TCR_Public/060131.mbx       T R O U B L E D   C O M P A N Y   R E P O R T E R

         Tuesday, January 31, 2006, Vol. 10, No.  26

                          Headlines

AAR CORP: S&P Rates $125 Million Convertible Senior Notes at BB-
ADELPHIA COMMS: Devon Trustee Wants $80M Claim Allowed for Voting
ADELPHIA COMMS: PG&E Can Litigate Claims Arising from Lawsuit
ADVANCED MICRO: $500 Mil. Equity Offering Cues S&P to Up Ratings
ALLEN-VANGUARD: Posts CDN$23.3 Million Net Loss in 4th Qtr. 2005

ARMSTRONG WORLD: Court Approves Sale Pact with EDC Finance and F&M
ARMSTRONG WORLD: Asks Court to Approve Frederick Settlement Accord
ATA AIRLINES: Bankruptcy Court to Confirm Plan of Reorganization
ATA AIRLINES: Wants to Purchase N194AT Aircraft from GECC
ATA AIRLINES: Can Walk Away from Sabre Work Order No. 1

BANC OF AMERICA: Fitch Puts Low-B Ratings on Classes B-4 & B-5
BANKATLANTIC BANCORP: Earns $59.1 Million of Net Income in 2005
BERRY-HILL GALLERIES: Employs AMJ as Restructuring Consultant
BLUE BIRD: Judge Zive Confirms Prepackaged Chapter 11 Plan
BLUE BIRD: Exits Chapter 11 as Reorganized Company

BOWATER INCORPORATED: Incurs $120.6 Million Net Loss in 2005
CALPINE CORP: Wants Stay Modified to Apply ISO Cash Collateral
CALPINE CORP: Wants Court to Okay Interim Compensation Procedures
CALPINE CORP: Gets Court OK to Reject Two Almaden Office Leases
CATHOLIC CHURCH: Foraker Balks at Portland's Disclosure Statement

CATHOLIC CHURCH: Claimants Balk at Portland Estimation Protocol
CELESTICA INC: Posts $28 Million Net Loss in Quarter Ended Dec. 31
CENTURY THEATRES: S&P Rates Proposed Secured Credit Facility at B+
CENVEO INC: Cost Cutting Measures Prompt S&P to Hold B+ Rating
CHARTER COMMS: S&P Junks Rating on Proposed $400 Mil. Senior Notes

COMPUTER SERVICES: Dutch Auction Cues S&P to Cut Ratings to BB+
CONJUCHEM INC: Oct. 31 Balance Sheet Upside-Down by CDN$23 Million
CORNELL TRADING: Committee Hires Gadsby Hannah as Local Counsel
COTT CORP: Posts $6.9 Million Net Loss in Quarter Ending Dec. 31
COTT CORP: Weak Earnings Prompt S&P to Downgrade Ratings to BB-

COVALENCE SPECIALTY: S&P Rates Proposed $500 Mil. Sr. Loan at B+
DIAMOND TRIUMPH: Lack of Info Prompts S&P to Withdraw B- Ratings
DRS TECHNOLOGIES: S&P Rates Proposed $300 Mil. Senior Notes at B+
DRYDEN III: Optional Redemption Prompts S&P to Withdraw Ratings
ENDURANCE SPECIALTY: S&P Assigns BB+ Rating on Preferred Stock

ENTERGY NEW ORLEANS: Wants Court to OK Bank of New York Settlement
ENTERGY NEW ORLEANS: Wants Court to Set Apr. 19 as Claims Bar Date
FUTURE BEACH: Files Notice of Intention Under BIA in Canada
G+G RETAIL: Taps Pachulski Stang as Bankruptcy Counsel
GAINEY CORPORATION: S&P Rates $260 Million Credit Facility at BB-

HURLEY MEDICAL: Fitch Cuts Ratings on $67.1 Million Bonds to BB+
J.P. MORGAN: Fitch Puts Low-B Ratings on Cert. Classes M-10 & M-11
KMART CORP: Court Reinstates Manuel Lomas' $2-Million Claim
KMART CORP: Judi Davis Wants Injunction Lifted to Pursue Claims
METALFORMING TECH: Has Until March 13 to Remove Civil Actions

MIRANT CORPORATION: Settles HSBC's $1.1 Billion Indenture Claims
MIRANT CORPORATION: Settles Citibank's Multi-Million Unsec. Claims
MIRANT CORPORATION: Settles Law Debenture's Multi-Million Claim
MORTGAGE ASSET: Fitch Holds BB Ratings on Two Certificate Classes
MUSICLAND HOLDING: Taps Retail Consulting as Real Estate Advisor

MUSICLAND HOLDING: Gets Court Nod to Pay Prepetition Taxes & Fees
NATIONAL ENERGY: Asks Court to Approve Columbia Settlement Pact
NELLSON NUTRACEUTICAL: Case Summary & 20 Largest Unsec. Creditors
O'SULLIVAN IND: Disclosure Statement Hearing Continues to Feb. 2
O'SULLIVAN IND: Wants to Honor Potential Exit Lenders' Expenses

OWENS CORNING: Slams Equity Panel's Insistence to Hold Meeting
OWENS CORNING: Ohio Asbestos Claimants Want to Litigate Claims
OWENS CORNING: Resolving AT Plastics' Preference Action
PLIANT CORP: Wants to Hire Sidley Austin as Bankruptcy Counsel
PLIANT CORP: Wants to Tap Young Conaway as Local Bankr. Counsel

PLIANT CORP: Wants to Employ McMillan Binch as Canadian Counsel
RESIDENTIAL ACCREDIT: Fitch Holds Low-B Ratings on 22 Class Certs.
SOLUTIA INC: Wants Until May 10 Make Lease-Related Decisions
SOLUTIA INCORPORATED: Wants More Time to Serve Complaints
SOLUTIA INC: Court Clerk Records 13 Claim Transfers in Nov. & Dec.

STRUCTURED ASSET: Fitch Holds Low-B Rating on Four Cert. Classes
UAL CORP: Inks Multi-Mil. Settlement with London Market Insurers
UAL CORP: Wants to Settle Tax Claims of 23 California Counties
UAL CORP: Kevakian Wants to Prosecute Whistle Blowers Act Lawsuit
W.R. GRACE: Court Fixes Compensation Procedures for Mediator

W.R. GRACE: Court Modifies Property Damage Estimation CMO
W.R. GRACE: Anderson Memorial Wants Stay Lifted on S.C. Lawsuit
W.R. GRACE: Wants to Hire Steptoe & Johnson as Tax Counsel
WINDOW ROCK: Taps Fulbright & Jaworski as Special Counsel
WINDOW ROCK: Committee Taps FTI Consulting as Financial Advisors

WINDOW ROCK: Wants Court OK to Hire Squar Milner as Accountants
WINN-DIXIE: Backs U.S. Trustee Decree to Disband Equity Committee
WORLDCOM INC: SAVVIS Insists It Can Recover Postpetition Charges
WORLDCOM INC: Parus Holdings Slams Move to Disallow Its Claims

* Large Companies with Insolvent Balance Sheets


                          *********


AAR CORP: S&P Rates $125 Million Convertible Senior Notes at BB-
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to
AAR Corp.'s 1.75% $125 million convertible senior notes due 2026
sold via SEC Rule 144A with registration rights.

At the same time, Standard & Poor's affirmed its ratings,
including the 'BB-' corporate credit rating, on the aviation
support services provider.  The outlook is stable.  About
$275 million of debt is outstanding, pro forma for the new issue
and conversion of $38 million of debt into equity in January 2006.

About $60 million of proceeds from the notes will be used to:

    * repurchase accounts receivable that have been securitized,

    * repay secured short-term debt, and

    * pay off an operating lease associated with aviation
      equipment.

The balance of proceeds will augment cash balances and will be
available for general corporate purposes.

"The ratings on AAR reflect the risks associated with highly
cyclical and competitive conditions in the airline industry, the
firm's primary market, and modest profitability," said Standard &
Poor's credit analyst Roman Szuper.  "Those factors are offset in
part by the company's established business position and moderately
leveraged balance sheet."

The global airline industry stabilized in 2004 and continued to
recover in 2005, spurred by a healthier economy and a noticeable
recovery in air traffic, despite problems in the U.S.  This
follows a severe downturn in the aftermath of the Sept. 11, 2001,
attacks and other shocks to the aviation system, which caused a
significant decline in AAR's business and resulted in weak
financial performance in the 2002-2004 period.  The company's
extensive cost reductions, strength in the defense-related
manufacturing and logistics business (about 35% of revenues), a
diversified customer base, and a strategy to expand operations in
Asia and Europe have helped cushion the impact.  Profitability
remains relatively modest, despite a material recovery in sales
and earnings.

Wood Dale, Illinois-based AAR is the largest independent provider
of aviation support services, operating in four groups:

    * aviation supply chain (50%-55% of revenues);
    * maintenance, repair, and overhaul (15%-20%);
    * structures and systems (25%-30%); and
    * aircraft sales and leasing (less than 5%).

North America is the largest market, accounting for around 75% of
sales.  AAR is well positioned for continued outsourcing by
airlines in view of its broad service offerings, investment in new
capabilities, low cost structure, good reputation, and the
customers' focus on core activities and operating efficiency.

Generally improved market conditions, AAR's initiatives to
strengthen its competitive position, and sufficient liquidity
should support current credit quality.  Sustained recovery in the
airline industry and further meaningful gains in the firm's
profitability could warrant an outlook revision to positive in the
near to intermediate term.  An outlook revision to negative is a
less likely scenario, given a better operating environment and
AAR's upward trending financial performance.


ADELPHIA COMMS: Devon Trustee Wants $80M Claim Allowed for Voting
-----------------------------------------------------------------
As previously reported, Adelphia Communications and its
debtor-affiliates objected to the claims filed by Devon Mobile
Communications, L.P. and amended by the Devon Mobile
Communications Liquidation Trust.

The Devon Liquidation Trustee asks the U.S. Bankruptcy Court for
the Southern District of New York to temporarily allow Claim No.
15910 for $80,000,000 against ACOM for the sole purpose of voting
on the Plan.

Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware, relates that the Liquidation Trustee and
the Debtors are currently engaged in litigation, which will
likely not be completed before the voting process has concluded.

If the Court does not temporarily allow Claim No. 15910 for the
limited purpose of voting on the Plan, the Liquidation Trustee
will be unable to exercise its right to participate in the
reorganization process, notwithstanding that the Litigation may
ultimately result in the allowance in full of the Devon Amended
Claims.

Mr. Nestor asserts that the $80,000,000 amount is appropriate
because it reflects the Liquidation Trustee's calculation of the
amounts owed by the Debtors to the Liquidation Trustee.

"Additionally, temporarily allowing Claim No. 15910 solely for
voting purposes with respect to the Plan will not prejudice any
other claimants, and will enable the Debtors to accurately and
appropriately tabulate votes on the Plan and otherwise dedicate
their time and energy to maximizing value for all creditors, and
emerging from Chapter 11 as quickly as is possible and
appropriate," Mr. Nestor says.

Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country.  Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks.  The Company and its more than 200
affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002.  Those cases are jointly
administered under case number 02-41729.  Willkie Farr & Gallagher
represents the ACOM Debtors.  (Adelphia Bankruptcy News, Issue
No. 119; Bankruptcy Creditors' Service, Inc., 215/945-7000)


ADELPHIA COMMS: PG&E Can Litigate Claims Arising from Lawsuit
-------------------------------------------------------------
On May 1, 2002, Sifa Tuiaki, one of Adelphia Communication's
subcontractors, suffered catastrophic injuries when he and his
equipment allegedly came in contact with high voltage lines while
installing fiber optic cable for the ACOM Debtors.

At the time of the accident, Adelphia and its debtor-affiliates
were covered under an insurance policy issued by Royal Insurance
Company and an umbrella policy issued by Liberty Mutual Insurance
Company.

The automatic stay prohibited the Claimant and his spouse Lupe
Tuiaki from pursuing their claims arising from the Accident
against the ACOM Debtors.

In April 2003, and in violation of the automatic stay, the
Claimants filed a complaint in the San Francisco County Superior
Court against Adelphia Telecommunications, Inc., and certain
other parties, including Pacific Gas & Electric Company, as the
cross-claimant, seeking damages for negligence, strict liability,
breach of warranty and loss of consortium and among others.  On
September 5, 2003, and in violation of the automatic stay, the
Claimants filed an amended complaint in the State Court Action

On January 6, 2004, PG&E filed Claim No. 7155 and on June 29,
2004, PG&E filed Claim Nos. 17638, 17639 and 17640 asserting
claims against the ACOM Debtors for any and all rights of PG&E in
connection with the State Court Action including contribution and
reimbursement.

On January 9, 2004, the Claimants' Complaint was dismissed
without prejudice as to Adelphia Telecommunications Inc. due to
the pendency of Adelphia Telecommunications' Chapter 11 Case and
the application of the automatic stay.

On April 19, 2004, the Claimants sought relief from the automatic
stay to prosecute the Claims and recover any judgment on those
claims from the ACOM Debtors' insurance as well as the ACOM
Debtors' estates.

The ACOM Debtors entered into a stipulation with the Claimants,
pursuant to which the Court partially lifted the automatic stay
for the Claimants to initiate actions against third party
insurance proceeds.

Subsequently, the ACOM Debtors sought to disallow and expunge the
PG&E claims.

In a stipulation, the ACOM Debtors and PG&E agreed that:

    a. the automatic stay will be modified for the sole purpose of
       permitting PG&E to assert and fully litigate any claims
       arising the State Court Action against the Debtors,
       provided however that any recovery by PG&E pursuant to an
       action, including costs and recovery of punitive damages,
       if any, will be limited to the proceeds available under the
       Insurance Policies;

    b. other than the modified automatic stay, all protections
       afforded by Section 362 of the Bankruptcy Code will remain
       in full force and effect;

    c. the PG&E Claims are deemed withdrawn;

    d. PG&E will not enforce any judgment in an action or the
       Claims arising by reason of the Accident against the assets
       of the Debtors except to the extent of proceeds available
       under the Insurance Policies; and

    e. PG&E further agrees to limit recovery of any damages
       against the Debtors from the Accident, including costs
       recoverable in an action, to the total insurance proceeds
       available pursuant to the Insurance Policies.

Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country.  Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks.  The Company and its more than 200
affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002.  Those cases are jointly
administered under case number 02-41729.  Willkie Farr & Gallagher
represents the ACOM Debtors.  (Adelphia Bankruptcy News, Issue
No. 119; Bankruptcy Creditors' Service, Inc., 215/945-7000)


ADVANCED MICRO: $500 Mil. Equity Offering Cues S&P to Up Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on
Sunnyvale, California-based Advanced Micro Devices Inc., including
its corporate credit rating, to 'B+' from 'B'.

In addition, the ratings on the microprocessor manufacturer were
removed from CreditWatch with positive implications, where they
were placed on Jan. 24, 2006.  The ratings outlook is stable.

"The rating actions reflect completion of an announced $500
million equity offering at $35.20 per share, and the company's
improving business and financial profile, notwithstanding
aggressive competition," said Standard & Poor's credit analyst
Bruce Hyman.  The ratings continue to reflect aggressive
competition from dominant supplier Intel Corp. and possible
continued negative free cash flows over the intermediate term.


ALLEN-VANGUARD: Posts CDN$23.3 Million Net Loss in 4th Qtr. 2005
----------------------------------------------------------------
Allen-Vanguard Corporation (TSX:VRS) of Ottawa, Canada, reported
its financial results for the fiscal year ended Sept. 30, 2005.

Revenue was CDN$9.1 million in Q4 2005 and CDN$51.4 million in FY
2005, compared to CDN$11.6 million in Q4 2004 and CDN$20.3 million
in FY 2004.

Allen-Vanguard recorded a net foreign exchange loss of CDN$200,000
in Q4 2005 and CDN$500,000 in FY 2005, compared to a gain of
CDN$200,000 in Q4 2004 and FY 2004.  Company operations have
become increasingly integrated in the second half of FY 2005.

The net loss for Q4 2005 was CDN$23.3 million and CDN$28.6 million
in FY 2005.  These figures compare to net earnings of CDN$900,000
in Q4 2004, and net earnings of CDN$100,000 in FY 2004.

Working capital totaled CDN$18.4 million at the end of FY 2005,
including a CDN$4.3 million receivable in respect of the Iraq
Contract.  This compares to working capital of CDN$4.2 million at
the end of FY 2004.  The Company stated that its financial
position remains healthy, with orders and backlog now increasing.  
The company was in compliance with its bank covenants at fiscal
year end and expects to be in compliance with all bank covenants
as at the end of the first quarter of fiscal 2006 ended Dec. 31,
2005.

Last October the Company reported its integration plan and
financing initiatives.  The plan included achieving approximately
CDN$5 million in annualized cost reductions.  This process began
in Q4 of fiscal 2005 and has continued through Q1 and into Q2 of
fiscal 2006.  The Company anticipates that it will be
substantially completed by the end of March 2006.  Associated
restructuring charges were accrued at fiscal year end 2005.  "We
intend to achieve the full amount of savings in the original plan
and we continue to look for further economies as we work to
restore profitability through lower costs and increased revenues,"
said Mr. Luxton.  "We expect to be able to provide an update on
our progress in the very near future."

Allen-Vanguard Corporation -- http://www.allen-vanguard.com/--   
develops and markets technologies, tools and training for
defeating and minimizing the effects of hazardous devices and
materials, whether Chemical, Biological, Radiological, Nuclear or
Explosive (CBRNE).  The Company's equipment is in service with
leading security and military forces in more than 120 countries.
This includes a complete range of remote intervention robots for
hazardous applications, vehicle barrier systems, suspect package
containers and Electronic Counter-Measures equipment.  Its Head
office operations are located in Ottawa, Ontario, Canada, with
manufacturing operations in Ottawa and Stoney Creek, Ontario;
Tewkesbury, U.K.; and Cork, Ireland, and sales offices in Canada,
the U.S., the U.K. and Asia.  The Company's shares are listed on
The Toronto Stock Exchange (TSX: VRS).

                         *     *     *

As reported in the Troubled Company Reporter on Jan. 3, 2006,
Allen-Vanguard Corporation (TSX:VRS) issued a notice of default on
Dec. 30, 2005.

The company disclosed that it was unable to file its financial
statements for the year ended Sept. 30, 2005, on or before
Dec. 29, 2005 due to these circumstances:

  (a) There has been a delay in completing the audits of Allen-
      Vanguard Limited, a United Kingdom corporation, and Allen-
      Vanguard (Ireland) Limited, a Republic of Ireland
      corporation.  AVL and AVI are indirect wholly owned
      subsidiaries of the Company which were acquired by the
      Company on Aug. 12, 2004.  Fiscal year 2005 therefore
      represents the first full year audit for AVL and AVI as
      public company subsidiaries.

  (b) The Company has a September 30 fiscal year end while AVL and
      AVI had December 31 fiscal year ends.  It was therefore
      decided to change the fiscal year end of AVL and AVI to
      correspond with the fiscal year end of the Company.  The
      fiscal year 2005 consolidated financial statements of the
      Company must therefore include the results of AVL and AVI
      for the stub periods of Oct. 1, 2004 to Dec. 31, 2004 and       
      Jan. 1, 2005 to Sept. 30, 2005.

  (c) Soberman LLP is the external auditor for the Company, while
      Ernst & Young, LLP was the external auditor for AVL and AVI.
      In late September 2005, E&Y informed the Company that it did
      not wish to continue as auditor of AVL and AVI beyond the
      fiscal year 2004 engagement if it could not also be
      appointed auditor for the Company.  This request was not
      acceptable to the Company and, with the agreement of E&Y,
      the Company selected Blick Rothenberg as the new auditor of
      AVL and AVI.  BR must therefore rely on the statutory audit
      reports of E&Y covering the fiscal year 2004 accounts for
      AVL and AVI for the opening balance sheets at Jan. 1,
      2005 to audit the 2005 Stub Period.  Soberman must rely on
      the audit report of E&Y for assurance on the 2004 Stub
      Period and on the audit report of BR for assurance on the
      2005 Stub Period.

  (d) The completion of the fiscal year 2004 statutory audits by
      E&Y was delayed, primarily due to uncertainties concerning
      the collectibility of a material receivable by AVL.  The
      collectibility of this receivable was referenced in notes to
      prior quarterly financial statements.  This uncertainty was
      successfully resolved on Dec. 20, 2005, but there is
      insufficient time, given the pending Christmas holiday
      season, for E&Y to complete its final audit procedures and
      issue an unqualified opinion on the statutory accounts of
      AVL and AVI.

  (e) Without such an opinion, BR and Soberman are themselves not
      in position to issue unqualified opinions.


ARMSTRONG WORLD: Court Approves Sale Pact with EDC Finance and F&M
------------------------------------------------------------------
Armstrong World Industries, Inc., owns a flooring plant located at
401 West Liberty Street in the northwest section of Lancaster,
Pennsylvania.

The Plant occupies approximately 63.81 acres with 2,650,000 square
feet of floor space.  It contains 196 buildings and has been AWI's
largest manufacturing facility.

Rebecca L Booth, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, relates that the Plant was built in 1906 for
the production of linoleum.  In recent years, the Plant has
manufactured residential and commercial sheet vinyl flooring as
well as residential and commercial tile.

At its peak in 1943 during World War II, more than 7,000 people
were employed at the Plant.  Over the past few decades, however,
AWI has reduced the scale of manufacturing activities at the Plant
and has discontinued some product lines manufactured there.

In November 2004, AWI announced its intention to phase out the
manufacture of two of the three remaining product lines at the
Plant by the end of 2005.  AWI intends to continue business
operations on 19.37 acres of the Plant to manufacture rotogravure
residential sheet flooring products.

As a result of AWI's business decision, Ms. Booth notes that
around 45 acres of the Plant have become available for other uses.  
However, the Property's structures were constructed for specific
industrial purposes and, given the unique prior use, materials,
age and structural design of those buildings, they are not
adaptable for modern day reuse.

Consequently, the Property must be cleared of all structures if it
is to be made available for other uses.  Ms. Booth tells Judge
Fitzgerald that despite AWI's selective demolition of buildings
over the last five years, the cost, however, is prohibitive, as it
is greater than the value of the Property without structures.  The
estimated cost per acre for structure demolition is $420,000 an
acre for off-site debris removal or $390,000 per acre for on-site.

In addition, AWI has substantial costs and liabilities associated
with the continued maintenance of the Property, including
environmental remediation costs.

"Therefore, even if the Property remains unused, it would generate
a significant cost to the estate," Ms. Booth asserts.  "In sum,
the Property is nonproductive and has a negative value to AWI."

              Revitalization of Lancaster Property

Immediately to the Property's south, east and west, the northwest
section of Lancaster is undergoing a large community
revitalization initiative, characterized by more than $230,000,000
in public and private investment.  That economic rebirth adjacent
to the Plant has resulted in the construction of:

    (i) a $28,000,000, 5,700-seat minor league multipurpose
        Clipper Stadium;

   (ii) the future home of Franklin & Marshall College's new
        $45,000,000 Life Sciences building and its $30,000,000
        mixed-use retail project;

  (iii) a recently completed $120,000,000 capital investment by
        Lancaster General Hospital in its facilities; and

   (iv) several brick warehouse renovations underway for retail,
        residential and hotel uses.

The Plant is located within the James Street Improvement District,
a two-year old community development effort anchored by Franklin &
Marshall and Lancaster General Hospital.  The area is also one of
Pennsylvania's first Keystone Innovation Zones and has been
awarded an Elm Street grant in conjunction with Lancaster City.

Ms. Booth tells Judge Fitzgerald that the significant investment
and urban renewal projects surrounding the Plant have created a
unique opportunity for AWI to transfer the Property at a cost less
than the net present value of AWI's carrying costs while also
participating in the historic revitalization of Lancaster City
and, thus, helping to improve the area that has been AWI's home
for close to 100 years.

To that end, Ms. Booth continues, AWI entered into a non-binding
letter of intent with EDC Finance Corporation and Franklin &
Marshall, dated November 29, 2004, pursuant to which the parties
expressed their willingness to work together to evaluate and
pursue productive re-use of the Property that would benefit all
parties involved.

EDC Finance, a membership-supported nonprofit organization, is a
certified industrial development agency under the laws of the
Commonwealth of Pennsylvania and a wholly owned subsidiary of the
Economic Development Company of Lancaster County.

Ms. Booth explains that EDC Finance's mission is to foster and
coordinate community development and to provide private and public
entities in Lancaster County with access to federal, state and
local funding and business resources, to encourage and strengthen
the Lancaster County's economic growth and prosperity.  EDC
Finance was involved in assembling and purchasing land for the
Clipper Stadium, located several blocks from the Property.

Because of EDC Finance's organizational goals, its active
participation in the development of the areas surrounding the
Plant, and its ability to raise public funds necessary for
demolition and remediation, EDC Finance is particularly well
suited to participate in the transfer and development of the
Property.

Because Franklin & Marshall recently developed mixed use retail
and student residences on Harrisburg Avenue, adjacent to the
Property, Franklin & Marshall is also uniquely situated to
participate in the transfer and development of the Property, as it
has a strong interest in acquiring contiguous property and can
raise significant public and private funds necessary for
demolition and remediation.

                         The BIOS Grant

On January 19, 2005, EDC Finance and Franklin & Marshall received
a $175,000 "Business In Our Sites" planning grant from the
Commonwealth of Pennsylvania for contracting professional firms
to:

    (a) develop a master plan for the Property to transform it
        into an urban area with institutional, commercial,
        retail and residential uses;

    (b) conduct a market analysis for those uses, absorption
        rates, tax revenues, and job creation;

    (c) assess the current environmental records of the
        Property to determine existing conditions, suggest
        additional testing required to define appropriate
        clean-up standards, and estimate costs for the relevant
        remediation to allow a change of use from heavy
        industrial to residential and commercial uses; and

    (d) determine costs to demolish and dispose of structures on
        the Property.

After considering the initial results of the Feasibility Studies,
the parties entered into good faith and at arm's-length
negotiations to determine how best to divest AWI of the Property
at a minimal cost and liability to the estate while achieving the
necessary funding for the demolition and remediation to convert
the Property from an idle industrial site into a revitalized mixed
use site.

                       The Sale Agreement

In furtherance of AWI's goal of transferring the Property at a
minimal cost and liability to the estate, AWI entered into a Sale
Agreement with EDC Finance and Franklin & Marshall.  The salient
terms of the Sale Agreement are:

    (1) AWI will sell the Property, together with any
        improvements, to EDC Finance and Franklin & Marshall,
        which will have the right to:

           * allocate the Property's acreage between them; and

           * require AWI to convey all of the Property to EDC
             Finance pursuant to a separate agreement between
             EDC Finance and Franklin & Marshall.

    (2) The purchase price for the Property will be $1 paid by
        EDC Finance to AWI at closing date.

    (3) The Property will be sold in "as-is, where-is"
        condition, without any representation, as to the
        condition or merchantability of the Property or its
        fitness for any particular use.  AWI will not be liable
        for any damages occasioned by or arising in connection
        with the Property's environmental condition.

    (3) AWI will contribute, on a dollar-for-dollar match, an
        amount equal to the amount contributed by Franklin &
        Marshall up to $6,000,000, to be used to fund demolition
        and disposal of existing structures on the Property,
        characterization and remediation of environmental
        conditions currently existing at the Property and the
        Retained Property, utility and infrastructure relocation
        and installation, and redevelopment site preparation.

    (4) EDC Finance will contribute its administrative and over-
        sight costs to the Project and have the primary
        responsibility for securing funding for the Project
        through governmentally assisted funding programs, loans
        and grants.

    (5) Franklin & Marshall will contribute an amount equal to
        the Contribution.  It will also be responsible to pay
        any and all Project funds not otherwise available.

    (6) After EDC Finance and Franklin & Marshall have provided
        AWI with evidence of the availability and commitment of
        the Government Funding for a 90-day period, Purchasers
        may inspect the Property's environmental condition.  If
        the results of the Inspection reveal environmental
        contamination beyond that which is reflected in the
        Supplemental Characterization Plan of Groundwater
        Sciences Corporation and those conditions are not
        reasonably acceptable to EDC Finance or Franklin &
        Marshall, either may terminate the sale agreement on
        written notice to AWI by the 90th day of the Inspection
        Period.

    (7) As expeditiously as possible after Closing, EDC Finance
        and Franklin & Marshall will attain cleanup standards
        provided under the Land Recycling and Environmental
        Remediation Standards Act to address any and all
        identified contamination exceeding the statewide health
        standards in soils or groundwater.  EDC Finance and
        Franklin & Marshall acknowledge that AWI will have the
        right to include the Retained Property in the Project
        and to attain an Act 2 standard for the Retained
        Property.  Any and all known existing environmental
        releases or threats of releases will be covered by the
        Act 2 response action undertaken under the Sale
        Agreement.  Existing environmental releases or threats
        of releases migrating from the Property will no longer
        be AWI's responsibility, but will be the sole
        responsibility of EDC Finance and Franklin & Marshall.

AWI will pay all real estate taxes, water, sewer and other current
lienable charges on the Property through the Closing date.  Ms.
Booth attests that AWI is not aware of any other entity that may
assert an interest in the Property.  AWI will be required to pay
for the subdivision of the property allowing for the transfer,
which is estimated to cost $50,000.  In addition, if real estate
transfer tax is payable, the parties will equally split the 2%
local real estate transfer tax in connection with the transfer of
title by AWI.

         Sale Agreement Divests Negative Value Property

The implementation of the Sale Agreement, Ms. Booth contends, is
conditioned on the determination by EDC Finance and Franklin &
Marshall that they have received an acceptable level of
commitments for government funding.

Pursuant to the terms of a proposed additional agreement between
EDC Finance and Franklin & Marshall, title to the Property will
initially be transferred to EDC Finance.  At the completion of the
Project, EDC Finance will transfer 26.25 acres to Franklin &
Marshall for its development of an athletic and recreational
complex.  The remaining 15.22 acres will be marketed for
institutional, commercial, retail and residential uses per the
master plan created from the BIOS Grant.

AWI sought and obtained Judge Fitzgerald's approval of the Sale
Agreement.

AWI believes that the transaction will allow it to divest
non-productive, negative value property, which, given the unique
prior use, materials, age and structural design of the buildings
located on the Property, is not adaptable for modern day reuse.

If the Sale Agreement is not approved, AWI maintains that it will
not be able to find another party willing to provide the same
value, particularly in light of the unique confluence of events
that have made the current transaction feasible.

Headquartered in Lancaster, Pennsylvania, Armstrong World
Industries, Inc. -- http://www.armstrong.com/-- the major
operating subsidiary of Armstrong Holdings, Inc., designs,
manufactures and sells interior floor coverings and ceiling
systems, around the world.  The Company and its debtor-affiliates
filed for chapter 11 protection on December 6, 2000 (Bankr. Del.
Case No. 00-04469).  Stephen Karotkin, Esq., at Weil, Gotshal &
Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton
& Finger, P.A., represent the Debtors in their restructuring
efforts.  When the Debtors filed for protection from their
creditors, they listed $4,032,200,000 in total assets and
$3,296,900,000 in liabilities.  (Armstrong Bankruptcy
News, Issue No. 85; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


ARMSTRONG WORLD: Asks Court to Approve Frederick Settlement Accord
------------------------------------------------------------------
In 1991 and in 1995, Todd W. Frederick incurred injuries while
working for American Olean Tile Company, which at that time, was a
wholly owned subsidiary of Armstrong World Industries, Inc.  Mr.
Frederick filed workers' compensation claims against American
Olean for, and received workers' compensation benefits in
connection with, the injuries.

On December 21, 1995, pursuant to a Stock Purchase Agreement, AWI
sold American Olean to Dal-Tile, Inc.  After the sale, the parties
began to dispute whether Dal-Tile or AWI was responsible for
certain self-insured workers' compensation claims that arose prior
to the execution of the Purchase Agreement.

                        The 1997 Civil Action

On July 15, 1997, Mr. Frederick commenced a civil action against
AWI, Swartley Bros Engineering Inc. and Star Engineering, Inc., in
the Court of Common Pleas of Montgomery County, Pennsylvania,
seeking to recover damages for a personal injury arising out of
the same event that lead to the 1995 Compensation Claim.  Mr.
Frederick alleged that AWI engineers had improperly designed the
equipment that allegedly contributed to the accident that caused
his injury.  Accordingly, Mr. Frederick asserted that AWI was
liable for the Personal Injury Claim, as well as the 1995
Compensation Claim.  AWI disputed that it is liable to Mr.
Frederick for either of the claims.  The Civil Action was later
removed to the United States District Court for the Eastern
District of Pennsylvania.

                        The Frederick Claim

On January 10, 2001, Mr. Frederick filed Claim No. 13, a general
unsecured claim for more than $1,000,000, for damages incurred in
connection with the Personal Injury Claim and sought to be
recovered to the Civil Action.  AWI objected to Claim No. 13 on
grounds that it did not contain any documentation to support the
claim amount.

In lieu of prosecuting the Claim Objection, AWI agreed to have the
automatic stay modified to allow Mr. Frederick to prosecute the
Civil Action to settlement or judgment.

                   The Dal-Tile Settlement Agreement

During the course of AWI's Chapter 11 case, AWI and Dal-Tile
continued to dispute a number of issues arising of the Purchase
agreement, including which party was liable for workers'
compensation claims arising prior to the Petition Date.

After a lengthy negotiation, on February 24, 2005, the Court
approved a settlement agreement between AWI and DAL-Tile, pursuant
to which:

   (a) AWI would be responsible for the insured American Olean
       workers' compensation claims;

   (b) Dal-Tile would be responsible for self-insured American
       Olean workers' compensation claims;

   (c) AWI is responsible for any liability arising under the
       1991 Compensation Claim; and

   (d) Dal-Tile is responsible for any liability arising
       under the 1995 Compensation Claim; and

   (e) AWI assigned to Dal-Tile all of its rights in the unused
       funds that the State Self-Insurance Division collected
       from the Wachovia Letter of Credit.

AWI was recently advised that if Dal-Tile's parent company issues
a separate guaranty for the American Olean self-insured workers'
compensation claims, the State Self-Insurance Division will
release to Dal-Tile the unused funds from the $1,000,000 draw down
on the Wachovia L/C currently held in trust by JP Morgan Trust
Company, N.A.

                  The Frederick Settlement Agreement

According to Mark D. Collins, Esq., at Richards, Layton & Finger,
P.A., in Wilmington, Delaware, AWI, Dal-tile and Mr. Frederick
have engaged in extensive, arm's-length negotiations.  To resolve
their dispute on a consensual basis, the Parties agree that:

   (1) AWI will pay Mr. Frederick $54,500 in full and final
       settlement of the 1991 Compensation Claim, and Dal-Tile
       will pay Mr. Frederick $190,500 in full and final
       settlement of the 1995 Compensation Claim;

   (2) The Frederick Claim will be reduced and allowed as a
       general unsecured claim against AWI for $225,000.  Mr.
       Frederick will assign $125,000 of the Allowed Claim to
       Dal-Tile;

   (3) Mr. Frederick will take all necessary actions to dismiss
       or otherwise dissolve the Civil Action, with prejudice;
       and

   (4) The Parties will mutually release each other from all
       claims and liabilities in connection with the Civil
       Action, the Workers' Compensation Claims, and the
       Frederick Claim.

The Parties further agree that the terms of the Settlement
Agreement will not become effective until:

   (1) the Bankruptcy Court enters a final, non-appealable order
       approving the Settlement Agreement; and

   (2) the compromise and release contemplated by the Settlement
       Agreement is approved by a workers' compensation judge
       pursuant to Section 449 of the Pennsylvania Workers'
       Compensation Act.

Mr. Collins relates that on October 12, 2005, Judge Bruce K.
Doman, a workers' compensation judge, approved the compromise and
release related to the Workers' Compensation Claims.

Accordingly, the Debtors ask the Bankruptcy Court to approve their
Settlement Agreement with Mr. Frederick and Dal-Tile.

If the Settlement Agreement is not approved, the Parties will
continue to incur attorneys' fees, costs and expenses
unnecessarily, Mr. Collins asserts.

Headquartered in Lancaster, Pennsylvania, Armstrong World
Industries, Inc. -- http://www.armstrong.com/-- the major
operating subsidiary of Armstrong Holdings, Inc., designs,
manufactures and sells interior floor coverings and ceiling
systems, around the world.  The Company and its debtor-affiliates
filed for chapter 11 protection on December 6, 2000 (Bankr. Del.
Case No. 00-04469).  Stephen Karotkin, Esq., at Weil, Gotshal &
Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton
& Finger, P.A., represent the Debtors in their restructuring
efforts.  When the Debtors filed for protection from their
creditors, they listed $4,032,200,000 in total assets and
$3,296,900,000 in liabilities.  (Armstrong Bankruptcy
News, Issue No. 87; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


ATA AIRLINES: Bankruptcy Court to Confirm Plan of Reorganization
----------------------------------------------------------------
ATA Holdings Corp. (Pink Sheets:ATAHQ) and four of its
subsidiaries, including ATA Airlines, Inc., received oral
confirmation by the U.S. Bankruptcy Court for the Southern
District of Indiana of their First Amended Plan of Reorganization.  
The Judge indicated that he would enter a written order confirming
the POR today, Jan. 31, 2006.  This approval clears the way for
the Company to emerge from Chapter 11 by late February 2006.

"Throughout this process, I have never doubted that our employees
were contributing everything they had to making our restructuring
a success," ATA Chairman, President and CEO John Denison, said.  
"Yesterday's ruling reflects their incredible accomplishments.  
Thanks to their hard work in developing an effective business
plan, ATA has been able to transform itself into a more viable
airline ready to emerge from Chapter 11.  I believe the same
efforts our employees applied during this challenging period will
allow us to exceed the expectations of customers for many years to
come."

During yesterday's hearing, the Reorganizing Debtors revealed that
both classes of unsecured creditors eligible to vote accepted the
Plan.  Independent of these results, the Hon. Judge Basil Lorch
III confirmed that the Plan fulfills all requirements of the U.S.
Bankruptcy Code and allows for fair and equitable treatment of all
creditors.  As part of the last steps in achieving this
confirmation, ATA recently finalized certain outstanding
agreements relative to the Plan, including settlement terms on its
loan from the Air Transportation Stabilization Board.  The judge
stated he plans to enter his official order confirming the First
Amended POR sometime today, Jan. 31, 2006.

"Reaching this positive end to the restructuring process is even
more rewarding because it is the result of consensual agreements
reached between ATA, various stakeholders, interested parties and
the Unsecured Creditors' Committee," ATA Interim Chief Financial
Officer Frank Conway, explained.  "Reaching such agreements so
quickly is an unusual achievement and has contributed greatly
toward allowing ATA to regain a solid operational and financial
footing in a remarkably short amount of time."

Doug Yakola, who will assume the role of ATA's Chief Financial
Officer upon emergence, agreed with Conway.  "With a strengthened
cash balance thanks to our new investment partner MatlinPatterson,
a substantially lower CASM due to several cost-saving initiatives,
and the right operational plan to leverage our strengths, all the
pieces are in place to help secure the Company's future," Mr.
Yakola, said.  "As we anticipate emergence, we look forward with a
renewed sense of confidence in ATA's enduring success."

                     Settlement Distribution

As part of the settlement of their claims, unsecured creditors
will receive upon emergence distributions of common stock
representing seven percent of the outstanding equity in the newly
formed privately held holding company, which will become the
ultimate parent company of ATA Airlines.  In addition, unsecured
creditors will receive warrants to acquire two percent of the
New Common Stock outstanding upon emergence.  Finally, ballots
have revealed that a rights offering providing qualifying Class
6 unsecured creditors the opportunity to purchase approximately
$25 million in value of New Common Stock has been fully
subscribed.  As a result, these qualifying unsecured creditors
will also receive an additional two percent of the New Common
Stock.  In accordance with the confirmed POR, ATA Holdings common
and preferred stock will be cancelled upon the emergence date and
no distribution will be made to current holders of those
securities.

                       Investor Commitment

As previously outlined, the Plan includes an investment of
$95 million from ATA's new investor, MatlinPatterson.  This
investment consists of:

     (i) $30 million in debtor-in-possession financing, which will
         be converted into equity upon emergence, and

    (ii) upon emergence, $45 million to New ATA Holdings Corp. in
         the form of an equity investment reflecting the full
         subscription of New Common Stock in the rights offering.

Upon emergence, MatlinPatterson will also provide an additional
$20 million of exit debt financing.

                    Airline Flight Expansion

Yesterday's ruling comes exactly one week following ATA's
announcement that it is expanding its codeshare agreement with
Southwest Airlines to increase service between Hawaii and the West
Coast and introduce new flights between Houston and New York.  
Earlier in the year, the U.S. Department of Transportation
approved both carriers entering into the seven-year expanded
codeshare agreement as a crucial part of ATA's restructuring
efforts.

A full-text copy of the 147-page Disclosure Statement with
respect to the First Amended Joint Chapter 11 Plan For
Reorganizing Debtors is available at no charge at
http://ResearchArchives.com/t/s?4c5

Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th   
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers.  ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft.  The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations.  Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange.  The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874).  Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts.  When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.  


ATA AIRLINES: Wants to Purchase N194AT Aircraft from GECC
---------------------------------------------------------
Pursuant to Section 363 of the Bankruptcy Code, ATA Airlines,
Inc., and its debtor-affiliates seek the U.S. Bankruptcy Court for
the Southern District of Indiana's authority to purchase a
Lockheed L-1011 aircraft, bearing serial number 1230 and U.S.
Registration Number N194AT, for nominal consideration pursuant to
a purchase agreement.

On December 21, 2004, ATA Holdings Corp., General Electric
Capital Corporation, and U.S. Bank National Association entered
into a stipulation providing rejection of certain equipment
relating to several aircraft and engines.  Among the aircraft
covered by the Stipulation was N194AT.  GECC is the beneficial
owner with respect to N194AT, whereas U.S. Bank, as trustee, is
the sublessor and registered owner of N194AT.

Pursuant to that Court-approved Stipulation, the Reorganizing
Debtors were authorized to use N194AT pursuant through Dec. 15,
2005.

In the event that ATA Holdings:

    (a) timely returned all of the Group A Aircraft to GECC;

    (b) did not reject the lease pertaining to the use of N194AT;
        and

    (c) complied with all other provisions in the Stipulation,

the Reorganizing Debtors would purchase N194AT from GECC and U.S.
Bank, pursuant to the terms of a purchase agreement to be executed
by the parties and submitted to the Court no later than today,
January 31, 2005.

Jeffrey J. Graham, Esq., in Indianapolis, Indiana, tells the
Court that the Reorganizing Debtors have neither rejected nor
abandoned the Aircraft.  Mr. Graham further reports that the
Reorganizing Debtors have complied with all the provisions of the
Stipulation other than obtaining Court approval for the purchase
of N194AT, which could not occur until the re-delivery of the
final Group A Aircraft on December 15, 2005.

Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th  
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers.  ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft.  The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations.  Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange.  The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874).  Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts.  When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.  
(ATA Airlines Bankruptcy News, Issue No. 46; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


ATA AIRLINES: Can Walk Away from Sabre Work Order No. 1
-------------------------------------------------------
ATA Airlines, Inc., and its debtor-affiliates sought and obtained
the United States Bankruptcy Court for the Southern District of
Indiana's authority to reject a work order for information
technology services.

ATA Airlines, and Sabre, Inc., are parties to an Information
Technology Services Agreement, under which the parties agreed to
enter into individual work orders for specific services and for
the license of licensed or hosted software.

The parties executed Work Order No. 1, effective October 2, 2003.  
ATA Airlines was granted the right to use certain hosted and
licensed software, including the Sabre Passenger Reservation
System, Sabre Reservation and Departure Control Interface, and
Sabre Qik-Schedule.

ATA Airlines and Sabre, Inc., are also parties to an Information
Technology Services Agreement, under which the parties agreed to
enter into individual work orders for specific software services.

Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana,
clarifies that Work Order No. 1 consists of two distinct
agreements:

   (i) an agreement for access to and use of Hosted Software; and
  
  (ii) an agreement for the use of Licensed Software,
       specifically the Sabre Reservations and Departure Control
       Interface and Sabre Qik-Schedule.

Ms. Hall relates that since November 2004, ATA Airlines has not
used the Software or any ancillary services provided under the
Licensed Software Agreement.  However, ATA Airlines is required to
pay a minimum monthly fee of almost $5,000 for those services.

While the Licensed Software Agreement imposes significant burdens
without any benefit, the Hosted Software Agreement continues to
provide important benefits to ATA Airlines.

Pursuant to Section 365 of the Bankruptcy Code, ATA Airlines
sought and obtained Court's authority to reject the Licensed
Software Agreement, without effect on the IT Agreement, Work Order
No. 1, or the Hosted Software Agreement.

Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th  
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers.  ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft.  The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations.  Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange.  The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874).  Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts.  When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.  
(ATA Airlines Bankruptcy News, Issue No. 46; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


BANC OF AMERICA: Fitch Puts Low-B Ratings on Classes B-4 & B-5
--------------------------------------------------------------
Banc of America Mortgage Securities, Inc., series 2006-A, mortgage
pass-through certificates, are rated by Fitch Ratings as follows:

    -- $309,988,100 classes 1-A-1, 1-A-2, 1-A-R, 2-A-1, 2-A-2,
       3-A-1, 3-A-2, 4-A-1, and 4-A-2(senior certificates) 'AAA';

    -- $7,247,000 class B-1 'AA';

    -- $1,933,000 class B-2 'A';

    -- $1,127,000 class B-3 'BBB';

    -- $644,000 class B-4 'BB';

    -- $483,000 class B-5 'B'.

The 'AAA' rating on the senior certificates reflects the 3.75%
subordination provided by the 2.25% class B-1, the 0.60% class
B-2, the 0.35% class B-3, the 0.20% privately offered class B-4,
the 0.15% privately offered class B-5, and the 0.20% privately
offered class B-6.  The ratings on class B-1, B-2, B-3, B-4, and
B-5 certificates reflect each certificate's respective level of
subordination.  Class B-6 is not rated by Fitch.

The ratings also reflect the quality of the underlying mortgage
collateral, the primary servicing capabilities of Bank of America
Mortgage, Inc. (rated 'RPS1' by Fitch) and Fitch's confidence in
the integrity of the legal and financial structure of the
transaction.

The transaction consists of four groups of adjustable interest
rate, fully amortizing mortgage loans, secured by first liens on
one- to four-family properties, with a total of 545 loans and an
aggregate principal balance of $322,066,721 as of Jan. 1, 2006,
(the cut-off date).  The four loan groups are cross-
collateralized.

The collateral consists of 3/1 (Group 1), 5/1 (Group 2), and 7/1
(Group 3), 10/1 (Group 4) hybrid adjustable-rate mortgage (ARM)
loans. After the initial fixed interest rate period of three,
five, seven, and 10 years respectively, the interest rate will
adjust annually based on the sum of one-year LIBOR index and a
gross margin specified in the applicable mortgage note.
Approximately 71.97% of all the loans require interest-only
payments until the month following the first adjustment date.

As of the cut-off date, the deal has an aggregate principal
balance of approximately $322,066,721 and an average balance of
$590,948.  The weighted average original loan-to-value ratio
(OLTV) for the mortgage loans is approximately 71.21%.  The
weighted average remaining term to maturity (WAM) is 359 months,
and the weighted average FICO credit score for the group is 751.
Second constitute 10.26 and 0% of the loans.  Rate/term and
cashout refinances account for 18.78% and 13.48% of the loans
respectively.  The states that represent the largest geographic
concentration of mortgaged properties are California (45.51%),
Florida (8.70%), and Virginia (7.16%).  All other states represent
less than 5% of the outstanding balance of the group.

Approximately 66.21% of the Group 1 Mortgage Loans, approximately
81.49% of the Group 2 Mortgage Loans, approximately 67.06% of the
Group 3 Mortgage Loans, approximately 83.40% of the Group 4
Mortgage Loans and approximately 78.00% of all of the Mortgage
Loans were originated under the Accelerated Processing Programs,
which require less documentation.  A total of 0.64% of the
Mortgage Loans were originated under the Accelerated Processing
Programs of All-Ready Home.

None of the mortgage loans are 'high cost' loans as defined under
any local, state, or federal laws.  For additional information on
Fitch's rating criteria regarding predatory lending legislation,
see the press release 'Fitch Revises Rating Criteria in Wake of
Predatory Lending Legislation,' dated May 1, 2003, available on
the Fitch Ratings web site at http://www.fitchratings.com/

Banc of America Mortgage Securities, Inc. deposited the loans in
the trust, which issued the certificates, representing undivided
beneficial ownership in the trust.  For federal income tax
purposes, elections will be made to treat the trust as one or more
real estate mortgage investment conduits.  Wells Fargo Bank,
National Association will act as trustee.


BANKATLANTIC BANCORP: Earns $59.1 Million of Net Income in 2005
---------------------------------------------------------------
BankAtlantic Bancorp, Inc. (NYSE: BBX), the parent company of
BankAtlantic and Ryan Beck & Co., reported a $59.1 million net
income for the year ended December 31, 2005, compared to
$70.8 million reported in 2004.

For the fourth quarter 2005, a ($1.6) million net loss was
recorded compared to earnings of $17.3 million for the fourth
quarter, 2004.  Operating income, which excludes a $10 million
charge relating to the compliance matter discussed and a
$2.4 million facilities charge earlier in 2005 was $71.5 million
for the full year, up 12% from operating income in 2004, which
excluded items relating to the early redemption of debt and a
litigation settlement.  Operating income for the fourth quarter,
2005 was down 52% from the corresponding quarter in 2004.  

Chairman and Chief Executive Officer Alan B. Levan commented
"As we previously have disclosed, deficiencies in our Anti
Money-Laundering and Bank Secrecy Act ('AML- BSA') compliance
were identified in mid-2004. With the assistance of our Audit
Committee, we embarked on a complete review of our AML-BSA
compliance policies and procedures.  We engaged a nationally
recognized consulting firm with specific expertise in this area,
which reviewed the identified deficiencies in our operating
systems and procedures and our employee training programs.  In
connection with their review, which was completed in late 2004, we
incurred expenses of approximately $4 million.  Following their
review and recommendations, we internally created a separate
AML-BSA Department, which resulted in a staff increase of
approximately 30 employees and made significant improvements to
our systems, processes, and training programs.  The on-going
financial impact of those changes and additions was to increase
recurring expenses by approximately $3.5 million annually.

"We believe that the Bank is currently in full compliance with all
AML-BSA laws and regulations.  Notwithstanding our current
compliance status, as we have previously reported, many financial
institutions have been the subject of proceedings which have
resulted in substantial fines and penalties and have been required
to enter into cease and desist orders with their primary
regulators based on AML-BSA deficiencies.  Under these
circumstances, we determined that it was appropriate at this time
to establish a $10 million reserve with respect to these matters,
and we anticipate that we will be required to enter into a cease
and desist order under which we agree to maintain satisfactory
compliance status.

Accomplishments and highlights include:

BankAtlantic

"BankAtlantic's 'Florida's Most Convenient Bank' initiative
combined with the fourth quarter introduction of our aggressive
new marketing and advertising campaigns brought unprecedented
growth in new customer accounts.  As the result of these
initiatives, we opened 67,000 low cost deposit accounts in the
fourth quarter, representing an increase of 69% over the same
period in 2004, and an all-time high for BankAtlantic.  Driving
this growth were the results for November and December 2005, when
new accounts rose 107% and 90%, respectively, from the same 2004
periods.  We believe this strong growth in new account openings is
directly attributable to the new advertising and marketing
program, which we launched in November.  Ending low cost deposit
balances increased to an all time high of $2.1 billion, up 15%
over 2004, and average low cost deposit balances for 2005
increased 23% over 2004.

"As we discussed in our third quarter, 2005 release, we continue
to believe the creation of long-term value lies in sustaining high
growth rates in core deposits.  Additional marketing outlays of
approximately $5 million per quarter were spent in the fourth
quarter, 2005, and will continue throughout 2006, which will have
an impact on earnings in the short run.  We believe this short-
term negative impact on earnings will be compensated by above
average 'top line' (low cost deposit) growth that over the long
run is vitally important to our franchise value and achieving
superior profitability.  

"Earnings within the bank declined in the fourth quarter,
principally as the result of the increase in marketing expenses,
and an increase in personnel expense (up $3.3 million, or 12%,
from the third quarter, 2005).  These personnel costs were
directly related to longer store hours, the opening of new stores,
and personnel necessary to maintain the service levels from
increased account volume.

"The tax equivalent net interest margin improved to 4.05% during
the fourth quarter, compared with 3.91% in the same period in
2004, and 3.96% in the third quarter of 2005.  Year-over-year, the
net interest margin improved to 3.95%, up from 3.79% in 2004.

"Total loans were $4.5 billion at year-end.  Loans are down
$300 million and total earning assets are down approximately
$450 million from their midyear peaks in 2005, consistent with our
strategy of limiting earning asset growth due to the relative
flatness of the current yield curve.  The decline in loans is
concentrated in residential real estate, the direct result of our
decision to delay purchases of mortgages in light of the current
yield curve; and in commercial real estate, because of runoff in
our high-rise condominium portfolio.  We remain comfortable with
the commercial real estate market in our trade area, and expect
the decline in our commercial real estate loan balances to prove
temporary.  Small business and consumer loans continued to grow,
with linked quarter increases of 18% and 15%, respectively.

"Borrowings, principally advances from the Federal Home Loan Bank,
are approximately $400 million lower than at year-end 2004, as we
utilized the funds associated with the increased levels of low
cost deposits to reduce borrowings rather than to fund earning
asset growth.  We anticipate following this strategy over the
course of 2006, reflecting our belief that reduction of leverage,
particularly given the yields available in the market today, is
the most appropriate use of these funds.

"Credit quality remained strong in the fourth quarter, with total
non-performing loans declining to $6.8 million at Dec. 31, 2005,
compared to $7.9 million at Dec. 31, 2004, and relatively flat
compared to the $6.9 million level at Sept. 30, 2005.  The ratio
of non-performing loans to total loans declined to 0.15% at
Dec. 31, 2005 from 0.17% at Dec. 31, 2004.  In 2005, the Bank
continued to experience net recoveries -- which totaled $606,000
for the fourth quarter and $1.8 million for the year.  As a
result, negative provisions of $109,000 and $6.6 million were
recorded for the quarter and year, respectively.  Most
significantly, our coverage of non-performing loans remained
extremely high, with the ratio of the allowance for loan losses to
non-performing loans at 606% at December 31, 2005.

"During 2005 we experienced continued growth throughout the
organization.  BankAtlantic expanded its 'branch' network with the
opening of five new stores during the year, including two that
were opened during the fourth quarter.  One of the new stores is a
midnight location, open from 7:30 AM to midnight, seven days a
week, bringing the total number of our stores with this
unprecedented level of convenience to seven.  Additionally, in
December BankAtlantic reached the 100,000 online customers
milestone for our award-winning Internet banking service.  We
anticipate surpassing 1,000,000 monthly logins in 2006.

Ryan Beck & Co.

"During the quarter, Ryan Beck's Private Client Group opened two
new Central Pennsylvania offices in Camp Hill and Lebanon, and
also relocated its Scarsdale office to White Plains, New York.   
Over the course of 2005, Ryan Beck added 63 experienced financial
consultants to its Private Client Group, with assets under
management totaling $2.3 billion and production of $18 million,
bringing the total number of financial consultants to 450.  
Total assets of Ryan Beck's customers reached a new record of
$18.3 billion.

"Ryan Beck & Co. was ranked as the number one mutual to stock
conversion advisor (based upon proceeds) by SNL Securities for the
fourth consecutive year, and second in SNL Securities' Bank and
Thrift 2005 Capital Offerings rankings.

"Additionally, Ryan Beck continued expansion of its Capital
Markets Division with the hiring of 18 new associates during the
fourth quarter, covering several industry sectors.  Included in
this move is the addition of a wholesale mortgage-backed
securities desk to deal in origination and trading of mortgage
backed securities.  Ryan Beck also expanded its Investment Banking
Division through the hiring of three senior bankers in its Middle
Markets Group.  The new associates included David P. Lazar,
Managing Director covering a broad range of industries, Robert von
Furth, Managing Director covering companies in the consumer sector
with a primary focus on retailing and restaurants, and Jay
Gaydosh, Managing Director responsible for REIT transactions.  
This year's expansion brought Ryan Beck to a year-end level of
approximately 1,100 employees, in 42 offices across the nation,"
Mr. Levan concluded.

Through these subsidiaries, BankAtlantic Bancorp provides a full
line of products and services encompassing consumer and commercial
banking, and brokerage and investment banking.  
  
                         *     *     *

As reported in the Troubled Company Reporter on Aug. 5, 2004,
Fitch affirmed the ratings of BankAtlantic Bancorp, Inc., (BBX;
long-term senior 'BB+', short-term senior 'B') and its bank
subsidiary, BankAtlantic FSB, and said its Rating Outlook is
Stable.


BERRY-HILL GALLERIES: Employs AMJ as Restructuring Consultant
-------------------------------------------------------------
Berry-Hill Galleries, Inc., and its affiliate, Coram Capital LLC,
sought and obtained permission from the U.S. Bankruptcy Court for
the Southern District of New York to hire Alan M. Jacobs as Chief
Restructuring Officer and AMJ Advisors, LLC, as Restructuring
Consultant.

As CRO, Mr. Jacobs is authorized to make final and binding
decisions with respect to all aspects of the management and
operation of the Debtors' businesses, subject to approval of
Berry-Hill's board of directors.

Additionally, Mr. Jacobs will:

   (a) oversee all financial and operational aspects of the
       Debtors;

   (b) develop and implement business and litigation strategies;

   (c) oversee day-to-day cash management, disbursements,
       collections and operations;

   (d) explore and implement restructuring options including a
       plan of reorganization; and

   (e) investigate potential affiliate and third party claims
       including potential avoidance actions.

Where necessary, Mr. Jacobs may determine to utilize the services
of independent contractors through AMJ from time-to-time to assist
him in carrying out his duties as CRO, James Berry Hill, Berry-
Hill's President, says.

Mr. Jacobs' hourly rate is $450, with a monthly fee capped at
$25,000.

Mr. Jacobs and AMJ are not being employed as professionals under
Section 327 of the Bankruptcy Code, hence, Mr. Berry Hill relates,
they will not be submitting quarterly fee applications pursuant to
Sections 330 and 331 of the Bankruptcy Code.  However, Mr. Berry
Hill says, AMJ will submit periodic reports of compensation paid.

Mr. Berry Hill assures the Court that Mr. Jacobs and AMJ do not
hold any interest adverse to the Debtors.

Headquartered in New York, New York, Berry-Hill Galleries, Inc., -
- http://www.berry-hill.com/-- buys paintings and sculpture  
through outright purchase or on a commision basis and also
exhibits artworks.  The Debtor and its affiliate, Coram Capital
LLC, filed for chapter 11 protection on Dec. 8, 2005 (Bankr.
S.D.N.Y. Case Nos. 05-60169 & 05-60170).  Robert T. Schmidt, Esq.,
at Kramer, Levin, Naftalis & Frankel, LLP, represents the Debtors
in their restructuring efforts.  When the Debtors filed for
protection from their creditors, they estimated assets between
$10 million and $50 million and debts between $1 million and
$50 million.


BLUE BIRD: Judge Zive Confirms Prepackaged Chapter 11 Plan
----------------------------------------------------------
The Honorable Gregg W. Zive of the U.S. Bankruptcy Court for
the District of Nevada confirmed Blue Bird Body Company and its
debtor-affiliates' Prepackaged Plan of Reorganization on
Jan. 27, 2006, a day after the Debtors filed for chapter 11
protection.

The approved restructuring plan was supported by 93% of the
company's lenders, increased Blue Bird's borrowing availability by
$52.5 million through a new and expanded loan agreement and
included a debt-for-equity conversion plan that is said to
dramatically strengthen the company's balance sheet.  

                       Treatment of Claims

All administrative claims and priority tax claims are unimpaired
and will be fully paid in cash.

The claims of Lloyds TSB Bank plc and The Royal Bank of Scotland
plc, and other lenders under a bank loan will be discharged in
full satisfaction of Blue Bird's debts.  The Bank Group will
receive:

   (a) its pro rata share of the Converted Term Loan, and

   (b) its pro rata share of the New Peach County Stock
       Distribution.

All Other Secured Claims will be reinstated on the Effective Date
and will continue with all contractual terms of any agreements
until those claims will be satisfied in full.

All Other Priority Claims are unimpaired and will be discharged in
full satisfaction of Blue Bird's debts.  The Priority Claimants
will receive:

   (a) unaltered treatment of the holders' contractual rights, and

   (b) other treatment that the Debtors and the holders have
       agreed in writing.

All Allowed General Unsecured Claims will be paid in full on the
date those claims become payable.

Holders of Interests in Peach County Holdings, Inc., will not be
impaired by the Plan.  Specifically, the holders will receive:

   (a) the Interests of any holder who accepted the Restructuring
       Agreement as of the Confirmation Date will be cancelled in
       accordance with the Restructuring Agreement, and

   (b) the Interests of any holder who did not accept the
       Restructuring Agreement as of the confirmation date will be
       cancelled, but the rights and remedies of any holder under
       applicable non-bankruptcy law with respect to those
       Interests otherwise will not be impaired by, the Plan.
       Interests in all subsidiary Debtors will be reinstated
       under, and will not be impaired by, the Plan.

A full-text copy of the Debtors' Disclosure Statement is available
for free at http://ResearchArchives.com/t/s?4c6

Headquartered in Fort Valley, Georgia, Blue Bird Body Company --
http://www.blue-bird.com/-- designs, manufactures and sells  
school buses, commercial buses and recreational vehicles.  Founded
in 1927, the Debtors have nearly 3,000 employees and three
facilities in two countries.  The Debtors also have an extensive
network of distributors and service parts facilities throughout
North America.  Blue Bird and five affiliates filed for chapter 11
protection on Jan. 26, 2006 (Bankr. D. Nev. Case No. 06-50026).  
Jay M. Goffman, Esq., Van C. Durrer II, Esq., and Mark A.
McDermott, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP and
Jennifer A. Smith, Esq., at Lionel Sawyer & Collins represent the
Debtors in their restructuring efforts.  The Debtors had
$497,588,000 in total assets and $539,294,000 in total debts as
stated in their SEC filing on Form 10-Q for the quarter ending
July 31, 1999.  In a Dec. 24, 2004, report, The Manufacturer.com
says the Debtors' total assets as of 2004 were $700 million.


BLUE BIRD: Exits Chapter 11 as Reorganized Company
--------------------------------------------------
Blue Bird Corporation reported that its prepackaged restructuring
plan filed last week with the United States Bankruptcy Court for
the District of Nevada and confirmed by the court on Friday,
became effective yesterday, Jan. 30, 2006.

The completion of the in-court restructuring process allows Blue
Bird's management team and employees to focus their full attention
on strengthening business operations, improving financial
performance, delivering best-in-class product performance and
innovation and providing world-class customer service, the Company
said.

"We are going to take full advantage of the opportunities this
restructuring plan provides Blue Bird," said Jeffry Bust,
President and Chief Executive Officer of Blue Bird.  "With the new
financing this plan provides, the hard work of our employees and
the ongoing commitment of our suppliers and distributors, Blue
Bird will remain one of the world's leading school bus and motor
home manufacturers for many decades to come."

The approved restructuring plan, which was supported by 93% of the
company's lenders, increased Blue Bird's borrowing availability by
$52.5 million through a new and expanded loan agreement and
included a debt-for-equity conversion plan that is said to
dramatically strengthen the company's balance sheet.  The plan
also provides for a full recovery to all of the company's general
unsecured creditors.

Kroll Zolfo Cooper specializes in financial and operational
restructurings.  Three members of KZC have been appointed to serve
on Blue Bird's Board of Directors:

   -- Stephen Cooper, who will serve as Chairman of the Board;
   -- Leonard LoBiondo; and
   -- Robert Bingham.

Headquartered in Fort Valley, Georgia, Blue Bird Body Company --
http://www.blue-bird.com/-- designs, manufactures and sells  
school buses, commercial buses and recreational vehicles.  Founded
in 1927, the Debtors have nearly 3,000 employees and three
facilities in two countries.  The Debtors also have an extensive
network of distributors and service parts facilities throughout
North America.  Blue Bird and five affiliates filed for chapter 11
protection on Jan. 26, 2006 (Bankr. D. Nev. Case No. 06-50026).  
Jay M. Goffman, Esq., Van C. Durrer II, Esq., and Mark A.
McDermott, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP and
Jennifer A. Smith, Esq., at Lionel Sawyer & Collins represent the
Debtors in their restructuring efforts.  The Debtors had
$497,588,000 in total assets and $539,294,000 in total debts as
stated in their SEC filing on Form 10-Q for the quarter ending
July 31, 1999.  In a Dec. 24, 2004, report, The Manufacturer.com
says the Debtors' total assets as of 2004 were $700 million.


BOWATER INCORPORATED: Incurs $120.6 Million Net Loss in 2005
------------------------------------------------------------
Bowater Incorporated (NYSE: BOW) reported a net loss of $120.6
million for the year 2005.  This compares with a net loss of $87.1
million in 2004.  Sales in 2005 totaled $3.5 billion compared to
$3.2 billion in 2004.  Excluding impairment and other special
items, the loss for 2005 was $39.6 million compared to a 2004 loss
of $73.2 million.

Bowater had a net loss of $101.9 million on sales of
$876.4 million for the fourth quarter of 2005.  These
results compare with a net loss of $35.2 million on sales of
$823.0 million in the fourth quarter of 2004.  Before special
items, the net loss for the fourth quarter of 2005 was
$14.4 million compared with the 2004 fourth quarter net loss
before special items of $23.6 million.  Special items in the
fourth quarter included a gain on asset sales of $21.7 million
offset by charges of $109.2 million, principally related to a
restructuring at the Thunder Bay, Ontario, mill.

Specifically, the company will permanently close the Thunder Bay
"A" kraft mill in the second quarter of 2006.  This facility
produces approximately 210,000 metric tons of market pulp per
year.  The closure will improve the financial performance of
the site by reducing the use of high cost wood and energy.  It
will result in a 20% employment reduction at the site.

"I regret the impact that our decision at Thunder Bay will have on
our employees, their families and the community.  However, this
restructuring is essential for the viability of this site.  Also
critical is an improved operating environment in Ontario," said
Arnold M. Nemirow, Chairman, President and Chief Executive
Officer.  "Although better than 2004, our 2005 financial results
were very disappointing, as we continued to face a stronger
Canadian dollar, and higher energy and wood costs.  With this
restructuring, as well as the $80 million cost reduction program
announced last quarter and better markets, we expect to continue
to improve our financial results in 2006."

Fourth quarter special items consisted of a $21.7 million
gain related to asset sales, an asset impairment charge of
$69.3 million, primarily related to the permanent closure at
Thunder Bay, tax charges of $27.3 million related to the
elimination of deferred tax assets, primarily associated with the
Thunder Bay operations, a severance charge of $12.8 million, a
$0.7 million gain resulting from currency changes primarily
related to the appreciation of the Canadian dollar and a  
$0.5 million charge related to the adoption of an accounting
standard related to asset retirement obligations.  Additional
pension charges related to the closure of approximately  
$17.0 million are expected to occur in 2006.

Operating costs for the company's pulp and paper products
increased during the fourth quarter, primarily as a result of
rising energy costs and the stronger Canadian dollar.  In
addition, repair spending was higher as a result of maintenance
outages.  Maintenance downtime at the Coosa Pines, Alabama pulp
mill was longer than anticipated as a result of limited labor
availability due to hurricane reconstruction projects in the
region.

Bowater's average transaction price for newsprint rose $13 per
metric ton in the fourth quarter compared to the third quarter,
while the company's average operating costs increased $19 per
metric ton.  Inventory decreased by 13,900 metric tons.  The
company curtailed 54,000 metric tons of newsprint production in
the fourth quarter for market and maintenance reasons.  In the
first quarter, the company expects to curtail approximately 39,000
metric tons representing maintenance outages and the continued
idling of a machine at Thunder Bay.  The company has informed its
North American customers of a $40 per metric ton price increase
effective February 1.

Bowater's average transaction price for coated and specialty
papers increased $9 per short ton compared to the third quarter,
while the company's average operating costs increased $14 per
short ton.  The company has informed its North American customers
of a $60 per short ton price increase, effective February 1, for
certain of its uncoated mechanical grades.

Bowater's average transaction price for market pulp was
essentially flat compared to the third quarter of 2005, while
operating costs increased $23 per metric ton.  The company
curtailed 24,000 metric tons of market pulp due to maintenance
outages in the quarter and expects to curtail approximately 6,000
tons in the first quarter.

The company's average transaction price for lumber decreased $9
per thousand board feet compared to the third quarter of 2005.  
During the quarter, the company paid countervailing and
antidumping duties of approximately  $6.2 million.  In December,
these duties for the company were reduced from 20.15% to 10.81%.

Headquartered in Greenville, South Carolina, Bowater Incorporated
produces newsprint and coated mechanical papers.  In addition, the
company makes uncoated mechanical papers, bleached kraft pulp and
lumber products.  The company has 12 pulp and paper mills in the
United States, Canada and South Korea and 12 North American
sawmills that produce softwood lumber.  Bowater also operates two
facilities that convert a mechanical base sheet to coated
products.  Bowater's operations are supported by approximately
1.4 million acres of timberlands owned or leased in the United
States and Canada and 30 million acres of timber cutting rights in
Canada.  Bowater is one of the world's largest consumers of
recycled newspapers and magazines.  Bowater common stock is listed
on the New York Stock Exchange, the Pacific Exchange and the
London Stock Exchange.  A special class of stock exchangeable into
Bowater common stock is listed on the Toronto Stock Exchange (TSX:
BWX).

                         *     *     *

As reported in the Troubled Company Reporter on Dec. 5, 2005,
Standard & Poor's Ratings Services lowered its ratings on pulp and
paper producer Bowater Inc. and subsidiary Bowater Canadian Forest
Products Inc., including the corporate credit rating on each
entity to 'B+' from 'BB'.  All ratings were removed from
CreditWatch, where they were placed on Oct. 12, 2005, with
negative implications.  S&P said the outlook is stable.  

As reported in the Troubled Company Reporter on Apr. 22, 2005,
Moody's Investors Service affirmed Bowater Incorporated's senior
implied, senior unsecured and issuer ratings at Ba3, and
concurrently, also affirmed the speculative grade liquidity rating
as SGL-2 (indicating good liquidity).  Moody's says the outlook
remains negative.

Ratings affirmed:

   -- Bowater Incorporated

      * Outlook: negative
      * Senior Implied: Ba3
      * Senior Unsecured: Ba3
      * Industrial and PC revenue bonds: Ba3
      * Issuer: Ba3
      * Speculative Grade Liquidity Rating: SGL-2

   -- Bowater Canada Finance Corp.

      * Outlook: negative
      * Senior unsecured guaranteed notes: Ba3

As reported in the Troubled Company Reporter on Mar. 30, 2005,
Fitch has rated Bowater's senior unsecured bonds and bank debt
'BB-'.  Fitch says the Rating Outlook is Stable.  Nearly
$2.5 billion of debt is subject to the rating.


CALPINE CORP: Wants Stay Modified to Apply ISO Cash Collateral
--------------------------------------------------------------
Robert G. Burns, Esq., at Kirkland & Ellis LLP, in New York,
relates that the California Independent System Operator
Corporation is a non-profit public benefit corporation operating
the electrical transmission system that delivers power throughout
most of California.

Participation in the markets administered by the ISO is limited
to Scheduling Coordinators, the principals in the financial
transactions administered by the ISO that act as intermediaries
between the ISO, the retailers and the customers.  The Scheduling
Coordinator is obligated under the Scheduling Coordinator
Agreement to perform all obligations under the ISO's Tariff,
including financial obligations.

Both the Scheduling Coordinator Agreement and the ISO Tariff are
approved by the Federal Energy Regulatory Commission.

Calpine Energy Services, LP, is a Scheduling Coordinator in the
ISO.  On December 27, 2005, the ISO issued the preliminary
invoices for the October market activity.  For that month, Calpine
Corporation and its debtor-affiliates would be ISO Debtors with
net charges of $2,908,460 as reflected in the preliminary invoices
for October 2005.  Payments were due to the market on January 4,
2006.

The ISO holds $3,337,610 in cash from Calpine Corporation and its
debtor-affiliates pursuant to the ISO Credit Policy and the ISO
Tariff that provide that a Scheduling Coordinator that lacks an
Approved Credit Rating must either post security or provide a
prepayment to the ISO as a cash collateral.  The Tariff allows the
ISO to use the cash collateral provided by the Debtors to clear
the market.  Any decision not to use the cash collateral to clear
the market may require FERC approval.

Accordingly, the Debtors ask the U.S. Bankruptcy Court for the
Southern District of New York to modify the automatic stay to
permit the ISO, effective January 4, 2006, to apply the cash
collateral held in the ISO account to the final October invoices,
in an amount not to exceed $2,925,000.

Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities with  
electricity from clean, efficient, natural gas-fired and
geothermal power plants.  Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces.  Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services.  The Company filed for chapter 11 protection on Dec. 20,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200).  Richard M. Cieri,
Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert
G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in
their restructuring efforts.  As of Dec. 19, 2005, the Debtors
listed $26,628,755,663 in total assets and $22,535,577,121 in
total liabilities. (Calpine Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


CALPINE CORP: Wants Court to Okay Interim Compensation Procedures
-----------------------------------------------------------------
Calpine Corporation and its debtor-affiliates seek the U.S.
Bankruptcy Court for the Southern District of New York's
permission to establish uniform procedures for the compensation
and reimbursement of court-approved professionals on a monthly
basis.

Specifically, the Debtors propose that:

   (a) On or before the 30th day of each month after the month
       for which compensation is sought, each Professional
       seeking compensation will serve a monthly statement, by
       hand or overnight delivery, on:

          * the Debtors,

          * the Debtors' counsel,

          * the attorneys for any committees appointed by the
            U.S. Trustee; and

          * the U.S. Trustee.

   (b) Each Monthly Fee Statement must contain a list of the
       individuals and their titles, who provided services during
       the statement period, their billing rates, the aggregate
       hours spent by each individual, a reasonably detailed
       breakdown of the disbursements incurred and
       contemporaneously maintained time entries for each
       individual in increments of tenths of an hour;

   (c) Each person receiving a Fee Statement will have 15 days
       after receipt to review it.  In the event a person has an
       objection to a Fee Statement, he will serve on the
       Professional whose statement is objected to, and the
       Notice Parties, a written notice of objection statement
       setting forth the nature of the objection and the amount
       of fees or expenses at issue, no later than 35 days after
       the end of the month for which compensation is sought,;

   (d) At the expiration of the 35-day period, the Debtors will
       promptly pay 80% of the undisputed fees and 100% of the
       undisputed expenses identified in each Monthly Statement
       to which no objection has been served;

   (e) If the Debtors receive an objection to a particular fee
       statement, they will withhold payment on that portion of
       the fee statement to which the objection is directed and
       promptly pay the remainder of the fees and disbursements
       in percentages set forth;

   (f) If the parties to an objection are able to resolve their
       dispute after the service of Notice of Objection to Fee
       Statement, and if the party whose statement was objected
       to serves on the Notice Parties a statement indicating
       that the objection is withdrawn and describing in detail
       the terms of the resolution, then the Debtors will
       promptly pay that portion of the fees statement which is
       no longer subject to an objection;

   (g) Every 120 days, but no more than every 150 days, each of
       the professionals will serve and file with the Court an
       application for interim or final Court approval and
       allowance, of the compensation and reimbursement of
       expenses requested;

   (h) Any Professional who fails to file an application seeking
       approval of compensation and expenses previously paid when
       due will be ineligible to receive further monthly payments
       of fees or expenses until further Court order, and may be
       required to disgorge any fees paid since retention or the
       last fee application, whichever is later; and

   (i) If a Committee is appointed, the attorneys for the
       Committee may, in accordance with the foregoing procedure
       for monthly compensation and reimbursement of   
       Professionals, collect and submit statements of expenses,
       excluding individual committee members' counsel expenses,
       with supporting evidence of payment, from members of the
       Committee he represents.

Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York,
tells that Court that the proposed procedures will enable the
Debtors to:

   -- monitor closely costs of administration;

   -- maintain a level cash flow availability; and

   -- implement efficient cash management procedures.

Moreover, the Debtors will allow the Court and key parties-in-
interest to insure the reasonableness and necessity of the
compensation and reimbursement sought pursuant to the procedures.

Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities with  
electricity from clean, efficient, natural gas-fired and
geothermal power plants.  Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces.  Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services.  The Company filed for chapter 11 protection on Dec. 20,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200).  Richard M. Cieri,
Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert
G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in
their restructuring efforts.  As of Dec. 19, 2005, the Debtors
listed $26,628,755,663 in total assets and $22,535,577,121 in
total liabilities. (Calpine Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


CALPINE CORP: Gets Court OK to Reject Two Almaden Office Leases
---------------------------------------------------------------
Calpine Corporation and its debtor-affiliates are parties to
approximately 20 leases of non-residential real property for
various office facilities located throughout the United States.  
substantially all of the Debtors' business operations, including
the Debtors' corporate headquarters facility in San Jose,
California.

In the year immediately preceding the Debtors' bankruptcy petition
date, the Leases cost the Debtors $21,081,410, in the aggregate,
for rent and other non-rent expenses, according to Richard M.
Cieri, Esq., at Kirkland and Ellis, LLP, in New York.

The Debtors began reviewing and analyzing the Leases in December
2005 to determine the quality of the real estate, the market for
comparable space and the current market rents, Mr. Cieri relates.

The Debtors have identified one leased property and one related
sublease that in their business judgment should be rejected as of
the Petition Date.

The Lease Property is comprised of 13,768 square feet of
corporate office space located at Suite 500, 150 Almaden Blvd.,
in San Jose, California.  The Lease is for $1,121,047 annually.  
The Sublease is for the same office space and is for $267,681
annually.  Both Leases will expire on July 17, 2006.  The
counterparties for the Leases are:

   (1) DivcoWest Property Services, and

   (2) American Funding & Financial Corp.

The Debtors do not use any of the Lease Property Space for their
own purposes, Mr. Cieri discloses.  The Debtors are paying more
rent for the Property than they are receiving in rent under the
Sublease and thus are paying approximately $853,366 annually in
rent for Property that they are not using.

Accordingly, the Debtors sought and obtained the U.S. Bankruptcy
Court for the Southern District of New York's authority to reject
the two Almaden Office Leases as of the Petition Date.

Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities with  
electricity from clean, efficient, natural gas-fired and
geothermal power plants.  Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces.  Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services.  The Company filed for chapter 11 protection on Dec. 20,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200).  Richard M. Cieri,
Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert
G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in
their restructuring efforts.  As of Dec. 19, 2005, the Debtors
listed $26,628,755,663 in total assets and $22,535,577,121 in
total liabilities. (Calpine Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


CATHOLIC CHURCH: Foraker Balks at Portland's Disclosure Statement
-----------------------------------------------------------------
David A. Foraker, the Future Claimants Representative appointed in
the Archdiocese of Portland's Chapter 11 case, argues that the
Disclosure Statement accompanying the Plan of Reorganization filed
by the Archdiocese should not be approved because the Plan is
unconfirmable as a matter of law.  Mr. Foraker points out that:

   (1) the Plan of Reorganization provides for categorical
       disallowance of all claims for punitive damages or for
       loss of consortium, which is impermissible under the
       Bankruptcy Code.

   (2) the "best interest of creditors" test of Section
       1129(a)(7)(A)(ii) of the Bankruptcy Code cannot be
       satisfied with regard to the Plan.

Mr. Foraker asserts that since the Plan is clearly unconfirmable
on its face, no purpose would be served by approving a disclosure
statement relating to the Plan or taking other steps in
furtherance of confirmation of the proposed Plan.  Doing so would
be a time-consuming and expensive act of futility unless Portland
first modifies the Plan to address the deficiencies.

Mr. Foraker further notes that unless the Plan is promptly
modified to correct the basic deficiencies, Portland's exclusive
right to file and solicit acceptances of a plan should be
terminated.

The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.  
Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts.  In its Schedules of Assets and Liabilities filed with
the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities.  (Catholic  
Church Bankruptcy News, Issue No. 51; Bankruptcy Creditors'  
Service, Inc., 215/945-7000)


CATHOLIC CHURCH: Claimants Balk at Portland Estimation Protocol
---------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
November 28, 2005, the Archdiocese of Portland in Oregon asked the
U.S. Bankruptcy Court for the District of Oregon to estimate and
temporarily allow all unresolved present child sex abuse tort
claims filed by April 29, 2005, for the limited purposes of voting
on, and confirmation of, Portland's Plan of Reorganization.

Thomas W. Stilley, Esq., at Sussman Shank LLP, in Portland,  
Oregon, informs Judge Elizabeth Perris that actual liquidation for
purposes of distribution of the Unresolved Present Child Sex Abuse
Tort Claims will unduly delay the administration of Portland's  
bankruptcy case.

                      Estimation Procedures

Portland's proposed estimation methodology is based primarily on
140 prepetition claims alleging sexual abuse of minors that were
actually liquidated within 2000 to 2004.  The Liquidation occurred
within the adversary system of the Oregon state courts, pursuant
to settlements between the Archdiocese and child sex abuse tort
claimants.

A total of 45 claims alleging misconduct by former priest Maurice
Grammond were liquidated for $28,404,500, for an average of
$631,211 per claim, and 14 claims alleging misconduct by former
priest Thomas Laughlin were liquidated for $10,054,765, for an
average of $773,443 per claim.  The remaining 82 non-Grammond and
non-Laughlin claims liquidated for $14,942,834, for an average of
$182,230 per claim.

According to Mr. Stilley, the average value of the Settled Claims
is highly probative of the aggregate actual value of the
Unresolved Present Child Sex Abuse Tort Claims for purposes of
Plan confirmation.

The Settled Claims and the Unresolved Present Child Sex Abuse
Tort Claims have similar characteristics, including:

   -- proximity in time of liquidation;

   -- type and nature of alleged abuse;

   -- range of time period from the alleged occurrence until the
      assertion of the claim;

   -- range of alleged damages;

   -- identity of employer or principal of the accused
      wrongdoers;

   -- applicable law;

   -- representation by and identity of claimants' attorneys; and

   -- requests for jury trials.

Based on the Settled Claims Data, the Unresolved Present Child
Sex Abuse Tort Claims is expected to actually liquidate in amounts
ranging from $0 to over $1,000,000.  However, since most of the
Unresolved Present Child Sex Abuse Tort Claims are in the earliest
stages of discovery, Mr. Stilley submits that it is speculative at
this time to predict whether any Unresolved Present Child Sex
Abuse Tort Claim will liquidate for $0, $1,000,000, or, more
likely, at some point in between.  The only certainty, Mr. Stilley
says, is that a claimant's allegations of the amount of damages he
or she is entitled to receive has no correlation to the amount of
damages the claimant will ultimately receive.

                           Responses

(A) FCR

David A. Foraker, the Future Claimants Representative appointed in
the Archdiocese of Portland's Chapter 11 case, asks the U.S.
Bankruptcy Court for the District of Oregon to reject Portland's
proposed "forced settlement" estimation method with regard to the
unresolved tort claims.

"In the context of this case, such a method -- even if properly
adjusted -- is appropriate only if the purposes of the estimation
are limited to setting voting rights for a plan and determining
whether a plan satisfies the 'best interest of creditors' test is
feasible," Mr. Foraker explains.

There simply is no good reason for the Court to do what the
Archdiocese is asking it to do, Mr. Foraker continues.  A plan can
be confirmed in Portland's case without first determining the
exact amount of the Archdiocese's total liability on account of
Unresolved Tort Claims.

Mr. Foraker tells the Court that the actual liquidation of the
Claims would not result in "undue delay" in the administration of
the case.  The claims liquidation process must go forward under
any plan structure.

Mr. Foraker also notes that under 28 U.S.C. Section 157(b)(2)(B)
estimation of unliquidated personal injury tort or wrongful death
claims is not a core proceeding that may be heard and determined
by bankruptcy judges, if the estimation is "for purposes of
distribution" in a bankruptcy case.  Under 28 U.S.C. Section
157(c)(1), a bankruptcy judge may hear a non-core proceeding but
must submit proposed findings of fact and conclusions of law to
the district court.  Only the district court may enter a final
order in a non-core proceeding, after de novo review of the
bankruptcy judges' proposed findings and conclusions, absent the
consent of all the parties to the proceeding to having the
bankruptcy judge enter the final order.

(B) 38 Tort Claimants

Neil T. Jorgenson, Esq., in Portland, Oregon, informs the Court
that 38 tort claimants support the entry of an order temporarily
allowing each of the claimants' claims for voting purposes for
$2,250,000, under the condition that the Court order:

   -- explicitly state that the claim is temporarily allowed
      only for voting purposes;

   -- is explicitly limited in nature and has no binding effect
      for any purpose other than the purpose of temporary
      allowance for voting;

   -- will have no effect with respect to the claims for any
      other purposes; and

   -- will not create any rights in any party to assert claims
      preclusion, issue preclusion, collateral estoppel or res
      judicata, or any other similar right including law of the
      case, in any other proceeding, whether in state or federal
      court.

Additionally, Mr. Jorgenson points out that neither the order, nor
any determinations must be admissible in any way with respect to
any hearing or trial regarding the claims, whether in state or
federal court.

(C) 45 Tort Claimants

On behalf of 45 tort claimants, Erin K. Olson, Esq., in Portland,
Oregon, and Daniel J. Gatti, Esq., at Gatti, Gatti, Maier,
Krueger, Sayer and Associates, in Salem, Oregon, argue that the
Archdiocese of Portland in Oregon's use of "weighted averages"
from past settlement figures is improper and unfair.

The abuses of many clergy-perpetrators who were not accused in
prior claims against the Archdiocese are now subject to claims
pending against Portland for which there are no historical
settlement figures, Mr. Gatti points out.

Use of settlements from other priests' abuses is invalid, and
Portland's use of postpetition settlements as a factor in its
estimation model is improper, Ms. Olson adds.  Many of the
postpetition settlements included conditions, which Portland has
breached by proposing an infeasible and unconfirmable plan of
reorganization, so they are not settlements at all.

If estimation is warranted at all for unresolved claims,
Mr. Gatti insists that jury verdicts are the appropriate
foundation, and not settlement figures.

In addition, Mr. Gatti and Ms. Olson assert that there is no
support for Portland's request that the Court simply disallow all
punitive damages claims.

(D) Tort Committee

"Estimation will result in unnecessary delay and expense," Albert
N. Kennedy, Esq., at Tonkon Torp, LLP, in Portland, Oregon, tells
Judge Perris.

Mr. Kennedy relates that for 18 months, Portland has delayed jury
trials.  Despite extensive efforts, Portland has had minimal
success in settling claims.  As a result, Portland has effectively
delayed the liquidation of tort claims.

Mr. Kennedy notes that Portland's assertion that the actual
liquidation for tort claims will cause "undue delay" in the
administration of the case is based on the unsupported and
unsupportable assertion that no plan of reorganization can be
confirmed until all claims have been liquidated.  Furthermore,
Portland's premise is wrong because the Archdiocese is solvent.  
A plan can be confirmed without liquidating tort claims.  

Accordingly, since Portland is solvent, the claim of each tort
claimant must be paid in full or a plan will not be confirmable
under Sections 1129(a)(7) and 1129(b)(2)(B) of the Bankruptcy
Code.

Mr. Kennedy clarifies that the Official Committee of Unsecured
Creditors supports the temporary allowance of tort claims for the
sole purpose of accepting or rejecting a plan pursuant to Rule
3018(a) of the Federal Rules of Bankruptcy Procedure.  The Tort
Committee also does not oppose Portland's proposed method for
temporary allowance for voting purpose.

The Tort Committee, hence, asks the Court to deny approval of
Portland's request to estimate tort claims except as it relates
solely to temporary allowance for voting on a plan.

Claimants John Doe 104, John Doe 105, C.B., J.C.1, G.P., D.S.,
R.H., J.D., N.M., M.J.D., D.C., and holders of Claim Nos. 181,
182, 183, 184, 185, 187, 188, 189, 302, 303, 304, 305, 306, 448
and 835 support the Tort Committee's arguments.

The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.  
Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts.  In its Schedules of Assets and Liabilities filed with
the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities.  (Catholic  
Church Bankruptcy News, Issue No. 51; Bankruptcy Creditors'  
Service, Inc., 215/945-7000)


CELESTICA INC: Posts $28 Million Net Loss in Quarter Ended Dec. 31
------------------------------------------------------------------    
Celestica Inc. (NYSE: CLS, TSX: CLS/SV) reported financial
results for the fourth quarter and fiscal year ended Dec. 31,
2005.

Revenue was $2.075 billion, compared to $2.333 billion in the
fourth quarter of 2004.  Net loss for the fourth quarter was
$28 million, compared to a net loss for the fourth quarter of
2004 of $810 million.

Adjusted net earnings for the quarter were $29 million, compared
to $43 million for the same period last year.  Adjusted net
earnings is defined as net earnings before amortization of
intangible assets, gains or losses on the repurchase of shares and
debt, integration costs related to acquisitions, option expense,
option exchange costs and other charges, net of tax and
significant deferred tax write-offs

For 2005, revenue was $8.471 billion compared to $8.840 billion
in 2004.  Net loss was $47 million, compared to a net loss of
$854 million last year.  Adjusted net earnings for the year were
$129 million, compared to adjusted net earnings of $96 million
in 2004.

"Demand in the quarter showed some modest seasonal strength,
particularly in our server segment," said Steve Delaney, CEO,
Celestica.  "Profitability was adversely affected by the cost of
supporting significant transfer activity combined with a late
surge in demand in one of our Americas plants.  Transition
activity continues in the site in the first quarter, but we have
deployed the necessary resources to restore efficiencies by the
second quarter."

                             Outlook

For the first quarter ending March 31, 2006, the company
anticipates revenue to be in the range of $1.8 billion to
$2 billion, and adjusted earnings per share ranging from
$0.04 to $0.12.
   
Headquartered in Toronto, Ontario, Celestica, Inc. --
http://www.celestica.com/-- is a world leader in the delivery of  
innovative electronics manufacturing services.  Celestica operates
a highly sophisticated global manufacturing network with
operations in Asia, Europe and the Americas, providing a broad
range of integrated services and solutions to leading OEMs
(original equipment manufacturers).  Celestica's expertise in
quality, technology and supply chain management, enables the
company to provide competitive advantage to its customers by
improving time-to-market, scalability and manufacturing
efficiency.

                         *     *     *

As reported in the Troubled Company Reporter on Dec. 26, 2005,
Fitch Ratings has initiated coverage of Celestica Inc. by
assigning these ratings:

     -- Issuer default rating 'BB-';
     -- Unsecured credit facility 'BB-';
     -- Senior subordinated debt 'B+'.

The Rating Outlook is Stable.  Fitch's action affects
approximately $750 million of debt.


CENTURY THEATRES: S&P Rates Proposed Secured Credit Facility at B+
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned a 'B+' corporate
credit rating to San Rafael, California-based movie exhibitor
Century Theatres Inc.  Standard & Poor's also assigned a 'B+'
rating and a recovery rating of '3' to the company's proposed
secured credit facility, indicating a meaningful (50%-80%)
recovery of principal in the event of a payment default.  The
outlook is negative.  Following the new debt issuance, the company
will have approximately $440 million in debt and $291 million in
present value of operating leases.

Proceeds for the $360 million term loan B portion of the secured
credit facility will be used to retire existing debt and to fund a
special dividend of $235 million to the company's shareholders.
The $75 million revolving credit portion of the credit facility is
expected to be undrawn at closing.

"The rating reflects the company's geographic concentration in the
western and midwestern states, high leverage, usage of debt to
fund a large special dividend, relatively aggressive expansion
plan, participation in a highly competitive industry, and reliance
on the unpredictable popularity of Hollywood films," said Standard
& Poor's credit analyst Tulip Lim.

These risks are partially offset by the company's:

    * good operating metrics and margins relative to peers,

    * strong market position in the markets in which the company
      operates, and

    * modern theater circuit relative to other theater chains.

The movie exhibition industry as a whole suffered in 2005 because
of a weak summer and fall box office.  The movie theaters' higher
margin concession business was correspondingly hurt by lower
traffic.  Century's profitability was flat in 2005 after adjusting
comparisons for an extra week in 2004, and margins remained good
relative to peers.

The company has a sizable new-theater construction plan for the
next few years, which should provide a boost to EBITDA. However,
it will be a cash drain in the near-to-intermediate term, raising
the possibility of the company incurring negative discretionary
cash flow and needing to draw on its revolving credit facility to
fund the expansion plan.

Also, the company's operating lease commitments will increase as
the company grows.  If the box office suffers a prolonged decline,
the company maintains its ambitious growth plan, and incurs
additional lease obligations, leverage may increase.


CENVEO INC: Cost Cutting Measures Prompt S&P to Hold B+ Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on Cenveo,
Inc., including the 'B+' corporate credit rating, and removed the
ratings from CreditWatch, where they were placed with negative
implications on Aug. 16, 2005.  The CreditWatch listing followed
the company's announcement it had reached an agreement with
Burton Capital Management LLC and Goodwood Inc. to end the
company's proxy contest, approved a new board of directors, and
hired a new management team.  The outlook is negative.

"We expect that, even though lease-adjusted debt leverage at
Cenveo is very high for the rating, the company will successfully
accomplish significant and prudent additional cost-cutting actions
in 2006, thereby meaningfully improving EBITDA, profit margins and
leverage during the period," said Standard & Poor's credit analyst
Emile Courtney.

Also, Cenveo is expected over the next few months to sell its
Canadian envelope subsidiary and to repay debt balances with most
of the proceeds.  Although this action may have only a moderate
impact toward deleveraging the balance sheet over the near term --
given the relatively sizable cash flow stream at the Canadian
subsidiary -- the proceeds would be used to meaningfully reduce
debt balances by as much as $300 million.  This would position
Cenveo to benefit considerably from planned cost-cutting actions.

Ratings reflect high debt leverage and the company's narrow
business focus on the highly competitive envelope and commercial
printing segments.  Cenveo is the largest manufacturer in the
North American envelope market and one of the largest regional
commercial printers in the U.S. Commercial printing and envelope
manufacturing segments are highly fragmented marketplaces
characterized by low margins.  Cenveo plans to rationalize
printing facilities, lower headcount, and consolidate its supplier
base toward a goal of achieving $75 million in annual cost cuts by
the end of 2006.


CHARTER COMMS: S&P Junks Rating on Proposed $400 Mil. Senior Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC-' rating to
the proposed aggregate $400 million senior notes of CCH II LLC
(CCC+/Negative/--) and CCH II Capital Corp. (CCC+/Negative/--),
which are indirect subsidiaries of cable TV system operator
Charter Communications Inc. (Charter; CCC+/Negative/B-3).

Proceeds will be used to reduce borrowings, but not commitments,
under the Charter Communications Operating LLC (CCC+/Negative/--)
revolving credit facility.

The notes are being offered in two tranches, the first of which
provides the option to pay interest in cash or in-kind, and will
mature in 2013.  The second tranche will be issued on terms
substantially identical to those of CCH II's existing 10.25%
senior notes due 2010.  Both issues are being offered under Rule
144A with registration rights.

The 'CCC+' corporate credit rating and all other ratings on
Charter and its subsidiaries were affirmed.  The outlook is
negative.  Charter had approximately $19.1 billion of debt as of
Sept. 30, 2005.

"The ratings on Charter continue to reflect high financial risk,"
said Standard & Poor's credit analyst Eric Geil.

Charter's high financial risk results from:

    * aggressive debt-financed acquisitions and capital
      expenditures,

    * intense competitive pressure from satellite direct-to-home
      TV providers,

    * weak revenue and EBITDA trends,

    * uncertain prospects for discretionary cash flow generation
      in the foreseeable future, and

    * pressure from significant debt maturities beginning in 2007.

These factors constrain the rating despite the company's position
as the still-dominant provider of pay-TV services in its markets,
a degree of EBITDA stability from largely subscription-based
revenues, advanced services growth, and good system asset values.

Charter boosted marketing efforts and related customer expenses in
2005 to improve subscriber retention, helping to moderate its rate
of subscriber erosion.  However, higher expenses are depressing
profitability, and Charter's subscriber numbers remain weaker than
most other major operators' generally flat trends.  High-speed
data customer growth was healthy, but net customer additions were
down from last year; this key growth driver is losing capacity to
temper weak video operating results.

Phone companies are more aggressively promoting DSL with
discounts, and Charter already faces initial competition in one of
its Texas systems from local phone company Verizon Communications
Inc. for video services.  During the next two years, Charter could
see new video competition in additional markets.  Though higher
spending on customer service, promotions, and digital video
recorders is helping Charter stabilize the subscriber base, the
company's weak financial condition could limit its ability to
sustain elevated spending needed compete effectively against
financially stronger rivals beyond the near term.

Rising programming costs and customer service expenses could
continue to pressure Charter's margins because intense competition
limits its capacity to raise customer prices.  Leverage is
excessive, and could rise given stagnant weak revenue growth,
further potential EBITDA declines, and significantly negative
discretionary cash flow.


COMPUTER SERVICES: Dutch Auction Cues S&P to Cut Ratings to BB+
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Dallas, Texas-based
Affiliated Computer Services Inc. to 'BB+' from 'BBB+' and placed
it on CreditWatch with negative implications.  The rating actions
follow ACS's announcement that its Board of Directors has
authorized a modified "Dutch Auction" tender offer to purchase up
to 55.5 million shares of its Class A common stock at a price per
share not less than $56 and not greater than $63.  The tender
offer is expected to commence on or about Feb. 6, 2006, and to
expire on or about March 6, 2006, unless extended.  The number of
shares proposed to be purchased in the tender offer represents
approximately 45% of ACS's currently outstanding common stock.

"The rating downgrades," said Standard & Poor's credit analyst
Philip Schrank, "reflect Standard & Poor's assessment that ACS no
longer possesses an investment-grade financial policy in light of
the announced $3.5 billion debt-financed Dutch tender offer." Pro
forma total debt to EBITDA will rise to about the 5x range from
under 1x currently.  If the tender offer is successfully completed
as contemplated, the likely outcome for the company's corporate
credit rating would be `BB' or `BB-', reflecting the company's
highly leveraged capital structure.  However, upon further
discussions with ACS management, ratings may be lowered an
additional notch based upon our review of management's future
financial policy and growth strategies.  "Additionally," said Mr.
Schrank, "we expect that existing senior unsecured debt would
either be refinanced and the ratings withdrawn, or else notched
below the corporate credit rating due to the expected new secured
debt in the capital structure."


CONJUCHEM INC: Oct. 31 Balance Sheet Upside-Down by CDN$23 Million
------------------------------------------------------------------
ConjuChem Inc. (TSX:CJC) reported financial results for its fiscal
year ended Oct. 31, 2005.

Revenues for the fiscal year ending Oct. 31, 2005, were
CDN$705,707, compared to CDN$820,449 of the prior year.

"2005 was highlighted by the development of our new PC-DAC(TM)
technology, which is a natural extension of our albumin bonding
expertise and intellectual property," said Lennie Ryer, Chief
Financial Officer.  "We believe strongly in the power of
PC-DAC(TM) to unlock the therapeutic potential of peptides.  
In 2006, we will endeavour to advance this technology in multiple
programs."

The Company's net loss for the year ended Oct. 31, 2005 was
CDN$38.5 million, compared to CDN$47.7 million for the year ended
Oct. 31, 2004.  The decrease in the net loss is mainly
attributable to a decrease in net research and development
expenses of CDN$13.7 million.

At Oct. 31, 2005, the Company had cash and cash equivalents
of CDN$17.8 million and a working capital position of
CDN$14.6 million.

As of Oct. 31, 2005, ConjuChem Inc.'s balance sheet showed
assets totaling CDN$20,410,052 and liabilities totaling
CDN$43,502,313.  The company's shareholders' deficit was
CDN$23,092,261, compared to a CDN$10,252,756 deficit at
Oct. 31, 2004.

ConjuChem Inc. -- http://www.conjuchem.com/-- is biotechnology   
company, developing drugs to improve the treatment of human
diseases.  At the core of ConjuChem is a powerful, proprietary
technology, which we are leveraging to create an attractive
portfolio of commercial drugs.  The Company's primary focus is the
further development of a drug for Type 2 diabetes, which is
currently in Phase II testing.


CORNELL TRADING: Committee Hires Gadsby Hannah as Local Counsel
---------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in Cornell
Trading, Inc.'s chapter 11 case seeks the Court's authority to
retain Charles A. Dale III and the law firm of Gadsby Hannah LLP
as its local counsel.

Gadsby Hannah is expected to:

   a) represent and communicate with the Committee in Court
      hearings;

   b) file all necessary motions, notices and other appropriate
      pleadings on the Committee's behalf; and

   c) assist the Committee generally in performing other services
      as may be desirable or necessary in connection with the
      discharge of the Committee's duties pursuant to Section
      1103 of the Bankruptcy Code.

Gadsby Hannah's current standard fees are:

     Professional                Hourly Rates
     ------------                ------------
     Partners                     $330 - $500
     Associates                   $195 - $300
     Paraprofessionals            $100 - $150

Steven Sass, Esq., at Gadsby Hannah, assures the Court that his
firm Hannah does not represent any interest adverse to the
Debtors.

Headquartered in Williston, Vermont, Cornell Trading, Inc. --
http://www.aprilcornell.com/-- sells women's and children's
apparel including dresses, skirts, blouses, and sleepwear.
Cornell also offers books and housewares like table linens,
placemats and napkins, bedding, and dolls and stuffed animals.
The Company filed for chapter 11 protection on January 4, 2006
(Bankr. D. Mass. Case No. 06-10017).  Christopher J. Panos, Esq.,
at Craig & Macauley, P.C., represents the Debtor in its
restructuring efforts.  When the Debtor filed for protection
from its creditors, it listed estimated debts and assets between
$10 million to $50 million.


COTT CORP: Posts $6.9 Million Net Loss in Quarter Ending Dec. 31
----------------------------------------------------------------
Cott Corporation (NYSE:COT; TSX:BCB) reported results for the
fourth quarter and full year ended Dec. 31, 2005.  

For the fourth quarter ending Dec. 31, 2005, Cott's sales grew to
$397.2 million, compared to $369.3 million sales in the quarter
ending Jan. 1, 2005.

For the fourth quarter ending Dec. 31, 2005, Cott's incurred a net
loss of $6.9 million, compared to a net income of $11.4 million in
the quarter ending Jan. 1, 2005.

As of Dec. 31, 2005, total assets were $1.71 billion and total
liabilities were $1.229 billion, resulting in a stockholders'
equity of $481 million.

"2005 was a challenging year for Cott and our industry as we faced
unprecedented commodity cost increases and a continuing consumer
shift toward non-carbonated beverages," said John K. Sheppard,
president and chief executive officer.  "Despite these challenges,
Cott remains a strong player in the beverage industry.  Our U.S.
retailer brand volume share remained steady for the past 52 weeks
and grew in the most recent four and 12-week periods,
despite category softness and aggressive national brand
promotional activity.  As we focus on the North American
realignment in 2006, we are taking actions that we expect will
drive sales growth and significantly improve our operating
performance as we move beyond this transition year."

For the full year ending Dec. 31, 2005, Cott's sales grew to
$1.755 billion, compared to $1.646 billion sales for the year
ending Jan. 1, 2005.

Headquartered in Toronto, Ontario, Cott Corporation --
http://www.cott.com/-- is one of the world's largest retailer  
brand beverage suppliers whose principal markets are North
America, the United Kingdom and Mexico.

                          *     *     *

As reported in today's Troubled Company Reporter, Standard &
Poor's Ratings Services lowered its ratings on Toronto-based
private label soft drink manufacturer Cott Corp. by one notch,
including its corporate credit rating, to 'BB-' from 'BB'.  At the
same time, the ratings were removed from CreditWatch, where they
were placed with negative implications Sept. 21, 2005, following
the company's announcement of substantially weaker earnings
expected for 2005.  S&P said the outlook is negative.


COTT CORP: Weak Earnings Prompt S&P to Downgrade Ratings to BB-
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Toronto-
based private label soft drink manufacturer Cott Corp. by one
notch, including its corporate credit rating, to 'BB-' from 'BB'.
At the same time, the ratings were removed from CreditWatch, where
they were placed with negative implications Sept. 21, 2005,
following the company's announcement of substantially weaker
earnings expected for 2005.  The outlook is negative.

"The downgrade reflects Cott's weakened performance in 2005 and
our belief that it will remain a challenge for some time for the
company to turn operations around," said Standard & Poor's credit
analyst Lori Harris.  Cott's operations have been negatively
affected by higher fixed and raw material costs, volume softness
in the carbonated soft drink market, and a demand shift in product
mix toward lower margin bottled water.  As a result, the company's
financial profile weakened in 2005, with the reported operating
margin (before D&A and nonrecurring items) dropping to 10.3% from
12.5% in 2004, despite a 6.6% increase in revenues year over year.

The ratings on Cott reflect its:

    * below-average business profile stemming from a narrow
      product portfolio,

    * customer concentration, and

    * small size in a sector dominated by companies with
      substantially greater financial resources and market
      presence.

Furthermore, the company's weaker-than-expected operating
performance resulted in a decline in operating margin.  These
factors are partially offset by Cott's good credit protection
measures for the rating and solid market position as the leading
private label manufacturer and marketer of take-home CSDs in the
U.S., U.K., and Canada.  Cott competes in the mature and highly
competitive soft drink category alongside larger players by
securing a strong private label share.  Despite this defensive
operating strategy, the company is vulnerable to pricing and
market share actions by its primary competitors.

Cott is the world's leading supplier of retailer-branded and the
fourth-largest manufacturer of CSDs.  The company provides an
integrated solution for retailers' private label strategy
including concept, concentrate formulation, production, packaging,
inventory management, fulfillment, warehouse delivery, and
promotion.  Core geographic operations are in the U.S., the U.K.,
and Canada. Cott has benefited from the higher concentration of
large food retailers in the U.S. and from an increased presence of
private label products in the grocery channel, which has expanded
at a faster rate than branded grocery sales.  Nevertheless, the
company is exposed to customer concentration risk as sales to its
top customer account for more than 35% of total revenues.

The negative outlook reflects our concerns regarding the
challenges faced by the company given its weak operating
performance.  Downward pressure on the ratings could come from the
ongoing deterioration in Cott's operations and/or weakness in
credit protection measures or liquidity.  In the medium term,
there are limited prospects for the ratings to be raised. The
outlook could be revised to stable if the company demonstrates
improved operating performance and credit measures.


COVALENCE SPECIALTY: S&P Rates Proposed $500 Mil. Sr. Loan at B+
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Covalence Specialty Materials Corp., which will
be formed as a stand-alone privately owned corporation following
the equity sponsor-led acquisition of Tyco International Ltd.'s
(BBB+/Watch Neg/A-2) plastics and adhesives businesses.

At the same time, Standard & Poor's assigned its 'B+' bank loan
rating and a recovery rating of '1' to the company's proposed
$500 million senior secured credit facilities, based on
preliminary terms and conditions.  The 'B+' rating is one notch
above the corporate credit rating; this and the '1' recovery
rating indicate that lenders can expect full recovery of principal
in the event of a payment default.  Standard & Poor's also
assigned its 'B-' rating and a recovery rating of '3' to the
company's $200 million second-priority senior secured floating
rate notes due 2013.  These ratings denote the likelihood that
second-priority noteholders would experience meaningful recovery
of principal (50%-80%) in a payment default.  Standard & Poor's
also assigned its 'CCC+' rating to the company's $295 million
senior subordinated notes due 2016.  Both the second-lien floating
rate notes and subordinated notes will be issued under Rule 144A
with registration rights.  Transaction proceeds will be used to
finance the acquisition and related fees and expenses.

The outlook is positive.  Pro forma for the transaction,
Princeton, New Jersey-based Covalence had total debt outstanding
of about $820 million at Dec. 31, 2005.

In December 2005, Apollo Management L.P. entered into a definitive
agreement to purchase the plastics and adhesives businesses of
Tyco International Ltd. for $975 million.

"The ratings reflect Covalence's vulnerable business risk profile
incorporating its exposure to industrial and other end markets
tied to general economic activity, potential vulnerability to
volatile raw-material costs if business conditions weaken,
challenges associated with operating as a stand-alone company,
aggressive debt leverage, and low operating margins that reflect a
moderate dependence on commodity-like products," said Standard &
Poor's credit analyst Liley Mehta.  These negative factors
outweigh the benefits of leading market positions in various
plastic films market segments, considerable scale and decent
product and customer diversity.

Ratings could be raised in the intermediate term, if the company:

    * establishes a track record of earnings improvement and free
      cash flow generation,

    * successfully establishes itself as a stand-alone entity, and

    * demonstrates its commitment to maintain debt at manageable
      levels.

Given the company's heavy debt burden and limited operating
profitability, preservation of sufficient liquidity under the
proposed revolving credit facility is a key underpinning for the
rating.  If financial performance fails to improve in line with
expectations, or if other unforeseen challenges develop to
challenge credit quality, the outlook or ratings could be
reevaluated.


DIAMOND TRIUMPH: Lack of Info Prompts S&P to Withdraw B- Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'B-' corporate
credit rating on Kingston, Pennsylvania-based Diamond Triumph
Auto Glass Inc.  At the same time, Standard & Poor's withdrew its
'B-' rating on Diamond Triumph's senior unsecured notes.  Standard
& Poor's no longer has sufficient information to maintain
surveillance on these ratings, as Diamond Triumph received consent
from debtholders to cease filing periodic financial reports with
the SEC.


DRS TECHNOLOGIES: S&P Rates Proposed $300 Mil. Senior Notes at B+
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' rating to DRS
Technologies Inc.'s proposed $300 million convertible senior notes
due 2026. The notes will be issued under SEC rule 144A without
registration rights.  The ratings on the proposed notes are not on
CreditWatch.  Certain other ratings on the defense electronics
supplier, including the 'BB-' corporate credit rating, remain on
CreditWatch, where they were placed with negative implications on
Sept. 22, 2005.

On Oct. 5, 2005, Standard & Poor's indicated that if the proposed
acquisition of Engineered Support Systems Inc. is completed on
terms similar to those presented, the ratings on DRS would be
affirmed and removed from CreditWatch.  The outlook would be
negative.

"The pending affirmation reflects expected improvements in program
and customer diversity as a result of the $2 billion, largely
debt-financed acquisition," said Standard & Poor's credit analyst
Christopher DeNicolo.  "However, the improved business risk
profile is offset somewhat by the increase in leverage and
deterioration in cash flow protection measures," the analyst
continued.  DRS has offered $43 for each share of ESSI stock to be
paid 70% in cash and 30% in DRS stock.  The cash portion,
including fees and expenses and repaying bank debt at DRS and
ESSI, will be financed with cash on hand and the proceeds from a
new credit facility, and new public debt securities. As a result
of the transaction, fiscal 2006 (ending March 31, 2006) pro forma
debt to EBITDA is expected to increase above 5x, from previous
expectations of 3.5x-4x for DRS stand-alone.  Similarly, funds
from operations to debt is likely to decline to the 10%-15% range
from over 20%.  The significant equity portion of the purchase
consideration limits the impact on debt to capital, which will
increase to 60% from around 50% currently.  However, the
acquisition will improve DRS' program diversity, increase its
exposure to the U.S. Air Force, and provide a service offering
(that should be less vulnerable to funding pressures) to
complement its existing largely product portfolio.  The
transaction is expected to close by Jan. 31, 2006.


DRYDEN III: Optional Redemption Prompts S&P to Withdraw Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on the
class A-1, A-2, A-3, B, C, and D notes issued by Dryden III
Leveraged Loan CDO 2002, a cash flow arbitrage high-yield
CLO transaction.

The rating withdrawals follow the optional redemption of the notes
pursuant to article 9 of the indenture.  The redemption took place
on the Jan. 26, 2006 distribution date.
   
                          Ratings Withdrawn
   
                 Dryden III Leveraged Loan CDO 2002

                    Rating                 
                    ------               Balance (in millions)
        Class   To          From          Current   Previous
        -----   --          ----          -------   --------
        A-1     NR          AAA           0.00       $188.00
        A-2     NR          AAA           0.00        $30.00
        A-3     NR          AA            0.00        $25.00
        B       NR          A             0.00        $15.00
        C       NR          BBB           0.00        $13.00
        D       NR          BB            0.00        $10.00


ENDURANCE SPECIALTY: S&P Assigns BB+ Rating on Preferred Stock
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'BBB'
senior debt, 'BBB-' subordinated debt, 'BB+' junior subordinated,
and 'BB+' preferred stock ratings to Endurance Specialty Holdings
Ltd.'s (NYSE:ENH; BBB/Positive/--) recently filed universal shelf.
The new shelf has an undesignated notional amount in accordance
with the new SEC rules effective Dec. 1, 2005.

"The ratings reflect the company's strong competitive position,
which is supported by a diversified business platform," explained
Standard & Poor's credit analyst Damien Magarelli.  In addition,
ENH maintains strong capital adequacy and strong operating
performance.  "Offsetting these positive factors are concerns
about exposure to catastrophes and ENH being a relatively new
operation and management not having been tested through difficult
market cycles while at the company," added Mr. Magarelli. Also,
ENH has expanded its product offering via new transactions and it
remains unclear if these new transactions will yield strong
earnings.

ENH has strong financial flexibility and debt leverage, and
interest coverage levels are well above that required for the
rating.  Also, ENH's diversified platform and strong earnings
support nonstandard notching.  ENH is expected to maintain debt
leverage of less than 20% and interest coverage of more than 10x
in support of nonstandard notching.  ENH had a debt-to-capital
ratio of 17.7% in 2004 and interest coverage significantly more
than the level required for the rating at 35x.

The outlook is based on Standard & Poor's expectation that ENH
will maintain strong earnings in 2006. Standard & Poor's also
expects that the group's capital adequacy ratio will remain strong
at more than 155%.  In addition, the company is expected to
exhibit the risk-management skills and underwriting discipline to
control the volume and profitability of business.  ENH is expected
to maintain debt leverage at less than 20% and interest coverage
of more than 10x in support of nonstandard notching.

If ENH maintains strong earnings in 2006, the rating could be
raised.  In contrast, if hurricane loss estimates are revised
significantly upward, if capital expectations are not met, or if
strong earnings are not maintained, the outlook could be revised
to stable.


ENTERGY NEW ORLEANS: Wants Court to OK Bank of New York Settlement
------------------------------------------------------------------
As previously reported, Entergy New Orleans Inc., sought a summary
judgment on Entergy Corporation's lien on insurance proceeds
contending that The Bank of New York does not have an interest or
valid lien in the insurance proceeds resulting from the
destruction of the Debtor's property, plant and equipment caused
by Hurricane Katrina.

The Bank of New York is the indenture trustee pursuant to a
Mortgage and Deed of Trust dated as of May 1, 1987.

Even if The Bank of New York has an interest or valid lien on the
insurance proceeds, the Debtor contended that it has the right to
use those proceeds, as provided in the Indenture, to reimburse
for the cost of restoration of its property, plant and equipment
or to repay the DIP Loans.

             Bank of New York's Adversary Proceeding

The Bank of New York has initiated an adversary proceeding against
the Debtor, asking the U.S. Bankruptcy Court for the Eastern
District of Louisiana to determine the:

   -- validity, priority and extent of the Trustee's liens on the
      Insurance Proceeds on account to damage sustained by the
      Indenture Collateral; and

   -- contractual rights under the Indenture regarding the
      reimbursement of the Debtor for the costs of rebuilding or
      renewing the Indenture Collateral.

The Trustee asserted that it has a valid security interest in the
Insurance Proceeds and that no designation as loss payee is
required for it to have a valid, full perfected security interest
on the Insurance Proceeds.

                          DIP Agreement

At the Final DIP Hearing, the Debtor, Entergy Corporation,
Financial Guaranty Insurance Company and Deutsche Bank
Securities, Inc., agreed to:

   -- allow the Debtor to use the Insurance Proceeds;

   -- grant to Entergy a priming lien; and

   -- provide the bondholders with adequate protection.

The Trustee did not consent to the DIP Agreement.  

The Court upheld the DIP Agreement.  The Trustee then filed an
appeal.

                The Bank of New York Settlement

To settle the issues raised, the Debtor and the Trustee agree
that:

   (a) the Trustee will dismiss the Appeal and the adversary
       proceeding;

   (b) the Debtor will dismiss its Summary Judgment Motion;

   (c) the DIP Agreement will be for the benefit of and binding
       on all Bondholders, except that the provisions for the
       payment of reasonable fees and expenses will only apply to
       the fees and expenses of the Trustee, FGIC, Deutsche Bank
       and their professionals; and

   (d) the DIP Agreement will be binding on the Settling Parties
       and that all Bondholders, creditors and other parties-in
       -interest are prohibited from filing any litigation
       against the Settling Parties.

The Debtor asks the Court to approve their Settlement with the
Bank of New York.

Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc.  
-- http://www.entergy-neworleans.com/-- is a wholly owned  
subsidiary of Entergy Corporation.  Entergy New Orleans provides
electric and natural gas service to approximately 190,000 electric
and 147,000 gas customers within the city of New Orleans.  Entergy
New Orleans is the smallest of Entergy Corporation's five utility
companies and represents about 7% of the consolidated revenues and
3% of its consolidated earnings in 2004.  Neither Entergy
Corporation nor any of Entergy's other utility and non-utility
subsidiaries were included in Entergy New Orleans' bankruptcy
filing.  Entergy New Orleans filed for chapter 11 protection on
Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697).  Elizabeth J.
Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the
Debtor in its restructuring efforts.  When the Debtor filed for
protection from its creditors, it listed total assets of
$703,197,000 and total debts of $610,421,000.  (Entergy New
Orleans Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


ENTERGY NEW ORLEANS: Wants Court to Set Apr. 19 as Claims Bar Date
------------------------------------------------------------------
To develop and confirm a plan of reorganization, Entergy New
Orleans Inc. will need to possess complete and accurate
information regarding the nature, amount and status of all claims
that will be asserted in its bankruptcy case.

Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure
provides that the Court will fix the time within which proofs of
claim must be filed in a Chapter 11 case.  Bankruptcy Rule
3003(c)(2) provides that any creditor whose claim or interest is
not scheduled or whose claim is scheduled as disputed,
contingent, or unliquidated will file a proof of claim within the
time period fixed by the Court.

Accordingly, the Debtor asks the U.S. Bankruptcy Court for the
Eastern District of Louisiana to fix April 19, 2006, as the
deadline by which proofs of claim based must be filed against
it.

Each person or entity asserting prepetition claim against the
Debtor is required to file a written proof of claim on or before
the Bar Date with the Clerk of the Bankruptcy Court.

A claimant need not file a proof of claim for these prepetition
claims:

   (a) Any prepetition claim for which a proof of claim against
       the Debtor has already been properly filed with the Clerk
       of Court;

   (b) Any prepetition claim of a person or entity (i) whose
       claim is listed on the Debtor's Schedules of Liabilities
       and (ii) is not described in the schedules as "disputed,"
       "contingent," or "unliquidated," and (iii) who does not
       dispute the amount, priority, status, or nature of the
       prepetition claim;

   (c) Any prepetition claim to the extent that the prepetition
       claim has been paid by the Debtor with the Court's
       authority; and

   (d) Any prepetition claim that has been fixed and allowed by
       a Court order entered on or before the Bar Date.

Proofs of claim for any rejection damage claims arising during
the Debtor's Chapter 11 Case must be filed by the later of:

   (i) 30 days after the effective rejection date; or

  (ii) the Bar Date.

Proofs of claim for any other prepetition claims with respect to
a lease or contract must be filed by the Bar Date.

The Debtor will provide actual notice of the Bar Date by mailing
a notice together with a proof of claim form to:

   (a) The Office of the United States Trustee;

   (b) Each member of any Committee appointed pursuant to the
       Bankruptcy Code, and any attorneys for that Committee;

   (c) All holders of prepetition claims listed on the Debtor's
       Schedules;

   (d) The district director of the Internal Revenue for the
       Eastern District of Louisiana, and all taxing authorities
       for the jurisdictions in which the Debtor conducts
       business;

   (e) The Securities and Exchange Commission; and

   (f) All persons and entities requesting notice, pursuant to
       Rule 2002 of the Federal Rules of Bankruptcy Procedure, as
       of the entry of the proposed Bar Date Order.

The Bar Date Notice will notify the parties of the Bar Date and
will inform them regarding:

   -- who must file a proof of claim;

   -- the procedure for filing of proofs of claim; and

   -- the consequences of failure to timely file a proof of
      claim.

Out of an abundance of caution, the Debtor reserves the right to
serve the Bar Date Notice to certain entities, with whom, before
the Petition Date, it had done business with or who may have
asserted a claim against it in the recent past.

All potential claimants will have approximately 90 days' notice
of the Bar Date, which is in excess of the minimum 20-day notice
period, to provide the creditors ample time within which to
prepare and file proofs of claim.

After the initial mailing of the Bar Date Notice, the Debtor
anticipates that it may be required to make supplemental mailings
of the Bar Date Notice in a number of situations, including in
the event that:

   (a) notices are returned by the post office with forwarding
       addresses, necessitating a re-mailing to the new
       addresses;

   (b) certain parties acting on behalf of parties-in-interest
       decline to pass along notices to the parties and instead,
       forward the Debtor the names and addresses for direct
       mailing; and

   (c) additional potential claimants become known to the Debtor.

The Debtor seeks the Court's authority to make supplemental
mailings of the Bar Date Notice up to 23 days in advance of the
Bar Date, with any of the supplemental mailings being deemed
timely.

The Debtor will also publish a notice of the Bar Date to provide
notice to:

   * those creditors to whom no other notice was sent and who are
     unknown or not reasonably ascertainable by the Debtor;

   * known creditors with addresses unknown to the Debtor; and

   * creditors with potential claims unknown to the Debtor.

The Debtor believes that the Publication Notice will convey
essential information in a succinct form that will minimize the
publication costs to be incurred by the estate.

The Debtor asks the Court to approve the Bar Date Notice and the
Mailing and Publication Procedures.

Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc.  
-- http://www.entergy-neworleans.com/-- is a wholly owned  
subsidiary of Entergy Corporation.  Entergy New Orleans provides
electric and natural gas service to approximately 190,000 electric
and 147,000 gas customers within the city of New Orleans.  Entergy
New Orleans is the smallest of Entergy Corporation's five utility
companies and represents about 7% of the consolidated revenues and
3% of its consolidated earnings in 2004.  Neither Entergy
Corporation nor any of Entergy's other utility and non-utility
subsidiaries were included in Entergy New Orleans' bankruptcy
filing.  Entergy New Orleans filed for chapter 11 protection on
Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697).  Elizabeth J.
Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the
Debtor in its restructuring efforts.  When the Debtor filed for
protection from its creditors, it listed total assets of
$703,197,000 and total debts of $610,421,000.  (Entergy New
Orleans Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


FUTURE BEACH: Files Notice of Intention Under BIA in Canada
-----------------------------------------------------------
Future Beach has filed a "Notice to Intention" to make a proposal
pursuant to the Bankruptcy and Insolvency Act of Canada.

Future Beach has transferred its manufacturing facilities in favor
of third party manufacturing facilities, which are currently
operational.  This is expected to achieve major savings in
manufacturing and operating costs.

Future Beach has received interim financing and is preparing a
proposal to creditors.

Contact:

     Mark Diamond
     Telephone (514) 693-9600

Headquartered in Pointe-Claire, Quebec, Future Beach Corp. designs
and manufactures the world's finest collection of non-motorized
watercraft and beach accessories at its 76,000 sq. ft. facility.  
The Future BeachT mission is to become the "World's Beach Company"
by providing fun, safe and easy to use products for the whole
family to enjoy.  Founded in 1992 and selling in over 46
countries, Future Beach is a one-stop-shop for the consumer and
institutional market.


G+G RETAIL: Taps Pachulski Stang as Bankruptcy Counsel
------------------------------------------------------
G+G Retail, Inc., asks the U.S. Bankruptcy Court for the Southern
District of New York for authority to employ Pachulski, Stang,
Ziehl, Young, Jones & Weintraub P.C. as its bankruptcy counsel.

Pachulski Stang will:

   a) provide the Debtor legal advice with respect to its powers
      and duties as a debtor-in-possession in the continued
      operation of its business and management of its property;

   b) prepare and pursue confirmation of Debtor's plan and
      approval of a disclosure statement;

   c) prepare necessary applications, motions, answers, orders,
      reports and other legal papers on behalf of the Debtor;

   d) appear in Court to protect the interests of the Debtor; and

   e) perform all other legal services for the Debtor which may
      be necessary and proper in this proceeding.

Laura Davis Jones, Esq., discloses Pachulski Stang's
professionals' hourly billing rates:

            Professional                  Rate
            ------------                  ----
         Laura Davis Jones, Esq.          $675
         William P. Weintraub, Esq.       $675
         David M. Bertenthal, Esq.        $495
         Curtis A. Hehn, Esq.             $350
         Sandra G.M. Selzer               $295
         Kathe F. Finlayson               $165

To the best of the Debtor's knowledge, Pachulski Stang does not
hold any interest adverse to the Debtor's estate.

Headquartered in New York, New York, G+G Retail Inc. retails
ladies wear and operates 566 stores in the United States and
Puerto Rico under the names Rave, Rave Girl and G+G.  The Debtor
filed for chapter 11 protection on Jan. 25, 2006 (Bankr. S.D.N.Y.
Case No. 06-10152).  When the Debtor filed for protection from its
creditors, it estimated assets of more than $100 million and debts
between $10 million to $50 million.


GAINEY CORPORATION: S&P Rates $260 Million Credit Facility at BB-
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' long-term
corporate credit rating to Gainey Corp., a provider of truckload
transportation.

At the same time, Standard & Poor's assigned its 'BB-' bank loan
rating to Gainey's new $260 million credit facility, which
consists of a $50 million five-year revolving facility and a $210
million six-year term loan.  The bank facility is guaranteed by
Gainey Corp. and is secured by all the company's assets and
capital stock and its subsidiaries.  A recovery rating of '3' was
also assigned to the bank facility, indicating expectations of a
meaningful (50%-80%) recovery of principal in the event of a
payment default.  Proceeds from the new bank facility will be used
to refinance existing debt and to pay a small dividend to the
owner, Harvey Gainey.  The rating outlook is stable. The bank loan
ratings are based on preliminary information and are subject to
review upon final documentation.

"Ratings on Gainey reflect its participation in a relatively low-
margin, highly fragmented, seasonal, and cyclical industry,
combined with a leveraged financial profile and an aggressive
acquisition history," said Standard & Poor's credit analyst Eric
Ballantine.  The ratings also incorporate the company's record of
fairly consistent profitability.  The truckload industry is large,
at over $300 billion, and highly fragmented, with over 300,000
participants.  The top 10 companies represent less than 5% of
total sales.  Gainey, with over $400 million in sales, is a
second-tier participant in truckload trucking, competing against
both large companies such as J.B. Hunt Transport Services Inc.
(with annual sales over $3 billion), and many smaller truckers.
The company operates approximately 2,200 trucks and over 2,400
trailers from 15 locations throughout the U.S. In addition, the
company's top 10 customers represent about 20% of the company's
business, giving Gainey some diversification.

Grand Rapids, Michigan-based Gainey operates in four business
segments:

    * dry van freight (which is the majority of the company's
      business),

    * refrigerated goods,

    * pressurized gases, and

    * freight brokerage.

This mix of businesses provides some diversity to help offset
cyclical fluctuations in individual business segments.  Gainey has
a wide range of customers, which include home improvement,
consumer goods, and major oil companies.

A good mix of customers, solid freight rates, and a healthy demand
for the company's services should continue to result in decent
cash flow over the near term.  The company's aggressive financial
profile and acquisitive nature makes a positive outlook unlikely.
If the company were to pursue a significant acquisition in the
near term or further lever up beyond Standard & Poor's
expectations, a negative outlook or ratings downgrade is possible.


HURLEY MEDICAL: Fitch Cuts Ratings on $67.1 Million Bonds to BB+
----------------------------------------------------------------
Fitch Ratings downgrades to 'BB+' from 'BBB-' the rating on
approximately $67.1 million City of Flint Hospital Building
Authority hospital revenue bonds listed at the end of the press
release.  The bonds are issued on behalf of Hurley Medical Center.
The bonds are removed from Rating Watch Negative.  The Rating
Outlook is Negative.

The rating downgrade reflects Hurley's continued operating losses
in fiscal 2005 (June year-end) and six months of fiscal 2006.
In fiscal 2005, Hurley posted a negative 1.5% operating margin
($5.0 million loss), falling short of its budgeted operating loss
of 0.7%.  Through six months of fiscal 2006, Hurley (hospital
only) generated a negative 3.6% operating margin and did not cover
maximum annual debt service (MADS) from EBITDA (negative 0.5
times).  Recent losses from operations reflect rising expense
pressures, including pension and malpractice, and declining
utilization trends.  In fiscal 2005, Hurley made a pension
contribution of $9 million, compared with none in each of the
previous four years.

Additional credit concerns include Hurley's limited capital
spending, unfavorable payor mix and high days in accounts
receivable.  Hurley's capital spending averaged only 71% of
deprecation expense from fiscal years 2001-2005, resulting in a
high average age of plant of 17.1 years in fiscal 2005.  Deferred
capital spending has contributed to improvement in Hurley's
liquidity indicators in recent years.  However, Hurley expects
capital spending to approximate 175% of depreciation expense in
fiscal 2006 and 125% beyond 2006.  Hurley's poor demographic
indicators are reflected in its Medicaid load, which accounts for
approximately one-third of Hurley's gross revenues.  As a safety
net hospital, Hurley has relied on supplemental Medicaid payments,
including intergovernmental transfers and disproportionate share
payments, which have ranged from $3.5 million -$8.5 million over
the last decade.  Given the expected downsizing of General Motors
and Delphi Corp., the service area's two largest employers, Fitch
expects Hurley's Medicaid and self-pay load to increase further
over the medium term.  Days in accounts receivable at Sept. 30,
2005 was high at 76.4 days and has remained above 69.5 days at
each fiscal year-end since 2001.  With few exceptions, all of
Hurley's financial indicators are below Fitch's investment-grade
medians.

Primary credit strengths are Hurley's moderately low debt burden
relative to revenue and liquidity and its status a Level I trauma
center providing high end tertiary services.  In fiscal 2005, MADS
as a percent of revenue was low at 2.3%, and debt-to-
capitalization was somewhat low at 43.5%.  In addition, cash-to-
debt at Dec. 31, 2005 was solid at 93.7%.  Hurley operates in a
competitive market and had a 30.5% market share in 2004, compared
to Genesys Medical Center (Genesys) at 33.2% and McLaren Health
Care Corporation (McLaren; revenue bonds rated 'AA-' by Fitch) at
25.6%.  However, the degree of competition is mitigated by
strategic partnerships, including a cancer center with Genesys.  
In addition, Hurley refers cardiovascular surgery volume to
McLaren while receiving most of Genesys' pediatric volume.

Under the direction of a new Chief Executive Officer who was hired
in mid-2005, Hurley has retained a turnaround consultant and
recently implemented a restructuring plan that outlines $14
million - $26 million of operating improvement, including the
reduction of FTEs, elimination of certain programs and a change in
its nurse staffing mix.  In addition, the plan identifies $6
million - $16 million of liquidity improvement from improved
revenue cycle and supply chain management.  Hurley expects to
fully realize these benefits in fiscal 2007.  Fitch believes the
plan is aggressive, but expects it to result in modest improvement
of Hurley's financial profile over the near to medium term.

Fitch's Negative Outlook reflects an expectation that Hurley's
operating margin will remain at or near 2005 levels over the short
term based on insufficient reimbursement and possible weakening of
service area demographics.  For fiscal 2006, the budgeted
operating loss (excluding the restructuring plan) was revised to
negative $11.8 million from negative $8.0 million to reflect
several items, including state budget cuts and declining volume,
which are partially offset by special Medicaid payments.  Given
Hurley's continued operating losses, Fitch believes that future
investment in property, plant and equipment will limit further
growth of its liquid reserves.  Inability to realize most or all
of the initiatives outlined in the restructuring plan and improve
operating performance over the next two years could place negative
pressure on the rating.

In 2004, Hurley entered into a fixed- to floating-rate swap
(notional amount of $35 million) with Piper Jaffray as the
counterparty in July 2004.  The swap terminates in 2011. Hurley
may terminate the swap at any time, and the counterparty may
terminate the swap if Hurley is downgraded below 'BB+'.  Given
Hurley's limited financial flexibility, Fitch views the potential
negative impact that could arise from a termination of the swap as
a credit concern.  As of Dec. 31, 2005, the mark-to-market value
of the swap was negative $1.4 million.

Hurley is a 461-bed acute care teaching hospital located in Flint,
MI.  Hurley had total operating revenues of $342 million in fiscal
2005.  Hurley covenants to provide annual and quarterly disclosure
to bondholders through the Nationally Recognized Municipal
Securities Information Repositories . Quarterly disclosure
includes financial statements (balance sheet, income, and cash
flow statements) and utilization statistics; however, management
discussion and analysis is not included.

Outstanding bonds:

    -- $35,000,000 City of Flint Hospital Building Authority
       revenue and revenue refunding bonds (Hurley Medical
       Center), series 2003;

    -- $14,705,000 City of Flint Hospital Building Authority
       revenue refunding bonds (Hurley Medical Center), series
       1998A;

    -- $18,510,000 City of Flint Hospital Building Authority
       revenue rental bonds (Hurley Medical Center), series 1998B;

    -- $2,200,000 City of Flint Hospital Building Authority
       revenue refunding bonds (Hurley Medical Center), series
       1995A.


J.P. MORGAN: Fitch Puts Low-B Ratings on Cert. Classes M-10 & M-11
------------------------------------------------------------------
J.P. Morgan Mortgage Acquisition Corp., asset-backed pass-through
certificates, series 2006-FRE1, are rated as follows by Fitch
Ratings:

    -- $757,278,000 classes A-1 through A-4 (senior certificates)
       'AAA'.

    -- $40,496,000 class M-1 'AA+';

    -- $36,953,000 class M-2 'AA';

    -- $22,273,000 class M-3 'AA-';

    -- $20,248,000 class M-4 'A+';

    -- $17,717,000 class M-5 'A';

    -- $16,198,000 class M-6 'A-';

    -- $15,692,000 class M-7 'BBB+';

    -- $14,174,000 class M-8 'BBB';

    -- $11,136,000 class M-9 'BBB-';

    -- $12,149,000 privately offered class M-10 'BB+';

    -- $10,630,000 privately offered class M-11 'BB'.

The 'AAA' rating on the senior certificates reflects the 25.20%
total credit enhancement provided by the 4.00% class M-1, the
3.65% class M-2, the 2.20% class M-3, the 2.00% class M-4, the
1.75% class M-5, the 1.60% class M-6, the 1.55% class M-7, the
1.40% class M-8, the 1.10% class M-9, the 1.20% privately offered
class M-10, the 1.05% privately offered class M-11, and
overcollateralization.  The initial and target OC is 3.70%. All
certificates have the benefit of excess interest.  In addition,
the ratings also reflect the quality of the loans, the soundness
of the legal and financial structures, and the capabilities of
JPMorgan Chase Bank, National Association as servicer (rated
'RPS1' by Fitch) and U.S. Bank National Association as trustee.

The collateral pool consists of 4,956 fixed- and adjustable-rate
mortgage loans and totals $1.01 billion as of the cut-off date.
Approximately 12.03% of the mortgage loans have fixed interest
rates, and approximately 87.97% of the mortgage loans have
adjustable interest rates.  The weighted average original loan-to-
value (OLTV) ratio is 81.80%.  The average outstanding principal
balance is $204,278, the weighted average coupon (WAC) is 7.636%,
and the weighted average remaining term to maturity (WAM) is 356
months.  The weighted average credit score is 627.  The loans are
geographically concentrated in California (24.71%), Florida
(12.76%), and New York (11.26%).

All of the mortgage loans were originated or acquired by Fremont
Investment and Loan, a California state-chartered industrial bank
headquartered in Brea, California.  Fremont conducts business in
45 states and the District of Columbia.


KMART CORP: Court Reinstates Manuel Lomas' $2-Million Claim
-----------------------------------------------------------
Manuel Lomas III filed three claims in Kmart Corporation's
Chapter 11 cases for damages on account of prepetition personal
injury:

   -- Claim Nos. 45827 and 45875 for $200,000 each; and
   -- Claim No. 48330 for $2,000,000.

Arturo R. Eureste, Esq., at Dovalina & Eureste, L.L.P., in
Houston, Texas, asserts that Mr. Lomas' Claims were all filed
within the time limits set by the U.S. Bankruptcy Court for the
Northern District of Illinois for filing of personal injury
claims.

According to Mr. Eureste, the Claims were disallowed by the Court
on July 15, 2003.

In this regard, Mr. Lomas asks the Court to reconsider its order
and allow the Claim.

Mr. Lomas proposes that his Claims be consolidated to reflect one
claim for $2,000,000.

Mr. Eureste contends that Mr. Lomas was not aware that his claim
was up for disallowance due to an "incomplete questionnaire."
The medical condition of Mr. Lomas was not completely ascertained
until mid-2005.  Moreover, "no order closing the estate has been
entered," Mr. Eureste adds.

                          *     *     *

Pursuant to an agreed order signed by Judge Sonderby:

   (a) Mr. Lomas' request for reconsideration is withdrawn;

   (b) the Court Order dated April 1, 2004, disallowing and
       expunging or otherwise reducing or reclassifying personal
       injury and other claims is vacated solely with respect to
       Mr. Lomas' Claim No. 48330;

   (c) Claim No. 48330 will be admitted into the Claims
       Resolution Procedures currently in place in Kmart's case;
       and

   (d) Kmart reserves all rights to challenge the validity,
       priority, and amount of the Claim in connection with the
       Claims Resolution Procedures, and to pursue any other
       claims, causes of actions, or potential offsets against
       the Claim.

Judge Susan Pierson Sonderby clarifies that the Agreed Order will
not be deemed Kmart's admission with respect to the Claim or any
facts alleged by Mr. Lomas.

Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART
Holding Corporation) -- http://www.bluelight.com/-- operates  
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam.  The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474).  Kmart emerged from chapter 11 protection on May 6,
2003.  John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts.  The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection.  Kmart bought Sears, Roebuck & Co., for $11 billion to
create the third-largest U.S. retailer, behind Wal-Mart and
Target, and generate $55 billion in annual revenues.  The
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act expired on Jan. 27, without complaint by the Department of
Justice.  (Kmart Bankruptcy News, Issue No. 106; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


KMART CORP: Judi Davis Wants Injunction Lifted to Pursue Claims
---------------------------------------------------------------
Judi A. Davis, as administrator of the Estate of Tina Bradley
Cole, filed Claim Nos. 34978 and 34979 in Kmart Corporation and
its debtor-affiliates' Chapter 11 cases for the wrongful death of
Ms. Cole.

According to Ms. Davis, Ms. Cole died of acute liver failure due
to acetaminophen toxicity caused by the ingestion of controlled
substances containing acetaminophen.  Ms. Davis notes that the
substances were provided by Christmann Joel Cole who was an agent,
employee, and pharmacist of Kmart Corporation.

Ms. Davis filed a lawsuit against Mr. Cole and Kmart in the
Superior Court of Buncombe County, North Carolina, on Feb. 23,
2001, to seek recovery for Ms. Cole's wrongful death.

Ms. Davis alleged, among other things, that Kmart:

   (a) negligently failed to supervise Mr. Cole;

   (b) negligently retained Mr. Cole;

   (c) failed to properly audit, manage, account for, control,
       monitor, and track controlled substances at its Kmart
       Store located at 1830 Hendersonville Road, City of
       Ashville, County of Buncombe, State of North Carolina

   (d) failed to have in place reasonable and proper standards,
       equipment, computer software, accounting methods, and
       personnel sufficient to prevent the unauthorized removal
       of controlled substances in that location;

   (e) failed to take adequate measure to prevent Mr. Cole from
       delivering controlled substances without proper
       prescriptions to third parties including the decedent;

   (f) acted without reasonable or ordinary care in the operation
       of the pharmacy; and

   (g) was negligent in other respects.

Ms. Davis further alleged that Kmart's negligence constituted
gross negligence and that its acts and behavior were reckless,
entitling Ms. Cole's Estate to recover punitive damages.

Derrick R. Bailey, Esq., Ms. Davis' attorney, relates that
Ms. Davis filed a timely proof of claim, and completed and filed a
questionnaire, as required by the U.S. Bankruptcy Court for the
Northern District of Illinois for the resolution of personal
injury claims.  However, Kmart and Ms. Davis have not yet reached
an agreement as to the value of the Claims.

On March 6, 2004, Ms. Davis responded to Kmart's Omnibus Objection
to claims and requested modification of the stay to allow the
Estate of Ms. Cole's Claims to proceed in North Carolina.

Against this backdrop, Ms. Davis asks the Court to lift the
injunction provision under Kmart's Plan of Reorganization and
allow the Claims to proceed in the North Carolina court.

Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART
Holding Corporation) -- http://www.bluelight.com/-- operates  
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam.  The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474).  Kmart emerged from chapter 11 protection on May 6,
2003.  John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts.  The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection.  Kmart bought Sears, Roebuck & Co., for $11 billion to
create the third-largest U.S. retailer, behind Wal-Mart and
Target, and generate $55 billion in annual revenues.  The
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act expired on Jan. 27, without complaint by the Department of
Justice.  (Kmart Bankruptcy News, Issue No. 106; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


METALFORMING TECH: Has Until March 13 to Remove Civil Actions
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extended
until March 13, 2006, the period within which Metalforming
Technologies, Inc., and its debtor-affiliates can remove
prepetition civil actions.

The extension will give the Debtors more time to make fully
informed decisions concerning removal of each pending action from
a remote court to the District of Delaware for continued
litigation.  The extension will assure that the Debtors don't
forfeit valuable rights.

Headquartered in Chicago, Illinois, Metalforming Technologies,
Inc., and its debtor-affiliates manufacture seating components,
stamped and welded powertrain components, closure systems, airbag
housings and charge air tubing assemblies for automobiles and
light trucks.  The Company and eight of its affiliates filed for
chapter 11 protection on June 16, 2005 (Bankr. D. Del. Case Nos.
05-11697 through 05-11705).  Joel A. Waite, Esq., Robert S. Brady,
Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt &
Taylor, represent the Debtors in their restructuring efforts.  As
of May 1, 2005, the Debtors reported $108 million in total assets
and $111 million in total debts.


MIRANT CORPORATION: Settles HSBC's $1.1 Billion Indenture Claims
----------------------------------------------------------------
Mirant Corporation, as issuer, and HSBC Bank USA, National
Association, as successor indenture trustee, are parties to two
Indentures dated May 31, 2001, and July 8, 2002.

Under the 2001 Indenture, Mirant issued $750,000,000 of its 2.5%
Convertible Senior Debentures due 2021.  In March 2003, Mirant
repurchased $83,050,000 of the 2.5% Debentures.

Under the 2002 Indenture, Mirant issued $370,000,000 of its 5.75%
Convertible Senior Notes due 2007.

HSBC Bank filed two claims against Mirant arising from the 2.5%
Debentures and the 5.75% Notes:

   (1) Claim No. 6831, which seeks to recover $750,000,000 in
       principal amount and $10,904,297 in interest; and

   (2) Claim No. 6832, which asserts $370,000,000 in principal
       amount and $10,578,403 in interest.

Upon review of their books and records, the Debtors objected to
Claim No. 6831 but agreed with the amount declared by Claim No.
6832.  Claim No. 6831 failed to account prepetition interest
payments totaling $9,375,000, the Debtors contended.

To avoid unnecessary litigation and expense, the Debtors and HSBC
agree that:

   (a) HSBC will be allowed a General Unsecured, Non-priority
       Claim for principal and interest due under the 2.5%
       Debentures against Mirant for $751,510,417;

   (b) HSBC will be allowed a General Unsecured, Non-priority
       Claim for principal and interest due under 5.75% Notes
       against Mirant for $380,578,403;

   (c) New Mirant will not receive any distributions of New
       Mirant Stock on account of the Repurchased Debentures; and

   (d) Other than the Allowed Claims, all of HSBC's proofs of
       claim will be expunged from the Debtors' claims registers.

Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines.  Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally.  Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590).  Thomas E. Lauria, Esq., at White &
Case LLP, represents the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $20,574,000,000 in assets and $11,401,000,000 in debts.
(Mirant Bankruptcy News, Issue No. 91 Bankruptcy Creditors'
Service, Inc., 215/945-7000)

                         *     *     *

As reported in the Troubled Company Reporter on Dec. 8, 2005,
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to power generator and developer Mirant Corp.  The
outlook is stable.  The rating reflects the credit profile of
Mirant, based on the structure the company expects to have on
emergence from bankruptcy at or around year-end 2005.


MIRANT CORPORATION: Settles Citibank's Multi-Million Unsec. Claims
------------------------------------------------------------------
On December 15, 2003, Citibank, N.A., filed three proofs of claim
against Mirant Corporation and its debtor-affiliates:

         Claim No.          Claim Amount        Asserted Debtor
         ---------          ------------        ---------------
           6470             $448,248,682        Mirant Corp.
           6471              214,221,482        MADC
           6473              214,221,482        Mirant Corp.

The Debtors, Credit Suisse First Boston and Citibank have
reviewed their books and records.  Accordingly, the parties agree
on these adjusted claim amounts:

        Claim No.          Adjusted Amount
        ---------          ---------------
           6470             $446,862,117
           6471              214,103,247
           6473              214,103,247

The parties further agree that:

   (a) Claim No. 6470 will be allowed as an Unsecured Claim for
       $446,862,117;

   (b) Claim No. 6471 will be allowed as an Unsecured Claim for
       $214,103,247;

   (c) Citibank will not receive a recovery from Claim No. 6473
       in accordance with the treatment of certain guaranty
       claims; and

   (d) Citibank will be entitled to postpetition interests
       aggregating $57,866,573 for Claim No. 6470 and $28,069,484
       for Claim No. 6471, calculated at the non-default contract
       rate, anticipated as of December 31, 2005.

Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines.  Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally.  Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590).  Thomas E. Lauria, Esq., at White &
Case LLP, represents the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $20,574,000,000 in assets and $11,401,000,000 in debts.
(Mirant Bankruptcy News, Issue No. 91 Bankruptcy Creditors'
Service, Inc., 215/945-7000)

                         *     *     *

As reported in the Troubled Company Reporter on Dec. 8, 2005,
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to power generator and developer Mirant Corp.  The
outlook is stable.  The rating reflects the credit profile of
Mirant, based on the structure the company expects to have on
emergence from bankruptcy at or around year-end 2005.


MIRANT CORPORATION: Settles Law Debenture's Multi-Million Claim
---------------------------------------------------------------
Under a Subordinated Notes Indenture dated as of October 1, 2000,
Mirant Corporation issued Junior Subordinated Notes aggregating
$355,670,150.

Deutsche Bank Trust Company Americas is the trustee under that
2000 Indenture.  Law Debenture Trust Company of New York
succeeded Deutsche Bank as trustee.

Law Debenture subsequently asserted Claim No. 6694, seeking to
recover $355,670,150 in principal amount and $6,437,431 in
interest arising from the Subordinated Notes Indenture.  Law
Debenture reserved its rights with respect to its fees, expenses
and indemnities.

Upon reviewed of their books and records, the Debtors disputed
the amount asserted in Claim No. 6694.  The Debtors maintained
that Claim No. 6694 failed to account prepetition interest
payments totaling $5,557,347 and $15,609 in impermissible
interest charges.

To resolve the matter, the parties agree to allow Law Debenture a
General Unsecured, Non-priority Claim for $356,534,626, plus any
postpetition interest it may be entitled under the Debtor's Plan
of Reorganization as a Mirant Debtor Class 3 - Unsecured Claim.

The parties further agree that Law Debenture and Deutsche Bank
may assert their rights to recover their Indenture Trustee Fees
in accordance with the Plan.

Law Debenture will be entitled to postpetition interest on the
Allowed Claim calculated at the non-default contract rate
anticipated to be $59,013,276 as of January 3, 2006.

Other than the Allowed Claim, Law Debenture will be barred from
asserting any other claims against any of the Debtors' estates.

Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines.  Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally.  Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590).  Thomas E. Lauria, Esq., at White &
Case LLP, represents the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $20,574,000,000 in assets and $11,401,000,000 in debts.
(Mirant Bankruptcy News, Issue No. 91 Bankruptcy Creditors'
Service, Inc., 215/945-7000)

                         *     *     *

As reported in the Troubled Company Reporter on Dec. 8, 2005,
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to power generator and developer Mirant Corp.  The
outlook is stable.  The rating reflects the credit profile of
Mirant, based on the structure the company expects to have on
emergence from bankruptcy at or around year-end 2005.


MORTGAGE ASSET: Fitch Holds BB Ratings on Two Certificate Classes
-----------------------------------------------------------------
Fitch Ratings has affirmed the following Mortgage Asset
Securitization Transactions (MASTR) residential mortgage-backed
certificates:

Series 2004-4, Pool 1

    -- Class I-A affirmed at 'AAA'.

Series 2004-4, Total Pools 2 & 3

    -- Classes II-A and III-A affirmed at 'AAA';
    -- Class B-1 affirmed at 'AA';
    -- Class B-2 affirmed at 'A';
    -- Class B-3 affirmed at 'BBB';
    -- Class B-4 affirmed at 'BB'.

Series 2004-6, Pool 1

    -- Class I-A affirmed at 'AAA';
    -- Class I-B-3 affirmed at 'BBB'.

Series 2004-6, Total Pools 2-7

    -- Classes II-A through VII-A affirmed at 'AAA';
    -- Class B-1 affirmed at 'AA';
    -- Class B-3 affirmed at 'BBB'.

Series 2004-9, Pool 3

    -- Class III-A affirmed at 'AAA'.

Series 2004-9, Total Pools 2 & 4

    -- Classes II-A and IV-A affirmed at 'AAA';
    -- Class 30-B-1 affirmed at 'AA';
    -- Class 30-B-2 affirmed at 'A';
    -- Class 30-B-3 affirmed at 'BBB';
    -- Class 30-B-4 affirmed at 'BB'.

Series 2004-9, Total Pools 1, 5, 6, & 7

    -- Classes I-A, V-A, VI-A, and VII-A affirmed at 'AAA'.

The affirmations, affecting approximately $1.4 billion of the
outstanding certificates, are due to credit enhancement consistent
with future loss expectations.  None of the above deals have
suffered losses since issuance.  The pools are only seasoned
between 17 (2004-9) and 22 months (2004-4).

The collateral of the above deals consists of conventional, fully
amortizing, jumbo prime 15-year and 30-year fixed-rate mortgage
loans secured by first liens on one- to four-family residential
properties and, in some cases, certificates from previous MASTR
deals. MASTR 2004-4, pool 1, is backed by three certificates:
MASTR 2003-10 class 3-A-1, which Fitch does not rate, and MASTR
2003-11 classes 1-A-1 and 2-A-1, both of which Fitch rates 'AAA'.
MASTR 2004-6, pool 2, is backed by a pool of 30-year, fixed-rate
mortgage loans and MASTR 2003-8 class 1-A-1, which Fitch rates
'AAA.' MASTR 2003-9, pool 3, is backed by MASTR 2004-6 class 7-A-
1, which Fitch rates 'AAA.'  A majority of the collateral backing
the affirmed deals was acquired by UBS from various mortgage
originators. In addition, the deals are master serviced by Wells
Fargo Bank Minnesota, N.A., which Fitch rates at 'RMS1.'

As of the Jan. 25, 2006 distribution date, the pool factors (i.e.,
current mortgage loans outstanding as a percentage of the initial
pool) for the above deals range from 64% (2004-4 total pools 2&3)
to 85% (2004-6 pool 1).


MUSICLAND HOLDING: Taps Retail Consulting as Real Estate Advisor
----------------------------------------------------------------
Musicland Holding Corp. and its debtor-affiliates seek the U.S.
Bankruptcy Court for the Southern District of New York's
permission to employ Retail Consulting Services, Inc., as their
exclusive real estate consultant to provide an expedited analysis
of their leasehold interests.

It is essential for the Debtors to be able to confirm their
internal analysis as to the value and liability for ongoing
leaseholds.  In addition, the Debtors need assistance with regard
to lease renegotiations, marketing, and the disposition of
certain real estate leases.

The Debtors selected RCS because of its considerable expertise
and experience as real estate consultants.  The Debtors believe
that the services to be provided by RCS is essential to their
efforts as debtors-in-possession and to maximize the value of
their assets for the benefit of their creditors.

As real estate advisor, RCS will:

    (a) prepare a Lease Portfolio Book organized by landlord and
        by store, showing:

        * current lease terms,
        * sales,
        * profits, and
        * occupancy cost and store contribution percentages
          relative to sales;

    (b) assist in the analysis of rejection claims;

    (c) contact landlords to negotiate items like rent cutback,
        term modifications, lease extensions and other necessary
        modification for the Debtors' leasehold properties;

    (d) work with landlords, the Debtors and the Debtors'
        advisors to document accurately all lease modification
        proposals and provide timely status reports that will
        reflect current progress;

    (e) attend and participate in all Court hearings and
        meetings when requested by the Debtors;

    (f) perform desktop leasehold valuations for leases
        identified by the Debtors;

    (g) negotiate waivers, reductions or payout terms for
        prepetition cure amounts;

    (h) conduct negotiations with respect to mitigating
        landlords' rejection damage claims;

    (i) provide marketing and disposition functions, including:

        * reviewing all pertinent documents and consulting with
          Debtors' counsel;

        * creating a marketing program and budget which may
          include newspaper, magazine or journal advertising,
          letter or flyer solicitation, placement of signs, direct
          telemarketing, e-mail, fax blasts and other marketing
          methods;

        * utilizing all professional contacts, mailing lists and
          other resources available to market the Debtors'
          disposition properties;

        * creating an active market and auction process for the
          disposition properties and working on behalf of the
          Debtors to negotiate and get the best terms and prices
          for the disposition properties;

        * preparing and disseminating marketing materials;

        * communicating with parties who have expressed an
          interest in a disposition property, endeavoring to
          locate additional parties who may have an interest in
          the purchase of a disposition property and providing the
          Debtors an updated list of parties which have expressed
          interest;

        * responding to and providing information necessary to
          negotiate with and solicit offers from prospective
          purchasers or settlements from landlords and making
          recommendations to the Debtors as to the advisability of
          accepting particular offers or settlements;

        * meeting periodically with Debtors, its advisors and
          attorneys, in connection with the status of its efforts,
          and providing guidance to the Debtors in resolving
          issues and problems pertaining to the disposition of
          Disposition Properties;

        * coordinating and organizing the public bankruptcy
          hearing or auction and obtaining the attendance of all
          interested parties through direct communications;

        * working with the attorneys responsible for the
          implementation of the proposed transaction, reviewing
          documents, negotiating and assisting in resolving
          problems;

        * appearing in Bankruptcy Court to testify or consult with
          Debtors in connection with the marketing or disposition
         of a Disposition Property; and

    (j) provide advice regarding other real estate matters.

The Debtors believe that RCS' services will not duplicate the
services other professionals may provide.

Prior to the Petition Date, the Debtors paid RCS a $125,000
non-refundable retainer fee as full payment for all analysis and
consulting services.

RCS will be paid $125,000 per month for lease renegotiations,
rejection claim analysis, and waiver or reduction of prepetition
cure amounts, starting January 1, 2006 until the termination of
the agreement, or unless ordered by the Court.

Upon closing of a transaction that disposes of any or all of the
Disposition Properties, a Consultant will receive:

    * 4% of the total amount of money paid to the Debtors, if no
      broker is used; or

    * 5% of gross proceeds if a co-broker is used.

Ivan L. Friedman, president of RCS, assures the Court that RCS is
a disinterested person within the meaning of Section 101(14) of
the Bankruptcy Code and as required by Section 327(a) of the
Bankruptcy Code.  Mr. Friedman asserts that RCS holds no adverse
interest to the Debtors or their estates.

Furthermore, RCS has no connection with the Debtors, their
creditors or their related parties except as disclosed, Mr.
Friedman says.

Headquartered in New York, New York, Musicland Holding Corp., is a
specialty retailer of music, movies and entertainment-related
products.  The Debtor and 14 of its affiliates filed for chapter
11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No.
06-10064).  James H.M. Sprayregen, Esq., at Kirkland & Ellis,
represents the Debtors in their restructuring efforts.  When the
Debtors filed for protection from their creditors, they estimated
more than $100 million in assets and debts.  (Musicland Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


MUSICLAND HOLDING: Gets Court Nod to Pay Prepetition Taxes & Fees
-----------------------------------------------------------------
In the ordinary course of business, Musicland Holding Corp. and
its debtor-affiliates incur and collect various taxes, fees, and
charges for payment to various taxing and licensing authorities.  
The taxes and fees are paid on a periodic basis.

    (a) Sales and Use Taxes

        Collectively, the Debtors estimate that they may owe
        $18,000,000 in sales taxes and the use taxes prior to the
        Petition Date.

    (b) Franchise Taxes

        The Debtors believe they are current in franchise taxes,
        but seek the U.S. Bankruptcy Court for the Southern
        District of New York's authority, out of caution, to pay
        amounts that may subsequently be determined to be owed
        prior to the Petition Date.

    (c) Business License Fees and Annual Report Taxes

        The Debtors estimate that the amounts owed with respect to
        business license fees and annual report or bi-annual
        report taxes prior to the Petition Date total $40,000.

By this motion, the Debtors seek the Court's permission to pay the
Sales and Use Taxes, Franchise Taxes and Business License Fees and
Annual Report Taxes to the Taxing Authorities.

According to James H.M. Sprayregen, Esq., at Kirkland & Ellis
LLP, in New York, the failure to pay the Taxes and Fees could have
an adverse impact on their ability to operate.  If the Taxes and
Fees are not paid, the Debtors believe that the Taxing Authorities
will cause the Debtors to be audited and may attempt to curtail or
suspend the Debtors' operations and pursue other remedies that
will harm the estates.

Furthermore, Mr. Sprayregen notes that the amounts to be paid were
held in trust for third parties to whom payment is owed.  Those
funds do not constitute property of the Debtors' estates within
the meaning of Section 541 of the Bankruptcy Code.

                       Court Authorization

Judge Stuart M. Bernstein authorizes the Debtors to pay and remit
to the Taxing Authorities the Taxes, Fees, and other charges in an
aggregate amount not to exceed $18,000,000.

Judge Bernstein also allows the Debtors to reissue any check or
electronic payment that was drawn in payment of any prepetition
amount that is not cleared by a depository.

Headquartered in New York, New York, Musicland Holding Corp., is a
specialty retailer of music, movies and entertainment-related
products.  The Debtor and 14 of its affiliates filed for chapter
11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No.
06-10064).  James H.M. Sprayregen, Esq., at Kirkland & Ellis,
represents the Debtors in their restructuring efforts.  When the
Debtors filed for protection from their creditors, they estimated
more than $100 million in assets and debts.  (Musicland Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


NATIONAL ENERGY: Asks Court to Approve Columbia Settlement Pact
---------------------------------------------------------------
NEGT Energy Trading - Power, L.P. and NEGT Energy Trading - Gas
Corporation ask the U.S. Bankruptcy Court for the District of
Maryland to approve their Settlement Agreement with Columbia Gas
Transmission Corporation and Columbia Gulf Transmission Company.

Pursuant to a Transportation Agreement with Columbia Gas, ET
Power established a $2,000,000 letter of credit with JP Morgan
Chase Bank to support the obligations of ET Power and USGen to
Columbia Gas and Columbia Gulf.

On July 6, 2005, the Debtors filed a complaint against Columbia
Gas and Columbia Gulf primarily alleging that:

    (i) Columbia Gas' draw on the Letter of Credit exceeded the
        obligations supported by the Letter of Credit by
        $1,481,896 -- the $2,000,000 draw less amounts applied to
        the obligation owed by ET Gas, and

   (ii) the Columbia Gulf Obligation and the Excess Draw
        constitute property of the Debtors' estates and should be
        returned.

Columbia Gas and Columbia Gulf filed an answer to the Complaint.

Dennis Shaffer, Esq., at Whiteford, Taylor & Preston LLP, in
Baltimore, Maryland, discloses that after extensive negotiations,
the Debtors and Columbia Gas and Columbia Gulf entered into a
settlement agreement, which provides for the payment of all
amounts owed by the Defendants to the Debtors without the expense
and uncertainty of litigation.

Pursuant to the Settlement Agreement, Columbia Gas will pay to ET
Power $1,046,533 and Columbia Gulf will pay to ET Gas $4,158.

Mr. Shaffer relates that the terms embodied in the Settlement
Agreement represent an appropriate exercise of the Debtors'
business judgment.

Headquartered in Bethesda, Maryland, PG&E National Energy Group,
Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas   
Transmission, Inc.) develops, builds, owns and operates electric
generating and natural gas pipeline facilities and provides energy
trading, marketing and risk-management services.  The Company
filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md.
Case No. 03-30459).  Matthew A. Feldman, Esq., Shelley C. Chapman,
Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr &
Gallagher represent the Debtors in their restructuring efforts.  
When the Company filed for protection from its creditors, it
listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT
received bankruptcy court approval of its reorganization plan in
May 2004, and emerged from bankruptcy on Oct. 29, 2004. (PG&E
National Bankruptcy News, Issue No. 54; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


NELLSON NUTRACEUTICAL: Case Summary & 20 Largest Unsec. Creditors
-----------------------------------------------------------------
Lead Debtor: Nellson Nutraceutical, Inc.
             5801 Ayala Avenue
             Irwindale, California 91706

Bankruptcy Case No.: 06-10072

Debtor affiliates filing separate chapter 11 petitions:

      Entity                                        Case No.
      ------                                        --------
      Nellson Holdings, Inc.                        06-10073
      Nellson Intermediate Holdings, Inc.           06-10074
      Nellson Northern Operating, Inc.              06-10075
      Nellson Nutraceutical Eastern Division, Inc.  06-10076
      Nellson Nutraceutical Powder Division, Inc.   06-10077
      Vitex Foods, Inc.                             06-10078

Type of Business: The Debtors formulate, make and sell bars and
                  powders for the nutrition supplement industry.

Chapter 11 Petition Date: January 28, 2006

Court: District of Delaware

Debtors' Counsel: Laura Davis Jones, Esq.
                  Rachel Lowy Werkheiser, Esq.
                  Richard M. Pachulski, Esq.
                  Brad R. Godshall, Esq.
                  Pachulski, Stang, Ziehl, Young,
                  Jones & Weintraub, P.C.
                  919 North Market Street, 16th Floor
                  Wilmington, Delaware 19899-8705
                  Tel: (302) 652-4100
                  Fax: (302) 652-4400

Estimated Assets: More than $100 Million

Estimated Debts:  More than $100 Million

Debtors' 20 Largest Unsecured Creditors:

   Entity                        Nature of Claim   Claim Amount
   ------                        ---------------   ------------
The Solae Company                Trade Debt          $1,355,573
c/o Box Bank of America
P.O. Box 169
Saint Louis, MO 63150-0169

Kerry Sweet Ingredients (DSCNT)  Trade Debt            $490,086
P.O. Box 98489
Baltimore, MD 21264-4420

Clasen Quality Coatings          Trade Debt            $325,256
2910 Laura Lane
Middleton, WI 53562

Printpack Inc.                   Trade Debt            $211,449
P.O. Box 102430
Atlanta, GA 30368-2430

ACH Food Companies Inc.          Trade Debt            $168,235

Orafti                           Trade Debt            $166,054

Erie Foods International         Trade Debt            $165,190

Barry Callebaut USA Inc.         Trade Debt            $161,541

Alcan Packaging Inc.             Trade Debt            $159,883

Blommer Chocolate Co., Inc.      Trade Debt            $149,774

Vyse Gelatin Company             Trade Debt            $135,680

Farbest-Tallman Foods Corp.      Trade Debt            $121,847

Meelunie America Inc.            Trade Debt            $115,344

Malnove Incorporated             Trade Debt            $111,346

Roquette America, Inc.           Trade Debt            $110,750

Concord Foods, Inc.              Trade Debt            $110,530

Pride Transport                  Trade Debt             $98,779

Crockett Container               Trade Debt             $97,259

Flavor Producers Inc.            Trade Debt             $81,522

CGU Capital Group, LLC           Landlord               Unknown


O'SULLIVAN IND: Disclosure Statement Hearing Continues to Feb. 2
----------------------------------------------------------------
O'Sullivan Industries Holdings, Inc., and its debtor-affiliates,
the Official Committee of Unsecured Creditors, and the Ad Hoc
Senior Secured Noteholders Committee -- GoldenTree Asset
Management L.P., Mast Credit Opportunities I, (Master) Ltd., and
Breakwater Fund Management, LLC -- agree to continue the hearing
on the adequacy of the Amended Disclosure Statement explaining the
Debtors' Plan of Reorganization to Feb. 2, 2006, at 9:30 a.m.

As previously reported in the Troubled Company Reporter on
Jan. 10, 2006, the Debtors delivered their First Amended Joint
Plan of Reorganization and First Amended Disclosure Statement to
the U.S. Bankruptcy Court for the Northern District of Georgia.

The Court approved the stipulation.

A hearing to consider confirmation of the Amended Plan is
currently scheduled for February 16, 2006, at 9:30 a.m. (Eastern
Standard Time).  

The Confirmation Hearing and Confirmation Objection Deadline are
likely to be rescheduled to a later date.

The Debtors will solicit votes on the Plan after approval of the
Disclosure Statement.  The Amended Plan provides that all votes to
accept or reject the Plan must be cast by February __, 2006.  
The Voting Deadline is likely to be extended to a later date.

Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings,
Inc. -- http://www.osullivan.com/-- designs, manufactures, and  
distributes ready-to-assemble furniture and related products,
including desks, computer work centers, bookcases, filing
cabinets, home entertainment centers, commercial furniture, garage
storage units, television, audio, and night stands, dressers, and
bedroom pieces.  O'Sullivan sells its products primarily to large
retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and
Office Depot.  The Company and its subsidiaries filed for chapter
11 protection on Oct. 14, 2005 (Bankr. N.D. Ga. Case No. 05-
83049).  On Sept. 30, 2005, the Debtor listed $161,335,000 in
assets and $254,178,000 in debts.  (O'Sullivan Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000)


O'SULLIVAN IND: Wants to Honor Potential Exit Lenders' Expenses
---------------------------------------------------------------
O'Sullivan Industries Holdings, Inc., and its debtor-affiliates'
amended plan of reorganization provides that they will obtain exit
financing pursuant to an approximately $50,000,000 exit credit
facility.  The Debtors need the exit proceeds to provide cash to
fund the Plan as well as their working capital needs.

The Debtors anticipate emerging from bankruptcy in the next
several months, once they obtain exit financing.  

Accordingly, the Debtors have solicited interest from numerous
potential exit credit facility lenders.  The Debtors are currently
engaging in negotiations with those lenders regarding the terms of
the exit credit facility.

James C. Cifelli, Esq., at Lamberth, Cifelli, Stokes & Stout,
P.A., in Atlanta, Georgia, tells Judge Mullins that as part of the
next stage in the exit credit financing process, potential lenders
will perform additional due diligence, including conducting field
or collateral audits, which are necessary for them to make final,
fully developed financial proposals.  

As a condition to performing due diligence, the potential lenders
have required that the Debtors pay advance deposits or reimburse
them for the reasonable and necessary expenses they incur.  
Specifically, Mr. Cifelli notes, potential lenders have indicated
that they will only initiate field or collateral audits once they
have received deposits.

The Debtors believe that if they are not able to pay the expenses
of the potential lenders, their schedule for securing exit
financing commitments and negotiating an exit credit facility will
be delayed, which could delay their emergence from bankruptcy.

In this regard, the Debtors seek the U.S. Bankruptcy Court for the
Northern District of Georgia's authority to reimburse, or to
provide advance deposits to cover, the reasonable and necessary
expenses of potential exit credit facility lenders, up to
$180,000.

Payment of the potential lenders' expenses is necessary to induce
the potential lenders to continue to pursue an exit credit
facility with the Debtors, Mr. Cifelli explains.

The Debtors believe that the proposed expense payment is
relatively small when compared to both:

   (i) the amount of the exit credit facility itself; and

  (ii) the amount that the Debtors hope to save in interest,
       costs, and fees by negotiating an exit credit facility on
       the most favorable terms.

Allowing the Debtors to pay the potential lenders' expenses, and
thus to have multiple proposals to choose from, will assist them
and their professionals in negotiating the most favorable exit
credit facility possible, Mr. Cifelli says.

Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings,
Inc. -- http://www.osullivan.com/-- designs, manufactures, and  
distributes ready-to-assemble furniture and related products,
including desks, computer work centers, bookcases, filing
cabinets, home entertainment centers, commercial furniture, garage
storage units, television, audio, and night stands, dressers, and
bedroom pieces.  O'Sullivan sells its products primarily to large
retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and
Office Depot.  The Company and its subsidiaries filed for chapter
11 protection on Oct. 14, 2005 (Bankr. N.D. Ga. Case No. 05-
83049).  On Sept. 30, 2005, the Debtor listed $161,335,000 in
assets and $254,178,000 in debts.  (O'Sullivan Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000)


OWENS CORNING: Slams Equity Panel's Insistence to Hold Meeting
--------------------------------------------------------------
Owens Corning and its debtor-affiliates ask the U.S. Bankruptcy
Court for the District of Delaware to:

    (a) deny the request of the Ad Hoc Committee of Preferred and
        Equity Security Holders to lift the automatic stay; and

    (b) declare that, under Section 362(a)(3) of the Bankruptcy
        Code, the Ad Hoc Committee and its members are barred from
        prosecuting an action in the Delaware Chancery Court to
        compel a shareholders' meeting.

As reported in the Troubled Company Reporter on Jan. 2, 2006, the
Ad Hoc Committee asked the Court to confirm that shareholders are
entitled to prosecute an action in the Court of Chancery of the
State of Delaware to compel the Debtors to immediately honor their
obligation to convene an annual shareholders' meeting.

In the alternative, the Ad Hoc Committee wants the stay lifted so
it may prosecute an action.

Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington,
Delaware, relates that the Ad Hoc Committee's request appears to
be an attempt to delay the Debtors' plan confirmation process and
the successful completion of the cases.  Changing the Board now
would only result in further delay, uncertainty and disruption of
the path toward confirmation, he says.

Mr. Pernick notes that the equity interest holders are clearly
out of the money.  The Ad Hoc committee, he argues, improperly
seeks to extract hold-up leverage on behalf of the equity
interest holders.  In Owens Corning's case, Mr. Pernick says,
even outside of the federal bankruptcy process, the state-law
right of shareholders to convene an annual meeting is
conditional.  When the federal rights and interests of all
stakeholders in the enterprise of a debtor-in-possession are at
stake in a collective chapter 11 proceeding, the rights of an
equity interest holder under state law must often yield.

In the case of Johns-Manville Corp., the court enumerated five
reasons why shareholders should not be permitted to force a
shareholders' meeting.  The same reasons can be found in Owens
Corning's case, Mr. Pernick says:

    (1) the Ad Hoc Committee's motion seeks to directly interfere
        with, if not derail, the currently pending plan
        confirmation process;

    (2) a shareholders' meeting would defeat the will of the real
        parties-in-interest -- the Debtors' creditors -- and
        ousting the current Board of Directors would undo months
        of plan negotiations;

    (3) the Committee's action seeks to threaten the Debtors'
        exclusive right to file and solicit any plan;

    (4) even if a new Board were elected, the underlying economics
        of the Debtors' cases, the reorganization value of the
        Debtors, and the prospects for asbestos legislation would
        not be affected, thus rendering the request futile; and

    (5) a meeting would only bring about additional costs,
        expenses, and uncertainty in the marketplace, which may
        potentially erode the Debtors' reorganization value.

Mr. Pernick says the Court has jurisdiction to enforce the
automatic stay of Section 362(a)(3) to prevent the Ad Hoc
Committee from:

      * usurping the authority of Owens Corning's properly
        constituted board; and

      * interfering with the Debtors' pending plan confirmation
        process and exclusive right to seek solicitation of the
        Fifth Amended Plan.

Mr. Pernick contends that a meeting is not warranted since the
Debtors have complied with the Bankruptcy Code and applicable
Delaware law with respect to their corporate governance.

James J. McMonagle, the legal representative for future
claimants, agrees with the Debtors and adopts their objection.

Owens Corning -- http://www.owenscorning.com/-- manufactures
fiberglass insulation, roofing materials, vinyl windows and
siding, patio doors, rain gutters and downspouts.  Headquartered
in Toledo, Ohio, the Company filed for chapter 11 protection on
October 5, 2000 (Bankr. Del. Case. No. 00-03837).  Mark S. Chehi,
Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the
Debtors in their restructuring efforts.  (Owens Corning Bankruptcy
News, Issue No. 124; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


OWENS CORNING: Ohio Asbestos Claimants Want to Litigate Claims
--------------------------------------------------------------
About 2,122 asbestos personal injury claimants in Ohio ask the
U.S. Bankruptcy Court for the District of Delaware to lift the
automatic stay in Owens Corning and its debtor-affiliates' chapter
11 cases to allow them to proceed in the Ohio state courts to
litigate their claims.

Alan B. Rich, Esq., at Baron & Budd PC, in Dallas, Texas, tells
the Court that during the five and a half years the Ohio state
tort cases against the Debtors have been stayed, the Asbestos
Claimants have suffered great harm in that some have either died
or been diagnosed with mesothelioma and did not live long enough
to have their claims heard by the state court.  Others continue
to suffer from the Debtors' actions, without remedy.  There is no
practical apparatus available to liquidate their claims before
the Bankruptcy Court, thus they seek to liquidate their claims in
the state courts.  He notes that the Ohio lawsuits contain no
issues of federal law.

Mr. Rich points out that the Bankruptcy Court is prohibited from
resolving the litigation between the Asbestos Claimants and the
Debtors because it lacks jurisdiction.  At the same time, due
process of law requires that the claims of the Asbestos Claimants
be tried and resolved in an appropriate forum.

Lifting the stay and allowing the Asbestos Claimants to move
forward with their claims against the Debtors in the state courts
will not impose any prejudice on either the Debtors or their
estates, Mr. Rich asserts.  Moreover, he continues, granting
relief from the stay would actually benefit the Debtors by saving
them the cost of duplicating, in the federal district court,
litigation already underway in the state courts.

Mr. Rich emphasizes that time is of the essence to the Asbestos
Claimants, many of whom are old or gravely ill.  If the stay is
not lifted and the reference to their cases is withdrawn, the
Asbestos Claimants would be forced to shoulder the additional
expense of duplicating their lawsuits.

Mr. Rich also believes that the Asbestos Claimants will prevail
on the merits of their claims against the Debtors because of the
Debtors' history of being found liable in the tort system for
asbestos injuries.

Owens Corning -- http://www.owenscorning.com/-- manufactures
fiberglass insulation, roofing materials, vinyl windows and
siding, patio doors, rain gutters and downspouts.  Headquartered
in Toledo, Ohio, the Company filed for chapter 11 protection on
October 5, 2000 (Bankr. Del. Case. No. 00-03837).  Mark S. Chehi,
Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the
Debtors in their restructuring efforts.  (Owens Corning Bankruptcy
News, Issue No. 124; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


OWENS CORNING: Resolving AT Plastics' Preference Action
-------------------------------------------------------
On September 30, 2002, Owens Corning and its debtor-affiliates
commenced an adversary proceeding against AT Plastics, seeking to
avoid certain transfers and asking the U.S. Bankruptcy Court for
the District of Delaware to enter a money judgment against AT
Plastics for $219,134 pursuant to Section 550 of the Bankruptcy
Code.

The Debtors and AT Plastics have engaged in settlement
negotiations with respect to the Preference Action.  In the
course of the negotiations, AT Plastics has provided to the
Debtors certain information and documentation with respect to its
asserted ordinary course defense and evidence of additional
subsequent new value for $38,254.  Accordingly, the Debtors and
AT Plastics have agreed to resolve the Preference Action on the
terms set forth in a Settlement Agreement dated January 12, 2006.
Specifically, the parties agree that:

    (a) AT Plastics will pay, or cause to be paid, $50,000 to
        Owens Corning in full and final satisfaction of the
        Preference Action;

    (b) The parties will take all necessary actions to have the
        Preference Action dismissed, with prejudice;

    (c) The Settlement Agreement provides for mutual releases;
        provided, however, that the claim for a purported debt
        owing to AT Plastics for $211,527 filed by AT Plastics'
        transferee, Export Development Canada, which has been
        designated on the official claims registry maintained in
        the Debtors' cases as Claim No. 3943, to the extent
        allowed, is not released or otherwise affected by the
        Settlement Agreement;

    (d) The Debtors will retain and have the right to object to
        the EDC Claim, and all defenses to any objection will be
        fully preserved and maintained; and

    (e) Any claim for or arising from payment of the settlement
        amount, whether asserted by AT Plastics, Export
        Development Canada or any other party, will be disallowed;
        however, nothing in the Settlement Agreement will affect
        the Court's determination of the allowance or disallowance
        of the EDC Claim.

J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington,
Delaware, says the resolution of the Preference Action through
continued litigation will cause added expense, inconvenience and
delay.  The Debtors also foresee that there could be some
difficulty in collecting any judgment, which may be obtained, in
that AT Plastics appears to conduct operations from Canada and
have assets in Canada.

Thus, the Debtors ask the Court to approve the settlement
agreement.

Owens Corning -- http://www.owenscorning.com/-- manufactures
fiberglass insulation, roofing materials, vinyl windows and
siding, patio doors, rain gutters and downspouts.  Headquartered
in Toledo, Ohio, the Company filed for chapter 11 protection on
October 5, 2000 (Bankr. Del. Case. No. 00-03837).  Mark S. Chehi,
Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the
Debtors in their restructuring efforts.  (Owens Corning Bankruptcy
News, Issue No. 124; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


PLIANT CORP: Wants to Hire Sidley Austin as Bankruptcy Counsel
--------------------------------------------------------------
Pursuant to Section 327(a) of the Bankruptcy Code, Pliant
Corporation and its debtor-affiliates seek the U.S. Bankruptcy
Court for the District of Delaware's permission to employ Sidley
Austin LLP as their general reorganization and bankruptcy counsel,
nunc pro tunc to their bankruptcy petition date.

Stephen T. Auburn, Pliant Corp.'s vice-president and general
counsel, says that Sidley Austin is uniquely qualified to
represent them.  Sidley Austin is a full-service law firm with a
national and international presence.  Sidley Austin has more than
1,550 lawyers in 14 offices in major cities throughout the United
States, Europe and Asia.  Sidley Austin has experience and
expertise in every major substantive area of legal practice, and
its clients include leading public companies and privately held
businesses in a variety of industries and major nonprofit
organizations.

In the months leading up to the Petition Date, Sidley Austin has
been advising the Debtors on restructuring and insolvency issues,
including factors pertinent to the commencement of these cases,
as well as on general corporate, banking and litigation matters.
In so doing, Sidley Austin has become intimately familiar with
the Debtors and their affairs.  

Sidley Austin will:

   (a) provide legal advice with respect to the Debtors' powers
       and duties as debtors-in-possession in the continued
       operation of their businesses;

   (b) take all necessary action on behalf of the Debtors to
       protect and preserve the Debtors' estates, including
       prosecuting actions on behalf of the Debtors, negotiating
       any and all litigation in which the Debtors are involved,
       and objecting to claims filed against the Debtors'
       estates;

   (c) prepare on behalf of the Debtors all necessary motions,
       answers, orders, reports and other legal papers in
       connection with the administration of the Debtors'
       estates;

   (d) attend meetings and negotiate with representatives of
       creditors and other parties in interest, attend court
       hearings, and advise the Debtors on the conduct of their
       Chapter 11 cases;

   (e) perform any and all other legal services for the Debtors
       in connection with their Chapter 11 cases and with the        
       formulation and implementation of the Debtors' plan of
       reorganization;

   (f) advise and assist the Debtors regarding all aspects of the
       plan confirmation process, including, but not limited to,
       securing the approval of a disclosure statement,
       soliciting votes in support of plan confirmation, and
       securing confirmation of the plan;

   (g) provide legal advice and representation with respect to
       various obligations of the Debtors and their directors and
       officers;

   (h) provide legal advice and perform legal services with
       respect to matters involving the negotiation of the terms
       and the issuance of corporate securities, matters relating
       to corporate governance and the interpretation,  
       application or amendment of the Debtors' corporate
       documents, including their certificates or articles of
       incorporation, bylaws, material contracts, and matters
       involving the fiduciary duties of the Debtors and their
       officers and directors;

   (i) provide legal advice and legal services with respect to
       litigation, tax and other general non-bankruptcy legal
       issues for the Debtors; and

   (j) render other services as may be in the best interests of
       the Debtors in connection with any of the foregoing and
       all other necessary or appropriate legal services in
       connection with their Chapter 11 cases, as agreed upon by
       Sidley Austin and the Debtors.

The Debtors will pay Sidley Austin for its legal services on an
hourly basis.  The Debtors will also reimburse the Firm for
actual and necessary costs and expenses incurred in connection
with its representation.  Sidley Austin's customary billing rates
are:

       Professional                          Hourly Rate
       ------------                          -----------
       Partners                             $415 to $850
       Senior counsel                       $415 to $850
       Associates                           $190 to $495
       Para-professionals                    $25 to $240

Sidley Austin received a $250,000 retainer on September 28, 2005,
and an additional $50,000 on October 25, 2005.  Sidley Austin's
unpaid fees and expenses through the Petition Date exceeded the
Retainer by $60,613.  The Firm is waiving the unpaid fees and
expenses.

In addition to the Retainer, Sidley Austin has received from the
Debtors $1,935,449 for fees and $38,043 within one year preceding
the Petition Date on account of legal services rendered in
contemplation of or in connection with the restructuring efforts
of the Debtors and the filing of their Chapter 11 cases.

James F. Conlan, Esq., a partner at Sidley Austin, discloses that
the Firm previously represented, and continues to represent,
parties-in-interest in matters unrelated to the Debtors' Chapter
11 cases.

Sidley Austin represents Meridian Automotive Systems, Inc., in
its Chapter 11 proceedings.  Pliant filed a $25,233 general
unsecured claim in Meridian's Chapter 11 case.

In 2001, Sidley Austin represented Clorox-California in a
litigation matter adverse to Pliant Corp.  In 2004, Sidley Austin
represented Exopack LLC in a litigation matter adverse to Pliant.  
Sidley Austin also represented General Electric Corp. in a
$90 million accounts receivable financing involving Pliant.  
Those matters are closed.

In 2005, Sidley Austin represented Tredegar Film Products Corp.
in a trade secret lawsuit.  Sidley Austin no longer represents
Tredegar, and has established an ethical wall between the Pliant
matters and former Tredegar matters.

Mr. Conlan assures the Court that Sidley Austin and its
professionals are "disinterested persons" within the meaning of
Section 101(14) of the Bankruptcy Code.

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. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000)


PLIANT CORP: Wants to Tap Young Conaway as Local Bankr. Counsel
---------------------------------------------------------------
Pliant Corporation and its debtor-affiliates seek the U.S.
Bankruptcy Court for the District of Delaware's consent to employ
Young Conaway Stargatt & Taylor, LLP, as their Delaware counsel,
effective on their bankruptcy petition date.

According to Stephen T. Auburn, Pliant Corp.'s vice president and
general counsel, the Debtors selected Young Conaway because of
its extensive experience and knowledge in the field of business
reorganizations under Chapter 11 of the Bankruptcy Code.

Young Conaway will:

   (a) provide legal advice with respect to the Debtors' powers
       and duties as debtors-in-possession in the continued
       operation of their business and management of their
       properties;

   (b) assist in the preparation and pursuit of confirmation of a
       plan and approval of a disclosure statement;

   (c) prepare on behalf of the Debtors necessary applications,
       motions, answers, orders, reports and other legal papers;

   (d) appear in Court and to protect the interests of the
       Debtors before the Court; and

   (e) perform all other legal services for the Debtors which may
       be necessary and proper in these proceedings.

Young Conaway has discussed with Sidley Austin LLP, the Debtors'
co-counsel, a division of responsibility to avoid duplication of
efforts.

In accordance with Section 330(a) of the Bankruptcy Code, the
Debtors will pay Young Conaway on an hourly basis and reimburse
the Firm for actual, necessary expenses and other charges.

The principal attorneys and paralegal presently designated to
represent the Debtors are:

       Professional             Hourly Fees
       ------------             -----------
       Robert S. Brady              $500
       Edition L. Morton            $365
       Kenneth J. Enos              $240
       Lisa A. Armstrong            $215
       Stefanie B. Boyle            $155

The Debtors employed Young Conaway on October 25, 2005, pursuant
to an engagement agreement.  On October 31, 2005, Young Conaway
received a $100,000 retainer in connection with the planning and
preparation of initial documents and its proposed postpetition
representation of the Debtors.

On December 13, 2005, the Firm applied $51,657 of the Retainer to
outstanding balances resulting from fees and expenses for the
period of October 25 through December 13.

On December 16, 2005, the Debtors paid an additional $51,657 to
Young Conaway to replenish the Retainer.  On December 30, the
Firm drew from the Retainer to cover fees and expenses incurred
from December 14, 2005 through January 3, 2006.

After reconciliation, $51,121 was allocated to satisfy all
prepetition amounts owed and the remaining Retainer of $48,879
will be held by Young Conaway and used to satisfy its
postpetition fees and expenses.

Robert S. Brady, Esq., a partner at Young Conaway, assures the
Court that the Firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.

Mr. Brady discloses that Young Conaway represents, or previously
represented, these parties-in-interest in matters related to
Pliant:

    -- Meridian Automotive Systems, Inc.,
    -- Ameripol Synpol, Inc.,
    -- Money Foods, and
    -- Official Committee of Unsecured Creditors of Uniflex, Inc.

Young Conaway also represents, or previously represented, other
parties-in-interest in matters unrelated to the Debtors.

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. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000)


PLIANT CORP: Wants to Employ McMillan Binch as Canadian Counsel
---------------------------------------------------------------
As previously reported, Uniplast Industries Co., Pliant
Corporation of Canada Ltd., and Pliant Packaging of Canada, LLC,
obtained an order from the Ontario Superior Court of Justice
(Commercial List), in Canada, recognizing their Chapter 11
proceedings as "foreign proceedings" pursuant to Section 18.6 of
the Companies' Creditors Arrangement Act.

Due to the involvement of the Canadian Debtors in Pliant
Corporation's overall debt structure, the successful restructuring
of the Debtors under any Chapter 11 plan may be significantly
affected by the application of Canadian procedural and substantive
law, Stephen T. Auburn, Pliant Corp.'s vice president and general
counsel, relates.

Pursuant to Sections 327(a) and 328(a) of the Bankruptcy Code, the
Debtors seek the U.S. Bankruptcy Court for the District of
Delaware's consent to employ McMillan Binch Mendelsohn LLP, as
their Canadian bankruptcy counsel.

Since November 3, 2005, McMillan's professionals have worked
closely with the Debtors' management team and the Debtors' other
professionals, and they have become well acquainted with the
Debtors' operations and businesses, especially with regard to the
Canadian Debtors.

Pursuant to an Engagement Letter, McMillan has agreed to:

   (a) prepare an application for relief pursuant to Section
       18.6 of the CCAA for the Canadian Debtors;

   (b) prepare motions and other court papers, documents and
       agreements that may be called for under the Canadian
       proceedings in connection with these cases;

   (c) represent the Debtors at and preparing for all attendant
       court appearances and out-of-court planning and
       negotiations that relate to the Canadian Debtors;

   (d) negotiate, prepare and prosecute any relief with
       respect to the Canadian Debtors related to Chapter 11
       plans and related solicitation and disclosure statements
       and other related documents; and

   (e) otherwise representing the Debtors, together with the
       Debtors' primary bankruptcy counsel, Sidley Austin LLP,
       in all aspects of the Debtors' Chapter 11 cases related
       to the Canadian Debtors.

Mr. Auburn attests that McMillan is well suited to serve as the
Debtors' Canadian bankruptcy counsel.  Founded in 1903, McMillan
provides a full range of business legal services and definitive
advice to corporate and financial services clients in Canada, the
US, and abroad.  Corporate restructuring and insolvency is one of
McMillan's core practice areas.  McMillan's extensive cross-
Canada and cross-border experience has earned it global
recognition in several key areas of practice, including corporate
restructuring and insolvency.  

McMillan intends to charge the Debtors at its regular hourly
rates, and seek reimbursement of actual, necessary expenses and
other charges.  McMillan's current rates are:

       Professional       Hourly Rate
       ------------       -----------
       Attorneys          CN$270 to CN$800
       Paralegals          CN$65 to CN$255

McMillan received $90,604 from the Debtors before to the Petition
Date in payment for prepetition services and related expenses.  
In addition, McMillan received a $75,000 evergreen retainer from
the Debtors.

In addition to the payment of $90,604, the Firm has applied,
after reconciliation, $51,774 from the retainer for additional
fees and expenses related to prepetition services and expenses,
which will be replenished by the Debtors.  McMillan intends to
hold the retainer as security for payment of postpetition fees
and expenses.

While the Debtors are in bankruptcy, the Bankruptcy Court will
have exclusive jurisdiction over all matters relating, in any
way, to disputes arising from the engagement until the Debtors
emerge from bankruptcy.

Jeffrey B. Gollob, Esq., a partner at McMillan, discloses that
the Firm had relationships with, or is currently providing
services to, parties-in-interest in unrelated matters:

     * Dow USA,
     * DuPont Company,
     * Arkema Inc., formerly known as Atofina Chemicals,
     * Sun Chemical Corp.,
     * GE Capital,
     * BASF USA,
     * BASF Canada,
     * GE Canada Finance Holding Company,
     * General Electric Capital Corporation,
     * Zurich Insurance Company,
     * The Northwestern Mutual Life Insurance Company, and
     * Wachovia, formerly known as First Union Capital Partners.

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. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000)


RESIDENTIAL ACCREDIT: Fitch Holds Low-B Ratings on 22 Class Certs.
------------------------------------------------------------------
Fitch Ratings has taken action on the following Residential
Accredit Loan, Inc. mortgage-pass through certificates:

Series 2001-QS13

    -- Class A affirmed at 'AAA';
    -- Class M-1 affirmed at 'AAA';
    -- Class M-2 upgraded to 'AAA' from 'AA';
    -- Class M-3 affirmed at 'A';
    -- Class B-1 affirmed at 'BB';
    -- Class B-2 affirmed at 'B'.

Series 2002-QS2

    -- Class A affirmed at 'AAA';
    -- Class M-1 upgraded to 'AAA' from 'AA+';
    -- Class M-2 upgraded to 'AA' from 'A';
    -- Class M-3 upgraded to 'A' from 'BBB';
    -- Class B-1 affirmed at 'BB';
    -- Class B-2 affirmed at 'B'.

Series 2002-QS5

    -- Class A affirmed at 'AAA';
    -- Class M-1 upgraded to 'AAA' from 'AA';
    -- Class M-2 upgraded to 'AA' from 'A';
    -- Class M-3 upgraded to 'A' from 'BBB';
    -- Class B-1 affirmed at 'BB';
    -- Class B-2 affirmed at 'B'.

Series 2003-QS5

    -- Class A affirmed at 'AAA';
    -- Class M-1 affirmed at 'AA';
    -- Class M-2 affirmed at 'A';
    -- Class M-3 affirmed at 'BBB';
    -- Class B-1 affirmed at 'BB';
    -- Class B-2 affirmed at 'B'.

Series 2004-QS3

    -- Class A affirmed at 'AAA';
    -- Class M-1 affirmed at 'AA';
    -- Class M-2 affirmed at 'A';
    -- Class M-3 affirmed at 'BBB';
    -- Class B-1 affirmed at 'BB';
    -- Class B-2 affirmed at 'B'.

Series 2004-QS4

    -- Class A affirmed at 'AAA'.

Series 2004-QS6

    -- Class A affirmed at 'AAA';
    -- Class M-1 affirmed at 'AA';
    -- Class M-2 affirmed at 'A';
    -- Class M-3 affirmed at 'BBB';
    -- Class B-1 affirmed at 'BB';
    -- Class B-2 affirmed at 'B'.

Series 2004-QS7

    -- Class A affirmed at 'AAA'.

Series 2004-QS8

    -- Class A affirmed at 'AAA'.

Series 2004-QS9

    -- Class A affirmed at 'AAA';
    -- Class M-1 affirmed at 'AA';
    -- Class M-2 affirmed at 'A';
    -- Class M-3 affirmed at 'BBB';
    -- Class B-1 affirmed at 'BB';
    -- Class B-2 affirmed at 'B'.

Series 2004-QS10

    -- Class A affirmed at 'AAA'.

Series 2004-QS11

    -- Class A affirmed at 'AAA'.

Series 2004-QS12

    -- Class A affirmed at 'AAA'.

Series 2004-QS13

    -- Class A affirmed at 'AAA';
    -- Class M-1 affirmed at 'AA';
    -- Class M-2 affirmed at 'A';
    -- Class M-3 affirmed at 'BBB';
    -- Class B-1 affirmed at 'BB';
    -- Class B-2 affirmed at 'B'.

Series 2004-QS15

    -- Class A affirmed at 'AAA';
    -- Class M-1 affirmed at 'AA';
    -- Class M-2 affirmed at 'A';
    -- Class M-3 affirmed at 'BBB';
    -- Class B-1 affirmed at 'BB';
    -- Class B-2 affirmed at 'B'.

Series 2004-QS16, Group I

    -- Class IA affirmed at 'AAA';
    -- Class IM-1 affirmed at 'AA';
    -- Class IM-2 affirmed at 'A';
    -- Class IM-3 affirmed at 'BBB';
    -- Class IB-1 affirmed at 'BB';
    -- Class IB-2 affirmed at 'B'.

Series 2004-QS16, Group II

    -- Class IIA affirmed at 'AAA';
    -- Class IIM-1 affirmed at 'AA';
    -- Class IIM-2 affirmed at 'A';
    -- Class IIM-3 affirmed at 'BBB';
    -- Class IIB-1 affirmed at 'BB';
    -- Class IIB-2 affirmed at 'B'.

The mortgage loans in the aforementioned transactions consist of
both 30-year fixed-rate and 15-year fixed-rate mortgages extended
to both Prime and Alt-A borrowers, which are secured by first and
second liens, primarily on one- to four-family residential
properties.

The upgrades, affecting $27.56 million of outstanding
certificates, are being taken as a result of low delinquencies and
losses, as well as significantly increased credit support levels.
As of the December 2005 distribution date, the credit enhancement
(CE) levels for the upgraded classes have grown at least 8.0 times
(x) original CE levels.  The affirmations, affecting over $2.39
billion of certificates, indicate stable collateral performance
and moderate growth in CE.

The mortgage loan performance of the RALI transactions has
generally been consistent with expectations.  The percentage of
loans over 90 days delinquent ranges from 0.0% to 5.76%. The
cumulative loss as a percentage of the initial pool balance ranges
from 0.0% to only 0.20%.

As of the December 2005 distribution date, the transactions are
seasoned from a range of 12 (2004-QS216) to 51 (2001-QS13) months.
The pool factors (current mortgage loan principal outstanding as a
percentage of the initial pool) range from approximately 9% (2001-
QS13) to 81% (2004-QS16).  The master servicer for all
aforementioned RALI deals is GMAC Residential Funding Corporation,
which is rated 'RMS1' by Fitch.


SOLUTIA INC: Wants Until May 10 Make Lease-Related Decisions
------------------------------------------------------------
Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York,
tells the U.S. Bankruptcy Court for the Southern District of New
York that Solutia, Inc., and its debtor-affiliates have had
insufficient time to fully appraise the value of their unexpired
nonresidential real property leases in the context of a plan of
reorganization.  To accomplish this task, the Debtors must
complete the plan negotiation process and propose a confirmable
plan of reorganization.

Against this backdrop, the Debtors ask the Court to further
extend their deadline to assume or reject the Unexpired Leases to
May 10, 2006.  The Debtors reserve their right to seek further
extensions.

As of January 18, 2006, the Debtors are party to 30 Unexpired
Leases, used in connection with their business operations around
the world.

Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications.  The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949).  When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts.  Solutia is represented by
Richard M. Cieri, Esq., at Kirkland & Ellis.   (Solutia Bankruptcy
News, Issue No. 54; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


SOLUTIA INCORPORATED: Wants More Time to Serve Complaints
---------------------------------------------------------
Pursuant to Section 546 of the Bankruptcy Code, the period for
the timely commencement of avoidance actions by filing adversary
proceeding complaints expired on December 17, 2005.

Solutia Inc. and its debtor-affiliates timely filed 86 complaints,
commencing Avoidance Actions against various defendants.  In
addition, tolling agreements were reached with eight other
potential defendants.

To conserve judicial, legal, financial and other resources, the
Debtors ask the U.S. Bankruptcy Court for the Southern District of
New York to extend the deadline to serve the complaints in the
Avoidance Actions to 180 days after the filing of the Avoidance
Complaints.

In addition, the Debtors ask the Court to further extend the
service deadline beyond the 180-day period for an additional 90
days, as necessary, without the need for further hearing.  The
Debtors suggest that they will simply file a notice of the
Additional Extension with the Court and serve that notice
on all interested parties.  Any subsequent extension requests
will be made by motion on notice to the necessary parties.

Garry M. Graber, Esq., at Hodgson Russ LLP, in New York, relates
that the Debtors are in the process of negotiating and drafting
their plan of reorganization.  The Plan, he says, may eliminate
the necessity to further prosecute certain of the Avoidance
Actions -- many of which involve defendants who continue to do
business with the Debtors.

Due to confidentiality concerns, the Debtors cannot provide
further detail regarding plan negotiations or the factors that
may impact a decision concerning the necessity of further
prosecuting certain Avoidance Actions.  However, the Debtors
believe that negotiations are progressing, and that the
provisions of a confirmable plan may eliminate the need to
further pursue some of the Avoidance Actions.

The Debtors want to avoid the costs and expenses associated with
the service and prosecution of the Avoidance Actions until they
determine that further prosecution is necessary and appropriate,
Mr. Graber explains.

Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications.  The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949).  When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts.  Solutia is represented by
Richard M. Cieri, Esq., at Kirkland & Ellis.  (Solutia Bankruptcy
News, Issue No. 54; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


SOLUTIA INC: Court Clerk Records 13 Claim Transfers in Nov. & Dec.
------------------------------------------------------------------
From November to December 2005, the Clerk of the U.S. Bankruptcy
Court for the Southern District of New York recorded at least 13
claim transfers in Solutia Inc. and its debtor-affiliates' Chapter
11 cases.  The Claim Transfers include:

Transferor               Transferee                Claim Amount
----------               ----------                ------------
RU Connected             Longacre Master Fund         $20,300
Ampacet Corporation      Argo Partners                  8,614
George Edwards Co. Inc.  Debt Acquisition Company         612
Ameren Services Co.      3V Capital Master Fund       137,934
Hardy Systems Corp.      Argo Partners                  5,578
Fluor Enterprises Inc.   Longacre Master Fund       6,731,277
Stone Container Corp.    Longacre Master Fund         183,791
URS Corporation          Longacre Master Fund         600,587
Harberger Inc.           Longacre Master Fund          18,867
Harberger Inc.           Longacre Master Fund         143,479
Carlton Bates Company    Fair Harbor Capital            2,933
Carlton Bates Company    Fair Harbor Capital            5,488
Clean One Janitorial     Fair Harbor Capital            3,593

Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications.  The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949).  When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts.  Solutia is represented by
Richard M. Cieri, Esq., at Kirkland & Ellis.   (Solutia Bankruptcy
News, Issue No. 54; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


STRUCTURED ASSET: Fitch Holds Low-B Rating on Four Cert. Classes
----------------------------------------------------------------
Fitch Ratings has affirmed 15 classes of Structured Asset
Securities Corp. (SASCO) residential mortgage-backed certificates,
as follows:

Series 2004-5H

    -- Class A at 'AAA';
    -- Class B1 at 'AA';
    -- Class B2 at 'A';
    -- Class B3 at 'BBB';
    -- Class B4 at 'BB';
    -- Class B5 at 'B'.

Series 2004-12H

    -- Class A at 'AAA';
    -- Classes 1B1, 2B1 at 'AA';
    -- Classes 1B2, 2B2 at 'A';
    -- Class B3 at 'BBB';
    -- Class B4 at 'BB';
    -- Class B5 at 'B'.

Series 2004-18H

    -- Class A at 'AAA'.

The mortgage loans were originated by various originators or
acquired by various originators or their correspondents in
accordance with such originator's respective underwriting
standards and guidelines.  The mortgage loans generally are
partially covered by primary mortgage insurance polices issued by
either United Guaranty Corporation in connection with the Borrower
Advantage Program, or Mortgage Guaranty Insurance Corporation in
connection with the Pro Mortgage Program.  The collateral consists
primarily of fixed-rate, conventional, fully amortizing first lien
residential mortgage loans. Additionally, all of the mortgage
loans have a weighted average original loan to value ratio in
excess of 101%.  The mortgage loans are master serviced by Aurora
Loan Services, Inc., which is rated 'RMS1-' by Fitch.

These affirmations reflect adequate relationships of credit
enhancement (CE) to future loss expectations and affect
approximately $376.28 million of certificates.  The above classes
have experienced small to moderate growth in CE since closing and
cumulative losses for series 2004-5H, 2004-12H, and 2004-18H have
been $2,342, $13,312, and $2,433 respectively.

The pools are seasoned from a range of only 15 to 23 months.  The
pool factors (current principal balance as a percentage of
original) range from approximately 60% (series 2004-12H) to 73%
(series 2004-18H) outstanding.


UAL CORP: Inks Multi-Mil. Settlement with London Market Insurers
----------------------------------------------------------------
James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago,
Illinois, tells Judge Wedoff that United Air Lines, Inc., has
reached a settlement with certain underwriters at Lloyd's,
London, and certain London Market Companies who severally
subscribed to hull and liability policies in favor of United from
October 1, 1956, to October 1, 1998.  The settlement, Mr. Mazza
explains, would resolve a dispute spanning seven years in which
United has sought reimbursement from the London Market Insurers
of amounts it incurred to remediate environmental damage at
various airports sites, and for defense and indemnification for
other known or projected environmental liabilities at airport
sites and other locations.

Under a Buy Back transaction, United wants to sell the London
Policies to the issuing London Market Insurers free and clear of
any pollution or asbestos claims or interests for a gross
consideration of $27,000,000.  Mr. Mazza notes that insolvency
and non-participation of certain London Market Insurers and the
inability to identify certain of the subscribing insurers will
reduce the actual payment initially received immediately from the
settlement by about $5,500,000, yielding a net payment of
$21,500,000.

                    London Policies' Structure

Mr. Mazza explains that the value of the London Policies is
constrained by their unique structure.  One set of policies,
incepting October 1, 1956, and ending October 1, 1969, consists
of excess policies, providing coverage on a per occurrence basis,
for hull and liability claims in amounts that exhaust primary
limits of $500,000 per occurrence.  Primary coverage was provided
during this period by another insurer, United States Aviation
Underwriters, with whom United previously reached settlement.  
The London Policies provided per occurrence limits during this
period in amounts ranging from $15,000,000 in 1960 to $75,000,000
in 1969.  The London Market Insurers contend that United has not
exhausted the $500,000 primary limit as to each "occurrence" --
defined by the insurers as each instance of fuel leakage -- and
therefore for most of United's claims, their excess policies
during this period are not triggered.

A second set of London Policies covered by the United settlement
comprises policies incepting June 1, 1970, and ending October 1,
1998.  In this period, the London Market Insurers wrote hull and
liability coverage on a quota share basis, with each insurer
subscribing severally to a discrete percentage of the first
dollar of risk.  Because these percentages varied from year to
year, each of United's environmental claims may be entitled to
different percentages of coverage from the London Market
Insurers.  United estimates that the London Market Insurers'
aggregate share of hull and liability insurance coverage during
this period is about 50%.

                  United's Environmental Claims

Over the past 15 years, United has incurred substantial
expense to investigate and remediate soil and ground water and
to provide engineering and monitoring reports by order of state
environmental agencies or responsible airport authorities.  Mr.
Mazza relates that United has incurred in excess of $78,000,000
in environmental costs.  United has reserved $45,000,000 for all
future environmental expenses, including response costs
associated with historic releases.

As United was compelled to perform cleanup work, United tendered
its claims to its insurers, including the London Market Insurers,
for defense and indemnification.  The London Market Insurers have
reserved their rights or denied coverage on virtually all of the
tendered claims.  The insurers have interposed numerous defenses
and exclusions, including the various forms of pollution
exclusions found in the London Market Policies.

         Delay of Settlement May Negatively Affect United

Many of the largest London Market Insurers subscribing to
United's policies have filed schemes of arrangement in the United
Kingdom, with bar dates for filing claims and a wide range of
payment terms.  Mr. Mazza says that these insolvent, and in some
cases solvent, insurers may seek to avoid payment of amounts
allocated to them under the proposed settlement.  United
anticipates that over time, additional London Market Insurers may
seek protection under a scheme of arrangement or other insolvency
proceedings, further reducing United's potential recoveries.

United has preserved its rights of recovery against insolvent
London Market Insurers, including the filing of the equivalent of
proofs of claim with the scheme administrators.  United has
recently received distributions on claims filed with two insurers
-- Aviation & General Insurance Co. and Andrew Weir -- totaling
about $1,030,000.  These funds are being held in escrow.  The
Lloyd's syndicates subscribing to the London Policies have been
relieved of liability by order of English Courts who approved the
appointment of an entity known as Equitas to assume and run off
all environmental and asbestos liabilities for policies placed in
the London Market prior to 1993.  Equitas has limited funds and a
mandate to close its books as soon as possible.  Thus, United
could not be guaranteed a recovery from Equitas should United
fail to settle with the London Market Insurers promptly.

"In light of the defenses and exclusions asserted by the London
Market Insurers, the limited coverage attributable to the London
Policies based upon United's claims, and the desire to avoid
protracted litigation over which there is no guarantee of
success, United determined that the Buy Back transaction at the
proposed settlement amount was favorable to the estate at this
time," Mr. Mazza says.

By this motion, United ask the Court to approve:

     (i) its entry into the agreement to settle and release all
         pollution and asbestos claims against the London Market
         Insurers under the London Policies;

    (ii) the London Market Insurers Buy Back of the London
         Policies free and clear of any pollution or asbestos
         claims or interests in the policies for a gross
         consideration of $27,000,000;

   (iii) the entry of a permanent mandatory injunction
         prohibiting any person from prosecuting any pollution or
         asbestos insurance coverage claims against the London
         Market Insurers under the London Policies; and

    (iv) the $5,000,000 claims fund as adequate protection for
         parties who prove valid interests in the London
         Policies.

In particular, the Agreement provides that:

   a. The London Market Insurers will pay to United and United
      will accept $27,000,000 in full satisfaction of all past
      and future pollution and asbestos claims.  Of this amount,
      about $1,000,000 has been paid already, and is being held
      in escrow by United's outside counsel pending Court
      approval of the Debtors' Request.  Of the remaining
      $26,500,000, United expects to receive $20,500,000 within
      the time periods specified within the Agreement.

   b. United will place $5,000,000 of the net proceeds in a
      separate account to provide adequate protection to parties
      who prove valid interests in the policies.  To assert a
      "valid" pollution or asbestos claim for purposes of the
      Claim Fund, a potential claimant must demonstrate:

      -- a valid legal interest in the London Policies, either as
         an additional insured or as the holder of a final non-
         appealable judgment, or allowed claim, against United;

      -- it has adequately verified the amount of its pollution
         or asbestos claim using commercially accepted and
         reliable cost accounting and estimation procedures; and

      -- its claim is covered under specific London Policies.

The Agreement also includes a full release between the parties
with respect to claims concerning pollution or asbestos.  

Thus, upon Court approval and final payment, no other person,
including but not limited to any other named insured, creditor or
additional insured can bring a claim against the London Market
Insurers under the London Policies with respect to pollution or
asbestos claims.

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.  Judge Wedoff confirmed
the Debtors' Second Amended Plan on Jan. 20, 2006 (United Airlines
Bankruptcy News, Issue No. 113; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


UAL CORP: Wants to Settle Tax Claims of 23 California Counties
--------------------------------------------------------------
UAL Corporation and its debtor-affiliates seek the U.S. Bankruptcy
Court for the Northern District of Illinois' authority to settle
certain tax disputes with 23 counties in California:

    (1) Alameda,
    (2) Fresno,
    (3) Kern,
    (4) Humboldt,
    (5) Los Angeles,
    (6) Monterey,
    (7) Orange,
    (8) Riverside,
    (9) Sacramento,
   (10) San Diego,
   (11) San Joaquin,
   (12) San Mateo,
   (13) Santa Barbara,
   (14) Santa Clara,
   (15) San Luis Obispo,
   (16) Shasta,
   (17) Solano,
   (18) Butte,
   (19) Del Norte,
   (20) Imperial,
   (21) Stanislaus,
   (22) Tulare, and
   (23) Ventura.

Erik W. Chalut, Esq., at Kirkland & Ellis LLP, in Chicago,
Illinois, tells Judge Wedoff that the Debtors and the Counties
have been involved in an ongoing dispute regarding the assessed
value of certain airline property for California property tax
purposes.  The controversy concerns whether an adjustment to the
value of the property is required to reflect economic
obsolescence in light of substantial changes in the airline
industry in recent years.  Many other airlines have also been
involved in the dispute.

The Counties have proposed a settlement agreement to the Debtors
-- and to virtually all other major U.S. airlines -- whereby the
assessed value of aircraft will be reduced and the airlines will
receive a tax credit to be used to offset future tax liability to
the Counties.  Under the Settlement, the Debtors will receive
future tax benefits in excess of $15,000,000, Mr. Chalut says.

Pursuant to the Settlement, among other things, the parties agree
that the taxable value of an aircraft of each Make, Model and
Series of Main-line Jets and Regional Aircraft for the years
2002 to 2003 and 2003 to 2004 will be calculated in this manner:

   a. Tax year 2002-2003

      Full Cash Value of each Make, Model and Series of Main-line
      Jets and Regional Aircraft will be the lesser of either:

      (1) the sum of 79.38% of the Trended Value of each Main-
          line Jet and Regional Aircraft within a Make, Model and
          Series: provided, however, that if this calculation
          produces a value for an individual Certificated
          Aircraft that is less than the APG Minimum, the APG
          Minimum value for Certificated Aircraft will be used
          instead; or

      (2) the Average APG Retail/Wholesale Value for the
          respective fleet.

   b. Tax year 2003-2004

      Full Cash Value of each Make, Model and Series of Main-line
      Jets and Regional Aircraft will be the lesser of either:

      (1) the sum of 82.08% of the Trended Value of each Main-
          line Jet and Regional Aircraft within a Make, Model and
          Series; provided, however, that if the calculation
          produces a value for an individual Certificated
          Aircraft that is less than the APG minimum, the APG
          minimum value for the Certificated Aircraft will be
          used instead; or

      (2) the Average APG Retail/Wholesale Value for the fleet.

For Tax Years 2004 to 2005 and 2005 to 2006, the parties agree
that the Full Cash Value of each Make, Model and Series of Main-
line Jets and Regional Aircraft for the tax year 2004-05 will be
determined in accordance with the provisions of Section 401.17(a)
of the California Revenue and Taxation Code.

The Settlement also provides that any party to the Settlement who
is operating under the authority of the federal bankruptcy laws
cannot receive benefits under the Settlement unless it obtains
court approval for the Settlement.

A full copy of the Settlement Agreement is available for free at
http://ResearchArchives.com/t/s?4c4

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.  Judge Wedoff confirmed
the Debtors' Second Amended Plan on Jan. 20, 2006 (United Airlines
Bankruptcy News, Issue No. 113; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


UAL CORP: Kevakian Wants to Prosecute Whistle Blowers Act Lawsuit
-----------------------------------------------------------------
Gregory S. Kevakian filed a civil action in the U.S. District
Court for the District of Arizona seeking $5,925,440 from UAL
Corporation and its debtor-affiliates for retaliatory
discrimination, unlawful termination of employment and violation
of the Whistle Blowers Act.  The action has been stayed due to the
Debtors' Chapter 11 cases.

From January 2003 through September 2004, Mr. Kevakian became
very vocal as to his objections with the Debtors.  Mr. Kevakian
assisted numerous whistle blowers that resulted in fines levied
against the Debtors by various federal agencies.  Mr. Kevakian
was also featured numerous times at the Debtors' official Web
site in which he was contacted by existing and former United
Airlines employees seeking advice on who to turn for help.

The Debtors filed a complaint against Mr. Kevakian and his wife
in the North Valley Justice Court, in Maricopa County, Arizona.
Mr. Kevakian filed a counterclaim for harassment, seeking
$850,000 from the Debtors for damages and at the same time citing
the Doctrine of Res Judicata to dismiss the Debtors' Complaint.
Mr. Kevakian's Counterclaim was stayed.

The Debtors' legal counsel contacted Mr. Kevakian on several
different occasions asking him to drop his claim and they will do
the same.  However, Mr. Kevakian refused.

Mr. Kevakian asks the U.S. Bankruptcy Court for the Northern
District of Illinois to:

   (a) lift the automatic stay regarding his Civil Action and
       Counter Claim; and

   (b) allow him to his amend claim by increasing the claim
       amount to $6,766,210 to include unresolved union
       grievances filed prior to employment termination.

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.  Judge Wedoff confirmed
the Debtors' Second Amended Plan on Jan. 20, 2006 (United Airlines
Bankruptcy News, Issue No. 114; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


W.R. GRACE: Court Fixes Compensation Procedures for Mediator
------------------------------------------------------------
W.R. Grace & Co. and its debtor-affiliates and the Official
Committee of Asbestos Personal Injury Claimants have each proposed
compensation procedures for Roger M. Whelan, the discovery
mediator with respect to asbestos personal injury claims
estimation, for his mediation services.

The U.S. Bankruptcy Court for District of Delaware rules that:

   (1) Mr. Whelan will be paid for his reasonable fees and for the
       actual and necessary expenses he incurs in connection with
       his mediation.  Mr. Whelan's fees will be based on the
       actual amount of time he spends on a mediation matter, and
       his hourly billing rate will not exceed $415.

   (2) If Mr. Whelan incurs time or out-of-pocket expenses in
       rendering mediation services in a given month, then on
       or before the last day of the immediately succeeding
       month, he will file with the Court and serve on the
       parties a written billing statement, including:

          -- a chronological itemization of services performed,
             including the date each service was performed, the
             amount of time spent in performing each service,
             and a narrative description of each service
             performed;

          -- an itemization of actual and necessary expenses
             incurred by the mediator; and

          -- a notation, indicating whether the service
             performed or expense incurred is related to a
             dispute between the Debtors and an individual
             claimant or claimants, or whether the service
             performed or expense incurred is related to a
             dispute between the Debtors and the PI Committee.

   (3) Each service or expense itemized will be accompanied by
       a description of the particular discovery objection or
       discovery-related motion that Mr. Whelan has mediated in
       connection with that service or expense.

   (4) If a discovery matter identified in Mr. Whelan's fee
       application is related to a dispute between the Debtors
       and the PI Committee, then the fees and expenses will be
       paid by the Debtors.  If it is related to a dispute
       between the Debtors and an individual claimant, the fees
       and expenses will be paid in equal share by all parties
       to the mediation.  If a discrete discovery issue is
       connected to a dispute among the Debtors, an individual
       claimant and the Committee, then the fees and expenses
       will be paid in equal share by all parties to the
       mediation, with the Debtors responsible for the PI
       Committee's share.

Headquartered in Columbia, Maryland, W.R. Grace & Co. --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally.  The Company and its debtor-
affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139).  James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts.  (W.R. Grace Bankruptcy
News, Issue No. 101; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


W.R. GRACE: Court Modifies Property Damage Estimation CMO
---------------------------------------------------------
Pursuant to the Case Management Order for the estimation of
asbestos property damage liabilities of W.R. Grace & Co. and its
debtor-affiliates, the U.S. Bankruptcy Court for the District of
Delaware rules that all discovery of experts and non-experts
related to Phase I of the Estimation addressing the Methodology
Issue will be abated until February 10, 2006.  Depositions may
commence on February 13, 2006, and will be concluded by April 7,
2006.

Judge Fitzgerald directs the Debtors to file and serve on counsel
for the Official Committee of Unsecured Creditors, rebuttal
expert reports, if any, on the Phase I Methodology Issue, and
identify:

   (i) rebuttal fact witnesses they intend to call to testify to
       address the Phase I Methodology Issue; and

  (ii) the general subject matter of any rebuttal fact witness
       testimony.

Judge Fitzgerald directs any PD estimation participant to file
and serve a final fact witness or expert list in respect of
Phase I hearing addressing the Methodology Issue no later than
April 12, 2006.  Any pre-trial motions, including motions in
limine, Daubert, and summary judgment motions addressing the
Methodology Issue will be filed not later than April 21, 2006.

Judge Fitzgerald will hold a preliminary pre-trial conference on
Phase I of the Estimation addressing the Methodology Issue at the
April 2006 omnibus hearing.  The Phase I trial is scheduled for
June 1, 2, and if necessary, June 12, 2006, at 9:00 a.m., in
Pittsburgh, Pennsylvania.

Headquartered in Columbia, Maryland, W.R. Grace & Co. --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally.  The Company and its debtor-
affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139).  James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts.  (W.R. Grace Bankruptcy
News, Issue No. 101; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


W.R. GRACE: Anderson Memorial Wants Stay Lifted on S.C. Lawsuit
---------------------------------------------------------------
Anderson Memorial Hospital asks the U.S. Bankruptcy Court for the
District of Delaware to modify the automatic stay to allow it to
file a petition addressed to Judge John C. Hayes, III, of the
South Carolina Court of Common Pleas, to unseal records from the
class certification proceedings conducted in Anderson Memorial
Hospital v. W.R. Grace & Co., et al., 92-CP-25-279.

Christopher D. Loizides, Esq., at Loizides & Associates, in
Wilmington, Delaware, tells Judge Fitzgerald that Anderson wants
to present substantial record on class certification, including
testimony and affidavits that directly contradict the claims made
by W.R. Grace &. Co. to the Bankruptcy Court regarding Speights &
Runyan and the Anderson proceedings in South Carolina.

Unsealing the record would provide the Bankruptcy Court with
clear and incontrovertible evidence that the Anderson Class
Certification issues were fully litigated before the South
Carolina Court, and that Grace's claims about the South Carolina
proceedings are false, Mr. Loizides asserts.

Moreover, Mr. Loizides contends, disclosure will allow Anderson
to present significant and uncontroversial evidence that the
adequacy attack Grace previously raised in the South Carolina
case is "utterly groundless and contradicted by a substantial
body of evidence."

                         Debtors Object

There is no reason to inject the South Carolina Court's purported
"substantial record on class certification, including testimony
and affidavits" into the Debtors' bankruptcy case, Laura Davis
Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones &
Weintraub, PC, in Wilmington, Delaware, tells Judge Fitzgerald.

The Debtors believe that Anderson is attempting to postpone
resolution of its pending class certification request, on behalf
of itself and all property owners everywhere whose buildings
contain or used to contain the asbestos-containing surface
materials for which the Debtors are allegedly responsible.

Anderson does not identify which of Grace's "claims" it disagrees
with, let alone explain how the disagreement impacts class
certification, Ms. Jones notes.  Anderson also ignores Grace's
clear position that the South Carolina proceedings have no
bearing on class certification in Grace's bankruptcy, "where
notice has already been given to all potential claimants through
means that were effective and approved by the Court."

Accordingly, the Debtors ask the Court to deny Anderson's
request.

Headquartered in Columbia, Maryland, W.R. Grace & Co. --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally.  The Company and its debtor-
affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139).  James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts.  (W.R. Grace Bankruptcy
News, Issue No. 101; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


W.R. GRACE: Wants to Hire Steptoe & Johnson as Tax Counsel
----------------------------------------------------------
W.R. Grace & Co. and its debtor-affiliates seek the U.S.
Bankruptcy Court for the District of Delaware's authority to
expand the services of Steptoe & Johnson LLP, to include advising
and representing them on other tax law and tax litigation matters
that may arise during the course of their Chapter 11 cases.

Steptoe currently represents the Debtors as their special tax
counsel in matters regarding certain corporate-owned life
insurance policies.

The Debtors assure Judge Fitzgerald that Steptoe's services will
be complementary rather than duplicative of the services to be
performed by the Debtors' other bankruptcy and reorganization
counsel.

The Debtors will pay Steptoe at its customary hourly billing
rates:

      Attorneys                   $235 to $930
      Paralegals and Analyst      $15 to $235

The Debtors will also pay for all other expenses incurred by
Steptoe in connection with their cases, including mail charges,
delivery charges, document processing, photocopying charges, and
travel expenses.

Anne E. Moron, a partner at Steptoe, assures the Court that the
firm does not represent any interest adverse to the Debtors or to
their estates, and is a "disinterested person" as that term is
defined under Section 101(14) of the Bankruptcy Code.

Headquartered in Columbia, Maryland, W.R. Grace & Co. --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally.  The Company and its debtor-
affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139).  James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts.  (W.R. Grace Bankruptcy
News, Issue No. 101; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


WINDOW ROCK: Taps Fulbright & Jaworski as Special Counsel
---------------------------------------------------------
Window Rock Enterprises, Inc., seeks permission from the U.S.
Bankruptcy Court for the Central District of California, to employ
Fulbright & Jaworski, L.L.P., as its special litigation counsel.

The Debtor expects Fulbright & Jaworski to represent them in:

   a) a lawsuit styled as Federal Trade Commission v. Window
      Rock Enterprises, et al., pending in United States
      District Court, Central District of California, Case No.
      CV04-8190DSF; and

   b) an arbitration proceeding pending before JAMS, entitled
      Greg S. Cynaumon and Infinity Advertising, Inc. v. Window
      Rock Enterprises, Inc., JAMS Ref. No. 1220033450.

Specifically, the Debtor seeks to engage Anthony DiResta along
with Robert E. Darby in the FTC Action; and Mr. Darby, Todd
Sorrell and other counsel in the firm's Los Angeles office in the
Cynaumon Arbitration.

In the FTC Action and the Cynaumon Arbitration, Fulbright &
Jaworski will:

   a) provide consultation to the Debtor;

   b) prepare pleadings;

   c) make court appearances;

   d) engage in settlement negotiations;

   e) provide other litigation services with respect to the
      proceedings; and

   f) take other actions and perform other services as the Debtor
      may require.

According to Mr. Darby, Fulbright & Jaworski will be paid on a
monthly basis.  The firm received a $123,000 retainer from the
Debtor.

Mr. Darby assures the Court that Fulbright & Jaworski does not
hold any interest adverse to the Debtor's estate.

Headquartered in Brea, California, Window Rock Enterprises Inc.
-- http://windowrock.net/-- manufactures and sells all-natural  
dietary and nutritional supplements.  The Debtor is also producing
its own TV, radio and print advertising campaigns for nutritional
and dietary supplements and has distribution in over 40,000 Food
Drug Mass Clubs as well as Health and Fitness Channels.  The
Company filed for chapter 11 protection on Nov. 23, 2005 (Bankr.
C.D. Calif. Case No. 05-50048).  Robert E. Opera, Esq., Winthrop
Couchot, PC represents the Debtor in its restructuring efforts.  
When the Debtor filed for protection from its creditors, it listed
estimated assets of $10 million to $50 million and estimated debts
of more than $100 million.


WINDOW ROCK: Committee Taps FTI Consulting as Financial Advisors
----------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in Window
Rock Enterprises, Inc.'s chapter 11 case asks the U.S. Bankruptcy
Court for the Central District of California for permission to
employ FTI Consulting, Inc., as its financial advisors.

FTI Consulting will:

   1) assist the Committee in the review and analysis of financial
      related disclosures required by the Court, including the
      Schedules of Assets and Liabilities, the Statement of
      Financial Affairs and the Monthly Operating Reports;

   2) review and analyze financial information distributed by the
      Debtor to creditors and other parties-in-interest, including
      cash flow projections and budgets, cash receipts and
      disbursement analyses, analyses of various asset and
      liability accounts, business plans, claim analyses and
      analyses of transactions;

   3) evaluate the Debtor's short-term cash management procedures,
      cash flow forecast and overall financial position and
      analyze its operations, marketing, product line and position
      in the market;

   4) research and analyze potential sources of recovery,
      including insurance policies, prepetition transfers and
      claims against other parties;

   5) assist and advise the Committee with respect to the Debtor's
      identification of core business assets and investigate the
      validity of potential disposition of any assets;

   6) assist the Committee in the valuation of the Debtor's
      operations and in reviewing its cost and benefit evaluations
      in connection with the affirmation or rejection of various
      executory contracts and leases;

   7) review and analyze the Debtor's management compensation,
      retention and any severance or bonus programs and assess the
      prospects for its reorganization or liquidation;

   8) attend meetings and assist in discussions with the Debtor,
      potential investors, secured lenders, the U.S. Trustee and
      other parties-in-interest and assist in the review or
      preparation of information and analysis for any chapter 11
      plan; and

   9) render all other business consulting and financial advisory
      services to the Committee that are necessary in the Debtor's
      chapter 11 case.

Cynthia Nelson, a senior managing director of FTI Consulting,
reports her firm's professionals bill:

      Designation                                   Hourly Rate
      -----------                                   -----------
      Sr. Managing Directors                        $595 - $655
      Directors and Managing Directors              $435 - $590
      Associates & Consultants                      $215 - $405
      Administration Staff and Paraprofessionals     $95 - $175

FTI Consulting assures the Court that it does not represent any
interest materially adverse to the Debtor and the Committee and is
eligible to represent the Committee under Section 1103(b) of the
Bankruptcy Code.

Headquartered in Brea, California, Window Rock Enterprises Inc. --
http://windowrock.net/-- manufactures and sells all-natural  
dietary and nutritional supplements.  The Debtor is also producing
its own TV, radio and print advertising campaigns for nutritional
and dietary supplements and has distribution in over 40,000 Food
Drug Mass Clubs as well as Health and Fitness Channels.  The
Company filed for chapter 11 protection on Nov. 23, 2005 (Bankr.
C.D. Calif. Case No. 05-50048).  Robert E. Opera, Esq., Winthrop
Couchot, PC represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it listed
estimated assets of $10 million to $50 million and estimated debts
of more than $100 million.


WINDOW ROCK: Wants Court OK to Hire Squar Milner as Accountants
---------------------------------------------------------------
Window Rock Enterprises, Inc., asks the U.S. Bankruptcy Court for
the Central District of California for permission to employ Squar,
Milner, Reehl & Williamson, LLP, as its accountants.

Squar Milner will:

   1) consult with the Debtor regarding tax matters and assist in
      preparing its federal and state income tax returns and in
      preparing financial reports, including the reports required
      to be submitted to the Office of the U.S. Trustee;

   2) assist the Debtor in preparing pleadings in connection with
      plan confirmation proceedings in its chapter 11 case and in
      expert testimony as needed by the Debtor;

   3) provide accounting support in litigation affecting the
      Debtor and its reorganization and assist in settlement
      negotiations related to its chapter 11 case; and

   4) perform all other accounting services to the Debtor that are
      necessary in its chapter 11 case.

Stephen P. Milner, C.P.A., a managing partner at Squar Milner,
discloses that his Firm received a $108,000 retainer.  Mr. Milner
reports that Squar Milner will also be paid on a monthly basis for
its professionals' fees and expenses after the retainer is
exhausted.   

Squar Milner assures the Court that it does not represent any
interest materially adverse to the Debtor pursuant to Section
327(a) of the Bankruptcy Code.

Headquartered in Brea, California, Window Rock Enterprises Inc. --
http://windowrock.net/-- manufactures and sells all-natural  
dietary and nutritional supplements.  The Debtor is also producing
its own TV, radio and print advertising campaigns for nutritional
and dietary supplements and has distribution in over 40,000 Food
Drug Mass Clubs as well as Health and Fitness Channels.  The
Company filed for chapter 11 protection on Nov. 23, 2005 (Bankr.
C.D. Calif. Case No. 05-50048).  Robert E. Opera, Esq., Winthrop
Couchot, PC represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it listed
estimated assets of $10 million to $50 million and estimated debts
of more than $100 million.


WINN-DIXIE: Backs U.S. Trustee Decree to Disband Equity Committee
-----------------------------------------------------------------
In proceedings before the U.S. Bankruptcy Court for the Southern
District of New York yesterday, Winn-Dixie Stores, Inc., and its
debtor-affiliates supported the decision of the U.S. Trustee to
disband the official committee of Winn-Dixie equity security
holders.  On Jan. 11, 2006, the U.S. Trustee disbanded this
"Equity Committee," which subsequently petitioned the Court for
reinstatement.  The Equity Committee's motion for reinstatement
remains pending before the Court.

As reported in the Troubled Company Reporter on Aug. 22, 2005,
Felicia S. Turner, the United States Trustee for Region 21,
appointed five parties willing to serve on the Official
Committee of Equity Security Holders in Winn-Dixie Stores, Inc.,
and its debtor-affiliates' chapter 11 cases:

       1. Brandes Investment Partners, L.P.;
       2. Houston N. Maddox;
       3. Poul Madsen;
       4. Michael Nakonechny; and
       5. Kenneth M. Thomas

Although the Company supported the creation of the Equity
Committee at that time, Winn-Dixie has now concluded that the U.S.
Trustee's disbandment of the Equity Committee is appropriate in
light of current information.  This information includes Winn-
Dixie's recent financial statements and its recently completed
confidential business plan, which contains forecasts regarding the
profitability of the reorganized company.  While the Company
believes the business plan shows that Winn-Dixie will be able to
reorganize successfully, it also makes it relatively clear that
there is no substantial likelihood of a meaningful recovery for
existing shareholders under a plan of reorganization.

Ultimately, as the Company has stated in the past, the value of
Winn-Dixie's common stock, if any, will be determined upon the
confirmation of a plan of reorganization.  The Company's objective
is to negotiate a plan of reorganization that maximizes recoveries
for all constituencies, including existing shareholders.

"Winn-Dixie is making good progress in its reorganization, and we
are seeing tangible improvements in our performance including an
increase in identical store sales of more than 7% for the second
quarter of fiscal 2006, excluding 11 stores in New Orleans that
have been closed since Hurricane Katrina," Jay Skelton, Chairman
of the Board of Directors of Winn-Dixie, commented.  "However, as
we have worked to prepare a plan of reorganization, it has become
clear that existing holders of Winn-Dixie common stock will
probably receive little or no value for their stock when the
Company emerges from Chapter 11.  While this is not an unusual
outcome in most Chapter 11 cases, we deeply regret this news.  
Fortunately, we do not believe the outlook for the Company's
existing stock is indicative of the outlook for our business and
future financial performance.  We are pleased with our progress
and excited about our prospects for continued improvement."

Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest   
food retailers.  The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people.  The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King &
Spalding LLP, represent the Debtors in their restructuring
efforts.  When the Debtors filed for protection from their
creditors, they listed $2,235,557,000 in total assets and
$1,870,785,000 in total debts.


WORLDCOM INC: SAVVIS Insists It Can Recover Postpetition Charges
----------------------------------------------------------------
As reported in the Troubled Company Reporter on Dec. 16, 2004,
SAVVIS Communications Corporation asked the U.S. Bankruptcy Court
for the Southern District of New York to allow its administrative
claim, aggregating $405,000.

Savvis Communications is a tenant in a building located at 580
Winter Street, in Waltham, Massachusetts.  Since WorldCom, Inc.
and its debtor-affiliates' chapter 11 filing, the Debtors have
also occupied and utilized a portion of the available space in the
Massachusetts Facility, and have utilized and benefited from
utility service provided to the Facility.

Savvis asserts that C&W Internet expressly assigned to it not only
the Exodus Lease but also any known or unknown rights, demands,
claims, or causes of action "arising out of" or "relating to" the
Exodus Lease or C&W Internet's overall business operations.  In
this regard, Savvis contends that it is clear that C&W Internet
assigned its right to recover the Postpetition Electricity Charges
to Savvis.  Thus, Savvis is now entitled to recover the Charges
from the Debtors.

C&W Internet assigned the Exodus Lease to Savvis pursuant to an
asset purchase agreement dated January 23, 2004.  The Exodus
Lease was expressly included in the definition of "Acquired
Assets" in the Asset Purchase Agreement, David M. Banker, Esq., at
Lowenstein Sandler, PC, in New York, relates.  As defined in the
Asset Purchase Agreement, the term "Acquired Assets" also included
within its nearly all-encompassing scope all "property and assets
of the Business, moveable and immoveable, real and personal,
tangible or intangible, of every kind and description and
wheresoever situated."

The term "Business" was, in turn, defined in the Asset Purchase
Agreement as the "business of providing network and hosting
services as conducted by [C&W Internet] and [its] respective
Subsidiaries on the date hereof . . ." and, thus, clearly,
included C&W Internet's operations at the Waltham Property, Mr.
Banker adds.

The Asset Purchase Agreement also provided that C&W Internet was
transferring and assigning to Savvis "any rights, demands, claims,
credits, allowances, rebates, causes of action, known or unknown,
or rights of set-off . . .arising out of or relating to any of the
Acquired Assets."  Thus, under their plain and unambiguous
meaning, the terms "arising out of" and "relating to" are
obviously intended to have an extremely far-reaching and expansive
scopes, Mr. Banker explains.

In identifying the types of claims and causes of action that would
be assigned to Savvis, the Asset Purchase Agreement not only
employed these two, extremely broad phrases -- that is, "arising
out of" and "relating to" -- it also couched the two phrases in
the disjunctive so that either one, or both, would be effective in
pulling potential claims or causes of action into the pool of
assets being transferred to Savvis.

C&W Internet's claims for the Postpetition Electricity Charge must
be regarded as having connection with the Exodus Lease and
C&W Internet's operations at the Waltham Property, for if C&W
Internet were not occupying and operating at the Waltham Property
pursuant to the Exodus Lease, it would have never paid the
Debtors' Postpetition Electricity Charges, Mr. Banker explains.

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. 112; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


WORLDCOM INC: Parus Holdings Slams Move to Disallow Its Claims
--------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
August 30, 2005, WorldCom, Inc. and its debtor-affiliates asked
the U.S. Bankruptcy Court for the Southern District of New York
to:

   (a) dismiss Parus Holding, Inc.'s statutory and tort based
       claims; and

   (b) limit Parus Holdings' recovery for breach of contract to
       $460,442.

Robert L. Driscoll, Esq., at Stinson Morrison Hecker, LLP, in
Kansas City, Missouri, relates that on November 20, 2000,
EffectNet, Inc., and EffectNet, LLC, entered into a Unified
Communications Services General Agreement with Intermedia
Communications, Inc.  Pursuant to the UC Contract, EffectNet
agreed to supply Intermedia with unified messaging, wholesale
communications and related services that Intermedia could resell
to its end user customers.

                         Parus Responds

"The Debtors' Motion is a tactical maneuver born of desperation,"
Robert S. Friedman, Esq., at Kelley Drye & Warren, LLP, in New
York, on behalf of Parus Holdings, Inc., avers.

Realizing that they have an admitted breach of contract with
significant exposure on the contract and torts claims, the Debtors
have posited a last ditch effort to avoid their discovery
obligations under the law, Mr. Friedman says.  The Debtors attempt
to offer an "easy" way out in a complex commercial case with sharp
factual issues.  However, the Debtors' attempts fail, as the
Motion ignores established precedent, especially considering the
pre-discovery status of the case.

Mr. Friedman asserts that the Debtors ignore authority directly
contrary to their arguments and exceptions to the general rules
they cast as absolute barriers to Parus' claims.

In addition, the Debtors' arguments ignore the fact that WorldCom
and Intermedia Communications, Inc., were totally distinct
entities during the time period most crucial to Parus' tort claims
-- the months leading up to the merger of those companies.

The Debtors' attempt to extricate themselves from an admitted and
intentional contract breach fails on its face, Mr. Friedman points
out.  The Unified Communications Services General Agreement dated
November 20, 2000, provides for direct damages:

   -- of more than $6,000,000 in minimums that Intermedia was
      obligated to meet; and

   -- well in excess of $6,000,000 for the benefit of Parus'
      bargain and the lost value of the UC Contract.

Neither of the direct damages are limited by the so-called
limitation of liability clause contained in the UC Contract.  
Even assuming the provision is enforceable, it does not preclude
direct or benefit-of-the-bargain damages, which is what Parus
seeks on its breach of contract claims, Mr. Friedman relates.

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. 112; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


* Large Companies with Insolvent Balance Sheets
-----------------------------------------------  

                                Total  
                                Shareholders  Total     Working  
                                Equity        Assets    Capital  
Company                 Ticker  ($MM)          ($MM)     ($MM)  
-------                 ------  ------------  -------  --------  
Abraxas Petro           ABP         (27)         120       (4)
Accentia Biophar        ABPI         (8)          34      (20)
AFC Enterprises         AFCE        (44)         216       53
Alaska Comm Sys         ALSK         (9)         589       49
Alliance Imaging        AIQ         (43)         643       42
AMR Corp.               AMR        (729)      29,436   (1,882)
Atherogenics Inc.       AGIX        (98)         213      190
Bally Total Fitn        BFT      (1,463)         486     (442)
Biomarin Pharmac        BMRN       (65)          209      (38)
Blount International    BLT        (201)         427      110
CableVision System      CVC      (2,486)      10,204   (1,881)
CCC Information         CCCG        (95)         112       34
Centennial Comm         CYCL       (488)       1,511       69
Cenveo Inc              CVO         (12)       1,146      127
Choice Hotels           CHH        (165)         289      (34)
Cincinnati Bell         CBB        (672)       1,893      (10)
Clorox Co.              CLX        (532)       3,570     (229)
Columbia Laborat        CBRX        (13)          17       10
Compass Minerals        CMP         (83)         686      149
Crown Media HL          CRWN        (64)       1,250     (125)
Deluxe Corp             DLX         (82)       1,426     (277)
Denny's Corporation     DENN       (261)         498      (72)
Domino's Pizza          DPZ        (553)         414        3
DOV Pharmaceutic        DOVP         (3)         116       94
Echostar Comm           DISH       (785)       7,533      321
Emeritus Corp.          ESC        (134)         713      (62)
Empire Resorts          NYNY        (18)          65       (4)
Foster Wheeler          FWLT       (375)       1,936     (186)
Guilford Pharm          GLFD        (20)         136       60
Graftech International  GTI         (13)       1,026      283
Hollinger Int'l         HLR        (177)       1,001     (396)
I2 Technologies         ITWO       (144)         352      112
ICOS Corp               ICOS        (67)         232      141
IMAX Corp               IMAX        (34)         245       30
Immersion Corp.         IMMR        (15)          46       29
Indevus Pharma          IDEV       (115)         113       79
Intermune Inc.          ITMN        (30)         194      109
Investools Inc.         IED         (20)          64      (46)
Kulicke & Soffa         KLIC         (3)         440      216
Level 3 Comm. Inc.      LVLT       (632)       7,580      502
Ligand Pharm            LGND        (96)         306      (99)
Lodgenet Entertainment  LNET        (69)         283       22
Maxxam Inc.             MXM        (677)       1,044      114
Maytag Corp.            MYG         (95)       2,989      371
McDermott Int'l         MDR         (53)       1,627      244
McMoran Exploration     MMR         (58)         408       67
NPS Pharm Inc.          NPSP        (55)         354      258
Omnova Solutions        OMN         (13)         355       46
Owens Corning           OWENQ    (8,443)       8,142      976
ON Semiconductor        ONNN       (317)       1,171      300
Quality Distribu        QLTY        (26)         377       20
Quest Res. Corp.        QRES        (27)         244      (29)
Qwest Communication     Q        (2,716)      23,727      822
Revlon Inc.             REV      (1,169)         980       86
Riviera Holdings        RIV         (28)         221        6
Rural/Metro Corp.       RURL        (93)         315       56
Rural Cellular          RCCC       (460)       1,367       46
SBA Comm. Corp.         SBAC        (47)         886       25
Sepracor Inc.           SEPR       (213)       1,193      703
St. John Knits Inc.     SJKI        (52)         213       80
Tivo Inc.               TIVO         (9)         163       36
Unigene Labs Inc.       UGNE        (15)          14       (9)
Unisys Corp             UIS         (33)       4,029      339
Vector Group Ltd.       VGR         (38)         536      168
Vertrue Inc.            VTRU        (30)         446      (82)
Visteon Corp.           VC       (1,430)       8,823      404
Vocus Inc.              VOCS         (9)          21      (10)
Worldspace Inc.         WRSP     (1,475)         765      249
WR Grace & Co.          GRA        (559)       3,517      876


                          *********

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, Cherry
Soriano-Baaclo, Terence Patrick F. Casquejo, Christian Q. Salta,
Jason A. Nieva, Lucilo Pinili, Jr., Tara Marie Martin, Terry
Profetana 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 ***