LaSalle promised to deliver the Documents by December 2005. The documents remain undelivered to date. On Dec. 23, 2005, the Trustee served a notice of Rule 2004 examination to LaSalle and requested for the production of substantially similar documents as those requested by Homarus/Marshall. The discovery notices required LaSalle to produce documents by Jan. 5, 2006, and witnesses by Jan. 11, 2006. Instead of Complying with the Trustee's request, LaSalle filed a motion for Protective Order. In the Protective Order motion, LaSalle argued that the Trustee's discovery requests were overbroad, unduly burdensome and unlimited in time. The Trustee maintains that LaSalle's Protective Order motion is without legal merit. 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. SHAWNE BRYANT: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Shawne R. Bryant, M.D. 3741 Little Neck Point Virginia Beach, Virginia 23452 Bankruptcy Case No.: 06-70036 Type of Business: The Debtor is a medical doctor. Chapter 11 Petition Date: January 12, 2006 Court: Eastern District of Virginia (Norfolk) Judge: Stephen C. St. John Debtor's Counsel: Kelly Megan Barnhart, Esq. Marcus, Santoro & Kozak, P.C. 1435 Crossways Boulevard, Suite 300 Chesapeake, Virginia 23320-2896 Tel: (757) 222-2224 Fax: (757) 333-3390 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 941 returns $25,900 Insolvency Unit P.O. Box 10025 Richmond, VA 23240-0025 Academy Collection Service Credit card debt $24,129 Attn: Bryan Days owed originally to 10865 Dacatur Road Cititcard Visa, Philadelphia, PA 19154 which has also been referred to NCO for collection NCO Credit card debt $24,129 507 Prudential Road owed originally to Horsham, PA 19044 Cititbank Visa, which has also been referred to Academy Collection Service for collection CITIcard Credit card purchases; $24,129 also being collected by Academy Collection Service and NCO BPA Trade debt $17,600 MidAtlantic Trade debt $4,485 Pitney Bowes Credit Corp. Trade debt $3,998 City of Virginia Beach Personal property tax $3,336 Purchase Power Trade debt $2,984 IKON Financial Services Trade debt $2,248 IOS Capital, Inc. Trade debt $2,248 LTD Financial Services Trade debt $1,792 Office Max Trade debt $1,792 Credit Adjustment Board Trade debt $1,066 Payer Path Trade debt $1,066 David C. Brown Services provided $950 Daniel F. O'Connell Services provided $600 LabCorp Trade debt $512 PBS Med. Com. Trade debt $488 Hampton Roads Communications Trade debt $475 STRATOS GLOBAL: Moody's Rates $150 Million Sr. Unsec. Notes at B2 ----------------------------------------------------------------- Moody's Investors Service lowered the Corporate Family and Senior Secured ratings of Stratos Global Corporation to B1 from Ba2 and assigned a B2 rating to Stratos' Senior Unsecured Notes issue. Moody's also affirmed the company's SGL-3 speculative grade liquidity rating. The outlook is stable. This action concludes the ratings review commenced on Aug. 5, 2005 and fully reflects the anticipated closing of Stratos' all-debt acquisition of Xantic B.V. for approximately US$190 million, on or around Jan. 31, 2006. The B1 Corporate Family rating is supported by: 1) Stratos' global position as the leading Inmarsat service provider, representing approximately 45% of Inmarsat's revenues (pro-forma the Xantic acquisition); 2) Stratos' #1 market share in each of the key related verticals, including maritime, land, leasing and carrier; 3) Stratos' diversification by product, based on its presence in mobile satellite, fixed satellite and microwave services, as well as its diversified industry, end-user customer and geographic market; 4) the potential for recent industry pricing pressures to ease following in-market consolidatio; and 5) the company's low cost base relative to peers, which we expect may improve further once synergies from the Xantic acquisition are realized. The rating is constrained by: 1) Stratos' dependence on a single satellite provider (Inmarsat) for approximately two-thirds of its pro-forma revenue; 2) the high degree of price competition within the remote communications industry generally, which combined with the "on-demand" nature of the majority of Stratos' revenue, may lead to the volatility of cash flows over the rating horizon; 3) Moody's belief that credit metrics are unlikely to see material improvement before 2007; 4) integration risks associated with the Xantic acquisition, which will increase the size of Stratos' revenue base by roughly 50%; and 5) Moody's opinion that Stratos may eventually pursue further acquisitions once the Xantic integration is complete. The stable outlook reflects Moody's belief that Stratos' results and credit metrics should begin to steadily improve beginning in early 2007 tempered by execution risks of the integration and expected cash consumption through 2006. Following the acquisition of Xantic, Stratos' pro-forma leverage (debt/EBITDA) will increase to over 4x from roughly 2.5x currently (TTM Q3/05). In addition, several other key credit metrics will initially similarly deteriorate. Furthermore, Moody's expects Stratos to consume a modest amount of cash through the next year (largely as a result of integration charges related to the acquisition) and that most credit metrics are unlikely to see much improvement until 2007 when the full benefits of the acquisition and the recent BGAN service launch potentially take hold. The ratings might be upgraded if Moody's were to believe that Stratos were able grow its revenues at mid single digits and improve its EBITDA margin into the upper teens while controlling capital expenditures to less than 6% of revenues all on a sustainable basis. These trends would be expected to reduce debt/EBITDA leverage towards 3x, improve (EBITDA-Capex)/ Interest to well over 2x and produce FCF/debt of roughly 10% all within a two year horizon. Moody's believes this outcome would most likely occur if Stratos were able to successfully integrate Xantic and realize US$20 -- US$25 million in annual synergies, current pricing pressures were to ease following industry consolidation and the new BGAN service meets with success. Alternatively, the rating might be downgraded if Stratos were unable to grow revenues organically and at least maintain an EBITDA margin of roughly 15% through a two year horizon. Moody's believes this outcome would likely be associated with debt/EBITDA remaining above 4x, (EBITDA-Capex)/ Interest near 1.5x and FCF/debt of less than 3%. The US $270 million Senior Secured bank facility consists of three tranches and will be used together with the US$150 million Senior Unsecured Notes to fund 100% of the Xantic acquisition and refinance the existing US $175 million Senior Secured facilities (US$165 million outstanding at Sept. 30, 2005). As the Senior Secured Facilities comprise the majority of the debt capital they have been rated at the same level as the Corporate Family Rating. The Senior Unsecured Notes are supported by upstream guarantees and have been notched one level below the Corporate Family rating to reflect their junior ranking position to the Senior Secured debt. Moody's does not expect Stratos to pursue further material acquisitions until the Xantic integration is largely complete. However, Moody's believes it is very possible that Stratos will be motivated to seek further consolidation opportunities beyond that timeframe, which may limit improvement to credit metrics over the longer term. Stratos' speculative grade liquidity rating of SGL-3 reflects Moody's belief that Stratos' liquidity remains adequate. Following the close of the acquisition, Moody's expects Stratos to have cash balances of roughly US$30 million and full access to its US$25 million committed revolver which is not expected to be drawn. Moody's believes these cash sources will support expected modest cash consumption in 2006 and minimal scheduled debt repayments. Finally, as Stratos' assets are already pledged to the B1 rated Senior Secured debt which is rated at the same level as the corporate family rating, Moody's does not believe the company would be able to raise additional liquidity from its assets if unexpected adverse events were to occur. These ratings are impacted by this action: * Corporate Family B1 (downgraded from Ba2) * Senior Secured B1 (downgraded from Ba2) -- Revolver Authorization, due January 2011 US$25 million (Currently matures December 2009) -- Term Loan A, due January 2011 US$20 million (new) -- Term Loan B, due January 2012 US$225 million (Currently US$150 million maturing December 2010) * Senior Unsecured B2 (assigned) -- Senior Unsecured Notes, due January 2013 US$150 million * Speculative Grade Liquidity SGL-3 (affirmed) Stratos Global Corporation is a global provider of mobile and fixed satellite-based communications services, with headquarters in St John's, Newfoundland, Canada, and executive offices in Bethesda, Maryland. TECHNEGLAS INC: Gets Court Nod to Assume 34 Contracts & Leases -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Ohio, Eastern Division, gave Techneglas, Inc., permission to assume 34 executory contracts and unexpired leases. A list of the assumed agreements is available at no charge at http://ResearchArchives.com/t/s?448 As reported in the Troubled Company Reporter on Nov. 11, 2005, the Debtors believed that the agreements are necessary for it to operate successfully upon emergence from bankruptcy. If it were unable to assume the agreements, the Debtors may likely be forced to renegotiate with many of the counterparties to the agreements to obtain the applicable goods and services. If this happens, the Debtors may lose the favorable terms of the agreements. The Debtors assured the Court that it will pay the cure amounts on account of each of the agreements following Court approval. Upon payment of the cure amounts, the Debtors submit that it will have fully cured all defaults arising under the agreements and be in full compliance with Section 365 of the Bankruptcy Code. Headquartered in Columbus, Ohio, Techneglas, Inc. -- http://techneglas.com/-- manufactures television glass (CRT panels, CRT funnels, solder glass and specialty glass), dopant sources, glass resins and specialty bulbs. The Company and its debtor-affiliates filed for chapter 11 protection on Sept. 1, 2004 (Bankr. S.D. Ohio Case No. 04-63788). David L. Eaton, Esq., Kelly K. Frazier, Esq., and Marc J. Carmel, Esq., at Kirkland & Ellis, and Brenda K. Bowers, Esq., Robert J. Sidman, Esq., at Vorys, Sater, Seymour and Pease LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $137 million and total debts of $336 million. The Court confirmed the Debtor's First Amended Joint Plan of Reorganization on Oct. 7, 2005. TELOGY INC: Court Establishes February 9 as Claims Bar Date ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California set Feb. 9, 2006, as the deadline for all creditors owed money by Telogy, Inc., on account of claims arising prior to Nov. 29, 2005, to file their proofs of claim. All Governmental Units must file proofs of claim on May 30, 2006 at 5:00 p.m. Creditors must file written proofs of claim on or before the February 9 Claims Bar Date and those forms must be delivered to: Telogy, Inc. c/o Omni Management Group, LLC 16161 Ventura Blvd. PMB # 608 Encino, CA 91436 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 restructurng efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. TRUST ADVISORS: Hires Shipman & Goodwin as Gen. Bankruptcy Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Connecticut gave Trust Advisors Stable Value Plus Fund permission to employ Shipman & Goodwin LLP as its general bankruptcy counsel. Shipman & Goodwin will: 1) advise the Debtor of its rights, powers and duties as a Debtor and debtor-in-possession in the continued management and operation of its business and property, including the management and control of funds in the trust; 2) advise and assist the Debtor in the negotiation and documentation of debt restructuring and its related transactions; 3) advise the Debtor concerning the actions that it might to collect and recover property for the benefit of its estates; 4) prepare on behalf of the Debtor certain necessary and appropriate applications, motions, pleadings, draft orders, notices, schedules and other documents; 5) counsel the Debtor in connection with the formulation, negotiation and promulgation of a plan of reorganization and its related documents; and 6) perform all other legal services to the Debtor that are necessary or appropriate in the administration of its chapter 11 case. Ira H. Goldman, Esq., a partner of Shipman & Goodwin, is one of the lead attorneys for the Debtor. Shipman & Goodwin intends to apply with the Court for compensation for services rendered and reimbursement of expenses incurred post- petition in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules and the Local Rules of Bankruptcy Procedures. Shipman & Goodwin had not yet submitted its retainer amount and hourly rate of its professionals to the Debtor when the Debtor filed its request with the Court to employ the Firm as its general bankruptcy counsel. Shipman & Goodwin assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Darien, Connecticut, Trust Advisors Stable Value Plus Fund is a collective trust for employee benefit plan investors and was created to serve as an investment vehicle for various types of pension plans qualified under Section 401(a)of the Internal Revenue Code. The Company filed for chapter 11 protection on Sept. 30, 2005 (Bankr. D. Conn. Case No. 05-51353). When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. TRUST ADVISORS: Murray Becker Approved as Financial Consultant -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut gave Trust Advisors Stable Value Plus Fund permission to employ Murray L. Becker, a Fellow of the Society of Actuaries, as its financial advisor and consultant. Mr. Becker will: 1) evaluate the Debtor's current investment policy and action plan for restoring the Debtor's Plus Fund's assets to book value, including underlying support to determine the reasonableness of the assumptions used to develop the action plan; 2) assist the Debtor with the formulation of a plan of reorganization and any alternatives that may be developed; 3) render expert testimony, as requested by the Debtor from time to time, regarding stable value investment issues, the feasibility of a plan of reorganization and other related matters; 4) assist the Debtor in complying with the reporting requirements of the Office of the U.S. Trustee; and 5) perform all other financial advisory and consulting services as requested by the Debtor from time to time. Mr. Becker disclosed that he charges $400 per hour for his services and his advisory and consulting fee is $10,000. Mr. Becker assures the Court that he does not represent any interest materially adverse to the Debtor or its estate Headquartered in Darien, Connecticut, Trust Advisors Stable Value Plus Fund is a collective trust for employee benefit plan investors and created to serve as an investment vehicle for various types of pension plans qualified under Section 401(a)of the Internal Revenue Code. The Company filed for chapter 11 protection on Sept. 30, 2005 (Bankr. D. Conn. Case No. 05-51353). Scott D. Rosen, Esq., at Cohn Birnbaum & Shea P.C. and Ira H. Goldman, Esq., at Shipman & Goodwin LLP represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. UAL CORP: Wants Court to Bless Disney Settlement Accord ------------------------------------------------------- Before filing for bankruptcy, UAL Corporation and its debtor- affiliates entered into leveraged lease financing arrangements relating to certain aircraft. Walt Disney Pictures and Television was the owner participant under the Financing Transactions. On May 12, 2003, Disney filed unsecured claims against the Debtors on account of certain rights, remedies, and liabilities arising under the Financing Transactions: Claim No. Tail No. Claim Amount --------- -------- ------------ 37718 N183UA $67,000,000 37719 N648UA 34,000,000 37720 N184UA 68,000,000 37721 N647UA 37,000,000 On July 26, 2005, the Debtors objected to Claim No. 37718, asserting that the claim was contractually barred and duplicative of other claims asserted by, or on behalf of, the debtholders in the Financing Transactions in the Debtors' Chapter 11 cases. The Debtors requested that the claim be disallowed in full. "As this Court knows, the duplicativeness argument asserted by United is not one supported -- or contradicted -- by direct precedent and has created a great deal of controversy within the leveraged lease universe," David A. Agay, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, informs Judge Wedoff. The Debtors have argued that all aircraft and tax indemnity claims, as well as the claims of numerous owner participants other than Disney, should be significantly reduced even if the Court did not sustain the Duplicativeness Objection. After extensive litigation and arm's-length negotiations, the Debtors and Disney agreed to settle all issues asserted in the Objections and allow the Claims in these amounts: Settlement Claim No. Tail No. Amount --------- -------- ---------- 37718 N183UA $16,000,000 37719 N648UA 8,000,000 37720 N184UA 17,000,000 37721 N647UA 9,000,000 The settlement is codified in a stipulation between the Debtors and Disney, which provides that: (a) each of the Claims will be deemed amended to assert claims only for the stated Settlement Amounts; (b) the Amended Claims will be allowed as non-priority general, unsecured claims against the Debtor's bankruptcy estate; (c) the Debtors will withdraw their objection to Claim No. 37718 and the Objection as to Disney with prejudice. Mr. Agay points out that the settlement with Disney resolves highly complex and untested issues of interest not only to the Debtors and the Claims but to other owner participants as well. "Irrespective of how the Court rules, appeals that would extend well beyond confirmation of the Debtors' chapter 11 plan are a certainty," Mr. Agay explains. "The prospect of continued protracted litigation over the Objections may necessitate Debtors reserving significant amounts of equity in reorganized United to account for disputed TIA claims at exit." Mr. Agay notes that the Settlement provides numerous benefits. Specifically: (1) The Stipulation reduces the Disney claims from an aggregate of over $200,000,000 to $50,000,000, which entails a 75% reduction that will enhance the value of the distributions under the Plan of Reorganization to other unsecured creditors that would otherwise be diluted by the Claims. (2) The Settlement can serve as a template for settlements with the other owner participants representing, together with the Claims, over $5,000,000,000 in unsecured claims filed against the Debtors. If the Debtors can, in the short term, similarly reduce the claims of other owner participants, unsecured creditors in the bankruptcy cases will realize a further, significant improvement in the value of their distributions under the Plan. (3) Absent a settlement with Disney and the other owner participants, protracted litigation and appeals are assured. Ongoing litigation in the District Court and beyond may spawn related disputes as to the size of the Debtors' disputed claims reserve under the Plan, which could significantly delay -- and will certainly reduce the size of -- interim distributions after the Plan's effective date. (4) Because of the novel issues raised by the Debtors' Objections, and the lack of guiding precedent, the Debtors can by no means be certain of the Objections ultimately being sustained. The issue of calculation of base indemnity and gross-up amounts is a novel issue before the Court. Moreover, the issue of whether the TIA creates a separate and enforceable claim on the part of owner participants, notwithstanding the allowance of an SLV- based claim for the benefit of debtholders is a complex and multi-layered issue -- one which counsel for some of the intervening owner participants have rightly pointed out has not been raised in previous airline bankruptcies. "In short, the settlement of the Claims now, and the potential settlement of other owner participant claims in the short term, will result in a tremendous benefit to the efficiency of the Plan voting and distribution processes," Mr. Agay maintains. These compromises are favored in bankruptcy and typically approved by courts as tools for expediting the administration of the case and reducing costs, Mr. Agay adds. For these reasons, the Debtors ask the Court to approve the settlement agreement with Disney in their entirety. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 112; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORPORATION: Inks Pact Resolving American Air Dispute --------------------------------------------------------- On May 8, 2003, American Airlines, Inc., filed Claim No. 36785 against UAL Corporation and its debtor-affiliates for $74,500,000. Claim No. 36785 had three components: (a) the JFK Terminal 8 and 9 Claim -- a $70,000,000 claim for estimated costs allegedly incurred by American at John F. Kennedy International Airport in connection with environmental contamination at Terminals 8 and 9 purportedly caused by discharges of jet fuel, gasoline, and diesel fuel; (b) the LGA Claim -- a claim for $300,000 based on an assessment by the New York Department of Conservation for contamination at the fuel farm and bulk and satellite fuel facilities at LaGuardia International Airport; and (c) the JFK Fuel Facilities Claim -- a claim for $4,200,000 based on an assessment by the NY Department of Conservation for contamination at the JFK bulk and satellite fuel facilities. The Debtors objected to Claim No. 36785. American responded. On July 6, 2005, American filed Claim No. 44609, which amended and superseded Claim No. 36785. American's Claim No. 44609 still sought recovery from the Debtors for the same JFK Fuel Facilities Claim and the same LGA Claim, but reduced the amount of the JFK Terminal 8 and 9 Claim from $70,000,000 to $34,300,000. On June 30, 2004, the Court entered a trial order establishing a schedule to resolve Claim No. 36785. The trial order effectively held in abeyance litigation over Claim No. 36785 until the Debtors filed their plan of reorganization. On September 7, 2005, the Debtors filed their Plan, thus, triggering the schedule set forth in the trial order. The Debtors and American have since engaged in negotiations to resolve the claim pursuant to the trial order's scheduling of a settlement conference. After extensive negotiations, the Debtors and American reached a settlement agreement resolving Claim No. 36785. By this motion, the Debtors seek the Court's authority to enter into the Settlement Agreement with American. Under the Settlement: (a) American will be allowed a general unsecured claim against Debtors for $7,500,000 in full and final compromise and settlement of any and all claims that American may have related to Claim No. 36785; (b) The Debtors and American release, discharge and covenant not to sue each other from any and all claims that relate to Claim No. 36785; and (c) American waives and releases all claims related to any matter addressed in Claim No. 36785 that it might have now or in the future against any of Debtors' insurance carriers, except for $500,000 in sale proceeds in the event that an "Insurance Sale" is consummated and approved. James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, explains that the Debtors are currently negotiating a separate settlement with certain of their insurers through which the Debtors would sell back to certain insurers their insurance policies in exchange for settlement amounts corresponding to the Debtors' environmental insurance coverage claims at various sites, including the Debtors' alleged liability with respect to Claim No. 36785. If the Insurance Sale is consummated and approved, the Debtors will pay American $500,000 from the sale proceeds. However, if the Insurance Sale is not consummated and approved by May 1, 2006, American has the option to elect to convert its right to the $500,000 of insurance proceeds from the Insurance Sale to a $10,000,000 unsecured claim against the Debtors. In the event that the Insurance Sale is not consummated and approved prior to July 31, 2006, American's right to the $500,000 of proceeds from the Insurance Sale will automatically convert to a $10,000,000 unsecured claim. Settlement Must be Approved The Settlement resolves a substantial claim that has required extensive review by the Debtors and their consultants, Mr. Mazza relates. The dispute between the Debtors and American regarding contamination at JFK Terminal 9 has been pending for nearly a decade and involves highly complex factual and scientific matters. In the absence of a settlement, Mr. Mazza says, it would likely take many months or years and significant resources to resolve the matter. In accordance with the agreed-upon and Court-approved trial procedures to resolve Claim No. 36785, the Debtors would be required to engage in extensive pre-trial and trial activities over the next eight months, including: (1) extensive fact and expert discovery, including depositions of up to 21 fact witnesses and 12 expert witnesses; (2) preparation of a complex expert case; (3) pre-trial briefing and motions; and (4) potentially a five-day hearing. The pre-trial and trial activities will result in significant and unnecessary expenses for the Debtors and would distract the Debtors from other, more pressing matters. Given the expense and uncertainty associated with further litigation of Claim No. 36785, the Debtors have determined that it is unlikely that they could substantially improve the benefit to the estate by continuing the litigation rather than accepting the benefits of the proposed Settlement Agreement. Additionally, Mr. Mazza asserts that the Settlement Agreement is a product of good business judgment because it is structured to minimize the impact of American's claim on the Debtors' estates, while ensuring American the benefit of its bargain. As structured, the Settlement Agreement allows the Debtors the opportunity to satisfy a portion of American' s claim with insurance proceeds. However, if the Debtors are unable to obtain insurance proceeds to satisfy American's claim by July 31, 2006, or, if American exercises its option to convert its right to insurance proceeds to an unsecured claim during the option period, American will effectively receive the equivalent economic value in the form of an additional $10,000,000 general, unsecured claim. In effect, Mr. Mazza maintains, the Settlement Agreement provides the Debtors with a reasonable opportunity to obtain insurance proceeds, but also ensures that Claim No. 36785 will be finally resolved within a reasonable period. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 112; Bankruptcy Creditors' Service, Inc., 215/945-7000) VOLT INFORMATION: Earns $8.4 Mil. of Net Income in Fourth Quarter ----------------------------------------------------------------- Volt Information Sciences, Inc. (NYSE: VOL) reported financial results for the Company's fourth quarter and fiscal year ended Oct. 30, 2005. For the fourth quarter of fiscal 2005 ended Oct. 30, 2005, the Company reported net income of $8.4 million compared to $11.5 million in the 2004 fiscal fourth quarter. Income from continuing operations for the 2004 fiscal fourth quarter included a gain from the sale of real estate of $3.3 million. The decline in net income for the quarter from the 2004 fiscal fourth quarter, net of the real estate gain, was primarily the result of expenses incurred during the quarter for the Sarbanes-Oxley Act Section 404 project, including audit and consulting fees, as well as increased fees for the year end audit. Net sales for the 2005 quarter increased by 11% to $590.2 million, compared to $531.6 million in last year's comparable quarter. Total segment operating profit increased by 14.7% over the 2004 comparable quarter. For the twelve months of fiscal 2005, the Company reported net income of $17 million on net sales of $2.178 billion, compared to net income of $33.7 million on net sales of $1.925 billion last year. As in the fourth quarter, an increase in the operating profit was more than offset by higher general corporate expenses for the year. The company reported income from continuing operations of $17 million in the twelve months ended Oct. 30, 2005, compared to $24.2 million in the comparable fiscal 2004 period. Income from continuing operations for fiscal 2004 included a gain from the sale of real estate of $3.3 million. The results of fiscal 2004 included income from discontinued operations of $14.1 million from the second quarter gain on the sale of real estate previously leased to the Company's formerly 59% owned subsidiary, Autologic Information International, Inc. The Company's interest in the subsidiary was sold in November 2001. Commenting on the results for the fourth quarter and year, Mr. William Shaw, Chairman, President and Co-CEO of Volt, stated "We are pleased by the increases in segment operating profit and revenue for both the year and the fourth quarter. Of particular significance are the benefits derived from the reorganization of the Telecommunications Segment, which produced an operating profit in the fourth quarter compared to a loss of more than $1.0 million in the fiscal 2004 quarter, as well as material strengthening of the Computer Systems segment market position. The previously announced acquisitions, subsequent to the end of the fiscal year, of the minority interest in Delta from Nortel Networks and the Varetis Solutions acquisition enhance the segment's potential for future growth." Staffing Services The Staffing Services segment's sales increased by $37.4 million, or 8%, and its operating profit increased by $0.4 million, or 3%, from the comparable 2004 quarter. Sales increased in three of the segment's business units, Technical Placements, Administrative and Industrial and VMC. The increase in operating profit was the result of improved results for the Technical Placements, ProcureStaff, Administrative and Industrial and Volt Europe divisions, offset by a decline in operating profits in the VMC unit compared to fourth quarter of fiscal 2004. Computer Systems The Computer Systems segment's sales increased by $5.7 million, or 15% over the comparable quarter in 2004, and its operating profit for the quarter was approximately equal to the fourth quarter 2004 profit. Increased operating profit in the Information Systems unit, including Operator Services, was offset by a decline in Maintech's operating profit. Telephone Directory The Telephone Directory segment's sales increased $5.2 million, or 26%, and its operating profit increased $1.8 million, or 62% over the comparable quarter in 2004. The primary reason for the improved results was increased profitability in DataNational and Uruguayan division slightly offset by reduced profitability of the Directory production unit. Telecommunications Services The Telecommunications Services segment's sales increased by $10.1 million, or 29%, from the comparable 2004 quarter. The fourth quarter of 2005 had a profit of $0.8 million compared to a loss in the same quarter of 2004 of $1.2 million. Each of the four divisions in this segment produced improved results over the 2004 quarter, primarily the result of reduced overhead expense achieved by the reorganization of the segment. General Corporate Expenses and Liquidity The increase in General Corporate expenses compared to the 2004 quarter was related to higher professional fees and other costs related to compliance with the Sarbanes-Oxley Act, communications, compensation and expenses necessary to meet the disaster recovery redundancy requirements for business continuity. Cash and cash equivalents, excluding restricted cash, was $62 million at the end of the quarter. At Oct. 30, 2005, the Company had sold a participating interest in accounts receivable of $100.0 million under its securitization program and had the ability to finance an additional $50.0 million under the facility. In addition, the Company may borrow under a $40 million revolving secured credit facility. The facility requires the maintenance of certain accounts receivable balances in excess of borrowings and terminates in April 2008 unless extended. At Oct. 30, 2005, the Company had borrowed EUR2 million under the facility. In December 2005, the Company paid approximately $50.0 million, principally from cash on hand, for the Nortel Networks and Varetis Solutions acquisitions. The remaining $36.8 million is due Feb. 15, 2006. Material Weakness The company has completed testing its internal control over financial reporting as required by the Sarbanes-Oxley Act. Due to the effect of a control deficiency related to the over- depreciation of assets of one of its subsidiaries by approximately $1.1 million, it failed to maintain effective control over financial reporting as of Oct. 30, 2005. Since the control deficiency could have potentially resulted in a material misstatement to the annual financial statements of the Company had it not been corrected, management has determined that it constituted a material weakness as of October 30, 2005, with respect to the Sarbanes-Oxley Act. Volt Information Sciences, Inc. -- http://www.volt.com/-- is a leading national provider of Staffing Services and Telecommunications and Information Solutions with a Fortune 100 customer base. Operating through a network of over 300 Volt Services Group branch offices, the Staffing Services segment fulfills IT and other technical, commercial and industrial placement requirements of its customers, on both a temporary and permanent basis. The Telecommunications and Information Solutions businesses, which include the Telecommunications Services, Computer Systems and Telephone Directory segments, provide complete telephone directory production and directory publishing; a full spectrum of telecommunications construction, installation and engineering services; and advanced information and operator services systems for telephone companies. WHITEHALL JEWELLERS: Might be Willing to Meet Newcastle Partners ---------------------------------------------------------------- Newcastle Partners, L.P. relates that it received a letter from Whitehall Jewellers, Inc. (Pink Sheets: JWLR.PK) which, although criticizing Newcastle's offer as not superior, does hold out the possibility that Whitehall might finally be willing to meet with Newcastle after weeks of delay to negotiate definitive agreements to consummate Newcastle's tender offer. Newcastle Partners, through its whole-owned subsidiary, commenced a cash tender offer to purchase all of the outstanding shares of Whitehall on Dec. 5, 2005. On Jan. 4, 2006, Newcastle said that it was increasing its offer price to $1.50 per share, extending the termination date of the offer to 5:00 pm, New York City time on Friday, Jan. 27, 2006 and eliminating or amending a number of conditions to its offer. Newcastle now believes that the majority of the remaining conditions are now in the control of the Board of Directors of Whitehall. Newcastle also reported that another leading proxy advisor, Glass Lewis & Co., has recommended that shareholders of Whitehall vote against the Prentice Financing proposals and for the Newcastle Partners director nominees at the Special Meeting of Stockholders scheduled for Jan. 19, 2006. In its analysis, Glass Lewis recognized that, "Newcastle's tender offer presents shareholders with a more certain value, and a premium, in exchange for their shares," and that, "Electing the Newcastle nominees to the board will facilitate a sale agreement and fair value for Whitehall shareholders." Speaking on behalf of Newcastle Partners, managing member Mark Schwarz stated: "Having the premier proxy advisors, ISS and now Glass Lewis, recommend a vote FOR the Newcastle nominees and a vote AGAINST the Prentice Financing proposals, clearly bolsters our case that the current Board and management team do not have the best interests of shareholders at heart. We continue to urge our fellow stockholders to vote the GREEN proxy card to help produce maximum value for all Whitehall stockholders." Mr. Schwarz reiterated that: "We believe our offer provides Whitehall's shareholders with a clearly superior alternative to the Prentice transaction. With the elimination of the financing contingency condition from our offer, we do not understand how the Board can continue to justify selling up to 87% of Whitehall to Prentice for as little as $.75 per share rather than allowing shareholders to receive $1.50 per share now." Mr. Schwarz concluded, "The Whitehall Board needs to act now to level the playing field and stop the Prentice deal from going forward until shareholders are able to make an unimpeded choice as to whether they want our premium offer of $1.50 per share or the Prentice Financing which gives shareholders no payment whatsoever." Shareholders who have questions or need assistance in voting their GREEN proxy card are encouraged to call Newcastle's proxy solicitors, MacKenzie Partners, Inc. toll-free at (800) 322-2885. The solicitation and the offer to buy Whitehall Jewellers, Inc.'s common stock is only made pursuant to the Offer to Purchase and related materials that Newcastle Partners, L.P. and JWL Acquisition Corp. filed on Dec. 5, 2005, as amended Dec. 22, 2005, Jan. 4, 2006, Jan. 5, 2006 and Jan. 9, 2006. Stockholders should read the Offer to Purchase and related materials carefully because they contain important information, including the terms and conditions of the offer. Stockholders can obtain the Offer to Purchase and related materials free at the SEC's website at http://www.sec.govfrom MacKenzie Partners, the Information Agent for the offer, or from Newcastle Partners, L.P. 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 * * * As previously reported in the Troubled Company Reporter, 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. WORLDCOM INC: Inks Stipulation Resolving Underwriter Claims ----------------------------------------------------------- WorldCom, Inc., its debtor-affiliates and 23 underwriters were parties to four underwriting agreements dated March 26, 1997, Aug. 6, 1998, May 19, 2000, and May 9, 2001, and a purchase agreement dated Dec. 14, 2000. Pursuant to the agreements, certain of the Underwriter Claimants served as underwriters in connection with certain securities offerings made the Debtors. The Underwriter Claimants are: 1. Salomon Smith Barney, Inc., also known as Citigroup Global Markets, Inc., 2. Salomon Smith Barney Holdings, Inc., 3. Citigroup, Inc., 4. Banc of America Securities, LLC, formerly known as Nationsbanc Montgomery Securities, LLC, 5. Bank of America Corp., 6. Blaylock & Partners, L.P., now known as Blaylock & Co. Inc., 7. Credit Suisse First Boston Corp., now known as Credit Suisse First Boston LLC, 8. Deutsche Bank AG, Deutsche Bank Alex. Brown now known as Deutsche Bank Securities, Inc., 9. Goldman, Sachs & Co., 10. The Goldman Sachs Group, Inc., 11. UBS Warburg, LLC, now known as UBS Securities LLC, 12. ABN AMRO Inc., 13. J.P. Morgan Securities Inc., formerly known as Chase Securities, Inc., 14. J.P. Morgan Chase & Co., 15. Fleet Securities, Inc., 16. Utendahl Capital Partners, L.P., 17. Lehman Brothers, Inc. and Lehman Brothers Holdings, Inc., 18. Tokyo-Mitsubishi International, PLC, now known as Mitsubishi UFJ Securities International PLC, 19. Westdeutsche Ladesbank Girozentrale now known as WestLB AG, 20. BNP Paribas Securities Corp., 21. BNP Paribas, 22. Caboto Holdings SIM S.P.A., now known as Caboto IntescaBci -SIM S.P.A., and 23. Mizuho International, PLC. The Underwriting Agreements contain indemnity and contribution provisions in favor of the Underwriter Claimants for losses, damages and costs incurred as a result of any actions against the Underwriter Claimants arising out of or related to the Securities Offerings. The Underwriter Claimants filed three claims against the Debtors: (1) Claim No. 56, which asserts a claim for indemnification and contribution arising out of the Underwriting Agreement; (2) Claim No. 16156, which amends Claim No. 56; and (3) Claim No. 25637, which amends Claim No. 16156. However, based on information that was not available to the Underwriter Claimants at the time that the Underwriter Claims were filed, the Underwriter Claimants now understand that the assets available for distribution under the Plan are insufficient to provide a recovery for all creditors in the Debtors' Chapter 11 cases. The Underwriter Claimants have concluded that they are not likely to recover a material percentage of the funds that they continue to believe are due under the Underwriter Claims from the Debtors' estate. Accordingly, in a Court-approved stipulation, the Parties agree that: (a) Claim Nos. 56 and 16156 are expunged as duplicative claims; and (b) Claim No. 25637 is allowed as a Class 7 Claim. 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) * Hede & Stogsdill Will Head Alvarez & Marsal's Creditor Advisory ---------------------------------------------------------------- Alvarez & Marsal, a global professional services firm, disclosed that New York-based managing directors Andrew Hede and Dennis Stogsdill have been named national co-heads of the firm's Creditor Advisory Services, which specializes in advising lender groups, bondholders and trade vendors in distressed and non-distressed situations. "For the last five years, Alvarez & Marsal has maintained a dedicated focus on serving the needs of secured and unsecured creditor constituencies involved in complex workout situations," said Bryan Marsal, co-chief executive and a founder of Alvarez & Marsal. "Andrew and Dennis exemplify the world class talent at A&M, and it was for this reason that we asked them to lead our continued expansion in Creditor Advisory Services. They have consistently demonstrated the dedicated focus, expertise, and energy needed to deliver the right answer in high stakes situations." Mr. Marsal emphasized the pair will continue to leverage the firm's deep operational roots, extensive range of restructuring and non-restructuring capabilities and experienced professionals across the United States as well as in Europe, Asia and Latin America to service client needs. Messrs. Hede and Stogsdill have recently been involved in a number of high profile creditor assignments including: * Delphi Corporation, the world's largest automotive component manufacturer, serving as financial advisor to the pre- petition senior lenders; * Winn Dixie Stores, which operated about 900 grocery stores in the Southeastern United States and Bahamas, serving as operations and real estate advisor to the official committee of unsecured creditors; * Fleming Companies, one of the largest wholesale grocery distributors in the U.S., serving as financial advisor to the senior lenders; and * Exide, a maker of automotive and industrial batteries, serving as financial advisor to the senior lenders. Other notable A&M Creditor Advisory assignments have included: * Collins & Aikman, * Oneida, * Bush Industries, * World Kitchen, * Formica, * Microcell Telecom, * Dan River, * DVI, * AT&T Latin America, * Parmalat (Latin America), * US Airways (Retiree Committee), * DS Waters, * Anchor Glass, * Aladdin Casino, * ANC Rental, * Magellan Health, * Polymer and * Rent Way, among others. A seasoned restructuring professional with experience in both the United States and Australia, Mr. Hede has advised clients in numerous formal and out-of-court restructurings. Mr. Hede's primary areas of concentration include financial and operational reviews, liquidity management, business and asset divestment, cross-border insolvency issues, business plan preparation and review, solvency analysis, recapitalization strategies, and negotiation of reorganization plans. Prior to joining A&M, Mr. Hede spent nine years in the corporate restructuring practice of Arthur Andersen and specialist financial consulting firms in New York and Melbourne, Australia. "A&M brings an extensive base of dedicated senior professionals with deep creditor advisory experience across the United States, Europe, Asia and Latin America. This gives us the distinct advantage of being able to effectively service our clients on a regional and international basis, and deliver a consistent level of quality and expertise in complex matters," said Mr. Hede. "The firm's operational heritage combined with our complementary advisory services such as real estate, business consulting and dispute analysis and forensics, position A&M to provide a unique 'one-stop' solution to creditor constituencies." Mr. Stogsdill has been involved in all aspects of the reorganization process primarily in advising troubled companies and creditors in distressed situations by developing creative solutions, including the development of workout, restructuring and refinance scenarios tailored to the individual client or creditor's needs. Mr. Stogsdill has assisted clients in bankruptcy planning, business plan preparation and review, cash flow projections, liquidation analyses, business valuations, and in the development and negotiation of reorganization plans. Prior to joining A&M, Mr. Stogsdill was with a boutique investment bank, where he assisted in the formation of its restructuring practice. Previously, Mr. Stogsdill was with the corporate restructuring practice of Arthur Andersen. "While perhaps better known for turning around troubled companies, A&M has successfully advised creditors in many of the high profile restructurings over the last five years," said Mr. Stogsdill. "Our team of professionals has a proven track record as an advocate for creditor groups and for maximizing returns in complex situations." About Alvarez & Marsal Alvarez & Marsal -- http://www.alvarezandmarsal.com/-- is a leading global professional services firm with expertise in guiding underperforming companies and public sector entities through complex financial, operational and organizational challenges. The firm employs a distinctive hands-on approach by working closely with clients, management and stakeholders to resolve problems and implement solutions. Founded in 1983, Alvarez & Marsal draws on its strong operational heritage to provide specialized services, including: Turnaround and Management Advisory, Crisis and Interim Management, Performance Improvement, Creditor Advisory, Global Corporate Finance, Dispute Analysis and Forensics, Tax Advisory, Business Consulting, Real Estate Advisory and Transaction Advisory. A network of experienced professionals in locations across the US, Europe, Asia and Latin America, enables the firm to deliver on its proven reputation for leadership, problem solving and value creation. * BOND PRICING: For the week of Jan. 9 - Jan. 13, 2006 ------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Comm. 3.250% 05/01/21 3 Adelphia Comm. 6.000% 02/15/06 2 Adelphia Comm. 7.500% 01/15/04 61 Adelphia Comm. 7.750% 01/15/09 60 Adelphia Comm. 7.875% 05/01/09 59 Adelphia Comm. 8.125% 07/15/03 56 Adelphia Comm. 8.375% 02/01/08 59 Adelphia Comm. 9.250% 10/01/02 58 Adelphia Comm. 9.375% 11/15/09 62 Adelphia Comm. 9.500% 02/15/04 55 Adelphia Comm. 9.875% 03/01/05 57 Adelphia Comm. 9.875% 03/01/07 59 Adelphia Comm. 10.250% 11/01/06 60 Adelphia Comm. 10.250% 06/15/11 63 Adelphia Comm. 10.500% 07/15/04 60 Adelphia Comm. 10.875% 10/01/10 60 Aladdin Gaming 13.500% 03/01/10 0 Albertson's Inc. 6.530% 04/10/28 75 Allegiance Tel. 11.750% 02/15/08 26 Allegiance Tel. 12.875% 05/15/08 28 Alt Living Scvs 7.000% 06/01/04 1 Amer & Forgn PWR 5.000% 03/01/30 71 Amer Color Graph 10.000% 06/15/10 71 American Airline 9.980% 01/02/13 69 American Airline 9.980% 01/02/15 67 American Airline 9.980% 01/02/15 67 American Airline 9.980% 01/02/15 67 American Airline 10.430% 09/15/08 70 American Airline 10.430% 09/15/08 70 Amer Plumbing 11.625% 10/15/08 15 Ames Dept Stores 10.000% 04/15/06 0 AMR Corp. 9.750% 08/15/21 16 AMR Corp. 10.125% 06/01/21 74 AMR Corp. 10.150% 05/15/20 75 AMR Corp. 10.200% 03/15/20 70 AMR Corp. 10.550% 03/12/21 75 Amtran Inc. 9.625% 12/15/05 4 Anchor Glass 11.000% 02/15/13 75 Anker Coal Group 14.250% 09/01/07 0 Antigenics 5.250% 02/01/25 58 Apple South Inc. 9.750% 06/01/06 3 Archibald Candy 10.000% 11/01/07 0 Armstrong World 6.350% 08/15/03 75 Armstrong World 6.500% 08/15/05 73 Asarco Inc. 7.875% 04/15/13 56 Asarco Inc. 8.500% 05/01/25 60 ATA Holdings 12.125% 06/15/10 4 ATA Holdings 13.000% 02/01/09 4 At Home Corp. 4.750% 12/15/06 0 Atlantic Coast 6.000% 02/15/34 3 Atlas Air Inc 8.770% 01/02/11 57 Autocam Corp. 10.875% 06/15/14 68 Avondale Mills 10.250% 07/01/13 71 Bank New England 8.750% 04/01/99 6 Bank New England 9.500% 02/15/96 3 Big V Supermkts 11.000% 02/15/04 0 BTI Telecom Corp 10.500% 09/15/07 52 Budget Group Inc. 9.125% 04/01/06 0 Builders Transpt 8.000% 08/15/05 0 Burlington North 3.200% 01/01/45 59 Cell Therapeutic 5.750% 06/15/08 57 Cell Therapeutic 5.750% 06/15/08 51 Cellstar Corp. 12.000% 01/15/07 42 Cendant Corp 4.890% 08/17/06 50 Charter Comm Inc 5.875% 11/16/09 74 Charter Comm Hld 8.625% 04/01/09 73 Charter Comm Hld 9.625% 11/15/09 74 Charter Comm Hld 10.000% 04/01/09 74 Charter Comm Hld 10.000% 05/15/11 54 Charter Comm Hld 10.250% 01/15/10 67 Charter Comm Hld 10.750% 10/01/09 72 Charter Comm Hld 11.125% 01/15/11 58 Clark Material 10.750% 11/15/06 0 Collins & Aikman 10.750% 12/31/11 44 Color Tile Inc 10.750 12/15/01 0 Comcast Corp. 2.000% 10/15/29 40 Compudyne Corp 6.250% 01/15/11 73 Cons Container 10.125% 07/15/09 64 Covad Communication 3.000% 03/15/24 58 CPNL-Dflt12/05 4.000% 12/26/06 10 CPNL-Dflt12/05 4.750% 11/15/23 26 CPNL-Dflt12/05 6.000% 09/30/14 23 CPNL-Dflt12/05 7.625% 04/15/06 42 CPNL-Dflt12/05 7.750% 04/15/09 43 CPNL-Dflt12/05 7.750% 06/01/15 9 CPNL-Dflt12/05 7.875% 04/01/08 42 CPNL-Dflt12/05 8.500% 02/15/11 26 CPNL-Dflt12/05 8.625% 08/15/10 27 CPNL-Dflt12/05 8.750% 07/15/07 39 CPNL-Dflt12/05 10.500% 05/15/06 40 Cray Inc. 3.000% 12/01/24 68 Curagen Corp. 4.000% 02/15/11 68 Curagen Corp. 4.000% 02/15/11 67 Curative Health 10.750% 05/01/11 64 DAL-DFLT09/05 9.000% 05/15/16 25 Dana Corp 5.850% 01/15/15 72 Dana Corp 7.000% 03/15/28 74 Dana Corp 7.000% 03/01/29 74 Delco Remy Intl 9.375% 04/15/12 41 Delco Remy Intl 11.000% 05/01/09 45 Delphi Auto Syst 6.500% 05/01/09 55 Delphi Auto Syst 7.125% 05/01/29 55 Delphi Corp 6.500% 08/15/13 54 Delphi Trust II 6.197% 11/15/33 29 Delta Air Lines 2.875% 02/18/24 23 Delta Air Lines 7.541% 10/11/11 63 Delta Air Lines 7.700% 12/15/05 25 Delta Air Lines 7.900% 12/15/09 26 Delta Air Lines 8.000% 06/03/23 20 Delta Air Lines 8.187% 10/11/17 62 Delta Air Lines 8.300% 12/15/29 26 Delta Air Lines 8.540% 01/02/07 29 Delta Air Lines 8.540% 01/02/07 26 Delta Air Lines 8.540% 01/02/07 53 Delta Air Lines 8.540% 01/02/07 29 Delta Air Lines 9.200% 09/23/14 60 Delta Air Lines 9.250% 12/27/07 17 Delta Air Lines 9.250% 03/15/22 25 Delta Air Lines 9.300% 01/02/10 54 Delta Air Lines 9.320% 01/02/09 55 Delta Air Lines 9.450% 02/26/06 54 Delta Air Lines 9.480% 06/05/06 46 Delta Air Lines 9.750% 05/15/21 24 Delta Air Lines 9.875% 04/30/08 66 Delta Air Lines 10.000% 08/15/08 25 Delta Air Lines 10.000% 05/17/09 62 Delta Air Lines 10.000% 06/01/09 56 Delta Air Lines 10.000% 06/01/10 49 Delta Air Lines 10.000% 06/01/10 69 Delta Air Lines 10.000% 06/01/10 64 Delta Air Lines 10.000% 06/01/11 26 Delta Air Lines 10.000% 06/05/11 54 Delta Air Lines 10.000% 06/18/13 58 Delta Air Lines 10.060% 01/02/16 59 Delta Air Lines 10.080% 06/16/07 60 Delta Air Lines 10.080% 06/16/08 58 Delta Air Lines 10.080% 06/16/08 58 Delta Air Lines 10.080% 06/16/08 58 Delta Air Lines 10.125% 05/15/10 26 Delta Air Lines 10.125% 06/16/10 58 Delta Air Lines 10.125% 06/16/10 58 Delta Air Lines 10.125% 06/16/10 61 Delta Air Lines 10.375% 02/01/11 24 Delta Air Lines 10.375% 12/15/22 25 Delta Air Lines 10.430% 01/02/11 20 Delta Air Lines 10.500% 04/30/16 68 Delta Air Lines 10.790% 09/26/13 20 Delta Mills Inc. 9.625% 11/15/33 29 Diva Systems 12.625% 03/01/08 0 Duane Reade Inc 9.750% 08/01/11 71 Dura Operating 9.000% 05/01/09 62 Dura Operating 9.000% 05/01/09 56 Duty Free Int'l. 7.000% 01/15/04 4 DVI Inc. 9.875% 02/01/04 14 Epix Medical Inc. 3.000% 06/15/24 61 Exodus Comm. Inc. 5.250% 02/15/08 0 Exodus Comm. Inc. 11.625% 07/15/10 0 Falcon Products 11.375% 06/15/09 3 Fedders North AM 9.875% 03/01/14 72 Federal-Mogul Co. 7.375% 01/15/06 34 Federal-Mogul Co. 7.500% 01/15/09 36 Federal-Mogul Co. 8.160% 03/06/03 34 Federal-Mogul Co. 8.330% 11/15/01 33 Federal-Mogul Co. 8.370% 11/15/01 31 Federal-Mogul Co. 8.370% 11/15/01 35 Federal-Mogul Co. 8.800% 04/15/07 36 Finova Group 7.500% 11/15/09 36 FMK- DFLT03/04 10.750% 10/15/06 74 FMXIQ-DFLT09/05 13.500% 08/15/05 9 Foamex L.P.-DFLT 9.875% 06/15/07 9 Ford Motor Co. 6.500% 08/01/18 68 Ford Motor Co. 6.625% 02/15/28 67 Ford Motor Co. 7.125% 11/15/25 66 Ford Motor Co. 7.400% 11/01/46 62 Ford Motor Co. 7.500% 08/01/26 67 Ford Motor Co. 7.700% 05/15/97 63 Ford Motor Co. 7.750% 06/15/43 64 Ford Motor Co. 8.875% 01/15/32 74 Ford Motor Co. 8.900% 01/15/32 75 Ford Motor Cred 5.000% 09/21/09 71 Ford Motor Cred 5.100% 02/22/11 72 Ford Motor Cred 5.150% 01/20/11 73 Ford Motor Cred 5.200% 03/21/11 74 Ford Motor Cred 5.200% 03/21/11 73 Ford Motor Cred 5.250% 02/21/11 73 Ford Motor Cred 5.250% 09/20/11 71 Ford Motor Cred 5.300% 04/20/11 73 Ford Motor Cred 5.350% 02/22/11 73 Ford Motor Cred 5.400% 09/20/11 73 Ford Motor Cred 5.400% 10/20/11 71 Ford Motor Cred 5.400% 10/20/11 71 Ford Motor Cred 5.450% 04/20/11 73 Ford Motor Cred 5.450% 10/20/11 73 Ford Motor Cred 5.500% 04/20/11 74 Ford Motor Cred 5.500% 09/20/11 72 Ford Motor Cred 5.550% 08/22/11 73 Ford Motor Cred 5.550% 09/20/11 59 Ford Motor Cred 5.600% 12/20/10 75 Ford Motor Cred 5.600% 04/20/11 73 Ford Motor Cred 5.600% 08/22/11 72 Ford Motor Cred 5.600% 09/20/11 74 Ford Motor Cred 5.600% 11/21/11 72 Ford Motor Cred 5.650% 05/20/11 74 Ford Motor Cred 5.650% 07/20/11 73 Ford Motor Cred 5.650% 11/21/11 72 Ford Motor Cred 5.650% 11/21/11 74 Ford Motor Cred 5.650% 12/20/11 72 Ford Motor Cred 5.650% 12/20/11 73 Ford Motor Cred 5.650% 01/21/14 66 Ford Motor Cred 5.700% 05/20/11 74 Ford Motor Cred 5.700% 12/20/11 71 Ford Motor Cred 5.700% 01/20/12 70 Ford Motor Cred 5.750% 08/22/11 73 Ford Motor Cred 5.750% 12/20/11 73 Ford Motor Cred 5.750% 02/21/12 73 Ford Motor Cred 5.750% 01/21/14 70 Ford Motor Cred 5.750% 02/20/14 70 Ford Motor Cred 5.750% 02/20/14 72 Ford Motor Cred 5.800% 11/22/10 75 Ford Motor Cred 5.850% 07/20/10 75 Ford Motor Cred 5.850% 07/20/11 74 Ford Motor Cred 5.850% 01/20/12 74 Ford Motor Cred 5.900% 02/20/14 69 Ford Motor Cred 6.000% 01/21/14 69 Ford Motor Cred 6.000% 03/20/14 70 Ford Motor Cred 6.000% 03/20/14 75 Ford Motor Cred 6.000% 03/20/14 71 Ford Motor Cred 6.000% 03/20/14 71 Ford Motor Cred 6.000% 11/20/14 69 Ford Motor Cred 6.000% 11/20/14 74 Ford Motor Cred 6.000% 11/20/14 65 Ford Motor Cred 6.000% 01/20/15 70 Ford Motor Cred 6.000% 02/20/15 72 Ford Motor Cred 6.050% 03/20/12 74 Ford Motor Cred 6.050% 02/20/14 70 Ford Motor Cred 6.050% 03/20/14 68 Ford Motor Cred 6.050% 04/21/14 72 Ford Motor Cred 6.050% 12/22/14 71 Ford Motor Cred 6.050% 12/22/14 68 Ford Motor Cred 6.050% 12/22/14 68 Ford Motor Cred 6.050% 02/20/15 67 Ford Motor Cred 6.100% 06/20/11 74 Ford Motor Cred 6.100% 02/20/15 70 Ford Motor Cred 6.150% 12/22/14 69 Ford Motor Cred 6.150% 01/20/15 68 Ford Motor Cred 6.200% 05/20/11 74 Ford Motor Cred 6.200% 04/21/14 68 Ford Motor Cred 6.200% 03/20/15 73 Ford Motor Cred 6.250% 06/20/11 75 Ford Motor Cred 6.200% 03/20/12 74 Ford Motor Cred 6.250% 12/20/13 72 Ford Motor Cred 6.250% 12/20/13 72 Ford Motor Cred 6.250% 04/21/14 73 Ford Motor Cred 6.250% 01/20/15 67 Ford Motor Cred 6.250% 03/20/15 71 Ford Motor Cred 6.300% 05/20/14 72 Ford Motor Cred 6.300% 05/20/14 72 Ford Motor Cred 6.500% 02/20/15 71 Ford Motor Cred 6.500% 03/20/15 70 Ford Motor Cred 6.520% 03/10/13 72 Ford Motor Cred 6.550% 12/20/13 70 Ford Motor Cred 6.550% 07/21/14 74 Ford Motor Cred 6.600% 10/21/13 73 Ford Motor Cred 6.800% 03/20/15 68 Ford Motor Cred 6.950% 05/20/14 72 Ford Motor Cred 7.250% 07/20/17 69 Ford Motor Cred 7.250% 07/20/17 68 Ford Motor Cred 7.350% 09/15/15 72 Ford Motor Cred 7.400% 08/21/17 75 Ford Motor Cred 7.500% 08/20/32 66 Ford Motor Cred 7.550% 09/30/15 73 Gateway Inc. 1.500% 12/31/09 74 Gateway Inc. 2.000% 12/31/11 70 General Motors 7.125% 07/15/13 72 General Motors 7.400% 09/01/25 64 General Motors 7.700% 04/15/16 68 General Motors 8.100% 06/15/24 63 General Motors 8.250% 07/15/23 69 General Motors 8.375% 07/15/33 71 General Motors 8.800% 03/01/21 70 General Motors 9.400% 07/15/21 72 Global Health SC 11.000% 05/01/08 1 GMAC 5.200% 11/15/09 72 GMAC 5.250% 01/15/14 73 GMAC 5.700% 10/15/13 72 GMAC 5.700% 12/15/13 75 GMAC 5.750% 01/15/14 70 GMAC 5.850% 06/15/13 74 GMAC 5.900% 01/15/19 72 GMAC 5.900% 01/15/19 70 GMAC 5.900% 02/15/19 74 GMAC 5.900% 10/15/19 65 GMAC 6.000% 02/15/19 75 GMAC 6.000% 02/15/19 69 GMAC 6.000% 02/15/19 73 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 74 GMAC 6.000% 09/15/19 67 GMAC 6.050% 08/15/19 72 GMAC 6.050% 08/15/19 72 GMAC 6.050% 10/15/19 74 GMAC 6.100% 09/15/19 75 GMAC 6.125% 10/15/19 70 GMAC 6.150% 08/15/19 72 GMAC 6.150% 09/15/19 70 GMAC 6.200% 04/15/19 73 GMAC 6.250% 01/15/19 73 GMAC 6.250% 04/15/19 75 GMAC 6.250% 05/15/19 74 GMAC 6.250% 07/15/19 71 GMAC 6.300% 08/15/19 74 GMAC 6.300% 08/15/19 70 GMAC 6.350% 04/15/19 73 GMAC 6.350% 07/15/19 73 GMAC 6.500% 12/15/18 75 GMAC 6.500% 05/15/19 73 GMAC 6.500% 01/15/20 73 GMAC 6.500% 02/15/20 75 GMAC 6.600% 06/15/19 70 GMAC 6.650% 02/15/20 71 GMAC 6.750% 11/15/18 75 GMAC 6.750% 06/15/19 72 GMAC 6.750% 06/15/19 74 GMAC 6.750% 03/15/20 72 GMAC 7.000% 02/15/18 74 GMAC 7.250% 03/15/25 74 Golden Books Pub 10.750% 12/31/04 0 Graftech Int'l 1.625% 01/15/24 71 Gulf Mobile Ohio 5.000% 12/01/56 72 Gulf States STL 13.500% 04/15/03 0 HNG Internorth 9.625% 03/15/06 37 Home Interiors 10.125% 06/01/08 73 Imperial Credit 9.875% 01/15/07 0 Impsat Fiber 6.000% 03/15/11 73 Inland Fiber 9.625% 11/15/07 48 Iridium LLC/CAP 10.875% 07/15/05 25 Iridium LLC/CAP 11.250% 07/15/05 26 Iridium LLC/CAP 13.000% 07/15/05 27 Iridium LLC/CAP 14.000% 07/15/05 25 Isolagen Inc. 3.500% 11/01/24 51 Jacobson's 6.750% 12/15/11 0 Jts Corp. 5.250% 04/29/02 0 Kaiser Aluminum & Chem. 10.875% 10/15/06 51 Kaiser Aluminum & Chem. 12.750% 02/01/03 8 Kellstrom Inds 5.500% 06/15/03 0 Key3Media Group 11.250% 06/15/11 0 Kmart Corp. 8.540% 01/01/15 16 Kmart Corp. 8.990% 07/05/10 21 Kmart Corp. 9.350% 01/02/20 26 Kmart Corp. 9.780% 01/05/20 73 Kmart Funding 8.800% 07/01/10 30 Kmart Funding 9.440% 07/01/18 61 Level 3 Comm. Inc. 2.875% 07/15/10 63 Level 3 Comm. Inc. 6.000% 09/15/09 65 Level 3 Comm. Inc. 6.000% 03/15/10 63 Liberty Media 3.250% 03/15/31 73 Liberty Media 3.750% 02/15/30 55 Liberty Media 4.000% 11/15/29 60 LTV Corp. 8.200% 09/15/07 0 Macsaver Financl 7.400% 02/15/02 3 Macsaver Financl 7.600% 08/01/07 3 Macsaver Financl 7.875% 08/01/03 0 Mcms Inc. 9.750% 03/01/08 0 Merisant Co 9.500% 07/15/13 62 MHS Holdings Co 16.875% 09/22/04 0 Metamor Worldwid 2.940% 08/15/04 0 Motels of Amer 12.000% 04/15/04 68 Movie Gallery 11.000% 05/01/12 74 MRS Fields 9.000% 03/15/11 70 MSX Int'l Inc. 11.375% 01/15/08 68 Muzak LLC 9.875% 03/15/09 57 Natl Steel Corp. 8.375% 08/01/06 0 Natl Steel Corp. 9.875% 03/01/09 3 New World Pasta 9.250% 02/15/09 7 New Orl Grt N RR 5.000% 07/01/32 72 Nexprise Inc. 6.000% 04/01/07 0 North Atl Trading 9.250% 03/01/12 59 Northern Pacific RY 3.000% 01/01/47 59 Northern Pacific RY 3.000% 01/01/47 59 Northwest Airlines 6.625% 05/15/23 39 Northwest Airlines 7.068% 01/02/16 69 Northwest Airlines 7.248% 01/02/12 16 Northwest Airlines 7.360% 02/01/20 71 Northwest Airlines 7.625% 11/15/23 39 Northwest Airlines 7.626% 04/01/10 62 Northwest Airlines 7.875% 03/15/08 40 Northwest Airlines 8.070% 01/02/15 40 Northwest Airlines 8.130% 02/01/14 31 Northwest Airlines 8.304% 09/01/10 73 Northwest Airlines 8.700% 03/15/07 38 Northwest Airlines 8.875% 06/01/06 39 Northwest Airlines 8.970% 01/02/15 21 Northwest Airlines 9.179% 04/01/10 40 Northwest Airlines 9.875% 03/15/07 40 Northwest Airlines 10.000% 02/01/09 41 NTK Holdings Inc. 10.750% 03/01/14 64 Nutritional Src. 10.125% 08/01/09 70 Oakwood Homes 7.875% 03/01/04 12 Oakwood Homes 8.125% 03/01/09 12 Osu-Dflt10/05 13.375% 10/15/09 0 Outboard Marine 9.125% 04/15/17 0 Overstock.com 3.750% 12/01/11 73 Owens-Crng Fiber 8.875% 06/01/02 75 PCA LLC/PCA Fin 11.875 08/01/09 23 Pegasus Satellite 9.625% 10/15/06 9 Pegasus Satellite 12.375% 08/01/06 10 Pegasus Satellite 12.500% 08/01/07 10 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 62 Phar-Mor Inc. 11.720% 09/11/02 1 Piedmont Aviat 9.900% 11/08/06 0 Piedmont Aviat 10.000% 11/08/12 9 Piedmont Aviat 10.200% 05/13/12 0 Piedmont Aviat 10.250% 01/15/49 0 Piedmont Aviat 10.250% 01/15/49 0 Piedmont Aviat 10.350% 03/28/11 0 Pinnacle Airline 3.250% 02/15/25 74 Pixelworks Inc. 1.750% 05/15/24 70 Pliant-DFLT/06 13.000% 06/01/10 21 Pliant-DFLT/06 13.000% 06/01/10 20 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 11.500% 02/15/06 0 Primedex Health 11.500% 06/30/08 57 Primus Telecom 3.750% 09/15/10 29 Primus Telecom 5.750% 02/15/07 67 Primus Telecom 8.000% 01/15/14 58 Primus Telecom 12.750% 10/15/09 53 Psinet Inc. 10.000% 02/15/05 0 Psinet Inc. 11.000% 08/01/09 0 Psinet Inc. 11.500% 11/01/08 0 Railworks Corp. 11.500% 04/15/09 0 Read-Rite Corp. 6.500% 09/01/04 15 Reliance Group Holdings 9.000% 11/15/00 20 Reliance Group Holdings 9.750% 11/15/03 0 Salton Inc. 12.250% 04/15/08 54 Scotia Pac Co 7.710% 01/20/14 74 Solectron Corp. 0.500% 02/15/34 75 Source Media Inc. 12.000% 11/01/04 75 Specialty PaperB 9.375% 10/15/06 75 Sterling Chem 11.250% 04/01/07 0 Tekni-Plex Inc. 12.750% 06/15/10 58 Toys R Us 7.375% 10/15/18 71 Trans Mfg Oper 11.250% 05/01/09 62 Transtexas Gas 15.000% 03/15/05 1 Tribune Co 2.000% 05/15/29 74 Trism Inc. 12.000% 02/15/05 0 Triton Pcs Inc. 8.750% 11/15/11 72 Triton Pcs Inc. 9.375% 02/01/11 72 Tropical Sportsw 11.000% 06/15/08 10 United Air Lines 7.270% 01/30/13 59 United Air Lines 7.371% 09/01/06 35 United Air Lines 7.762% 10/01/05 60 United Air Lines 7.870% 01/30/19 59 United Air Lines 8.250% 04/26/08 3 United Air Lines 9.000% 12/15/03 24 United Air Lines 9.020% 04/19/12 71 United Air Lines 9.125% 01/15/12 24 United Air Lines 9.200% 03/22/08 52 United Air Lines 9.350% 04/07/16 71 United Air Lines 9.560% 10/19/18 70 United Air Lines 9.750% 08/15/21 24 United Air Lines 10.250% 07/15/21 22 United Air Lines 10.670% 05/01/04 24 United Air Lines 11.210% 05/01/14 23 United Homes Inc 11.000% 03/15/05 0 Univ. Health Services 0.426% 06/23/20 55 Universal Stand 8.250% 02/01/06 1 US Air Inc. 10.250% 01/15/49 25 US Air Inc. 10.250% 01/15/49 12 US Air Inc. 10.250% 01/15/49 7 US Air Inc. 10.550% 01/15/49 25 US Air Inc. 10.610% 06/27/07 0 US Air Inc. 10.680% 06/27/08 3 US Air Inc. 10.700% 01/01/49 26 US Air Inc. 10.700% 01/15/49 3 US Air Inc. 10.700% 01/15/49 25 US Air Inc. 10.750% 01/15/49 13 US Air Inc. 10.800% 01/01/49 4 US Air Inc. 10.800% 01/01/49 27 US Air Inc. 10.800% 01/01/49 28 US Airways Pass 6.820% 01/30/14 65 Universal Stand 8.250% 02/01/06 1 Venture Hldgs 9.500% 07/01/05 0 Venture Hldgs 11.000% 06/01/07 0 Venture Hldgs 12.500% 06/01/07 0 WCI Steel Inc. 10.000% 12/01/04 60 Werner Holdings 10.000% 11/15/07 24 Westpoint Steven 7.875% 06/15/05 0 Westpoint Steven 7.875% 06/15/08 0 Wheeling-Pitt St 5.000% 08/01/11 74 Wheeling-Pitt St 6.000% 08/01/10 71 Winstar Comm 10.000% 03/15/08 0 Winstar Comm 12.750% 04/15/10 0 World Access Inc. 4.500% 10/01/02 4 ********* 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 ***